Croatia Considers Cuts to Shipyard Aid

According to a Bloomberg report, Croatia's to EU negotiator indicated the country’s next government will have to cut subsidies to the shipbuilding industry to move on with efforts to join the European Union. With 11,000 jobs at stake at five main shipyards, Croatia has put off the subsidy cuts until after elections on Nov. 25. EU rules bar government bailouts of unprofitable businesses, subjecting Croatia to the same clampdown that still provokes resentment in the eastern European countries that joined in 2004. Poland last month protested an EU order to reclaim aid payments to the Gdansk shipyard, home of the Solidarity movement. Some of the $500m in cash and guarantees that Croatia offered the shipyards in 2006 breaks EU rules, the negotiator said. No aid went in 2006 to the steel industry, also under EU pressure to modernize. Croatia, with 4.5 million people, would become the second ex- Yugoslav state to enter the EU, after Slovenia. Croatia started talks in 2005 and aims to be ready to join by 2009, with the entry date dependent on how quickly the EU's 27 national parliaments ratify the membership treaty. While Croatia has made headway, the overhaul of noncompetitive industries such as shipbuilding and steel requires further efforts, Christian Danielsson, a top European Commission enlargement negotiator, indicated. Croatia also needs to strengthen its public administration and justice system, and work harder to adopt EU policies on environmental protection, agriculture and government contracting, Danielsson said. Croatia has started EU talks in 12 of 35 policy areas and completed two. [Source: Bloomberg]