• Croatia After EU Accession

  • By Stipe Curković | 06 Dec 13 | Posted under: Central and Eastern Europe , Croatia
  • From the perspective of economic policy initiatives, one of most notable developments since Croatia’s entry into the EU on 1 July 2013 is an intensified drive towards completing the privatisation process of the remaining publicly owned assets.

    Though for now still predominantly a matter of a politics of announcements, the determination of the political class to ‘mop up’ and push for an accelerated completion of the transition towards a fully-fledged capital-driven economy is being made loud and clear. The coalition government, led by the Social Democrats, thus recently announced the immediate selling off of 28 state-owned companies, including such major assets as the ports of Rijeka, Ploče, Zadar and Šibenik, seven airports (Osijek, Pula, Rijeka, Zadar, Split, Dubrovnik, Zagreb), the national lottery, the postal service Hrvatska pošta, the national airline Croatia Airlines, and the largest producer of artificial fertilisers in the region, Petrokemija in Kutina (to name just a few)1. This already ambitious list is completed by plans to ‘monetise’ Croatia’s highways, i.e. grant concessions for operating them to private firms for a period of 40-50 years, and by statements from the controversial mayor of Zagreb, Milan Bandić, announcing the imminent restructuring and subsequent privatisation of companies in the ownership of the large city-owned enterprise Zagreb Holding. Given the importance of the capital for the country’s economy – approximately 1.1 million of Croatia’s 4.4 million inhabitants live in metropolitan Zagreb – the broader economic and social implications of these assets changing into private hands cannot be underestimated.

    This push for privatisation is flanked by a whole package of new labour legislation currently in the making, aiming at the further deregulation and flexibilisation of the labour market and the promotion and normalisation of what until recently were considered atypical forms of employment, ranging from part-time work to temporary-agency employment. To this have to be added persistent (but thus far largely failed) attempts to change existing legislation regulating higher education, which, in the name of promoting ‘excellence’, aim at effectively curtailing the autonomy of universities, make them to an even greater extent financially dependent on the collection of tuition fees and more responsive to the demands of the labour market and impose models of governance emulating market mechanisms.

    The rationale underlying these policies is lifted straight out of the neoliberal catechism holding sway over the economic thinking of the political class and their associated ‘experts’. Market solutions are widely promoted as the only remedy for Croatia’s economic predicaments, while official discourse is permeated with invocations of ‘entrepreneurial initiative’ and foreign direct investment, the surge of which the government sees as its duty to actively facilitate. The fact that Croatia is suffering its fifth successive year of economic downturn, with an aggregate decline in GDP of 11.7 % in the crisis period 2009-20132, accompanied by an official unemployment rate of 16.7 % in August 2013 (i.e. at the peak of the tourist season, when unemployment traditionally drops) and a youth unemployment rate of 52 % in the second quarter of 20133, may in part explain this intensification of efforts to complete the neoliberal transformation of socio-economic relations. But it also serves as a convenient legitimation strategy and a means to stifle public debates which may question the social and political implications and desirability of the transformation. Official (and mainstream media) discourse on the crisis thus construes it as a form of ‘state of exception’ calling for immediate and radical reforms. At the same time it effaces the political content of these reforms and narrows public debates down to the ostensibly purely administrative question of the most appropriate time frame for their realisation. The plausibility of these arguments depends to a large extent on pointing to the ‘insufficient modernisation’ of Croatian society as the chief cause of the crisis and current economic difficulties. Hindered by an allegedly still widespread ‘socialist mentality’ and the ensuing susceptibility to ‘populism’ of large parts of the population, the full realisation of the ‘necessary but unpopular measures’, which would make Croatia’s economy more competitive and thus prosperous, has, according to official wisdom, already been delayed for too long – with dire consequences. Against this background, advocates of neoliberal policies can then play the role of heroic modernisers determined to do what is ‘objectively required’, without flinching.

    Yet a closer inspection of this posturing soon reveals its decidedly less heroic foundations. The virtual absence of serious interest amongst Croatian politicians and mainstream pundits in the structural causes of the global crisis and, especially, in its critical manifestations in the European Union and the structural flaws it has revealed in the latter’s economic and institutional architecture, does not merely indicate short-sightedness or incompetence. Rather, it is a symptom of a peculiar form of selective blindness, which, in turn, is the result of what could be termed ‘ideological path dependency’.

    Accession to the EU has for decades functioned as a kind of eschatological fantasy in the country’s dominant political imagination. The Yugoslav debt crisis of the 1980s and the resulting crisis of the Yugoslav project itself re-enforced the investment of Croatian elites (and not only the elites) in ‘Europeanisation’ as a panacea for all of the country’s economic, social and political ills.4 Despite common misconceptions, often actively nurtured by many of its liberal critics, Croatian nationalism was in its fundamental self-conception never a truly autarchic project. Tuđman himself on numerous occasions identified his personal historical mission as facilitating Croatia’s ‘return into the fold of Western civilisation’, where it had supposedly always belonged. Underneath its idiosyncratic, archaic rhetorical expression, this formula effectively translated into a programme of full-scale capitalist restoration and European integration. Nationalism was to make this possible by violently severing all political, economic and cultural links to the backward Balkans and the prison of the socialist Yugoslav federation, which kept Croatia from realising its long-awaited ‘return to Europe’. The political efficacy of this narrative was provided by the asymmetries of development among the different Yugoslav republics. As the crisis of the 1980s unfolded, even many members of the League of Communists in Slovenia and Croatia, the economically most developed republics, increasingly perceived their obligations to the federal budget as an unacceptable and parasitic draining of their hard-earned resources. Economic (proto)-nationalism soon escalated into its ideologically full-blown and emphatically political version as the threat of recentralisation and loss of autonomy (pushed by the IMF and the EC among others) under the leadership of Slobodan Milošević, who himself had ridden a wave of resurgent Serb nationalism to power, became increasingly palpable.

    Croatian nationalism indeed managed to sever its links with Yugoslavia,5 but as it increasingly became obvious that Tuđman was steering the country toward relative international isolation, rather than toward a swift entrance into the European Union, the appeal of his policies started to decline significantly.6 Soon after Tuđman’s death, his party, HDZ (Hrvatska demokratska zajednica – Croatian Democratic Union), paid the price by being ousted in the 2000 elections by a coalition led by Ivica Račan’s SDP (Socijaldemokratska partija – Social Democratic Party). As each government has done ever since, Račan’s government saw it as its explicit mandate to complete the journey – initiated but eventually blocked by Tuđman – and lead Croatia ‘from the Balkans into Europe’, dropping all excessive ideological ballast along the way. If for Tuđman it had been the Yugoslav framework which had to be abandoned at any cost to ensure Croatia’s ‘return to Europe’, in an ironic twist of historical fate, it was time for Tuđman’s crude ethno-chauvinism to be thrown overboard.

    In consequence, the Račan years are still widely perceived as marking a decisive ‘pro-European’ turn in Croatia’s political orientation. Despite being marred by seemingly endless petty conflicts within the governing coalition (which eventually contributed to its electoral defeat in 2003 in favour of a reformed and ‘Europeanised’ HDZ led by Ivo Sanader), this period saw the economic fortunes of the country turn around with the beginning of a phase of continuous growth at an annual average of 4.2 % of GDP in the pre-crisis period 2000-2008.7 Dependent on a continuous expansion of credit-fuelled consumption, this trend came to an abrupt halt when the shock waves of the global economic crisis hit Croatia in 2009 and GDP dropped by 6.9  %.

    The pre-crisis period of debt-fuelled growth in combination with the prospect of EU accession (and the future prosperity associated with it) encouraged a certain blithe disregard for the structural weaknesses of Croatia’s economy – above all, the fragility and dangers inherent in a foreign-credit and consumption-led model of development, an overpriced currency effectively pegged to the Euro, the resulting persistent trade deficit and continuing deindustrialisation and high unemployment, all of which has been accompanied by continuously rising inequality, the unremitting erosion of social and labour rights and an increasingly indebted population.

    With the end of growth, all of these problems have now come to the fore.

    This to a large extent accounts for the new found determination among establishment representatives to aggressively pursue policies whose full implementation seemed less urgent under conditions of continuous growth and were in part deterred by the perspective of dire electoral repercussions for those presiding over them.

    In addition, the goal of EU accession, which for so long has served as the ultimate legitimation for every socio-economic policy, has now been formally achieved. This, however, carries its own risks. One of the fundamental virtues of the European integration narrative has been its immense capacity to build consent by projecting the desired and/or promised outcomes of neoliberal policies into a future beyond the threshold of EU membership, and thus – by definition – beyond the reach of immediate empirical refutation. With this ‘future’ now having become the present, the hegemonic efficacy of this narrative is in danger of disintegrating under the pressure of spreading disillusionment. The fact that Croatia has entered the EU in the moment of its most severe crisis, with seemingly endless cycles of austerity in store, can only accelerate this process.

    Croatia’s ‘political class’ and establishment pundits bemoaned the growth of ‘Euro-scepticism’ in the population even before EU accession. It may, however, be more appropriate instead to speak of ‘Euro-fatalism’, given that it has (for now) mostly taken the form of cynical resignation. ‘Euro-fatalism’ also seems to encapsulate the prevailing attitude of much of the establishment itself, as the earlier ‘Europhile’ discourse is increasingly being displaced by open references to the inevitability of surrender to policy dictates originating in Brussels. Even at their rhetorically most offensive, the spokesmen of further neoliberal ‘reforms’ eventually contradict their own proactive posing when effectively construing themselves in the same breath as mere administrators and local enforcers of policy guidelines received from above. That this glaring contradiction should result in cynicism towards the political process as such is no surprise.

    Yet, cynicism and ‘passive consent’ could very soon be replaced by active challenges to the status quo. Even if meant to pacify, the formula ‘There is no alternative!’ carries the risk of triggering revolt, not least because of its effectively antidemocratic implications. The current policy offensive may also be an attempt to anticipate such a turn of events and milk the ‘Europeanisation’ narrative for the last drop of ideological legitimation it can still provide, before counter-hegemonic projects have had the time to form and consolidate.

    Its eventual collapse would open up the space for competing counter-narratives. This would certainly present a chance for the left, but also carries dangers which should not be underestimated. A look at developments in neighbouring countries reveals at least two possible scenarios.

    In Hungary, the crisis has swept Victor Orban’s Fidesz to power on a wave of xenophobic and nationalist resentment. A similar future development in Croatia would probably mean the repetition of ideological responses to the crisis and dissolution of Yugoslavia, but this time in the absence of a ready-made solution in the form of prospective EU membership. Some commentators have already identified HDZ president Tomislav Karamarko as the most plausible candidate for the role of ‘Croatia’s Orban’. Since defeating then president Jadranka Kosor in the race for party leadership in May 2012, Karamarko has been attempting to re-consolidate a HDZ weakened by the fall and arrest of its one-time ‘moderniser’ Ivo Sanader on corruption charges by appealing to the party’s ostensible ‘core values’. These read like a veritable neoconservative manifesto. In this context, the recent resurgence of anti-Serb sentiments, anti-gay campaigns and ‘anti-communist’ rhetoric may be omens of worse things yet to come.

    The alternative might be called ‘the Slovenian scenario’. Unlike most post-socialist states, Slovenia initially escaped the ‘transitional depression’ and its dire socio-economic consequences. But since entering the Eurozone in 2007 all of its former gains were quickly eroded. It too now faces the familiar ‘transitional’ hydra of deindustrialisation, high unemployment, rising indebtedness and austerity policies. Discontent erupted in October 2012 in the town of Maribor, initiating a wave of nation-wide protests lasting well into 2013, which eventually led to the resignation of conservative prime minister Janez Janša. Although not much has changed since then in terms of actual policy direction, the ‘Slovenian uprising’ did achieve a tectonic shift in political imagination by – for the first time since independence – making even the mainstream media receptive to critical voices from an explicitly anti-capitalist left. This process has, for the time being, found its culmination in the formation on 1 May 2013 of the Initiative for Democratic Socialism.

    Even though left forces in Croatia are still relatively weak in comparison, significant progress over the past years cannot be denied. The most recent privatisation announcements have been met by the organisation of an oppositional front which includes trade unions, NGOs, feminist organisations, various activist groups and left intellectuals. While the success of this campaign remains to be seen and larger organisational questions still linger, this and similar initiatives nonetheless represent the most plausible environment out of which a genuinely counter-hegemonic bloc could be built.8



    1. http://globus.jutarnji.hr/hrvatska/28-drzavnih-tvrtki-hitno-trazi-kupca

    2. www.limun.hr/UserDocsImages/RBAnalize_br51_listopad %202013.pdf

    3. www.business.hr/ekonomija/nezaposlenost-mladih-u-hrvatskoj-52-posto

    4. For an account of the history of European integration in the broader Yugoslav context see: Andreja Živković, ‘The future lasts a long time: a short history of European integration in ex-Yugoslavia’, www.criticatac.ro/lefteast/the-future-lasts-a-long-time-a-short-history-of-european-integration-in-the-ex-yugoslavia-2/

    5. At a high cost for all of its citizens, but especially for its Serb minority, which saw its percentage of the population drop form the pre-war 12.2 % to a current 4.4 %.

    6. Of course, ubiquitous corruption scandals and the negative socio-economic impacts of the ‘transition’ played their part and contributed to the perception of the later years of Tuđman’s rule as a blind alley.

    7. http://www.hnb.hr/statistika/h-ekonomski_indikatori.htm

    8. For a provisional history of the formation of the ‘Croatian New Left’, see the respective contributions in: Michael Kraft (ed.), Soziale Kämpfe in Ex-Jugoslawien, Mandelbaum, 2013.

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