Institute for War and Peace Reporting | Giving Voice, Driving Change

Croatia and Serbia Move Closer

Zagreb and Belgrade have a lot to gain by restoring economic ties
By Dragutin Hedl

Croatia and Serbia are cautiously drawing closer together, pushed by Washington and the respective needs of their tattered economies. But the rapprochement has not been welcomed by the vast majority of Serbs and Croats.


Under a US initiative, Croatian president Stipe Mesic met his Yugoslav counterpart Vojislav Kostunica in the Swiss town of Davos in January during the World Economic Forum - their second meeting in the past two months.


Washington is hoping their talks will help to speed up the democratic process in the Balkans, especially in Bosnia, where Americans are keen to see the Croatian and Serbian leadership encourage Croat and Serb minorities to put an end to their separatist ambitions.


At Davos, Kostunica proposed a meeting between Croatian, Bosnian and Yugoslav presidents - Mesic agreed to it.


Mesic, however, will have to proceed cautiously. The majority of Croatians have mixed feelings about establishing closer ties, as the memories of the Yugoslav conflict are still fresh in people's minds.


Indeed, the first meeting between Mesic and Kostunica during the EU summit in Zagreb last November was not well received in Croatia.


On that occasion, Kostunica refused to apologise to Zagreb for the 1991 war. Some say the authorities should have insisted on him doing so before being allowed into the country.


As a result of his talks with Kostunica and his willingness to cooperate with the war crimes tribunal, Mesic's popularity is falling, for the first time since his election.


Yet while these meetings may cause consternation in Croatia and Serbia, they are vital to improving the economies of both countries and resolving many of the problems confronting their citizens - such as visa restrictions and property disputes.


Cooperation between the two states was enhanced when Kostunica and Mesic agreed at Davos to exchange ambassadors. Diplomatic relations had been established during Dayton negotiations, but they were suspended with the outbreak of the Kosovo war.


The two leaders also talked about easing the visa process, which obstructs the development of economic and other relations. Their agreement to aim for the reciprocal abolition of travel permits was strongly backed by economists from both countries..


The economies of Croatia and Serbia have long been interdependent. So much so that before the war the two countries would produce goods jointly.


The Djura Djakovic military factory in Slavonski Brod worked with the Electronic Industry company in Nis to manufacture a tank part which was sold abroad.


The Jugoplastika company in Split made parts for the Yugo car firm Crvena Zastava in Kragujevac.


Jugoplastika was one of biggest chemicals plant in the Balkans but was hit so badly by the loss of its domestic markets after the break up of the old federation, that it is now reduced to making toys. Zastava has fallen on hard times for similar reasons.


Over the last decade, trade practically came to a halt. But now there are signs that commercial ties are being restored.


In Croatia, furniture shops are beginning to stock sofas and armchairs made by the Serbian company Simpo. Car show rooms boast new models of the Yugo - manufactured in Kragujevac - have started to appear, but because of the car's associations advertisers have changed its name to Tempo.


In Serbia, meanwhile, Serb shoppers can now buy their once favourite brands of Croatian sweets and spices.


Trade delegations have been shuttling back and forth between the two countries in an effort to expand economic cooperation. At the beginning of February, for instance, a group from the Zagreb city assembly visited Novi Sad to promote Croatian industry in the area.


There have also been attempts to improve relations in other spheres. In early January, Nenad Canak, president of the Vojvodina assembly, visited the Croatian border town of Ilok to discuss local border problems.


Farmers in the area are particularly affected, as much of their land has been carved up by the countries' shared frontier.


Also last month, a delegation from the Vojvodina municipality of Bac visited Vukovar to finalise a cooperation agreement.


These bilateral meetings at local level were until recently unthinkable.


It is increasingly clear that the normalisation of relations is inevitable. Kostunica and Mesic accept this, but now they must persuade the doubters amongst their citizens to do likewise.


Dragutin Hedl is a regular IWPR contributor