Zagreb, Croatia's picturesque capital, is famous for its cafés. On
nearly every block tables spill out onto the sidewalk, or even the
street, filled with well-dressed locals sipping coffees and
cocktails.
Try to find an actual restaurant, however, and you could walk
kilometres.
Many Croatians reflexively use this as a metaphor for their
economy. The country's wealth of low-hanging economic fruit - a
majestic coastline and large inward flows of remittances - masks a
general lack of nourishment, and tempts the public and policymakers
to put off or water down much-needed reforms. Although well ahead
of the war-ravaged former Yugoslav republics to the east, Croatia
trails star EU candidate Slovenia and other advanced transition
countries, and runs the danger of complacently muddling through
another decade.
The prevailing economic and political climate in the small
republic of roughly 4.5 million flows from the homeland war of
1991-95 and its aftermath and last year's sweeping change...
