PRESIDENT TUDJMAN ADDRESSES SPECIAL GOVERNMENT SESSION

ZAGREB, Nov 5 (Hina) - The performance of the Croatian Government in the past year can be judged as very positive, with visible results having been achieved in all fields of social and economic life, Croatian President Franjo Tudjman said at Thursday's special government session. The session was held to mark Zlatko Matesa's third anniversary as Premier. The most important political event was certainly the peaceful reintegration of the Croatian Danube river region, which for the first time confirmed Croatia's integrity within its internationally recognised borders, Tudjman said. A very successful event in interior and foreign policy was the agreement on special relations between Croatia and the Federation of Bosnia-Herzegovina and the agreement on the use of the Croatian port of Ploce by Bosnia-Herzegovina and free passage through Neum (BH Federation) by Croatian citizens, Tudjman reported. He recalled there had been considerable pressures to give up the agreement on special relations and to sign only the agreement on Ploce and Neum. Tudjman also recalled statements by some international factors who requested that relations between Zagreb and Mostar be severed on all levels, and added that only recently international negotiators recommended he give up signing the agreement on special relations. The President stressed he had not accepted the recommendation, because the agreement on special relations would have been jeopardised had the agreement on Ploce been signed first. Croatia agreed to the Croat-Muslim Federation and the Dayton peace agreement so that the Federation could become a guarantee of not only the survival of Bosnian Croats, but Croatia's strategic interests as well. Some international factors believe Bosnian Croats would turn to Sarajevo following a break up of relations between Zagreb and Mostar. What they do not know is that Sarajevo once had a 38 percent Croat population, while only 3-4 percent live there today. Severing the ties between Zagreb and Mostar, Bosnian Croats would emigrate to Split, Zagreb, and other countries and not, as international representatives believe, turn to Sarajevo, Tudjman said. We had to insist on the implementation of the Dayton and Washington peace agreements in both letter and spirit, the President stressed. Another event of outstanding importance was the Holy Father's second state and pastoral visit to Croatia, on the occasion of the beatification of late Croatian Cardinal Alojzije Stepinac. With his second visit, Pope John Paul II showed his support for the Croat people and its democratic state. The Pope's visit is all the more important because it was obviously undertaken in spite of those international circles which are ill- intentioned and one-sided in their unfounded blaming of Croats in general. They blame them not only for their past but also present behaviour, Tudjman said, adding in doing so these circles also resorted to ominous pressures. As regards the interior situation, evident results have been achieved in economy, he said, adding macroeconomic stability had been preserved. Over the past five years economic growth has been strong, while especially encouraging is the uninterrupted three-year growth of industrial production. Work productivity is on the increase, there has been a high rise of salaries and pensions, even by rates which threaten internal stability and international competitiveness. An increase in exports by 6.6 percent and a 2 percent imports reduction have resulted in a necessary deficit reduction on the balance of current accounts by around US$1 billion. Despite all these results, the economy and society in general are facing very serious difficulties, Tudjman noted. Examples are the still high unemployment rate, the rising problem of mutual non-payment and high interest rates, as well as the difficulties experienced by several banks. "Misuse in the transformation process and irregularities in private entrepreneurship have led to the erosion of public morals and business ethics", he warned. Society is faced with attempts to undermine trust in institutions of Croatian authority by internal and external enemies of sovereign Croatia with maximum support by some media. The international economic and financial crisis has left Croatia's economy relatively unaffected. The negative effects of the world crisis will affect Croatia with less favourable conditions of borrowing, export, and major privatisation projects. The most effective means to counter those difficulties is the country's own healthy economic and financial policy, he said. Speaking about next year's aims, Tudjman said economic policy has to be based on the so-called strategy of concerted effort, which means that available and limited means should be directed at fewer priorities in order to gain maximum results. This refers especially to the budgetary and fiscal policy, since it is obvious that only by applying the strategy of concerted effort it will be possible to achieve results in the economic and social spheres. It is of great importance for authorities and other social structures to be professional. All those in any way involved in any dubious activities and misuse of office must be called to account, regardless of their position in the power hierarchy. All open questions of possible misuse have to be solved as soon as possible, Tudjman concluded. (hina) mm rml/ha