Ghost of Yugoslav bank haunts Croatia’s EU path

Ljubljanska Banka.jpg

Slovenia threatened to block Croatia's path to EU accession, citing a long-standing unresolved dispute over money owed by a Slovenian bank to Croatian depositors dating back to before the 1991 breakup of Yugoslavia.

Croatia hopes to join the European Union in July 2013 but can only do so after all current members, including Slovenia, ratify its membership accord (see background).

Zagreb wants bilateral talks with its Balkan neighbour on some €172 million the now-defunct Slovenian bank Ljubljanska Banka (LB) owes to Croatian depositors.

But Slovenia says the issue must be resolved as part of broader "succession talks" aimed at sorting out all such disputes among the former states of Yugoslavia and being led by the Basel-based Bank of International Settlements.

"I personally wish Croatia would join the EU as soon as possible and that we ratify the accord," Slovenian Foreign Minister Karl Erjavec said on the sidelines of an EU foreign ministers' meeting in Brussels, Slovenian national news agency STA reported.

"But the precondition for that is that we solve the question of LB in line with obligations Croatia agreed to when closing Chapter Four," he added, referring to an EU requirement ahead of new member states joining that refers to the free flow of capital.

Slovenia, the only former Yugoslav state to have joined the EU so far, also says Croatia agreed that the LB problem would be solved as part of the succession talks.

Croatian Foreign Minister Vesna Pusi?, who was also at the meeting in Brussels, said the issues of EU accession and the LB deposits should not be lumped together.

"I strongly believe that Croatia and Slovenia need European partnership and that is why those two issues should be treated separately," Pusi? told Croatian state agency Hina.

The European Commission said that it was up to the two countries to resolve the dispute and that it hoped the matter would not delay Croatia's EU membership.

Slovenia blocked Croatia's EU bid for most of 2009 over a border dispute until the two agreed to refer the issue to international arbitration.

MEPs approved Croatia's EU membership by a large majority on 1 December 2011.

The former Yugoslav Republic is expected to become a full EU member as of 1 July 2013. On 22 January, two-thirds of Croatians voted in favour of joining the European Union in a referendum.

After the collapse of former Yugoslavia, Ljubljanska Banka (LB) had refused to compensate holders of foreign exchange deposits at its branches in Zagreb, Sarajevo and Skopje. In response, Zagreb had denied Slovenia's Ljubljanska bank access to the Croatian market as long as savers from the former Yugoslavia, now Croatian citizens, had not been refunded.

The Council of Europe appealed in 2004 for Croatia, Slovenia, Macedonia and Bosnia and Herzegovina to set up a collective fund to compensate depositors. It also offered to help.

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