- The Washington Times - Thursday, September 30, 2010

Croatia is at a crossroads. The former Yugoslav republic is on the verge of entering the European Union. Accession talks have begun, and many Croatians hope the nation will join the EU by next year.

They falsely think membership in the coveted club will transform Croatia into a prosperous, Western-style state. Zagreb’s political elites - both right and left - imagine that the EU will serve as the panacea for the nation’s systemic problems. It won’t.

In fact, the frenzied dash toward EU membership is papering over the moral rot at the heart of the country - a social cancer that threatens to devour this small nation of more than 4 million. Croatia’s major problem is that it has never confronted its tragic communist past.

Under Serb-dominated Yugoslavia, Croatia was reduced to an economic vassal of Belgrade. From 1945 until his death in 1980, Communist dictator Josip Broz Tito imposed a brutal police state. His multiethnic empire subjugated Yugoslavia’s constituent peoples - especially Croatians.

Tito sought to smash the two great sources of opposition to his totalitarian rule: the Croatian peasantry and the Roman Catholic Church. His regime murdered more than 200,000 Croatians, including countless priests and nuns. Churches were confiscated. State-sponsored atheism was inculcated systematically in the youth. Press freedoms were abrogated. Dissidents and anti-communist intellectuals were shot or imprisoned. The environment was ravaged. Economic collectivism destroyed private enterprise and personal responsibility. Cronyism and corruption became rampant. Croatian nationalism was suppressed savagely. In short, Croatia’s moral and historic core - traditional Catholicism fused with Central European civilization - was eradicated.

After a four-year war with rebel Serbs, the country achieved its national independence. But it came at a high cost: A Balkan criminal underworld took root, smuggling guns, drugs and cigarettes during much of the fighting. Many gangsters infiltrated the government. Also, many former communists simply changed the Titoist red star for the Croatian red-and-white checkerboard. They retained their authoritarian, corrupt habits. The Croatian state became pregnant with a new criminal elite - one whose tentacles reach into every sector of society.

The governing Croatian Democratic Union, known by its acronym HDZ, is the political expression of this gangster ruling class. Its former prime minister, Ivo Sanader, is under investigation for embezzlement, bribery, corruption and influence-peddling. High-ranking sources both within the government and outside say that, along with his cronies, Mr. Sanader plundered public assets. They have amassed huge personal fortunes - all at the expense of the Croatian taxpayer. The HDZ elite have stolen or siphoned off about $1 billion - a grotesque sum for such a small nation. Mr. Sanader belongs in one place: the dock. He should answer for his crimes to the Croatian people.

Moreover, the HDZ refuses to implement sweeping reforms needed to kick-start Croatia’s sluggish economy. Zagreb continues to embrace a bureaucratic corporatist model marked by a bloated public sector, stifling regulation and crushing taxes. The reason is simple: Creating a genuine free-market economy would dissolve the stranglehold the ruling class has on society. Croatia’s politicians derive their power - and wealth - from statism and the massive bureaucracy, creating a vast patronage machine dispensing jobs to loyal allies.

Hence, there is little transparency and openness. Political connections and bribery are necessary to personal advancement. A healthy, vibrant society is based upon pluralism, the rule of law, entrenched private property rights and meritocracy. Croatia has none of these. The HDZ may pay lip service to these goals. In reality, it seeks the very opposite: a Balkan-style kleptocracy, which exerts considerable influence upon the media, business and the economy.

The status quo may serve the elites well, but not the vast majority of Croatians. Unemployment is at 18 percent. The economy actually contracted last year. The soaring national debt threatens the country’s long-term future. Foreign investment and much-needed business capital are fleeing. Economic stagnation has set in. The gap between the rich and the poor is growing dangerously large, potentially leading to social instability. The middle class is shrinking. Croatia is becoming a two-tiered society, divided between the haves and have-nots. This is not the independent Croatia many dreamed of - or died for.

Croatia’s fledgling democracy has the potential to become the Switzerland - or to be more accurate, the Austria - of southeastern Europe. It has a talented, innovative and intelligent population. Its natural beauty and stunning Adriatic coastline already are making the country a tourist mecca. Its ancient ties to the Austro-Hungarian Empire firmly anchor its culture to the West. Its press can be lively, combative and brainy - when allowed to function free of political harassment.

Yet Croatia will never achieve its national potential or civilizational destiny until it wages a serious war on corruption. Its gangster regime is not only stunting the country’s development, but draining it of precious energy and treasure. Numerous skilled and educated Croatians are emigrating, a massive brain drain depleting the country of vital human capital.

Many states have a mafia. In Croatia, however, the mafia has a state. Until this is recognized and genuinely resolved, the relentless slide toward an economic abyss will continue. No amount of spin or EU subsidies can change this.

Jeffrey T. Kuhner is a columnist at The Washington Times and president of the Edmund Burke Institute, a Washington think tank.