Sanctions threat

It's official. The honeymoon between the European Union and its newest member, Croatia, is over. On Wednesday (18.09.2013), just 80 days after Croatia joined the EU, Brussels took the first step towards punitive measures against the country for refusing to change its policy regarding extradition.

Viviane Reding, the EU's commissioner for justice, has initiated the so-called article 39 proceedings against Croatia, which she had been discussing for days. This mechanism enables the EU to put "suitable measures" in place with the goal of prodding the Zagreb government to "finally accurately implement" the framework decision dealing with European arrest warrants.

The European Union thereby named concrete financial penalties, including freezing 80 million euros ($108 million) within the next year. Croatia receives the money to prepare for a bid to join the Schengen Area, a treaty signed by currently 24 European countries to end internal border checkpoints and controls. Additionally, Croatian justice and home affairs are to be more closely monitored. The EU member states have 10 days to decide on these measures. The same deadline was set for Prime Minister Zoran Milanovic to relent to the EU's demands.

Croatiawants more time

The proceedings by the EU Commission are seen as an attempt to put pressure on EU member states not to change existing laws. Just three days before Croatia joined the EU on July 1, the country's parliament passed a special extradition bill. The amendment states that anyone accused or convicted of a crime before August 2002 cannot be transferred abroad for trial. As a result, those accused of atrocities during the Balkan wars of the 1990s cannot be extradited to face trial, which contradicts the EU's arrest warrant legislation.

Many believe the amendment was enacted to protect former Secret Service General Josip Perkovic and about 20 others from being extradited. Germany is seeking Perkovic because he is believed to be responsible for the murder of a Yugoslav dissident in Bavaria in 1983.

"The time limit of the European detention order is a clear and severe violation of EU law," said a spokesperson for the EU Commission. Due to pressure from Brussels, the Zagreb government had consented to the new amendment. However, this amendment will only become effective on July 15, 2014 - an unjustified delay, says the EU. Croatia only needed a couple of days to change its laws against the EU regulation in summer, so it shouldn't take longer to restore the legal conformity, said the Commission spokesperson.

Prime minister digs in his heels

But despite the warnings from the EU, the Croatian government hasn't shown any willingness to compromise yet. The daily newspaper "Jutarnji List" published an unofficial letter by the Croatian government to the European Commission stressing once again that Croatia feels mistreated by Brussels.

At the beginning of the week, Milanovic expressed his defiance, saying Croatia "is not a bird sanctuary" and that "no one is allowed to wipe the floor with Croatia." Croatian politicians close to Milanovic are reacting cautiously thus far regarding his stubborn behavior. But his political opponents are outraged and are demanding early parliamentary elections.

The Perkovic issue was expected to be discussed at a government meeting on Thursday (19.09.2013), but the topic never ended up as part of the talks. It's believed that the consent of the main Social Democratic coalition partner, the Liberals (HNS), is likely to be missing. Leading HNS politician and Croatian Foreign Minister Vesna Pusic was an opponent of the controversial law from the beginning. The cabinet's now-delayed decision is based, as speculated in the media, on Pusic's wish to immediately change the disputed law, as required by the EU Commission, and not next year, when Milanovic and his justice minister have decided to make the change.

The Croatian public has reacted with a mix of appall and amazement at Milanovic's approach to the Perkovic issue. Editorials in a number of Croatian newspapers and online news sites have spent time pondering what could possibly be motivating the prime minister's actions. Many have speculated that Perkovic, who played an important role in the security services of both Yugoslavia and in independent Croatia, could air the country's dirty laundry if he is extradited.

Croatian political scientist Davor Gjenero, however, said he suspects that Milanovic is using the issue to distract attention from Croatia's weak economic situation.

"The current situation in Croatia is a paradox," Gjenero said. "The opposition, president and smaller parties are all in agreement and shocked at Milanovic's behavior. But it appears that he still has a firm grip on the cabinet and can prevent any logical solution."

Milanovic supported Croatia's membership in the EU but some have wondered if he was aware of the bloc's actions and mechanisms." He takes part in the EU meetings, but he does not communicate with anyone there," Gjenero said.

Accusations leveled at Brussels

Instead, the prime minister has made matters worse by blaming not only conservative powers in Croatia for the situation, but those in the European Union as well. In parliament this week, he accused the leader of the opposition party HDZ of lobbying against Croatia in Germany. Tomislav Karamarko, the party's head, had recently returned from Germany after attending a campaign stop for Chancellor Angela Merkel and her Christian Democratic Union, the German counterpart to his own party.

Biljana Borzan, a Croatian Social Democrat and member of the European Parliament, said EU Commissioner Reding was only taking a strict approach to Croatia because she wanted to improve her image as a way of being named successor to EU Commission President Jose Manuel Barroso.

"She is campaigning and trying anything to attract media attention," Borzan told Radio Osijek.

The HDZ is currently Croatia's only party that stands to benefit from the Perkovic affair. Polling has shown support for the party grow since the scandal began. Many expect that the longer Perkovic debate last, the louder calls for early elections will become.

Most observers said they believe that Milanovic will give in now that sanctions from the EU and international embarrassment have been threatened. Tihana Tomicic, a columnist for the daily "Novi list" said diplomats were working hard to find a way out of the dilemma.

"It looks like everything is pointing toward a compromise," Tomicic said, adding that talks are taking place that would allow Milanovic to save some political integrity while coming into line with the EU's demands.

"The answer could see Milanovic enact the altered law soon, rather than next year, and have the EU Commission walk back from sanctions and cutting funds and be satisfied with the reprimand."