EC REPORT: CROATIA FACED WITH TWO MAJOR CHALLENGES

ZAGREB/BRUSSELS, April 4 (Hina) - Strengthening democracy and implementing wide structural reforms are the two major challenges facing Croatia, a report by the European Commission on developments in the Stabilisation and Association Process (SAP) states. #L# The EC on Thursday released their first report for the year on developments in the SAP. The report contains annexes for all five countries participating in the process (Croatia, Bosnia and Herzegovina, Yugoslavia, Macedonia and Albania). With the change in government early 2000, the political environment was radically changed and Croatia's political and economic isolation came to an end. This led to accelerated improvement in bilateral relations with EU countries, the report notes. For further success to be possible, all sections of the state administration need to be resolute and actively participate in civil society. The region of Europe's south-east or western Balkans - as it is technically referred to in European institutions - is considered to be very complicated politically and economically, however, it is believed that Croatia has recently succeeded to relatively successfully cast off the not so distant past. In contrast to Croatia, it is difficult for the remaining countries to manage to make any advancement in the struggle with two barriers - inter- ethnic tensions and a ruined political and economic environment which give way to corruption and organised crime. The report considers that changes have been achieved by the new government in the area of respect of human rights (including minority rights) and respect for obligations under peace agreements. Nevertheless, the report continues, the largest possible threat to realising economic, political and social reforms is the still apparent weak spots in the judiciary and other problems related to the implementation of the law. The pace of reforms is being influenced by nationalist pressure, particularly with regard to the process of returns and true integration of the Serb minority. These pressures had a determining role with regard to co-operation with the Hague-based UN war crimes tribunal, and affect the government's stance towards the enhancement of regional cooperation. Croatia needs to rise above regional and historical disagreements and accept a more open approach to resolving important issues with its neighbours. Macro-economic indicators show that the situation in the economy in Croatia is improving. The total Gross Domestic Product in all five countries in the region amount to EUR40 billion. Croatia has less than one-fifth of the population in the region and holds half the foreign trade for the region. The report refers to government measures in economic and structural reforms which are unfolding slower than expected. Tangible results are expected in the coming period - even during this year. The main cause for concern, the report believes, is the high unemployment rate. The report continues by saying that the signing of the Stabilisation and Association Agreement was a further indicator of the continuing improvement in relations between Croatia and the EU. The sincerity of Croatia's aspirations to become a candidate for membership in the EU above all depends on Croatia's success in implementing the agreement. That agreement had immediate effect on internal reforms because the government is making huge efforts to establish a proper legal framework. However, the implementation of adopted laws continues to be a challenge for the government, which needs to consider it's own ability to implement reforms and face the deficiencies which occur in the process. Even though it appears the government is aware of this, it continues to concentrate on the more glamorous political goals of Croatia's European policy instead of concentrating on the huge efforts required to come closer to European standards. (hina) sp sb