Privatization in Croatia refers to political and economic reforms which include the

privatization Privatization (rendered privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation w ...

of state-owned assets in

Croatia Croatia, officially the Republic of Croatia, is a country in Central Europe, Central and Southeast Europe, on the coast of the Adriatic Sea. It borders Slovenia to the northwest, Hungary to the northeast, Serbia to the east, Bosnia and Herze ...

. Privatization started in the late 1980s under Yugoslav Prime Minister

Ante Marković Ante Marković ( sh-Cyrl, Анте Марковић, ; 25 November 1924 – 28 November 2011) was a Croatian and Yugoslav politician, businessman and engineer. He is most notable for having served as the last Prime Minister of Yugoslavia from 1 ...

and mostly took place in the 1990s after the

breakup of Yugoslavia After a period of political and economic crisis in the 1980s, the constituent republics of the Socialist Federal Republic of Yugoslavia split apart in the early 1990s. Unresolved issues from the breakup caused a series of inter-ethnic Yugoslav ...

, during the presidency of

Franjo Tuđman Franjo Tuđman (14 May 1922 – 10 December 1999) was a Croatian politician and historian who became the first president of Croatia, from 1990 until his death in 1999. He served following the Independence of Croatia, country's independe ...

and the rule of his party

Croatian Democratic Union The Croatian Democratic Union (, , HDZ) is a major conservative, centre-right political party in Croatia. Since 2016, it has been the ruling political party in Croatia under the incumbent Prime Minister Andrej Plenković. It is one of the ...

(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 In ordinary language, a crime is an unlawful act punishable by a state or other authority. The term ''crime'' does not, in modern criminal law, have any simple and universally accepted definition,Farmer, Lindsay: "Crime, definitions of", in Cane ...

Early privatization

The privatization process in the

former Yugoslavia The Socialist Federal Republic of Yugoslavia (commonly abbreviated as SFRY or SFR Yugoslavia), known from 1945 to 1963 as the Federal People's Republic of Yugoslavia, commonly referred to as Socialist Yugoslavia or simply Yugoslavia, was a country ...

was initiated during the government of Yugoslav Prime Minister

.Patrick Heenan, Monique Lamontagne
Central and Eastern Europe Handbook
Routledge, 2014, p. 96 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 Croatia, officially the Republic of Croatia, is a country in Central and Southeast Europe, on the coast of the Adriatic Sea. It borders Slovenia to the northwest, Hungary to the northeast, Serbia to the east, Bosnia and Herzegovina and Mont ...

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.William Bartlett
Europe's Troubled Region: Economic Development, Institutional Reform, and Social Welfare in the Western Balkans
Routledge, 2007, p. 65 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 A planned economy is a type of economic system where investment, production and the allocation of capital goods takes place according to economy-wide economic plans and production plans. A planned economy may use centralized, decentralized, ...

to a

market economy A market economy is an economic system in which the decisions regarding investment, production, and distribution to the consumers are guided by the price signals created by the forces of supply and demand. The major characteristic of a mark ...

was thus slow and unsteady.International Business Publications
Croatia Investment and Trade Laws and Regulations Handbook
p. 22

Main events

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.Patrick Heenan, Monique Lamontagne
Central and Eastern Europe Handbook
Routledge, 2014, p. 110 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 A transition economy or transitional economy is an economy which is changing from a planned economy, centrally planned economy to a market economy. Transition economies undergo a set of structural transformations intended to develop market-base ...

. Primary method of privatization in Croatia was management employee buyouts, while the secondary method used was

voucher privatization Voucher privatization (, ) is a privatization method where citizens are given or can inexpensively buy a book of vouchers that represent potential shares in any state-owned company. Voucher privatization has mainly been used in the early to mid-1 ...

. In 1991 the

private sector The private sector is the part of the economy which is owned by private groups, usually as a means of establishment for profit or non profit, rather than being owned by the government. Employment The private sector employs most of the workfo ...

'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 Crony capitalism, sometimes also called simply cronyism, is a pejorative term used in political discourse to describe a situation in which businesses profit from a close relationship with state power, either through an anti-competitive regul ...

. The ruling party was particularly criticised for transferring enterprises to a group of privileged owners connected to the party. Croatian president

was also a target of critics and allegations of

nepotism Nepotism is the act of granting an In-group favoritism, advantage, privilege, or position to Kinship, relatives in an occupation or field. These fields can include business, politics, academia, entertainment, sports, religion or health care. In ...

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.

In popular culture

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

Early privatization

Main events

In popular culture

See also

References

Further reading