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Croatia
FY 2001 Program Description and Activity Data Sheets
>> Regional Overview >> Croatia Overview FY 2001 Program
On December 10, 1999 the President Tudjman died. In January 2000, presidential elections were held, and a pro-Western, pro-reformist president, Stip Mesic, was elected, and a more reform-minded coalition government formed.
In this environment, there is potential for historic and fundamental change. USAID is preparing to move, as opportunities for reform occur; e.g., to reactivate support for broader economic restructuring to assist new leaders to deal effectively with a broad range of unresolved economic reform issues, particularly implementation of reforms needed to promote broader-based growth in Croatia. Support for fiscal reform and general economic restructuring will become the highest priority for USAID’s program in Croatia. Total SEED funding for this sector is expected to be about one-third to one-half of total SEED assistance to Croatia.
USAID assistance for democratic reform in Croatia will continue to support a broad range of civil society organizations, including NGOs, trade unions, independent media practitioners and alternative political parties to support broader democratization, and encourage broader public participation in political processes. Assistance for the return of displaced persons and refugees will support improved municipal and local infrastructure in municipalities open to returnees; human and civil rights protection; and small- and medium-scale private enterprise, and agricultural development. Through the end of 2001, facilitating the return of displaced persons and refugees to communities of origin, economic reform, and encouraging broader democratization will be the primary objectives of the U.S. assistance program in Croatia.
In FY 2001, modest funding will support cross cutting program support and participant training requirements.
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ACTIVITY DATA SHEET
PROGRAM: Croatia
TITLE: More Competitive, Market-responsive Private Financial Sector, 160-014
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $5,925,000 SEED
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $12,725,000 SEED
STATUS: Continuing
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2005Summary: Since independence in 1991, Croatia has made some progress in implementing the economic reforms needed to create a foundation for the development of a market economy. However, crony capitalism and the heavy role of the state continue to undermine real structural reform. Fiscal progress has been achieved on the taxation side, but on the budgetary side, expenditures are not transparent and deficits are growing. Although Croatia had a few high profile privatizations over the past year, recent privatization receipts may mitigate against these deficits in the short run, but macroeconomic stability will not be achieved without a fundamental restructuring of the economy. Restructuring is needed in fiscal policy, banking sector reform, privatization (including land), enterprise restructuring, commercial legal reform (especially bankruptcy), competition policy and investment policy, and agricultural reform in order to sustain economic growth and enable Croatia to compete in the global economy. Given the economic conditions in neighboring Serbia and Montenegro, and the comparatively small size of Slovenia’s economy, Croatia could prove a significant engine for economic growth in the region if it implemented reforms essential to its transformation. From 1995 to early 1998, USAID assistance for economic restructuring in Croatia was limited to support for financial sector restructuring and development. Since April 1998, USAID assistance under in this area has been suspended due to Government of Croatia unwillingness to engage in any meaningful economic reform.
Key Results: Will be re-evaluated in the context of ongoing plans for a rapid-response, economic reform program that will focus on immediate assistance to the new government in developing an effective and enforceable policy, legal and regulatory framework to support transparent, market-oriented restructuring of the economy.
Performance and Prospects: No progress to report due to suspension of program activities since 1998.
Possible Adjustments to Plans: Parliamentary and presidential elections held in January 2000 put a new, reform-oriented government in place in Croatia. In light of this change, USAID is preparing to implement an aggressive, new program of assistance to the new government to establish an enforceable policy, legal and regulatory environment for market-oriented economic restructuring of the economy. Current plans include initial USAID-funded technical advisors and programs covering the areas of macroeconomic, fiscal and banking reform, privatization, agricultural policy, trade and investment, and small enterprise development. In addition, USAID proposes reintroduction of a commercial law program that will emphasize implementing bankruptcy laws; establish intellectual property rights protection; strengthen national anti-corruption laws; improve court administration and cooperation between the judicial branch and the police for enforcement of the court decisions. Providing assistance and micro-loans to the private sector will also be a focus. Activities are expected to begin in early 2000. USAID will closely coordinate with, and complement the World Bank and International Monetary Fund programs in Croatia to increase leverage and impact. USAID assistance in the economic sector complemented by the international financial institutions, and cannot be separated from the context of the regional situation and the efforts with respect to the Stability Pact fiscal measures with the idea that Croatia could play a leading role in regional initiatives.
Other Donor Programs: USAID will coordinate assistance with the World Bank, the International Monetary Fund (IMF), European Bank for Reconstruction and Development, the British Know How Fund, and other international donors. USAID has been comparatively inactive in this area for almost two years. However, with plans to move ahead in FY 2000 with an economic reform agenda, USAID expects to be a technical leader in this area.
Principal Contractors, Grantees, or Agencies: It is expected that once assistance in this sector begins again, the consortia for Sustainable Economic Growth for Institutional Reform (SEGIR), KPMG/Barents Group, Booz-Allen, Department of Treasury and World Learning will be USAID’s initial partners.
Major Results indicators: Due to program suspension since early 1998, there has been no data on program performance.
ACTIVITY DATA SHEET
PROGRAM: Croatia
TITLE: Increased, better informed Citizens’ Participation, 160-021
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $4,100,000 SEED
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $8,350,000 SEED
STATUS: Continuing
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2004Summary: In reviewing USAID support for democratization in Croatia, it is important to make the distinction between support to the government and support for democratic reformers. Outside of government circles, there exists in Croatia an impressive and well-respected cadre of democratic reform advocates who merit and need outside support to survive and gain influence in a markedly adverse political environment. For the independent media, non-governmental organizations (NGOs), alternative political parties, and trade unions, support from USAID and other donors has been a vital source of badly needed financing, training, and technical assistance to maintain operations and achieve long-term viability.
Key Results: Principal results under this objective include: (1) increased capacity of civil society organizations; (2) more diverse and independent sources of public information; and (3) more representative composition of national and local governments.
Performance and Prospects: Since its independence from Yugoslavia, Croatia has made unsatisfactory progress towards full democratization. Croatia has failed to improve any of the basic democratic indices of political rights and civil liberties, and has actually regressed in the area of media freedom. The principal obstacle to systemic democratic reform in Croatia remains the ruling party’s ambivalence and, at times, open hostility to basic democratic principals and civil liberties. The Government of Croatia’s unsatisfactory performance in supporting and encouraging broader democratization has restricted the country’s access to European and Trans-Atlantic institutions. Performance in this area will continue to be monitored closely and will be the basic litmus test for determining Croatia’s further participation in the process of European integration as well as its eligibility for participation in Trans-Atlantic institutions.
With a new, reform-oriented government in place following elections in January 2000, prospects for a more progressive posture toward democratic reform are excellent. USAID progress toward achievements under this objective has been satisfactory, but with difficulty given the recalcitrance the government. In the area of independent media, USAID assistance under the Professional Media Project has supported the development of professional associations including the Croatian Journalists Association with 2,800 members, the nine-member Association of Independent Television Stations and a 14-member Association of Independent Radio Stations. These associations are playing an important role in efforts to break the government’s monopolistic control of electronic media, and provide alternative sources of news and information for a broad segment of Croatian citizens. USAID has also provided key technical assistance, managerial training, and financial support to sustain independent media outlets currently operating in Croatia. USAID-funded political party development activities, implemented through the National Democratic Institute and the International Republican Institute, have enabled political parties to: expand political bases through public outreach to professionalize operations. These activities also strengthen platform development capacity; help parties advocate more effectively for changes to the electoral law; and assist potential leaders to compete more effectively in national elections. USAID is supporting a broad range of advocacy NGOs under its NGO Sector Development Program administered by the Academy for Educational Development (AED) to encourage increased participation of private citizens in public decision making.
Labor unions, whose memberships include almost two-thirds of the formal work force, are an important potential catalyst for democratization in Croatia. USAID through the American Center for International Labor Solidarity has developed activities to improve unions’ capabilities in planning strategically for organizational growth. Activities included establishment and integration of multi-ethnic unions in Eastern Slavonia; and holding seminars on topics such as long-range planning, membership recruitment and collective bargaining. This assistance will improve unions’ management and financial sustainability, and help them to improve efficiency, control spending and enhance recruitment.
Possible Adjustments to Plans: With a new government in place, significant political change in Croatia, and the advent of a new, more democratic era is anticipated. New parliamentary elections will be held in January 2000 as will the next presidential election. In FY 2001, USAID’s democratization program will be adjusted to work with the new government to support independent media, political party strengthening, civil society development, rule of law, anti-corruption, local government, and women’s programs. USAID will continue to monitor political developments and events closely to identify key opportunities to catalyze change.
In addition, the International Training Center for Journalists in Opatija is being used as a regional center providing international seminars, conferences, lectures and symposiums for participants who attend from countries throughout the region. Participants include professionals in various fields of journalism and are typically from countries in transition. The Center is positioning itself as a regional institution that considers the development of an independent and free press as integral to democratization. Its role will become increasingly important as press freedom places professional demands on the media and as freedom of expression becomes a part of democratization and economic reform. When the Center was established in 1998, it was anticipated that it would act as a regional training center for journalists not just from the countries of former Yugoslavia but from throughout the region. To achieve its goal, the Center has been actively providing training programs for journalists from Central and Eastern Europe and typically attracts distinguished journalism professionals to share their experiences. The Center is also regularly used by other U.S. agencies that participate in journalism activities such as the former United States Information Service which conducts its training programs in Opatija. USAID will continue to develop the Center’s regional capacity and enable it to attract an ever-growing alumni of journalists from Croatia and neighboring countries and build on its reputation as a regional leader.
Other Donor Programs: The United States continues to play an important leadership and coordination role among the international community in promoting democratization in Croatia. USAID has been instrumental in developing an agenda of key policy reforms to support independent media, ensure protection of human rights, strengthen the rule of law and develop more open and equitable electoral processes. U.S. leadership has also been crucial for developing consensus agreement within the international community to apply pressure on the Government of Croatia to adopt reforms. USAID has been effective in using its assistance activities to leverage and coordinate support from other donors to support democratization. USAID coordinates its assistance under this SO with the OSCE, the European Union, Norway, other bilateral donors, and international NGOs, including the Open Society Institute, Mott Foundation, and Freedom House.
Principal Contractors, Grantees, or Agencies: The International Research and Exchange Board, the National Democratic Institute, the International Republican Institute, the International Center for Not-for-Profit Law, the American Center for International Labor Solidarity, the Academy for Educational Development, the American Bar Association Central and Eastern European Law Institute, and World Learning.
Selected Performance Measures:
Baseline (1997)
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)Improvement in the Freedom House Combined Average rating for Croatia
4.0/Part Free 4.0 4.0 3.5 2.0/Free Improvement in Freedom House Press Freedom Rating
61-75/Not-Free 61-75 61-75 31-60/Part-Free Free Improvement on NGO Index for Civil Liberties*)
6.0
6.0 5 4 3 __
*Based on a scale of 7 equals harassment of the NGO sector to 1 as generally supportive
ACTIVITY DATA SHEET
PROGRAM: Croatia
TITLE: Social Sector: Reintegration of War-Affected Populations, 160-031
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $2,300,000 SEED
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $5,600,000 SEED
STATUS: Continuing
INITIAL OBLIGATION: FY 1995 ESTIMATED COMPLETION DATE: FY 2004Summary: Resolution of the displaced persons and refugees crisis remains a high priority U.S. foreign policy objective. The Government of Croatia has made limited progress in improving relations and cooperation with the international community on a broad range of issues affecting return of DPs and refugees to communities of origin. Agreements with the Government of Croatia on return procedures, a national return plan and national reconstruction and development plan were significant milestones towards improved performance in meeting Dayton and Erdut agreement commitments. At the core of these agreements is a commitment by the Government of Croatia to adopt more transparent and non-discriminatory policies to encourage return and implement reconstruction assistance. Whether the Government of Croatia will actually do what it has promised remains uncertain. USAID activities supporting returns in Croatia are important foreign policy tools both for catalyzing returns and for verifying Government of Croatia compliance with the terms of its agreements.
Key Results: Accomplishment of this objective will be determined by success in achieving three principal results: (1) growth of small- and medium-scale enterprises and agriculture, providing jobs and incomes to support returning and remaining populations; (2) improved human rights monitoring capacity and access to legal services for affected populations; and (3) development and implementation of plans by municipalities and local governments to enable all displaced persons and refugees to return to communities of origin.
Performance and Prospects: Despite progress made in Croatia in rebuilding war-damaged housing and infrastructure and restoring economic growth, there remain three to four hundred thousand ethnic Croats, Serbs and others from and in Croatia who have been unable to exercise their right to return to their original communities. This group includes internally displaced persons, Croatian Serb refugees in Bosnia and Herzegovina (BiH) and the Federal Republic of Yugoslavia, and Croats displaced from BiH and elsewhere within Croatia.
Progress towards achievement of key results has been as slower than expected. In 1999, USAID’s Return Assistance Program (RAP) supported municipalities that demonstrated a commitment to encourage and support returns. In 1999, seven additional municipalities entered into RAP partnership agreements (total for 1998 and 1999 was 15) with a total return target of approximately 60,000 people. Actual returns to RAP partner municipalities in 1999 were estimated at 18,000. In 2000, RAP will add additionalpartner municipalities and we expect an even greater number of returnees. It is projected that returns facilitated directly under RAP are expected to catalyze larger scale returns throughout Croatia. In the area of human rights monitoring and protection, USAID-funded assistance has directly supported the development of a legal services and assistance network consisting of 25 local NGO service providers. In 1998, the network provided services to over 25,000 displaced persons, refugees and returnees to resolve legal and administrative issues including citizenship, property rights, professional licensing, business registration and certification, and access to social benefits. USAID support for private enterprise and agricultural development in war-affected areas has benefited over 5,000 entrepreneurs and farmers throughout Croatia.
In 1999, USAID provided direct technical assistance and training to fifty-six client firms and twenty-two farmers’ associations. USAID has expanded its support network to include all war-affected areas in Croatia. Firms receiving USAID support reported an average 4% increase in employment and 17% increase in salesrevenue. USAID also helped to establish over 325 new business linkages in Croatia and abroad for firms in eastern Slavonia -- a major war-affected area. Through the end of 1999, the USAID-funded, micro-loan activity had disbursed approximately 1000 loans valued at $5.3 million to small-scale entrepreneurs and farmers in the region. Micro-loan recipients have been able to sustain nearly 1550 jobs while creating over 970 new jobs for area residents.
Possible Adjustment to plans: The original time frame of December 1999 for achievement of this strategic objective needs to be extended through at least 2000 to allow adequate time to achieve a comprehensive solution to the DP and refugee situation in Croatia and the region. FY 2000 funding under this objective will be used to sustain USAID funded activities in the area of local governance and economic development. Given that progress in Croatia is closely linked to progress in Bosnia and Herzegovina (BiH) and the Federal Republic of Yugoslavia (FRY), greater emphasis in FY 2000 will be placed on facilitating cross-border returns between Croatia and BiH and the FRY. Emphasis will be placed also on identifying opportunities to support regional cooperation on trade and investment issues.
Within the Social Sector, we anticipate regional environmental and energy programs focussing on coastal areas for USAID countries that border the Adriatic and Black Seas. Included in the program would be support for policy and legislation assistance and funding for implementation of environmental management projects. This effort not only would serve the coastal populations with cleaner surroundings, but would also attract more tourists and consequently more businesses and jobs.
Other Donor Programs: The United States leads other donors in this area from a funding and technical standpoint. The Government of Croatia has committed itself to allocating $500 million annually through 2003 from the national budget to meet reintegration costs. U.S. assistance is closely coordinated with the Government of Croatia, the OSCE, the EU, the World Bank, UNHCR, the governments of Norway, Belgium and other bilateral donors and several international foundations. Strong donor coordination among the international community has been instrumental in pressuring the Government of Croatia to adopt more fair and transparent policies and procedures to support multi-ethnic returns.
Principal Contractors, Grantees, or Agencies: America’s Development Foundation, the International Organization for Migration, Opportunity International, the Small Enterprise Assistance Fund, the University of Delaware-Firm Level Assistance Group, World Learning, the Urban Institute and Eco-Links.
Selected Performance Measures:
Baseline (1997)
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)
Number of Partner Municipalities
0 8 15 22 30 Number of returnees to Partner Municipalities
0 7000 18000 30000 35000 Human and civil rights monitored and protected
25000
30000 37000 25000* 30000 *End of one activity and start-up of new activity.
EXPLANATION FOR SPECIAL INITIATIVES and CROSS-CUTTING OBJECTIVES
Title: Cross-cutting Programs, 160-042
Planned FY 2000 Obligation and Funding Source: $2,775,000 SEED
Proposed FY 2001 Obligation and Funding Source: $3,325,000 SEEDSummary: This objective is designed to accommodate activities that make significant contributions to more than one objective. The activities included in this objective for Croatia are the participant training program, and program development and support activities.
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Last Updated on: February 01, 2001 |
