Croatia flag

Croatia country brief

Overview

The Republic of Croatia, or Republika Hrvatska, extends in a crescent from the plains of the Danube, Drava and Sava Rivers in the east to the Gulf of Venice in the west and then southward along the Adriatic Sea to the border of Montenegro. Croatia is bordered by Slovenia, Hungary, Serbia, Montenegro and Bosnia and Herzegovina. Its extensive Adriatic coastline on the south-west includes nearly 1,200 islands and islets. According to the Croatian Census (2011), the Croatian population is approximately 4.28 million.

Political overview

System of government

The Republic of Croatia is a parliamentary democracy. The President of the Republic is the Head of State, directly elected for a five year term. As Commander in Chief of the Armed Forces, the President also participates in foreign and national security policy decision-making and in the appointment of the heads of the intelligence services. The current President, Dr Ivo Josipović, was inaugurated on 18 February 2010 following Presidential elections in December 2009 and January 2010. The Social Democratic Party candidate won the elections with a convincing victory, taking 60.3 per cent of the vote. The legislative branch of government is a unicameral assembly (the Hrvatski Sabor). The current parliament has 151 seats with 140 deputies elected from the political parties’ lists in ten constituencies, three deputies elected by districts for Croatian citizens living abroad (the so called "Diaspora" district) and eight deputies elected as representatives of national minorities. Members are directly elected by popular vote and serve four year terms.

Political developments

After eight years in power, the Croatian Democratic Union (HDZ) - comprised of the Croatian Citizens' Party (HGS) and Democratic Centre (DC) - lost the elections in December 2011. The winner was the centre-left "Kukuriku" coalition, comprised of the SDP (Social Democratic Party), HNS (Croatian People's Party), IDS (Istrian Democratic Assembly) and HSU (Croatian Party of Pensioners). It won in eight of the twelve electoral districts, gaining 80 seats (up from 63) and an outright majority. Led by the Prime Minister and President of the SDP, Zoran Milanović, the coalition government was sworn in on 23 December 2011.

On 9 December 2011, the Republic of Croatia signed its European Union (EU) Accession Treaty in Brussels, marking a historic moment in the country's history. The Croatian Parliament unanimously ratified the Treaty on 9 March 2012. By 16 May 2013, Germany was the last of the 27 EU countries to do the same, paving the way for Croatia’s EU accession on 1 July 2013.

Croatia joined the North Atlantic Treaty Organisation (NATO) in April 2009 and currently has five personnel deployed in a NATO Provincial Reconstruction Team in Afghanistan (led by Hungary). Croatia has a total of 30 police, UN Military Exports on Mission, and troops deployed to UN peacekeeping operations.

Former conflict in Croatia

Formerly a republic of the Socialist Federal Republic of Yugoslavia (SFRY), Croatia declared its independence from SFRY on 25 June 1991. Fighting soon broke out in the east of the country as Croatian Serbs, with the help of the Yugoslav National Army, expelled Croats from the area. By the end of 1991, the Serbs controlled nearly one-third of Croatian territory. Despite deployment of a UN peacekeeping force in 1992, fighting continued until the end of 1995, during which period Croatia also became involved in the war in Bosnia-Herzegovina (BiH). Croatia agreed to the peaceful reintegration of Croatian provinces that remained in dispute in 1995. A year later, then-President Tudjman was one of the signatories of the Dayton peace accords which ended the war in BiH. On 15 December 2002, UN peacekeepers withdrew from the Prevlaka Peninsula giving control of all sovereign Croatian territory to the Croatian authorities for the first time since independence.

Economic overview

Croatia’s economy suffered badly during the 1991-95 war. However, reforms introduced by the then-governing SDP Coalition in 2000, which continued under the HDZ-led government and accelerated following commencement of EU accession negotiations, helped restore the economy. Between 2000 and 2007, Croatia saw moderate GDP growth between 4 and 6 per cent, driven by a rebound in tourism and increased consumer spending.

The economy was seriously affected by the global financial crisis, with a drop in GDP of 6 per cent in 2009, followed by a further 1.2 per cent contraction in 2010 and zero growth in 2011. The economy is yet to recover. It was predicted to contract again in 2012-2013 before returning to weak growth in 2014-17. This outlook is based largely on structural impediments to growth, including a lack of competitiveness, and bottlenecks to investment and export-led growth.

Croatia’s budget deficit was reduced from 5.5 per cent of GDP in 2011 to an estimated 2.9 per cent in 2012. Government debt had risen to 54 per cent of GDP at the end of 2012. Judging that Croatia’s current efforts at fiscal consolidation would be insufficient to reverse this debt ratio in the medium term, credit-rating agency Moody’s downgraded Croatia’s government bond rating to Ba1 from Baa3 in February 2013. However, capital markets responded well to a $1.5 billion Croatian bond issue in 2013, which was oversubscribed by over $8 billion.

The average unemployment rate has climbed steadily in recent years, reaching 21.7 per cent in the first quarter of 2013.

Bilateral Relationship

Short history of the relationship

Australia recognised Croatia on 16 January 1992, following its declaration of independence on 25 June 1991. Diplomatic relations were established on 13 February 1992 and the first Australian Ambassador to Croatia (resident in Vienna) presented credentials the following month. On 21 September 1992, an Australian Consulate was opened in Zagreb. Australia opened an Embassy in Zagreb in October 1999.

Community presence in Australia

At the heart of the bilateral relationship are the personal links built by the large Croatian community in Australia, the largest national group from the former Socialist Federal Republic of Yugoslavia. These links help generate a significant two-way flow of visitors. The 2011 census recorded 48,830 Croatia-born persons in Australia, and 126,264 persons claiming Croatian ancestry.

Early migrants from Croatia mainly originated from Dalmatia. Following a brief hiatus, migration resumed in the 1920s from the regions of Medumurje and continued until the Second World War.

Post-Second World War immigration can be divided into four phases. The first was made up mainly of members of the defeated military forces and refugees and continued up to the 1960s.

The largest group ever to reach Australia arrived during the 1960s when then-Yugoslavia opened its borders. Between 1961 and 1976, almost 100 000 Yugoslavia-born people took advantage of this opportunity, including a number who arrived under a Residence and Employment agreement with Yugoslavia finalised in 1970.

Migration to Australia during the third phase in the 1980s was mainly through family reunion programs and the skilled migration program. The fourth phase was largely made up of Croatians from Bosnia-Herzegovina escaping the conflicts of the 1990s. Since 1991, almost 30,000 settlers from former Yugoslavia have migrated to Australia, mostly under Australia's Humanitarian programme.

The Croatian Diaspora is eligible to vote in Croatian presidential and parliamentary elections. At the 2011 elections, all three seats for this district went to the Croatian Democratic Union.

Bilateral agreements

On 13 May 2003, the Australian and Croatian Governments signed a bilateral social security agreement to give improved social security protection to people who have lived and/or worked in both Australia and Croatia. The Agreement came into effect on 1 July 2004.

Among other things, the Agreement provides that Australian employers do not have a double liability for certain social security payments for Australian employees in Croatia. Specifically, Australian employers will be exempted from the need to make superannuation (or equivalent) contributions under Croatian law where an employee has been temporarily seconded to Croatia, provided the employee remains covered in Australia by compulsory superannuation arrangements. Further information, including on how to obtain a certificate of coverage is available from the Australian Taxation Office website.

On 8 December 2004, the Australian Government amended Australia's extradition legislation in relation to Croatia. The Extradition (Croatia) Regulations 2004 simplify the requirements for Croatia when making an extradition request to Australia.

In February 2007, Australia and Croatia finalised air services arrangements, including a Memorandum of Understanding and text of an Air Services Agreement to be recommended to respective governments. The arrangement will enable airlines of both sides to operate daily services between Australia and Croatia and help to expand tourism and commercial links.

High-level visits

The most recent high-level visit from Australia to Croatia was by then-Parliamentary Secretary for Foreign Affairs, Richard Marles, in July 2012. In October 2008 a nine-member Australian Parliamentary delegation, led by the President of the Senate, Senator the Hon John Hogg, visited Croatia at the invitation of Croatian Speaker of Parliament, Mr Luka Bebic. The Governor of New South Wales, HE Marie Bashir, visited Croatia in August/September 2007 at the invitation of Croatian President Mesic. The Western Australian Minister for Education and Training, the Hon Mark McGowan MLA, visited Zagreb in April 2007.

Significant visits to Australia from Croatia include then-Minister for Foreign Affairs and European Integration, Ms Kolinda Grabar-Kitarovic in October-November 2005; Ms Vesna Pusic, then-Deputy Speaker of the Croatian Parliament in June 2004; a Parliamentary delegation led by then-Speaker of the Croatian Parliament, Mr Zlatko Tomcic, in June 2003; and then-Foreign Minister Tonino Piccolo in 2002.

Bilateral economic and trade relationship

Bilateral trade between Australia and Croatia is modest. In 2011-12, two-way merchandise trade was A$35 million, overwhelmingly in Croatia’s favour. Australian exports to Croatia dropped from A$17 million in 2010-11 to A$2 million in 2011-12 when coal exports dropped. Australia’s principal export to Croatia is now beef. Imports from Croatia totalled A$33 million and consisted largely of electrical circuits equipment, edible products and preparations, electric power machinery and parts, and mechanical handling equipment and parts. Opportunities for Australian exporters exist in the shipping sector, energy, infrastructure, agribusiness, innovative technologies, water management and sectors relating to tourism. Australian investments in Croatia are primarily in the tourism sector. Australia's trade in services with Croatia is negligible.

Last updated May 2013