Troubled past haunts nation

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Until a few weeks ago, the prospects looked bright for Ivo Sanader, Croatia’s prime minister.

The European Union, despite misgivings, said it could embrace the country of 4.5m as a 28th member state regardless of open questions about the bloc’s future shape. The government would just have to concentrate on faster domestic reforms.

On the international stage, Mr Sanader had led his smallish central European country to respectability – signified by a non-permanent seat on the United Nations Security Council; a role in peacekeeping missions to 15 global hotspots; and an invitation to join the Nato military alliance next year.

The ex-Yugoslav republic’s break with the troubled 1990s appeared almost complete. And much of the credit went to Mr Sanader for converting his Croatian Democratic Union (HDZ) – once the hard-line nationalist base of the wartime president, Franjo Tudjman – into a pro-EU conservative party that would pass nearly unnoticed in Brussels.

But breaking with the past has proven not so easy.

Organised crime networks, with roots in 1990s war profiteering, will not go away, however much state administrative systems come into conformity with EU standards.

A lethal car bomb on October 23 blew the unwashed laundry all over Zagreb’s stately middle European streets.

On the domestic front, the prime minister already faced a chorus of questions about his personal wealth, and the onset of the global financial crisis heightened anxieties all round.

While the well-provisioned banking system avoided catastrophe, citizens and the government alike fretted about the looming recession – sure to bite hard when tourism accounts for a fifth of gross domestic product.

Mr Sanader looked secure enough. After his narrow parliamentary re-election victory late last year, he hammered out a stable coalition with a farmers’ party and the ethnic Serb party.

The rival Social Democrats – despite a swell of popularity under their fresh-faced leader, Zoran Milanovic – could not outflank the expert political pugilist. Splinter factions from the old HDZ, after all, lingered at the far right of the spectrum, and Mr Sanader was the most effective bouncer to keep them out in the cold.

To some, his lack of an overwhelming electoral endorsement confirmed Croatia’s successful transition to a democratic system.

“Croatia has come a long way since those testing days of struggle [in the 1991-1995 war for independence],” Mr Sanader said. “We have developed a stable democracy and a growing economy.”

No one denies his autocratic tendencies. The main counter-balance has come from the country’s left-leaning president, Stjepan Mesic, a veteran politician from the late-Yugoslav period. But Mr Mesic must step down at the next election cycle. Mr Sanader briefly toyed with running for president in 2010 while inserting a subordinate HDZ member as prime minister, say sources close to the government. Mr Mesic said he was not worried, since “constitutional structures would prevail”.

Croatia is not yet “a fully-fledged state of law”, but the biggest reforms will happen in the home stretch of the EU accession process, Mr Mesic says. Despite the misgivings of the French EU presidency about further enlargement, Croatia’s improvements would be noted in a progress report on the West Balkans published today, officials at the European Commission suggested.

Positive signals from Brussels would top off Mr Sanader’s April triumph at Nato’s Bucharest summit, when the western alliance approved Croatia’s induction as a member next year.

Joining the EU, of course, is far more complicated. But by meeting certain conditions, Croatia could finish its accession talks – closing all 33 chapters – by the end of next year. By an optimistic stretch of the imagination, EU membership would then be attainable by 2011 – in time, perhaps, to propel Mr Sanader into a third term as prime minister.

The economy has performed decently – although not spectacularly – under HDZ stewardship since the end of 2003. “The government has been doing the necessary fiscal reforms, although there’s still the issue of external debt to GDP, which has reached 90 per cent this year,” says Andrew Roberts, chief consultant at Eastern Europe Economics.

Mr Sanader’s governing partner, the Croatian Peasants Party, promises to prepare farmers for EU competition and help them sell the country’s best agricultural products Europe-wide (see Potatoes blighted by identity problem).

The government has also pleased Brussels with the promise of privatisation tenders by the end of this year for six state-owned shipyards – a money-losing industry employing thousands of people.

The judiciary – once notoriously corrupt, inefficient, and biased against ethnic minorities – has improved in leaps and bounds, international observers say.

But the home-grown “mafia” has re-emerged as the toughest nut of all. Balkan-wide organised crime pre-dates the Yugoslav break-up and flourished in the 1990s wars. The heads of Croatia’s Tudjman-era smuggling networks still live free, or remain powerful from behind bars, officials say.

Nowadays, organised crime is “like an octopus ... investing in legitimate businesses and holding the best real estate in downtown Zagreb,” says Davor Butkovic, political columnist for Jutarnji List, a leading newspaper.

But these new “white collar criminals” still use their old methods to keep past malfeasances covered up, Mr Butkovic says. This year, Zagreb has seen a string of murders, beatings and threats – widely understood as “messages” from mafia bosses. Public disgust reached its boiling point with the October 6 murder of Ivana Hodak, the daughter of a defence lawyer involved in organised crime cases.

One crime boss may have been warning competitors not to testify against him, Mr Butkovic said. Or perhaps the message was to society at large. Mr Sanader took the Hodak murder as a personal threat, a senior adviser said.

The prime minister reacted swiftly, sacking his justice minister, interior minister and top police chief – all HDZ loyalists – and replacing them with untainted “experts” from outside party circles.

The Hodak tragedy might have ended well for the country. Then, however, the car bomb killed the sensationalistic editor publisher, Ivo Pukanic, and his marketing chief outside their offices. This time, when Mr Sanader promised a “final reckoning” with the presumed perpetrators, he looked flustered. He promised not to let Croatia become “another Beirut” and put the blame vaguely on “terrorism”.

The deeper chill may be yet to come. As Ivan Simonovic, the new justice minister, has warned, without a strong, clean police force and judiciary, economic hardships in the next year or two could create the sort of conditions where organised crime thrives.

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