This is the history of Croatia since the end of the Croatian War of Independence.
Tuđman: peacetime presidency (1995–1999)
In November 1995 the war in Croatia ended. Around 20,000 people were killed in the war, while official figures on wartime damage published in Croatia in 1996 specify 180,000 destroyed housing units, 25% of the Croatian economy destroyed, and US$27 billion of material damage. Europe Review 2003/04 estimated the war damage at US$37 billion in damaged infrastructure, lost economic output, and refugee-related costs, while GDP dropped 21% in the period.Europe Review (2003), p. 75 15 percent of housing units and 2,423 cultural heritage structures, including 495 sacral structures, were destroyed or damaged. The war imposed an additional economic burden of very high military expenditures. By 1994, as Croatia rapidly developed into a de facto war economy, the military consumed as much as 60 percent of total government spending.Commonwealth (1999), p. 280
Following the end of the war, parliamentary elections were held in 1995, which resulted in a victory of the ruling Croatian Democratic Union. Zlatko Mateša became the new prime minister of Croatia, replacing Nikica Valentić, and formed the first peacetime government of independent Croatia. Elections for the Zagreb Assembly were held at the same time, which were won by the opposition. This led to the Zagreb crisis since the president refused to provide formal confirmation to the opposition parties proposed Mayor of Zagreb. On Halloween 1995 under the pretext of alleged "drug addicts causing riots" in the city, Tuđman's police brutally dispersed Halloween punk concert in town of Samobor. The police severely beat and fired weapons at mostly young concert attendees, and in some cases even brutally beat accidental bystanders. In 1996 mass demonstrations were held in Zagreb in response to revoking broadcasting license to Radio 101, a radio station that was critical towards the ruling party.
As a result of the macro-stabilization programs, the negative growth of GDP during the early 1990s stopped and turned 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 1995-97 and improved economic conditions.Istvan Benczes: Deficit and Debt in Transition: The Political Economy of Public Finances in Central and Eastern Europe, Central European University Press, 2014, p. 203 Real GDP growth in 1995 was 6,8%, in 1996 5,9% and in 1997 6,6%.
In 1995 a Ministry of Privatization was established with Ivan Penić as its first minister.William Bartlett: Europe's Troubled Region: Economic Development, Institutional Reform, and Social Welfare in the Western Balkans, Routledge, 2007, p. 18 Privatization in Croatia had barely begun when war broke out in 1991 and its transformation from a planned economy to a market economy was thus slow and unsteady. The ruling party was criticised for transferring enterprises to a group of privileged owners connected to the party.William Bartlett: Europe's Troubled Region: Economic Development, Institutional Reform, and Social Welfare in the Western Balkans, Routledge, 2007, p. 66
Croatia became a member of the Council of Europe on 6 November 1996. President of Croatia Franjo Tuđman won the 1997 presidential elections with 61.4% of the votes and was re-elected to a second five-year term. Marina Matulović-Dropulić became the Mayor of Zagreb having won the 1997 local elections, which formally ended the Zagreb crisis.
The remaining part of former Republic of Serbian Krajina, areas adjacent to FR Yugoslavia, negotiated a peaceful reintegration process with the Croatian Government. The so-called Erdut Agreement made the area a temporary protectorate of the United Nations Transitional Administration for Eastern Slavonia, Baranja and Western Sirmium. The area was formally re-integrated into Croatia on 15 January 1998. On 3 October 1998 Pope John Paul II beatified Cardinal Alojzije Stepinac.
Value-added tax was introduced in 1998 and the central government budget was in surplus that year.OECD: Agricultural Policies in Emerging and Transition Economies 1999, p. 43 At the end of 1998 Croatia went into a recession and GDP growth slowed down to 1,9%. The recession continued throughout 1999 when GDP fell by 0,9%. Unemployment increased from around 10% in 1996 and 1997 to 11,4% in 1998. By the end of 1999 it reached 13,6%. The country emerged from the recession in the 4th quarter of 1999.Istvan Benczes:Deficit and Debt in Transition: The Political Economy of Public Finances in Central and Eastern Europe, Central European University Press, 2014, p. 207
Račan government (2000–2003)
Tuđman died in 1999 and in the early 2000 parliamentary elections, the nationalist Croatian Democratic Union (HDZ) government was replaced by a center-left coalition, with Ivica Račan as prime minister. At the same time, presidential elections were held which were won by a moderate, Stjepan Mesić.
The new Račan government amended the Constitution, changing the political system from a semi-presidential system to a parliamentary system, transferring most executive presidential powers from the president onto the institutions of the Parliament and the Prime Minister. Nevertheless, the President remained the Commander-in-Chief, and notably used this power in response to the Twelve Generals' Letter. In August 2000, former Croatian Army officer and whistleblower Milan Levar was killed in his own garage in Gospić by explosive device for testifying about war crimes committed by Croatian forces during the war. The perpetrator of this murder remained at large up to this day.
Economic growth picked up in 2000 following the recession. The new government started several large building projects, including state-sponsored housing and the building of the vital Zagreb-Split Highway, today's A1. 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.International Business Publications: Croatia Investment and Trade Laws and Regulations Handbook, p. 22CIA Factbook - Croatia The country rebounded from a mild recession in 1998/1999 and achieved notable economic growth during the following years. The unemployment rate would continue to rise until 2001 when it finally started falling. Return of refugees accelerated as many homes were rebuilt by the government; most Croats had already returned (except for some in Vukovar), whereas only a third of the Serbs had done so, impeded by unfavorable property laws as well as ethnic and economic issues.
The Račan government is often credited with bringing Croatia out of semi-isolation of the Tuđman era. Croatia became a World Trade Organization (WTO) member on 30 November 2000. The country signed a Stabilization and Association Agreement (SAA) with the European Union in October 2001, and applied for membership in February/March 2003. Račan's government was undermined by right wing HDZ who organized mass opposition rallies against Croatian collaboration with ICTY. In one such rally in Split HDZ's leader Ivo Sanader accused prime minister Račan and Mesić for treason for wanting to extradite Croatian officers, while they, in turn accused the rallyists for preparing coup d'etat.
Sanader government (2003–2009)
In late 2003, new parliamentary elections were held and a reformed HDZ party won under leadership of Ivo Sanader, who became prime minister. After winning elections Sanader chose to form the new government in coalition with Serb minority, rather than with far right nationalist parties. Sanader also took his government on a strong pro-European course. After some delay caused by controversy over extradition of army generals to the ICTY, in 2004 the European Commission finally issued a recommendation that the accession negotiations with Croatia should begin. Its report on Croatia described it as a modern democratic society with a competent economy and the ability to take on further obligations, provided it continued the reform process.
The country was given EU applicant status on 18 June 2004 and a negotiations framework was set up in March 2005. Actual negotiations began after the capture of general Ante Gotovina in December 2005, which resolved outstanding issues with the ICTY in the Hague. Despite Sanader's earlier rhetoric against extradiction of Croatian generals to the ICTY it was, in fact, his government that extradited Gotovina to ICTY. Numerous other complications also stalled the negotiating process, most notably during Slovenia's blockade of Croatia's EU accession from December 2008 until September 2009.
In August 2007, Croatia experienced a tragedy when during the fires that ravaged its coast, 12 firemen died as a result of a fire on Kornat island.
Sanader was reelected in the closely contested 2007 parliamentary election.
The October 2008 assassination of Ivo Pukanić was one of several prominent murders in Croatia at the time which were attributed to organized crime and associated by the media with an increased occurrence of crime in Zagreb in 2008. In March 2008, an 18-year-old Bad Blue Boys football fan was killed in the Ribnjak Park, followed by a retaliation by other BBB members. A mob beating at a bus stop in the high-traffic Većeslav Holjevac Avenue ensued, with deadly consequences for 18-year-old Luka Ritz. The October 2008 murder of Ivana Hodak, the daughter of Zvonimir Hodak, the lawyer who defended alleged war profiteer general Vladimir Zagorec, caused the Prime Minister Ivo Sanader to fire Marijan Benko, chief of Zagreb Police Department, Berislav Rončević, Minister of Internal Affairs and Ana Lovrin, Minister of Justice. Rončević was replaced by Tomislav Karamarko and Lovrin by Ivan Šimonović. In February 2009, the Hodak murder was attributed by the police to a homeless unemployed man blaming Zvonimir Hodak for his problems in life.
In June 2009, Sanader abruptly resigned his post, leaving scarce explanation for his actions. As written by Florian Bieber, the explanation came in 2010 when Sanader fled to Austria due to fear of being charged for corruption. He was eventually extradited back to Croatia. In the ensuing court hearing, it was discovered that Sanadar possessed the collection of luxurious watches, luxurious villa and collection of arts, none of which could be afforded legally from salaries of Croatian public sector. In November 2012, he was sentenced to ten years in prison, which was later reduced to eight and half years. In 2015, this sentence was annulled for procedural errors, but before his re-trial could begin, he was sentenced to four and half years in prison for another corruption case. Therefore, Bieber concludes, it turned out that pro-European reforms which Sanader had initiated created institutions such as USKOK which eventually sentenced him and played a prominent role in his downfall. Bieber claims that HDZ's orientation towards pro-European course became key for Croatia's successful transition towards consolidated democracy, while one of its key actors Ivo Sanader became "a victim" of democratic institutions he had helped to create.
Kosor government (2009–2011)
Jadranka Kosor assumed the head of the government following Sanader's resignation. Kosor continued with her predecessor's policy of integration into European Union She also had to introduce austerity measures to counter the consequences of the 2008 financial crisis and launched the anti-corruption campaign aimed at public officials.