Now in EU, Croatia Asks: Where are the Leaders?

[Bogdan Giuşcă]For those who follow developments along the geographic periphery of the European Union, this was a good weekend to be in Croatia, the EU’s 28th — and newest — member.  The weather along the Adriatic coast is still summer-like, and many of the region’s media movers and shakers gathered at the seaside town of Rovinj to compare notes on how Croatia and its neighbors are faring.

The answer, judging by remarks and analysis at the sixth annual “Weekend” conference, is — not very well at all.  The several mini-states carved out of the former Yugoslavia are having trouble finding their own economic niches.  Surrounded by EU member states, Croatia and its Balkan neighbors are still in an economic crisis, even if they have not committed the same sins — or sinned to the same degree — as their EU neighbor to the south, Greece, or their EU neighbor to the West, Italy.

“The financial crisis cut down many small, would-be entrepreneurs before they became established,” said Miodrag Sijatovic, a senior Croatian business journalist and editor.  “Now we are left with an import-oriented economy, instead of an export-oriented one.”

For Sijatovic, who is editor-in-chief of a business weekly called “Lider” (Leader), the irony could not be more pronounced.  “We now have a lack of business leaders as well as a lack of political leaders,” he states.   “Under Yugoslavia, we used to say that there was money but nothing to spend it on.  Now there’s plenty to spend money on, but no money.”

Besides foreign investment, and some agricultural exports, Croatia has counted on tourism to bring in the money.  Tourism now accounts for about 25 per cent of the country’s GDP, more than any other EU country, and much of the talk among the Croats at “Weekend” was about how to grow this sector.  Tourists are in fact coming in ever greater numbers, but on average they are not spending more money.  The trick for Croatia is how to get the typical tourist to leave more Euros behind in Croatia when they return home to Austria, Germany and other parts of the “old” Europe.

Once again, the lack of leadership or the lack of creative ideas, seems to be holding development back.

Of course, the other alumni of Yugoslavia — EU-member Slovenia; EU candidate countries Serbia, Montenegro and Macedonia; and potential future candidates Kosovo and Bosnia-Hercegovina — have no comparable tourist economies, and so are even more anxious about their own future.   In attendance at the conference were officials from Sarajevo eager to promote the city’s cultural diversity as a tourism draw, but they had no expectation that their growing menu of spectator events (including a 150 km Gran Prix bike race next year) would compete with tourist pursuits on Croatia’s Adriatic coast.

Clearly, small states in the large economy of Europe can succeed — witness the Netherlands and its Benelux neighbors.  But building a highly networked and sophisticated Benelux of the Balkans will take decades, and it is by no means a given that  young and creative Bosnians, Serbs and Croats will stay at home to make their fortunes here.  And, unlike the atmosphere in this part of Europe in the years immediately before the 2008 financial collapse, there is very little confidence that membership in the “Europe” of the EU by itself will turn things around economically.

The good news — and this cannot be said too often — is that, despite their lackluster economic prospects, the countries of the former Yugoslavia have no apparent interest in resuming the bloody conflicts that accompanied Yugoslavia’s demise.  They will muddle on, perhaps, in or out of a European Union that promotes stability but only rarely innovation.  As Sijatovic puts it, “war demands courage — and we displayed that.  Now we need intelligence and a desire to change things.  That’s what we seem to lack.”