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                                       The Week in Review
Weekend edition of the MediaScan review of Croatian print and broadcast media                                             © 2009 Terna d.o.o.

27 February – 5 March 2009                                                                                                     Issue 422
                                                         Executive Summary

 Following last week's meeting between Prime Minister Ivo Sanader and his Slovenian counterpart Borut Pahor in the
border town of Mokrice [[see CWIR #421]], which produced no tangible progress on the removal of the Slovenian blockade of
Croatian EU accession negotiations, Sanader held a top-level meeting on Monday with heads of all parliamentary parties,
President Stipe Mesic and Speaker of Sabor Luka Bebic to discuss the matter.
   Consensus was reached that mediation by a commission chaired by [former Finnish President] Martti Ahtisaari in the
border dispute with Slovenia would be accepted, but only if this route produces a solution in court. All agreed that it would be
unacceptable to have the border determined by a political body. A working group has thus been formed, and will phrase an
answer to the EC regarding its offer of mediation [[see CWIR #418-421]] by Monday.
    If Slovenia and Croatia both accept the mediation, the Croatian EU accession process would be unblocked and would
continue separately from the border issue. EC Enlargement Commissioner Olli Rehn called on Slovenia and Croatia to accept
the mediation proposal without setting impossible conditions, which would effectively mean refusal. President Mesic responded:
“Croatia adhered – and continues to adhere – to the principle that if an international dispute exists, it needs a resolution based
on international law. This means using international conventions as the basis, which Croatia has accepted, and which means
that facts must be determined by an international court. This is the Croatian position.”
    Permanent Rapporteur of the European Parliament for Croatia Hannes Swoboda and German deputy in the EP Doris Pack
[who is the Chairwoman of the parliamentary Delegation for Southeast Europe] claim the mediation proposal is biased towards
Slovenia and that a legal solution would be better. To remedy this, Swoboda has proposed that the EC facilitate a top-level
tripartite meeting aimed at reaching an urgent solution to the blockade.
   Meanwhile, the European Commission has rejected the Slovenian proposal to postpone the intergovernmental conference
on accession slated for 27 March. The EC wants no further delays in resolving the dispute. Croatia is still optimistic about being
able to open and close blocked chapters at the intergovernmental conference.

 Foreign Ministers of NATO member-countries – including US State Secretary Hillary Clinton, Croatian Foreign Minister
Gordan Jandrokovic and his counterpart Samuel Zbogar – gathered in Brussels on Thursday for a meeting. The joint
conclusion was that all efforts should be invested in ensuring that Croatia and Albania join NATO as full members at the NATO
summit on 3 and 4 April in Strasbourg and Kehl.

 Polled on their support for Croatian accession to NATO and the EU, a convincing majority of 62.2 percent of respondents
supported the Croatian membership in NATO, and only 29.7 percent opposed it. Accession to the EU was supported by 51.6
percent of respondents, and opposed by 39.6 percent. The poll was conducted by JUTARNJI LIST.

 The EU reportedly sent a demarche to Croatia on 27 February, in which it warned that the issue of the missing artillery logs
is a priority for opening the negotiation chapter 23, thus dispelling all doubts that only five countries object to Croatian lack of
cooperation with the ICTY [[see CWIR #421]]. Croatian media reported that the Government decided to keep the demarche
secret from the public. When confronted, the Cabinet denied having received any demarche from the EU. The Justice Ministry
confirmed reception, but insisted the official note was no cause for alarm.

 Social Democratic Party (SDP) president Zoran Milanovic and People‟s Party (HNS) vice-president Radimir Cacic
criticized the Government for forming the working group tasked with preparing the proposal for the constitutional changes
necessary for EU accession. [[The need for changes lies with the articles that stipulate that Croatia will not enter any federal association of
states without the majority of all registered voters expressing support in a referendum.]]
    They feel the entire Sabor, and not merely the Government, should deal with changes to the Constitution as they should be
based on a consensus of all major political forces and require a two-thirds majority in the national parliament. Independent
Democratic Serb Party (SDSS) vice-president Milorad Pupovac and Parliamentary Deputy for the Italian minority Furio Radin
also disagree with the Government's decision.

 On Monday, SDP, HNS, the Democratic Center (DC) and the Social Liberal Party (HSLS) signed a coalition agreement for
Zagreb County. SDP-affiliated Zagreb County Assembly president Palma Klun Posavec will be the coalition candidate for

                                                         27 February – 5 March 2009

County prefect.

 On Monday, the Ministry of Justice appointed 61 judges to the specialized courts that will deal with cases processed by the
Office for Fight Against Corruption and Organized Crime (USKOK). As such, the so-called USKOK courts have opened their
doors in Zagreb, Split, Osijek and Rijeka. Despite extensive background checks, there is still considerable controversy over one
of the appointments, particularly with the choice of Split-based Justice Slavko Lozina, infamous for his bizarre rulings. Justice
Sinisa Plese, who presided over the trial against Gen. Vladimir Zagorec, and Justice Ivan Turudic, known for sentencing
Hrvoje Petrac, are also part of the „anti-mafia elite‟. [[Petrac is a controversial businessman generally suspected to be part of the
Croatian criminal underground, who is currently serving a jail sentence for the kidnapping of Gen. Zagorec‟s son.]]

 On Monday, Gen. Vladimir Zagorec (ret.), charged with massive wartime fraud and abuse of official authority during his
term as Assistant Minister of Defense for Procurement, was found guilty by the Zagreb County Court. [[For background, see CWIR
#323, 412 and earlier]] Zagorec was sentenced to seven years in prison and his assets will be seized in the appraised value of the
gemstones he has been found guilty of stealing – HRK 39.4 million. Both the prosecution and the defense have announced their
intentions to appeal the verdict – the former because it deems the sentence too lenient for the crime committed, and the latter
because it believes there was insufficient evidence to prove Zagorec is guilty.

 The Open Society Institute (OSI), part of the Soros foundation network, will organize two regional conferences in Zagreb at
the end of April, dealing with two worrisome trends – growing censorship in the media, and corruption and organized crime in
former Yugoslav countries. Government representatives, NGOs and experts from the entire region will participate.

Business and Economy

 Reactions to the long-awaited anti-recession package, which Prime Minister Sanader presented on Thursday [[see CWIR
#421]], were abundant. [[See also Alternative Anti-Recession Measures and More Alternative Measures elsewhere in this issue.]] The
Prime Minister rejected the complaints that the measures are long overdue, saying that the 2009 budget was prepared four
months ago in line with the predicted GDP growth at the time, which was 1 to 2 percent.
   Sanader also dispelled the rumors that the budget revision would introduce cuts of HRK 10 to 15 billion, but rather from HRK
one to three billion. He also assured the public that the State is not facing bankruptcy at this time.

 Representatives of Croatian and Hungarian national distributors of natural gas, Plinacro and FGSZ Natural Gas
Transmission, signed an agreement on Tuesday for a joint project to connect the Croatian and Hungarian gas network. Of the
298 kilometers of pipeline to be built, 88 will be on the Croatian side and 210 on the Hungarian. Each side will build its “own”
part of the pipeline. The work should be completed by end of 2010. The project is worth some EUR 95 million for the Croatian
side. The project will give both sides greater security, independence and diversification in their natural gas supply. After more
than 30 years, Croatia will have a supply line independent from the Russia source.

 On 27 February, the National Bank performed a foreign currency intervention, buying EUR 331.2 million from commercial
banks. Most economists predicted such a move, since the latest repo deals were mostly aimed at increasing the circulation of
the Euro. The result of the latest foreign currency intervention is a stronger Kuna, now being traded at 1 to 7.40 for Euro. The
HNB has thus once again asserted its clearly defined strategy of keeping the Kuna stable and tightening the cash flow of the
domestic currency among banks, while simultaneously releasing the Euro.

 The Fitch credit rating agency has confirmed its BBB- rating for Croatia, designating the domestic economy as slightly risky
for investors [[see CWIR #401]]. Since the investment grade remains unchanged, the same lending standards apply. However,
Fitch has warned that the troubling foreign debt and current account deficit could lead to a downgrade. Fitch suggests the
Croatian Government implement more restrictive budget management policies. The agency fears the investment climate will be
heavily influenced by the reforms implemented ahead of EU accession.

 Production at the Zeljezara Split steelworks has come to a standstill because of HRK 11.5 million in overdue gas and
electricity bills. Alarmingly, Zeljezara Split owes almost HRK 100 million to its suppliers. The financial woes can partly be
ascribed to the unstable financial position of its owner, the Polish Zlomrex Group, a major steel products manufacturer, which
has been hit hard by the global financial crisis. A meeting with trade unions is scheduled for 5 March.

 The Austrian Boxmark upholstery leather manufacturer and German BHS corrugated cardboard machinery manufacturer
announced plans to downsize their workforce in production facilities in the Varazdin free trade zone in order to recover their
business performance and safeguard jobs in the parent companies. The Austrian Trade Office in Zagreb has revealed that
other Austrian investors are also considering giving up on investments in Croatia. Croatian observers blame the recession, but

                                                        27 February – 5 March 2009

also the unfavorable amendments to the Free Trade Zones Act, which have abolished exemptions from profit taxes.

 On Wednesday, the European Federation for Retirement Provision (EFRP) sent a memo to all domestic pension
management funds, voicing its support for the second pension tier model, denounced as unsuccessful by Prime Minister
Sanader [[see CWIR #419]]. The EFRP is quite critical of the Government plan to push insurers into the first tier, warning that this
could adversely affect the living standard of citizens and hamper economic growth.

Return to Right-Wing Rhetoric                                           direct negotiations.
                                                                            The implementation of the campaign appears to have
 Croatian Party of Rights (HSP) president and Mayor of                 been spliced into numerous contracts worth less than HRK
Osijek Anto Djapic launched his local election campaign                 70,000 each, which is the limit below which public tender is
with an emphatic return to the extreme right wing and                   not required by law. As procurement of audio-visual
nationalist rhetoric. At a Saturday party convention, held in           content is exempt from the public bidding requirements, the
Zagreb, Djapic called on the Government to withdraw its                 price of cartoon ads exceeded this limit.
application for EU membership if Slovenia insists on its
                                                                           However, the Briefing PR agency, which received HRK
“boycott” of Croatian EU accession. Similarly, Djapic
                                                                        335,000 for the animations, hired Luminus Studio video
argued that the Croatian soldiers in Afghanistan should be
                                                                        production company as a sub-contractor to create the ads.
withdrawn if the country does not become a full-fledged
                                                                        The former was also paid HRK 66,800 in a separate
NATO member in April.
                                                                        contract to organize a press conference.
   Djapic also stated that he wants to see the special
                                                                            Additional suspicion arose when the broadcasting rights
electoral district for ethnic minorities abolished, saying that
                                                                        for the song used in television ads were paid to two
it “derogates the majority people” and “has turned
                                                                        separate companies, one of which is not even listed in the
Croatians into second-class citizens”.
                                                                        court registry of companies. Broadcasting rights were thus
    Most controversially, Djapic argued that the salute “Za             paid twice, HRK 83,200 to the Ross media consulting
dom – spremni” [[literally “For home – ready”]] need not be             and HRK 146,000 to Konekt marketing, bringing the total
criminalized, as it was used by members of the Croatian                 to more than HRK 200,000 – the legal limit beyond which
Defense Forces (HOS) [[paramilitary units formed by the                 public tenders are mandatory.
Croatian Party of Rights (HSP) during wartime]], “400 of whom
                                                                           In a related article, NACIONAL columnist Srecko
have laid down their lives for the independence of this
                                                                        Jurdana takes a look at the campaign itself. The very title,
                                                                        'Corruption -- I Am Not Part of It', suggests that it is the
    [[The call “Za dom – spremni” was originally used by the World      public and the ordinary citizen that is corrupt, and not the
War II Ustasha regime as a salute in the Independent State of           Government. It also implies that corruption is an inevitable
Croatia (NDH), as an equivalent to the Nazi “Sieg -- Heil”. Prime       psychological phenomenon, that “in each and every one of
Minister Sanader unequivocally condemned it last year, saying it
cannot be considered an expression of patriotism. For more, see
                                                                        us there is a wicked little corrupt person, and once we
CWIR #415.]]                                                            expel it out of our systems, the State will become healthy
                                                                        again”, notes Jurdana.
    For the past couple of years, Djapic has been working
very hard at distancing his party from the extreme right,                 It is a strategy by which responsibility is dispersed
especially from Ustasha ideology. Apparently, he has now                among everyone so it cannot be pinned on the
definitely given up on his “cleaned up act”, notes                      Government, he concludes.
JUTARNJI LIST columnist Jelena Lovric.                                                                 Published in MediaScan # 3074
                                                                                                       Sources: Tuesday / Wednesday
    Djapic‟s assessment that the time is right to revert to a                                            VECERNJI LIST, NACIONAL
nationalist rhetoric and Euro-skepticism shows political
astuteness, argues Lovric, since, in a time of crisis,
extremist politics always gain in popularity. However, there
is no need to rehabilitate an Ustasha salute. “Harsh right-             Protectionism in Croatia Is Impossible
wing talk must be distinguished from a return to Ustasha
iconography,” she says.                                                  The global turn towards protectionism has prompted
                                 Published in MediaScan # 3073          debate among domestic economists on the feasibility of
                       Sources: Sunday/Monday JUTARNJI LIST,            this economic policy in Croatia.        Most agree that
                         Sunday VECERNJI LIST and NOVI LIST             protectionism is not a viable option due to the GDP
                                                                        structure of the domestic economy and the underdeveloped
                                                                        manufacturing sectors, which do not even meet domestic
Corrupt Anti-Corruption Campaign?                                       demands. Furthermore, they explain that Croatia is a
                                                                        relatively small and open market economy, which, being
                                                                        part of the World Trade Organization (WTO), must conform
 It seems the Government anti-corruption PR campaign,
                                                                        to free trade regulations.
'Corruption -- I Am Not Part of It', for which HRK 2.4
million have been set aside in the State budget, is itself                  Ivan Lovrinovic of the Zagreb School of Economics
corrupt. Almost none of the campaign funds have been                    proposes introducing more sophisticated protectionist
spent in a transparent way – that is, through public tender             policies aimed at decreasing import quotas for low-cost
announcements, claims VECERNJI LIST. The only budget                    goods – a model favored in developed economies, where
amount allocated through public procurement was for the                 imports from China were restrained through the adoption of
rental of outdoor advertising surfaces. The rest of the                 such restrictive measures. Lovrinovic also advocates the
funds have been disbursed by State Secretary at the                     introduction of an import duty on food items, as they
Ministry of Justice Marina Dujmovic-Vukovic through                     negatively affect the trade balance.

                                                       27 February – 5 March 2009

     Croatian Association of Employers (HUP) director              receive priority status, he says.
Djuro Popijac points out that, due to the poor industrial              When it comes to incentive programs, Jurcic proposes
output of the domestic economy, there are relatively few           a selective allocation of funds, saying that subsidy funds
products that can be protected with restrictive economic           should be calculated in line with the production quotas of a
measures. On the other hand, he supports marketing                 given company.
initiatives that encourage the purchase of Croatian                                                Published in MediaScan # 3072
products.                                                                      Sources: Saturday NOVI LIST – POGLED Supplement
    This is of overriding importance when it comes to public
procurement procedures. State-owned companies have
often complained that domestic companies are                       More Alternative Measures
discriminated against in favor of foreign competition in
procurement deals.                                                  In response to the anti-recession measures the Cabinet
                                                                   presented last week, the Association of Independent Trade
    Luka Brkic of the Zagreb School of Political Science           Unions (SSSH) presented its own anti-recession measures
points out that only rich economies with a high GDP growth         on Thursday, demanding they be instated as soon as
can afford protectionist measures.         Restrictive trade       possible. The SSSH believes the measures currently on
regulations would not yield any tangible results in small          the table are covering up the failures of the employers and
open-market economies, such as Croatia, he argues. Only            the Cabinet.
minor emergency measures that do not violate WTO
regulations could be implemented. Also, liberalization of             “The workers are not to blame,” said SSSH President
trade lies at the core of the Croatian economy, adds Brkic.        Ana Knezevic. “A Cabinet that does not know how to run
                                                                   a country is to blame, as are employers who do not know
                              Source: Tuesday BUSINESS.HR
                                                                   how to organize their business and manage operational
                                                                   processes. This is why we will not allow that the workers
                                                                   pay for this crisis, be fired, have their wages reduced or
Alternative Anti-Recession Measures                                work overtime.”
                                                                      SSSH is calling for the formation of a fund, which would
 Three prominent political figures take a close look at the       help only those companies that are not cutting jobs or
anti-recession package, which the Cabinet presented on             wages. Other proposals are to suspend all payments to
Thursday [[see CWIR #421]]: HNS president Cacic, SDP               members of supervisory boards, to introduce a luxury tax
chief economic strategist Jurcic and Croatian Chamber of           and to introduce a moratorium on increase of all taxes,
Commerce (HGK) president Nadan Vidosevic.                          excises, communal fees and other expenses.
    All agree that the adoption of the recession package is            Regarding the liquidity problems plaguing the economy,
four months overdue. Furthermore, they argue that the              SSSH proposes that the FINA national financial agency
most critical measure – the budget revision – has not been         automatically block accounts of all businesses that exceed
presented as a tangible model, as it does not clearly define       the legal 60-day payment deadline, and implement
the savings measures for each ministry.                            immediate seizure of assets to pay outstanding dues. The
    They also feel that the State budget revenue target            SSSH also demands the postponement of all infrastructural
should be reduced by HRK 7 billion to HRK 12 billion and           projects, such as the Peljesac Bridge, until after the crisis.
that the State should utilize all disposable funds to sustain                                      Published in MediaScan # 3076
solvency in the economy, stimulate investments and boost                                          Sources: Friday JUTARNJI LIST,
industrial output. They welcome the measures aimed at                                             Thursday evening HRTV Dnevnik
reducing low-quality imports, shortening payment deadlines
for State-owned companies and the reduction of para-fiscal
fees for businesses.
                                                                   Layoffs Have Started
    Cacic proposes that the State issue guarantees for 20
percent of housing loans raised by first-time buyers. A             The economic crisis has already hit most of the private
wage freeze in the public sector also makes his list of            sector. However, the recent results of a poll carried out by
measures. Cacic additionally suggests that the State               the MojPosao online employment portal show that the
reinvest dividend payments in State-owned companies and            commerce, construction, tourism and food sectors have so
demand that strategic partners follow suit. As far as the job      far felt the greatest impact. By contrast, the public sector,
market is concerned, the State should set aside at least           NGOs, the ITC industry and education remain relatively
HRK 500 million for professional retraining, he suggests.          untouched by the crisis so far.
    Vidosevic advocates the cancellation of infrastructural            Companies are trying to counter the recession through
projects and measures for avoiding the repatriation of             cutbacks – layoffs, pay cuts and the cancellation of new
profits. He also proposes a stronger cooperation between           projects. Poll results reflect this. Forty-seven percent of
the Government, the National Bank (HNB) and commercial             the respondents report layoffs in their companies, 46
banks in determining lending conditions for domestic               percent say their salaries have been frozen, and a third say
businesses. Similarly, he suggests that the State should           their salaries have been cut. Some employees feel their
no longer raise loans from domestic banks, but seek                employers are using the crisis as a pretext for cutbacks.
financial aid from HNB instead.                                    Indeed, 74 percent of the respondents claim that their
    At the core of the anti-recession measures advocated           employers are either not giving raises or are firing people.
by Jurcic is the alleviation of the liquidity crunch and a             In light of this, an overwhelming majority – 58 percent –
strong domestic currency. Due to the sizeable debts                responded that the crisis has already had a tangible
incurred by consumers and the State, every exchange rate           negative effect on their companies. A further 29 percent
fluctuation or increase in interest rate could wreak havoc on      expect the crisis to affect their companies in the next
the living standard of the entire population, argues Jurcic.       several months. By comparison, only 13 percent feel the
Projects with a short rate of return on investments should         crisis will completely circumvent their place of employment.

                                                  27 February – 5 March 2009

Half of those polled expect the current crisis to last              predict two potential scenarios.
between one and two years, but almost as many – 45                     According to the first one, the GDP is expected to drop
percent – feel it could last even longer.                           by at least 2.9 percent, causing budget revenues to
    In a related story, JUTARNJI LIST points out that sales         decrease between HRK 7 and HRK 8 billion. The bleaker
of anti-depressant pharmaceuticals are soaring – over 30            scenario envisages a contraction of five percent, which
percent in just the past few weeks. The patient profile has         could cause a HRK 10-billion budget shortfall.
also changed, from middle-aged users to youth. Experts                  When the planned deficit target of HRK 2.4 billion is
explain this is a logical result of the overwhelming fear           coupled with the lower-than-expected revenue projections,
mongering of the media, which report horror stories about           the deficit could ultimately run as high as HRK 5.4 billion,
the recession and all its negative impacts to an insecure           stresses POSLOVNI DNEVNIK. Even this prediction might
nation on a daily basis.                                            prove overly optimistic, given that the 2008 budget fell short
    Some have concrete reasons for their fear, hints                of expectations, earning HRK one billion less than planned.
JUTARNJI, claiming that individuals who were just laid off              Economists stress that precise forecasts are difficult,
by Pliva pharmaceutical company are among those now on              because budget earnings greatly depend on diverse GDP
anti-depressants. However, taking medication is a step in           items. Personal consumption, for instance, is a vital factor
the right direction, argues the paper, because it at least          and contributes largely to GDP figures, whereas net
implies they have sought help.                                      exports are less significant.
                          Sources: Wednesday JUTARNJI LIST,
                             Wednesday POSLOVNI DNEVNIK                “Should the GDP decline be triggered by [poor] net
                                                                    exports, the impact on budget revenues will be negligible;
                                                                    however, if the GDP contracts further due to a decrease in
                                                                    personal consumption, the budget shortfall could reach
HAAB Lowers Growth Estimates                                        HRK 10 billion,” warns HAAB analyst Hrvoje Stojic. It
                                                                    remains to be seen how the tourist season will influence
 The predictions of GDP growth for 2009 are becoming               economic activities and whether the downsizing plans of
darker and bleaker. Hypo Alpe Adria Bank (HAAB)                     Croatian businesses will adversely affect the purchasing
economic analysts are expecting a drop between three and            power.
five percent. The precise amount will depend on the cut to              A number of independent economists, reacting to Prime
investments, personal consumption and exports, among                Minister Sanader‟s statement that the budget would be
other things. Analysts also expect the foreign debt to              revised by HRK 1 to 3 billion, are warning that such
continue to grow, possibly surpassing 100 percent of the            revision of the budget would be inadequate, reports
GDP for the first time.                                             JUTARNJI LIST. Independent economists Ante Babic and
    Budget revenues could be HRK 7 to 9 billion lower than          Damir Novotny both claim there is room in the budget for
expected due to a drop in economic activity. Hence, one of          major cuts, by reducing wages and subsidies and cutting
the key questions will be how to finance losses in State            infrastructural projects.
coffers. The budget deficit could be 10 percent, meaning                                      Published in MediaScan # 3073, 3074
that the Government should lower it in the revision by the                           Source: Tuesday / Wednesday JUTARNJI LIST,
same amount in order to help the economy.                                               Wednesday POSLOVNI DNEVNIK, Tuesday
    “The National Bank clearly said it will not support                             VECERNJI LIST, Monday evening HRTV Dnevnik
refinancing the State on the domestic market, so it is up to
the State to gain the trust of foreign creditors as soon as
possible through a credible fiscal policy so that it can draw       Is Croatia Uncompetitive on Tourism?
certain amounts from abroad,” said HAAB analyst Hrvoje
Stojic.                                                              Croatia ranked 34    out of 133 countries in the 2009
    HAAB analysts further expect loans to grow by 8                 Travel and Tourism Competitiveness Report of the World
percent. The Kuna will be under pressure, especially if the         Economic Forum (WEF). The National Competitiveness
tourist season is not as good as expected. However, it              Council (NVK) presented the report on Wednesday.
should not exceed 7.60 to 7.70 to the EUR.                              The ranking is based on the Travel & Tourism
    Delivering a lecture at the HAAB Zagreb headquarters            Competitiveness Index (TTCI), which measures the various
on Monday, Bayerische Landesbank Chief Economist                    regulatory and business-related issues that determine
Jürgen Pfister said prices are expected to drop by up to 2          whether a country has an attractive environment for
percent by summer, but this should not be tied to deflation.        developing its travel and tourism industry. To this end, the
Price falls will be positive for developments in 2010. Pfister      TTCI looks at the legal framework regulating tourism, the
emphasizes the predictions for 2009 are worse than the              investment climate, human resources as well as the
actual economic developments. It is a recession, not a              cultural heritage of countries.
crisis, he says, pointing out that nothing out of the ordinary          The weakest aspects of the domestic tourist sector are
has been noted in the strongest economic powerhouses,               overly restrictive regulations governing foreign direct
such as the USA or German.                                          investment (FDI) policies, an insufficient number of
    Despite his reassuring messages, Pfister also stressed          international flight connections, low-quality infrastructure of
companies should abandon the illusion that they will make           ports and expensive fuel.
huge profits. The capital market will be dominated by fear              The regular participation of Croatian tourist associations
and poor expectations for some time to come, and the drop           and companies in tourist fairs, the number of airports and
in profits for companies will be in double digits.                  cultural sights has been positively assessed. Additionally,
   If the worst-case scenario GDP growth estimate of the            the report confirms that tourism is one of the strongest
HAAB comes true, State revenues might fall HRK 10-billion           “Croatian brands”.
short of expectations, warn POSLOVNI DNEVNIK and                      Commenting on the results, NVK president Darko
JUTARNJI LIST. In its latest forecast, HAAB economists              Marinac [also former Podravka food company board

                                                   27 February – 5 March 2009

president] underlines that “we must urgently improve the                    costs, he stresses.
quality of our tourist offering so as to set a favorable
                                                                                The current apathy that pervades the crisis-hit real
cost/performance ratio”. Consumers, he adds, will be more
                                                                            estate market can only be remedied with solidarity. If
cautious when it comes to cost planning and choice of
                                                                            banks refuse to grant loans to construction companies, the
destination. Hence, Croatia must struggle to become more
                                                                            latter will not be capable of paying out their workers, and
efficient in terms of price competitiveness in order to retain
                                                                            apartment construction will eventually come to a standstill,
its current tourists and entice new ones, he argues. [[The
article fails to note that Croatia's position on the Index has not
                                                                            she warns. It would be encouraging, she adds, if more
improved from 2008.]]                                                       market participants devised their own strategies to recover
                                     Published in MediaScan # 3076          the sales decline.
                           Source: Thursday POSLOVNI DNEVNIK
                                                                                In a related article, POSLOVNI DNEVNIK commentator
                                                                            Tomislav Birtic takes a look at the Cabinet‟s anti-
                                                                            recession measure aimed at facilitating real estate sales.
Is Housing Market Reviving?                                                 He is critical of the plan to subsidize housing loan interest
                                                                            rates since these funds will be drawn from the State
 JUTARNJI LIST commentator Branka Stipic comments                          budget, and not all citizens can take advantage of the
on the radical turnaround on the real estate market whose                   incentive program, only those buying their first home.
sales have dramatically decreased, as the recession                         Consumers who are already paying their monthly
becomes more severe.                                                        installments to banks will have to cope with higher interest
    The market has been thrown out of balance, causing a                    rates, he points out.
chain reaction that has struck banks, the construction                          The role of the Government is not to reinforce social
sector and consumers, who cannot easily afford the more                     inequality, argues Birtic.        Such measures, whose
expensive loan arrangements. This has prompted the                          effectiveness is questionable as it is, are jeopardizing
Raiffeisen Bank to reduce housing loan interest rates and                   social equality. Moreover, Birtic points out that he sees “no
offer discounts on apartment sales.                                         logic or interest of the [major market players] in the
    Many investors were euphoric about this move, as if                     recovery of the stock exchange before [the major market
they wished to join this initiative and sacrifice a part of their           players] buy the land, houses and apartments”.
profits for the benefit of the population, notes Stipic. Not so                                                Published in MediaScan # 3073
long ago, these very same investors justified the lofty                                                         Sources: Monday POSLOVNI
square meter prices with various charges and building land                                                     DNEVNIK and JUTARNJI LIST

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                                                       27 February – 5 March 2009

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