Interview for HAK – Croatian Automobile Club
Croatia is finalizing EU negotiations, are you satisfied with Croatian progress?
On 9th November 2010, the European Commission adopted its annual assessment of the European
Union's enlargement agenda (the so called “Enlargement Package”). On Croatia, the Commission
concluded that good overall progress has been achieved in numerous fields. We have now reached
the final phase of accession negotiations and we are looking forward to seeing Croatia becoming the
28th Member State of the European Union in the foreseeable future.
There were many polls about our citizens thoughts and attitudes concerning EU, some were
positive, some were negative. Do you expect positive income of our national referendum?
I would not comment on these polls individually. Data are not always comparable, also due to
different methodologies. I believe that in general all these data suggest still a highly volatile public
opinion in Croatia, coloured by a high degree of scepticism and even negativism about public
affairs and the future of Croatia. But I do not believe that the Croatian citizens have in general a
negative opinion of the EU and Croatia's accession to it. In my view, the still volatile public support
is an indication that the citizens are not yet sufficiently informed about the EU and the benefits of
EU membership.
Most of the Croatian people are still wondering about positive aspects of entering EU? First,
do you feel there should be more information available about EU in Croatian public?
Croatia's accession to the EU risks remaining a project of the political and economic elite, if it is not
supported by the general public. Ultimately, it is up to the citizens of Croatia, to decide whether
they want to be part of this family of the European Union. To that end, the Croatian authorities
intend to organise a referendum after the end of the accession negotiations. It is very important to
prepare the Croatian citizens for this in order to enable them to make an informed choice and give
Croatia's accession to the EU full democratic legitimacy. Even more crucial would be to prepare
Croatian citizens for EU membership, and not just for the referendum. Given that it is the
Government of Croatia, which is negotiating the terms and conditions of Croatia’s future
membership, it is the responsibility of this Government to fully inform the citizens of the Republic
about the advantages and disadvantages of the possible accession to the EU. We, from the EU
Delegation, are doing as much as we can to help the government in this project. It is important that
this campaign involves a broad spectrum of the political and social life, political parties, media,
civil society across the country. Also, the goal of informing citizens must be above partisan
interests.
Second, in your own words, should the middle class Croatian citizens be enthusiastic about
Croatia entering EU and why?
EU membership will bring certainly many changes to Croatia and its citizens. Amongst others,
Croatia will be part of and have access to a market of 500 million consumers. My message to the
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Croatian citizens is: do not be afraid of the single market. It is an opportunity, not a threat. Croatian
citizens will have access to the entire labour market of the EU. Croatian companies can provide
their services without restriction to about 500 million consumers. Young people can study at any
university within the EU, etc. But companies, like any body else, have to prepare themselves for
this challenge; they should explore the opportunities of this big Single Market. They should explore
“niche markets” and upgrade the quality of their goods and services to the level of demand of EU
consumers.
Some people are afraid that their life will be more expensive when we enter EU, and especially
when we introduce Euro?
The fear is understandable but unfounded. Croatia, as an EU member, will have free access to the
markets of the 27 EU countries and vice versa. All remaining barriers to trade in goods and services
between Croatia and the EU shall be eliminated. Consequently, there will be much more
competition and, as a result, the prices should go down. Let's take the example of the
telecommunications sector: the prices of services decreased with the growing number of mobile-
telephony service providers appearing on the market.
The adoption of the Euro and the single monetary policy require meeting certain convergence
requirements, known as the Maastricht criteria1, in order to ensure the smooth functioning of the
European Monetary Union. This means that the objectives of the central bank of a Member State
must comply with those of the European Central Bank, and that a country must ensure full
independence of the central bank as well as the stability of prices, interest rates, exchange rates and
public finances. Hence, Croatia will not yet replace the Kuna by the Euro in the days of accession.
It is expected that the introduction of the Euro will take a few more years.
It is true that this may result in a one-off increase in the price level of certain goods and services.
When Slovenia adopted the Euro in January 2007, the total impact of the changeover on consumer
prices was 0.3 percentage points, according to official EU estimates. Beyond this short-term impact,
however, the Euro is likely to reduce inflation rather than increase. Consumers and companies can
compare prices more easily in a wider market, which stimulates competition. Furthermore, the cost
of changing money when travelling or doing business within the Euro zone disappears and cross-
border payments become cheaper or disappear altogether.
After Bulgaria and Romania entered EU and after the problems with Lisbon agreement, do
you feel that Croatia's negotiations were more rigorous and exhaustive than earlier?
No, the conditions are the same for all countries which want to become a member of the EU, i.e.
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The Maastricht criteria:
A Member State’s inflation rate must not exceed the average of the three best-performing Member States in terms of price stability by
more than 1.5 percentage points.
The long-term interest rate of a Member State must not exceed the average interest rate of the three best performing Member States in
terms of price stability by more than 2 percentage points.
The country must, at least for two years, participate in the currency exchange rate mechanism (known as ERM II) and keep the exchange
rate of its currency stable against the Euro.
The general government deficit must be lower than 3% of GDP and the government debt must be smaller than 60% of GDP, or
approaching the required level at a satisfactory speed.
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stable political institutions guaranteeing democracy, the rule of law, the protection of human rights
and rights of national minorities, the existence of a functioning market economy and the ability to
apply the common legislation of the EU. However, we have learnt the lessons from the previous
enlargements. This means, for instance, that we look at the fight against corruption, at an as early
stage as possible. We want to have a convincing track record of effective investigations,
prosecutions and court rulings in such way that it will indeed convince the EU Member States and
the Commission that this trend for fighting corruption is well on track in Croatia. So, in this respect
only the methodology has changed. This is first and foremost to the benefit of the Croatian citizens.
Can you please explain why is so important to clear situation with Croatian shipyards?
One of the closing benchmarks for Chapter 8 (competition) says that Croatia has to ensure full
application of the EU state aid rules, in particular in the shipbuilding sector. Since 2006, the year as
of when Croatia had the legal obligation to comply with these rules, the European Commission has
been warning the Croatian government on the consequences of the state aid given to shipyards. Let
me explain that state aid is not bad per se: a good balance of state aid measures can help an
economy develop, enhance social and regional cohesion, support SMEs in accessing finance, or
boost research and development, and facilitate production of other "public goods", when private
initiative alone is not enough. So, the European Commission does not ban state aid, but regulates it
to limit it as much as possible, target a better and more efficient allocation of taxpayers’ money, and
a healthier internal market. State aid is instead not acceptable, when it subsidises certain businesses
or production of certain goods, changes fair conditions in the market, and affects trade within the
EU Member States. After all, taxpayers do not want their money used to give a company an unfair
advantage over another. On a broader level, state aid takes away financial resources and structural
investments from other sectors (for example improvement of public services, including road
construction/maintenance, road safety, etc.).
Worldwide, shipbuilding is a particular economic sector affected by cyclical crisis, long investment
horizons, and overcapacity: there are too many ships around, and prices are "low", so shipyards
struggle to remain profitable. To address this, the EU since 2004 set up a temporary framework to
support innovation in the sector. The recent economic crisis has also affected the shipyards in the
EU. The EU set up a separate framework for state aid measures, in all sectors. Notwithstanding this,
many EU Member States had to face difficult choices for their shipyards. In the case of the Croatian
shipyards, most of them find themselves in critical financial conditions: only restructuring them
may allow them to survive and continue as more efficient shipyards, or converted to some other
more profitable production. State aid given over the years was also used to cover losses generated
by the shipyards, and has created unfair market conditions towards other EU-based shipyards.
Several billions of HRK of debt held by the state-owned shipyards towards the state, banks, and
suppliers – this needs to be tackled. The margins and the options available are now very narrow.
It is therefore crucial to re-establish fair conditions, and restructure the shipyards, before Croatia is
able to join the EU. The EU funds may also offer also some direct support – additionally to the
actions that the Croatian government will consider - to help relieve the impact of possible closures.
Based on your experiences, what do you see as a possible solution for state-owned companies
with big losses, like Croatian Railways? For Croatia, these are very delicate questions.
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States have to restructure loss-making state companies, simply because they consume funds, which
can be better spent elsewhere and because such practice hinders other companies from growing in
that market. It is however, important to develop a strategy to make these companies profitable
again- or to take difficult decisions of closure. In such case the government together with the
regional authorities needs to offer the workers new job perspectives or further training. This is
admittedly not an easy task, but it can sometimes not be postponed. Many EU Member States had to
undergo a similar transformation process and it has turned out that the sooner they started dealing
with it, the better it was for their economies and the people affected by the change.
We can witness that Croatia made progress with transposition and implementation of EU railway
legislation in 2010. The Market Regulatory Agency is fully operational. Since 2009, HZ
Infrastruktura publishes the Network Statement. The safety authority and the accident investigation
body have been established, but still work needs to be done regarding respective management
bodies which are not yet appointed and agencies are not yet functioning. Moreover, functional
separation between HZ Infrastruktura and HZ Holding is required, based on the amended Railway
Act. The rail market is fully open for Croatian undertakings only and rail access to the maritime and
inland waterways ports is still only for the existing state-run railway. Croatia should asses whether
HZ Passengers, HZ Cargo and HZ Traction companies will be eligible for the state aid in line with
relevant EU Directives. Those companies should be able to operate independently on the open
railway market in future.
Do you think that we used EC funds in the right way so far?
Let us look at the latest figures published recently by Deputy Prime Minister and Minister of
Finance, Mr Šuker for the use of pre-accession fund IPA 2007, Component I. They show very good
results (92,2%) of funds committed. These funds are being used for support programmes relating to
the fight against corruption, human rights and minorities. They are available for setting up the
necessary institutional and administrative capacity building in many policy areas, such as
environment, competition, justice, agriculture, etc. and can be used for improving the business
environment. Furthermore, they contribute to developing the Croatian administrative capacity in
order to manage the future EU funds. But since the money is committed, the projects need to be
implemented in accordance with the terms and conditions agreed upon and within strict deadlines.
Over the last 10 years, Croatia benefited, in total, from approximately € 1.3 billion. Future funding
will be significantly more important as soon as Croatia will be a member of the EU. Therefore, the
administrative capacity and project preparation need to be further strengthened. The government is
aware of that and is working hard to improve the system even more.
Are you surprised by the level of corruption in our society?
In its annual reports on Croatia the EC has regularly pointed to corruption as a main obstacle to
establishing the rule of law. I am glad to see that both PM Kosor and President Josipović put the
fight against corruption high on their agenda and we have seen encouraging developments in the
recent past.
Do you have an idea how to fight it more efficiently?
PM Kosor said on a number of occasions, that there are no untouchables any longer. Nobody must
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be above the law. Corruption has to be prosecuted at any level and regardless of the person’s party
affiliation. In order to do so, it is important that the institutions dealing with the fight against
corruption – the Police, USKOK, the courts - have enough staff which is well trained to deal with
often highly complicated corruption cases. The eradication of corruption is primarily in the interest
of the Croatian citizens. From the EU side, we are expecting that Croatia will submit a critical mass
of evidence, which will be of such a nature that the 27 Member States and the European
Commission will be convinced that there is a solid track record of effective investigation,
prosecution and court rulings. These actions must of course take place with full respect for the
separation of power in the country. In other words judges must do their work independently and
they must respect all rules of procedure, including of the defence.
For the EU, the solution consists in adopting a mix of preventive (strengthen the access to
information right, the control on financing of political parties, the prevention of conflict of interests.
What about our judiciary, we see a lot of positive steps recently. Is it enough for EU?
Over the last years, Croatia has put a lot of effort to create the legal framework for an independent
judiciary. This will certainly show results in the future. It is now essential that these laws are strictly
applied, that justice is delivered efficiently and impartially by the courts, that the best candidates are
appointed as judges, that corruption is effectively prosecuted at all levels, and that minority rights
are guaranteed in practice. We want to see this reformed judiciary work in practice and see the
results of the reform.
Could it be said that permanent EU demands in negotiations helped us to start solving our
own problems?
Experience from the new Member States has shown that preparation for EU accession has, indeed,
generated far-reaching political and economic reforms which contributed to the modernisation of
their societies. We witness a similar process also here in Croatia. The reforms which Croatia is
going through will benefit the citizens of the Republic.
Recently we heard from American ambassador that there are many obstacles in Croatia for
investors. Simplifying that procedure seems like very important step?
The EU Delegation is aware of many complaints - primarily on the basis of information provided by
Ambassadors of the EU Member States - mainly from small and middle sized foreign companies.
They refer in particular to the slow and bureaucratic procedure for registration and business
activities, a non-transparent and unfair public procurement system, as well as the lack of certainty
of legal title. Unfortunately, in this way, many investment and job creating opportunities are lost.
Therefore, improving the business environment has become extremely important for the economic
recovery and prosperity. Removing bureaucratic obstacles is one step. Eradicating petty corruption
at all levels is of the utmost importance.
Do you think that membership in EU will help us to bring investors, or is it depending mostly
on our government, and especially local administration?
Foreign investors will not come automatically after Croatia becomes Member of the EU. Foreign
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companies will wish to establish themselves in Croatia, if the conditions are right. Again, corruption
and red tape must be eradicated. Also, the market conditions must be convincing. Croatia has very
well trained employees and workers. However, labour relations are “challenging” and wages are not
attractive in comparison with certain other countries. Croatia has to undertake a well targeted “PR
campaign” with the view to polishing its image of being an attractive country for investors. But
adequate measures need to be adopted fast. If we look at the 12 new Member States, who joined the
EU in 2004 and 2007, they have enjoyed an unprecedented inflow of foreign direct investment. This
has fuelled the rapid modernisation of their economies.
EU is planning to invest 3.5 billion dollars in Croatia in the first two years of membership.
Based on experience, what will be the best way to use that money?
These 3,5 billion Euros, which have been foreshadowed (not committed) relate to the probable EU
financial allocation to Croatia during the first two years of full membership. In particular, this
estimation includes the two main areas of the Cohesion Policy (2.2 billion €) and the Common
Agriculture Policy. It covers as well other sectors such as competitiveness, security, freedom,
justice and citizenship. Croatia is already benefitting from the IPA pre-accession fund, the main
purpose of which is to prepare Croatia exactly for the efficient use of the 2,2 billion available under
the Cohesion fund after accession. Therefore, it would appear logic to follow the priorities
supported by IPA, where Croatia has already gained experience, i.e. transport, environment,
regional competitiveness and human resources. As Croatia is to join the EU during an ongoing
financial period 2007-13 these funds have to be spent quickly but in line with sound financial
management. One has to bear in mind that Croatia will benefit from 10 times more funds compared
to IPA. Let me mention that the national plan on how to use these funds, so called National
Strategic Reference Framework, is available for the public under www.strategija.hr.
Do you think that our economy is competitive to sustain competition of open European
market. Textile industry, shipyards, agriculture… are pretty weak, and they are coping very
hard with competition.
Croatia has already fully liberalised its trade with the EU countries in terms of industrial products
and is in a process of gradual liberalisation of agricultural products. This means Croatia's imports
from the EU Member States after accession are not expected to increase significantly. However, it
is true that Croatian companies and businessmen have to prepare themselves properly in order to be
successful on the EU market.
With regard to agriculture, in the framework of its Common Agricultural Policy, the EU will
introduce incentives for the revival of Croatian rural areas through Rural Development measures.
Croatia is currently developing its Rural Development Plan which should focus on main Croatian
needs in this area.. Once in the EU, Croatia will, just like other Member States, receive agricultural
subsidies and will use the funds aimed at agriculture and rural development. I have to emphasize
that Croatia already has the possibility to use similar measures funded from EU pre-accession
programme called IPARD (previously SAPARD). This is a great opportunity for Croatian
agriculture before entering EU and it should be used to the maximum extent possible.
Greece, Ireland, perhaps Spain, Portugal… European economies are under a great pressure.
How to enrich European spirit in member countries when there is feeling that some are
paying for mistakes of others?
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In such a complicated structure like the EU, there are always different interests, be they political or
economic. But, solidarity and compromising that is what the European Union is about, and the
Member States are very much aware of that. What is important is that the economic situation in the
EU is improving, despite of the monetary challenges Ireland and a number of other MS are facing.
As regards economic governance, the EU is making major progress. In October 2010, the European
Council endorsed the biggest reform of the Economic and Monetary Union since the Euro was
created. The Member States agreed on a mechanism which ensures greater fiscal discipline, broader
economic surveillance and a permanent crisis management mechanism, including the possibility of
sanctions. This could not have achieved without the Member States willingness to find a common
solution to common problems, in the spirit of solidarity. Further discussion will take place among
Member States in the context of the European Council, which will meet before Christmas.
Some of regulations of Lisbon agreement are promoting sustainable development. Should
Croatia work more on solar energy, wind energy and biomass? We have a big potential but a
very low usability of those resources.
It is true that Croatia has a great potential in utilising renewable energy sources and in achieving
energy savings. It is encouraging that Croatia has placed energy among the priorities for financing
under the future structural funds. Nevertheless, there are still a number of administrative barriers
that need to be removed in order for increased investments in renewable energy sources and energy
efficiency. In addition, citizens need to be stimulated to save energy and use renewables at home
and at work.
Croatian automobile club has been proactive in promoting and advocating road safety issues.
We are supporting new Croatian National Program for Road Safety that is expected to be
finished by the end of the year. For years we operate within EU clubs frame when they are
testing road infrastructure and drivers’ behaviour. Should we be doing more?
In our ultra mobile world the development of an efficient and safe road network is indispensible,
and the HAK has contributed a lot to it. Road safety is, however, not only a matter of infrastructure.
Equally important is to educate the road-users how to cope with the ever increasing traffic. This is a
permanent task where the HAK – possibly in cooperation with the police - can do a lot.
Thank you for asking this question. I was posted as an EU diplomat from 2005 to 2009. I did not
have my personal car in Moscow during this period of time. I was too scared. Car traffic in Moscow
is a disaster. One never knows when one shall arrive at one’s destination. Traffic jams occur
everywhere. But also pedestrians crossing roads at traffic lights risk their lives. Travelling through
Russia by car was a nightmare: roads are in a bad condition and traffic rules are not respected. So,
driving a car in Croatia is a pleasure. I just bought a new car, which enables me to discover this
beautiful country from North to South and from West to East.
How do you see the role of Croatian automobile club as part of greater civil society, or non-
governmental scene in Croatia? We cooperate with number of professional, grassroots and
volunteer organizations.
Automobile clubs in Europe have, and so has HAK, become much more than just a service to
deliver technical assistance on the road. In our motorised world the automobile has become part of
our lives, our live stiles, and so it is only natural that HAK is integrated in the Croatian society as
part of the civil society. I am looking forward to establishing close contacts with HAK and the non-
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governmental organisations. The activities of these organizations are very valuable to the
authorities. They can provide a substantial input on how new laws and regulations are implemented
in the field in many areas of society. My Delegation maintains a permanent dialogue with civil
society. This dialogue is very enriching and opens the reality of the Croatian society to the foreign
diplomats.
Would you and your office like to be involved in FIA / UN / Croatian automobile club
campaign “Make Roads Safe”?
Me personally and my Delegation whole-heartedly support the initiative.
Slovenia was blocking some negotiation chapters for some time. Are you satisfied with the
way both countries handled open issues, like border issues and Ljubljanska banka?
Since the signing of the Arbitration Agreement on the border last year, Slovenia and Croatia have
demonstrated their willingness and ability to solve their outstanding bilateral issues in a spirit of
good neighbourly relations. There is every reason to believe that the growing mutual confidence
between Slovenia and Croatia will help the two countries to solve other bilateral issues.
What can you personally say about Croatia, country's landscapes, venues, people, life?
Croatia is a beautiful country. This year I visited all counties and met their prefects as well as
mayors of big cities. But I also met people involved in projects financed by the EU, which
contributed to the modernisation of the country. Each time, during the visits, I also addressed a
group of university students or pupils at high schools. I love sharing with them my views about EU
which is the biggest most successful political enterprise in the European continent of the XX
century. Soon Croatia will be the 28th Member State of the EU and the Croatian language will be
the 24th official language of the EU. Croatia is so rich in terms of state reserves and natural parks.
The diversity of the landscape is truly amazing. Your cities are beautiful and full of history and
tradition. Above all, Croatians are nice people and I love your traditional products and dishes. I
continue to struggle with Croatian language, which is so beautiful but difficult. But I am not giving
up. I take language lessons at the most impossible hours…
What about our cheese and cream, our tradition of homemade sausages and ham and also
making of "rakija"? Europhobes are using tradition as argument against EU, who will
allegedly not allow it?
This is absolutely not true, to the contrary: The EU as a union of diversity respects and promotes
national identities not only of the countries but of the regions as well. Therefore, the EU will not
prohibit the production of Croatian domestic food products. Croatia will be able to protect its
traditional originating products (“food national heritage”) and to make them more recognisable for
the EU market. However, if these products are to be offered on the EU market, then these will have
to meet EU sanitary and other standards. This is only to the benefit of the consumers. Therefore,
Croatian farmers should lose no time and prepare themselves for that.
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And, at the end, when will Croatia become EU member?
We have definitely reached the final phase of accession negotiations. But negotiations will not be
completed unless we are convinced that the benchmarks and track records for all chapters are
fulfilled. This is not a mathematical exercise. If Croatia's efforts, in particular in the chapter
judiciary and fundamental rights show good results, the negotiations could be finalised next year.
Then follow the signing of the accession treaty, the referendum for the Croatian citizens on
Croatia's EU accession, and the ratification of the accession treaty by each of the 27 EU member
states. According to previous experience, this ratification process lasts about one year. In any case,
we are looking forward to Croatia becoming the 28th member of the EU and Croatian the 24th
official language of the EU.
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