Three Seas Talks – Leo Marić, Nova Perspektiva

Stefan: We are here for a podcast with Leo Marić from Croatia. This is part of the Institute of New Europe series of conversations with experts from all twelve Three Seas countries. Today we are speaking with an expert from Croatia. Let’s start the conversation with an introduction from you, what you do, what you specialize in, before we launch into the rest of the conversation.

Leo: Okay, so I am from Croatia. I’m a historian and a writer. I’m writing mostly about political and geopolitical issues, covering the news from the Central and Eastern Europe.

Stefan: Excellent. So today’s conversation, like all the other conversations, is primarily around the regional cooperation, mostly in the sphere of economics. Everything really emerges from or is interlinked with that. It’s a very broad subject. Maybe let’s start with the current state of Croatia and its cooperation with the rest of the Three Sea nations. Could you give us a rough outline of what are the most important economic industries in Croatia, who its major partners are, what countries Croatia is currently doing trade with. Give us a brief outline. I’m not expecting an in depth, expert analysis.  Let’s just scratch the surface together, get a bit of an understanding of who the main players are in this story.

Leo: Even if you asked for the in depth economic expertise, I’d not be the right person that could give it to you. In short, Croatia’s economy is in relatively bad shape, mostly because of our socialist mentality and the heritage we got from the socialist Yugoslavia, but also because of the widespread corruption, that mostly comes from the ruling center-right Croatian Democratic Union.

As for the Croatian business and trade partners…. Within the region we deal mostly with Slovenia and Hungary. Those two countries are the countries with which we have a really big share of trade relations. Apart from them, our trade relations are with the rest of the Central and Eastern Europe. By that I mean in general, the Three Seas Initiative countries. The trade with the Three Seas accounts for around 50% of the total trade exchange we have within the European Union. That’s good percentage, but total numbers are relatively low.

Stefan: I see. Just to jump in on the corruption element… I actually have a great anecdote from Croatia. I was there with a very good friend of mine. We were driving down the road. Clearly the police realized it was a rental car. There was a rather wonderful exchange. They found some ridiculous technicality. We breached the code of the road. It was something incredibly silly. They pull us over and in short, they demanded roughly the equivalent of EUR 500. And the choice we were given was night in jail or EUR 500 in cash now.

And we didn’t have EUR 500 euro in cash on us, obviously, so we sort of briefly deliberated. We were wondering whether it would be a good anecdote to go and spend the night in jail or not. Decided against it. And so we said, look, fine, we’ll accept the fine. Can we transfer you the money? They said “absolutely not. We know a cash point”. We were somewhere down the coast, quite close to the border and Dubrovnik. So we were quite far down south. The police escorted us with the siren on to the nearest cash point, which was about 20, maybe 30 kilometers away. And they stood next to us and they were like “EUR 500”, so we took the money out. That was that.

Leo: It’s a funny story, but for people living there it is a really bad situation to live in.

Stefan: It actually wasn’t that funny, because 500 euro is a lot of money. It was a very big bribe. Sorry, I digress from much more serious conversation…

Leo: I also want you to add to this digression. I have a good friend from my hometown who made very good business in the our region with eight young people employed. Several months after he started the business, he was invited by the then local mayor who basically tried to take some money from him and he didn’t want to give it. In the next few weeks there was an inspection in his place and they found that he didn’t have an exit sign, that his fire equipment was not up to date and he got a fine of €3000 or something like that. Of course, he had to close the business and move to Zagreb, the capital. So this kind of corruption is really making it impossible to make any new business in the small towns if you don’t have very good connections with the local power.

Stefan: Yeah, that brings to mind that very famous quote from Joseph Stalin  “Find me a man, and I’ll find a paragraph for him”. But it is as you say… It’s interesting that you bring this up because I think you’ve been one of the only people in all the discussions that I’ve had so far with various experts who’s actually brought up corruption as a problem.

I do think that minimizing corruption is one of the major successes of Polish transformation. I think that on the pathway to democratization corruption in Poland has genuinely been uprooted. I mean, you wouldn’t really get a police officer today stopping you and saying “give me a bribe”. And that was quite normal 10, 15 or 20 years ago. That’s been stamped out.

Leo: If I can ask a question, what did you do to change that?

Stefan: It’s a really interesting question you as, but I’m not entirely sure what the answer is. My guess would be that it has partially to do with a very long tradition of democracy in Poland, stemming from the democracy of the nobles that we had in the Polish-Lithuanian Commonwealth,  having the first constitution in Europe, the second one in the world after the United States of America.

I also think that Poland is a relatively high trust society. It’s ironic that it’s a high trust society, because you would think the opposite, given its communist past. But ironically the ties between individuals are really quite strong. I think that would probably be one of the key differences between Croatia, where you had really difficult past… I mean, obviously, you know about this much better than me.

Leo: In Croatia you also have the ideological polarization that comes from the Second World War, but we also had the civil war in Croatia.

Stefan: Exactly. And then obviously the breakup of Yugoslavia, right? Having that tradition, that being really quite close, and then having that fall apart in the 90s. When people are talking about the war in Ukraine and the Russian aggression of Ukraine, they seem surprised that a war can happen in Europe. Well, actually, we had a conflict not so long ago [in the Balkans]. It is very interesting that you bring that up as an issue.

This discussion is quite important because obviously there are two people behind the Three Seas Initiative – Polish President Andrzej Duda and the former Croatian president. So Croatia is really important to the Initiative. Croatians were a sort of the spiritus movens of project alongside the Poles.

Another thing that I wanted to ask you about…  Let’s step aside from the economics and business and delve deeper into the actual ties. You said 50% of the businesses is with Central and Eastern Europe. What are the main opportunities for Croatia that come from being a part of the Initiative? What is Croatia looking to get from being a member of it? Why was it so heavily involved in formulating the idea in the first place?

Leo: For start, I don’t think that the Initiative is supported by Croatian political elites in general. It didn’t have a full support even inside the ruling Croatian Democratic Union. It was supported by some circles inside the party, and particularly by former Croatian president Kolinda Grabar-Kitarović, who also didn’t have the full support of the party. Even now, after she was removed from the position of president, Croatian Democratic Union, which is still in power, don’t do very much to deepen the Croatian cooperation with the Central and Eastern Europe. So, the Initiative does not have a total support from the whole spectrum of Croatian politics, like, for example, in case of Poland, Hungary, Czech Republic, etc. This is the main difference in my opinion.

Stefan: So you would say that in Croatia this remains in the realm of ideas rather than reality?

Leo: Within the Croatian mainstream politics, with the Croatian Democratic Union in charge, the attitudes are somewhere in between. CDU is not against the Initiative, but they are not very enthusiastic. They play both sides, cooperating both with Brussels and with Hungary and Poland. They are on both sides.

Stefan: But surely the projects that part of the Three Seas Initiative are ultimately all beneficial for Croatia, for its economics, its infrastructure and its energy sovereignty. Surely there should be a widespread support for increased infrastructure development, uniting the north south axis, making sure that the energy flows are safe and secure, making sure that we’re digitized. Essentially it’s all about catching up with Western Europe and repairing the damage resulting from being unfairly stuck behind the Iron Curtain. Obviously, Yugoslavia were in a slightly different situation than the rest of the region, but nonetheless, still experienced being under a communist regime and being held back economically for almost half a century. Why this reticence?

Leo: I think the two most important economic benefits that Croatia can offer to the Three Seas Initiative is that we can become some sort of transport and energy hub for the region. We have an access to the open sea, to the Mediterranean, and also have a relatively large port on the Adriatic Sea. Through the existing, and future, LNG terminal we can offer liquefied natural gas to the rest of the Central and Eastern Europe. We can also offer our ports to use to the Central Eastern Europe. So these are the main benefits that we can offer to the region. And in exchange, of course, we hope to receive some raw materials, tourists from the Central and Eastern Europe and so on. Economic exchange in general.

Stefan: One of the other things that’s been touched upon in most of the conversations that I had, is this realization that Central and Eastern Europeans don’t really know each other that well. For example, Lithuania and Poland have a very deep and interconnected history, but most of Poles don’t really know our Lithuanian neighbors that well. Same goes for the Slovaks, the Czechs, and even Hungarians, which whom we have a historic friendship. Obviously, I’m saying this from the perspective of a Pole, from a Polish centric perspective.

It is interesting that actually there are two places in the region that Poles actually do know well. One of them is Bulgaria, the Poles love travelling there. Another one is Croatia, which is also a very popular tourist destination for the Poles. So it’s a kind of interesting dichotomy of not knowing well our closest neighbors and our closest economic partners. And at the same time many of us have been on holiday by the Adriatic coast and enjoyed your beautiful cities, and there is a sense of familiarity with Croats and with Croatia. Speaking of tourism… What sort of percentage would you say are Central-Eastern tourists as opposed to Western tourists?

Leo: I think it’s also around 50%. I didn’t see exact numbers, but it’s something around this number. It’s important to add that tourism at this moment is responsible for around 20% to 25% of the Croatian economy, of the Croatian GDP. So it’s very important to us.

Stefan: Yeah, I can imagine.

Leo: We should deepen the cooperation in tourism. It should be not only about the summer vacations at the Adriatic Sea, but also about cultural cooperation and exchange of students between the regional universities. All of these things can deepen our cooperation. We need exchanges between the ordinary people, not only between economies.

Stefan: Absolutely agree. I mean, there is an over prioritization of Western universities in Erasmus. I mean, there really is that belief that if we don’t go west, we can’t get [good education]. I agree with you.

I think it’s so important to have this integration occurring on that north south axis that we haven’t really been focusing on. It always surprises me, that despite all of our countries being behind the Iron Curtain, we didn’t get to know each other better before. It’s funny, because during that time Poland had this reputation of being the “happiest barrack in the socialist block”. Nonetheless, there’s actually quite a distance between us and our neighbors. We also keep on looking west towards Berlin, which is the major economic partner of most countries in CEE, or further on to Brussels, as opposed to having this really solid block of countries that is on the upwards economic trajectory.

Going back to the Croatian issues that you started bringing up… What could be done to convince Croatian elites that this project is worth pursuing, that this project is valuable, and that this project is in the interest of the Croatian people?

Leo: I think we need to make some change within the Croatian political elites; to replace at least part of the current elites with the new ones. A lot of political elites in Croatia comes from the communist regime. Some of those people were active already in the 80s in Croatian politics. Some of them are sons and grandsons of the people that were high communist functionaries. That is why they keep being focused on the cooperation with the western Balkans: Serbia, Slovenia, Bosnia and Herzegovina, Montenegro etc. They replaced the Yugoslavia with the European Union. EU is some sort of surrogate for the missing Yugoslav state.

This kind of elite, they won’t cooperate with the Poland, Hungary and so on, with some exceptions. There are people who are aware of our interests in the region, but most of our politicians aren’t. That’s the problem. I think that geopolitical circumstances in Europe today will force Croatia to have a better cooperation with its region, especially due to the war in Ukraine and general redistribution of power in Europe.

Stefan: Faced with the Russian aggression in Ukraine, two great European countries, France and Germany showed a lot of reticence towards supporting the Ukraine. One can even say that they were hoping that the war would rapidly end so they could go back to business as usual.

Then you have CEE countries such as Poland and the Baltic states who have been absolutely outstanding in the role they’ve taken in the region. Players like Czechia and Slovakia and others. Slovenian Prime Minister Janša alongside Prime Minister Fiala from Czechia, Prime Minister Morawiecki and Jarosław Kaczynski from Poland, went to Kiev as the first foreign leader.

Has the war shifted the opinion of the Croatian elite, but more importantly of the public opinion? There has been definitely a balance of power shift which made Warsaw the absolute hub of logistics for humanitarian aid or weapon transfers. Warsaw really has become an absolute hub of pro-Ukrainian efforts and a gateway into Ukraine. Has the war shifted the political opinion at all in Croatia, would you say?

Leo: Yes, sure. And I think it the attitudes towards that will be even better in the next few years.

Stefan:  Croatia has recently announced that it would be training Ukrainian soldiers. That’s been a fairly major announcement, right?

Leo: Croatian Prime Minister announced that, but the Croatian President, who is pro-Russian, has blocked that decision. So we won’t train Ukrainian soldiers. The president was playing on the popular feelings against the war, and used them to promote his pro-Russian agenda.

Stefan: I see. Right. Going back to the Three Seas Initiative and the public’s opinion of it. Is the 3SI something that still operates just in the sphere of experts, think tanks, policy makers and politicians? Or is there an understanding and awareness of the Three Seas Initiative in the mainstream?

Leo: No, outside of the experts circles it’s not really a popular idea. I mean, people are not against it, people are mostly indifferent towards it. It’s not very well-known in Croatia. But I don’t think it’s really problem in this concrete situation, because it takes a long time to make such initiatives popular. The idea of European Union was also not well-known in the 1950.

Stefan: The Steel and Coal Community, as it was known back then, before the Maastricht Treaty. This type of recognition grow in an exponential way, rather than linearly…

Leo: So it’s a long term project and we will probably see some better achievements in the region in 20 or 30 years. Unfortunately, that’s the situation.

Stefan: Yeah. There is one thing that I found in my analysis of the Three Seas, quite sad, slightly even pessimistic. I think that the growth and the success of the Three Seas initiative in some ways is linked with the decline noticeable in the West, especially the pauperization of the middle class.

I think that the COVID-19 pandemic and the policies around it in the West have been very detrimental to small and medium sized businesses. So it really have hurt the middle class and the poorest spheres of society. We’re witnessing something in the west that’s very unusual, that the millennials and generation Z are the first two generations ever that are not going to be better off than their parents or their grandparents. In fact, they’ll probably have it significantly worse. One of symptoms of that is the fact that millennials are very unlikely to get onto the property ladder. Obviously the West is incredibly powerful, incredibly wealthy; there’s an accumulated wealth over centuries. I’m not saying that they’re going broke tomorrow. But there is definitely that pauperization of the lower classes and of a certain destruction of the middle class that has accelerated over the last two years.

We see the reverse of that in our region of Central and Eastern Europe. Based on statistics, Poland has seen an upward trajectory, 27 years of uninterrupted economic growth between 1992 and 2019, interrupted briefly by COVID, then bouncing back. Now as business is being brought back from China, Poland is a leading location for nearshore investment for the West. What we’re in result seeing is our generation of millennials and then all of those were born after us prosper. Those born in the early 2000s were born in a really unique time in the history of Central and Eastern Europe. Even despite that Russian aggression, we’re living in a really exceptional time. I would argue that in Poland we are seeing a once in a several century opportunity. I don’t know if you would say the same thing for Croatia…

Leo: I’m a little bit more pessimistic about that. When you mentioned the COVID it must be said that the Polish and Hungarian governments were not very much better than the western governments when it comes to the anti-COVID measures. They also introduced some measures which were bad for medium and small businesses.

Stefan: I don’t disagree.

Leo: There was not very much difference. In Croatia, we had very radical measures, but only on paper. In reality, due to corruption those anti-Covid measures were not very much in place. So that’s the difference. In some cases it’s useful to have a corrupted system like this.

I also think that situation of young people is not very good in Croatia, and neither is in the region. I mean that since the early 2000s, we have experienced a large exodus of mostly young people from our region to the Western Europe. So if you look at the demographic pyramid, the situation is not very good. Western Europe might be in a slightly better situation about but that’s because of immigrants, their domicile population is even in a worse situation than us. I don’t think our social system will survive in the next 10 or 20 years, because the pension system and healthcare depend on the young people and people who work. We lack enough young people. That’s a problem.

Stefan: The demographic situation of Poland isn’t great either. We have one of the worst demographic numbers and indicators in the whole of Europe, if not globally. Generally, we’re well below replacement levels.

Moving on to the next, hopefully more cheerful and optimistic topic… From a Croatian perspective, what do you think the role of Poland should be in the process of integration of the Tree Seas Initiative?

Leo: Polish role is the biggest one because it’s the biggest country in the region. It has the most to say in the European Council, because of its population and it’s economic strength. So it should have the biggest and the strongest role in the Integration. The second reason for that is the fact that the Three Seas idea originally came from Poland. It’s based on the Intermarium concept from the 20s-30s of the last century.

So obviously the Poland should have the key role, but I believe that the region and regional integration should be made on the basis of equality between the countries. I don’t think we need to build a deep integration similar to the European Union. I think the 3SI should be what the European Union was in the 50s-60s, an economic cooperation.

Stefan: Yes, absolutely. What do you think the role Croatia should play? I assume the answer is fairly similar, right? What do you think the next steps for Croatia are? What are your hopes for the role that Croatia could play in this process?

Leo: I hope that in the near future there will be an opportunity for us to become members of the Visegrad Group, for example. I think that the whole 3SI should make more infrastructure investments in the region. The most important goal is to make road and railway connections between the countries. Today you have, I think, only two rail connections between Zagreb and Budapest and no rail connection with Warsaw, Cracow, Prague or Bratislava; only with Budapest and only two daily. So it’s a problem. If you, an ordinary citizen, want to travel by train for business, cultural exchange or studies, it’s not possible.

Stefan: I definitely agree. This process is going to take time. I think we need to keep pushing for that on an individual level, on a citizen level. I also think that an increased awareness of the general population, essentially forces the political class into action. So we need activities that promote the Initiative, discusses it or just talks about its general aims.

We also need to keep reminding people that the entire infrastructure of our region is geared towards East and West and that we’re a transit zone. It is deeply unfair that we’re a transit zone, so we need to integrate and to connect that north south axis.

I think we need to focus on powerful explanation of what the core of the project is: It’s redressing a historic injustice of what happened to our region, of what was done to us and what was imposed on us by Moscow; and the resulting massive economic delay, essentially withholding our economic potential for such a long time.

And there is this second injustice that was done to us. This is obviously a slightly harder point to argue, but while we were busy rebuilding ourselves out of the communist hellhole, the massive capital that has flown into our countries and has established itself making us unable to fully compete. This is another great injustice that we need to address.

So the Three Seas Initiative is essentially catching up, integrating and becoming an equal partner in the European Union. That’s the key point of the project, right?

Leo: Yes, for now. I think in the future there will be a need for a new geopolitical block outside of the European Union. But for now we should stay inside the EU and use all available benefits.

Stefan: Leo, thank you so much. It’s been really interesting to get the Croatian perspective on this.

Leo: Thank you.