Croatia, the War, and the Future

No Takers For Croatia’s Head of Corruption and Organised Crimes Prosecution Job

September 24, 2023 by inavukic 4 Comments

A historic first for Croatia!

Nobody wants the head job of prosecuting corruption and organised crime!

Advertisement to fill the vacant position, one of the top positions in Croatia, important hierarchy-wise, of head of USKOK/Office for Suppression of Corruption and Organised Crime, did not bear fruit. With applications closed last week there were no takers! Nobody applied!

To my view, this is largely symptomatic of an overwhelming lack of confidence among the public or the pool from which applicants could be drawn, in the ability to work in the job without political and other pressure or interference, perhaps to even “look the other way” when fraud or corruption show their ugly head, and fear of prosecuting corruption for fear of nasty reprisals. This did occur at this time when corruption is high and government officials have been found guilty of and were involved in many corruption scandals or have been alleged to be involved in serious corruption or fraud whether under investigation or not.

Perhaps the loudest opinions regarding this alarming turn of events where there are no applicants to fill the vacancy of a very prominent job in the country, even the locum or temporary person working in that position did not apply for the permanent position, are the echos in Croatia’s roads, streets, and lanes are the ones that go like this: “Everyone is corrupted and so nobody wants to apply for that job,”… “who would want that job, the whole country is corrupted,” … “that job is like a greased plank, and everyone is greasing it…you will slip off sooner or later,”… “that body operates like an extended arm of the government and, therefore, there is not even an “i” in the independence in its work,” … while the former director of USKOK, Zeljko Zganjer, thinks that today this job, or function, is neither attractive or has anyone to rely upon “if you intend to do this job independently, deal with facts and evidence while ignoring whether today something is politically opportune for criminal prosecution or not opportune for prosecution.”

Speaker of the Croatian Parliament Gordan Jandrokovic said, rather stupidly in my view, that the situation that no one applied for the position of head of USKOK is an indicator that the Government does not control or supervise DORH/State Attorney Office and USKOK, because if it did control them, it would probably find a person to install into that position. This of course does not prove anything regarding government’s pressure upon USKOK, of course, for it could also mean that the government tried to find someone suitable for the position behind the scenes but did not find anyone willing to do the job that could even find it necessary to prosecute the Prime Minister for corruption in the future. And that would surely mean own sinking into social and career oblivion. Certainly, the fact that prosecuting former government minister Gabriela Zalac for fraud and corruption regarding EU funds, where there have been suspicions of the Prime Minister having had his fingers in that pie, was abandoned, and could well be hiding or stifling a whole range on unpleasant goings on for the government and parliament. The opposition accused that words by Jandrokovic point to political instability in the country and not that government has no influence on the work of the anti-corruption body.

As things stand now, current acting director of USKOK, Zeljka Mostecak, appointed to this position by the chief state attorney Zlata Hrvoj Sipek at the end of April this year (after the previous director Vanja Marusic resigned from the position amidst a scandal of not reporting her chauffer being in car accident when not on duty and covering his cost) will continue at the USKOK helm for the time being. One cannot discard the possibility that in this pre-parliamentary election year the ruling HDZ/Croatian Democratic Union party most likely does not want any new corruption or organised crime investigated that could implicate its members and, hence, the technicality of no applicants for head of USKOK suits it perfectly!?

No country is immune to corruption. That is a fact. The fact is also in that abuse of public office for private gain erodes people’s trust in government and institutions, makes public policies less effective and fair, and siphons taxpayers’ money away from schools, roads, and hospitals. Political will can turn the tide against corruption and Croatia evidently lacks much of that, or rather its government and governments before it since year 2000, some of whom, like SDP/Social Democratic Party, are currently in opposition. The other parts of opposition in Croatian Parliament have commented last Thursday that nobody is crazy enough to put their head on a chopping block by applying for the head of USKOK position. Alluding in no uncertain terms that, given high-level corruption scandals and convictions and many in the pipeline, fear for own safety and livelihood could well have poisoned most of the enthusiasm for that well-paid, important position.

A few days ago upon his visit to Croatia (an OECD membership hopeful), the former Australian Minister of Finance and currently OECD (Organisation for Economic Cooperation and Development) Secretary General Mathias Cormann warned about the weak control of corruption in Croatia in the public sector compared to other EU members. In other words, it points to non-existent or ineffective measures put in place to firmly control corruption and eradicate most of it.

It was in late June 2023 when the Paris, France, based Financial Action Task Force (FATF), an international financial crime watchdog, placed Croatia on the so-called “grey list” of countries that would be subject to “increased monitoring”. This essentially means the country on that list has committed to implement an Action Plan to resolve swiftly the identified strategic deficiencies within agreed timeframes. According to the FATF website there is a FATF-Interpol partnership to ignite global change to take the profit out of crime! About time! Many would agree. Money laundering and financing terrorism are among the top priorities to tackle.

Croatia will reportedly work to implement its FATF action plan by: (1) Completing the national risk assessment, including assessing risk of, and vulnerabilities to, being used by money launderers and terrorist financiers associated with the misuse of legal persons and legal arrangements and the use of cash in the real estate sector; (2) Increasing human resources and improving analytical capabilities; (3) Continuing to improve LEAs (Law Enforcement Agency) detection, investigation and prosecution of different types of ML (Money Laundering), including ML involving a foreign predicate offences and the misuse of legal persons; (4) Demonstrating a sustained increase in the application of provisional measures in securing direct/indirect proceeds, as well as foreign proceeds subject to confiscation; (5) Demonstrating the ability to systematically detect and where relevant investigate TF (Terrorism Financing) in line with its risk profile; (6) Establishing a national framework for the implementation of UN TFS/Targeted Financial Sanction measures and providing guidance and conducting outreach and training to the reporting entities; and (7) Identifying the subset of NPOs (Non-Profit Organisations) most vulnerable to TF abuse and providing targeted outreach to NPOs and to the donor community on potential vulnerabilities of NPOs to TF abuse.

If these warnings were not enough to set Croatia on the straight and narrow against corruption and organised crime then one can always add the fact that in July 2023 the European Commission recommended that Croatia increase the efficiency of investigations and prosecution of corruption offences.

The European Commission recommended that Croatia revise the criminal procedure code and the law on the office for the suppression of corruption and organised crime, as set out in the anti-corruption strategy, to increase the efficiency of investigations and prosecution of corruption offences.

Evidently the task for Croatia in curbing and controlling corruption and organised crime still looms larger than life itself. The legitimate concerns of financial probity that have ended up with Croatia on the FATF grey list will surely adversely impact Croatia reputation wise. But also, being on the grey list for monitoring should be the stimulus needed to increase scrutiny of the illicit money and assets allegedly and evidently flowing to and through Croatia. Croatia remains mired in corruption, especially at high levels of government and corporate leadership, but it has done nothing to truly comb through corruption at local government levels or health and academic service where bribes are commonplace and, indeed, necessary to have anything done on time, like building licence for instance or surgery …and so, no wonder nobody is currently applying for the important permanent job of head of prosecution of corruption and organised crime in Croatia. Perhaps at the next round of advertisements or …? Ina Vukic

Filed Under: Uncategorized Tagged With: corruption, corruption control, Croatia, FATF, Grey list, Head corruption prisecutor Croatia, MOney laundering, OECD, Organised crimes, USKOK

Croatian Government Intervenes in Cost of Living Crisis

September 17, 2023 by inavukic 11 Comments

With concerning level of inflation hovering around 12% in Croatia during the first quarter of 2023 and in August around 7.8% government attempts to curb it further have been the main topic of Croatian newsworthiness during the past week. With the peak tourist season ending, when prices of goods and services saw a great deal of runaway increases, particularly in the coastal region of Croatia, and given that tourism is among the main industries Croatia depends on for revenue it is somewhat odd and concerning that the government had not stepped in to interfere in prices with a similar force and determination before the tourist season began, i.e., when inflation was much higher. If one were to rely on media reports in Croatia this summer, then it is blatantly clear that high prices will most likely deter many tourists from returning to Croatia for holidays in 2024.

Cost of living crisis has been growing faster than before for more than eighteen months in Croatia with energy prices skyrocketing (as elsewhere in the world) during the post-Covid pandemic global energy crisis, 2021 – 2023, food prices as well, and especially just prior and post the adoption of euro as official currency at the beginning of 2023. But wages and pensions failed to follow suit and domestic food production saw a serious slump due to floods, other inclement weather events and pig diseases etc. Certainly. the supply of food was significantly lower than the demand, regardless of whether it was produced domestically or imported.

Governments will usually impose price ceilings when they believe that the equilibrium price in the market is too high and undesirable (e.g., weak consumers cannot afford a necessity, etc.). Good examples of markets where maximum prices could be imposed are food and housing. Food is a necessity and in countries such as Croatia where masses are on low incomes, many people might be unable to afford the quantities required for survival. Hence, governments could impose price ceilings on certain foods.

Last week in Croatian politics has seen the government capping the prices of a limited array of common products, as well as the introduction of the fifth package of economic measures aimed at alleviating the inflationary pressures felt by both the general public and business entities.

As from Monday 18 September 2023 the price freeze for the basic 30 products starts and will be returned to the level before January 1 of this year. All products whose prices will be limited will be marked with a special logo, a new label “Restricted Price“(Ograničena cijena). The decision to freeze prices for about 30 products in such a way was presented as part of a new package of economic measures devised by those in Croatian government and primarily aimed at aiding both individuals and business entities going forward. The package was voted in unanimously by the government.

“According to an already very good and established procedure, we consulted with partners, trade unions, employers, chambers of commerce and trade, pensioners, associations of cities and counties, representatives of the largest banks and retail chains in Croatia. This package is the result of government consultations with many actors “, Prime Minister Andrej Plenkovic said and then commented on the announced price freeze.

“The price freeze will guarantee more favourable prices for certain foodstuffs and will have the effect of slowing down inflation,” said the Prime Minister. “This package primarily aims to maintain a low price of electricity for all citizens, institutions, and businesses. It is a message of economic stability,” Plenkovic said, adding that the package contains measures for both pensioners and families.

“During talks with the government, the retail chains decided to make certain products cheaper, and I am sure that some of them will return some prices to the levels from the end of last year. I expect cooperation from them,” he said, adding that they had agreed with the banks that they would increase interest on deposits.

The price of electricity for households remains the same, but the semi-annual threshold is raised from 2,500 to 3,000 kWh. The price of electricity for the public sector and small businesses remains the same as well. There is no measure for large businesses; that is, electricity supply is to be contracted according to market conditions.

There appears to be a consensus in Croatia, particularly from pensioner umbrella organisations. that the price freeze is welcome, however, they are adamant that freezing prices of only 30 products does not go very far to alleviate living standard crisis especially since many essential products remain at old prices and insist that a much larger number of products would need to be included to make a meaningful mark for those on low incomes.(HRT TV Dnevnik news bulletin 15 September 2023)

Inflation is near a historical high since 1991 independence status of Croatia (during 1980’s inflation in former Yugoslavia exceeded 1000%). Central banks around the world have for a few years now been promising to intervene. However, a critical factor that is driving up prices remains largely overlooked: an explosion in profits. During the last decade, profit margins around the Western nations especially post-pandemic have reached levels not seen before and a number of corporate businesses in Croatia have not been lagging far behind. Bottlenecks in supply and demand chain caused by the Covid pandemic call for rather sudden or fast restructuring of production and I hope producers of food in Croatia will reap the benefits of this situation and not be restricted by EU quotas. Large corporations with market power have used supply problems as an opportunity to increase prices and scoop windfall profits. It would seem obvious that what is needed is a serious conversation about strategic price controls – just like it was after the Second World War. Croatia’s government has last week made a step in that direction, however small.

It is a known fact that leading world economists are divided into two opposing thoughts on the inflation question: one thought promotes the idea that we ought not to worry about inflation since it will soon go away while the other urges for fiscal restraint and a raise in interest rates. But a third option is sticking its neck out: the government could target the specific prices that drive inflation instead of moving to austerity which risks a recession.

“To use a metaphor: if your house is on fire, you would not want to wait until the fire eventually dies out. Neither do you wish to destroy the house by flooding it. A skilful firefighter extinguishes the fire where it is burning to prevent contagion and save the house. History teaches us that such a targeted approach is also possible for price increases.”

All said, price fixing (and wage fixing) can be harmful at any time and under any conditions because it spells out a large step toward a dictated, regimented, and authoritarian economy. Aside from prices, in reality, the main culprit of inflation is in increases in the supply of money and credit. Without a doubt, this is always brought on, directly or indirectly, by governmental policy—especially by governmental deficits which lead to an increase in the supply of money and credit. Croatia’s economy has not been the one to boast of sound operations and directions and people appear to have been living in a constant economic crisis for the past two decades at least. The current HDZ government bears large responsibility for the crisis and, hence, if not directly then indirectly or through “back room dealings” bears responsibility for price increases. Budget deficits and rising foreign debt had become a second skin to Croatia’s national operations, and funds from the European Union have plugged some holes since 2013, but not enough. The new package of economic measures announced by the Croatian government last week for the next six months is worth 464 million euros, in addition to the existing 551 million euros, which is the total value of the measures from the previous package that are in force for one year. The package includes various subsidies to business and additional payments to pensioners on low income, child support payment increases etc. How much of this package will be effective in reducing the supply-demand gap that drives the prices and how much will contribute to budget deficit and national debt is yet to be seen. Certainly, efforts to curb inflation are praiseworthy, but only if they produce positive results for the people truly struggling with the cost of life crisis every day. Ina Vukic

Filed Under: Uncategorized Tagged With: Andre Plenkovic, ceiling prices, Controlling inflation in Croatia, Croatis. Inflation in Croatia, Government measures to reduce inflation, Price control, Price freeze, Restricting prices

Croatia: Population Triple Whammy

September 10, 2023 by inavukic 14 Comments

Croatia’s population of elder Croatians is soaring, its birth-rate plummets deeper and deeper while increasing droves of working age people leave the country have put Croatia at the forefront of a global demographic trend that experts call a disaster needing an urgent fix in order to retain a national identity and prosperity as we know it. The levels of age and disability pensioners (including disabilities resulting from participating in the 1990’s Homeland War and, would you believe it [!], participating as Yugoslav communist partisan in WWII) compared to levels of taxpayers are so very far apart that the economy itself cannot sustain such a state in retirement and requires increasing reliance on borrowed money for pensions. Certainly, Croatia is not one of the countries that though and planned decades ahead to set up a Superannuation system that would significantly relive the burden on tax funds for age pensions.

There is great deal of movements in Croatia that affect its well-being both politically and economically and spell out national crises of all sorts. Firstly, the relatively excessive loss of population, close to 18% since the War of Independence and subsequent entry as member state of the European Union. Source. In 2022 though, more than 10,000 people came to Croatia than the number that left. That is, 46,287 people left Croatia in 2022, while 57,972 individuals arrived or returned (according to the August 2023 preliminary report by Bureau of Statistics), with a significant number being workers from other countries. Furthermore, an analysis of the data shows that the positive migration balance is partially due also to the arrival of Ukrainian citizens who were fleeing from Russian aggression. However, at the same time, there is also a continuous emigration of Croatian citizens, with emigration increasing by 26% compared to 2021. Hence, population mix is occurring at a rather fast pace so much so that a different character of multiculturalism will be the result, but not by choice of Croatian citizens. Most feel that they have been forced to tolerate cultures that are completely strange and incompatible with theirs and that make them uncomfortable if not bitter. For the time being it is understood that the foreign workers are a temporary fixture to Croatian population as work visas are time limited, however, the economy may dictate the opposite as time goes by and brain and muscle drain from Croatia continues at such high rates into countries with better wages and better working conditions or seeking better education. The January 2023 entry in the Schengen Zone that provides a great deal of fluidity for movements and residence choices to the Zone’s citizens means that people movements between countries may not be labelled as emigration for much longer.

And so, secondly, large number of foreign workers imported into Croatia during the past 18 months even more signifies the drastic loss of Croatian work force to other countries. The foreign workers imported into Croatia have brought a visible clash of cultures feeling of which has surely resulted from the unpreparedness of the domestic population to deal with an entirely different multicultural fabric of daily life than what they have been used to with established several ethnic minorities (all of European descent). The foreign workers though, with their productivity and taxpaying are poised to benefit the economy of Croatia. To add fuel to the fire because of their ethnic characteristics and appearance majority of Croatians see the foreign workers in similar light as they see illegal immigrants. This is troubling because illegal migrants are mainly seen as disturbing the way of life people have been used to and essentially seen as enemies of sort or unwelcome guests.

Thirdly, Croatia is experiencing an ‘unprecedented’ number of migrants crossing its border from neighbouring Bosnia and Herzegovina this summer, with the government working to combat the influx by finalising plans for a new migrant registration hub and building a large registration centre on an abandoned military training ground around the town of Karlovac. This is currently causing much unrest and protest within the domicile population.

Croatia is located on the so-called Balkan route, walked by many illegal migrants originating from the Middle East and North Africa, which sees them travel from Turkey and Greece towards northwest Bosnia and Herzegovina. Once there, they cross the EU’s external border into Croatia from where most intend to reach other EU countries like Germany and France. In fact, the number of incoming migrants this year increased by 170% according to the Croatian Ministry of Interior Affairs and recorded a 700% increase in asylum applications in the country.

Croatian mainstream and other media have become saturated with heart-wrenching stories and plights for help from the local population. They feel that their lives have been infringed and intruded upon by the migrants that walk into their private courtyards stealing food or water, set up camp in their unused field cottages, sleep and defecate in their private forests or agricultural fields, they feel their children can no longer go and play in the local park because the illegal migrants lie or sit there or congregate… For months now the local Croatian population has been living in desperation from wanting its normal life back but unable to due to constant influx of migrants. Amidst questions as to where the illegal migrants should apply for asylum in March 2023 the Croatian government had pushed back into Bosnia and Herzegovina hundreds of illegal migrants who had crossed the Croatian border. How desperate and alarming the situation is can also be seen from public statements Croatian Interior Minister made this past week.

“Last night alone, some 600 illegal migrants were apprehended while attempting to illegally enter Croatian territory – these are unprecedented figures. Everyone who does manage to enter the country has certain rights according to European law, and we respect those rights,” Interior Minister Davor Bozinovic told reporters on Thursday 7 September 2023 while attending a police event near Zagreb.

“However, we will respect their rights by making the rules ourselves. This means we will take them to migration centres in an organised manner,” Bozinovic added, Hina Agency reported.

“It is in everyone’s interest that migrants are moved from the centres of cities and parks. In the facilities above Krnjak (near the town of Karlovac), we can carry out all the administrative tasks that we must carry out in accordance with European and national legislation, and on the other hand, create conditions so that our citizens feel it as little as possible”, he pointed out and noted that the migration pressure, which the whole of Europe is facing, cannot disappear overnight, given that millions of people from mainly Africa and the Middle East see their future precisely on the European continent.

Croatia plans to build a large registration centre at the village of Krnjak, some 20 kilometres south of the major town of Karlovac, on the site of an abandoned military training ground. Last week, about a hundred locals protested the plan and against the setting up of a migrant camp on their doorstep. The protesters insisted that the Republic of Croatia must have greater border control and take care that as few people enter Croatia illegally as possible, and now that number is extremely high and creates problems for the government system and the population. There is a small number of inhabitants in this area, as in many other rural areas in Croatia. The local government had made rather great efforts for people to return to the area, to settle. If an open-type camp is built, it will have negative consequences for the demographics and the area will be abandoned, the protesters asserted.

Evidently, people living in those areas are not ready for what is being imposed on them and asserted that “there are already bad experiences with migrants”, i.e., with thefts, burglaries, and littering. The fear is that these will increase if the migrant camp goes ahead.

“I’m afraid of everything. I am most afraid for the children, the future, the local community, and most of all for the state,” said Dejan Mihaljovic, the Deputy Prefect of Karlovac Municipality.

On Tuesday, 5 September 2023, Bozinovic visited the site and told reporters that the complex includes some 55 buildings suitable for housing people and that the government plans to ask the EU for funding to repurpose the site.

Evidently a great deal of movement and happening is occurring in Croatia that threatens the relative homogenous population profile is concerned as far as ethnic majority and prevalent culture and religion are concerned. It does not matter if some of these movements are considered temporary because there are no indications that the Croatians who have emigrated or those living in the diaspora for decades will return in such large numbers that would improve the demographic picture of Croats living in Croatia. That scenario is a possibility but only with the right political and economic program and the Croatian governments since year 2000 have not had much to offer to make the return of Croats a real and practical choice for most. Political spinning of romantic phrases about love for Croatia as a motive for return can only be stretched so far and to only a few when it comes to realities of living. Considering all that it is more certain than not that Croatian demographics are changing in the race mix and this fact is likely to become permanent rather than stay temporary. The only problem then would be to ensure prevalence of the Croatian ethnic mix to preserve the mainstream culture and language/ Croatian identity. Ina Vukic