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    Copyright: The following text is for personal information only. Any professional use or publication in written or electronic form is subject to an agreement with AIM, 17 rue Rebeval, F-75019 Paris, France

    SAT, 26 NOV 1994 08:28:29 GMT

    Slovenian-Croatian economic relations



    Just before Slovenia and Croatia became independent, the relations between the two countries were very good and cooperative. That is what they continued to be like right after both states had proclaimed independence and won international recognition. Unfortunately, though, this did not last long, and various problems appeared, the biggest among them being settlement of border issues where policy interfered to a large extent, all the way to economic problems which considerably contributed to an interstate intolerance. Despite everything, both parties are striving to overcome present obstacles and reach a solution through negotiations.

    Before the dissolution of the SFRY, Croatia was the major Slovenian commercial partner, alhough Slovenia has never had a large concentration of external economic relations. The war and general instability in the former Yugoslav space caused a drop of over 80 per cent of Slovenian economic exchange with the states on the territory of former Yugoslavia. Last year the economic exchange with Croatia was reduced to only 11 per cent, so the neighbouring state from the first place, as the once most significant commercial partner, dropped to the third, behind Germany and Italy. The situation continues to deteriorate. In the first four months this year, Slovenian enterprises exported to Croatia 188 million-dollar worth of commodities, which is by 22 per cent less than in the same period last year. And Slovenia imported from Croatia 164 million-dollar worth of goods, which is as much as one third less than last year.

    According to the data of the Chamber of the Economy of Slovenia, in 1993 the enterprises there exported to Croatia mostly mineral fuels and oils, reactors, boilers, and machinery, paper and cardboard, pharmaceutical products, elecric machinery and equipment, road vehicles and similar. And they imported primarily mineral fertilizers, electric machinery, pharmaceutical products, plastics, wood and wood products. Among the enterprises which export the most to Croatia are - OMV-Istra from Koper, the Nuclear Power Station Krsko, Krka and Lek - pharmaceuticals, Sava Kranj-rubber plant, Gorenje - electrical appliances and many others, while the greatest importers of Croatian goods are Nafta from Lendava, OMV-Istra from Koper, Kemofarmacija, Salus, Revoz...

    There are certainly more than one reason for such a situation. As mentioned, one of them which is definitely not insignificant is political. Croatia has introduced quotas which prevent selling of Slovenian goods in the neighbouring Croatia. Besides the 20 per cent customs duty for import of plastic packing materials, the Croats have introduced 35 per cent of ecological taxes, which are half smaller for Croatian enterprises. They have also introduced import taxes, and legal property relations between the two countries have not been resolved. Dut to all those unsettled issues, many Slovenian entreprises complained to the Chamber of Commerce last summer. Thus the factory of drugs and pharmaceuticals Krka from Novo mesto warned about the increase of customs duty for import of pharmaceutical products from 10 to 17 per cent. Ilirija Vedrog from the same branch, believes that Croatia has gone too far with the formalities about determination of the origin of goods, while Belinka thinks that the Croatian customs duties, especially for consumer goods are too high, and they are dissatisfied with the paying power of Croatian partners. Kli from Logatec also complains because of debts, since certain Croatian firms owe this enterprise 275 thousand Swiss francs way back since 1989 and 28 thousand dollars since 1991.

    There are tens of such cases, if not even hundreds. But, one should not forget the differences between the two neighbours. Slovenia is known to have been the best developed republic in former Yugoslavia. It is also known that it was the only one to quickly and without major consequences get out of the Balkan war. Even by the loss of the Yugoslav market it has suffered a much lesser damage than it was expected not only in other former Yugoslav republics, but in Slovenia itself. Despite all that, Slovenian entrepreneurs and politicians speak of an economical crisis. The problems of the decline of productivity, and the even the greater problem of a sudden increase of the number of the unemployed..., all that did not prevent Slovenia to find new markets. It is simply unbelievable that, according to the data of the World Bank, Slovenia ranks an excellent 21st in import per capita. This is six times better than Greece and, for instance, four times better than Spain!

    Croatia, of course, is in a totally different position. Due to the situation it is in, Croatia is still led by the logic of war economy, and the authorities there are to blame for it a great deal. Professor Dr. Branko Horvat, in an interview to Belgrade daily, the "Borba", several months ago, said among other: "In February this year, the World Bank has published a study on economic development of Eastern European countries for the past four years, which coincides approximately with the Croatian Democratic Community (HDZ) rule in Croatia. The data clearly show that the regime has managed to ruin the Croatian economy which is among the worst three out of the 25 observed countries...". Croatia is in a much worse position than Slovenia internationally as well. While Slovenia has already become a member of majority of European and World financial organizations, and (if not prevented by Italy) it has great chances to become an associated member of the European Union. Croatia, on the other hand, was deleted from the programs of the European Union, and it did not succeed in signing a contract with the International Monetary Fund, while Slovenia has been its member for quite some time now.

    While these differences were taken into consideration in the beginning, and lated tolerated, now neither the Slovenian economy, nor the authorities, have much understanding. Namely, while Croatian economy is gradually closing its doors to Slovenia, the latter still maintains liberalized import of Slovenian goods, so the Slovenian entreprises feel that they are in an unequal position, which de facto they are.

    Slovenia still makes a surplus in visible trade with its neighbour, but when all the accounts are balanced for the past summer season when most of the Slovenians spent their holidays in Croatia and left significant sums of money in foreign currency there, it may easily happen that Slovenia will be in the red.

    If watched from the point of view of Croatia, things look differently. In strenuous, rigid, but still more or less regular negotiations, besides the border in Piran bay and Istria, the two major problems are the issue of the debt of Ljubljana Bank (LB) to Croatian foreign currency savers, and the issue of the Krsko nuclear power plant. Concerning these two issues, the Croats feel damaged. The Ljubljana Bank owes its Croatian savers about 800 million German marks. This problem is being resolved by the two parties practically ever since they became independent. Many problems occurred primarily because of the Slovenian Constitutional Law which was adopted when Slovenia became independent, and which actually prevented Slovenia to resolve this issue. The new Constitutional Law includes the obligations of the greatest Slovenian bank to Croatian savers. The previous Law did not permit guarantees for deposits outside Slovenian borders, while the new one, adopted by the Slovenian Parliament last summer, provides the possibility of bilateral agreements even before the negotiations on succession. Slovenian Minister of Finance, Mitja Gaspari, in an interview to the Ljubljana daily "Delo", said that in the case of continuation of negotiations with the Croatian party, the issue of debts of Ljubljana Bank will certainly be resolved in favour of the Croatian savers who have not transferred their deposits to the Croatian state, and simultaneously, the question of outstanding debts which the LB has in respect to its Zagreb branch office, that is the lease-holders of its credits. But, all promises, which have in fact come too late, cannot convince the damaged savers. Croatian press has politicized this issue and the people believe nobody any more. Which is nothing strange in this Balkan space. The damaged savers have, thus, come to Ljubljana, in accordance with the Balkan methods, again: to resolve the problems in the street. And on the other side, the Ljubljana police behaved as if they were dangerous terrorists, although a handful of the afflicted people gathered in front of the Ljubljana Bank. The epilogue: according to the already tested recipe, nothing can be solved in the street, and this event is no exception. Only promises remain.

    Many unclarified issues which are also resolved too slowly appear concerning the Krsko nuclear power plant. Namely, the executive councils of the former socialist republics of Slovenia and Croatia signed the agreement on construction of the Krsko nuclear power plant in the end of November 1970, and agreed to share the power fifty-fifty. And that was about all. The construction of the nuclear power plant, however, began under altogether irregular circumstances, both in economic and technical sense. Four years later, Slovenian and Croatian investors signed the contract on pooling resources for joint construction and exploitation of the nuclear power plant, and in 1982 an annex to the contract was signed, but it occurred to noone to determine the manner of financing a possible decommissioning of the power plant. Another omission was that when the two separate states were established, the 1970 contract did not develop into an interstate contract. That is why now numerous open questions emerge. The question of money is essential. While the Croats claim that half of the nuclear power plant is Croatian, the Slovenian party stresses that the actual balance should be determined, and especially the paid assets by both the states. Since Slovenia has paid a part of Croatian commitments, Ljubljana claims that 70 per cent of the nuclear power plant ought to be in Slovenian hands. This is just a part of many open issues concerning the nuclear power plant which will have to be resolved by negotiating for quite some time.

    To a certain extent all these disputes and disagreements are understandable. Once a country is dissolved, which was built so as to remain united, enormous and numerous problems arise. But, on the other hand, there are no reason to "solve" the new open issues by intolerance and unhealthy competition, with both parties unrealistically emphasizing their merits, and reducing the significance of efforts and accomplishments of the other. In Slovenian-Croatian relations it is not significant who deserves more credit, but how the two neighbouring countries will resolve all the pressing issues with as little pain as possible, because they both have other problems which lie heavy on their shoulders and are perhaps more fatal that the mentioned ones.

    Janja Klasinc, AIM