"Those are pure insinuations," he told the press on Monday.
Racan said that during the previous government, when he was prime minister, the law on compensation for property seized during communist Yugoslavia was amended after the Constitutional Court repealed some of its provisions. He added that there could be no discrimination in paying damages to those who were not Croatian citizens.
Racan said the law was amended to stipulate that a previous owner was not entitled to compensation if the issue had been settled by bilateral agreement, and that foreigners could gain that right only if this was regulated by a new bilateral agreement.
He confirmed that when he was prime minister two negotiating rounds were held with Austria, but that an agreement was not reached. He said the latest agreement initialled with Austria was a bad move.
"It is neither moral nor honest nor nationally sound to sign agreements whereby Croats will compensate foreign citizens whose property was seized by the communist authorities, without this simultaneously raising the issue of compensation of Croats who, for example, were victims of camps in other states. Who will compensate them?"
Racan said that damages could not be paid to only one country, and that Poles, the Czech, Slovaks and Serbs might start making compensation requests as well.
He announced he would not vote for the law which would ratify the agreement with Austria, whose passing requires a two-thirds parliamentary majority.
Asked if failure to pass the law might serve as an alibi to Prime Minister Ivo Sanader, Racan said he would not be surprised.
At another press conference, Istria County Prefect Ivan Jakovcic was asked if the agreement with Austria might prompt the Esuli, Italians who fled Croatia after WW2, to also request the return of their property.
Jakovcic said the Esuli property issue was settled by an agreement between communist Yugoslavia and Italy, and that as a successor to the former federation Croatia should fully honour it, which is also the position of President Stjepan Mesic.
"We must respect bilateral agreements and don't have the right to cause new injustices... to citizens residing in Istria County," Jakovcic said, adding it was necessary to find a formula to enable the Esuli and their offspring to buy real estate in Croatia without any hurdles.
Jakovcic said he initiated the building of a Croatian-Italian friendship house, which would also be dedicated to the Esuli, "to symbolically show that they, too, are entitled to their home in Istria".