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'''Privatization in Croatia''' refers to political and economic reforms which resulted in the ] of state-owned assets in ], immediately after the ]. Most privatization took place in the 1990s, during the presidency of ] and the rule of his party ] (HDZ). Some aspects of the privatization process are still seen as controversial as the political and economic turmoil, coupled with the events of the simultaneous ], are thought to have led to a degree of ], which plunged the country into an ] immediately after it declared independence in 1991. '''Privatization in Croatia''' refers to political and economic reforms which include the ] of state-owned assets in ]. Privatization started in the late 1980s under Yugoslav Prime Minister ] and mostly took place in the 1990s after the ], during the presidency of ] and the rule of his party ] (HDZ), and continued in the 2000s with the privatization of large state enterprises. Many aspects of the privatization process are still seen as controversial as the political and economic turmoil, coupled with the events of the simultaneous ], are thought to have led to a degree of ].{{citation needed|date=May 2015}}


== Events == == Early privatization ==
The privatization process in the ] was initiated during the government of Yugoslav Prime Minister ].<ref name=Handbook>Patrick Heenan, Monique Lamontagne: , Routledge, 2014, p. 96</ref> In 1990 he introduced a privatization program, with newly passed federal laws on privatization allowing company management boards to initiate privatization, mainly through internal share-holding schemes, initially not tradeable in the stock exchange.<ref>Milica Uvalic: , Cambridge University Press, 2009, p. 185</ref> This meant that the law put an emphasis on "insider" privatization to company workers and managers, to whom the shares could be offered at a discount. Yugoslav authorities used the term "property transformation" when referring to the process of transforming public ownership into private hands.<ref name=Handbook/>


Separate privatization laws in individual republics soon replaced the federal law.<ref name=Handbook/>{{when|date=May 2015}} ] replaced the federal law on privatization with its own privatization law in April 1991. The new law stipulated compulsory privatization and the elimination of public ownership, while publicly owned enterprises were to be transformed into joint-stock or limited liability companies.<ref name=Bartlett>William Bartlett: , Routledge, 2007, p. 65</ref> These new laws in Croatia and Slovenia were interpreted as tacit nationalization, a tendency of both governments to first re-nationalize public property in order to later proceed with privatization.<ref>Milica Uvalic: , Cambridge University Press, 2009, p. 190</ref>
⚫ At the time Croatia gained independence, its ] (and the whole ]) was in the middle of recession. As a result of the ] that started in 1991, infrastructure sustained massive damage, especially the revenue-rich tourism industry. ] and transformation from a ] to a ] was thus slow and unsteady, largely as a result of public mistrust when many state-owned companies were sold to politically well-connected at below-market prices. With the end of the war, Croatia's economy recovered moderately, but corruption, cronyism, and a general lack of transparency stymied economic reforms and foreign investment. <ref>International Business Publications: , p. 22</ref><ref>Istvan Benczes:, Central European University Press, 2014, p. 203</ref>


⚫ At the time Croatia gained independence, ], as well as the whole ], was in the middle of recession. As a result of the ], infrastructure sustained massive damage, especially the revenue-rich tourism industry. Privatization and transformation from a ] to a ] was thus slow and unsteady.<ref name="books.google.com">International Business Publications: , p. 22</ref>
⚫ Primary methods of privatization in Croatia were ], while secondary methods were vouchers. In 1991 private sector share in GDP was 25% and in employment 22%.<ref>Saul Estrin: ''The Impact of Privatization in Transition Economies'', London School of Economics and Political Science, 2007, p. 18-19</ref> The method of privatization contributed to the increase of state ownership because the unsold shares were transferred to state funds. In 1999 the private sector share in GDP reached 60%, which was significantly lower than in other former socialist countries.<ref>Istvan Benczes:, Central European University Press, 2014, p. 205-206</ref> The government retained 1-30% shareholdings in privatised firms in 33,4% of firms, and above 30% in 7,6% firms, much higher than other countries.<ref>Saul Estrin: ''The Impact of Privatization in Transition Economies'', London School of Economics and Political Science, 2007, p. 20</ref>


== Main events ==
⚫ The privatization of large government-owned companies was practically halted during the war and in the years immediately following the conclusion of peace. As of 2000, roughly 70% of Croatia's major companies were still state-owned, including water, electricity, oil, transportation, telecommunications, and tourism.<ref>, p. 473</ref>
During the rule of the ] (HDZ), Croatia initiated its privatization program in 1992 when companies began arranging sales of shares to their employees. Privatization revenues and two thirds of unsold shares were then transferred to the Development Fund, while the remainder of unsold shares was transferred to the Pension Fund and the Disability Insurance Fund, both controlled by the state.<ref name=Handbook2>Patrick Heenan, Monique Lamontagne: , Routledge, 2014, p. 110</ref> Privatization often involved appointing new managers close to HDZ, or even the party's leading members,<ref>William Bartlett: , Routledge, 2007, p. 18</ref> a trend which discouraged foreign investors.<ref name=Handbook2/> The state also took full ownership of over 100 important large companies and appointed new managers there, who were also often members of the ruling party.<ref name=Bartlett/>

With the end of the war in 1995, Croatia's economy recovered moderately, but corruption, cronyism, and a general lack of transparency stymied economic reforms and foreign investment, accompanied by public distrust when many state-owned companies were sold to politically well-connected people at below-market prices,<ref name="books.google.com"/><ref>Istvan Benczes:, Central European University Press, 2014, p. 203</ref> all of which were common to reforms that took place in most post-communist ].<ref>Saul Estrin: ''The Impact of Privatization in Transition Economies'', London School of Economics and Political Science, 2007, p. 14-15</ref>

⚫ Primary method of privatization in Croatia was ], while the secondary method used was ]. In 1991 the ]'s share of GDP was 25 percent, and its share of employed workforce was 22 percent.<ref>Saul Estrin: ''The Impact of Privatization in Transition Economies'', London School of Economics and Political Science, 2007, p. 18-19</ref> The method of privatization contributed to the increase of state ownership because unsold shares were transferred to state funds. In 1999 the private sector's share in GDP reached 60 percent, which was significantly lower compared to other former socialist countries.<ref>Istvan Benczes:, Central European University Press, 2014, p. 205-206</ref> The government retained 1-30% shareholdings in privatised firms in 33,4% of firms, and above 30% in 7,6% firms, much higher than other countries.<ref>Saul Estrin: ''The Impact of Privatization in Transition Economies'', London School of Economics and Political Science, 2007, p. 20</ref>

In 1995 a Ministry of Privatization was established with Ivan Penić as its first minister.<ref name=Bartlett/> The privatization program was criticized by Croatian economists who characterized it as ]. The ruling party was particularly criticised for transferring enterprises to a group of privileged owners connected to the party.<ref>William Bartlett: , Routledge, 2007, p. 66</ref> Croatian president ] was also a target of critics and allegations of ] and the likelihood that he personally profited. An alleged statement about 200 wealthy families<ref>{{Cite news |title=Croats say 'no' to nationalism |url=https://www.csmonitor.com/2000/0126/p6s1.html |archive-url=https://web.archive.org/web/20220930140150/https://www.csmonitor.com/2000/0126/p6s1.html |archive-date=2022-09-30 |access-date=2024-03-06 |work=Christian Science Monitor |issn=0882-7729}}</ref> that would manage Croatian economy is at times attributed to him,<ref>{{Cite news |last=Gall |first=Carlotta |date=2000-09-03 |title=A Feeble Croatia Is Battling Its Ex-Leaders |url=https://www.nytimes.com/2000/09/03/world/a-feeble-croatia-is-battling-its-ex-leaders.html |archive-url=https://web.archive.org/web/20230605112953/https://www.nytimes.com/2000/09/03/world/a-feeble-croatia-is-battling-its-ex-leaders.html |archive-date=2023-06-05 |access-date=2024-03-06 |work=The New York Times |language=en-US |issn=0362-4331}}</ref> although others note that there is no evidence that Tuđman ever said that.<ref>Roman Domović: </ref>

⚫ The privatization of large government-owned companies was practically halted during the war and in the years immediately following the conclusion of peace. As of 2000, roughly 70 percent of Croatia's major companies were still state-owned, including water, electricity, oil, transportation, telecommunications, and tourism.<ref>, p. 473</ref>


{| class="wikitable" {| class="wikitable"
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|colspan="5" |*<small>Including capital revenues</small> <br>*<small>cumulative, in % of GDP</small> |colspan="5" |*<small>Including capital revenues</small> <br>*<small>cumulative, in % of GDP</small>
|} |}

== In popular culture ==
Croatian documentary series ] (''The Boss'') covers the privatisation and rise of controversial tycoons during the 1990s Croatia.<ref>{{Cite news|url=https://www.vecernji.hr/kultura/privatizacija-za-pocetnike-na-primjeru-miroslava-kutle-1220678|title=Privatizacija za početnike na primjeru Miroslava Kutle|access-date=2018-01-20|language=hr}}</ref><ref>{{Cite web|url=http://www.novilist.hr/Vijesti/Hrvatska/Nastavak-Gazde-Jurican-i-Paparella-rekonstruirali-privatizaciju|title=Nastavak "Gazde": Juričan i Paparella rekonstruirali privatizaciju / Novi list|last=Komunikacije|first=Neomedia|website=www.novilist.hr|date=15 November 2017 |language=hr-HR|access-date=2018-01-20}}</ref>


== See also == == See also ==
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==Further reading== ==Further reading==
* {{hr icon}} * {{in lang|hr}}


{{Croatia topics}} {{Croatia topics}}
{{Europe topic|Privatization in }}


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Privatization in Croatia refers to political and economic reforms which include the privatization of state-owned assets in Croatia. Privatization started in the late 1980s under Yugoslav Prime Minister Ante Marković and mostly took place in the 1990s after the breakup of Yugoslavia, during the presidency of Franjo Tuđman and the rule of his party Croatian Democratic Union (HDZ), and continued in the 2000s with the privatization of large state enterprises. Many aspects of the privatization process are still seen as controversial as the political and economic turmoil, coupled with the events of the simultaneous 1991–95 independence war, are thought to have led to a degree of criminal activity.

Early privatization

The privatization process in the former Yugoslavia was initiated during the government of Yugoslav Prime Minister Ante Marković. In 1990 he introduced a privatization program, with newly passed federal laws on privatization allowing company management boards to initiate privatization, mainly through internal share-holding schemes, initially not tradeable in the stock exchange. This meant that the law put an emphasis on "insider" privatization to company workers and managers, to whom the shares could be offered at a discount. Yugoslav authorities used the term "property transformation" when referring to the process of transforming public ownership into private hands.

Separate privatization laws in individual republics soon replaced the federal law. Republic of Croatia replaced the federal law on privatization with its own privatization law in April 1991. The new law stipulated compulsory privatization and the elimination of public ownership, while publicly owned enterprises were to be transformed into joint-stock or limited liability companies. These new laws in Croatia and Slovenia were interpreted as tacit nationalization, a tendency of both governments to first re-nationalize public property in order to later proceed with privatization.

At the time Croatia gained independence, its economy, as well as the whole Yugoslav economy, was in the middle of recession. As a result of the 1991–95 war, infrastructure sustained massive damage, especially the revenue-rich tourism industry. Privatization and transformation from a planned economy to a market economy was thus slow and unsteady.

Main events

During the rule of the Croatian Democratic Union (HDZ), Croatia initiated its privatization program in 1992 when companies began arranging sales of shares to their employees. Privatization revenues and two thirds of unsold shares were then transferred to the Development Fund, while the remainder of unsold shares was transferred to the Pension Fund and the Disability Insurance Fund, both controlled by the state. Privatization often involved appointing new managers close to HDZ, or even the party's leading members, a trend which discouraged foreign investors. The state also took full ownership of over 100 important large companies and appointed new managers there, who were also often members of the ruling party.

With the end of the war in 1995, Croatia's economy recovered moderately, but corruption, cronyism, and a general lack of transparency stymied economic reforms and foreign investment, accompanied by public distrust when many state-owned companies were sold to politically well-connected people at below-market prices, all of which were common to reforms that took place in most post-communist transition economies.

Primary method of privatization in Croatia was management employee buyouts, while the secondary method used was voucher privatization. In 1991 the private sector's share of GDP was 25 percent, and its share of employed workforce was 22 percent. The method of privatization contributed to the increase of state ownership because unsold shares were transferred to state funds. In 1999 the private sector's share in GDP reached 60 percent, which was significantly lower compared to other former socialist countries. The government retained 1-30% shareholdings in privatised firms in 33,4% of firms, and above 30% in 7,6% firms, much higher than other countries.

In 1995 a Ministry of Privatization was established with Ivan Penić as its first minister. The privatization program was criticized by Croatian economists who characterized it as crony capitalism. The ruling party was particularly criticised for transferring enterprises to a group of privileged owners connected to the party. Croatian president Franjo Tuđman was also a target of critics and allegations of nepotism and the likelihood that he personally profited. An alleged statement about 200 wealthy families that would manage Croatian economy is at times attributed to him, although others note that there is no evidence that Tuđman ever said that.

The privatization of large government-owned companies was practically halted during the war and in the years immediately following the conclusion of peace. As of 2000, roughly 70 percent of Croatia's major companies were still state-owned, including water, electricity, oil, transportation, telecommunications, and tourism.

Year GDP Growth Deficit/Surplus* Debt to GDP Privatization revenues*
1994 5,9% 1,8% 22,20%
1995 6,8% -0,7% 19,30% 0,9%
1996 5,9% -0,4% 28,50% 1,4%
1997 6,6% -1,2% 27,30% 2,0%
1998 1,9% 0,5% 26,20% 3,6%
1999 -0,9% -2,2% 28,50% 8,2%
2000 3,8% -5,0% 34,30% 10,2%
2001 3,4% -3,2% 35,20% 13,5%
2002 5,2% -2,6% 34,80% 15,8%
*Including capital revenues
*cumulative, in % of GDP

In popular culture

Croatian documentary series Gazda (The Boss) covers the privatisation and rise of controversial tycoons during the 1990s Croatia.

See also

References

  1. ^ Patrick Heenan, Monique Lamontagne: Central and Eastern Europe Handbook, Routledge, 2014, p. 96
  2. Milica Uvalic: Investment and Property Rights in Yugoslavia: The Long Transition to a Market Economy, Cambridge University Press, 2009, p. 185
  3. ^ William Bartlett: Europe's Troubled Region: Economic Development, Institutional Reform, and Social Welfare in the Western Balkans, Routledge, 2007, p. 65
  4. Milica Uvalic: Investment and Property Rights in Yugoslavia: The Long Transition to a Market Economy, Cambridge University Press, 2009, p. 190
  5. ^ International Business Publications: Croatia Investment and Trade Laws and Regulations Handbook, p. 22
  6. ^ Patrick Heenan, Monique Lamontagne: Central and Eastern Europe Handbook, Routledge, 2014, p. 110
  7. William Bartlett: Europe's Troubled Region: Economic Development, Institutional Reform, and Social Welfare in the Western Balkans, Routledge, 2007, p. 18
  8. Istvan Benczes:Deficit and Debt in Transition: The Political Economy of Public Finances in Central and Eastern Europe, Central European University Press, 2014, p. 203
  9. Saul Estrin: The Impact of Privatization in Transition Economies, London School of Economics and Political Science, 2007, p. 14-15
  10. Saul Estrin: The Impact of Privatization in Transition Economies, London School of Economics and Political Science, 2007, p. 18-19
  11. Istvan Benczes:Deficit and Debt in Transition: The Political Economy of Public Finances in Central and Eastern Europe, Central European University Press, 2014, p. 205-206
  12. Saul Estrin: The Impact of Privatization in Transition Economies, London School of Economics and Political Science, 2007, p. 20
  13. William Bartlett: Europe's Troubled Region: Economic Development, Institutional Reform, and Social Welfare in the Western Balkans, Routledge, 2007, p. 66
  14. "Croats say 'no' to nationalism". Christian Science Monitor. ISSN 0882-7729. Archived from the original on 2022-09-30. Retrieved 2024-03-06.
  15. Gall, Carlotta (2000-09-03). "A Feeble Croatia Is Battling Its Ex-Leaders". The New York Times. ISSN 0362-4331. Archived from the original on 2023-06-05. Retrieved 2024-03-06.
  16. Roman Domović: Autentičnost sintagme "200 obitelji"
  17. Eastern Europe: An Introduction to the People, Land, and Culture, p. 473
  18. National Accounts Main Aggregates Database
  19. "Privatizacija za početnike na primjeru Miroslava Kutle" (in Croatian). Retrieved 2018-01-20.
  20. Komunikacije, Neomedia (15 November 2017). "Nastavak "Gazde": Juričan i Paparella rekonstruirali privatizaciju / Novi list". www.novilist.hr (in Croatian). Retrieved 2018-01-20.

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