Croatia was given an overall rating of 3.75 for democratic development in 2004, which was an improvement from 2003 when it scored 3.83.
The ratings were based on a scale of 1 to 7, with 1 representing the highest level and 7 the lowest level of democratic development.
Croatia made progress in the electoral process category after introducing a new law during the 2004 presidential race aimed at increasing transparency in campaign funding.
Compared to other Balkan nations, Croatia shared third place with Serbia, with Bulgaria and Romania occupying first two positions.
Citing positive achievements of Croatian democracy in 2004, the report said that Prime Minister Ivo Sanader signed agreements with representatives of the national minorities, initiated judicial reform and transferred eight war crimes indictees to the Hague tribunal.
Croatia scored best in the electoral process and civil society categories, winning a rating of 3, and worst in the categories of corruption (4.75) and judicial framework and independence (4.50). The study observed that democratic governance was better at the national than at the local level.
The report also noted that Croatia was granted European Union candidacy status, but that it received a warning from Brussels that significant reform challenges lay ahead. It also said that despite its declared commitment to greater transparency the government of Prime Minister Ivo Sanader was drawn into several affairs that shook public confidence.
Freedom House concluded that the Balkan nations showed signs of increased stability in 2004, but that they were still facing great challenges in consolidating democracy, particularly the countries of the Western Balkans.
Every year the organisation provides a comprehensive analysis of transition processes in post-communist countries, monitoring their democratic development in terms of electoral process, civil society, independent media, governance, and judicial framework and independence.