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Croatia Defence and Security Report Q3 2011
Business Monitor International, May 2011, Pages: 62
The Croatia Defence and Security Report provides industry professionals and strategists, corporate analysts, defence and security associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Croatia's defence and security industry.
The defence industry and security position in Croatia both remain virtually static. The good news is that the country faces no real external or terrorist threat. Its security problems are internal and relate to entrenched corruption due in the first instance the presence of organised crime. Progress on these issues is required for EU entry. The Croatian leadership and EU negotiators plead that much has been achieved. They point out that former Prime Minister Ivo Sanader and the CEO of INA, the formerly state-run oil company, have been arrested as evidence of their serious intent. The review on progress published by Brussels in March remains unconvinced. We nonetheless expect Croatia to achieve EU membership in 2013 as planned.
The domestic economy remains quite flat. While GDP growth has returned to positive territory this has been due to an increase in exports, led by tourism. The local economy is dogged by high unemployment (18%) and an overhang from excessive consumer borrowing through the years leading up to the GFC. We cannot foresee any meaningful upturn in the near future.
In common with several other Eastern European countries, Croatia had been a significant weapons manufacturer. With the end of that period and with Croatia moving into NATO the need is for much more sophisticated systems in order to allow interoperability. The local defence industry is simply not positioned for that role. Its shipyards are capable of manufacturing basic ships and are presently doing so for, principally, commercial customers. In the small arms and light weapons (SALW) arena, Croatia is staking a place as an exporter of pistols and related products.
The military forces need to be re-equipped. The air force for instance has 18 MiG-21 fighters but eight of these are not capable of being restored to an airworthy state. There is a plan to purchase 12 new multirole fighters but funding will be problematic. Similarly, the navy is looking for new patrol boats and corvettes as well as missile and radar systems. These programmes can only become affordable if the expenditure on military personnel is reduced, but this is politically dangerous at a time of high unemployment.
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