ZAGREB, March 7, 2019 - During talks with European Council President Donald Tusk and European Commission President Jean-Claude Juncker on Thursday in Brussels, Croatian President Kolinda Grabar-Kitarović suggested that cohesion funds shouldn't be decreased in the next European budget.

"There was talk about the situation in Croatia but also about the multi-annual financial arrangement considering the current negotiations about that. Croatia has its interest concerning the efforts to retain funding for classic policies such as the Joint Agriculture Policy and Cohesion Policy," Grabar- Kitarović told reporters after meeting with the heads of European institutions.

The European Commission proposes the 10-percent reduction of funds in the next EU budget for the cohesion policy that is intended to decrease the difference in development of regions in the EU.

Grabar- Kitarović underscored that that it would be detrimental to Croatia if the national share in projects that are co-funded from EU funds were to be increased.

That would be detrimental, particularly in some areas that even with the current prescribed percentage (15%) cannot co-finance projects, the president said.

In its draft multi-annual financial framework for the period 2021 to 2027, the European Commission has proposed that the national share in co-financing projects be increased from the current 15% to 30%. Most member states in central and eastern Europe have voiced their objections to that proposal.

The Croatian head of state also discussed the Three Seas Initiative with the EU officials. "Both presidents offer full support, particularly for projects because the initiative is directed to cohesion of European space and promoting European ideas and values," she said.

During the talks with Juncker, Grabar- Kitarović discussed the coming EU-China summit scheduled for April 9 considering the fact of China's growing presence in Europe.

Asked whether there was any mention of the arbitration for the Slovenia-Croatia border row, the president said that they touched on that topic and that she expressed her dissatisfaction to Juncker about some statements made by some members of the Commission in that regard.

"I told President Juncker that some opinions and some statements coming from the Commission and some of its members are not directed at achieving a bilateral agreement between Slovenia and Croatia," Grabar - Kitarović said calling for the refraining from statements like that. "I am not referring to him (Juncker) personally but to some others," she said.

There was also talk on enlargement and the situation in Bosnia and Herzegovina. "Croatia advocates the policy of enlargement, based on absolute fulfilment of all the criteria," she said.

As far as Bosnia and Herzegovina is concerned, she said that she has more understanding for endeavours to change the electoral law.

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

ZAGREB, March 5, 2019 - European Commissioner for Regional Policy Corina Cretu said in Dubrovnik on Tuesday that there is no danger for future EU projects in Croatia that would be financed from the Cohesion Fund following a reduction of budget funds, and Croatia's minister responsible for European funds, Grabrijela Žalac, said that Croatia had some objections to the European Commission's proposed budget for the period 2021-2027.

A ministerial conference of the group of "Friends of Cohesion - Cohesion Policy and Structural Reforms Post 2020", organised by the Ministry of Regional Development and European Union Funds, was held in Dubrovnik on Tuesday, with Žalac and Cretu attending.

Cretu said that the EC has proposed a reduction of 10% in funds for cohesion policy and that a total of 373 billion euro has been secured, which is more than ever.

There is no danger for future projects in Croatia due to the reduced funds. We will begin negotiations in March with all member states on their operational programmes. The Croatian government and regions have to prepare a strategy based on the funding they have available and the rate of co-financing, Cretu said.

Žalac said that Croatia, as the newest EU member state, is a recipient of European funds and that it has some objections to the European Commission's proposed multi-annual budget 2021-2027, which will increase the rate of co-financing from 15% to 30% while reducing the rate of pre-financing, and the deadline to implement projects will be reduced from three to two years.

"We want to discuss that in detail with EC representatives, particularly with the Directorate-General for Budget. Everyone should not be treated equally considering that Croatia only started to use the benefits of the cohesion policy two years ago and only now are the effects of that visible in the field. By the end of the year we need to adopt all the necessary regulations for the new financial perspective, and our EU presidency will be marked by the adoption of the European budget, Žalac said.

Last May the EC presented its proposal for the multi-annual budget for the period 2021-2027, which is larger than the present budget but foresees lower amounts for cohesion policy and agriculture. According to the proposal, Croatia would receive about 6% less than in the current multi-annual budget.

The purpose of the Dubrovnik conference, which brought together ministers and state-secretaries for regional development and EU funds of EU member states, was to exchange opinions on connections between cohesion policies and structural reforms in the period after 2020 and to find answers to key issues related to cohesion policy and the proposed multi-annual financial framework for the period following 2020.

The "Friends of Cohesion" group consists of 16 EU member states opposed to cut backs in cohesion funding in the new EU multi-annual budget, which is supposed to reduce the gap between wealthier and poorer EU countries. The group is made up of Croatia, Czech Republic, Estonia, Hungary, Malta, Poland, Slovenia, Slovakia, Bulgaria, Cyprus, Latvia, Lithuania, Romania, Italy, Portugal and Greece.

Cretu said that the conference discussed the future of the cohesion policy, what is important for Croatia, which has EUR 9.9 billion at its disposal for the 2021-2027 period, but also for Europe overall.

I recalled three key points in the EC's proposal through a simple and pragmatic approach. Above all, a more modern policy that focuses on the transition toward a 'smart economy' and a low-carbon economy and so the cohesion policy has to pass through all European regions preparing for that transition. We need an effective policy that requires public policy that will stimulate investment and innovation and an efficient administration, Cretu said.

She added that the cohesion policy should be simplified particularly with regard to the implementation of projects, and in that regard the European Commission proposes 80 various measures.

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

ZAGREB, February 28, 2019 - Prime Minister Andrej Plenković said on Thursday that in line with a report by the European Commission of Wednesday, his government would step up preparations for the introduction of euro as the official currency because, among other things, it would contribute to Croatia's long-term sustainable economic growth.

Addressing the second session of the National Council to introduce the euro as the official currency in Croatia, Plenković said that accession to the euro area was one of the government's political goals and recalled that by signing the accession treaty with the EU, Croatia had very clearly assumed that obligation.

He said that the government's commitment to structural reforms was confirmed in yesterday's report by the European Commission, which states that Croatia has economic imbalances but no longer excessive ones.

"... We will step up preparations for the introduction of the euro... because we believe that it will contribute to Croatia's long-term sustainable growth, owing to stronger integration with the single EU market in all economic sectors and better coordination of economic policies with other euro area countries," said Plenković.

He said that the EC's report very clearly confirmed progress on four recommendations given last year, stressing that Croatia had never before experienced such progress.

The PM noted that based on the EC's assessment, Croatia was the only country to enter a higher category of member-countries, exiting the excessive macroeconomic imbalances procedure in which it had been since 2014.

Plenković said that the introduction of the euro meant that in a few years' time households and companies would be using the benefits of the world's second most important currency, which would additionally strengthen the economy and the financial system, and enhance citizens' financial security and investor confidence.

Consequently, we can expect higher living standards as was the case with other Central European countries after they introduced the euro, he said.

Plenković said that by joining the euro area and the Schengen area of passport-free travel Croatia would complete the process of its full integration with and affirmation in the EU.

Plenković claimed that the kuna-to-euro conversion would have a mild and one-off impact on consumer price growth as indicated by the experience of other member-countries where prices increased by a mere 0.23% on average.

He said that the government would define measures to follow the process of conversion, including mandatory pricing in both kuna and euros to prevent abuse such as price rounding up and unjustified price growth.

"In the past 14 years prices in the euro area have grown much less than in Croatia, and in the same period gross average salaries in the Central European countries that have introduced the euro have grown faster than in Croatia. Therefore, vocal slogans that we will get European prices and retain Croatian salaries are not true," said Plenković.

The head of the MHS trade union, Vilim Ribić, said ahead of today's meeting that he was in favour of introducing the euro but not at present. There is no need to rush the introduction of the euro because there is no efficient currency that is to the benefit of all EU countries, he said.

The president of the Croatian Employers' Association (HUP), Gordana Deranja, said that the introduction of the euro would be a major advantage for exporters as well as those with loans tied to the euro. She also said that in the context of the current appreciation of the kuna, the introduction of the euro would be good also for the tourism sector as tourists would get real value for their money.

More news about the introduction of the euro can be found in the Business section.

ZAGREB, February 28, 2019 - The parliamentary European Affairs Committee on Wednesday supported, by a majority vote and one vote against, MEP Ivana Maletić's (HDZ) candidacy for a member of the European Court of Auditors in the period from 2019 to 2025, with Maletić saying that she would freeze her membership in the Croatian Democratic Union (HDZ) for that period.

The only vote against was cast by independent MP Marin Škibola, who asked Maletić whether it was fair that she be appointed by "political decree without any selection process or test of her competence."

Maletić has been nominated by the government and parliament has to confirm that decision.

Maletić will be interviewed by the European Parliament and has to obtain approval from the European Council.

Speaking to the press, Maletić said that this was "an important step forward" in her professional career.

The Court of Auditors deals with financial audits, efficiency and compliance audits, special reports, such as reports on the new multi-annual financial framework, and regulations on EU funds, she said.

Maletić denied that she was in fact nominated due to inter-party disputes with Andrej Plenković and was in fact being marginalised by the party.

She added that when she took up the new position, she would freeze her membership in the HDZ.

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

ZAGREB, February 27, 2019 - Croatia, which was identified with excessive imbalances in 2018, is found to be experiencing imbalances now, according to the conclusions which the European Commission made in its European Semester Winter Package in which Brussels assesses member states' progress on economic and social priorities.

The European Semester was introduced as a tool to coordinate economic policies so as to fend off future crises.

In 2014, the EC established that Croatia was in the category of countries in excessive deficit procedure, and Zagreb managed to leave that procedure in 2017.

The latest report underscores that Croatia is found to be experiencing imbalances. "Economic developments have been contributing to a gradual correction of existing imbalances, notably those related to high stocks of public, private and external debt, and in that way leading to a reduction of risks," the report says.

"Policy action and commitments that would help a sustainable correction of imbalances have been stepped up recently, and their full, swift and effective implementation will be crucial," reads the Croatia section.

The EC warns that remaining vulnerabilities are linked to high levels of public, private and external debt in a context of low potential growth. However, they have been narrowing over the past years, which is was supported by robust nominal growth, above estimated potential.

"The negative net external position remains large, but has been improving due to continued current account surpluses," the Commission says.

"Private sector deleveraging is ongoing, though its pace is set to abate as credit growth and investment recover. The budget balance has been in surplus since 2017 and public debt has declined notably since its 2014 peak," the Commission says, praising "a prudent fiscal policy."

"The financial sector is well-capitalised and profitable while non-performing loans, although declining, remain elevated.

"The foreign currency exposure of corporations and households has reduced, but remains a vulnerability. Policy action has been stepped up with the adoption of a pension reform and new legislation to improve the fiscal framework. Other relevant policy measures are in the pipeline and their thorough implementation remains crucial for strengthening the resilience of the economy," the Commission says.

In its latest document, the EC says that apart from Croatia, another nine member-states are experiences imbalances: Bulgaria, France, Germany, Ireland, Romania, the Netherlands, Portugal, Spain and Sweden.

Three countries -- Cyprus, Greece and Italy -- are found to have excessive imbalances.

More news about Croatia economy can be found in the Business section.

ZAGREB, February 26, 2019 - Croatian National Bank (HNB) Governor Boris Vujčić announced on Monday that a letter of intent for ERM membership (European Exchange Rate Mechanism II) was expected to be sent "some time in the second quarter of this year."

Responding to questions to the press after delivering a lecture on Croatia's prospects of entering the euro area at the Croatian Academy of Sciences and Arts (HAZU), Vujčić said that the letter would certainly not be sent by the end of this month and would most likely be sent "some time in the second quarter".

"In any case, first there will be a report from the European Commission, then we will continue consultations with our partners - the European Central Bank, the Commission and the Eurogroup, and after that we will decide on an exact date," Vujčić said, adding that he hoped Croatia would soon get out of the excessive imbalance procedure, on which the Commission is soon to release a report.

Asked if Croatia could be expected to join the exchange rate mechanism in 2020, the governor said this was a tentative time frame, but he would not speculate about an exact date.

Vujčić said that Croatia "de facto" meets all five nominal convergence criteria, while "de iure" it does not meet one relating to exchange rate stability. He said that the exchange rate stability requirement can be met only within the exchange rate mechanism, and that this is the first key step for entering the mechanism.

On the other hand, there is a range of indicators relating to excessive macroeconomic imbalances, such as public debt, external debt, unemployment rates and labour market participation. "Here we stand much better than we did five years ago because external imbalances have been reduced as a result of the decline in public debt, which right now is three times faster than that required by the EU procedures."

More news on the introduction of euro in Croatia can be found in the Business section.

ZAGREB, February 26, 2019 - The proportion of Croatian citizens with a positive image of the European Union has grown over the past year, and Croatians consider freedom of movement to be the EU's greatest achievement, shows a Eurobarometer survey published on Monday.

Thirty-nine percent (39%) of Croatians have an entirely positive image of the EU, an increase of eight percentage points over a period of one year, 42% have a neutral image and 18% a negative image.

Seventy-three percent (73%) of Croatians believe that freedom of movement for people, goods and services is the EU's biggest achievement, followed by peace among member-countries and the EU's economic power.

The autumn Eurobarometer survey covered the 28 member countries, five candidate countries and the Turkish community in Cyprus.

The survey included 1,011 Croatians aged above 15.

Asked what the EU meant to them personally, 55% of Croatian respondents cited freedom of movement, work and study in the EU, 29% cited economic progress, and 28% cultural diversity.

Forty-three percent (43%) of Croatians believe unemployment is the biggest problem the country is faced with, 9% less than in the previous survey. Unemployment is followed by the economic situation in the country (28%) and inflation (27%). EU-wide, unemployment is cited as the biggest problem by one in four respondents, followed by price growth and immigration.

Asked about the biggest problems the EU was currently faced with, 48% of Croatians said immigration, followed by terrorism (32%) and the state of public finance in the member-countries (19%).

Support for EU enlargement in Croatia has increased to 61% while most Croatians (56%) are against the introduction of the euro.

As for confidence in the media, Croatian and European respondents trust radio and television the most (each 50%), while trust in the internet and social networks is declining.

Three in five Croatians believe they are poorly informed about European issues even though the number of those who consider themselves well informed is eight percentage points higher than last year, at 41%.

Croatians continue to be dissatisfied with the country's judiciary and political system.

More than two-thirds of Croatians do not trust the judiciary. Trust in police has grown (58%) while trust in the army has declined from 79% to 68%.

There are still more Croatians who prefer the left side of the political spectrum than those who consider themselves rightwing, however, the difference in their number has dropped over the past year from eight to only two percentage points, which is also probably owing to conflicts in the Social Democratic Party (SDP).

 More news about Croatia and the European Union can be found in the Politics section.

ZAGREB, February 24, 2019 - Commissioner for Competition Margrethe Vestager has been voted the best member of Jean-Claude Juncker's European Commission, according to the results of a survey by public affairs firm Burson Cohn & Wolfe (BCW), prepared in collaboration with EURACTIV. Croatian EU commissioner Neven Mimica is second to last.

The results were presented in Brussels earlier in the week. The online survey was conducted between October 9 and December 3 last year among 1,769 persons. Most respondents were residents in Belgium (38.5%), the UK (10.2%), and Germany (5.6%). Many respondents were business people, EU staff, media, NGOs and national governments.

Respondents gave their verdict on the performance of each individual commissioner, ranking them from 0 to 10.

With an approval rating of 50.2%, Vestager of Denmark was the only commissioner to achieve a score above 50%. The Commission's average approval rate was 46%.

EU foreign affairs chief Federica Mogherini (49.6%) came second, followed by Commission First Vice-President Frans Timmermans (46.9%), and EU trade Commissioner Cecilia Malmström (44.7%).

At the bottom of the scale is Tibor Navrascics, the EU’s education Commissioner from Hungary, who was credited with an approval rating of only 19%, just behind Croatia’s Neven Mimica, the EU’s development aid Commissioner, with 20.6%.

The report says that Mimica "has aligned development policy with the UN’s Sustainable Development Agenda, taking account of environmental and social factors. He has prepared the planned merger of 12 development funding streams into one, the €89.2 billion Neighbourhood, Development and International Cooperation Instrument. Last year, he helped launch formal talks on the EU’s relationship with 79 African, Caribbean and Pacific (ACP) states after 2020. In the wake of the 2015 migration crisis, he adapted budget plans to include measures 'addressing the root causes of irregular migration', attracting criticism that he was diverting money for anti-poverty programmes – this may have been a factor as to why he came second last in the Scoreboard."

With 20% of votes, Vestager was also the clear favourite to become the chief of the EU executive, followed by Finland’s former Prime Minister Alexander Stubb (7%), Timmermans (6%) and Barnier (5%).

More news on Croatia and the European Union can be found in the Politics section.

ZAGREB, February 23, 2019 - Croatian Minister of Foreign and European Affairs Marija Pejčinović Burić attended a meeting of EU foreign ministers on Friday which expressed concern about the current global trade crisis and support to protect the values of the multilateral trade system, the ministry said in a statement.

The informal meeting of the Foreign Affairs Council was held in Bucharest as part of the Romanian presidency of the European Union. The main issues discussed were the modernisation of the World Trade Organisation (WTO) and trade relations between the European Union and the United States of America.

The ministers expressed concern about the current crisis in global trade relations and about challenges faced by the WTO. They supported the European Commission's initiatives aimed at preserving the values of the multilateral trade system, the statement said.

Also discussed was the current state of EU-US trade relations and the intention to initiate negotiations to ease the present tensions in trade caused by the introduction of protectionist measures.

Reuters news agency said that EU ministers were aware that US President Donald Trump might impose punitive tariffs on EU car imports if they waited too long with their decision.

"Diplomats say Germany, whose exports of cars and parts to the United States are worth more than half the EU total, wants to press ahead. But France, with very few U.S. car exports, is reluctant to move before the European Parliament election in May, convinced that dealing with Trump is not a vote winner," Reuters said.

The European Commission informed the ministers of the state of trade talks with Mexico, the South American trade bloc Mercosur, Australia, New Zealand, China, Chile and Indonesia, the Croatian ministry said in its statement.

More news on Croatia and the European Union can be found in the Politics section.

ZAGREB, February 22, 2019 - European Justice Commissioner Vera Jourova said in Zagreb on Friday that citizens' trust in the judiciary would not grow without court autonomy and that that the trust was undermined by excessively long trials in Croatia.

On the second day of her visit to Zagreb, Jourova addressed an international conference on the EU as a global leader in the rule of law, saying said that the rule of law and court autonomy were pillars of the European Union.

A functioning judiciary at the national as well as the European level makes citizens trust the judiciary, Jourova said at the conference, recalling some of the main complaints of Croatian citizens.

Croatians do not trust judicial institutions because trials take too long, she warned, adding that court autonomy was a precondition for restoring citizens' trust. Degradation of the judiciary takes a country further from democracy, she said. The public is not aware that degradation of the judiciary leads to a totalitarian regime, she said.

The Zagreb conference was held on the occasion of the establishment of the Jean Monnet Centre of Excellence and was organised by the Zagreb School of Law and the European Commission Representation in Croatia.

In a dialogue with citizens, Jourova warned about differences in the perception of the rule of law among EU countries.

EU countries are different in their interpretation of the rule of law due to cultural and other reasons, she said.

Dialogues with citizens are a direct form of two-way communication between EU citizens and European Commission officials on a wide range of topics. They have been held throughout Europe since 2013.

Once a year the EC publishes an overview of the situation in the judiciary. The overview covers mainly civil and commercial cases as well as administrative proceedings, with focus on the three main elements of a functioning judiciary - efficiency, quality and autonomy.

More news on the justice system in Croatia can be found in the Politics section.