Croatia must meet existing obligations

Croatia must make sure it meets obligations from an existing association accord with the European Union or risk facing delays in talks on full membership of the bloc, a top EU official in Zagreb said.

Talking about Croatia's problems with neighbours Slovenia and Italy, European Commission envoy Vincent Degert said many issues, like border disputes, were purely bilateral and had no impact on EU talks.

"But another case is obligations from the Stabilisation and Association Agreement (SAA). They will have direct influence on negotiations. We may decide not to open a chapter (of discussions) if certain obligations are not met," Mr Degert told Reuters in an interview.

Croatia opened accession talks last October, hoping to complete them in time to join around 2009. Mr Degert said the target was ambitious but feasible if Croatia made steady progress in implementing EU standards.

He said a typical contentious issue was that of Belgian bank KBC, which has complained to the European Commission about Zagreb's refusal to give it access to the Croatian market.

KBC has a stake in Slovenia's Nova Ljubljanska Banka (NLB), the successor to Ljubljanska Banka, which is at the heart of a row over debt to Croatian depositors dating from before Yugoslavia's 1991 break-up.

Croatia's Central Bank demands the debt issue to be resolved before NLB or KBC can come to Croatia.

"This is a typical issue from the SAA, the chapter on free movement of capital. This issue has been pending for years and we believe efforts should be made by both partners so that it does not burden the negotiating process," Mr Degert said.

In a similar vein, Rome objected that Croatia has failed to open its real estate market to Italians while being far more welcoming of other countries. The complaint is still pending.

The EU and Croatia publicly disagreed on this issue of real estate, at a meeting of EU and Croatian foreign ministers in Luxembourg on Monday.

The EU said Croatia was not complying with its obligation to open its real estate market and urged it to do so.

Croatian Foreign Minister Kolinda Grabar-Kitarovic denied any wrongdoing, but she told a news conference that Croatia was going to simplify administrative procedures for buying property.

Mr Degert listed environment, competition policy, justice and home affairs, agriculture and budget as the toughest issues, or chapters, in the talks. He urged Croatia to learn from the examples of Bulgaria and Romania, whose accession, due in 2007, might be delayed for a year if the EU decides they have failed to make progress on corruption, judiciary, border controls and minority rights.

"Croatia has to look at their experience very seriously, draw the lessons and make necessary reforms on time, to avoid that they burden the negotiating process when we are so close to concluding it." The reason, he said, was that Croatia also lacked some basic standards despite the progress that reformist Prime Minister Ivo Sanader's Cabinet had made in the past year.

"When you look at judicial reform, administration reform, fight against corruption, there has to be more progress. That's why we are very much insisting and welcoming the initiatives in that respect.

But initiative is good only if it is followed by implementation. We will very much look at the results."