Croatia: For Business Growth To Succeed, Communist Culture Needs Eradication Urgently

Kristijan and Zorana Begic
Photo: Ante Cizmic/EPH

A couple of days ago I was alerted to an article in one of the biggest newspapers and news portals in Croatia – “Slobodna Dalmacija” – published 27 March 2016 and dealing with the ruination by “mysterious” public administration moves of a 10 million kuna (1,300.000 euro) business set up by a man born in Germany to Croatian parents, who decided to go and live in Croatia and invest into business.

Coming to Croatia from the diaspora to invest and thus contribute to the betterment of Croatian economy, to contribute to a decrease in unemployment … is the stuff of “politicians’ dreams come true” in Croatia. Or so it would seem! They – the politicians – have been talking about this kind of stuff for twenty years! They have been inviting and calling the diaspora Croats to come and invest in Croatia incessantly. No matter which political camp (centre-right or centre-left) was in government, say since 1995 when armed conflict/war finished, they all have consistently failed to show and demonstrate clearly which parts of the Croatian (read: former communist) business and investment culture has fully changed to accommodate such a return of Croats-with-money from abroad – or any investment for that matter. Mistrust in Croatia’s red tape continued and continues even if there have been ample cases where such barriers were not an obstacle to successful investments.

The case of Kristijan Begic from Germany seems to justify that mistrust and powers that be in Croatia must set about correcting such wrongs. Kristijan Begic and his wife Zorana had reportedly purchased land from the Sibenik council to build a factory for the manufacture of Harley-Davidson motorbike parts. Initial difficulties with building the factory due to the council’s failure to subdivide the land prior to selling it (!) were eventually ironed out – it took three and a half years to iron this pathetic blunder of either incompetency or carelessness out! Begic then got five years within which to build the factory on the purchased land but, pending the building of the factory, he commenced business operations away from the building site, employed staff and promptly paid the tax. Then the following year – 2015 – their accountant discovered that the company could no longer pay wages to its employees because the company was wiped off the company register and its “tax file number” (OIB/PIN) had been cancelled!

Despite the fact that the company had paid its due tax and received the certificate for it, the company was wiped off the company register as if it was inactive and non-trading! Trying to find out who within the relevant public service had made such a terrible mistake was impossible – and apparently untraceable! Kristijan and Zorana are left to take the matter to court and sue an “unknown” public servant for unwarranted and unjustified deletion of their company from the register and the deletion of its tax file number, or perhaps sue themselves in order to get to the bottom of it and restore their company!

This is the stuff nightmares are made of!

An embarrassment for all politicians who keep inviting the diaspora to invest in Croatia! So I hope this government gets its act together and intervenes as, after all, the error is in public administration and not in private person.

Kristijan Begic
Photo: Screenshot RTL 29 March 2016

These terrible moves were undoubtedly made under the pro-communist Social Democrat led former government but no attempts by the new government seem to have been made to restore the company in the company register, locate the nasty culprit in the public administration office who cancelled the business unlawfully and demonstrate to the public and the diaspora that sound policing and monitoring of business administration is in place.

So what does this example tell us? The main point is that the diaspora is and has been ready to help Croatia boost its economic fortunes but Croatia is not ready for this. Instead of inviting the diaspora almost ad nauseam,  to return to Croatia, without making lasting changes in Croatia, Croatian politicians in power should roll up their sleeves and start changing Croatia within, truly moving away from the communist culture and habits – not just in words. Start working at earning the trust of the diaspora to put its hard earned money where Croatia needs it!

It is clear that the government or presidential advisers for the diaspora employed so far in Croatia during the past twenty years have failed miserably at assisting the homeland society and ingrained pathetic culture customer relations change. Perhaps the reasons for this lie in both the questionable qualifications of many advisers (many of whom had not “made it” in the diaspora when it comes to public administration and managing key social/cultural changes) and in the lack of political will to bring about changes at grassroots levels, i.e. attitudes and practices of those manning public office desks and benches.

The Begic case I believe bears witness to today’s much lamented and deplored gap between rhetoric and practice of democracy. This case demonstrates that there is a great deal of foot-dragging on the issue of operational democracy in Croatia for, after all, in which democracy of the world does the recipient of an error made by a public servant need to take the error to court to correct it without the capacity of having the matter corrected outside a court when all needed supporting facts to correct the “administrative” error are there (?). Perhaps the error was made with purposeful malice and jealousy – a pathetic public servant being jealous of someone’s success (?) or sabotaging investments from the diaspora (?) – wouldn’t put it past the communist culture in public administration. But even if it is the latter the victim of such and administration error should not need to take the matter to court but have the right to have it addressed with the particular public department’s complaints resolution or other similar processes.

Judging by this case, complaints to a public department in Croatia seem to get the same treatment as “spitting in the wind” gets!

Without a doubt, the period between the late 1980’s and early 1990s was indeed one of the most remarkable periods in recent history of world political economy as it sentenced to death and executed the Communist rule in much of Eastern/ North and South-Eastern Europe, and steered into motion the beginning of the end of the so-called Cold War. The countries in transition from communism, including Croatia, embraced en mass the ideology of Western liberal political economic system. For some of these countries the decision to go democrat was, of course, not so much a decision made out of heart-felt conviction and commitment to democracy as it was to dance with the tune of the time for it was the only game in town that shed a light into possible betterment of ones living standard (closer to the one seen in the West) than what communism/socialism had allowed most. Besides the motive of economic prosperity “for all” to transition into democracy Croatia wanted independence and sovereignty – out of the oppressive and burdensome federation of states bound into Yugoslavia.

So, a new Constitution (first version) was written for Croatia and passed in the parliament in December 1990, with all required or a good amount of democratic values and principles within it. The speech made by president Franjo Tudjman at the time contained the main aspects of the daunting task of Croatia’s translating the democratic principles and values into practice. Of course, the war of aggression against Croatia soon followed and any orderly transitioning of public administration culture and habits dragged from Yugoslav communist era was to suffer severely for at least a decade, or until 1998 when the last piece of Serb-occupied Croatian territory was reigned back into Croatia’s sovereign borders. But after that time – there is absolutely no acceptable excuse for Croatia’s public administration to be dragging its feet so badly in getting rid of red tape and anti-customer culture rooted in almost all government owned businesses or departments since the very first days of communist rule after WWII.

It seems blatantly clear that in Croatia – on levels of government or public administration – there’s still a good deal of a kind of tabula rasa approach that existed when it emerged from communist Yugoslavia, which assumed that somehow the communist past had been swept away in the dramatic moments of 1990/91 – at the secession from communist Yugoslavia. While the laws have been changed to accommodate the Constitution for a democratic order the damaging communist culture and habits have not been addressed and dealt with at the same time.

The euphoria unleashed by the events of 1989-1990, secession from communist Yugoslavia, caused many to forget (or ignore purposefully) that ways of doing business or serving the public sustained by the communist regime are not the sort of qualities conducive to free societies, democratic political orders, or their supporting market economies. In short, communist culture and habits are obstacles to the emergence of a functioning, democratic civil society, perpetuating a dysfunctional institutional and political culture. In other words, because of the strong and un-policed communist heritage the post-Communist Croatia still functions abnormally and its economic systems, in particular, suffer serious impairments or deficits due to the maladaptive nature of the communistically institutionalised behaviour for a democratic order. The dysfunction comes from the interactions of the historical experiences, institutions, and traditions amassed during almost half a century of communist regime prior to 1990.

Moving from command to market economy has not been easy and, as one would expect in such circumstances, failures are aplenty. But now, Croatia must absolutely ensure prevention of the appalling behaviour of public administration towards the diaspora (and all investors) as seen in abovementioned case Begic and the only way of doing this is to mount vigorous ongoing measures and procedures and “policing” that will ultimately reduce or eradicate the communist culture still sitting undisturbed behind government offices’ benches and desks. Otherwise inviting the diaspora to come and invest in Croatia will become the fodder of comedians and satire, irreparably damaging the relationship that still gives so much hope for a better future in Croatia. Ina Vukic, Prof. (Zgb); B.A., M.A.Ps. (Syd)