Neven Mimica, Croatia’s Deputy Prime Minister of Home, Foreign and European Affairs, discusses the country’s preparations for its imminent membership of the EU, the ongoing development of a privatisation strategy, and how the pro-union government is encouraging an economic framework that would be favourable for new investment, whether it be foreign, domestic, public or private. He points out that by taking the accession process seriously, they have proved “at a European and national level, we are able to effectively enforce legislation, and fulfil social and economic trends that fit the core of the EU processes.”
Croatia has seen number of successes during the recent years, including the ratification of its Treaty of Accession to the EU.
It has been 20 years now since our independence, and 10 years since we have begun the reforms and processes of our EU accession. We started the European integration process some time during the early part of 2000. This crucial process may have taken longer than we have expected, but it bears great benefits. The true beauty of enlargement is reform. The process of accession is a process of reform. This is what changed Croatia. We have come a long way since then. It is definitely a different and better Croatia. This improvement reflects on our contribution to the EU in the area of regional (as is evident in the Western Balkans, which is predicted to be a long process) and foreign security policies.
Our regional knowledge, experience, and interests are such that we will definitely be one of the most active and vocal members of the EU (especially when it comes to the continuation of the enlargement process in the region). This is because we see the importance of regional stability. This is particularly relevant to Croatia. We need more politically and economically stable neighbours within the EU. Our immediate neighbours suffered a great blow from the recession. They are struggling in terms of stability, and are dealing with certain levels of aggression. We would like to promote regional stability through the platform of the EU. This is the only way for member countries like Croatia to get the full benefits of their membership.
It will not be an easy process. It will take a lot of time. It will require real political understanding and commitment for the reforms of all of these countries. We believe we have a role to play in terms of sharing our knowledge and experience.
According to EU Commissioner for Enlargement and Neighbourhood Policy Štefan Füle, “Croatia’s entry to the EU is a good sign for the country and the region.” In what way will its accession to the union its relationship with the neighbouring countries?
Croatia’s accession to the EU is good news for Croatia because it officially recognises all the efforts, reforms, and changes that we have implemented to reach established European standards. It brings about a new mindset in the country.
Our membership is also good news for the EU because it demonstrates the effectiveness of its policies (specifically, its Stabilisation and Association Process).
It is good news for the older countries, as well, as it serves as a motivating example of the rewarding process of EU-based reforms.
Because we have been exploring regional cooperation policies for a very long time (since we started the accession process 10 to 12 years ago), we do not expect our regional policies to change as much. However, there will be some improvements from the new opportunities available to us. We should be able to help neighbouring countries by offering them more concrete assistance in their processes. Croatia will continue its regional advocacy within the EU.
You mentioned the Croatia-EU Stabilisation and Association Agreement that is set to harmonise the country’s legislation with the acquis communautaire. How is Croatia a better country after the implementation of the legislation?
As I have said earlier, the process of accession is a process of reform. This involves changing policies, legislations, institutional structures, and the mindset of people. It is the most important reform that we have implemented in the last 10 to 12 years. All these have made Croatia the improved country that you see today. It has allowed us to take on the responsibilities and commitments of a new EU member state. At a European and national level, we are able to effectively enforce legislation, and fulfil social and economic trends that fit the core of the EU processes.
After all the changes that we have been through, as a member of the EU, Croatia now enjoys social and political stability, as well as economic competitiveness. It is definitely a better country.
How would you comment on the British support for Croatia’s EU accession?
Yesterday, the House of Lords finalised the ratification procedures. It is now just waiting for Her Majesty, The Queen’s signature. It formally demonstrates the UK’s support to Croatia. In fact, it has been one of those member states that have been very clear in their support of the enlargement process of Southeastern Europe. Despite some concerns that some parts of the UK government have about the internal set-up of the EU and their position, the British have always been in favour of Croatia’s enlargement process. They were close by, defining the substance of the reforms that we needed to implement in the country. Their assistance during the reform process was also very clear, seeing us through it, making sure it was a success and that we understood the interrelations within the EU, as well as their position in all of that.
UK’s clear interest in our accession process reflected positively on Croatia, and therefore crucial to the entire exercise.
Steps are clearly being taken to form a parliamentary friendship with the UK.
In a way, this exercise brought us closer together. I spent the last eight years of my life in the parliamentary chair of the European Integration Committee (as well as the parliamentary friendship group between Croatia and the UK). This parliamentary diplomacy and the ties that were institutionally developed between the Croatian, European and American parliamentarians, largely contributed to the better understanding of the processes in Croatia. The same goes for the UK-Croatian parliamentary friendship group.
Could you give us an outline of the country’s new economic and political strategies?
Our membership of the EU spells a new era of economic and political strategies in Croatia. Of course, like all member countries, the transformation process will be a continuous thing, as we strive to achieve better economic, financial and monetary performance and strategies. Croatia will follow the most prominent and updated processes in bringing more strength to all aspects of our EU cohesion. It will be one of those in favour of economic union and stronger overall bonds between the different EU member states.
We are joining the EU in June/July, at a time when the crisis is still there, leaving us to cope with classic economic development challenges, as well as address the issues that we had before and during the crisis.
In terms of the new government, what we have been doing in the past 12 months since we came into office here is to try to find a balance between fiscal austerity and growth incentives. During the first year, we have managed to keep fiscal discipline right on track. Now, we have to really change the model for economic growth. Twenty years ago, when we started out as a newly independent country, the economic policy was different. Consumption and expenditures were major vehicles/generators of GDP growth. However, this triggered a process of new loans. We fuelled our GDP growth with other people’s money, through credit. We had to end this cycle of growing public and foreign debt. The new government can now ensure that our GDP growth is primarily driven by new investments. We are trying to set an economic framework that would be favourable for new investments (be it foreign, domestic, public or private). Economic analysts expect that joining the EU would help us through this process of making the country’s business environment attractive to investment. This covers economic and legal aspects. They can expect to see here what they would normally see in other EU member states.
The country will continue its privatisation process through the Croatian Privatisation Fund (CPF), its agency for asset management. Could you kindly outline the opportunities for foreign companies and your objectives for this agency?
We are in the process of developing a privatisation strategy that should set the rules and objectives for the next era of privatisation in the country. It should clearly specify that we will not privatise the country’s natural resources. Public utilities will continue to fall under the state’s ownership (not forgetting that it still has to be competitive in the market).
We shall start privatising state assets that we have in commercial companies (where the government’s share is less than 50%). This allows people to come and explore new business opportunities in the country (not only in the greenfield area, but in the brownfield area as well). There is a long list of over 600 companies where the Croatian government still has shares (of almost 50%). Very soon, we shall start privatising major insurance companies. There is also the Hrvatska Poštanska Banka (HPB) or the Croatian Postal Bank, which represent some of the most attractive investments in the country.
Croatia is a gateway to the Western Balkans and Southeastern Europe. The country is set to benefit from investments in transport infrastructure, energy, and urban development. This is set to offer a wide range of opportunities to SMEs. What strategy does the government have to attract more foreign investment for these projects?
Key areas include transport infrastructure, energy, tourism, food processing and electrical industries. Of course, the government is not there to point out where the investors should invest their money. It is there to set the overall legal and institutional framework to make these sectors more attractive to investment.
We have recently passed a new law on investment. It provides incentives for new investments in Croatia. Depending on the size of the investment, there are a number of direct incentives for new employment and new capital. Very soon, we shall introduce a new law on strategic investments to dismantle administrative barriers, and reduce (if not eliminate) redundant bureaucratic procedures that slow down (if not hinder) investment. This should present a clearer and more concise process that would enable new strategic investments.
What will your new key tasks be after the country’s accession to the EU in July?
I have been in politics for almost 30 years, 10 years of which have been heavily devoted to the EU integration process. I was there from the very beginning when we started the Stabilisation and Agreement Process negotiations. To this day, we are still addressing some of the very concrete measures that pertain to meeting our accession treaty commitments in full. The final report on Croatia’s preparedness for its EU membership will be released in March. This puts the government in a new position. As I have said, transition might be over, but transformation continues in various areas (e.g., economy, politics, institutional capacity, legal framework, etc.) as Croatia moves to become a fully fledged EU member. I expect that I would be part of this process.
Could you comment on the possibility of you becoming the first Croatian officer in Brussels?
Very soon, a decision will be made on who the first Croatian Commissioner to the EU will be, and I am among the serious candidates.
You have been a driving force of change and evolution in Croatia. You have also been relentlessly promoting Croatia to the EU. What importance do you give to campaigns that seek to promote the country’s brand?
As a young, independent country and new member of the EU, we really need to explore various types of communication activities and public promotions. We need this to make the European public know about the country’s true potential, and what has been done by the government (in formal terms) to prepare Croatia for its EU membership. This is crucial. We need more knowledge, more public understanding, and more public support. We need to better explain the accession process.
This sort of campaign within the Daily Telegraph aligns well with this objective. It will bring Croatia as a country, and Croatians as a people, closer to our neighbours in Europe, and make us better understood.