Syndicate content
Welcome to Adriatic Institute's blog with contributions from the independent think tank's leadership, senior fellows and special guest contributors. The new blog focuses on the economy, individual liberty, rule of law, protection of property rights, public policy issues and security.Adriatic Institute
Updated: 1 hour 15 min ago

Croatia: $35.6 Billion in Illicit Financial Outflows via Crime, Corruption and Tax Evasion Hemorrhages the Balkan Nation's Economy

Wed, 11/10/2017 - 01:29

Croatia: $35.6 Billion in Illicit Financial Outflows via Crime, Corruption and Tax Evasion Hemorrhages the Balkan Nation's Economy
RIJEKA - ZAGREB — Croatia's economy continues to hemorrhage at a higher rate with over $35.6 billion leaving the nation through illicit financial outflows via crime, corruption and tax evasion for the years 2005-2014.  The report was published by Global Financial Integrity based in Washington, DC, and widely shared by strategic partners Adriatic Institute and International Leaders Summit.  This significant loss to Croatia's economy which amounted to $35.6 billion accounts for 73% of the nation's 2015 GDP.   

On average, Croatia lost 7.3% of its annual GDP (2005-2014) to crime, corruption and tax evasion.  Greater amounts were lost in cash transactions not included in the report. Croatia's illicit financial flows for this period are the highest in the entire Western Balkan region.

Since the 1990s, Croatia received billions of taxpayer aid from the United States, United Kingdom, Germany, Japan, Netherlands, Norway, Sweden and other developed nations. For the years 2014-2020, Croatia is to receive a total of $20 billion from EU taxpayers.

According to reports published by Adriatic Institute for Public Policy and International Leaders Summit, Croatia's loss is greater when considering the plundering of the nation's treasury since the early 1990s when the HDZ political party came into power.  The HDZ political party has ruled the nation for the majority of the country's existence since it declared independence in 1991.

Croatia's colossal corruption has increased poverty in the Balkan country and deprives its citizens and taxpayers of basic services in the areas of healthcare, education and aid to the working poor, while fueling a mass exodus of the youth and professionals.
200,000 Croatians fled the nation over the past yew years According to media group, over the last few years, some 200,000 Croatian citizens left the nation for Western EU members states including Germany, Austria, Ireland, Sweden and Great Britain.  

A report from the International Organization of Migration states, "In 2015, nearly 20% of all citizens of Croatia lived outside the country  of origin."

The unfunded liabilities of Croatia are rising significantly due to the government's fiscal mismanagement and lack of political will to address structural reforms, specifically pension reform. 
Croatia's compromised cadre in government unfit to tackle rampant corruption Kolinda Grabar-Kitarovic, president of Croatia, recently gave a speech about "branding Croatia."  Rather than spending taxpayer funds to host conferences on image-making, the Balkan nation's president and Andrej Plenkovic, its prime minister, should begin by inviting visiting judges from strong rule of law nations and judicial experts in tracking and recovering Croatia's stolen taxpayer funds sent to secret foreign bank accounts in Austria, Liechtenstein and beyond. 

The US government's Kleptocracy Initiative at the US Justice Department has addressed these glaring issues by holding to account corrupt politicians and their private partners in crime foreign jurisdictions including Malaysia (recovered approximately $540 million), Nigeria, Ukraine (DoJ is focusing on overseas asset transfers made by Ukrainian officials, including former President Viktor Yanukovych), Uzbekistan and Russia.

Croatia's elected officials should ask for assistance from leading experts in the United Kingdom and the United States and work to design laws that curtail illicit financial outflows, establish the rule of law and effectively implement anti-bribery measures. These action items would create momentum to address Croatia's "image problem" as an oasis of corruption in the Balkans. 

For too long, Croatia's government officials representing the HDZ, SDP, HNS and other political groups have vehemently blocked principled efforts to recover illicit financial outflows and confiscate unexplained wealth of corrupt politicians.  In contrast, Romania's judicial system jailed hundreds of politicians and confiscated illicit wealth gained by corrupt officials. 

When looking at the rise of illicit financial outflows in the Balkans, Croatia's anti-graft prosecutors USKOK have failed to address the nation's grave problems with several hundred local and national politicians mired in corruption allegations given free reign in jurisdictions across the country.

Croatia's politicians including Kolinda Grabar-Kitarovic, its president, and Andrej Plenkovic, prime minister, should spend less time pontificating about Croatia's branding and begin to address the glaring problems at home including colossal corruption. The alarming illicit financial outflows repel foreign investors from strong rule of law nations to enter Croatia's marketplace.

The flight of 200,000 young and professional group of Croatians (a 10% loss of Croatia's electorate) in the past few years should be a wake-up call for Croatia's stakeholders.

If rampant corruption is not addressed, then the next 200,000 Croatians wishing to leave the moribund economy will eagerly join their compatriots in the West, where the rule of law prevails and opportunities abound. 



Categories: Hrvatska