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The prospects for a green economy in Croatia

In the debate / 01/07/2013 Can Croatias entry to the European Union create an opportunity to change the countrys economic and ecological paradigms? For Paul Stubbs, that potential exists, but will only succeed if new political alliances are created that bring together a broad range of social movements.

Aut hor
Paul Stubbs is a Senior Research Fellow at the Institute of Economics (Z agreb). He holds of PhD f rom the University of Bath (UK) and is widely published on the topic of social policy in the Balkans. Croatia became the 28th Member State of the European Union on 1 July 2013, in the middle of the biggest crisis the EU has f aced in its lif etime. Instead of the optimism of most previous waves of enlargement: notably when Spain and Portugal emerged f rom dictatorships and joined in 1986, and 8 post-communist countries joined in 2004, there is a real question mark about what membership will mean f or Croatia and what Croatia will mean, if anything, f or the EU. Croatia is a small state, so that the total population of the EU will grow by less than 1%. T he concern is less about the idea, most f orcef ully expressed in the case of Bulgaria and Romania in 2007, that a country is joining which is not ready f or membership, although some of that is in the air not least around the vexed questions of corruption, human rights, and lack of enthuiasm f or key ref orms. Instead, the uncertainty appears to be more f ocused on what kind of European Union will emerge in the f uture and how the new hegemonic austerity politics of the core Member States, in alliance with DG Economics and Finance, the IMF, the ECB, and others, will impact on Croatia. In the f if th year of a deep recession, the f ear is of ten expressed that Croatia will not receive the boost in f oreign direct investment which EU membership is meant to bring, will f ail to implement structural ref orms, and may be targeted f or disciplinary austerity much as many of her Southern European neighbours have recently.

A space f or alternatives
Much less of ten discussed is the balance between the economic aspects of membership and the environmental and social dimensions. Whilst the Europe 2020 strategy still talks of growth and jobs as central to the European project, the insistence on sustainable and inclusive growth does, at least, of f er a potential space f or a dif f erent model of development than the current neo-liberal orthodoxy. T he political prospects f or this in Croatia are not good: the new ruling coalition, led by a Social Democractic Party, appears intent on maintaining many aspects of the clientelistic f oundations of its right-wing predecessor, hoping f or a model of recovery which relies on a combination of (of ten state-driven) inf rastructure projects combined with an attack on both organised labour and the poor and excluded. A progressive Minister of the Environment was dismissed f rom the Government early on, and has now lef t the SDP in protest over its environmental policies; and the Minister of Social Af f airs and Youth appears f ocused on rooting out supposed benef it f raud amongst recipients of state social assistance, f orgetting that a much bigger problem is the huge numbers of poor people who do not receive the benef it.

Renewables as a bright spot

Croatia enters the EU with the f if th highest level of poverty and social exclusion of the 28 member states: a total of 1.38 million people or 32.7% of the Croatian population was at risk on at least one of the three key indicators (relative poverty, severe material deprivation, low work intensity) in 2011 (the last year f or which statistics are avilable). Only Bulgaria (49.1%), Latvia (40.4%), Romania (40.3%), and Lithuania (33.4%) had higher rates. Croatias target is to reduce this by 100,000 by 2020, a target as lacking in ambition as it

is lacking in substance. A similarly depressing f igure concerns the employment rate, which stood at 57% in 2011 and which the Government expects to rise only to 59% by 2020, making it the least ambitious target of all the Member States and condemning Croatia to f all f urther behind the EU average and much behind the overal EU target of 75%. T he crisis has hit employment hard in Croatia, particularly amongst young people, with Eurstat f igures showing an unemployment rate f or the 15-24 age group at 51.6% in March 2013, doubling in less than f our years. In terms of the share of renewable energy in gross f inal energy consumption, Croatia is perf orming better than the EU average at 15.7% in 2011 compared to the EU-27 at 13.0%, and may even be on track to meet the 20% target by 2020. In 2010 its primary energy consumption was 96.8% of its level in 2005, although this is more a result of the crisis than any ef f ective policies. Croatia does not appear in EU data f or greenhouse gas emissions, although EEA f igures suggest that Croatia managed to reduce emissions only by 0.9% between 1990 and 2008. T he EEA also suggests that climate change is particularly worrying in Croatia since it will mainly af f ect agriculture, f isheries, hydropower and tourism, sectors which employ about 600,000 people and constitute a quarter of the Croatian economy.

Building the case f or a new model

T here is an opportunity, however small, to seize on Croatias EU memberships as a moment to transf orm the growth paradigm and to think about the development of a more sustainable and inclusive eco-social policy. It is too easy to f orget, in the midst of a long depression, that the golden years of growth f rom 2000 to 2007 were largely jobless, unsustainable, import-seeking, and consumption maximising. T he crisis which f ollowed has had, and continues to have, a severe and structural impact on unemployment, decimation of industrial production and, by implication, f urther contributing to a view that the most desired employer is the state or the local municipal authorities. T he challenge is to build a political case f or green jobs, i.e. low-carbon, low-energy, low raw material jobs and jobs which protect and restore eco- systems and bio diversity and/or minimise the production of waste and pollution. Croatia could seize the opportunity to reward early adopters of green technology within a much more ambitious programme of support f or Corporate Social Responsibility and social enterprises. Can the decimations of deindustrialisation be turned into a comparative advantage in a region with perhaps both the most intact, and theref ore most vulnerable, eco-system in wider Europe? Why not become leaders in ecological f ood production, f orest preservation, electricity production f rom wind and sunlight and, of course, sustainable tourism? All of this is important, in and of itself , but what is needed more than ever are new kinds of sustainable and redistributive eco-social policies which, in Ian Goughs words, can achieve ecologically benef icial and socially just impacts promoting new patterns of production, consumption and investment, changing producer and consumer behaviour while improving well-being, and ensuring a f airer distribution of power and resources. Inequality in Croatia is more dramatic than tends to be shown by raw aggregate f igures suggesting, f or example, that the Gini coef f icient of income inequality was 0.31 in 2011. More worrying are regional inequalities and demographic changes which suggest that the younger, better educated, population has tended to move away f rom rural areas and move to large cities. Whilst the likely impact of brain drain out of Croatia proper cannot be f orecast with certainty, its impact will probably be less than the decline of rural, isolated, and war af f ected areas. It is precisely in these areas that a new kind of regeneration, not based on traditional models of competitiveness and ef f iciency, can be envisaged. Nothing short of an holistic re-linkage of the economic, the ecological and the social, much as is attempted in T he Green New Deal, is needed. T his has to combine sustainable production with new f orms of taxation and revenue raising, to make possible real and meaningf ul redistribution plus innovative responses to socalled new risks which render nation-state traditional welf are state solutions sub-optimal: such as climate change, migration, the oppression of minorities, erosion of meaningf ul participation, the rise of gendered transnational care chains, and so on. T he 2008 Green Vision f or a Social Europe also, rightly, emphasised the importance of Services of General Interest and the need to f ight against so-called trade creep where the creation of f ree markets in services is f uelling the privatisation and commercialisation of essential services, including health and education. Croatia needs a political alliance, including reinvigorated social movements, which can articulate a set of winnable demands around social and environmental justice,

including the importance of public space and decommodif ication, as a plausible counter-narrative to austerity and an unachievable and unsustainable growth paradigm. EU membership may make it easier f or these social f orces to make alliances, and become more aware of trans-national connections on these questions.