This summer Croatia will be the second of the former Yugoslavian countries to join the European Union, after a 10 year struggle. EU membership of course means European governance when it comes to water management. Jeremy Josephs looks at how the country is preparing for the Water Framework Directive and opportunities for the global water sector.
The small Balkans' state of Croatia situated at the crossroads of central Europe and the Mediterranean only came into being as a legal entity in 1991. But no one would seek to dispute the fact that when it comes to Croatia's accession to the European Union, it has been a lengthy encounter. After more than 10 years of occasionally fraught negotiations, the European Commission has finally given Croatia the green light to join the EU on 1 July as the 28th member state.
Croatia will thus become the second of six former Yugoslav republics to join the bloc, with Slovenia having been granted entry in 2004. But Croatia's leaders are acutely aware that elaborate EU rights come packaged together with onerous responsibilities - and nowhere is this duality more apparent than in respect of the implementation of the Water Framework Directive (WFD).
This landmark EU measure obliges members to achieve good qualitative and quantitative status in respect of all water bodies (including marine waters up to one nautical mile from shore) by 2015. Easier said than done.
Croatian ecologists were initially up in arms, accusing their government of deceiving and flaunting EU legislation, and going public with the harsh accusation that Croatia's implementation of the WFD was nothing more than "a dead letter" despite the fact that government in Zagreb had moved swiftly and early on to transpose the WFD into national legislation.
"Water management in Croatia is far from sustainable", they thundered, "and consists of redundant and extremely expensive hydro-technical river regulations. This is typical old-fashioned water management which disregards EU institutions and its legislation. Worst of all, it appears that State agency for water management, Hrvatskevodem, is accelerating all such activities to regulate as many rivers and streams as possible prior to accession."
It was perhaps as well that Dr. Stephan von Keitz and his European Twinning Team Project was able to issue a more upbeat assessment of Croatia's WFD track record. They concluded that while there were undoubtedly challenges ahead there was absolutely no reason at all why the small but energetic Balkan state would not be able to strengthen the institutional and administrative capacities of all stakeholders involved.
In fact the truth was that when it came to the issue of EU accession, ecological issues were relatively low down on the agenda. Rather, the fight against organized crime and corruption in Croatia always taking priority. Still, slowly but surely in the years prior to accession the government in Zagreb, with support and assistance from Brussels, was working away to ensure that water came to be seen as a valued natural resource - an integral part of the aquatic and terrestrial eco-system.
When it comes to tourism, at least, this somewhat ambitious agenda and occasionally rousing rhetoric has undoubtedly been far easier to get across. For the very simple reason that tourism continues to dominate the Croatian service sector, accounting for up to 20% of GDP. Annual tourist industry income is now estimated at a massive €6.61 billion. Much of this is attributable to Croatia's stunning 1800 km of coastline, where the Adriatic brims with isolated beaches, watersport hotspots and historic ports.
Which means that no degree in either hydrology or environmental studies is required to realise that it is in almost every Croatian's interests to ensure that the Adriatic becomes as pollution free as it possibly can be. And precisely why Croatia recently teamed up with Montenegro to eliminate sea pollution and thus further and more effectively protect the Adriatic Sea. The EU assisted the project with a grant of over half a million Euros. The objective is to control sewage levels going into the sea and monitor overall water quality.
The French-based conglomerate and service provider Suez Environnement is present in over 70 countries on five continents. Its arch rival Veolia Environnement boasts a similarly impressive international portfolio. Little wonder, therefore, that both had been closing monitoring the rapidly evolving Croatian water service sector throughout the many years that the EU accession talks were going on.
Six years ago, in fact, representatives from Suez were reported to have visited the ancient Roman city of Split, interested in investing in the public sector – not just in water but gas distribution too.
"Suez's ambitions apparently extend far beyond the city borders to the whole of Croatia", the Transnational Institute of Water Justice reported at the time. Clearly partisan in its approach, its readers were informed that "the misinformed city government, influenced by business interests, seems ready to generously offer property belonging to the city to the French multinational".
Not that such one-sided reasoning would have deterred either French group – but these early investment soundings happened to coincide with what came to be known as the great Croatian privatisation controversy – a phrase used to describe matters associated with mafia-style activity which plunged the nascent Balkan republic into a severe economic depression almost immediately after its creation.
Croatian Privatisation Cartel
There were dozens of incidents known collectively in Croatia as the "privatisation robbery" (privatizacijska pljačka) when favoritism became common. This was to the extent that the President had apparently decided on a concept of some two hundred families controlling all property in Croatia. Of course all of this was more than sufficient to ensure that even the most enthusiastic investor would lay low and keep his head down, at least for a while.
Still, it would be a brave person who would put money on either of the French giants Veolia and Suez from returning to knock on Croatia's potentially lucrative water sector doors. And in any event, their various subsidiaries have already taken tentative steps in other sectors, transport and energy included.
As Vanesa Vujanić from the Centre for Energy, Petroleum and Mineral Law and Policy at the University of Dundee has pointed out, what is likely to influence the ongoing tug of war between the public and private sectors in relation to the Croatian water sector is not in fact the WFD, believe it or not, but harmonisation with two specific water utility directives – the Drinking Water Directive and the Urban Waste Water Treatment Directive. Why these two in particular? Because their implementation has been estimated to require some 4.5 billion euro's worth of investments. That's right – billions, not millions.
Croatian tourism might indeed be doing very well indeed but even that booming sector did not manage to prevent the country from reentering a recession in 2012 with Zagreb cutting back significantly on spending on a wide variety of programs. Moreover its high foreign debt, strained state budget and over-reliance on tourism revenue are all likely to combine to hinder future economic progress in both the short and medium terms.
All of that to suggest that when it comes to the privatisation of the Croatian water sector (and thus the entry of the major international players – French or otherwise) it is highly unlikely to be the end of the matter. Far from it, in fact.
The Croatian capital Zagreb is located in the northwest of the country, along the Sava river which is an integral part of the Black Sea drainage basin. It is a little known fact that the Sava is one of the longest rivers in Europe and among a handful of major European rivers that do not drain directly into a sea.
One key initiative got underway in 2008 – the International Sava River Basin Commission (SRBC) - which aims to promote trans-border cooperation for the sustainable development of the region. The SRBC is well placed to do this – since the Sava runs through Slovenia, Croatia, Bosnia and Herzegovina and Serbia and is the most important Danube tributary, adding almost 25% to the Danube's total discharge at their meeting point in Belgrade. Significant pressures have been identified within the basin, true enough, notably the fact that many agglomerations within it have no, or insufficient, wastewater treatment and are therefore key contributors to organic and nutrient pollution. But despite these shortcomings it has been heralded as an example of how cooperation and education can serve to solve regional water problems in the Balkans.
Vladan Bozovic from neighbouring Montenegro's Biotechnical faculty is in no doubt that good cooperation in respect of water issues is the way forward: "People in our region should harmonise national water acts and policies, improve development and implementation of legislation and regulations in accordance with EU directives and policies, co-ordinate management and protection of water basins including reservoirs for hydropower plants, irrigation and rehabilitation of degraded areas around water basins."
This is another example as to how the successful resolution of water issues can become a broader catalyst for peace.
The question has to be raised of whether those responsible for strategy and international investments at the Paris headquarters of both Suez and Veolia - might dare to take a second look at the prospect of the undoubtedly good returns waiting to be found out there in the key Croatian cities of Zagreb, Split, Osijek, Zadar and Dubrovnik. For there can surely be no doubt that there is much work to be done in both water supply and sanitation and therefore good returns to be made.
Author's note: Jeremy Josephs is a freelance contributor to WWi magazine. For more information, please email: [email protected]