CROATIA – MAFIA STATE

By: International Leaders Summit

Photo: www.medium.com

In the 2019 Global Competitiveness Report presented by the World Economic Forum (WEF), Croatia’s judicial independence was ranked 126th out of 141 countries, rated the worst within the European Union (EU), and falling further behind non-EU member states including Russia, Ukraine and Serbia. In the previous year’s 2018 report, Croatia’s judicial independence ranked 120 out of 140 nations reviewed.

The report’s findings expose a flawed EU enlargement project which continues to ignore the most significant bedrock of democratic governance — the foundational rule of law which protects human rights, private property and safeguards democratic institutions. Independent judiciary is necessary for the rule of law to prevail, otherwise, the legal rights of citizens and private economic stakeholders are abused. The severe violation of the rule of law principle with a deficient court system in Croatia perpetuates injustice and rampant corruption, destroying the lives of Balkan nation’s citizens and driving out legitimate foreign investors.

A further abuse of the rule of law principle was noted on January 1, 2020, when Croatia took over presidency of the European Union, namely the Council of the European Union, for the first half of the year. The flawed EU enlargement initiative allowed lawless Croatia to preside over the EU. While Western leaders, including EU institutions, rightfully deride non-EU Eastern Europe’s reform laggards and their governance as deeply flawed and corrupt, these nations score better than the EU-presiding Croatia. The WEF report ranks the Russian Federation’s judicial independence the 91st place, Ukraine 99th, and Serbia at 101st, outranking EU and NATO member Croatia at 126th out of 141 nations.

According to WEF, the analysis presented in the Global Competitiveness Report 2019 is based on a methodology integrating the latest statistics from international organizations and a survey of executives.

Croatia’s government mired in corruption is the recipient of billions of dollars of taxpayer aid from citizens in the United States and Western Europe. The West’s elected representatives and diplomatic corps have failed to address a vital fiduciary responsibility to ensure that taxpayer funds are used to strengthen the rule of law rather than propping-up corrupt and criminal networks.

Croatia’s illicit financial outflows via crime, corruption and tax evasion for the years 2005–2014 are over $35.6 billion (not including cash transactions), amounting to 73% of the Balkan country’s 2015 GDP, a study completed by Dr. Dev Kar, distinguished senior fellow, International Leaders Summit, chief economist emeritus at Global Financial Integrity and former senior economist at the International Monetary Fund, Washington, DC.

The findings on Balkan Croatia, and the rest of Eastern Europe, should alarm America and Europe’s electorate, taxpayers, legislators and stakeholders sending taxpayer aid, approving generous grants and loans through the World Bank and the European Bank for Reconstruction and Development (EBRD), providing US military assistance and budgeting EU cohesion funds which prop-up corrupt networks in lax law nations.

The WEF report on Croatia’s public sector performance, and key areas related to governance, reveals the following important findings — when comparing this Balkan country to other countries in the world.

Croatia — World Economic Forum’s Global Competitiveness Report 2019 (141 countries ranked):

1. In the “legal framework in challenging regulations”, Croatia is 138th.
2. Croatia’s property rights is listed at the dismal 111th place.
3. In the “government ensuring policy stability”, Croatia is 132nd.
4. “Government’s responsiveness to change” is at 136th place.
5. The “burden of government regulation” category, Croatia is 139th.
6. In “efficiency of legal framework in settling disputes”, Croatia is 140th.

Croatia — the judicial reform laggard of post-communist Eastern Europe

Since its independence in 1991, Croatia’s government has been ruled by the Balkan country’s two largest political blocks — the center-right Croatian Democratic Union (HDZ) and the center-left Social Democratic Party (SDP). Both political networks and their politicians are mired in rampant corruption. In guarding their political class from corruption investigations into illicit enrichment and criminal activities, Croatia’s major political groups have brazenly blocked justice reforms and thwarted principled recommendations presented by strong rule of law nations including the United Kingdom and the United States. In order to protect their illicit wealth and continue with the theft unimpeded, Croatia’s political class appoints compromised judges and perpetuates an ineffective judicial system.

In contrast to Croatia, Estonia’s principled leaders, including Mart Laar, its prime minister who pioneered bold changes, implemented judicial reforms and supported a lustration policy (removing all communists from any government position). In his book titled, “The Little Country that Could”, published by the Centre for Research into Post Communist Economies, Mart Laar outlined the reform process in which the rule of law was established, protection of property rights (including intellectual property) became a top priority, the flat tax reform initiative was applied which included a built-in anti-corruption mechanism, and corruption was addressed with full vigor.

In the mid-1990s, 67% of Estonia’s judicial corps was replaced by a new generation of judges, with the majority under the age of 40. On October 1, 1993, the Soviet-era Supreme Court was abolished and, as part of the judicial reform process, all Soviet-era judges were required to apply for the position of judge through a new qualification exam. Estonia’s judicial vetting process and the Baltic nation’s market reforms launched it into a new era of prosperity.

In the WEF report for 2019, Estonia’s judicial independence is at the coveted 22nd spot out of 141 nations, even surpassing mature democracies.

A similar approach took place after the reunification of Germany, when judges from East Germany, the former Soviet satellite — German Democratic Republic (GDR), were fired and replaced by West Germany’s younger judges committed to upholding the rule of law.

At the International Leaders Summit event in Zagreb in 2006, reform leader Mart Laar, Estonia’s former prime minister and advisory board member of the think tank, made this profound statement to an audience of Croatia’s business, government and media leaders:

“The first step in combating corruption is not to be corrupt yourself.” — Mart Laar, former prime minister, Estonia and International Leaders Summit’s executive advisory board member.

Estonia’s elected officials exhibited principled leadership based on integrity and a concern for the citizens’ well-being and the nation’s future; whereas in Croatia, grand corruption flourished.

The Economist highlights this important note:

ANOTHER broadside from the excellent Adriatic Institute on the slow pace of change in south-eastern Europe. Natasha Srdoc highlights the interplay between bad political practices (clientelism, cronyism) and poor economic outcomes:

“If we want economic freedom in southeast Europe — and as we learn what it truly means we discover we definitely do — then we need to reprioritise. Yes, we need to see continued efforts to make business environments more conducive to foreign and domestic investment. But we also need to address more overtly the twin legacies of communist rule: disregard for private property rights and the inheritance of institutional power by networks of corrupt government officials and their private partners in crime.” — Natasha Srdoc

A specific example from the 2000’s revealed Croatia’s government thwarting principled initiatives proposed by strong rule of law nations. The United Kingdom’s government seconded its top prosecutor to advise the Croatian justice minister and present necessary judicial reforms to establish the rule of law. After a few short months, the agreement was abruptly terminated by Croatia’s government, and Britain’s top prosecutor was sent back to the UK.

During this same period, The Economist featured a piece on Croatia and Romania’s struggle with judicial reform titled “Judge or be judged” — the media group stated:

“Cleaning up the communist-era justice system is one of the ex-captive nations’ toughest tasks. Crooks, spooks and politicians have an unhealthy influence, especially on judges and prosecutors rooted in the old system.” — The Economist on Croatia

Romania – Success in Addressing Corruption

While Croatia blocked judicial reforms, Romania made significant strides. According to published reports, “By 2018, Romania’s anti-corruption agency DNA had jailed 17 ministers, a former prime minister, and indicted a sitting prime minister.”

The report also states, “Between 2010 and the end of 2017, Romania passed 4,720 final corruption sentences, an average of nearly 600 convictions per year.”

Croatia – Get Out of Jail Card for Corrupt Politicians: A Politically Influenced Judiciary

When reviewing Romania’s robust measures, Croatia’s pin-prick strike against corruption has led to the conviction of just one major political figure — former Prime Minister Ivo Sanader. The country’s anti-corruption agency — Office for Fight Against Corruption and Organized Crime (USKOK) has been ineffective in addressing colossal political corruption in Croatia.

Media Highlights and Reports: The Rule of Law Subverted in Croatia

1. OCCRP’s report: “HDZ political party — were indicted for graft in connection with operating slush funds for their own election campaigns. According to the indictment, the HDZ took 31.6 million kuna (US$5.6 million), and Sanader [prime minister] personally got another 15 million kuna (US$2.7 million) during those six years. USKOK named the party’s former Treasurer Mladen Barisic and former government spokesman Ratko Macek. The 60,000 page indictment also accuses employees of Fimi Media, a public relations firm, of assisting the government officials.”
2. The Economist Intelligence Unit (EIU) reported on November 3, 2011: “On October 27th the prime minister, Jadranka Kosor, announced that her ruling Croatian Democratic Union (HDZ) is under investigation by the State Attorney’s Office and the Office for Combating Corruption and Organised Crime (USKOK). The HDZ, including a number of high-ranking party officials, is being investigated for the alleged use of illegal funds. Mrs Kosor is not personally under investigation, although allegations that €5m (US$7m) in illegal funds was used to finance her failed presidential campaign in 2005 are being examined.” During this time period, Kolinda Grabar Kitarovic, Croatia’s president (2015–2020) was a senior official of HDZ and served within the HDZ cabinet.
3. On the HDZ — Fimi Media trial, the presiding judge Ivana Calic stated: In the period of the crime [the end of 2003 — January 2009], the legal entity HDZ was in power which means that because of a majority in the Sabor [parliament] it adopted laws, governed the state and its repressive apparatus among others. When this and such a legal entity violates the laws, it undermines the foundations of the rule of law because everyone should ask themselves what message is this to the citizens when those in power violate the laws but those who have elected them are required to obey them.” In the first Fimi media trial in 2014, former prime misniter Sanader’s prison sentenced was overturned by the Supreme Court ordering a retrial.
4. In 2016, Croatia’s government collapsed due to corruption charges brought forward against Tomislav Karamarko, deputy prime minister and leader of the national-conservative HDZ party.
5. Croatia’s N1 reported on HDZ politician Ivica Kirin: “Former interior minister and incumbent Mayor of Virovitica Ivica Kirin on Monday was acquitted by Zagreb County Court pending appeal of abuse of office and power in the Fimi Media case due to lack of evidence.” An additional report from N1: “In September 2019, former HDZ minister acquitted in corruption case, three co-defendants found guilty — Bozidar Kalmeta of the Croatian Democratic Union (HDZ), on Thursday was acquitted of the charges that he and his associates had split among themselves more than HRK 15 million and EUR 850,000 siphoned from road maintenance and construction companies and that he had defrauded the Transport Ministry, however, three of his co-defendants were found guilty of the charges.”
6. Croatia has failed to restitute private property belonging to Croatia’s citizens including Jewish descendants. The pro-Nazi Croatian Ustasha government stole Jewish and Serbian private property along with currency and gold coins. Today, Croatia’s government and its politically influenced court system have blocked the return of private property.
7. Some court cases have been recycled in the parlous judicial system since Croatia declared its independence in 1991. On March 2, 2006, Vesna Skare-Ozbolt, former justice minister of Croatia wrote in The Wall Street Journal: “When I arrived on the job, Croatia’s justice ministry was in bad shape. At the land registry department we had a backlog of 1.5 million cases. In a new country like Croatia, born out of the breakup of the old socialist Yugoslavia and a decade of war in the region, land claims are contentious. But they’d been completely neglected. Another legacy of those days was the sheer size of the judiciary. In per capita terms, Croatia had the most courts and judges of any European country, as well as the largest backlog of cases.” Croatia’s population is around 4.1 million people.
8. The ties of SDP politician Vojko Obersnel, mayor of Rijeka to money laundering Nigerian funds through Volpi who was red-flagged by US Justice: “While the DoJ’s investigations were ongoing, Gabriele Volpi, red-flagged by the US Senate’s Permanent Subcommittee on Investigtions, was signing agreements with Mayor Obersnel to invest in Rijeka’s soccer club and the City of Rijeka.”

While Romania’s anti-corruption initiatives jailed 17 cabinet ministers, a former prime minister, indicted a sitting prime minister and brought to justice 4,720 final corruption sentences during the years 2010–2017, Croatia’s justice system was able to convict just one major political figure — Ivo Sanader, the country’s former prime minister.

Croatia’s law enforcement officers within Croatia focusing on corruption cases have stated that there is no justice within the EU country due to the country’s politically influenced judiciary.

Best and Worst — WEF Judicial Independence Ranking 141 Economies Focusing on EU’s post-communist Eastern European Members

Estonia: 22

Czech Republic: 48

Lithuania: 53

Romania: 62

Latvia: 74

Slovenia: 82

Bulgaria: 89

Hungary: 102

Slovak Republic: 114

Poland: 118

Croatia: 126

Judicial Independence Ranking of 141 Economies:
Select Non-EU Members in Eastern Europe

Georgia: 80

Russian Federation: 91

Serbia: 101

Ukraine: 105

Relevant Graphs from the 2019 EU Justice Scoreboard

In addition to the concerns raised in the WEF report on Croatia’s judicial independence, the 2019 EU Justice Scoreboard revealed the following details:

Croatia (listed as Hrvatska-HR in the graphs) scores the worst within the European Union with the general public stating concerns of the lack of independence within the judiciary:

1. The status and position of judges do not sufficiently guarantee their independence.
2. Interference or pressure from economic or other specific interests.
3. Interference or pressure from government and politicians.

A Principled Solution:

In The Wall Street Journal’s Opinion-Editorial print edition on May 19, 2009, Natasha Srdoc and Joel Anand Samy, co-founders of International Leaders Summit and Adriatic Institute for Public Policy advanced a principled solution:

“Instead of continuing to send cash, it might be a better idea for the EU to send judges and prosecutors who can assist in strengthening the rule of law and an independent judiciary. The EU may also consider setting up an independent body to investigate allegations of corruption and look into how some politicians have come to their unexplained fortunes.” — Natasha Srdoc and Joel Anand Samy, The Wall Street Journal

In upholding the rule of law, the European Commission’s official statement conveys the following:

The Rule of law guarantees fundamental rights and values, allows the application of EU law, and supports an investment-friendly business environment. It is one of the fundamental values upon which the EU is based on.

Initiative to strengthen the rule of law in the EU: In recent years, the European Commission has been confronted with crisis events in some EU countries, which revealed systemic threats to the rule of law. The Commission reacted by adopting the rule of law framework to address such threats in EU countries.

Rule of law framework: In a crisis, the Commission can trigger the rule of law framework to address systemic threats in EU countries.

Bulgaria and Romania were subjected to the European Commission’s Cooperation and Verification Mechanism (CVM). In the World Economic Forum’s report on judicial independence, Romania is ranked 62nd and Bulgaria 89th (out of 141 nations), revealing the benefits of accountability through the European Commission’s CVM. In contrast, corrupt Croatia’s government lobbied for exemption from CVM structure.

Today, Croatia is ranked 126th out of 141 nations in the world in judicial independence, worse than non-EU members such as Ukraine, Russia and Serbia.

In light of Croatia’s failed judiciary, the courts cannot address the country’s rampant corruption.

Principled Solutions

If the European Commission is serious about addressing grand corruption and the destruction of the rule of law in Croatia, which are detrimental to Western EU taxpayers, then Brussels’ leaders ought to immediately trigger the Cooperation and Verification Mechanism for Croatia. Anything less, will be an ongoing abuse of EU taxpayer funds, which are sent to prop-up Croatia’s corrupt politicians and their private partners in crime.

On the American front, the engaged electorate, legislators and the administration must press forward in ensuring that US taxpayer aid, military assistance and the proposed visa-waiver program for Croatia be carefully reviewed in light of the Balkan country’s serious backsliding on the rule of law. US taxpayer funds or US political support should be tied to measured results in establishing the rule of law and independent judiciary.

NATO’s preamble states, “They are determined to safeguard the freedom, common heritage and civilization of their peoples, founded on the principles of democracy, individual liberty and the rule of law.”

American leadership must sanction Croatia’s politicians who are blocking US investments to the region. The growing influence of China and Russia’s state-owned/tycoon dubious investments, and money laundering from Nigeria and other lax law nations, destroys the Balkan region’s economy and threatens the West. The absence of an independent judiciary in EU and NATO member Croatia and the Balkan country’s rampant corruption erodes stability in the entire region.

Lady Thatcher’s noteworthy quote on the significance of the rule of law:

“You know we can’t have freedom without a rule of law. This is a thing I’m always saying to countries who come out of tyranny. You can’t have unconstrained freedom, you have to have a rule of law. And you know, my friends, the most difficult thing is to explain what a rule of law is, as distinct from just an oppressive law. They say, well we’ve got a lot of regulations, the government makes them, the government dictates to us. That’s not what a rule of law is, I say. It’s having wise judges who decide fairly and whose decisions are taken and honoured. It’s having your laws made in a parliament which is accountable to the people and which you know are going to be honourably administered. That’s why we don’t just call it law, we call it a rule of law. You cannot have freedom without a rule of law, and that is the most difficult thing, I think, to get into countries that have never known it. And if you don’t have it, what you tend to get is corruption and that is death to freedom, it’s death to truth, it’s death to honour, it’s death to democracy. We need to bring over to the West people from countries who have not known a rule of law, who have not known independent judges, who have not known the free debate that we have, we should bring them over so that they can, in fact, see what happens in this country. — Margaret Thatcher, speech to the European Foundation, October 1, 1996

EU and the US institutions led by elected officials must begin a thorough review of countries within Euro-Atlantic structures which undermine the foundational rule of law. Western legislators ought to advance principled measures which require accountability, strict monitoring and just intervention by censuring and bringing to justice politicians mired in corruption.

The West’s engaged electorate, hard-working taxpayers, stakeholders and investors which are vital to America and Europe’s economic growth have long demanded results in addressing Eastern Europe’s weak rule of law and poor governance. American, British and Western European leadership is essential in addressing Croatia and Eastern Europe’s crumbling justice foundations.