Prices Soar Throughout Croatia

AIM Zagreb, August 28, 2001

Everybody should live, not on they!, this was one of the slogans of the strongest party inside the ruling coalition in Croatia, the Social Democratic Party, during its struggle for power. This effective piece of political advertising and truthful depiction of social conditions in Croatia, where a narrow circle of people at the top -- tycoons and mafia bosses -- live in extreme luxury as opposed to the impoverished and starved masses, has lost its initial meaning, especially at the end of summer when prices began soaring. Croatian Telekom officially raised its prices by 12-24 percent. But according to calculations by various consumer associations and trade unions, by the end of August, when the bills reach customers, they will be in fact 200 percent higher. Car insurance went up five percent, and as of the beginning of fall, natural gas prices will increase 10 percent. School textbooks, a regular burden of family budgets each autumn, are not only going to be more expensive, but the number of students who used to receive them free of charge will be substantially reduced.

Pensioners were shocked most of all -- the government has announced it plans to tax their meager income, breaking one of its campaign promises that several dozen pension checks that were stolen from the elderly during the decade of Croatian Democratic Union rule would be paid. This segment of the population, which, together with the unemployed (about 400,000 people, the unemployment rate being about 23 percent, among the highest of all countries in transition), were negatively affected by yet another drastic decision: the Croatian Health Care Fund reduced its list of medications available free of charge or at a low cost. People who need them, and these are mostly the elderly, will pay 10, 25, and even 50 percent of the full price! This will depress a number of people, and if somebody opts to see a doctor, he might end up with a prescription for Zoloft anti-depressant, price tag, 210 kuna!

The latest markups will increase costs of living by 4.5 percent. But that is not all, because new price hikes have been announced, as well as other changes, such as a new system of pension insurance. In addition to current pension deductions from all salaries, those who are lucky enough to have a job will have to pay for old age pensions. Insurance companies have already flooded newspapers with ads for their services, and Croatian citizens, starting next year, will have to choose which fund they will make payments to for "the next stage" of their pension insurance. The government has planned to free itself from the obligation of using budget funds for pensions. And the situation in the pension fund is alarming indeed: one employee supports one pensioner, which is an untenable situation. In order to pay pensions the government has resorted to selling "the family silverware": it sold Croatian Telekom to the Germans, who are its majority owner. But there are not too many other things foreigners are willing to buy in Croatia. And when everything is sold, the situation will have not changed at all.

Finance Minister Mato Crkvenac has announced additional cuts in social benefits -- payments for maternity leave will be further reduced, as well as child benefits. People affected by this this will find little comfort in the fact that while the Croatian Democratic Union was in power it set aside 1.13 million kuna for that purpose, and the Racan government is giving close to two million kuna. When a right is limited or withdrawn, it causes dissatisfaction regardless of the explanation. More expensive telephone calls and the reform of the pension system are explained away as adjustments to European standards. Croatian citizens, however, could not care less about paying European Union prices, with the average salary being below 1,000 German marks, and with 130,000 employees earning less than 2,000 kuna (about DM530). The average pension is about 1,600 kuna (DM420). And it should not be forgotten that all the stories about average income are like the story about everyone, on average, eating meat and potatoes. Only some eat mostly potatoes, and only a few get to taste the meat!

Almost 176,000 pensioners in Croatia receive from 500 to 1,000 kuna per month (130-260 German marks), and their standard of living can be best seen in larger cities where many of them go through garbage dumpsters in search of food they cannot otherwise afford. Such low income is, of course, unthinkable in the EU, and comparison makes no sense, least of all harmonization of standards which sounds ridiculous, even ironic. The monthly consumer basket for a family of four, after the latest price hikes, costs about 5,000 kuna (over DM1,300), but very few families earn that much.

The dramatic social picture of Croatia, despite all assurances by the Racan government that unemployment growth has been curbed, that industrial production has been restarted, that exports are on an upward trend, and the foreign currency reserves on the rise, sound hollow to the ordinary citizen because his standard of living is steadily deteriorating. Social dissatisfaction simmering under an ostensibly undisturbed surface is being used by those political circles that are themselves to blame for the current grave situation. The rightists, spearheaded by the Croatian Democratic Union radicals, who, given the enormous plunder of Croatia during the past decade that many of them directly participated in, should be in prison instead of at making speeches, is getting louder and sees its chance in channeling social unrest that could explode this fall. Of course, their loud campaign across Croatia speaks of a defense of national interests and against extradition of Croatian generals to the International Criminal Tribunal for the Former Yugoslavia in The Hague. But we have seen many times before how rightist radicalism flourishes in grave social conditions. Croatia seems to have taken many a step down that path already.

Drago Hedl

(AIM)