The Decentralisation of Croatia

AIM Zagreb, March 11, 2001

Almost eleven years ago at first multi-party elections the citizens of Croatia disregarded the possibility they were offered to vote for the regional set-up of their state by electing a political party which explicitly supported the centralisation of the country in the coming period. Despite parties whose programmes advocated regionalisation, something else was important to Croats so that during ten years of Franjo Tudjman's rule the nation looked to the capital as the center of all activity while turning its back to the provinces. In the case of Croatia such an orientation was additionally harmful since because of its specific geographic location everything is here a province except for Zagreb. Consequently, Zagreb flourished and regions withered like gangrenous limbs. Only Istria offered some resistance because of its closeness to the West but also its distance from Zagreb.

However, several days ago Ministers of the coalition Croatian Government met in Rijeka to discuss the decentralisation of the state. They symbolically chose this regional center which two hours drive from the capital (but in a better state than Split and Osijek). Anyway, the important thing is that they have broached the subject and proceeded from words to deeds.

The first of such moves was the adoption of a draft Law on Local and Regional Self-Government, followed by amendments to eight Laws which would contribute to the state's decentralisation. These represent a legislative foundation which defines the state's competences over local self-government bodies in the fields of health and social care, education and culture. The former regime used these sectors to show its force thereby letting the plebs know that it is impossible to appoint even the lowest school janitor without Zagreb's approval.

During the times of the Croatian Democratic Union the authorities used to award the status of a town to every godforsaken place if it did not show any rebellious inclination against its policy so that colourful boards with allegedly historic coats-of-arms of those and such towns cropped up all over the country, as well as signposts which showed the way from the state main road to the "center" of some "town" with four thousand souls. Politicians of those towns did not worry about their own problems, because Zagreb did not allow them such unprecedented degree of autonomy and did not intend to let itself be bothered by the utilities of some tiny town. Naturally, the most important issue under the competence of local self-government and central authorities, is money. Irrespective of the size of the small-town complexes, no one ever had any illusion that it would be possible to run towns and districts without the right to one's own treasury so that the Ministers also had that problem in mind at their Rijeka meeting.

In the future the districts will get an increased share of revenues from income taxes: it will rise from current 8 to 23 percent. Towns, whose number will soon decrease (33 instead of current 122) - not because of natural disasters but as a result of the revision of the town status - will be in charge of a part of elementary education. For that they will need money so that the rate of their share in income tax revenues will increase from 32 to 40 percent. Taken out of a specified context these percentages do not mean much, but it is clear that the difference will be made at Zagreb's expense. According to the possibilities of their citizens, all municipalities will have the right to introduce a surtax on the usual income tax, and it has also been proposed to increase the tax on weekend-houses. Districts and lower self-governing units will be entitled to some other types of taxes, from that charged on agricultural land to taxes on firms or for the use of public areas.

The state competences will be partly transferred to lower units of governance. The districts will decide on the planning of local economic development, transport and transport infrastructure, as well as the establishment of a network of various institutions. They will also be in charge of a major part of health and educational sectors. The towns will administer a part of social care, health and school services, pre-school and elementary education and will be in control of utilities and town planning. Local self-government units will have a greater freedom of establishing internal and international links, while the Government will no longer be able to dissolve their bodies, except in extraordinary circumstances. Towns with over 30 thousand inhabitants will have greater rights than before, and the overall state supervision over matters within the competences of local units will be carried out only as regards the legality of their work.

Government's first Ministers, authors of this reform, think that from now on individual stronger districts will register speedier development, while until now the weaker district were the ones to set its pace. A special fund will be established with a view to avoiding a dangerous imbalance. Less developed districts and municipalities will use this fund to finance their lagging behind. Costs of the entire decentralisation will amount to some 1,7 million kunas while, for the time being, the mentioned fund will have around 586 million kunas. Nevertheless, undoubtedly the most interesting information among all these numerical indicators represents the comparison of the current state and local budgets with those some 12 years ago. Namely, in 1990 when the HDZ took over in Croatia, the sum of all local budgets in Croatia was 20 percent above the state budget. And today, the state budget is five times higher than the sum of all local budgets.

With this move, the current Croatian authorities will certainly help restore citizens' trust because in time they will be more directly involved in the decision-making on the use of public funds. However, the Government will also help itself with this move. Indeed, what it needs now least of all, in order to avoid being thrown out too early, is direct care of every single segment of public life in the country. That means that the local self-governments will get a hot potato, but will peel it for its own use. The citizens will be in a position to know more specifically who is spending their compulsory contributions because they will constantly keep an eye on the first men in charge of public funds. These changes, which will come into force when new local self-government teams assume office, i.e. after the May elections, will mean a veritable turnabout. In a way, this will represent a return to the road of social progress.

We had here a certain degree of fundamental regionalisation only during socialist self-management. Although these are essentially different set-ups, in principle both processes strive towards the ideal of more just spending of earned funds, where those most prosperous have the right to invest in themselves, while those less developed are guaranteed assistance.

In the former Yugoslavia the national principle was decisive in the country's federalisation, but in the new Croatia it became an excuse for its total centralisation. It took two whole historic periods in just one century for this society to realise that the national principle is not only important in striking an ideal balance between the centre and its regions, but that much better priorities exist in that process, such as economic or cultural ones. We only wish it to regain its senses completely, because with such a change it will become aware that this is not just another reversible process.

Igor Lasic

(AIM)