Foreign Affairs

Europe’s authoritarian regime
By Natasha Srdoc

The fact that I was called an “enemy of the state” would be amusing if it had not been relayed by Croatia’s finance minister and prime minister to a messenger who was assassinated in a car bomb explosion in October 2008.

Less than a week after I landed in Croatia during the first week of February 2009 and the day after a critical article on Croatia was published in the Washington Times, I received a call from Croatia’s tax authorities who wanted to review the books of Adriatic Institute for Public Policy–an independent and non-government funded free-market think tank. The Croatian authorities were interested in the 2007 records and the year 2008—some three weeks prior to the official deadline for the 2008 tax filings. Alarmingly, Croatia’s authorities inquired about Adriatic Institute’s donors, members and activities.

The Balkan region’s corrupt regime is hard at work in masking its international image, while democratic institutions, freedom of speech and liberty have come under assault in Croatia. The alarming trends in Croatia reveal pubic assassinations of prominent individuals, death threats, murder attempts and physical beatings of independent journalists investigating political corruption and political opponents and entrepreneurs who report about corruption.

Regrettably, the realities on the ground depict a Croatian state which is now considered worse than the days of President Franjo Tudjman who was Croatia’s authoritarian ruler in the 1990s. The twin legacies of communist rule and the Balkan wars created an underground power base comprised of organized crime, the intelligence service, military, corrupt government officials and their private partners in crime. Organized crime and criminal capitalism thrives in today’s Croatia under the ruling HDZ political party.

Last October, Ivana Hodak, the 26-year-old daughter of a lawyer defending General Vladimir Zagorec was executed in front of her apartment, shot twice in the head. The dead young lady's mother, Ljerka Mintas Hodak, was a former deputy prime minister and her father is a prominent lawyer, Zvonimir Hodak.

Ms. Hodak’s father defended a former defense assistant minister and general indicted for embezzling diamonds worth $5 million during the Balkan wars of the 1990s. Prior to his extradition from Austria to Croatia, the general had mentioned that there were over 80 secret foreign bank accounts of high-ranking HDZ officials who siphoned-off funds intended to buy arms during the region’s United Nation’s arms embargo. The regime recently arrested what it claims is Ms. Hodak’s killer—a homeless man, who supposedly shot the young lady after harboring a revenge for losing his job in 1995.

Shortly after Ms. Hodak’s murder, a bomb explosion in Croatia’s capital killed Ivo Pukanic, a prominent publisher and bold critic of Croatian Prime Minister Ivo Sanader. This horrifying act raises questions about the security of independent voices that expose the regime’s numerous scandals. Mr. Pukanic’s popular magazine Nacional exposed Mr. Sanader’s owning of $200,000 worth of watches, his sordid act of illegally seizing private property and drew attention to Mr. Sanader’s unexplained wealth. Mr. Pukanic was also one of the key witnesses in Zagorec’s case.

When looking at the chronology of events in Croatia, both horrific killings followed shortly after Mr. Zagorec’s extradition from Austria. Subsequently, Mr. Zagorec was sentenced to seven years in prison. A more troubling fact is that the issue of 80 secret foreign accounts of high-level HDZ politicians was never brought to light.

The criminal privatization of the 1990s has not been resolved. The HDZ-led government refuses to reveal the secret contract of public-private partnerships in Suncani Hvar (commercial hotel industry). Deutsche Telecom which is partly owned by the German government and the HDZ government have rejected calls to reveal the secret contract of “privatizing” Croatia’s telecommunication company now known as T-HT.

One of the many still unresolved criminal cases involves a money laundry scheme in the amount of $6 million, which was uncovered by the Austrian Interpol in 2006. If it had not been uncovered by the Interpol, this case would have most probably gone unnoticed in Croatia. The funds came and left Croatia’s state-owned shipyard, Brodosplit, before any construction started. The money was even guaranteed by the state-owned Croatian Bank for Reconstruction and Development (HBOR)–a recipient of funding by European Bank of Reconstruction and Development (EBRD). This transaction took place under the watchful eyes of Branko Vukelic, then minister of economy, who served as president of the shipyard’s supervisory board. Mr. Vukelic had been avoiding the court hearing until external pressure builds up.

Three additional HDZ cabinet ministers, including the finance minister, Ivan Suker, are supervisory members of the HBOR, and were responsible for issuing a state guarantee. The former minister of economy is now Croatia’s minister of defence dealing with NATO-related issues and directing taxpayer funds intended for purchasing new military hardware.

A few weeks after Croatia’s accession into NATO, an old scandal re-surfaced which involved acquiring a fleet of trucks for the military without a public tender. It was initiated by Finnish police investigating bribe-giving initiated through a Finnish company which was the seller. Under Croatia’s two ministers of defence, Mr. Roncevic and Mr. Vukelic purchased vehicles amounting to €112 and €68 million respectively with significant loss to taxpayers.

For Croatia’s politicians, the stakes in keeping their unexplained wealth are significantly high. Today, the international image of Croatia’s tarnished government is being defended with millions of Croatian taxpayer dollars paid to public relations agencies and lobbying firms mostly in the United States and Europe’s capitals. Those championing an authoritarian state should be aware of complicity with evil.

How can an authoritarian regime silence the remaining few independent voices and pro-reform groups which spotlight the regime’s wrongdoings? This attempt by the government conveys a similar tactic used in another country: Vladimir Putin’s Moscow. Political intimidations, mafia-style killings, persecution of independent voices and threats should have no place in a country that aspires to participate in Euro-Atlantic institutions.

A Financial Times’s editorial called Croatia a “criminal state.” The 2009 Index of Economic Freedom published by The Heritage Foundation and the Wall Street Journal revealed that Croatia’s world ranking has slipped over the years and that a key category, “property rights and the rule of law,” is well below Africa’s average. Croatia’s regional ranking is at the bottom of Europe.

The European Union (EU) frequently raises issues about the absence of public tenders and the opaque system of government payments.

The Freedom House 2009 study on global press freedom shows that Croatia has dropped in the world rankings and the report cites grave concern about the region. The report highlights the assassinations of journalists in the region.  This does not bode well for a nation that just joined NATO and is rushing to enter the EU.

The Croatian government’s verbal attack on the BBC after it broadcast an investigative report called “Croatia Cursed by Crime and Corruption” in April 2009, reveals the nature of the beast. Mr. Sanader’s domestic spin was that BBC’s radio producers were jealous of Croatia’s tourism.

Mr. Sanader’s government and the corruption-ridden HDZ party continue to test the limits. Conflicts of interest, money laundering, fixed public tenders and the embezzlement of public funds have become the most common means of amassing wealth and have led to the unexplained wealth by government cabinet ministers and HDZ politicians. The Croatian taxpayers’ appeal for accountability and “checks and balances” has been ignored by unscrupulous individuals representing the authoritarian regime. These political figures are non-transparent in their dealings and not held accountable for their actions.

The most recent proclamation of golfing as an activity of strategic national interest opens the door for the confiscation of private property. With the lack of protection of property rights in Croatia and a backlog of nearly one million court cases for a nation of four million people, the government’s new scheme will further undermine the protection of property rights.  Tens of thousands of citizens in Croatia have been waiting to have property cases resolved–some cases have been stuck in the system for over 20 years.

This year’s court decision dismissing the restitution/denationalization claim of a legitimate homeowner whose property was illegally seized by Mr. Sanader reveals a troubling trend. It proves that government officials live above the law and that the rights of citizens and taxpayers are discarded.

Croatia’s judiciary is politically influenced. The state-owned media has become a mouthpiece for the government’s propaganda. In light of the recent global economic slowdown, Croatia’s state-owned companies, together with their private cronies which are dominating Croatia’s economy, are the only entities able to maintain their advertising spending and are keen to drive out the few remaining independent media.

Croatia’s Minister of Justice is now asking foreign governments for an additional aid package of 42 million euros to reform the judiciary. In the past decade, U.S. taxpayers invested $500 million into Croatia’s reforms without any proven results.  Now, over 430 million euros from EU member states are making their way to an unaccountable and corrupt state’s treasury. Why should a corrupt Balkan government be rewarded for stalled reforms and silencing independent voices calling for the rule of law and market reforms?

For the sake of safety, human rights and freedom of individuals in Croatia, the authoritarian regime’s assault on democracy, freedom of speech and liberty itself should be raised through official hearings in Congress, EU buildings and NATO’s halls.  American and EU member state taxpayer funds are aiding a corrupt and vile regime.  It is time to starve it and bring it to justice.

- Natasha Srdoc is co-founder and president of the Adriatic Institute for Public Policy, an independent think tank in Croatia. She is also an advisory board member of Balkan Investigative Reporting Network and Balkan  Insight.