The Slovenia Times

LB Issue Dominate Slovenia-Croatia Relations



Stemming from the early 1990s when Ljubljanska banka (LB) went bankrupt after the breakup of former Yugoslavia, the issue came to the fore after the Croatian government authorised two Croatian commercial banks to sue LB and NLB over foreign currency deposits that in the early 1990s were transformed into Croatia's public debt and thus paid out to part of LB clients.

Proceedings in these cases had been running before Croatian courts since 1996, until they were all annulled and ordered for retrial by the Supreme Court in 2010.

Since Croatia declined to withdraw the authorisation given to the banks in 2001 before the start of fresh proceedings, the governments of Slovenia and Croatia appointed financial experts to solve the problem.

However, after four rounds of talks Slovenia's France Arhar and Croatia's Zdravko Rogić have still not been able to find a solution acceptable to both sides.

Slovenia has been demanding of Croatia to withdraw its authorisation for the lawsuits as the condition for ratification of Croatia's EU Accession Treaty in Slovenia's parliament.

But the government in Zagreb has been refusing to grant Slovenia's request, insisting that the issue is unrelated to Croatia's progress on the path to full membership of the EU, which is expected for 1 July 2013.

The countries are expected to try to solve their dispute by that date, with the EU too underscoring that this bilateral issue should not hinder Croatia's accession process.

The issue is thus expected to continue to dominate bilateral relations in 2013, also after the Slovenian government's recent decision to extend Arhar's mandate to the end of next year, while Rogić's term is not time limited.

Even though 98% of all foreign currency savings deposit holders in all countries successors to the former Yugoslavia have had their savings restored, the issue has been marring bilateral relations for decades.

The succession agreement of 2001 binds successor countries to solve the issue of guarantees for Yugoslav-era foreign currency savings deposits in talks before the Bank for International Settlements (BIS) in Basel, but the talks have not started yet.

Croatia did not concede until October 2010 that the savings deposits were a matter of succession, but the government elected in December last year changed this position, until officially suggesting to Slovenia in October this year that the two countries turn to BIS for help together.

One important development in the issue was the European Court of Human Rights ruling against Slovenia in the case of two deposit holders from Bosnie and Herzegovina on 6 November.

The court ordered Slovenia to take measures to allow the applicants and all others in their position to be paid back their foreign-currency savings "under the same conditions as those who had such savings in domestic branches of Slovenian banks".

The court said that that there were another 1,650 similar petitions concerning more than 8,000 applicants pending.

The ruling is not final yet and Slovenia has announced an appeal, arguing that the issue needed to be tackled as part of the succession talks and that the country had guaranteed for savings deposits with all banks on its territory. The deadline for appeal is 6 February 2013.

Meanwhile, the border issue is being resolved far from the public eye following the December 2011 launch of arbitration procedure under the accord signed by Slovenia and Croatia in 2009.

The countries have picked members of the tribunal to arbitrate on the border between the two countries. At its maiden session on 13 April the tribunal headed by judge Gilbert Guillaume decided that the countries would present it with their positions in the case on 11 February 2013.

The countries will then have until 11 November to put forward their response to the each other's memoranda and hearing is expected to start in the spring of 2014.

The countries' top officials have been meeting regularly. Foreign Minister Karl Erjavec made his first official visit to Croatia on 19 March when he and his counterpart Vesna Pusić proposed a meeting of both governments to discuss all open issues between the countries, which has however not taken place yet.

The pair also called for a more effective work of the bilateral economy commission. The latter met in May and agreed to continue cooperation after Croatia's accession to the EU and to meet again in Croatia in the second half of 2013.

Also in May, a delegation of the parliamentary Foreign Policy Committee made what was the first such official visit in 14 years.



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