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Economy of Croatia

The economy of Croatia is a highly developed social market economy. It is one of the largest economies in Southeast Europe by nominal gross domestic product (GDP). It is an open economy with accommodative foreign policy, highly dependent on international trade in Europe. Within Croatia, economic development varies among its counties, with strongest growth in Central Croatia and its financial centre, Zagreb. It has a very high level of human development, low levels of wealth inequality, and a high standard of living. Croatia's labor market has been perennially inefficient, with inconsistent business standards as well as ineffective corporate and income tax policy.

Croatia's economic history is closely linked to its historic nation-building efforts. Its pre-industrial economy leveraged the country's geography and natural resources to guide agricultural growth. The 1800s saw to a shipbuilding boom, railroading, and industrial production. During the 1900s, Croatia entered into a planned economy (with socialism) in 1941 and a command economy (with communism) during World War II. It experienced rapid urbanization in the 1950s and decentralized in 1965, diversifying its economy before the collapse of Yugoslavia during the 1990s. The Croatian War of Independence (1991-95) curbed 21–25% of wartime GDP, leaving behind a developing transition economy. As a modern state Croatia has since turned to social capitalism, aided by ongoing European integration and globalization.

The modern Croatian economy is considered high-income and dominated by its tertiary service sector, which accounts for 70% of GDP. The high levels of tourism in Croatia contributes to nearly 20% of GDP, with a total of 20.6 million tourists visiting in 2023. Croatia is an emerging energy power in the region, with strategic investments in liquefied natural gas (LNG), geothermal power, and electric automobiles. It supports regional economic activity via transportation networks across the Adriatic Sea and throughout Pan-European corridors. As a member of the European Union, Eurozone, and Schengen Area, it uses the euro (€) as official currency. Croatia has free-trade agreements with many world nations and is a part of the World Trade Organization (2000) and the EEA (2013).

Pre-20th century
When Croatia was still part of the Dual Monarchy, its economy was largely agricultural. However, modern industrial companies were also located in the vicinity of the larger cities. The Kingdom of Croatia had a high ratio of population working in agriculture. Many industrial branches developed in that time, like forestry and wood industry (stave fabrication, the production of potash, lumber mills, shipbuilding). The most profitable one was stave fabrication, the boom of which started in the 1820s with the clearing of the oak forests around Karlovac and Sisak and again in the 1850s with the marshy oak masses along the Sava and Drava rivers. Shipbuilding in Croatia played a huge role in the 1850s Austrian Empire, especially the long-range sailing boats. Sisak and Vukovar were the centres of river-shipbuilding. Slavonia was also mostly an agricultural land and it was known for its silk production. Agriculture and the breeding of cattle were the most profitable occupations of the inhabitants. It produced corn of all kinds, hemp, flax, tobacco, and great quantities of liquorice.

The first steps towards industrialization began in the 1830s and in the following decades the construction of big industrial enterprises took place. During the 2nd half of the 19th and early 20th century there was an upsurge of industry in Croatia, strengthened by the construction of railways and the electric-power production. The industrial production was still lower than agricultural production. Regional differences were high. Industrialization was faster in inner Croatia than in other regions, while Dalmatia remained one of the poorest provinces of Austria-Hungary. The slow rate of modernization and rural overpopulation caused extensive emigration, particularly from Dalmatia. According to estimates, roughly 400,000 Croats emigrated from Austria-Hungary between 1880 and 1914. In 1910 8.5% of the population of Croatia-Slavonia lived in urban settlements.

In 1918 Croatia became part of the Kingdom of Yugoslavia, which was in the interwar period one of the least developed countries in Europe. Most of its industry was based in Slovenia and Croatia, but further industrial development was modest and centered on textile mills, sawmills, brick yards and food-processing plants. The economy was still traditionally based on agriculture and raising of livestock, with peasants accounting for more than half of Croatia's population.

In 1941 the Independent State of Croatia (NDH), a World War II puppet state of Germany and Italy, was established in parts of Axis-occupied Yugoslavia. The economic system of NDH was based on the concept of "Croatian socialism". The main characteristic of the new system was the concept of a planned economy with high levels of state involvement in economic life. The fulfillment of basic economic interests was primarily ensured with measures of repression. All large companies were placed under state control and the property of the regime's national enemies was nationalized. Its currency was the NDH kuna. The Croatian State Bank was the central bank, responsible for issuing currency. As the war progressed the government kept printing more money and its amount in circulation was rapidly increasing, resulting in high inflation rates.

After World War II, the new Communist Party of Yugoslavia converted to a command economy on the Soviet model of rapid industrial development. In accordance with the communist plan, mainly companies in the pharmaceutical industry, the food industry and the consumer goods industry were founded in Croatia. Metal and heavy industry was mainly promoted in Bosnia and Serbia. By 1948 almost all domestic and foreign-owned capital had been nationalized. The industrialization plan relied on high taxation, fixed prices, war reparations, Soviet credits, and export of food and raw materials. Forced collectivization of agriculture was initiated in 1949. At that time 94% of agricultural land was privately owned, and by 1950 96% was under the control of the social sector. A rapid improvement of food production and the standard of living was expected, but due to bad results the program was abandoned three years later.

Throughout the 1950s Croatia experienced rapid urbanization. Decentralization came in 1965 and spurred growth of several sectors including a prosperous tourist industry. SR Croatia was, after SR Slovenia, the second most developed republic in Yugoslavia with a ~55% higher GDP per capita than the Yugoslav average, generating 31.5% of Yugoslav GDP or $30.1Bn in 1990. Croatia and Slovenia accounted for nearly half of the total Yugoslav GDP, and this was reflected in the overall standard of living. In the mid-1960s, Yugoslavia lifted emigration restrictions and the number of emigrants increased rapidly. In 1971 224,722 workers from Croatia were employed abroad, mostly in West Germany. Foreign remittances contributed $2 billion annually to the economy by 1990. Profits gained through Croatia's industry were used to develop poor regions in other parts of former Yugoslavia, leading to Croatia contributing much more to the federal Yugoslav economy than it gained in return. This, coupled with austerity programs and hyperinflation in the 1980s, led to discontent in both Croatia and Slovenia which eventually fuelled political movements calling for independence.

In the late 1980s and early 1990s, with the collapse of socialism and the beginning of economic transition, Croatia faced considerable economic problems stemming from:
 * the legacy of longtime communist mismanagement of the economy;
 * damage during the internecine fighting to bridges, factories, power lines, buildings, and houses;
 * the large refugee and displaced population, both Croatian and Bosnian;
 * the disruption of economic ties; and
 * inefficient privatization

At the time Croatia gained independence, its economy (and the whole Yugoslavian economy) was in the middle of recession. Privatization under the new government had barely begun when war broke out in 1991. As a result of the Croatian War of Independence, infrastructure sustained massive damage in the period 1991–92, especially the revenue-rich tourism industry. The privatization of sovereign assets and transformation from a planned economy to a market economy was thus slow and unsteady, largely as a result of public mistrust when many state-owned companies were sold to politically well-connected at below-market prices. With the end of the war, Croatia's economy recovered moderately, but corruption, cronyism, and a general lack of transparency stymied economic reforms and foreign investment. The privatization of large government-owned companies was practically halted during the war and in the years immediately following the conclusion of peace. In 2000, roughly 70% of Croatia's major companies were still state-owned, including water, electricity, oil, transportation, telecommunications, and tourism.

The early 1990s experienced high inflation. In 1991 the Croatian dinar was introduced as a transitional currency, but inflation continued to accelerate. The anti-inflationary stabilization steps in 1993 decreased retail price inflation from a monthly rate of 38.7% to 1.4%, and by the end of the year, Croatia experienced deflation. In 1994 Croatia introduced the kuna as its currency. As a result of the macro-stabilization programs, the negative growth of GDP during the early 1990s stopped and reversed into a positive trend. Post-war reconstruction activity provided another impetus to growth. Consumer spending and private sector investments, both of which were postponed during the war, contributed to the growth in 1995–1997. Croatia began its independence with a relatively low external debt because the debt of Yugoslavia was not shared among its former republics at the beginning. In March 1995 Croatia agreed with the Paris Club of creditor governments and took 28.5% of Yugoslavia's previously non-allocated debt over 14 years. In July 1996 an agreement was reached with the London Club of commercial creditors, when Croatia took 29.5% of Yugoslavia's debt to commercial banks. In 1997 around 60 percent of Croatia's external debt was inherited from former Yugoslavia.

At the beginning of 1998 value-added tax was introduced. The central government budget was in surplus in that year, most of which was used to repay foreign debt. Government debt to GDP had fallen from 27.30% to 26.20% at the end of 1998. However, the consumer boom was disrupted in mid 1998, as a result of the bank crisis when 14 banks went bankrupt. Unemployment increased and GDP growth slowed down to 1.9%. The recession that began at the end of 1998 continued through most of 1999, and after a period of expansion GDP in 1999 had a negative growth of −0.9%. In 1999 the government tightened its fiscal policy and revised the budget with a 7% cut in spending.

In 1999 the private sector share in GDP reached 60%, which was significantly lower than in other former socialist countries. After several years of successful macroeconomic stabilization policies, low inflation and a stable currency, economists warned that the lack of fiscal changes and the expanding role of the state in the economy caused the decline in the late 1990s and were preventing sustainable economic growth.

21st century
The new government led by the president of SDP, Ivica Račan, carried out a number of structural reforms after it won the parliamentary elections on 3 January 2000. The country emerged from the recession in the 4th quarter of 1999 and growth picked up in 2000. Due to overall increase in stability, the economic rating of the country improved and interest rates dropped. Economic growth in the 2000s was stimulated by a credit boom led by newly privatized banks, capital investment, especially in road construction, a rebound in tourism and credit-driven consumer spending. Inflation remained tame and the currency, the kuna, stable. In 2000 Croatia generated 5,899 billion kunas in total income from the shipbuilding sector, which employed 13,592 people. Total exports in 2001 amounted to $4,659,286,000, of which 54.7% went to the countries of the EU. Croatia's total imports were $9,043,699,000, 56% of which originated from the EU.

Unemployment reached its peak in late 2002, but has since been steadily declining. In 2003, the nation's economy would officially recover to the amount of GDP it had in 1990. In late 2003 the new government led by HDZ took over the office. Unemployment continued falling, powered by growing industrial production and rising GDP, rather than only seasonal changes from tourism. Unemployment reached an all-time low in 2008 when the annual average rate was 8.6%, GDP per capita peaked at $16,158, while public debt as percentage of GDP decreased to 29%. Most economic indicators remained positive in this period except for the external debt as Croatian firms focused more on empowering the economy by taking loans from foreign resources. Between 2003 and 2007, Croatia's private-sector share of GDP increased from 60% to 70%. The Croatian National Bank took steps to curb further growth of indebtedness of local banks with foreign banks. The dollar debt figure is adversely affected by the EUR-USD ratio—over a third of the increase in debt since 2002 is due to currency value changes.

Economic growth has been hurt by the global financial crisis. Immediately after the crisis it seemed that Croatia did not suffer serious consequences like some other countries. However, in 2009, the crisis gained momentum and the decline in GDP growth, at a slower pace, continued during 2010. In 2011 the GDP stagnated as the growth rate was zero. Since the global crisis hit the country, the unemployment rate has been steadily increasing, resulting in the loss of more than 100,000 jobs. While unemployment was 9.6% in late 2007, in January 2014 it peaked at 22.4%. In 2010 Gini coefficient was 0,32. In September 2012, Fitch ratings agency unexpectedly improved Croatia's economic outlook from negative to stable, reaffirming Croatia's current BBB rating. The slow pace of privatization of state-owned businesses and an over-reliance on tourism have also been a drag on the economy.

Croatia joined the European Union on 1 July 2013 as the 28th member state. The Croatian economy is heavily interdependent on other principal economies of Europe, and any negative trends in these larger EU economies also have a negative impact on Croatia. Italy, Germany and Slovenia are Croatia's most important trade partners. In spite of the rather slow post-recession recovery, in terms of income per capita it is still ahead of some European Union member states such as Bulgaria, and Romania. In terms of average monthly wage, Croatia is ahead of 9 EU members (Czech Republic, Estonia, Slovakia, Latvia, Poland, Hungary, Lithuania, Romania, and Bulgaria).

The annual average unemployment rate in 2014 was 17.3% and Croatia has the third-highest unemployment rate in the European Union, after Greece (26.5%), and Spain (24.%). Of particular concern is the heavily backlogged judiciary system, combined with inefficient public administration, especially regarding the issues of land ownership and corruption in the public sector. Unemployment is regionally uneven: it is very high in eastern and southern parts of the country, nearing 20% in some areas, while relatively low in the north-west and in larger cities, where it is between 3 and 7%. In 2015 external debt rose by €2.7 billion since the end of 2014 and is now around €49.3 billion.

2016–2019
During 2015 the Croatian economy started with slow but upward economic growth, which continued during 2016 and conclusive at the end of the year seasonally adjusted was recorded at 3.5%. The better than expected figures during 2016 enabled the Croatian Government and with more tax receipts enabled the repayment of debt as well as narrow the current account deficit during Q3 and Q4 of 2016 This growth in economic output, coupled with the reduction of government debt has made a positive impact on the financial markets with many ratings agencies revising their outlook from negative to stable, which was the first upgrade of Croatia's credit rating since 2007. Due to consecutive months of economic growth and the demand for labour, plus the outflows of residents to other European countries, Croatia had recorded the biggest fall in the number of unemployed during the month of November 2016 from 16.1% to 12.7%.

2020
COVID-19 Pandemic has caused more than 400,000 workers to file for economic aid of 4000.00 HRK./month. In the first quarter of 2020, Croatian GDP rose by 0.2% but then in Q2 Government of Croatia announced the biggest quarterly GDP plunge of -15.1% since GDP has been measured. Economic activity also plunged in Q3 2020 when GDP slid by an additional -10.0%.

In autumn 2020 European Commission estimated total GDP loss in 2020 to be -9.6%. Growth was set to pick up in the last month of Q1 2021 and the second quarter of 2021 respectively +1.4% and +3.0%, meaning that Croatia was set to reach 2019 levels by 2022.

2021
In July 2021 projection was improved to 5.4% due to the strong outturn in the first quarter and the positive high-frequency indicators concerning consumption, construction, industry and tourism prospects. In November 2021 Croatia outperformed these projections and the real GDP growth was calculated to be 8.1% for the year 2021, improving its projection of 5.4% GDP growth made in July. The recovery was supported by strong private consumption, the better-than-expected performance of tourism and the ongoing resilience of the export sector. Preliminary data point to tourism-related expenditure already exceeding 2019 levels, which has been supportive of both employment and consumption. Exports of goods have also continued to perform strongly (up 43%yoy in 2Q21) pointing to resilient competitiveness. Croatian merchandise exports in the first nine months of 2021 amounted to €13.3 billion, an annual increase of 24.6%. At the same time, imports rose 20.3% to €20.4 billion. The coverage of imports by exports for the first nine months is 65.4%. This made 2021 Croatian export's record year as the trade off-set from 2019 was exceeded by €2 billion.

Exports recovered in all major markets, more precisely with all EU countries and CEFTA countries. Specifically, on the EU market, only a lower export result is recorded in relations with Sweden, Belgium and Luxembourg. Italy is again the main market for Croatian products, followed by Germany and Slovenia. Apart from the high contribution of crude oil that Ina sends to Hungary to the Mol refinery for processing, the export of artificial fertilizers from Petrokemija also has a significant contribution to growth.

For 2022, the Commission revised downwards its projection for Croatia's economic growth to 5.6% from 5.9% previously predicted in July 2021. Commission again confirmed that the volume of Croatia's GDP should reach its 2019 level during 2022, while in 2023 the GDP will grow by 3.4%. The Commission warned that the key downside risks stem from Croatia's relatively low vaccination rates, which could lead to stricter containment measures, and continued delays of the earthquake-related reconstruction. Croatia's entry into the Schengen area and euro adoption towards the end of the forecast period could benefit investment and trade.

On Friday, 12 November 2021 Fitch raised Croatia's credit rating by one level, from ‘BBB−‘ to ‘BBB’, Croatia's highest credit rating in history, with a positive outlook, noting progress in preparations for Eurozone membership and a strong recovery of the Croatian economy from the pandemic crisis. This is also secured by the failure of the eurosceptic party Hrvatski Suverenisti in a bid on the referendum to block Euro adoption in Croatia. In December 2021 Croatia's industrial production increased for the thirteenth consecutive month, observing the growth of production increasing in all of the five aggregates. meaning that industrial production in 2021 increased by 6.7 percent.

In 2021 Croatia joined the list of countries with its own automobile industry, with Rimac Automobili's Nevera started being produced. The company also took over Bugatti Automobiles in November same year and started building its new HQ in Zagreb, titled as the "Rimac Campus", that will serve as the company’s international research and development (R&D) and production base for all future Rimac products, as well as home of R&D for future Bugatti models. The company also plans to build battery systems for different manufacturers from the automotive industry This campus will also become the home of R&D for future Bugatti models due to the new joint venture, though these vehicles will be built at Bugatti’s Molsheim plant in France.

2022
In late March 2022 Croatian Bureau of Statistics announced that Croatia's industrial output rose by 4% in February, thus growing for 15 months in a row. Croatia continued to have strong growth during 2022 fuelled by tourism revenue and increased exports. According to a preliminary estimate, Croatia's GDP in Q2 grew by 7.7% from the same period of 2021. The International Monetary Fund (IMF) projected in early September 2022 that Croatia's economy will expand by 5.9% in 2022, whilst EBRD expects Croatian GDP growth to reach 6.5% by the end of 2022. Pfizer announced launching a new production plant in Savski Marof whilst Croatian IT industry grew 3.3% confirming the trend that started with Coronavirus pandemic where the Croatia's digital economy increased by 16 percent on average annually from 2019 to 2021. It is estimated that by 2030 its value could reach 15 percent of GDP, with the ICT sector being the main driver of that growth.

In 2022, Croatian economy is expected to grow between 5.9 and 7.8% in real terms and it is expected to reach between $72 and $73.6 billion according to preliminary estimates by Croatian Government surpassing early estimates of 491 billion kuna or $68.5 billion. Croatian Purchasing Power Parity in 2022 for the first time should exceed $40 000, however considering Croatian economy experienced 6 years of deep recession, catching up will take several more years of high growth. Economic outlook for 2023 for Croatian economy are mixed, depends largely on how the big Eurozone economies perform, Croatia's largest trading partners; Italy, Germany, Austria, Slovenia and France are expected to slow down, but avoid recession according to latest economic projections and estimates, so Croatian economy as a result could see better than expected results in 2023, early projections of between 1 and 2.6% economic growth in 2023 with inflation at 7% is a significant slow down for the country, however country is experiencing major internal and inward investment cycle unparalleled in recent history. EU recovery funds in tune of €8.7 billion coupled with large EU investments in recently earthquake affected areas of Croatia, as well as major investments by local business in to renewable energy sector, also EU supported and funded, as well as major investments in transport infrastructure and rapidly expanding Croatia's ICT sector, Croatian economy could see continuation of rapid growth in 2023.

On 12 July 2022, the Eurogroup approved Croatia becoming the 20th member of the Eurozone, with the formal introduction of the Euro currency to take place on 1 January 2023. Croatia joined the Schengen Area in 2023. By 2023, the minimum wage is ostensibly expected to rise to NET 700 EUR,  increasing consumer spending.

Sectors
In 2022, the sector with the highest number of companies registered in Croatia is Services with 110,085 companies followed by Retail Trade and Construction with 22,906 and 22,121 companies respectively.

Tourism
Tourism is a notable source of income during the summer and a major industry in Croatia. It dominates the Croatian service sector and accounts for up to 20% of Croatian GDP. Annual tourist industry income for 2011 was estimated at €6.61 billion. Its positive effects are felt throughout the economy of Croatia in terms of increased business volume observed in retail business, processing industry orders and summer seasonal employment. The industry is considered an export business, because it significantly reduces the country's external trade imbalance. Since the conclusion of the Croatian War of Independence, the tourist industry has grown rapidly, recording a fourfold rise in tourist numbers, with more than 10 million tourists each year. The most numerous are tourists from Germany, Slovenia, Austria and the Czech Republic as well as Croatia itself. Length of a tourist stay in Croatia averages 4.9 days.

The bulk of the tourist industry is concentrated along the Adriatic Sea coast. Opatija was the first holiday resort since the middle of the 19th century. By the 1890s, it became one of the most significant European health resorts. Later a large number of resorts sprang up along the coast and numerous islands, offering services ranging from mass tourism to catering and various niche markets, the most significant being nautical tourism, as there are numerous marinas with more than 16 thousand berths, cultural tourism relying on appeal of medieval coastal cities and numerous cultural events taking place during the summer. Inland areas offer mountain resorts, agrotourism and spas. Zagreb is also a significant tourist destination, rivalling major coastal cities and resorts.

Croatia has unpolluted marine areas reflected through numerous nature reserves and 99 Blue Flag beaches and 28 Blue Flag marinas. Croatia is ranked as the 18th most popular tourist destination in the world. About 15% of these visitors (over one million per year) are involved with naturism, an industry for which Croatia is world-famous. It was also the first European country to develop commercial naturist resorts.

Agriculture
Croatian agricultural sector subsists from exports of blue water fish, which in recent years experienced a tremendous surge in demand, mainly from Japan and South Korea. Croatia is a notable producer of organic foods and much of it is exported to the European Union. Croatian wines, olive oil and lavender are particularly sought after. Value of Croatia's agriculture sector is around 3.1 billion according to preliminary data released by the national statistics office.

Croatia has around 1.72 million hectares of agricultural land, however totally utilized land for agricultural in 2020 was around 1.506 million hectares, of these permanent pasture land constituted 536 000 hectares or some 35.5% of total land available to agriculture. Croatia imports significant quantity of fruits and olive oil, despite having large domestic production of the same. In terms of livestock Croatian agriculture had some 15.2 million poultry, 453 000 Cattle, 802 000 Sheep, 1.157 000 Pork/Pigs,88 000 Goats. Croatia also produced 67 000 tons of blue fish, some 9000 of these are Tuna fish, which are farmed and exported to Japan, South Korea and United States.

Croatia produced in 2022:

 * 1.66 million tons of maize;
 * 970 thousand tons of wheat;
 * 524 thousand tons of sugar beet (the beet is used to manufacture sugar and ethanol);
 * 319 thousand tons of barley;
 * 196 thousand tons of soybean;
 * 154 thousand tons of sunflower seed;
 * 146 thousand tons of grape;
 * 107 thousand tons of potato;
 * 59 thousand tons of rapeseed;

In addition to smaller productions of other agricultural products, like apple (93 thousand tons), triticale (62 thousand tons) and olive (34 thousand tons).

Transport

The highlight of Croatia's recent infrastructure developments is its rapidly developed motorway network, largely built in the late 1990s and especially in the 2000s. By January 2022, Croatia had completed more than 1300 km of motorways, connecting Zagreb to most other regions and following various European routes and four Pan-European corridors. The busiest motorways are the A1, connecting Zagreb to Split and the A3, passing east–west through northwest Croatia and Slavonia. A widespread network of state roads in Croatia acts as motorway feeder roads while connecting all major settlements in the country. The high quality and safety levels of the Croatian motorway network were tested and confirmed by several EuroTAP and EuroTest programs.

Croatia has an extensive rail network spanning 2722 km, including 985 km of electrified railways and 254 km of double track railways. The most significant railways in Croatia are found within the Pan-European transport corridor Vb and corridor X connecting Rijeka to Budapest and Ljubljana to Belgrade, both via Zagreb. All rail services are operated by Croatian Railways.

There are international airports in Zagreb, Zadar, Split, Dubrovnik, Rijeka, Osijek and Pula. As of January 2011, Croatia complies with International Civil Aviation Organization aviation safety standards and the Federal Aviation Administration upgraded it to Category 1 rating.

The busiest cargo seaport in Croatia is the Port of Rijeka and the busiest passenger ports are Split and Zadar. In addition to those, a large number of minor ports serve an extensive system of ferries connecting numerous islands and coastal cities in addition to ferry lines to several cities in Italy. The largest river port is Vukovar, located on the Danube, representing the nation's outlet to the Pan-European corridor VII.

Energy
There are 631 km of crude oil pipelines in Croatia, connecting the JANAF oil terminal with refineries in Rijeka and Sisak, as well as several transhipment terminals. The system has a capacity of 20 million tonnes per year. The natural gas transportation system comprises 2544 km of trunk and regional natural gas pipelines, and more than 300 associated structures, connecting production rigs, the Okoli natural gas storage facility, 27 end-users and 37 distribution systems.

Croatian production of energy sources covers 29% of nationwide natural gas demand and 26% of oil demand. In 2023, net total electrical power production in Croatia reached 16,378 GWh and Croatia imported 26% of its electric power energy needs. The bulk of Croatian imports are supplied by the Krško Nuclear Power Plant in Slovenia, 50% owned by Hrvatska elektroprivreda, providing 12% of Croatia's electricity.

Electricity:
 * Production: 13,696 GWh (2022)
 * Consumption: 18,391 GWh (2022)
 * Exports: 7,225 GWh (2022)
 * Imports: 11,920 GWh (2022)

Electricity – production by source:
 * Hydro: 34% (2023)
 * Thermal: 21% (2023)
 * Nuclear: 12% (2023)
 * Renewable: 7% (2023)
 * Imports: 26% (2023)

Crude Oil: Natural Gas:
 * Production: 594 thousand tons (2022)
 * Consumption: 2.306 million tons (2022)
 * Exports: 202 thousand tons (2022)
 * Imports: 1,979 million tons (2022)
 * Proved Reserves: 3508900 m3 (2022)
 * Production: 745 million m³ (2022)
 * Consumption: 2,529 billion m³ (2022)
 * Exports: 1,063 million m³ (2022)
 * Imports: 3,022 billion m³ (2022)
 * Proved Reserves: 15.592,4 million m³ (2022)

Central bank
The country's monetary policy is formulated and implemented by its national bank.
 * Croatian National Bank

Retail banks

 * Zagrebačka banka (owned by UniCredit from Italy)
 * Privredna banka Zagreb (owned by Intesa Sanpaolo from Italy)
 * Hrvatska poštanska banka
 * OTP Banka (owned by OTP Bank from Hungary)
 * Raiffeisen Bank Austria (owned by Raiffeisen from Austria)
 * Erste & Steiermärkische Bank (former Riječka banka, owned by Erste Bank from Austria)

Central budget
The central budget is set by the Government of Croatia to cover their upcoming fiscal year, which runs from 1 January to 31 December. For 2024, they reported €28.52 billion in revenue with €32.61 billion in expenditure, running a €4.09 billion budget deficit.

The breakdown of Croatia's budget for 2023, by ministry (department), is shown below.
 * Labor and Pension System, Family and Social Policy – €10.59 billion
 * Finance – €7.15 billion
 * Health – €4.29 billion
 * Science and Education – €3.84 billion
 * Economy and Sustainable Development – €2.19 billion
 * Maritime Affairs, Transport and Infrastructure – €1.56 billion
 * Agriculture – €1.22 billion
 * Interior – €1.18 billion
 * Defence – €1.17 billion
 * Physical Planning, Construction and State Property – €0.74 billion
 * Justice and Public Administration – €0.68 billion
 * Culture and Media – €0.54 billion
 * Regional Development and EU funds – €0.42 billion
 * Tourism and Sport – €0.28 billion
 * Veterans' Affairs – €0.17 billion
 * Foreign and European Affairs – €0.15 billion

Stock exchanges

 * Zagreb Stock Exchange

Economic indicators
The following table shows the main economic indicators for the period 2000–2023 according to the Croatian Bureau of Statistics. The Purchasing Power Parity (PPP) conversion factors are based on OECD estimates. Croatian government debt values are published by the Croatian National Bank. Indicators for 2024-2027 are provided by the IMF, specifically the World Economic Outlook (April 2024).

title: Economy of Croatia


text:
Transport in Croatia

Transport in Croatia relies on several main modes, including transport by car, train, ship and plane. Road transport incorporates a comprehensive network of state, county and local routes augmented by a network of highways for long-distance travelling. Water transport can be divided into sea, based on the ports of Rijeka, Ploče, Split and Zadar, and river transport, based on Sava, Danube and, to a lesser extent, Drava. Croatia has 9 international airports and several airlines, of which the most notable are Croatia Airlines and Trade Air. Rail network is fairly developed but regarding inter-city transport, bus tends to be far more common than the rail.

Air transport
Croatia counts 9 civil, 13 sport and 3 military airports. There are nine international civil airports: Zagreb Airport, Split Airport, Dubrovnik Airport, Zadar Airport, Pula Airport, Rijeka Airport (on the island of Krk), Osijek Airport, Bol and Mali Lošinj. The two busiest airports in the country are the ones serving Zagreb and Split.

By the end of 2010, significant investments in the renovation of Croatian airports began. New modern and spacious passenger terminals were opened in 2017 at Zagreb and Dubrovnik Airports and in 2019 at Split Airport. The new passenger terminals at Dubrovnik Airport and Zagreb Airport are the first in Croatia to feature jet bridges.

Airports that serve cities on the Adriatic coast receive the majority of the traffic during the summer season due to the large number of flights from foreign air carriers (especially low-cost) that serve these airports with seasonal flights.

Croatia Airlines is the state-owned flag carrier of Croatia. It is headquartered in Zagreb and its main hub is Zagreb Airport.

Croatia is connected by air with a large number of foreign (especially European) destinations, while its largest cities are interconnected by a significant number of domestic air routes such as lines between Zagreb and Split, Dubrovnik and Zadar, between Osijek and Rijeka, between Osijek and Split and between Zadar and Pula. This routes are operated by domestic air carriers such as Croatia Airlines or Trade Air.

Railway corridors
The Croatian railway network is classified into three groups: railways of international, regional and local significance. The most important railway lines follow Pan-European corridors V/branch B (Rijeka - Zagreb - Budapest) and X, which connect with each other in Zagreb. With international passenger trains, Croatia is directly connected with two of the neighbouring (Slovenia and Hungary), and many medium-distanced Central European countries such as Czech Republic, Slovakia (during the summer season), Austria, Germany and Switzerland. Dubrovnik and Zadar are the two of the most populous and well known cities in Croatia that are not connected with the railway, while the city of Pula (together with the rest of westernmost Istria County) can only be directly reached by railway through Slovenia (unless one takes the railway company's organized bus service between Rijeka and Lupoglav). As most of the country's interior-based larger towns are connected with the railway on which regular passenger train operation is provided (opposite to the coastal part of the country), there are many small inland towns, villages and remote areas that are served by the trains running on regional or local corridors.

Infrastructure condition
In Croatia, railways are served by standard-gauge (1,435 mm; 4 ft 8+1⁄2). Construction length of the railway network is 2617 km; 1626.12 mi. (2341 km; /1454.63 mi. of single-track corridors and 276 km / 171.49 mi. of double-track corridors). 1013 km (629.44 mi.) of railways are electrified, according to the annual rail network public report of Croatian Railways (2023 issue). The largest part of country's railway infrastructure dates back from the pre-World War II period and more than half of the core routes were, in fact, built during the Habsburg monarchy i.e. before the World War I. More on that, there were also significant lack of investments and decrease of proper maintenance in Croatian railway infrastructure, roughly from the time of country's independence (1991) to late 2000's, which mainly resulted in slowing of permitted track speeds, increase of the riding times and decrease in the overall quality of passenger transport, especially since 2010's on Inter City level. As a result, fair amount of routes lag significantly behind the West-European standards in the form of infrastructural condition.

However, major infrastructure improvements started to occur in early 2010's and continued through 2020's, such as full-profile reconstruction and/or upgrading of the country's international and most of the regional/local corridors. Those improvements, among other things, results in increasing of both maximum track speed and operation safety, shortening of the travel time and modernization of supporting infrastructure (stations, platforms and other equipment.

First newly built railway in Croatia since 1967 (L214) was opened in December 2019.

The official rail speed record in Croatia is 181 km/h. Maximum speed reached in regular service is 160 km/h.

Passenger transport
All nationwide and commuter passenger rail services in Croatia are operated by the country's national railway company Croatian Railways.

Road transport
From the time of Napoleon and building the Louisiana road, the road transport in Croatia has significantly improved, topping most European countries. Croatian highways are widely regarded as being one of the most modern and safe in Europe. This is because the largest part of the Croatian motorway and expressway system (autoceste and brze ceste, resp.) has been recently constructed (mainly in the 2000s), and further construction is continuing. The motorways in Croatia connect most major Croatian cities and all major seaports. The two longest routes, the A1 and the A3, span the better part of the country and the motorway network connects most major border crossings.

Tourism is of major importance for the Croatian economy, and as most tourists come to vacation in Croatia in their own cars, the highways serve to alleviate summer jams. They have also been used as a means of stimulating urgently needed economic growth, and for the sustainable development of this country. Croatia now has a considerable highway density for a country of its size, helping it cope with the consequences of being a transition economy and having suffered in the Croatian War of Independence.

Some of the most impressive parts of the road infrastructure in Croatia includes the Sveti Rok and Mala Kapela tunnels on the A1 motorway, and the Pelješac Bridge in the southernmost part of the country.

, Croatia has a total of 26958 km of roads.

Traffic laws
The traffic signs adhere to the Vienna Convention on Road Signs and Signals.

The general speed limits are:
 * in inhabited areas 50 km/h
 * outside of inhabited areas 90 km/h
 * on marked expressways 110 km/h
 * on marked motorways 130 km/h

Some of the more technical safety measures include that all new Croatian tunnels have modern safety equipment and there are several control cereers, which monitor highway traffic.

Motorways
Motorways (Autocesta, plural autoceste) in Croatia applies to dual carriageway roads with at least two traffic lanes in each driving direction and an emergency lane. Direction road signs at Croatian motorways have green background with white lettering similar to the German Autobahn. The designations of motorways are "A" and the motorway number. , the Croatian motorway network is 1306.53 km long, with additional 25.3 km of new motorways under construction. The list of completed motorways is as follows (see individual articles for further construction plans and status):

 * A1, Zagreb - Bosiljevo - Split - Ploče (E71, E65)
 * A2, Zagreb - Krapina - Macelj (E59)
 * A3, Bregana - Zagreb - Lipovac (E70)
 * A4, Goričan - Varaždin/Čakovec - Zagreb (E71)
 * A5, Osijek - Đakovo - Sredanci (E73)
 * A6, Bosiljevo - Rijeka (E65)
 * A7, Rupa - Rijeka bypass (E61)
 * A8, Kanfanar interchange - Matulji (E751)
 * A9, Umag - Pula (E751)
 * A10, A1 Ploče interchange - Metković border crossing
 * A11, Velika Gorica - Lekenik

Toll is charged on most Croatian motorways, and exceptions are the A11 motorway, Zagreb bypass and Rijeka bypass, as well as sections adjacent to border crossings (except eastbound A3). Payment at toll gates is by all major credit cards or cash, in Euro. Most motorways are covered by the closed toll collection system, where a driver receives a ticket at the entrance gates and pays at the exit gates according to the number of sections travelled. Open toll collection is used on some bridges and tunnels and short stretches of tolled highway, where drivers immediately pay the toll upon arriving. Various forms of prepaid electronic toll collection systems are in place which allow quicker collection of toll, usually at a discounted rate, as well as use of dedicated toll plaza lanes (for ENC system of the electronic toll collection).

Expressways
The term brza cesta or expressway refers to limited-access roads specifically designated as such by legislation and marked with appropriate limited-access road traffic signs. The expressways may comprise two or more traffic lanes, while they normally do not have emergency lanes.

Polu-autocesta or semi-highway refers to a two-lane, undivided road running on one roadway of a motorway while the other is in construction. By legal definition, all semi-highways are expressways.

The expressway routes in Croatia usually correspond to a state road (see below) and are marked a "D" followed by a number. The "E" numbers are designations of European routes.

State roads
Major roads that aren't part of the motorway system are državne ceste (state routes). They are marked with the letter D and the road's number.

The most traveled state routes in Croatia are:
 * D1, connects Zagreb and Split via Lika - passes through Karlovac, Slunj, Plitvice, Korenica, Knin, Sinj.
 * D2, connects Varaždin and Osijek via Podravina - passes through Koprivnica, Virovitica, Slatina, Našice.
 * D8, connects Rijeka and Dubrovnik, widely known as Jadranska magistrala and part of E65 - runs along the coastline and connects many cities on the coast, including Crikvenica, Senj, Zadar, Šibenik, Trogir, Split, Omiš, Makarska and Ploče.

Since the construction of A1 motorway beyond Gorski kotar started, D1 and D8 are much less used.

These routes are monitored by Croatian roadside assistance because they connect important locations. Like all state routes outside major cities, they are only two-lane arterials and do not support heavy traffic. All state routes are routinely maintained by Croatian road authorities. The road sign for a state route has a blue background and the route's designation in white. State routes have one, two or three-digit numbers.

County roads and minor roads
Secondary routes are known as county roads. They are marked with signs with yellow background and road number. These roads' designations are rarely used, but usually marked on regional maps if these roads are shown. Formally, their designation is the letter Ž and the number. County roads have four-digit numbers.

The least known are the so-called local roads. Their designations are never marked on maps or by roadside signs and as such are virtually unknown to public. Their designations consist of the letter L and a five-digit number.

Bus traffic
Buses represent the most-accepted, cheapest and widely used means of public transport. National bus traffic is very well developed - from express buses that cover longer distances to bus connections between the smallest villages in the country, therefore it's possible to reach most of the remotest parts of Croatia by bus on a daily basis. Every larger town usually has a bus station with the ticket office(s) and timetable information. Buses that run on national lines in Croatia (owned and run by private companies) are comfortable and modern-equipped vehicles, featuring air-conditioning and offering pleasant traveling comfort.

National bus travel is generally divided in inter-city (Međugradski prijevoz), inter-county (Međužupanijski prijevoz) and county (local; Županijski prijevoz) transport. Although there can be bus companies whose primary goal is to serve inter-city lines, a certain bus company can - and most of them usually do - operate all or most of the above-mentioned modes of transport.

The primary goal of intercity buses is to connect the largest cities in the country with each other in the shortest possible time. Buses on inter-city level usually offer far more frequent daily services and shorter riding time than trains, mostly due to the large amount of competing companies and great quality of the country's freeway network. According to timetables of bus companies, there are several types of inter-city bus lines. Some lines run directly on the highway to connect certain cities by the shortest route. Other lines run on lower-ranked roads (all the way or part of the way) even when there is a highway alternative, to connect settlements along the way, while some lines run on the highway and sometimes (one time or more) temporarily exit it to serve some smaller settlement nearby, thus giving the opportunity to a certain smaller settlement to be connected by express service.

Buses on county lines usually run between larger cities or towns in a particular county, connecting towns and smaller villages along the way. These buses are mostly used by local residents - students or workers and occasional passengers, so the timetables and line frequencies of these bus routes are mostly adjusted according to the needs of passenger's daily migrations. Since there is no bus terminal in smaller villages, passengers which board buses from those stations buy a ticket from the driver while boarding the bus, unless they have a monthly student or worker pass, in which case they must validate it each time they board the vehicle. Buses running on inter-county lines usually have the same or very similar purpose, except they cross county borders to transport passengers to the more distanced larger town or area.

There are many international bus routes from Croatia to the neighboring countries (Slovenia, Bosnia and Herzegovina, Serbia, Hungary) and to other European countries. International bus services correspond to European standards.

Zagreb has the largest and busiest bus terminal in Croatia. It is located near the downtown in Trnje district on the Marin Držić Avenue. The bus terminal is close to the main railway station and it is easy to reach by tram lines and by car.

Coastal infrastructure
Republic of Croatia counts six ports open for public traffic of outstanding (international) economic importance and those are the ports: Rijeka, Zadar, Šibenik, Split, Ploče and Dubrovnik. There are also numerous smaller public ports located along the country's coast.

Rijeka is the country's largest cargo port, followed by Ploče which is of great economic importance for the neighboring Bosnia and Herzegovina. The three most common destinations for foreign cruise ships are the ports of Dubrovnik, Split and Zadar. Split is the country's largest passenger port, serving as the public port for domestic ferry, conventional ship and catamaran services as well as for international ferry, cruise or mega cruise services.

Zadar has two public transport ports opened for passenger traffic – one located in the town center served by conventional ship and catamaran services and the other located in the suburb of Gaženica, serving ferry and cruise ship services. Republic of Croatia defined the need to relieve the Zadar's passenger port and the historic center of Zadar and move ferry traffic from the city center to the new passenger port in Gaženica. Work on the construction of the new port began in 2009, and a new ferry port of approximately 100,000 square meters was opened to traffic in 2015. The advantages of the Port of Gaženica are the short distance from the city center (3.5 kilometers), the proximity of the airport and quality traffic connection with the A1 Motorway. The Port of Gaženica meets multiple traffic requirements - it serves for domestic ferry traffic, international ferry traffic, passenger traffic on mega cruisers and RO-RO traffic, with all the necessary infrastructure and accompanying upgrades. In 2019, the passenger port of Gaženica was named Port of the Year at the most prestigious Seatrade Cruise Awards held in Hamburg.

Connection of islands and the mainland
Performing of the public transport on national conventional ship, catamaran and ferry lines and all occasional public maritime lines in Croatia is supervised by the government-founded Agency for coastal line traffic (Agencija za obalni linijski promet). Croatia has about 50 inhabited islands along its coast (most of which are reached from either Zadar or Split ports), which means that there is a large number of local car ferry, conventional ship and catamaran connections. The vast majority of Croatian islands have a road network and several ports for public transport - usually a single ferry port and one or more additional ports mostly located near the bay settlements, served exclusively by conventional ships and catamarans. According to sailing schedules or in case of extraordinary conditions, conventional and catamaran ships can also serve ferry ports. There are also very small number of car-free islands that are accessible only by conventional ship or catamaran services, such as Silba in northern Dalmatia.

Regarding national ferry lines, in the lead terms of the number of transported passengers and vehicles are the one between Split and Supetar on the island of Brač (central Dalmatia) and one between Valbiska (island of Krk) and Merag (island of Cres) in northern Kvarner Gulf. Ferry line between Zadar and Preko on the island of Ugljan (northern Dalmatia) is the most frequent one in Croatia and the rest of the Adriatic - in the summer sailing schedule on this 3 nmi there is around 20 departures per day in each direction. The longest ferry line in Croatia is Zadar - Ist - Olib - Silba (passenger service only) - Premuda - Mali Lošinj (63.4 nmi), while the shortest one is between Biograd na Moru and Tkon on the island of Pašman (1.4 nmi), both operating in northern Dalmatia.

Almost all ferry lines in Croatia are provided by the state-owned shipping company Jadrolinija, except the ferry service between Stinica and Mišnjak on the island of Rab (Kvarner Gulf area) which is operated by the company “Rapska Plovidba d.d”. Catamaran and passenger ship services are operated by Jadrolinija and several other companies such as "Krilo - Kapetan Luka", "G&V Line Iadera" , Tankerska plovidba, "Miatours d.o.o." etc. Jadrolinija alone provides a total of 34 national lines with almost 600 departures per day during the summer tourist season, when the number of ferry, conventional ship and catamaran lines on the most capacity-demanding routes is significantly higher compared to the off-season period.

International routes
With its largest vessels, Jadrolinija connects Croatia with Italy by operating international cross-Adriatic routes Split - Ancona - Split, Zadar - Ancona - Zadar and Dubrovnik - Bari - Dubrovnik. Ferry line between Split and Ancona is also operated by Italian operator SNAV.

River transport
Croatia is also on the important Danube waterway which connects Eastern and Central Europe. The major Danube port is Vukovar, but there are also some smaller ports in Osijek, Sisak and Slavonski Brod.

Navigable rivers:
 * Danube(E 80) - 137,5 km from entering Croatia near Batina to exits near Ilok; VIc class
 * Sava(E 80–12) - 383.2 km from Sisak until it exits Croatia near Gunja; II-IV class
 * Drava(E 80–08) - 14 km from the mouth of the Danube to Osijek; IV class

Total waterway length (2021): 534.7 km

Pipelines
The projected capacity of the oil pipeline is 34 million tons of oil per year, and the installed 20 million tons of oil per year. The system was built for the needs of refineries in Croatia, Slovenia, Serbia and Bosnia and Herzegovina, as well as users in Hungary, the Czech Republic and Slovakia. The total capacity of the storage space today is 2,100,000 m3 for crude oil and 242,000 m3 for petroleum products. The pipeline is 631 km long and it is fully controlled by JANAF. The system consists of: reception and dispatch Terminal Omišalj on the island of Krk, with two berths for tankers and storage space for oil and derivatives, receiving and dispatching terminals in Sisak, Virje and Slavonski Brod with oil storage space at the Sisak and Virje terminals, Žitnjak Terminal in Zagreb, for storage of petroleum products with railway and truck transfer stations for delivery, reception and dispatch of derivatives.

Natural gas is transported by Plinacro, which operates 2549 km of the transmission system in 19 counties, with more than 450 overhead transmission system facilities, including a compressor station and 156 metering and reduction stations through which gas is delivered to system users. The system houses the Okoli underground storage facility with a working volume of 553 million cubic meters of natural gas.

Public transport
Public transport within most of the largest cities (and their suburbs/satellite towns) in Croatia is mostly provided by the city buses owned and operated by municipal organizations such as Zagrebački električni tramvaj in Zagreb, Promet Split in Split, "Autotrolej" d.o.o." in Rijeka, "Liburnija Zadar" in Zadar, "Gradski Prijevoz Putnika d.o.o." in Osijek, etc.

In addition to city buses, the cities of Zagreb and Osijek have tram networks. Tram lines in Zagreb are operated by Zagrebački električni tramvaj (which also operates a single funicular line - mostly for tourist purposes - and a gondola lift system), while the tram lines in Osijek are operated by "Gradski Prijevoz Putnika d.o.o.". Tram network in the capital city of Zagreb is, however, far more extensive than the one in Osijek.

license: Creative Commons - Attribution Share-Alike - https://creativecommons.org/licenses/by-sa/4.0/

title: Transport in Croatia


text:
Armed Forces of Croatia

The Armed Forces of the Republic of Croatia (Oružane snage Republike Hrvatske – OSRH) are the military forces of Croatia.

The President is the Armed Forces Commander-in-Chief, and exercises administrative powers in times of war by giving orders to the chief of staff, while administration and defence policy execution in peacetime is carried out by the Government through the Ministry of Defence. This unified institution consists of land, sea, and air branches referred to as:

 * Croatian Army (Hrvatska kopnena vojska - HKoV)
 * Croatian Navy (Hrvatska ratna mornarica - HRM)
 * Croatian Air Force (Hrvatsko ratno zrakoplovstvo - HRZ)

The Croatian Armed Forces are charged with protecting the Republic as well as supporting international peacekeeping efforts, when mandated by NATO, the United Nations or the European Union.

The Army has 650 AFVs, around 150 pieces of artillery, 100 MLRSs, around 75 tanks, and 25 SPGs. The Air Force has 12 MiG-21 jet fighters, 10 combat-transport Mi-171 and 16 OH-58 attack helicopters. The Navy has 30 ships, out of which five 60-80 metre fast attack craft are used in offensive capabilities. In April of 2024 Croatia acquired first 6 out of 12 used French Rafale F-3R.

Strength
In 2020, Armed Forces had 15,605 members, of which 14,325 were active military personnel and 1,280 civil servants. Of the 14,506 active military personnel, 3,033 were officers, 5,549 non-commissioned officers, 5,214 soldiers, 529 military specialists, 307 civil servants and 973 other employees.

Total available male manpower aged 16–49 numbers 1,035,712, of which 771,323 are technically fit for military service. Male citizens are now no longer subject to compulsory military service since January 1, 2008. However, the last generation of 2007 servicemen was also absolved of compulsory service by an act from then Minister of Defence Berislav Rončević.

Budget
The trajectory of Croatian military budget and spending was constantly below 2% of GDP, a major difference from the 1990s when defence expenditure represented a major stake in Croatian budgetary expenditure due to then ongoing Croatian War of Independence. For example, 1995 Croatian defence budget stood at 12.4 billion Croatian Kuna or around 10% of GDP, which was also represented at the time highest defence expenditure rate. In late 2019, Croatian Government issued revised defence expenditure strategy which will see country increase its defence expenditure to gradually meet 2% NATO target, with 2019 and 2020 defence budgets seeing immediate revisions and increases to meet new spending plan. Defence expenditure in 2025 therefore based on current projections could reach €1.75 billion or around 2% of GDP which would meet NATO recommendation. However, if defence pensions are included in Croatia's defence expenditure, then Croatia already meets 2% target recommended by the NATO. Some €1140 million was paid in defence pensions to some 97000 individuals in Croatia.

Defence expenditures in recent years (source Croatian MOD);

 * Croatia adopted € and therefore, Kuna is no longer national currency in circulation or used in statistics. As of January 1, 2023 exchange rate for €1 = 7.53 Kuna.

Although the budget has been decreased in percentage of BDP from year to year, overall budget increased and the Croatian Armed Forces were able to maintain military readiness and to participate in major NATO exercises in Croatia and overseas. Downsizing of the armed forces has allowed for more funds to be allocated to modernization over the past few years with an average of 1.6 billion HRK spent on modernization, infrastructure and construction of new facilities.
 * (*) - projected expenditure
 * (**) - proposed expenditure

A $3 billion modernization plan was proposed by the then Prime Minister Ivica Račan of the SDP led government in 2003., with planned modernization starting in 2006. and ending in 2015.. However it has been delayed due to the subsequent economic recession that has cost the Croatian MOD several billion HRK since 2006.. A new plan under former Prime Minister Zoran Milanović should define exactly how and what the Croatian armed forces should look like by 2023.. A defense white paper was published in 2015 with emphasis placed on modernization of the Army.

Dr. Franjo Tuđman Military Academy
The Dr. Franjo Tuđman Military Academy, named after Franjo Tuđman, acts as a school of higher learning responsible for training and educating future generations of military personnel. The academy consists of several schools including "Ban Josip Jelačić", "Blago Zadro", "Katarina Zrinska", the Officers Academy, and a school for non commissioned officers. The academy has 300 full-time staff and is the only military academy in Croatia. Each year also 100–120 foreign nationals attend the academy.

Commander
The Commander-in-Chief of all Croatian armed forces in peace and war is the President of the Republic. The Commander-in-Chief prescribes the organisation of the Croatian Armed Forces at the proposal of the Chief of General Staff, with consent of the Minister of Defence.

The Armed Forces consist of peacetime and wartime components. The peacetime component is composed of the active military officers, civil servants and employees in the Croatian Armed Forces, cadets, and conscripts serving a 6-month national service and reservists when on military exercise. The wartime component of the Armed Forces includes all other reservists.

The General Staff is part of the Ministry of Defence in charge of commanding, training and use of the Armed Forces. It also has a number of units under its direct command, including the Special Operations Battalion, Honour Guard Battalion and several others.

In peace, the Commander-in-Chief exercises his command through the Minister of Defence. In war and in cases where the Minister of Defence is not fulfilling his orders, the Commander-in-Chief exercises his command directly through the General Staff Commander.

The Croatian Parliament exercises democratic control over the Armed Forces by adopting defence strategy, defence budget, and defence laws.

Special Forces Command
Special Forces Command (Zapovjedništvo specijalnih snaga, ZSS) was established in February 2015, succeeding the Special Operations Battalion (Croatia), in accordance with the Long-term Development Plan of the Croatian Armed Forces in the period 2015–2024. The command staff is composed of the members who served in the special units, guards brigades and reconnaissance units of the Croatian Armed Forces. The main mission of the Special Forces Command is to ensure combat readiness of the special forces in the protection of the territorial integrity, sovereignty and independence of the Republic of Croatia, as well as for the participation in NATO-led operations. Colonel Perica Turalija is the current commanding officer of the command.

The Croatian General Staff exercises direct command over the battalion which thus elevates the unit to strategic level deployment for quicker reaction and overall better and faster response to tactical and strategic situations. Also, this means that members of all three branches of the Croatian armed forces can apply for selection.

Other special operations units are the Military Intelligence Battalion (Vojno-obavještajna bojna, VOB) and Special Military Police Company (Satnija specijalne vojne policije, SS VP).

The duties of an Honor Guard are performed by the Honor Guard Battalion (Počasno zaštitna bojna), located at Zagreb in the Tuškanac military base.

Projects
A long term modernization plan for 2015–2024 has been published outlining overall goals and is available for download (102 pages) at the Ministry of Defense of Croatia website. According to earlier reports from the government, the Croatian Armed Forces are set to receive vitally needed new equipment.

Army

 * Modernisation of M-84A and M-84A4 Snajper MBTs and upgrade to M-84D standard. The programme is at a standstill and is unlikely to receive further funding due to high costs involved of nearly 20 million kuna per tank, but overhaul of existing fleet might be completed by the end of 2017 at cost of 120 million kuna (24 vehicles already overhauled at cost of 60 million kuna).
 * The Croatian Army is looking at replacing 128 M80A IFV in its inventory, Croatian Army requires 108 vehicles, 88 infantry combat vehicles, 4 driver training vehicles, 8 armoured ambulance vehicles and 8 command vehicles. It was announced that M2 Bradley in M2A2 ODS variant was chosen, 60 + 24 vehicles for spare parts will be delivered in 2020 as a donation from United States and modernised in Croatia by BAE Systems. In 2022 Croatia bought 89 M2 Bradley vehicles.
 * Talks are being held with US and German governments on possible purchase of M270 Multiple Launch Rocket System, Croatian requirements call for initially 8 systems to form a two battery teams at independent Artillery regiment, with potential for further 16 systems to equip 2 active brigades for total of 24 systems + simulators and training aids. Number of systems Croatian Army might purchase will solely depend on price of the entire purchase and delivery dates, Croatian Defence budget has set aside some 200 million kuna or $32 million for this programme, although it is likely said systems might be donated by the US for symbolic price in turn Croatian MOD paying only VAT.
 * The initial order of 8 Elbit UT30Mk2 CRO unmanned turrets for Patria AMV, armed with 30mm gun and Spike launchers in 2019, value of the contract: $14.9 million.
 * Scores of smaller programmes, communication equipment, night vision capability, electronic sensors, NBC equipment, battlefield management systems and modernisation of artillery systems with new sights and electronic fire control systems are planned.
 * Procurement of advanced short to medium range NATO SAM system. As of now no real funding has been mentioned other than the statement that this project is a priority and current requirements call for one battery. Estimated value – $50–70 million for new system. Alternately a second-hand system might be obtained as a donation by the United States, in which case only the VAT cost will be incurred.
 * Procurement of short range SAM systems – no indication of what system or specifications other than a requirement for a range of up to 10 km. Intent is for up to 3 batteries with one battery being ready by 2015/6. Total funding for this programme has not been made public yet, but similar western systems tend to be in range of $17–20 million per battery.

Air Force

 * Croatia has a requirement for a small number of fighter aircraft (6-12) to replace the MiG-21. A plan to acquire ex-Israeli F-16C/Ds was cancelled in January 2019 after the United States refused to allow Israel to sell the aircraft. The Croatian interdepartmental commission for the procurement of multi-purpose combat aircraft has sent requests for proposals (RFP) for two new fighter types (F-16 Block 70/72 and JAS-39C/D) and five second hand fighters types (F-16AM/BM, F-16C/D, F-16 Barak, Eurofighter Typhoon and Dassault Rafale). Croatia's government said it expects to receive the new offers by May and make the decision by August 2020. In 2021 Croatia bought 12 used Dassault Rafale from France.
 * Purchase of up to 10–12 transport helicopters (after 2020) – replacing older Mi-8. With the Government indicating that purchase of 10 new helicopters might be the only option after 2020. Most likely candidate is the UH-60M since the United States donated two new helicopters and Croatia decided to purchase additional two. Programme cost: 2.5 billion kuna.

Navy
Navy plans are still being worked on but present plans call for a moderate expansion of the naval force.

 * 5 new patrol boats, locally built, 42 metres in length. Cost of programme 750 million kuna, or 375 million for first 5 ships, first to enter service in 2018.
 * 2 new corvettes – 80–125 metres in length. Cost of programme 3.0 billion kuna. Programme is at standstill due to lack of funds, feasible only after 2020.
 * Overhaul of existing 2 Kralj class fast attack crafts, including new engines. Cost of programme – 40 million kuna.
 * Overhaul of sea radar Falcon 2 Enhanced Peregrine – programme is being financed by US government at estimated cost of $8 million.
 * Possible purchase of 2nd minesweeper before 2020; although there are only indications that this might happen if funds can be allocated. Programme cost – 80 million kuna.

Arms exports
As a small country, Croatia has a relatively well developed arms industry that is highly competitive internationally with significant annual arms exports. In 2012, Croatia managed to export nearly €120 million. However it has been reported in The New York Times that Croatia has been arming Syrian rebels with Croatian manufactured arms used during the Homeland War, arms Croatia no longer uses due to their obsolescence. Nevertheless, these arms played a crucial role in some significant rebel gains during 2012. As a result of these arms sales into this volatile region the Croatian government ordered the immediate withdrawal of the Croatian UN Golan Heights contingent to avoid their being targeted in retaliation.

In 2013 Croatia exported €143 million worth of arms, however it is not clear if this also includes $36.5 million worth of arms Croatia exported to Jordan for Syrian rebels. Croatia was the top supplier of arms to Syrian rebels in 2013, but much of it through illicit channels without Croatian government approval or knowledge. Most of these arms were exported via Jordan.

In 2014 Croatian arms exports reached 1.5 bn HRK (Croatian kuna) or €200 million or $257 million, the majority of exports being to NATO allies and Australia. In late 2014 the Croatian Defence Minister announced a major export deal to Iraq including the State of Kurdistan. This agreement includes the sale of 20,000 VHS Rifles, 150,000 complete sets of uniforms, helmets and associated equipment valued at €100 million. Croatian arms exports are growing steadily at 10–15% year-on-year and were expected to reach 1.75 billion HRK in 2015 or around €230 million, although much of the equipment exported is non-lethal. Croatian firms are well positioned on some major arms tenders in the Middle East, supplying complex military hardware such as the Patria AMV incorporating a newly developed 30mm overhead weapon station (valued at €1.25 million each) and said vehicles valued at €1.75 million. Kuwait, the UAE, and Saudi Arabia have been mentioned as potential customers, although no concrete contracts have been signed so far. Croatian firms are participating in Kuwaiti and UAE tenders for next-generation APC programmes, each valued at billions of euros.

Croatian arms exports have grown steadily for the better part of this decade and have reached €325 million per year, placing Croatia in the top 10 arms exporters within NATO, behind the US, Germany, UK, France, Netherlands, Spain, Italy, Poland and Norway. The vast majority of these exports are to NATO partners such as the US, Norway, Australia, Canada, France. Croatia granted €5.75 billion in export licenses in 2016 and 2017; however, only a fraction of this sum has materialised in actual arms exports.

International cooperation
On 1 April 2009, Croatia joined NATO and on 1 July 2013, it became the 28th member of the European Union. The Croatian Armed Forces participate in many of the (military) aspects of both organisations as well as actively participating in many United Nations peacekeeping operations worldwide.

title: Armed Forces of Croatia


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Foreign relations of Croatia

The foreign relations of Croatia is primarily formulated and executed via its government which guides the state's interactions with other nations, their citizens, and foreign organizations. Active in global affairs since the 9th century, modern Croatian diplomacy is considered to have formed following their independence from Yugoslavia in 1991. As an independent state, Croatia established diplomatic relations with most world nations – 187 states in total – during the 1990s, starting with Germany (1991) and ending most recently with Togo (2023). Croatia has friendly relations with most of its neighboring countries, namely Slovenia, Hungary, Montenegro, Albania, and Italy. They maintain colder, more tense relations with Serbia as well as Bosnia and Herzegovina due to historic nation-building conflict and differing political ideologies.

Croatia is seen as a stabilizing influence in Southeast Europe due to its political alignment with the Western world. It maintains strong relations with the United States, the United Kingdom, and the European Union (E.U.), joining the organization in 2013. Croatia is a military ally to the U.S., U.K., and E.U. through its membership in NATO, having joined in 2009. The economy of Croatia is one of the largest in Southeast Europe with $80.1 billion in nominal gross domestic product (GDP). The country receives foreign aid from the IMF and USAID.

Their foreign policy objectives have shifted since the Croatian War of Independence. During the 1990s, Croatia sought to gain international recognition and join the United Nations (2000), later seeking entry into NATO (2009) and the European Union (2013). Modern policy objectives are regional stabilization, influence in international organizations, and strengthening multilateral cooperation. Succession issues following the 1991-92 dissolution of Yugoslavia continue to complicate regional relations. Croatia has outstanding border disputes, sovereign ownership issues, and treaty disagreements with multiple neighbors.

Croatia is a member of the United Nations (UN), the Council of Europe, the World Trade Organization (WTO), Union for the Mediterranean and a number of other international organizations. The Council of Europe has been led by Croatian diplomat Marija Pejčinović Burić since 2019.

History
The first native Croatian ruler recognised by the Pope was duke Branimir, who received papal recognition from Pope John VIII on 7 June 879. Tomislav was the first king of Croatia, noted as such in a letter of Pope John X in 925. Maritime Republic of Ragusa (1358-1808) maintained widespread diplomatic relations with the Ottoman Empire, Republic of Venice, Papal States and other states. Diplomatic relations of the Republic of Ragusa are often perceived as a historical inspiration for the contemporary Croatian diplomacy. During the Wars of the Holy League Ragusa avoided alignment with either side in the conflict rejecting Venetian calls to join the Holy League.

Antun Mihanović, author of the anthem of Croatia, spent over 20 years as a consul of the Austrian Empire in Belgrade (Principality of Serbia), Bucharest (Wallachia) and Istanbul (Ottoman Empire) starting in 1836. The Yugoslav Committee, political interest group formed by South Slavs from Austria-Hungary during World War I, petitioned Allies of World War I and participated in international events such as the Congress of Oppressed Nationalities of the Austro-Hungarian Empire. The Association for the Promotion of the League of Nations Values was active in Zagreb in the interwar period organizing lectures by Albert Thomas, Goldsworthy Lowes Dickinson and Ludwig Quidde. During World War II, the Axis puppet state known as the Independent State of Croatia maintained diplomatic relations with several different countries in Europe.

Socialist Republic of Croatia within Yugoslavia
While each constitution of Yugoslavia defined foreign affairs as a federal level issue, over the years Yugoslav constituent republics played increasingly prominent role in either defining this policy or pursuing their own initiatives. Number of diplomats from Croatia gained significant experience in the service to the prominent Cold War era Yugoslav diplomacy.

In June 1943 Vladimir Velebit became the point of contact for foreign military missions in their dealings with the Yugoslav Partisans. Ivan Šubašić (1944-1945), Josip Smodlaka (NKOJ: 1943–1945), Josip Vrhovec (1978-1982) and Budimir Lončar (1987-1991) led the federal level Ministry of Foreign Affairs while numerous Croatian diplomats served in Yugoslav embassies or multilateral organizations. In 1956 Brijuni archipelago in People's Republic of Croatia hosted the Brioni Meeting, one of the major early initiatives leading to the establishment of the Non-Aligned Movement. Between 1960 and 1967 Vladimir Velebit was executive secretary of the United Nations Economic Commission for Europe. During the Croatian Spring Croatian economist Hrvoje Šošić argued for the separate admission of the Socialist Republic of Croatia into the United Nations similar to the membership of Ukrainian and Byelorussian Soviet Socialist Republic which led to his imprisonment. In 1978, Croatia together with SR Slovenia joined the newly established Alps-Adriatic Working Group. The breakup of Yugoslavia led to mass transfers of experts from federal institutions enabling post-Yugoslav states to establish their own diplomatic bodies primarily by employing former Yugoslav cadres. The 2001 Agreement on Succession Issues of the Former Socialist Federal Republic of Yugoslavia formally assigned to Croatia a portion of the diplomatic and consular properties of the previous federation.

Foreign policy since independence

On 17 December 1991 the European Economic Community adopted the "Common Position for the recognition of the Yugoslav Republics" requesting the Yugoslav republics wishing to gain recognition to accept provisions of international law protecting human rights as well as national minorities rights in hope that credible guarantees may prevent incentives for violent confrontations. Later that month Croatian Parliament introduced the Constitutional Act on the Rights of National Minorities in the Republic of Croatia opening the way for 15 January 1992 collective recognition by the Community. Croatia maintained some links beyond the Euro-Atlantic world via its observer status in the Non-Aligned Movement which it enjoyed already at the 10th Summit of the Non-Aligned Movement in Jakarta, Indonesia.

Following the international recognition of Croatia in 1992 the country was faced with the Croatian War of Independence between 1992 and 1995. A significant part of the country was outside of the control of the central government with the declaration of self-proclaimed unrecognized Republic of Serbian Krajina. In 1992 signing of the Sarajevo Agreement led to the cease-fire to allow UNPROFOR deployment in the country. Diplomatic efforts led to unsuccessful proposals which included the Daruvar Agreement and Z-4 Plan. In 1995 UNCRO mission took over the UNPROFOR mandate yet soon after Operation Storm led to a decisive victory for the Croatian Army with only the Eastern Slavonia, Baranja and Western Syrmia remaining initially as a rump territory of Krajina. A diplomatic solution that avoided conflict in Eastern Slavonia was reached on 12 November 1995 via the signing of the Erdut Agreement with significant support and facilitation from the international community (primarily the United States, and with United Nations and various European actors). Temporary UNTAES administration over the region opened the way for the signing of the Dayton Agreement which ended the Bosnian War. It also led to the signing of 1996 Agreement on Normalization of Relations between the Federal Republic of Yugoslavia and the Republic of Croatia.

With the resolution of some of the major bilateral issues arising from the Yugoslav Wars Croatian foreign policy has focused on greater Euro-Atlantic integration, mainly entering the European Union and NATO. The progress was nevertheless slow in the period between 1996 and 1999 with rising concerns over authoritarian tendencies in the country. In order to gain access to European and trans-Atlantic institutions, it has had to undo many negative effects of the breakup of Yugoslavia and the war that ensued, and improve and maintain good relations with its neighbours. Croatia has had an uneven record in these areas between 1996 and 1999 during the right-wing HDZ government, inhibiting its relations with the European Union and the United States. In 1997 United States diplomacy even called upon its European partners to suspend Croatia from the Council of Europe as long as country fails to show adequate respect for human and minority rights. Lack of improvement in these areas severely hindered the advance of Croatia's prospects for further Euro-Atlantic integration. Progress in the areas of Dayton, Erdut, and refugee returns were evident in 1998, but progress was slow and required intensive international engagement. Croatia's unsatisfactory performance implementing broader democratic reforms in 1998 raised questions about the ruling party's commitment to basic democratic principles and norms. Areas of concern included restrictions on freedom of speech, one-party control of public TV and radio, repression of independent media, unfair electoral regulations, a judiciary that is not fully independent, and lack of human and civil rights protection.

With the 1999 death of President Franjo Tuđman, 2000 Croatian parliamentary election as well as corresponding regional changes such as the Overthrow of Slobodan Milošević, the European Union organized the 2000 Zagreb and 2003 Thessaloniki Summits in which European integration perspective was discussed for all the countries in the region. The new SDP-led centre-left coalition government slowly relinquished control over public media companies and did not interfere with freedom of speech and independent media, though it did not complete the process of making Croatian Radiotelevision independent. Judiciary reforms remained a pending issue as well. The government's foreign relations were severely affected by the hesitance and stalling of the extradition of Croatian general Janko Bobetko to the International Criminal Tribunal for the Former Yugoslavia (ICTY), and inability to take general Ante Gotovina into custody for questioning by the Court. Nevertheless, Croatia managed to enter NATO's Partnership for Peace Programme in May 2000, World Trade Organization in July 2000, signing a Stabilization and Association Agreement with the EU in October 2001, Membership Action Plan in May 2002, and joined the Central European Free Trade Agreement (CEFTA) in December 2002. The EU membership application was the last major international undertaking of the Račan government, which submitted a 7,000-page report in reply to the questionnaire by the European Commission. Negotiations were initiated with the achievement of the full cooperation with the Hague Tribunal in October 2005. Croatian president Stjepan Mesić participated in the NAM conferences in Havana in 2006 and Sharm el-Sheikh in 2009 using the country's post-Yugoslav link with the Third World in its successful campaign for the Eastern European Spot at the United Nations Security Council in 2008–2009 (in open competition with Czech Republic which was a member state both of EU and NATO).

Refugee returns accelerated since 1999, reached a peak in 2000, but then slightly decreased in 2001 and 2002. The OSCE Mission to Croatia, focusing on the governed by the UNTAES, continued to monitor human rights and the return of refugees until December 2007 with the OSCE office in Zagreb finally closing in 2012. Croatian Serbs continue to have problems with restitution of property and acceptance to the reconstruction assistance programmes. Combined with lacking economic opportunities in the rural areas of former Krajina, the return process was only partial.

Accession to the European Union
At the time of Croatia's application to the European Union, three EU members states were yet to ratify the Stabilization and Association Agreement: United Kingdom, the Netherlands and Italy. The new Sanader government elected in 2003 elections repeated the assurances that Croatia will fulfill the missing political obligations, and expedited the extradition of several ICTY inductees. The European Commission replied to the answers of the questionnaire sent to Croatia on 20 April 2004 with a positive opinion. The country was finally accepted as EU candidate in July 2004. Italy and United Kingdom ratified the Stabilization and Association Agreement shortly thereafter, while the ten EU member states that were admitted to membership that year ratified it all together at a 2004 European Summit. In December 2004, the EU leaders announced that accession negotiations with Croatia would start on 17 March 2005 provided that Croatian government cooperates fully with the ICTY. The main issue, the flight of general Gotovina, however, remained unsolved and despite the agreement on an accession negotiation framework, the negotiations did not begin in March 2005. On 4 October 2005 Croatia finally received green light for accession negotiations after the Chief Prosecutor of the ICTY Carla Del Ponte officially stated that Croatia is fully cooperating with the Tribunal. This has been the main condition demanded by EU foreign ministers for accession negotiations. The ICTY called upon other southern European states to follow Croatia's good example. Thanks to the consistent position of Austria during the meeting of EU foreign ministers, a long period of instability and the questioning of the determination of the Croatian government to extradite alleged war criminals has ended successfully. Croatian Prime minister Ivo Sanader declared that full cooperation with the Hague Tribunal will continue. The accession process was also complicated by the insistence of Slovenia, an EU member state, that the two countries' border issues be dealt with prior to Croatia's accession to the EU.

Croatia finished accession negotiations on 30 June 2011, and on 9 December 2011, signed the Treaty of Accession. A referendum on EU accession was held in Croatia on 22 January 2012, with 66% of participants voting in favour of joining the Union. The ratification process was concluded on 21 June 2013, and entry into force and accession of Croatia to the EU took place on 1 July 2013.

Current events
The main objective of the Croatian foreign policy is positioning within the EU institutions and in the region, cooperation with NATO partners and strengthening multilateral and bilateral cooperation.

Government officials in charge of foreign policy include the Minister of Foreign and European Affairs, currently Gordan Grlić-Radman, and the President of the Republic, currently Zoran Milanović.

Croatia has established diplomatic relations with 186 countries around the world. As of 2009, Croatia maintains a network of 51 embassies, 24 consulates and eight permanent diplomatic missions abroad. Furthermore, there are 52 foreign embassies and 69 consulates in the Republic of Croatia in addition to offices of international organizations such as the European Bank for Reconstruction and Development, International Organization for Migration, Organization for Security and Co-operation in Europe (OSCE), World Bank, World Health Organization, International Criminal Tribunal for the former Yugoslavia (ICTY), United Nations Development Programme, United Nations High Commissioner for Refugees and UNICEF.

International organizations
Republic of Croatia participates in the following international organizations: CE, CEI, EAPC, EBRD, ECE, EU, FAO, G11, IADB, IAEA, IBRD, ICAO, ICC, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Inmarsat, Intelsat, Interpol, IOC, IOM, ISO, ITU, ITUC, NAM (observer ), NATO, OAS (observer), OPCW, OSCE, PCA, PFP, SECI, UN, UNAMSIL, UNCTAD, UNESCO, UNIDO, UNMEE, UNMOGIP, UPU, WCO, WEU (associate), WHO, WIPO, WMO, WToO, WTO

There exists a Permanent Representative of Croatia to the United Nations.

Foreign support
Croatia receives support from donor programs of:
 * European Bank for Reconstruction and Development (EBRD)
 * European Union
 * International Bank for Reconstruction and Development
 * International Monetary Fund
 * USAID

Between 1991 and 2003, the EBRD had directly invested a total of 1,212,039,000 EUR into projects in Croatia.

In 1998, U.S. support to Croatia came through the Southeastern European Economic Development Program (SEED), whose funding in Croatia totaled $23.25 million. More than half of that money was used to fund programs encouraging sustainable returns of refugees and displaced persons. About one-third of the assistance was used for democratization efforts, and another 5% funded financial sector restructuring.

In 2003 USAID considered Croatia to be on a "glide path for graduation" along with Bulgaria. Its 2002/2003/2004 funding includes around $10 million for economic development, up to $5 million for the development of democratic institutions, about $5 million for the return of population affected by war and between 2 and 3 million dollars for the "mitigation of adverse social conditions and trends". A rising amount of funding is given to cross-cutting programs in anti-corruption, slightly under one million dollars.

The European Commission has proposed to assist Croatia's efforts to join the European Union with 245 million euros from PHARE, ISPA and SAPARD aid programs over the course of 2005 and 2006.

International disputes
Relations with neighbouring states have normalized somewhat since the breakup of Yugoslavia. Work has begun — bilaterally and within the Stability Pact for South Eastern Europe since 1999 — on political and economic cooperation in the region.

Bosnia and Herzegovina
Discussions continue between Croatia and Bosnia and Herzegovina on various sections of the border, the longest border with another country for each of these countries. Sections of the Una river and villages at the base of Mount Plješevica are in Croatia, while some are in Bosnia, which causes an excessive number of border crossings on a single route and impedes any serious development in the region. The Zagreb-Bihać-Split railway line is still closed for major traffic due to this issue. The border on the Una river between Hrvatska Kostajnica on the northern, Croatian side of the river, and Bosanska Kostajnica on the southern, Bosnian side, is also being discussed. A river island between the two towns is under Croatian control, but is also claimed by Bosnia. A shared border crossing point has been built and has been functioning since 2003, and is used without hindrance by either party.

The Herzegovinian municipality of Neum in the south makes the southernmost part of Croatia an exclave and the two countries are negotiating special transit rules through Neum to compensate for that. Recently Croatia has opted to build a bridge to the Pelješac peninsula to connect the Croatian mainland with the exclave but Bosnia and Herzegovina has protested that the bridge will close its access to international waters (although Croatian territory and territorial waters surround Bosnian-Herzegovinian territory and waters completely) and has suggested that the bridge must be higher than 55 meters for free passage of all types of ships. Negotiations are still being held.

Italy
The relations between Croatia and Italy have been largely cordial and friendly. Occasional incidents do arise on issues such as the Istrian–Dalmatian exodus or the Ecological and Fisheries Protection Zone.

Montenegro
Croatia and Montenegro have a largely latent border dispute over the Prevlaka peninsula, and maintain friendly relations.

Serbia
The border between Croatia and Serbia in the area of the Danube is disputed while at the same time the issue is not considered of the highest priority for either country in their bilateral relations. The issue therefore only occasionally entered into in the public debate with other open issues being higher on the agenda, yet with some commentators fearing that the issue may once be used as an asymmetric pressure tool in the accession of Serbia to the European Union. While Serbia holds the opinion that the thalweg of the Danube valley and the centerline of the river represents the international border between the two countries, Croatia disagrees and claims that the international border lies along the boundaries of the cadastral municipalities located along the river—departing from the course at several points along a 140 km section. The cadastre-based boundary reflects the course of the Danube which existed in the 19th century, before meandering and hydrotechnical engineering works altered its course. The area size of the territory in dispute is reported variously, up to 140 km2 and is uninhabited area of forests and islands. Croatian and Serbian authorities have made only occasional attempts to resolve the issue with the establishment of a joint commission that rarely met and the 2018 statement by presidents of the two countries that the issue will be brought to international arbitration if agreement is not reached until 2020.

Slovenia
Croatia and Slovenia have several land and maritime boundary disputes, mainly in the Gulf of Piran, regarding Slovenian access to international waters, a small number of pockets of land on the right-hand side of the river Dragonja, and around the Sveta Gera peak. The two states contested the sovereign ownership of Yugoslav bank Ljubljanska banka, which ended in Slovenia's favor. The status of Croatian depositors' savings in the bank remains an outstanding issue. Slovenia was disputing Croatia's claim to establish the Ecological and Fisheries Protection Zone, an economic section of the Adriatic.

Diplomatic relations
List of countries which Croatia maintains diplomatic relations with:

title: Foreign relations of Croatia