ZAGREB, January 24, 2019 - The government on Wednesday launched changes to the Nomenclature of Territorial Units for Statistics (NUTS 2), dividing Croatia into four statistical non-administrative units which will improve regional aid allocation and ensure better terms for the absorption of European Union cohesion funds.

Another goal is forming as homogeneous regions as possible in terms of development, and the new division will also redress the injustice done in 2012, when less developed parts of the country, notably Slavonia and Baranja, were obstructed in attracting EU funds, said Regional Development and EU Funds Minister Gabrijela Žalac.

The government's decision, under which the country is divided into Pannonian Croatia, North Croatia, Adriatic Croatia and the City of Zagreb, will go into force on 1 January 2023, at the same time as new European regulations, she said, adding that the proposal would be submitted to Eurostat by February 1 this year and that the EU's new financial perspective would be based on the new regulations.

Žalac said that under the current division, the continental region comprises 14 counties and the City of Zagreb and the Adriatic region seven coastal counties.

The counties of the former Pannonian Croatia – five in Slavonia and Bjelovar-Bilogora, Sisak-Moslavina and Karloavac counties – will again make up one statistical region, she said, recalling that these counties were at 40% of the EU development average.

Five counties in north Croatia – Krapina-Zagorje, Varaždin, Međimurje, Zagreb and Koprivnica-Krizevci – make up the third statistical region, while Adriatic Croatia is made up of the seven coastal counties.

The City of Zagreb becomes a separate unit as it has a population of over 800,000 and is the only unit in Croatia whose development is more than 100% above the EU average, and also to prevent its development degree from spilling over to other counties and diminishing their businesses' ability to absorb higher percentages of regional aid.

Prime Minister Andrej Plenković said Bjelovar-Bilogora County would be part of Pannonian Croatia, although the county said they wanted to be part of North Croatia. He said such a decision was in the interest of all those wishing to invest and create jobs in the county.

He noted that Bjelovar-Bilogora was the eighth most undeveloped county and that it would get higher economic aid. He said the county could intensively cooperate on joint European projects with the northern counties.

More news on the Croatia and EU funds can be found in the Business section.

ZAGREB, January 15, 2019 - Prime Minister Andrej Plenković held a meeting on Tuesday with representatives of the associations of Croatian counties, municipalities and cities for the talks on a new subdivision of Croatia for statistical purposes as envisaged by the Nomenclature of Territorial Units for Statistics (NUTS) developed and regulated by the European Union for the purposes of EU funds usage.

Plenković said that his cabinet was open to suggestions and proposals, noting that the existing statistical subdivision of Croatia into two NUTS statistical regions was made in 2012. Many debates have been held since then about whether this division is good or bad.

"We are currently considering new proposals for the statistical subdivision. At the initiative of the Regional Development and the EU Funds Ministry, we have engaged the Institute for Development and International Relations to prepare an expert assessment that can help us in the new circumstances and based on the acquired experience from the past five-six years to make a decision that is supposed to connect the subdivision of regions to the highest extent with the future 20121-2027 financial perspective," said Plenković.

The purpose of today's meeting is to consult county heads who have an insight into the state of affairs and are well acquainted with this topic, he added.

In attendance were a few cabinet ministers and Regional Development and EU Funds Minister Gabrijela Žalac made a presentation on this topic concerning NUTS regions.

More news on the EU funds and Croatia can be found in the Business section.

ZAGREB, January 14, 2019 - Regional Development and EU Funds Minister Gabrijela Žalac said on Monday that 2.9 billion euro was made available in 2018 through 152 tenders for the allocation of European Union funds, whereby 79% of the total 10.7 billion euro has been made available.

Speaking at a press conference, Žalac said the total amount of the tenders advertised had risen to 8.5 billion kuna. She added that in the 2014-18 period tenders were advertised for 5.6 billion euro, 52% of the available allocation.

Žalac said project contracting had risen in this government's term, from 975 million euro at the end of 2016, the beginning of the term, to 6.6 billion euro. She added that 62% of the EU funds allocated had been contracted, a surge of 572%.

At the end of 2018, 1.98 billion euro in EU funds had been disbursed, of which 1.05 billion last year alone. At the end of October 2016, 291 million euro had been paid out, accounting for a surge of 578% until the end of last year.

Žalac said a statement of expenditure worth 1.03 billion euro was forwarded on the last day of 2018 and that 1.83 billion euro had been verified to date. In line with that statement, Žalac expects the European Commission to appropriate the approved funds to the Croatian budget by the end of this month.

As for the N+3 rule, under which a member state has an additional three years to absorb funds after the year in a project was approved, Žalac said all the funds allocated to Croatia for 2015 had been submitted to the European Commission.

She said the contracting rate had increased more than five times and that the goal was to reach at least 85% of the 10.7 billion euro by the end of this year.

Žalac underlined the Slavonia, Baranja and Srijem Project, as part of which grants worth 8.7 billion kuna were contracted last year, 47% of the total 18.75 billion kuna.

She announced changes to statistical regions, saying the aim was to redress the injustice made in 2012 when the City of Zagreb was added to the Continental Croatia region, whereby GDP in undeveloped areas jumped from 39% to 64% overnight.

The minister said the Competitiveness and Cohesion Operational Programme would be amended this year, with a view to transferring funds to finished projects. She said "major underperformance" was recorded in the programme's information and communication technologies and environment and resource efficiency thematic priorities, and that "we are surprisingly poor" in climate change and risk prevention.

Žalac said those funds did not go to waste but would be redirected to the economy and enterprises, adding that Croatia was most successful in the SMEs competitiveness priority.

Asked which beneficiaries had the biggest contracting problems, she said big infrastructure projects in water agglomeration. She added that poor project documentation also affected implementation.

The minister said the EU's draft multiannual framework for 2012-27 envisaged 9.9 billion euro for Croatia, 5.6% less than the current framework for the cohesion policy and 6% less for the common agricultural policy. She said the draft also envisaged increasing national co-financing from 15 to 30% as well as doubling the current pre-financing. She said was this was unacceptable for Croatia and that negotiations at EU level were yet to begin.

More news on the EU funds and Croatia can be found in the Business section.

So far, the Croatian transport sector has contracted 76 projects from EU funds, totalling almost 25.5 billion kuna. Last year was marked by a massive investment boom in the Croatian transport infrastructure, and many key projects were agreed, co-financed mainly from EU funds, reports Večernji List on January 3, 2019.

The most important among them is Pelješac Bridge. A Chinese contractor will complete the 2.08 billion kuna project, and the start of visible works on the bridge is expected soon. Works at the Brajdica container terminal at the Rijeka port worth 270 million kuna have started, as well as the 614 million kuna works on the Zaprešić-Zabok railway line. Last year, Croatia also received EU grants for the construction of the Vinkovci-Vukovar railway line, a project worth 677 million kuna.

In late 2018, 1.23 billion kuna construction works started for the completion of the Istrian motorway system. Last year, the Čiovo Bridge was finally completed and a EU contract to co-finance the DC 403 road from Škurinje to Rijeka port worth 520 million kuna was signed. So far, six projects with a total value of 169 million kuna have been contracted to finance the construction of county ports from EU funds. Last year, the Transport Ministry also announced a 315 million kuna tender for the procurement of public transportation vehicles.

It is expected that Croatia will sign several significant contracts this year as well. The most important among them is the signing of a grant agreement for the reconstruction and construction of the second track of a 44.25-kilometre long section of the Hrvatski Leskovac-Karlovac railroad line. The estimated value of these works is about 2.6 billion kuna, which is more than Pelješac Bridge.

This will continue the reconstruction and modernization of the railway line from Rijeka to the Hungarian border, after the reconstruction of the part of the line from Zagreb to the Hungarian border has already begun. Works on the section of the railway from Dugo Selo to Križevci are already well underway, and this year a contract will be signed, and works will begin on the construction of the second track on the Križevci-state border section. The value of these works is 283.9 million euro, and 85 percent of the cost is co-financed from EU funds.

The railways will again be one of the largest investors in the country this year. It is expected that a contract for works on the upgrade and electrification of the Vinkovci-Vukovar railway line will be signed later this year. The section is 18.71 kilometres long, and the value of works is almost 680 million kuna.

In addition to the railway lines, investments in trains are also expected. The Ministry has announced that it is launching a train project for Croatian Railways Passenger Transport, which plans to purchase a total of 21 trains. These trains would be used for regional and urban-suburban traffic, and the estimated value of the project is 1.3 billion kuna.

This year, works will be completed on the newly-constructed Gradec-Sv. Ivan Žabno section, worth 30.1 million euro, and contracts will be signed for works to upgrade infrastructure at the Rijeka port (Container Terminal Zagreb), worth 31 million euro.

In late 2018, a tender for works on the construction of the first phase of the road project Stobreč-Dugi Rat-Omiš was announced, and the start of these works worth 250 million kuna is expected this year. The construction of the Sava bridge at Gradiška will also start, with an estimated value of 221 million kuna. This year, the construction of the access roads to the Pelješac Bridge will begin. The Croatian Motorways will complete the construction of the Svilaj Bridge and will start the works on the Beli Manastir-Halasica Bridge section of the Beli Manastir-Osijek motorway.

More news on Croatia and the EU funds can be found in our Business section.

Translated from Večernji List (reported by Josip Bohutinski).

ZAGREB, December 20, 2018 - The European Commission on Thursday decided to make available an additional 305 million euro in emergency assistance to support migration and border management in Greece, Italy, Cyprus and Croatia, and Croatia will receive 6.8 million euro of the amount.

"The Commission is awarding 6.8 million euro to Croatia to help reinforce border management at the EU's external borders, in full respect of EU rules," the Commission stated in a press release.

"The funding will help strengthen border surveillance and law enforcement capacity by covering the operational costs of 10 border police stations through the provision of the daily allowances, over-time compensation and equipment. A monitoring mechanism will be put in place to ensure that all measures applied at the EU external borders are proportionate and are in full compliance with fundamental rights and EU asylum laws.

"Today's award brings the overall emergency funding for migration and border management allocated to Croatia by the Commission to almost 23.2 million euro. This comes on top of nearly 108 million euro allocated to Croatia under the national programmes of the Asylum Migration and Integration Fund and the Internal Security Fund 2014-2020," reads the press release.

The total funding will support efforts to increase reception capacity, protect victims of human trafficking and strengthen border surveillance and management capacity, and Greece is given 289 million euro for the following purposes: rental accommodation and allowances (190 million euro), reception conditions (61 million euro), search and rescue (33 million euro) plus 357,000 euro to provide blankets, winter jackets and winterisation kits.

The Commission is awarding 5.3 million euro in emergency funding to the Italian authorities to help protect victims of human trafficking in the context of migration.

The European Commission is awarding 3.1 million euro to Cyprus to step up its reception capacity and transform the temporary emergency centre "Pournaras" into a fully-fledged first reception centre.

More news on Croatia’s migrant policies can be found in our Politics section.

ZAGREB, December 14, 2018 - During ongoing negotiations on the new multiannual financial framework for the 2021-2027 period, Croatia wants the EU budget to take account of its particularities as the newest member state so that the European project would not be perceived in Croatia as a brain drain destination but as a strong lever to boost economic growth and living standards.

"There is one aspect of membership, and that is free movement of people, which gives the impression that the EU is literally a space for brain drain, in addition to the otherwise big demographic problem. So, in order to avoid the European Union being perceived as a space for brain drain, we need a strong, quick and concrete injection of investment from the European budget to raise the level of development, living standards and GDP growth," Plenković told reporters before the start of the second day of the EU summit in Brussels.

On the first day of the summit on Thursday, EU leaders discussed the proposed multiannual financial framework for 2021-2027. The European Commission had unveiled the document in May, proposing a larger budget for 27 member states than the present one which includes the United Kingdom, a net annual contributor of about 12 to 14 billion euro.

In addition to the budget hole that will be left by the UK's departure from the EU next year, new needs have arisen that require more funding from the EU budget, such as migration, common defence and protection of the external borders. That's why the Commission proposed higher contributions from member states and cuts in funding for individual policies, for example a 10 percent cut for cohesion policy and a 15 percent cut for the common agricultural policy.

While wealthier member states are opposed to increasing national contributions into the European budget and are in favour of cuts in cohesion funding, poorer members take the opposite view - they have nothing against higher national contributions, but are against reducing funding for cohesion and agriculture.

"Yesterday I elaborated to my colleagues that in our case absorption of EU funding is going well, but not fast enough to be felt in increased growth," Plenković said. He noted that Croatia had been an EU member only five years, and that the share of EU funding in investment in member states was about 8.5 percent on average, while in Croatia it was 80 percent. "That's why this funding is crucial to us."

Plenković said that all this year his government had been involved in contacts with the European Commission and other institutions to ensure that, despite the proposed cuts for cohesion and agriculture policies, Croatia received roughly the same amounts for the two policies from the next budget as it had under the present budget.

"We said that account needs to be taken of Croatia's particularities, that it is the newest member state, that it has been using EU funding only for five years, and I think we are getting sympathy," the prime minister said.

He also advocated for Croatia to be granted a longer time frame for using EU funding and for the N+3 rule to be kept in place in Croatia's case, under which funding can be absorbed three years after the conclusion of given contracts. The Commission proposed that this rule be changed to N+2 in the next multiannual financial framework.

Plenković said it was not true that Croatia had the lowest growth among new member states. "That's not true, the point is that we have sound growth. ... Previously, growth was generated by borrowing, while we are implementing fiscal consolidation and have healthy growth. That's the point of this growth of 2.9 percent that we have."

More news on Croatia’s use of EU funds can be found in our Politics section.

December 1, 2018 — Being a member of the world’s largest trading bloc has benefits, including nearly EUR 11 billion allocated for Croatia’s EU funds. If only the country actually used it.

Croatia has so far won approval on EUR 6.3 billion-worth of projects through Nov. 15, 2018, yet only 15 percent of those funds were actually doled out, well below the 23 percent EU average. Only Malta is worse, with 12 percent.

Croatia unlocked 59 percent of available EU funds since 2014, with only two years left to withdraw the remainder, according to the latest report on European Structural and Investment Funds.

The bloc’s governing body and Croatia’s government can’t agree on how to interpret the results. Minister Gabriela Žalac of the Ministry of Regional Development and EU Funds said she’s satisfied with the results, after a poor start from 2014 — 2016.

The European Commission called the results “unsatisfactory,” according to Poslovni Dnevnik. The lackluster absorption of EU funding has been a black eye for successive governments.

A recent conference on EU funds concluded Croatian authorities need to better education about EU funds in order to provide full technical support for applicants, helping them prep projects and absorb funds.

The Operational Program for Competitiveness and Cohesion withdrew the most funds, with 62 percent, while the Operational Program for Maritime and Fisheries garnered the least.

The EU funds aim to close the gap between the EU’s poorer and member nation.

So far, Croatia has used EU funds to bolster a number of projects, including craft beer, about HRK 120 million of Split’s overall budget, and most-notably the Peljesac Bridge.

For more on Croatia and the EU, check our dedicated page.

ZAGREB, December 1, 2018 - Croatia is opposed to the European Commission's changes in EU funds regulations. One of them is that the programming of investments financed with EU funds in the Multiannual Financial Framework (MFF) for the period 2021-2027 is done only for the first five years, while decisions on investments for the last two years would be made after a mid-term review, Croatian Regional Development and EU Funds Minister Gabrijela Žalac said in Brussels on Friday.

"The Commission is in favour of discussing implementation effects after five years of the new financial perspective, and only then deciding how much funds will or won't be allocated for the remaining two years. We consider that proposal absolutely unacceptable," said Žalac.

"We want a seven-year period with concrete allocations so that we can know precisely how to plan and prepare programmes," said the minister who attended a meeting of the General Affairs Council which discussed the cohesion policy for the next seven-year period.

Regional Policy Commissioner Corina Cretu said the proposed shortening of the programming period was due to the need for flexibility. She said that previous experience showed that the current framework was not ideal because it was impossible to predict every new challenge and need.

The EC proposal is supported by the richer countries, net contributors, while those that receive more money from the EU budget than they pay oppose it. "For the past two years, the Council has been discussing simplification of rules and procedures for project implementation. I believe that this proposal is contrary to that. I think this is an attempt by net contributors to the EU budget to exert pressure on undeveloped countries, net recipients," said Žalac.

The EC has said that during a review in 2025 it will take into account changes in the socio-economic situation, new challenges identified in the context of the European Semester and the programme success achieved.

With certain restrictions, funds within one programme can be transferred from one investment priority to another without the Commission's official approval, the EC says in its proposal.

Žalac reiterated Croatia's position on the Multiannual Financial Framework proposal which the EC published in early May. Croatia shares that position with all countries that are members of an informal group called "Friends of Cohesion", which held a meeting in Bratislava on Thursday.

Croatia cannot accept cuts in cohesion funds. In the next MFF, Croatia is expected to get 5.6% less funds than in the current multiannual framework.

The country is also against an increase in national co-financing from 15% to 30%, as well as against the shortening of the deadline for the implementation of projects from three to two years.

Croatia also cannot accept a reduction in project pre-financing, i.e. advance payments.

When it published its proposal, the EC called on member-countries to reach agreement on the matter by the end of the term of the current European Parliament, that is, by the spring of 2019, but now it is almost certain that that will not be possible and that a decision will be made after elections for the European Parliament.

The Multiannual Financial Framework proposal has already been discussed two times at the ministerial level, and heads of state or government will discuss it for the first time at the next EU summit on December 13-14.

For more on Croatia and the EU funds, click here.

ZAGREB, November 29, 2018 - For Croatia and other Friends of Cohesion countries, it is important that the new EU multiannual budget for 2021-2027 provides sufficient funding to continue developing thanks to their membership in the Union, Prime Minister Andrej Plenković said in Bratislava on Thursday, adding also that it mustn't be forgotten that Croatia is the youngest EU member and that it needs more time to catch up with other countries.

The Friends of Cohesion, an informal group of EU member states that are opposed to cohesion funds being reduced in the new multiannual budget, met in Bratislava on Thursday to once again ask that funding not be reduced for poorer countries that need to be assisted in coming closer to more developed and wealthier countries.

The new multiannual budget foresees a 6% cut in cohesion funds and a reduction of funding for the Common Agriculture Policy (CAP). Croatia estimates that it would be entitled to 5.6% less money from cohesion funds.

The group was united in their stance and adopted a joint declaration setting out their priorities. "Today's meeting of the Friends of Cohesion is an important message ahead of the European Council. Cohesion policy and CAP mean a lot to our countries for reducing inequalities in society, for a better and more balanced regional development, and for catching up with old EU member states," Plenković said after the meeting.

The joint declaration comes two weeks ahead of the EU summit in Brussels that will discuss the new multiannual EU budget. "The messages in the declaration are good for all the countries here today and for Croatia in particular," Plenković said.

The declaration notes that the cohesion policy and common agricultural policy have to remain at the 2014-2020 budget level. Sufficient funding is required for real convergence, growth, jobs, investments and competitiveness within the Union and the Union on the global market, and at the same time for the fight against inequalities within and between member states.

Apart from needing to catch up with old and wealthier EU member states, Croatia also needs to catch up new members. "The thing that I have in particular underscored is that Croatia, compared to other members of the Cohesion group, is the youngest EU member state with only five years of membership. We need at least two financial perspectives to catch up with other members in Central and Eastern Europe," Plenković said.

"It is important that the new budget framework provides sufficient funding for new members to continue developing thanks to their membership of the European Union," he added.

"The European budget has to secure sufficient funding for security and defence, the fight against terrorism, climate change, sustainable transport, research and development, digitisation, migration, and to strengthen Europe's external activities," Plenković concluded.

As far as negotiations on the new financial perspective are concerned, Plenković is sceptical that they can be completed by the European parliamentary election next year.

For more on Croatia and the EU, click here.

ZAGREB, November 29, 2018 - The Friends of Cohesion meeting in Bratislava is a good opportunity to reiterate the importance of balanced regional development of all European Union member states and the need to reduce the inequalities between them, Croatian Prime Minister Andrej Plenković said on Thursday.

The meeting organised by Slovak Prime Minister Peter Pellegrini is a good opportunity for all member states, mainly those in Eastern Europe, but also founders such as Italy, to which it is important that the south continue to develop, to underline again the importance of balanced regional development of all member states, of reducing inequalities, and the significance of convergence in terms of economic growth, development and everything the European cohesion policy gives us as added value, Plenković told Croatian reporters covering his visit ahead of the meeting.

Representatives of the 16 EU member states which comprise the Friends of Cohesion group met today to make the political statement that they are against slashing cohesion funds in the EU's new multiannual budget intended for reducing differences between richer and poorer member states.

Our messages today will be that in the 2021-27 financial perspective those funds should be the real impetus for economic growth and development at national level, said Plenković. He was accompanied by Croatian Regional Development and EU Funds Minister Gabrijela Žalac.

In order to maintain a sufficient level of cohesion policy funds, the Friends of Cohesion countries must act together, Pellegrini said ahead of the meeting also attended by the prime ministers of the Czech Republic, Estonia, Hungary, Malta, Poland, Slovenia and Slovakia as well as senior representatives of Bulgaria, Cyprus, Latvia, Lithuania, Romania, Italy, Portugal and Greece.

The 2021-27 multiannual financial framework which the European Commission proposed in May envisages less funds for the cohesion policy and agriculture than the current one. Under the proposal, Croatia would get 6% less funds.

Speaking of the 2021-27 framework, Plenković said its context was tied to two key elements, "a Union without the United Kingdom, one of the big contributors," and the question of "how to prevent with the Union's development policy the big problem of migration." He underlined the importance of the EU's awareness of the need to bolster the security policy, the external dimension and internal security.

Pellegrini said the Friends of Cohesion would sign a joint declaration at the end of the meeting to say that the new European budget must ensure sufficient funds to deal with new challenges such as security, defence, climate change and migration.

For more on Croatia’s use of EU funds, click here.