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A Time for Resolve and Solidarity

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Photo: Matija Habljak/Pixsell

Focusing on the Next Generation will make all the difference

Music festivals, family reunions, and far-away travels. Long hugs with loved ones, office meetings, and spontaneous chats with neighbors. This is how we wish 2021 to look like after an Annus Horribilis which has wrecked many lives and badly hurt economies across the globe. A year which has been especially unkind to Croatia, because of the triple shocks of health crisis, economic recession and the Zagreb earthquake, which have tested the people’s resilience beyond expectations.

But can the year ahead live up to our high expectations? Will life in Croatia get back to normal, how fast, and which choices will be made to ensure the country can recover faster than during the 2009 crisis and become more resilient for the next one?

While the news about successful testing of first vaccines has finally sparked hope, there is still some way to go before returning to the degree of normalcy seen before the pandemic. Much will depend on how such vaccines will work, if the distribution will be successful and at a sufficient scale, not only in Croatia but for her trade partners and the world as well. Overall, we know we must brace for the health crisis to continue for most countries, including Croatia, well into 2021.  

And what about the economy? In 2021, the Croatian economy will partially recover but a high degree of uncertainty will remain. If the health situation was to normalize in the first half of the year, we can expect a relatively robust growth of around 5.5 percent supported by a surge in tourism, increased business and consumer optimism, and EU funded capital investments. Croatia’s basis for recovery is solid. also due to the interventions by the Government earlier this year. Three years of fiscal surpluses and a public debt firmly on a downward path allowed Croatia to prepare earlier in the year a large support package targeting both companies and households, including some of the most vulnerable groups in society. We estimate that in absence of this support, and the appropriate Central Bank’s response, the economic and social consequences of the crisis would be much more severe, with unemployment rate shooting up to close to 20 percent.

Croatia is a very different country than it was a decade ago. It has proven it can bring its public finances in order, regaining confidence from rating agencies; it is on a path to euro adoption which may happen as early as 2023; and the country’s political situation is stable, allowing the swift action of the Government during the crisis. The recovery can hence be faster and can create a stronger foundation for accelerated convergence to the higher level of income in the medium run. But only if appropriate choices are made. Croatia’s economy continues to be characterized by high reliance on tourism, which generates around a fifth of gross value added, has a relatively small share of processing industry in GDP, and limited exports diversification. Together with well-known structural issues, this makes the country less resilient to external shocks and weights on its growth potential.

The question is hence which decisions will Croatia make and what will be the path of recovery the country will embark upon. Will it be one that truly focuses on the “Next Generation”, promotes sustainable growth, focuses on an irreversible path towards decarbonization, provides the boost to digital transformation, and builds on the dynamism of the young innovators in the private sector of Croatia, who love this country and want to stay here in spite of its difficult business environment? The path to diversification and resilience must include broadening the portfolio of competitive industries, including by using funds for digital transformation. Sadly, during crises politicians all over the world recognize the opportunities to change and build back better, but too often end up building the same economy – as we have seen happening after previous crises.

But this time it can be different and especially for Croatia it must be. Let me explain why in my view.

First, with its recently launched 2030 National Development Strategy, the Government has come up with its most comprehensive vision for the country’s development to date, outlining a path towards improved governance, better services for citizens, and higher quality of living. The strategy is set to give impetus to all sectors willing to grow via innovation and digital transformation. It opens the door for broadening and protecting Croatia’s natural assets base, enhancing the productivity of its natural capital, and supporting a unique generational transition towards climate neutrality. Some may have wished for the document to have an even more ambitious vision, with implementation spelled out in details, but what seems more important is to recognize that the vision is set, and a roadmap is in place. It would be wise for all stakeholders to set aside their differences, short-termism, and corporate and vested interests, and for the country to gather around the NDS, as the only way Strategies can be implemented is through an alliance of institutions, non-governmental and economic actors.         

Second, Croatia will have access to an unprecedented amount of EU funds over the next ten years. This is a unique opportunity to operationalize the NDS. Properly using the Next Generation EU funds can set the foundations for a society that will truly work for the future generations, making way for an economy that will put at its core smart, climate and environmentally friendly actions. The reforms and investments Croatia needs should be prioritized, well selected and even better prepared, and a plan for implementation developed and closely monitored. This will require taking a hard and honest look at institutional weaknesses, being realistic about what can be done with limited capacity, not only in the public, but also in the private sector for example to rebuild and modernize the green infrastructure the country needs. Here it seems that an urgent action would be to establish a delivery unit, staffed with appropriate resources and highly qualified professionals, including from the private sector who could quickly deal with the urgent task of design, implementation and monitoring actions to make the national resilience and recovery plan a success. And we should not forget the key task of better programming the EU funds for this upcoming financial period and design a more streamlined, flexible and merit-based spending EU Program. This represents another opportunity of several billion euros to support the country’s development. As it happened in most other new member states, their second programming period after joining the EU, has resulted in a Croatia should not be an exception in this regard.

Third, Croatia does not just need any type of recovery, but a fair, equal, and people first recovery. More generous social safety programs with better coverage. Safety nets that can help the poor and vulnerable to prepare for, cope with, and adapt to shocks – before, during, and after they occur. This includes providing greater opportunities for formal jobs to women, who have taken on most of the additional care responsibilities brought about by the pandemic, while holding less secure jobs and being at greater risk of falling into poverty.

And while all this may sound like a lofty ideal, now is the right moment for Croatia to shoot for the stars. 2021 is a year of critical importance for Croatia. It will in good part determine the success in containing the pandemic, set foundations for a resilient recovery, and kick-off the program for the next generation. It is up to Croatia to seize these extraordinary opportunities to fundamentally transform its economy and society. It is time for resolve and solidarity. A time for a new, better, greener normal.

Opinion editorial by Elisabetta Capannelli, the World Bank Country Manager for Croatia, as submitted for publication by Poslovni Dnevnik on November 30, 2020.

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Europe

The Leaders of the Western World Meet

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The annual meeting of the G7 comprising the largest western economies plus Japan is being hosted this year by the United Kingdom.  Boris Johnson, the UK Prime Minister has also invited Australia, South Korea, South Africa and India.  There has been talk of including Russia again but Britain threatened a veto.  Russia, which had been a member from 1997, was suspended in 2014 following the Crimea annexation.  

Cornwall in the extreme southwest of England has a rugged beauty enjoyed by tourists, and is a contrast to the green undulating softness of its neighbor Devon.  St. Ives is on Cornwall’s sheltered northern coast and it is the venue for the G7 meeting (August 11-13) this year.  It offers beautiful beaches and ice-cold seas.

France, Germany. Italy, UK, US, Japan and Canada.  What do the rich talk about?  Items on the agenda this year including pandemics (fear thereof) and in particular zoonotic diseases where infection spreads from non-human animals to humans.  Johnson has proposed a network of research labs to deal with the problem.  As a worldwide network it will include the design of a global early-warning system and will also establish protocols to deal with future health emergencies.

The important topic of climate change is of particular interest to Boris Johnson because Britain is hosting COP26  in Glasgow later this year in November.  Coal, one of the worst pollutants, has to be phased out and poorer countries will need help to step up and tackle not just the use of cheap coal but climate change and pollution in general.  The G7 countries’ GDP taken together comprises about half of total world output, and climate change has the potential of becoming an existential problem for all on earth.  And help from them to poorer countries is essential for these to be able to increase climate action efforts.

The G7 members are also concerned about large multinationals taking advantage of differing tax laws in the member countries.  Thus the proposal for a uniform 15 percent minimum tax.  There is some dispute as to whether the rate is too low.

America is back according to Joe Biden signalling a shift away from Donald Trump’s unilateralism.  But America is also not the sole driver of the world economy:  China is a real competitor and the European Union in toto is larger.  In a multilateral world, Trump charging ahead on his own made the US risible.  He also got nowhere as the world’s powers one by one distanced themselves.

Secretary of the Treasury Janet Yellen is also endorsing close coordination in economic policies plus continued support as the world struggles to recover after the corona epidemic.  India for example, has over 27 million confirmed cases, the largest number in Asia.  A dying first wave shattered hopes when a second much larger one hit — its devastation worsened by a shortage of hospital beds, oxygen cylinders and other medicines in the severely hit regions.  On April 30, 2021, India became the first country to report over 400,000 new cases in a single 24 hour period.

It is an interdependent world where atavistic self-interest is no longer a solution to its problems.

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Revisiting the Bosnian War

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Genocide is not an alien concept to the world nowadays. However, while the reality (and the culprit) is not hard to profile today, history is ridden with massacres that were draped and concealed from the world beyond. Genocides that rivaled the great warfares and were so gruesome that the ring of brutality still pulsates in the historical narrative of humanity. We journey back to one such genocide that was named the most brutish mass slaughter after World War II. We revisit the Bosnian War (1992-95) which resulted in the deaths of an estimated 100,000 innocent Bosnian citizens and displaced millions. The savage nature of the war was such that the war crimes committed constituted a whole new definition to how we describe genocide.

The historical backdrop helps us gauge the complex relations and motivations which resulted in such chaotic warfare to follow suit. Post World War II, the then People’s Republic of Bosnia and Herzegovina joined the then Federal People’s Republic of Yugoslavia. Bosnia-Herzegovina became one of the constituent republics of Yugoslavia in 1946 along with other Balkan states including Croatia, Slovenia, Macedonia, Montenegro, and Serbia. As communism pervaded all over Yugoslavia, Bosnia-Herzegovina began losing its religion-cultural identity. Since Bosnia-Herzegovina mainly comprised of a Muslim population, later known as the Bosniaks, the spread of socialism resulted in the abolition of many Muslim institutions and traditions. And while the transition to the reformed Federal Republic of Yugoslavia in 1963 did ease the ethnic pressure, the underlying radical ideology and sentiments never fully subsided.

The Bosniaks started to emerge as the majority demographic of Bosnia and by 1971, the Bosniaks constituted as the single largest component of the entire Bosnia-Herzegovina population. However, the trend of emigration picked up later in the decades; the Serbs and the Croats adding up to their tally throughout most of the 70s and mid-80s. The Bosnian population was characterized as a tripartite society, that is, comprised of three core ethnicities: Bosniaks, Serbs, and Croats. Till  1991, the ethnic majority of the Bosniaks was heavily diluted down to just 44% while the Serbian emigrants concentrated the Serbian influence; making up 31% of the total Bosnian population.

While on one side of the coin, Bosnia-Herzegovina was being flooded with Serbs inching a way to gain dominance, the Yugoslavian economy was consistently perishing on the other side. While the signs of instability were apparent in the early 80s, the decade was not enough for the economy to revive. In the late 80s, therefore, political dissatisfaction started to take over and multiple nationalist parties began setting camps. The sentiments diffused throughout the expanse of Yugoslavia and nationalists sensed an imminent partition. Bosnia-Herzegovina, like Croatia, followed through with an election in 1990 which resulted in an expected tripartite poll roughly similar to the demographic of Bosnia. The representatives resorted to form a coalition government comprising of Bosniak-Serb-Craot regime sharing turns at the premiership. While the ethnic majority Bosniaks enjoyed the first go at the office, the tensions soon erupted around Bosnia-Herzegovina as Serbs turned increasingly hostile.

The lava erupted in 1991 as the coalition government of Bosnia withered and the Serbian Democratic Party established its separate assembly in Bosnia known as ‘Serbian National Assembly’.  The move was in line with a growing sentiment of independence that was paving the dismantling of Yugoslavia. The Serbian Democratic Party long envisioned a dominant Serbian state in the Balkans and was not ready to participate in a rotational government when fighting was erupting in the neighboring states. When Croatia started witnessing violence and the rise of rebels in 1992, the separatist vision of the Serbs was further nourished as the Serbian Democratic Party, under the leadership of Serb Leader Radovan Karadžić, established an autonomous government in the Serb Majority areas of Bosnia-Herzegovina.

The vision and the actions remained docile until the ring of independence was echoed throughout the region. When the European Commission (EC), now known as the European Union (EU), and the United States recognized the independence of both Croatia and Slovenia, Bosnia-Herzegovina found itself in a precarious position. While a safe bet would have been to undergo talks and diplomatic routes to engage the Serbian Democratic Party, the Bosnian President Alija Izetbegović failed to realize the early warnings of an uprising. Instead of forging negotiations with the Bosnian Serbs, the Bosniak President resorted to mirror Croatia by organizing a referendum of independence bolstered by both the EC and the US. Even as the referendum was blocked in the Serb autonomous regions of Bosnia, Izetbegović chose to pass through and announced the results. As soon as the Bosnian Independence from Yugoslavia was announced and recognized, fighting erupted throughout Bosnia and Herzegovina.

The Bosnian Serbs feared that their long-envisioned plan of establishing the ‘Great Serbia’ in the Balkans was interred which resulted in chaos overtaking most of Bosnia. The blame of the decision, however, was placed largely on the Bosniak president and, by extension, the entire ethnic majority of the Bosniaks. The Bosnian Serbs started to launch attacks in the east of Bosnia; majorly targeting the Bosniak-dominated towns like Foča, Višegrad, and Zvornik. Soon the Bosnian Serb forces were joined by the local paramilitary rebels as well as the Yugoslavian army as the attacks ravaged the towns with large Bosniak populations; swathing the land in the process. The towns were pillaged and pressed into control whilst the local Bosniaks and their Croat counterparts were either displaced, incarcerated, or massacred.

While the frail Bosnian government managed to join hands with the Croatian forces across the border, the resulting offense was not nearly enough as the combination of Serb forces, rebel groups, and the Yugoslavian army took control of almost two-thirds of the Bosnian territory. The Karadžić regime refused to hand over the captured land in the rounds of negotiations. And while the war stagnated, the Bosniak locals left behind in small pockets of war-ravaged areas faced the brunt in the name of revenge and ethnic cleansing.

As Bosniaks and Croats formed a joint federation as the last resort, the Serbian Democratic Party established the Republic Srpska in the captured East, and the military units were given under the command of the Bosnian-Serb General, Ratko Mladic. The notorious general, known as the ‘Butcher of Bosnia’, committed horrifying war crimes including slaughtering the Bosniak locals captured in violence, raping the Bosniak women, and violating the minors in the name of ethnic cleansing exercises. While the United Nations refused to intervene in the war, the plea of the helpless Bosniaks forced the UN to at least deliver humanitarian aid to the oppressed. The most gruesome of all incidents were marked in July 1995, when an UN-declared safe zone, known as Srebrenica, was penetrated by the forces led by Mladic whilst some innocent Bosniaks took refuge. The forces brutally slaughtered the men while raped the women and children. An estimated 7000-8000 Bosniak men were slaughtered in the most grotesque campaign of ethnic cleansing intended to wipe off any trace of Bosniaks from the Serb-controlled territory.

In the aftermath of the barbaric war crimes, NATO undertook airstrikes to target the Bosnian-Serb targets while the Bosniak-Croat offense was launched from the ground. In late 1995, the Bosnian-Serb forces conceded defeat and accepted US-brokered talks. The accords, also known as the ‘Dayton Accords’, resulted in a conclusion to the Bosnian War as international forces were established in the region to enforce compliance. The newly negotiated federalized Bosnia and Herzegovina constituted 51% of the Croat-Bosniak Federation and 49% of the Serb Republic.

The accord, however, was not the end of the unfortunate tale as the trials and international action were soon followed to investigate the crimes against humanity committed during the three-year warfare. While many Serb leaders either died in imprisonment or committed suicide, the malefactor of the Srebrenica Massacre, Ratko Mladic, went into hiding in 2001. However, Mladic was arrested after a decade in 2011 by the Serbian authorities and was tried in the UN-established International Criminal Tribunal for Yugoslavia (ICTY). The investigation revisited the malicious actions of the former general and in 2017, the ICTY found Ratko Mladic guilty of genocide and war crimes and sentenced him to life in prison. While Mladic appealed for acquittal on the inane grounds of innocence since not he but his subordinates committed the crimes, the UN court recently upheld the decision in finality; closing doors on any further appeals. After 26-years, the world saw despair in the eyes of the 78-year-old Mladic as he joined the fate of his bedfellows while the progeny of the victims gained some closure as the last Bosnian trail was cased on a note of justice.

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Greece And Yugoslavia: A Brief History Of Lasting Partitions

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Prior to the 1992-1995 Balkan war, the European Community delegated the British and Portugese diplomats, Lord Carrington and Jose Cutileiro, to design a suitable scheme for ethno-religious partition of Bosnia-Herzegovina, and in February 1992 they launched the Lisbon Conference, with the aim of separating Bosnian ethno-religious communities and isolating them into distinct territories. This was the initiation of the process of partition, adopted in all subsequent plans to end the war in Bosnia. However, such a concept was stipulated by Carrington and Cutileiro as the only available when there was no war to end, indeed, no war in sight; and, curiously, it has remained the only concept that the European Community, and then the European Union, has ever tried to apply to Bosnia.

Contrary to the foundations of political theory, sovereignty of the Bosnian state was thus divided, and its parts were transferred to the three ethno-religious communities. The Carrington-Cutileiro maps were tailored to determine the territorial reach of each of these communities. What remained to be done afterwards was their actual physical separation, and that could only be performed by ethnic cleansing, that is, by war and genocide. For, ethno-religiously homogenous territories, as envisaged by Carrington and Cutileiro, could only be created by a mass slaughter and mass expulsion of those who did not fit the prescribed model of ethno-religious homogeneity. The European Community thus created a recipe for the war in Bosnia and for the perpetual post-war instability in the Balkans. Yet, ever since the war broke out, the European diplomatic circles have never ceased claiming that this ‘chaos’ was created by ‘the wild Balkan tribes’, who ‘had always slaughtered each other’. There was also an alternative narrative, disseminated from the same sources, that Russia promoted the programme of ‘Greater Serbia’, which eventually produced the bloodshed in Bosnia and Kosovo.

Facts on the ground, however, do not support either of these narratives. All these ‘tribes’ had peacefully lived for centuries under the Ottoman and Habsburg empires, until nationalist ideas were imported into Serbia and Greece at the beginning of the 19th century. On the other hand, Russia’s influence in the Balkans could never compete with the influence of the Anglo-French axis. The latter’s influence was originally implemented through the channels of Serbian and Greek nationalisms, constructed on the anti-Ottoman/anti-Islamic and anti-Habsburg/anti-Catholic grounds, in accordance with strategic interests of the two West European powers to dismantle the declining empires and transform them into a number of puppet nation-states. In these geopolitical shifts, nationalist ideologies in the Balkans utilized religious identities as the most efficient tool for mobilization of the targeted populations and creation of mutually exclusive and implacable national identities.

The pivotal among these nationalist ideologies has been the Serb one,  built on the grounds of Orthodox Christianity, with its permanent anti-Islamic and anti-Catholic agenda. The existence and expansion of Serbia was always explicitly backed by London and Paris – from a semi-autonomous principality within the Ottoman territory in the 1830s and the creation of the Kingdom of Serbia in 1882, through the 1912-13 Balkan wars and World War I, to its expansion into other South Slavic territories in the form of the Kingdom of Serbs, Croats and Slovenes (later, the Kingdom of Yugoslavia), promoted at the Versailles Peace Conference in 1919.

Eventually, the Serbian elites – supported by the Anglo-French axis, again – used the dissolution of the communist Yugoslavia as an opportunity for implementation of the 19th-century ‘Greater Serbia’ programme, that is, Serbia’s expansion in all the Yugoslav territories populated by the Orthodox Christians. However, this time ‘Greater Serbia’ was used as a catalyst in a bigger geopolicial reshuffling advocated by the UK and France – the simultaneous implementation of four ethnnically homogenous greater-state projects, including ‘Greater Serbia’ (transferring the Orthodox-populated parts of Bosnia, plus Montenegro and the northern part of Kosovo, to Serbia), ‘Greater Croatia’ (transferring the Catholic-populated parts of Bosnia to Croatia), ‘Greater Albania’ (transferring the Albanian-populated parts of Kosovo and Macedonia to Albania) and ‘Greater Bulgaria’ (transferring the Slavic parts of Macedonia to Bulgaria).

Since 1990s, ethno-religious nationalisms in the Balkans have served only  this geopolitical purpose – creation of ethno-religiously homogenous ‘greater’ states, including the disappearance of Bosnia and Macedonia, whose multi-religious and multi-ethnic structure has been labelled by the British foreign policy elites as “the last remnant of the Ottoman Empire“ that needs to be eliminated for good. The only major foreign power that has opposed these geopolitical redesigns is the US, which has advocated the policy of inviolability of the former Yugoslav republics’ borders. Yet, the US has never adopted a consistent policy of nation-building for Bosnia and Macedonia, which would be the only one that could efficiently counter the doctrine of ethno-religious homogeneity promoted by the UK and France and supported by most EU countries.   

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