Croatian Right Revival Fears

As far as pension schemes go Bosko Maric has it good, by Croatian standards. But the 77-year-old's monthly income barely allows him to support a wife, daughter and two grand-daughters. This, despite earning more than twice the 150 US dollars a month doled out to most retirees.

Bosko gets more because he used to be a high-ranking officer in the Yugoslav People's Army, JNA. Still, life used to be better. Back in early Seventies, he says, he could have bought 1350 litres of petrol a month and now, by comparison, he could only afford a quarter of that amount. And soon he'll get even less.

Croatian prime minister Ivica Racan is under pressure to force through harsh economic reforms. And social benefits are among the first victims of a cutback policy demanded by Western banks and institutions pledging credits.

For a country tired of years of war and economic hardship such reforms are playing into the hands of right-wingers who accuse the current moderate government of betraying the people.

As part of a three-year economic programme, the Croatian government is looking to reduce public spending as part of an overall programme even the International Monetary Fund, IMF, calls "ambitious". But it is necessary, nonetheless, if cautious foreign institutions are going to release funds.

This year budgetary savings of 83 million dollars need to be made from the budget and redirected into stimulating the economy as part of an agreement with the IMF over a 255 million dollar stand-by credit agreed in March this year. The deal obliges the government to "firmly control" pension finances and health funds.

As a result of the cutbacks, patients will soon have to start paying a per diem rate for hospital stays. On top of this, they will have to pay a part of the bill for any operations they undergo, as well as picking up half the tab for medication. Up to now, all this has been free of charge.

And the introduction of these and other measures come at a time of hard hitting price rises. For instance, telephone calls costs have risen threefold since Deutsche Telekom took over the majority holding in Croatian Telecom, HT, at the beginning of August.

Maric's phone bill came to 40 dollars in June. He can ill-afford to start paying nearly a third of his pension on calls. His household will also be facing increases in the price of gas, electricity and water.

Those lucky enough to be employed in Croatia are hardly better off than pensioners. The Guncic family from Zagreb make around 600 dollars a month. With two young daughters, their basic outgoings reach 570 dollars. Child benefit cuts will reduce their income by 20 dollars, leaving them ten dollars in pocket. For any sort of normal life, they estimate they would need another 150 dollars a month.

It is this sort of hardship that the country's resurgent nationalist right is trying to exploit as they seek to topple the current Social Democrat-led government headed by Ivica Racan. Elected at the beginning of last year, it is failing to live up to its promises of providing its citizens with a better quality of life.

Hardly surprising, as the country is still staggering from the ten years of rule by late president Franjo Tudjman. In addition to suffering the effects of war, the country was plundered by the fraudulent privatisation of former state-owned institutions.

Little surprise, then, that under Tudjman's rule foreign investment for the near-annihilated manufacturing sector evaporated.

Many big companies have either closed or run out of business; their workers laid off or dismissed. The unemployment rate now stands at 23 per cent. And prospects for the 400,000 or so Croatians looking for work are bleak. The young may have a chance. Those in middle age have little hope of ever holding down a job again.

When Racan came to power in January 2000, Western agencies promised aid. However, the arrival of any credits has been contingent not only on economic reform but also on the delivery of suspected war criminals to The Hague tribunal. The latter has been vigorously opposed by right-wingers from hard line parties such as the Croatian Democratic Union, HDZ and the Croatian Party of Rights, run by Tudjman's son Miroslav.

The Right thus have the government in a stranglehold. On the one hand, they are attacking the authorities for the dire state of the economy. On the other, they are preventing necessary aid by stalling the very policies necessary for western economic packages to get through.

The authorities have no option but to apply for credits. The external debt has already reached 12 billion dollars. And the ranks of the unemployed and pensioners look set to rise even further.

As a part of the cuts, the government has agreed to reduce the number of public sector employees. The police have already been worst hit by the redundancies. The army is expected to be the next in line.

All these quite unpopular measures may deliver economic benefits in the long term. But Croatians, exhausted by war and hard life, are running out of patience. And the Croatian Right will exploit the discontent in its bid to return to power.

Goran Vezic is a journalist with the independent news agency Stina in Split.