PRESIDENT POINTS OUT ECONOMIC SUCCESSES AT TRADE FAIR OPENING

( Editorial: --> 0306 ) ZAGREB, Sept 14 (Hina) - Since becoming independent, Croatia has achieved outstanding results, despite many unfavourable circumstances, and has mostly fulfilled the expectations of the Croatian people, President Franjo Tudjman said on Monday opening the 74th Zagreb International Autumn Trade Fair. The Croatian President especially pointed out the establishment of an institutional framework of democratic state organisation and socially-orientated market economy, the creation of a respectable military force, and the results achieved in the reconstruction of the country. About US$2.2 billion had been invested in the reconstruction of war-ravaged regions so far. About 455,000 displaced persons had returned to these areas to date, while 80,000 families were still waiting to do so, he said. Tudjman in particular pointed out to the results achieved in the establishment of new ownership relations, assessing the privatisation model and its implementation as successful. Only 70 out of 2,650 formerly socially-owned companies remained in state ownership after privatisation. These 70 companies accounted for some 36 per cent in the entire capital and a five per cent in the total number of employees. Close to two million Croatian citizens have taken part in the privatisation process, Tudjman said, refuting the claim that privatisation had boiled down to "only a few hundred very rich people". Speaking about the stabilisation and development of the economy, the President pointed out a relatively high annual economic growth rate of 6.5 per cent. Even though tourism results this year are expected to be as planned, Tudjman believes Croatia's true tourist potential is much bigger. With the results it has achieved, Croatia is among the most successful among countries in transition. Only those poorly informed and ill-intentioned can deny this because of their own demagogic and nationally-destructive reasons, Tudjman said. Despite the successful results, the President warned that Croatia was facing some serious difficulties of an objective nature, and some negative occurrences as well. The objective difficulties are the result of the necessity for reconstruction, the return of refugees and displaced persons, a relatively high rate of inherited and veiled unemployment, and new unemployment caused by the Serbian aggression, as well as of restructuring and privatisation. The President said special attention had to be given to problems caused by a high current account deficit. To overcome economic difficulties it is necessary to drop high interest rates and to prevent quakes caused by crises in several medium-sized and small banks, he emphasised. Tudjman believed that the relatively low wages of a number of employees and pensioners were the cause of not only political dissatisfaction, but also a hindrance to faster economic growth. "Also evident is a discrepancy which should not be allowed between legal norms and their application in practice, the problem of rule of law effectiveness is not being resolved in a sufficiently resolute and quick way," Tudjman said. He added that due to the bureaucratic behaviour of the administration and the courts, citizens often lacked the possibility of exercising their basic rights in due course. Our people have rightfully become a lot more sensitive to injustice, "especially when (injustice) stems from those from whom it shouldn't be expected in the least". "Besides, people don't object so much to the little as to the unjust," Tudjman said. People are especially sensitive to the arrogant behaviour of individuals in politics, especially in administrative and economic ranks. Another great contribution to widespread dissatisfaction, according to the President, is the "incoherent campaign of some professionally disaster-oriented demagogues and media". The results we have achieved, as well as the difficulties we are facing, urge us to constantly keep in mind the basic directives of state policy and strategies of economic and social development on the eve of the 21st century, the President said. Tudjman pointed out these include the further development and strengthening of the socially-orientated market economy system, the realisation of high viable economic growth rates, the strengthening of state and economic stability, and a further opening towards the world and inclusion into international economic movements. Speaking about the development of a market economy, the President assessed the state was still forced to have a major engagement in the entrepreneurial function. In the economy, the state should lean more towards the creation of general preconditions for a stable and fast economic growth, and gradually abandon cases of the selective financial rehabilitation of certain companies and banks. "We especially have to oppose attempts at the revival of neo- socialism, namely a return to state ownership and the omnipotent role of the state and the state budget," the President said. Accepting a free trade system entails values resulting from that system, he said, but added the principle of a social state must not be forgotten in the process, as it would lead to unacceptable relations in income distribution and the destabilisation of society. We must take prudent steps in tax and the entire fiscal policy, in order to ensure a distribution of the national income in keeping with our conditions, Tudjman said. As an example he mentioned the necessity of introducing more elements of progressive taxation, including increasing the non- taxable income amount, higher taxation on luxury assets, and a simultaneous improvement of living conditions, such as health care and education, for all, especially of the poor. The principle of a social state does not imply care only for those who may be under the minimum level, but giving everyone equal starting conditions, the President said, adding the social state must work towards the preservation of a worker's dignity and moral integrity. Many interpreted independence in decision-making as an opportunity for material gain, and not as a responsibility towards economic and all-round development, Tudjman said, adding the state's controlling role was often underestimated. To achieve high rates of viable growth it is necessary to increase exports and competition on the domestic and world markets. Speaking about the tasks surrounding access to European integration and returning to former markets, Tudjman emphasised the importance of closer cooperation with neighbouring countries, but without taking part in any formal Balkan integration. Special attention has to be given to the development of relations with the Croat-Muslim Federation of Bosnia-Herzegovina, as well as with the whole of Bosnia, he said. Pointing out to the increasingly pronounced economic integration in the world, Tudjman said it was necessary to protect our economic identity and national strategic interests. We have to be organised in entering the world economic game, with recognisable and high quality products. It is obvious that difficult tasks await us, especially in resolving existing problems. To neglect them would be irresponsible to say the least, Tudjman said, since the difficulties might increase. He dismissed as unacceptable any apocalyptic visions of helplessness and destruction, since there were no reasons for that, and advocated the raising of a winning spirit in peace-time as well. Despite evident success, some international factors this year tried to destabilise Croatian national consciousness in Bosnia, even Croatia itself, Tudjman said, adding they wanted changes and a different Croatia. "Many have already written that we have started a war, that Croatia is in isolation, etc. Last week's events, since last Sunday, have shown the full illusion of such endeavours and such aspirations," the Croatian President concluded. (hina) ha jn /mbr 141901 MET sep 98