Stipe Mesic
Stipe Mesic; drawing by David Levine

The face of Franjo Tudjman has turned a horrible gangrene yellow. What is surprising is that Tudjman, the man who led Croatia to independence in 1991, died only last December. Yet no one seems to care that the photograph of the father of the nation that hangs in the lobby of Zagreb’s grand Esplanade Hotel is deteriorating so rapidly that soon you won’t be able to make out his features at all.

Croats talk of the “change of atmosphere.” In fact, ever since Tudjman’s death and the collapse of his party, the once all-powerful Croatian Democratic Union, the HDZ, in January’s elections, Croatia has begun a transformation little short of a quiet revolution. Whether it will complete the transformation is another question.


“Secret Agent Bak here…. I hear you’ll be seeing two journalists tomorrow. In fact they are eating and drinking with me now,” says Ivan Zvonimir Cicak. A nationalist dissident under communism and tireless human rights activist for the last ten years, he lies back on his couch, laughs, and tries to fix a time for his friend the new president of Croatia, Stipe Mesic, to come to his house for a barbecue. Cicak says to us: “The President sends you his regards.”

We are in Cicak’s hilltop house in Celine, a village in the hills close to the Slovene border. A Croatian television crew has just left. “Ha!” Cicak says. “They didn’t visit for ten years and now they are here every day!” Meanwhile, on the phone, Stipe Mesic, at the presidential palace, is receiving an earful from Cicak, who is concerned about a government measure to ban the public display of symbols of the Nazi-quisling or Ustasha state which ruled Croatia from 1941 to 1945. “Listen Stipe,” he says, “once you start, where do you stop? You’ll have to do [Serbian] Chetnik symbols, Yugoslav ones, Communist ones…. It’s better to fight them with arguments than by banning things.”

Stipe Mesic, in office since February, has some presidential experience. In fact he was once the president of another country, although the problems he faced then were rather different. He was the last president of the old Yugoslavia. During the awful summer of 1991, as Croatia began its slide into war, interminable meetings were held in the vast airport-like Federation Palace in Belgrade. Unlike Slobodan Milosevic, then the president of Serbia—and now the president of what remains of Yugoslavia—Mesic would slip outside for a cigarette and a joke with the journalists, who were being devoured by mosquitoes and trying to find out what was going on from the waitresses serving tea.

Later Mesic wrote a book called How We Destroyed Yugoslavia. Unlike Tudjman, the new Croatian president has a highly developed sense of humor. One has to wonder whether his next book might be called The Laughs in the Tudjman Tapes.

When he took office in February Mesic found a dead phone in his office. This, it is widely believed, had been a direct line from Tudjman to Milosevic; but whether it actually ever worked is open to question. When the Mesic team began opening up rooms in the presidential palace, they found an archive of some 830 tapes and 17,000 transcripts of conversations between Tudjman and just about every single person who had visited him since 1991. “These are the microphones,” Mesic says, pointing at some black pads on the table. “They are recording us now, simply for practical reasons.”

Tudjman was obsessed with history. That is why he taped everything. What he obviously did not take into account was that, within months of his death, the tapes and transcripts would be used in a systematic fashion to destroy his reputation and those of his close collaborators, or at least those who, unlike Mesic, had not fallen out with him by the end of his life.

But the tapes have done far more than shatter the reputation of the Second World War Partisan fighter, Yugoslav Communist general, and football fanatic who led Croatia to independence, fought a war with the Serbs, and then connived with Milosevic to dismember Bosnia. They have revealed that Tudjman’s Croatia was rotten to the core; that with his blessing, the HDZ elite pillaged every public institution in sight and virtually bank-rupted the country. To be more precise they have served to offer proof of what many suspected—but the shock is that the damage inflicted on Croatia by the Tudjman regime was far, far greater than anyone ever dared to imagine.

Over the last few months Croats have been both titillated and appalled by the revelations now leaking out of the president’s office. For example, on April 8 last year, two weeks after the NATO bombing of Yugoslavia began, Tudjman was discussing his favorite topic, the division of Bosnia, with one of his ministers. First they made derisory remarks about anyone who thought that the Bosnia created at the Dayton, Ohio, talks in November 1995, presided over by Richard Holbrooke, had a future. “There is no serious man who does not claim that Bosnia will fall apart,” said Tudjman. Tudjman was irritated by the NATO bombings because Croatia had just signed some important business contracts with Serbian industries.


Still, he thought that the war might give him some opportunities that he could exploit. He mused about calling for an international conference in which Bosnia would now be formally divided between Serbia and Croatia. The Muslims would be given a small chunk to be called Muslimania and Kosovo would be divided between Serbia and Albania. Tudjman reckoned that by giving Milosevic some Serbian parts of Bosnia and trading him the southernmost tip of Croatia, the Serbian leader “would then have a victory which he could show the Serbs in exchange for the lost portions of Kosovo.”

Another transcript discusses a major missile system that the Croats managed to buy sometime between 1991 and August 1995, while a third of their country was still under Serbian rule. The missiles were acquired from the Ukrainian mafia and imported despite the UN arms embargo on the countries of the former Yugoslavia. The problem was that the Ukrainians had tricked the Croats; the missiles were of less use than a packet of garden fireworks, since they came without the necessary guidance systems.

Considering what to do with the rockets, Tudjman and his entourage hit on the idea of a major military parade, which would at least serve to intimidate the Serbs, who would see the missiles on television. After that, they could be sold to the Israelis; but someone pointed out that this might pose problems, especially since the Croats had successfully double-crossed the Ukrainians—who hadn’t been paid for their dud missiles anyway.

A more recent transcript reveals a 1998 arms shipment from Azerbaijan to Croatia in which the accompanying documents stated that the “end user” was an American company. The real destination for these arms—whether the Kosovo Liberation Army or the Montenegrin police—remains unclear, and, according to Mesic, is now the subject of a government inquiry.

“It is the real story,” said Ivo Pukanic, the editor of the weekly Nacional, who is a friend of Mesic and who has been publishing many of the transcripts. “You can find everything about the real Croatian past on these tapes.”

Well, almost everything. Slaven Letica, an academic, a former Tudjman adviser, and a leading commentator in the Croatian press, accuses Mesic and the government of Ivica Racan, the reform Communist prime minister, of leaking the tapes and transcripts selectively and for political reasons, “which, from an ethical point of view, is unacceptable.” Letica charges that the President “is making Croatia a kind of banana republic. This is too serious to be done only for the sheer fun of Mesic and his aides.”

Mesic denies this and says that requests to see the transcripts are reviewed by a commission of three people; so long as they are not “classified as military secrets they can be used freely.” What is interesting though is that, thus far, nothing has been disclosed about the conduct of the wars in Croatia or Bosnia. In fact, most of what has been published has been about relatively recent events. The reason could be that state secrets are involved; it could be that people like Mesic himself were, at various times, close to Tudjman. Or, as is also widely believed, it may be that much of the most sensitive material was removed in the three weeks between Tudjman’s death and the election of the new government. According to the Croatian press, 154 pounds of the most sensitive documents were removed by Miroslav Tudjman, the President’s eldest son, who was then the head of the secret services, and Ivica Pasalic, his top adviser. Miroslav Tudjman denies this but, significantly, he has not taken the matter to court.

If, as seems likely, there are missing documents, they may well include conversations with Milosevic, or with the intermediaries used by the Serbian and Croatian leaders. The Croatian press believes they include sensitive material about Croatia’s help to the Bosnian Croats in their bid to carve out a separate Croatian state in Bosnia. Croatia would have annexed this state when the time was right. They are also believed to include conversations between Tudjman and Dario Kordic, the former Bosnian Croat leader now awaiting trial for war crimes at the International Criminal Tribunal for the former Yugoslavia in The Hague.

If it is true that sensitive documents were removed, however, those who took them did not have time to smuggle out of the presidential palace the transcripts concerning the wholesale plunder of the economy by Tudjman’s entourage. The discussions about economic issues, especially so-called privatizations, make for horrifying reading. They make clear that until now, through systems of fake accounting, borrowing, and shunting money through closed circles of companies and banks, the former regime just about managed to keep the economy afloat. Now the new government will have to pay the price of putting things right.


A typical privatization, but one that had more political significance than others, was the takeover of Vecernji List, one of Croatia’s main daily papers. The transcripts of the conversations between Tudjman and Ivica Pasalic reveal that, using a Virgin Islands-based company set up by the HDZ and funded by money from Croatian banks, Tudjman’s party bought the paper illegally.

Pasalic said to Tudjman: “I’ve created a big smokescreen around the whole thing because we must not let it appear, even from an airplane, that this has anything to do with us.” Tudjman answered: “That’s fine. Our interest is to have it under our control,” to which Pasalic noted: “For the benefit of those outside we will also create the illusion of democratization, privatization, and so on.”

Behavior like this was the norm. “Well, we all knew it,” says Mesic, “and so did the citizens because they knew there was no rule of law…. However what we did not know was the high extent of the indebtedness of Croatia and we did not know so much capital had leaked out of the country.” Mesic concludes that what happened “has destroyed the Croatian economy” and that “it’s incredible how a democratically elected government allowed this brutal robbery of their own people. I mean it was really astonishing and shameless, the way it was done…. The result was disaster.”


Zagreb is at its most pleasant in early summer. The weather is not too hot, the cafés are full, and people are chatting about where they are going on holiday. Indeed Croatia does not look like a country about to undergo an extremely painful experience. But, as the economists agree, Croatia is on the edge of an abyss. Drazen Kalogjera, head of Zagreb’s Center for Economic Research and Business Consulting, says categorically, “More damage was inflicted by the process of privatization in industry than the war…. Fifty percent of industries, private and public, are candidates for bankruptcy.”

According to Kalogjera, who was, briefly, a minister in Tudjman’s first government in 1990, the former president’s “obsession was to put the economy in the hands of 250 families, not for the sake of good governance but simply to create loyalty to the regime. He did not succeed in this but, after ten years, a big part of the Croatian economy has been destroyed and devastated.”

Kalogjera cites the notorious example of the former barman Miroslav Kutle, now in jail, who in exchange for his party loyalty bought, with no money of his own, 157 companies. “He destroyed this small imperium.” None of Kutle’s companies, or many of the others handed out to Tudjman’s cronies, produced much or succeeded in becoming competitive. In fact the cronies either had no idea how to make money or simply stripped what they had acquired of assets. Says Kalogjera: “Nobody knows how much money they extracted or where it is.”

Today the Croatian economy functions at 60 percent of the level of production of 1990, that is to say just before the war. The country’s GDP is now 20 percent lower than it was a decade ago, when, starting from a level similar to that of Slovenia, both countries’ economies were far more advanced than those of Poland, Hungary, or the former Czechoslovakia. Now Slovenia’s economy is, according to Kalogjera, “100 percent ahead of us,” and much of Croatia’s industrial plant is “obsolete.”

Phony privatizations, the falsification of economic statistics coupled with a currency, the kuna, overvalued, according to Kalogjera, by 40 percent, and with only one million people employed out of a population of 4.6 million, which includes one million pensioners—from all this it is clear that dark days are coming. Croatia already has an unemployment rate of 22 percent, or 350,000, although an unknown proportion of these people work in the gray economy, and over the last couple of months 100,000 people have not been paid and the government has fallen behind in paying pensions. The overvalued kuna means that Croatian firms cannot compete on international markets.

Tudjman’s regime kept this artificial economy going by building up a $15.1 billion domestic and foreign debt. At least fifteen banks and other financial institutions are now in a state of collapse, and it is clear that the government is faced with an appalling dilemma. A center-left coalition of six parties, it was elected by people fed up with Tudjman and the HDZ nouveaux riches, and particularly with the way they used the patriotic struggle to justify hardship for ordinary people. But the war ended almost five years ago. Just before the war started the average monthly wage was about $1,000; now it is little over half that. The government is already beginning to lose popularity as people realize that life is going to get a lot tougher before it gets better.

When Mirko Galic was made director of Croatian television and radio by the new government, he had an audit made and found that the previous directors had covered up the indebtedness of the state broadcasting system. “Every day we discovered more debts. The last directors had given inexact figures and sent reports to the government saying that they had saved money and they had a surplus. It was not true.”

As bad as the debt, Galic says, is the fact that his company has 3,500 full-time workers, meaning it is overstaffed by almost one third. “I won’t do the dirty work,” he says. “If we have to get rid of 1,000 people the government must take responsibility.” Many other companies, it is now clear, face a similar situation.

In the center of Zagreb is a department store called Nama, part of a chain. It has not been privatized but, amid the surrounding private shops and boutiques, it stands as a symbol of everything that is wrong with the Croatian economy. Utterly bankrupt, the store has hardly anything to sell, but there are plenty of people ready to sell you nothing—and being paid for this. When the new government came to power it pledged to shut down companies like Nama, whatever the cost in unemployment. Outraged Nama employees began demonstrating outside the office of the prime minister, the government wobbled, and now everyone is waiting to see what it will do.

Galic says: “I don’t know if this government is prepared to pay the price, to go right to the obvious conclusion. Enterprises that produce debt and which are not profitable must go bankrupt, but this means 50,000 to 60,000 new unemployed. I don’t think there is any other solution, but people, the trade unions, the church even, say we must not sack people.” His gloomy conclusion is simply that “the social situation ahead is catastrophic.”

Despite its difficulties and dilemmas, the new government, still benefiting from the goodwill produced by the elections, has impressed outsiders with its apparent willingness to set Croatia back on a sound economic footing. It has also started to attack corruption by, for example, revealing a scandal by which thousands of healthy war veterans, including several generals, were receiving invalids’ pensions. As a result the country will soon begin negotiating a Stabilization and Association Agreement with the EU, which means, in effect, that Croatia is about to be welcomed into the EU waiting room, and will get some economic help from Western countries. There is hope too that Croatia’s once-strong tourist trade, in which millions admired towns like Dubrovnik every year or sunned themselves on the Adriatic, may begin a strong recovery this year. Last year’s hopes were, of course, dashed when major tour companies pulled out—as NATO bombed Serbia next door.


Between 1991 and the summer of 1995, the so-called Republic of Serbian Krajina, the home of over 200,000 Serbs, made up almost one third of Croatian territory. From the summer of 1991 to December of that year this separate Serb territory was carved out by a combination of Yugoslav troops, Krajina Serb police, and various militias. Towns such as Vukovar and Dubrovnik came under Serb attack, Vukovar falling to Serbian forces. Croats fled or were ethnically cleansed from areas that came under Serbian control and Serbs fled or were ethnically cleansed in other parts of Croatia—although many did stay on, especially in the cities.

In August 1995, with, at the very least, some informal US backing, most of Krajina was reconquered by the Croatian army. Almost everyone who lived there fled in three days in vast, pathetic columns, jeered at by the Croats they passed. Almost every single Serbian house was then burned or blown up. With the land now depopulated, Tudjman began the next stage in the policy of population exchange that he complicitly shared with Serbian leaders. He began resettling thousands of Bosnian Croat refugees there and far smaller numbers of Kosovo Croats. Just after the Serbs fled he said, disingenuously, that Croatia had asked them to stay but since they had not: “Bon voyage!” Few ever imagined that any would come back. But now at least some are.

Up in the hills of Banija, fifty-five kilometers south of Zagreb, the Janjanin family—all Serbs—have fixed up some rooms in one of their houses in Gornja Bacuga. Still daubed on the walls are Ustasha symbols and the name of a Croatian army unit, the Black Mambas, whose members presumably dynamited the family’s big farmhouse in 1995. Until the war they were prosperous. They owned seven hundred pigs which they would sell to the local salami factory. Now the Janjanins barely manage to make a living as they slowly try to rebuild their lives. There used to be five hundred people in the village, all of whom fled in 1995. Now eighty have returned.

The Janjanins returned from Sabac in Serbia two years ago. On the neighboring hill you can see the new roofs of a Croatian village, which unlike Gornja Bacuga received reconstruction funds years ago. “I would be lying if I said [the Croats] liked us,” says Luka Janjanin, the head of the family. “At first, when we came back, there were insults, but now there are no fights, but no contacts either.” Still, says Mr. Janjanin, none of the family regretted coming home, and they felt physically secure. “With all the difficulties and problems, we keep saying we are in our home. In Sabac we felt like servants.”

Milorad Pupovac, the head of the Serbian National Council, an umbrella organization for Serbian groups in Croatia, believes that of the 600,000 Serbs who lived in Croatia before the war 250,000 of them are now in Serbia, Montenegro, or the Republika Srpska in Bosnia. He thinks that 50,000 may have gone abroad, to countries like Australia or Canada, and that there are now 250,000 Serbs in Croatia. According to Andrej Mahecic, spokesman for the UN High Commissioner for Refugees in Zagreb, of the Serbs in Croatia today some 40,000 have returned since 1995 and another 30,000 have returned to their original homes from what was Serb-controlled eastern Slavonia.

The figures are imprecise since many people are not returning home for good but are coming and going. Some come to arrange their citizenship papers, find out what has happened to their property, and seek legal advice if it is occupied by, for example, resettled Bosnian Croats. Pupovac believes that “one third of the returnees have not resettled permanently and are going back and forth to Serbia.” Many elderly people are arranging to have their Croatian pensions paid but are not moving back since a pension does not go far in Croatia, while it is a small fortune in Serbia.

There are hopes that this summer more Serbs than before will return. The Croatian government is removing discriminatory legislation that made it hard for Serbs to receive money to rebuild their houses. President Mesic and others have been making conciliatory statements of a type absolutely unimaginable during the Tudjman years. He says: “We certainly advocate a position that all should and may return…because displaced people are the victims of war and not the cause of war.”

In May a UNHCR information campaign among the refugees in Serbia brought a flood of inquiries and some officials are convinced that large numbers of refugees really will go back now. Vesna Petkovic of UNHCR in Belgrade says that for her it is significant that since last September arrangements have been made for the return of five hundred tractors to Croatia. The refugees, many of whom were farmers, had fled on their tractors, and from this she concludes: “Every year we say this is the year of return but I think this year it really will be true.”

So far, those who have returned have tended to be elderly, partly because there are few jobs in the former Serb-held regions. Now, however, with the change of government in Croatia and the desperate economic situation in Serbia, more families are beginning to return, and inevitably more will come if and when they are reassured by those who have already done so.

The prospect of significant numbers of Serbs returning to Croatia has outraged the far right and even caused problems within the governing coalition. According to Pupovac there have been three ethnically motivated murders of Serbs this year, but in general the police have been providing security.

Still, there have been some ugly incidents. On May 6, in the small town of Veljun, Pupovac was asked to attend a commemoration service at a monument and grave for Serbs murdered by the Ustashas in 1941. When he got there he discovered that most of the Serbs who had planned to be there had been scared off by threats. Just as the event was about to begin it was disrupted by a crowd of angry nationalist Croats singing Ustasha songs. During the commotion a woman pushed through the crowd and urinated on the monument. She said to Pupovac: “I peed on their graves and I can pee anywhere I want to in Croatia.”

Pupovac told me that in some places vicious far-right groups are becoming more influential, claiming that the government is giving rights to Serbs by taking them away from Croats. “The government has to deal with them more decisively,” he said. “The right are jeopardizing democratization on the basis of Ustasha tradition and sentiment.”

At a recent rally in Vukovar, which was devastated by Serb forces in 1991, Ante Djapic, a politician of the far right, said that while the last government could forgive the Serbs, and so could the present government, when his party came to power “we’ll deal with you.”

It is not only Serbs who have been slow to return to the former Krajina. Because there are few jobs there and because many Croatian families have made new lives in other parts of the country, large areas are nearly empty. The region of Glina, in Banija, south of Zagreb, used to be home to some 23,000 people, including 17,000 Serbs. Now there are perhaps 5,000, of whom perhaps 2,200 are Serbs, while the rest are Croats.

The lack of people makes for an eerie feeling on Glina’s leafy main street. In a sidewalk café we sit with Nikola Suznjevic, the local head of the Serbian Democratic Forum, which helps Serbs return and sort out their problems. During the war he was the head of a commission in northern Krajina which arranged exchanges of prisoners and bodies with the Croats. Suznjevic says he normally avoids sitting openly in this café because he does not want to provoke incidents; but it was striking that a man who held a rather important job during what he refers to as the “Krajina time” now feels secure here.

Suznjevic says he came back because he was born here: “I did not want to renounce my native country and I wanted to help my people who are living here in atrocious conditions. Also I have some principles.” Referring to Serbia and the authorities in Belgrade he says: “I can’t thank those who betrayed us. They say we are cowards but they betrayed us.”

In Glina, as in other places where Serbs once predominated, there are no Serbs in the local administration, which remains dominated by the HDZ; there are no Serbian teachers, health workers, or policemen. But this may change after next spring’s local elections, especially since enough Serbs are returning to make up majorities in some of the small towns.

In Gornja Bacuga I asked Luka Janjanin what he now thought about the war and the “Krajina time.” He replied: “I think everyone would agree with me that we were dragged into this by mad people and that it was an idiotic war led by idiots.”


The new Croatian government is being welcomed into the Western club. Although Balkan fatigue is widespread, Western governments also recognize that the new regime must be encouraged. Croatia’s first reward came on May 25 when it joined NATO’s Partnership for Peace program, which means it will be getting some military aid while waiting to join the NATO alliance.

On all the matters that Western countries asked Croatia to change its policies, it has done so. Refugees are not prevented from returning. Croatian television is no longer a state or party mouthpiece and relations with Bosnia have also been transformed. The final major Western demand was full cooperation with the Hague tribunal. Although sources in The Hague say they are still not completely satisfied, the new government has now explicitly recognized, as it refused to do before, that the tribunal has jurisdiction over the events of the summer of 1995 which brutally swept away the would-be Serbian state in Croatia. Teams from The Hague have already been excavating graves of Serbian civilians widely believed to have been murdered by Croatian forces in 1991 and 1993.

Until now every Croat publicly indicted by the tribunal has been indicted for war crimes in Bosnia. In the next few months we can expect indictments for war crimes against Serbs in Croatia. Already former senior generals have been making inquiries about lawyers and, according to one source to whom they have been talking, they are frightened. As Cicak says: “Once you open the door to let the wind in, you can’t control it.”

There is little doubt that the Croatian right wing will try to mobilize public opinion against the government by claiming, when the indictments are handed down, that it is betraying the “heroes of the homeland war.” Mesic rejects this, saying that the real problem would be “if we tolerate collective guilt. We believe in assigning individual responsibility for crime because we firmly believe that no one can use or commit any crimes on behalf of the Croatian state or the Croatian people.”

President Mesic is an optimist. Whether because of the economy, the war crimes indictments, or returning Serbs, the next year will be extremely tough for Croatia and its government. Still, hard as the future looks, Croatia has finally started down the road that it failed to take in 1995. After five years of political suspended animation and economic stagnation, and after having gained a somewhat unsavory reputation, Croatia has gotten out of the hands of a thuggish leader and his cronies and is looking forward to something better. Western diplomats charged with making policy toward the Balkans are openly relieved, even gleeful, about this. But Croatia is not their main preoccupation. Serbia is.

The trains between Zagreb and Belgrade have been running again only since June 1. On the way to a wedding in Belgrade I found myself the only passenger in the first-class sleeping compartment. No one else could pay the extra $12.00 to reserve a bed for the eight-hour trip. In Belgrade, I watched the bride and groom dancing on a table to the tune of a famous Gypsy band. Later, I could see that in the city center reconstruction is proceeding apace on some of the ministry buildings devastated by NATO missiles. Compared to a year ago the atmosphere is relaxed. The fear of a war with Montenegro has receded, if not gone. Just as they have done every year for a decade, everyone wonders how long Milosevic will survive. The government has been preparing an anti-terrorism law that—with reason—many fear will be used to stamp out Otpor, a new student-based protest movement. The mainstream opposition parties are as divided as ever, and they are frightened too. On June 15 Vuk Draskovic, the leader of the Serbian Renewal Movement, survived a second assassination attempt.

Western diplomats hope that Serbs will draw hope from Croatia, follow its example, and be encouraged by the benefits it is gaining from its participation in Western institutions. They are publicly saying that money is being earmarked for the reconstruction of post-Milosevic Serbia. My friends at the wedding just laugh at this. Milosevic may go tomorrow and he may go in ten years’ time. He is closeted with his wife and a few others, well-protected by his police, and still in control of the army; nobody knows what he is thinking anymore or what the fate of the country will be. Will Serbs have to wait until Milosevic dies in his bed as Franjo Tudjman did? While that seems unlikely, it is possible. But Milosevic is only fifty-eight years old. Franjo Tudjman was seventy-seven when he died. As if to make this point, Milosevic on July 6 had the Yugoslav parliament change the constitution so that he could stay in power for at least another eight years.

—July 12, 2000

This Issue

August 10, 2000