Part of the Austro-Hungarian Empire from medieval times and of the Yugoslav state for much of the 20th century, Croatia still has a strong national identity. The country includes the historic provinces of Slavonia, Istria, and Dalmatia (Dinara). Actively involved in the conflicts which broke up Yugoslavia in the early 1990s, Croatia only regained full control of Serb-occupied Eastern Slavonia, around Vukovar, in 1998.

Before the breakup of Yugoslavia, Croats made up nearly 80% of the population, and Serbs 12%. In 1991, the Serbs, alienated by Croatian nationalism, proclaimed the Republic of Serbian Krajina in areas where they formed a majority. Croatian forces retook most Serb-held territory in offensives in 1995, precipitating a huge exodus of Serb refugees. The last rebel Serb enclave, Eastern Slavonia, was reintegrated into Croatia in 1998. Many of the 250,000 Bosnian refugees who fled to Croatia have now settled there. By 2001 Serbs comprised only 4% of the population.

Strengths

Moderate growth as economy made recovery from 1998–1999 recession. Progress in reducing government overspending, backed by IMF.

Weaknesses

War damage estimated at $50 billion. Slow privatization until 2001. High and persistent unemployment.

Croatia left the former Yugoslavia in 1991 under the direction of the right-wing HDZ led by Franjo Tudjman. However, the country suffered growing international isolation because of its nationalist stance and ambiguous support for the 1995 Bosnian peace accord. The HDZ was left rudderless after Tudjman's death in December 1999 and, mired in corruption and spying scandals, was swept from power in elections in January 2000 by left-leaning parties. The eclipse of the HDZ was confirmed in presidential elections the following month, won by one-time Yugoslav federal president Stipe Mesic. The new government's priorities were to rehabilitate Croatia internationally and to reduce the authoritarian powers of the presidency.

Tudjman's nationalist stance after independence worked against closer relations with the West. Croatia's military successes in 1995, hastening the end of the Bosnian war, were reflected in the Bosnian peace accord. Tudjman's successors seek closer cooperation with the EU. In 2000 Croatia joined NATO's Partnership for Peace program.

The army proved its effectiveness when it recaptured territory held by Serb forces in 1995. Under 2002 proposals its size will be halved by 2005.

Croatia generates 40% of its energy needs from combustion and 60% from hydroelectric sources. It has very few minerals, although it does have oil and gas fields. The rich fishing grounds of the Adriatic are a major resource.

Croatia was the first Yugoslav republic to create reserves in order to protect endangered and unique wetlands.

Zagreb has recovered from the devastation of war and sanctions on Yugoslavia, and is once again an important regional road and rail hub. The Adriatic Highway affords fantastic views from the mountainous Dalmatian coast.

Most Croats are covered by a health insurance scheme. However, an extra strain on already scarce funds is created by the demands of refugees and disabled war veterans.

The education system is well developed. There are four universities, at Zagreb, Rijeka, Osijek, and Split.

Under Tudjman, former Croat HOS militiamen escaped prosecution for "ethnic cleansing" in Bosnia, but the post-Tudjman government ordered a number of arrests.

Wage rises in the mid-1990s and again in 1999 led to spending booms. Consumers' high expectations were reined in by tighter wage policies.

The Adriatic coast is regaining its popularity as a tourist destination. There is also a variety of historical sites.

In 1945–1991 Croatia was a republic of the Yugoslav federation.

• 1991 Independence. Rebel Croatian Serb republic proclaimed.
• 1992 Tudjman president. Involvement in Bosnian civil war.
• 1995 Krajina and Western Slavonia recaptured. Dayton agreement ends fighting.
• 1998 Eastern Slavonia reintegrated.
• 1999 Death of Tudjman.
• 2000 Center-left wins elections.