Grabar-Kitarović: The Time Has Come for an Ambitious Croatia

We do not need painful cuts, but those that will alleviate pain. The system must work for citizens and entrepreneurs.

The year ahead is a great challenge, but also a great opportunity in the effort to finally transform Croatian society into all that generations of Croats have hoped for long before we fought for independence.

We are witnessing changes, and the question is only whether we will manage them or they will manage us.
The world is changing, and we can no longer live outside global flows and influences, like an isolated island. Croatia is a member of the European Union and NATO. Regardless of the challenges facing the entire European family, Europe still offers us opportunities that we would not have the strength to generate independently.

We need a stable government.

Economic crises, geopolitical upheavals, trends in relations within the international community in which Croatia has its place and role are becoming increasingly dynamic and harder to predict, containing dangers and risks, but also great opportunities and possibilities. It is crucial not only how we will position ourselves at home but also on the global stage.
Therefore, my messages to the public are frequent that Croatia needs a stable government. Because the biggest challenge for the new government will be to adopt a new budget, which must ensure growth but also demonstrate a policy shift. This is by no means an easy task, but it must be reacted to quickly and decisively if we want to avoid a downgrade in credit rating as early as April next year.

The public debt counter relentlessly counts down the billions. The unemployment rate is still high, and the employment level is low. In seven crisis years, public debt has increased two and a half times. Through spillover effects and the resilience of entrepreneurs, our exports are slowly recovering, but I often warn that it is important to look at the structure of exports because statistics can be misleading. Of course, it is always important to look at the numbers, but it is even more important to care about the quality of life of people. The state exists for its people.

My task, as well as my constitutional obligation, is to ensure the stable, normal, and coordinated functioning of state authority. I will persist in this and will not allow anyone to jeopardize the stability of the state and its democratic order for personal interests.

Stability is also expected by entrepreneurs. Just like the predictability of the system, which will enable increased entrepreneurial activity, domestic and foreign investments, higher employment, and increased exports. We must finally rid ourselves of the legacy of excessive bureaucratic procedures, as well as the pervasive distrust embedded in the very core of almost every institution. The framework of a functioning rule of law needs to be strengthened. The system must work for citizens and for entrepreneurs.

We do not need painful cuts, but cuts that will alleviate pain. Changes are necessary. Within my constitutional powers, I have initiated a significant change – a change in activities in foreign policy. I want to see a more ambitious, self-aware, and assertive Croatian foreign policy. We have been a member of the European Union and NATO for long enough, however, it is evident that there is almost no awareness of this in society and among political elites. We behave almost as if we still expect membership in Euro-Atlantic integrations. We follow instead of leading. We implement instead of participating in shaping policies. We lack vision in this post-accession period. We lack ambition, initiative, creativity, and a bit of courage.

A space of immense possibilities.

Croatia must overcome these growing pains and actively and confidently position itself among European friends. Adhering to the healthiest principle of every great offer, we must use the principles of ancient Roman politics: I give you so that you may give me. There is no healthier principle in international relations and better protection of one’s own interests in the long run.

Therefore, I have initiated the Adriatic – Baltic – Black Sea initiative to connect the north and south of the Central European space, with access to the Black Sea. This is a space of immense possibilities that we can unlock by connecting transport and energy infrastructure, entrepreneurs, scientists, and citizens, through digitalization and strengthening science, research, and innovation. By strengthening political relations, we will bolster our Central European vertical both in its regional dimension and in protecting and promoting common interests within the EU and NATO.

This initiative is one in which everyone wins, or undoubtedly fares better. This has been recognized by all my colleagues within the initiative, as well as the European Union, the United States, and China. This is not a new idea. It has long been contemplated in the grand vision of Prague’s political circles, especially Masaryk. If you will, it dates back to ancient times with the establishment of the so-called amber road. But times have changed.
The vertical is today a natural environment for Croatia within the EU that allows for stronger development of competitiveness, security, and overall economic development. It is an area that, according to many analyses, was one of the strongest regional drivers of global growth before the crisis. Only China (10 percent) and India (5.6 percent) achieved a higher average annual growth than, for example, Central and Eastern Europe (4.8 percent) from 2000 to 2008. During that same period, the entire European Union recorded an average growth of 1.4 percent.

We are coming out of an inverted position.

The countries on the vertical are completely clear about the benefits and the need for cooperation and a joint approach because this is how we will best utilize our common strengths and growth and development opportunities.
By forming this vertical and increasing overall cooperation within it on economic, energy, transport, and security issues, we finally accept our position and take a more active role in the European Union. We are coming out of an inverted position and closing ourselves off, stepping into a much broader environment in which we finally show that today we are no longer just one of the countries sitting at the common table, but at that table, we have our goals that we know how to clearly present and advocate. Together with our partners, we take the initiative and an active role in shaping our and Europe’s future.
At the same time, on the internal front, only a possible consensus on key issues of social development will enable us to take the right steps regarding strategically important issues. With them, we can solidify the current modest growth on much better foundations and then build upon it with economic development that will be long-term and sustainable.

Current growth, as well as the growth rate projected for the next few years, is not sufficient for all the challenges ahead of us. A growth rate of around two percent per year until 2018, at a time when other countries in the region are already growing at an annual rate higher than three percent, is completely insufficient for creating new jobs. If we are just now starting to walk, it will be difficult to catch those who have been running ahead of us for a long time. Setting low goals shows a complete lack of vision, ambition, and even capability. All forecasts have been made based on the assumption that there will be no change in the functioning of the state and the economy. Therefore, I strongly advocate for a more ambitious Croatia, in every sense.

Our goal must be to achieve growth greater than two percent next year so that in three to four years we reach a minimum growth of four percent or more. This rate is necessary for us to be able to control the growth of public debt and to create the conditions for the development of our entrepreneurs and the opening of quality new jobs. Everything contrary to this leads us to regression and lagging behind. I do not want Croatia to be a weak link in the chain.

Croatia must not be just a transit point for trade exchange, but must become a production location. Otherwise, our economy, as before, will be extremely sensitive to all global, regional, and local shocks. I hope no one in Croatia wants to accept such a fate of a walnut shell.
We must prepare the foundations and platform for our entrepreneurs that will enable them a high level of competitiveness and successful competition in the global market. It is necessary to facilitate business both at the level of administration and bureaucracy, as well as at the level of business and labor costs. It is necessary to provide more favorable financing conditions for entrepreneurship with the help of domestic institutions, such as the traditional HBOR, but also new models of financing from the European Union, especially through the ‘Juncker Plan’. If we do not do this, among other things, we will continue to encourage a non-competitive economy and jeopardize exporters, who must be the backbone of our development.

The form of non-ambition and avoidance of responsibility is also evident in the reliance on European structural funds and programs. They are certainly a potential and opportunity for development, but we must not rely solely on them. We must not see them as the key to solutions or salvation for our economy. Structural funds are generators, catalysts, and flywheels, but they are not the solution to all our needs and challenges. If we rely only on non-repayable grants for the development of public and private projects, and do not accept our share of the risk in business ventures along with other forms of financing, these funds will cease to be generators and flywheels and will become just crutches, an unsatisfactory support for a poorly mobile and undynamic economy. The cards are laid out, the opportunities are here for us to seize, and it is up to us to implement them.

Unity, courage, and determination.

The next year must be the beginning of a turnaround because we can hardly afford any other scenario. We must harness all our limited resources to achieve these goals because we can no longer spend on those who do not provide the best, maximum effect.

Therefore, I believe we must focus on initiating the procedure for fiscal consolidation and control of public debt, on encouraging the production of goods and services, thus directly creating new jobs, as well as on strengthening exports.

Now is the moment when quick, decisive, and responsible decisions are needed. Waving our hands, ignoring, not resolving, perhaps even encouraging problems leads us into a crisis that will be long-term, increasingly difficult to resolve, and devastating for our society.

It is time for unity, courage, and determination. For ambition that demands much from all of us. It is time to take our share of the risk in achieving goals. It is time to stop sleeping on the wealth that Croatia offers us and start working on everything we want from ourselves, for ourselves, and for our Croatia.