In the tragic tale of Trump’s election, apathy is the true villain

(A piece I wrote for a local paper, but was kicked at the last minute, then died of old age.SPECIAL NOTE: I understand there are many, many more issues related to Trump's election, and particularly what led to the results. No need to point them out.)

By Roger Malone

I’m a member of a secret Facebook group called Pantsuit Nation. It can’t be found by doing a search, and you can only join by invitation, sort of like the Illuminati, but much less powerful or cool. Until the wee hours of Wednesday in Zagreb, the page was filled with inspirational stories and pictures of women in pantsuits, Hillary Clinton’s campaign uniform.

Then the bottom fell out, and against all expectations, Donald Trump was elected president of the United States of America. There he stood, a racist, misogynist, xenophobe – the list of ugly labels seemed endless– thanking voters for making him what many people call the leader of the free world. I sat in my darkened living room in Zagreb numb, watching an America I didn’t recognize.

Postmortems of the results will be written for decades. My short instant thesis: the Republican voters – particularly less-educated white guys – trained for decades to focus on social issues like abortion, gay marriage, and gun rights, suddenly realized GOP leaders had stole their economic wellbeing. Trump, with all his many obvious failings, promised change, and these carefully trained voters could not stomach voting for a Democrat.  I know other factors vie for supremacy, but ultimately president-elect Trump was created by decades of Republican programming.

But change comes with a price, and no one – maybe not even Trump himself – knows what the ultimate price will be. After spending more than a year recklessly insulting immigrants, women, the disabled, judges, his political rivals of both parties, and many others, the reality show actor suddenly became a statesman. He gave an acceptance speech that hit all the right buttons, congratulating Clinton for a good fight, promising unity, and so forth. So, is this now the real Trump? Who knows? As a product of working class parents, I’m not holding my breath. He lied consistently on the campaign trail, and old habits are hard to break.

Whatever the price, it will be paid in the United States, in Croatia, and the rest of the world. One joke making the rounds is that his wife, Melania, is Slovene, and a Trump administration would push Croatia to accept Slovenia’s territorial claims in the Piran Gulf. If it only stopped there. The specter of a global recession has been raised, which could devastate Croatia’s climb out of recession. Efforts to combat climate change could be set back, and the US commitment to NATO has been called into question.

In meantime, life goes on. For the moment, tree-hugging liberals like me will have to turn to faith for comfort. We must have faith that our democratic institutions, particularly the courts, are strong enough to rein in the excesses of Trump’s apparent instincts. Faith that even though Republicans control Congress, some level of reason will prevail and establishment Republicans will not be entirely powerless. Faith that the weight of the office of US president will sink in and President Trump (there, I’ve written it) will be a different person than candidate Trump. Faith that progressive Americans have learned a lesson and will start mitigating the damage by electing a new Congress in just two years and a new president in four.

The biggest leap of faith is perhaps my last point, because the true tragedy of this week’s US election is that Americans just could not be bothered to act. The 2016 vote was the most important US presidential election in a generation, if not longer. Yet only about half the eligible voters in the United States cast a ballot. Early numbers suggest voter turnout was about 54 percent – roughly in line with that of Croatia’s last national election, by the way.

More than 100 million Americans could not take time away from chatting on social media, shopping, playing computer games, discussing football, or doing something equally important. Granted, some of those who didn’t were stopped by voting restrictions. And the strange habit of holding elections on Tuesdays, a work day, is also a problem, though somewhat eased by early voting opportunities in many states. But in key states, Clinton lost by less than 150,000 votes, often by much less.  Trump won the election with 1 million fewer votes than Mitt Romney received in 2012, and Clinton lost the election with almost 6 million fewer votes than Barrack Obama got in 2012.

The hidden villain in this election is American apathy. And the ugly truth is that turnout this week was on the high side compared with that of US presidential elections since I started voting in 1980. This was not good enough, especially in an election with so much in the line. And there’s always something important on the line in an election.

Of course, there’s no guarantee that Pantsuit Nation would be celebrating today if those 100 million voters had gone to the polls Tuesday. They could have all voted for Gary Johnson, the libertarian candidate who didn’t know Allepo, couldn’t name a single world leader, and wanted to eliminate the minimum wage. But, you have to have faith.

[Follow Roger Malone on twitter at @ExpatinZagreb or at www.expatinzagreb.blogspot.com]

Tips from the grave from Singapore’s founding father Lee Kuan Yew

(A version of this article, in Croatian, appeared in Tuesday's edition of Jutarnji List, Croatia's largest newspaper.)

An Expat in Zagreb

By Roger Malone

Lee Kuan Yew died Monday. Almost no one in Croatia noticed, but for all of Asia and many other places, Lee’s death is momentous. Lee was the founding father of Singapore, taking control of the country 50 years ago when Malaysia, worried about growing Chinese influence, threw the city-state out of the country. Beyond this, he was an elder statesman whose voice carried throughout Asia.

During my decade in Singapore, his presence was everywhere. The sparkling international airport was built because Lee wanted the island to become a regional air hub. Movies and other media were censored because that fit into Lee’s vision of a harmonious society. Even in his later years, Singapore opened its doors to gambling because Lee eventually acquiesced.

While there is room to criticize Lee’s methods, his success is undeniable. In 1965, when the former British colony gained its independence, the country was still reeling from its occupation by Japan in World War II and the political turmoil that followed. Lee had bet the country’s future on a merger with neighboring Malaya – it became Malaysia by adding an “si” for Singapore – and wept on television as he announced Singapore was on its own.

Against all odds, Singapore today is the envy of most counties. Despite having no natural resources and no history of independence, the city-state became a modern, gleaming metropolis with high-tech industry, top-rated universities, a thriving cosmopolitan culture, low crime and high-end shopping. Its zoo is spectacular, its new casino is a global architectural icon, and public transportation is spotless. GDP per capita is about $62,000, the 7th highest globally, and the country is ranked by one consulting firm as the most liveable place on the planet.  

I never met Lee during my time in Singapore, but I met his eldest son, Lee Hsien Loong, the current prime minister, several times and interviewed him once. And as reports spread of the elder Lee’s deteriorating health, I began wondering whether any part of the Singapore story could be useful to Croatia. The two countries have comparable populations, but Croatia somehow produces more football stars and Singapore more economic stars.

I don’t believe Singapore’s success can be copied anywhere. Like many rising leaders of the time, Lee stifled politicians who opposed his vision. Operation Coldstore in 1962, was an effort by Singapore, Malaya and Britain to put the communist opposition on ice and led to the arrests of more than 100 suspected communists. But unlike other rising leaders, he ruled an island with few places for opposition movements to hide. He ruled as prime minister without real opposition for three decades, and his influence lingered well into his son’s turn at the helm.

The real difference, though, was how Lee used his power. After all, other Southeast Asian leaders also acquired near absolute power, but didn’t create a Singapore. Cambridge educated, Lee had a vision for Singapore, which he set into motion quickly. Speaking of the separation with Malaysia in his memoirs, Lee wrote, “The people … were prepared to do whatever was needed to make an independent Singapore work. I did not know I was to spend the rest of my life getting Singapore not just to work, but to prosper and flourish.” By all evidence, Lee’s efforts were truly an extension of what he believed was best for the country.

Almost immediately after independence, Lee said he was “sickened” by corruption and vowed to eradicate it. Like many countries, he created anti-corruption legislation and institutions, but he also backed these efforts by paying civil servants – from ministers to clerks – enough to make bribery less tempting and imposing harsh penalties on anyone who was still tempted. Things were different in neighboring Indonesia, where President Suharto’s term overlapped with Lee’s as prime minister. Suharto, who left office in 1998 amid anti-government protests, is thought to have stolen up to $35 billion from the country. Despite improvements, the New York Times reports corruption remains endemic in Indonesia.

Lee was also quick to welcome foreign direct investment and make it easy for companies to set up shop in Singapore. In 1968, three years after independence, Texas Instruments signed a $6 million deal to open a semiconductor and circuit board plant in Singapore. By 1974, after about a decade of independence, total foreign investment in Singapore was 20 times greater than in 1963. By 2013, annual foreign investment in Singapore was equal to about 20 percent of GDP. For several years, Singapore has topped the World Bank rankings for ease of doing business.

Without question, Singapore’s economic story cannot be copied, and the next chapter, free of Lee’s presence and driven by young people without personal experience of how far Singapore has come, is unpredictable. Singapore’s astonishing progress over the past decades is a result of a unique combination of power, vision and compassion. Not everyone would agree to the pragmatic trade-offs Lee made as he built his nation, but 5.4 million Singaporeans are better off today than they would have been without him. And some of his measures can serve as lessons for others.

[Follow Roger Malone on twitter at @ExpatinZagreb or at www.expatinzagreb.blogspot.com]

Croatia’s populist movement distracts from country’s real woes

(The Croatian version of this article ran in today's Jutarnji List, Croatia's largest daily newspaper.)

An Expat in Zagreb

By Roger Malone

During Croatia’s presidential campaign, I couldn’t look at Ivan Sinčić without seeing Seneca Crane, the creepy game master in the first Hunger Games movie. They are both bearded showmen who manipulate reality.

Fortunately, I don’t think Sinčić can conjure up a pack of bloodthirsty wild dogs to bring his show to a spectacular end. Instead, he has to conjure up a populist image of a world where loans are forgiven and newly printed money falls from heaven like gumdrops.

The populists’ appeal is easy to understand. Croatia has suffered six years of economic malaise, and its economy is 12 percent smaller now than it was in 2008. Politicians are not ready to join together to start a recovery that will create jobs and lead to sustainable public financing. A fresh, young voice ready to break the rules can be very tempting. As an added bonus, he’ll stick it to those evil corporations.

But the rise of a populist movement that offers the wrong easy answers to a difficult reality will only delay Croatia’s recovery further.

Economic rules are not broken with impunity. Print more money to cover government debt, and you get soaring inflation and a central bank that finds it more difficult to keep the kuna stable against the euro. Let the kuna devalue, and every import from iPhones to cheddar cheese will cost more. Also, most mortgages in Croatia are linked to the euro, the wailing when those payments rise will make the Swiss franc-loan protests seem like tea parties in comparison.

You can just forgive all private loans. Good for me, of course, but not so good for anyone who needs a mortgage or a car loan anytime soon. Why would any bank offer credit in Croatia if it can’t get its money back? It is a personal tragedy when someone loses their home because they can’t meet their mortgage payments. It is much more tragic to deny a generation access to mortgages and loans because of an ill-conceived populist act. Human walls and activists detained by police make good press, but little else.

For perhaps 17 minutes, I thought there might be a sinister plan behind this populist rhetoric. The economic ramifications are so apparent, the only true purpose of such a platform must be the utter destruction of the Croatian economy. That makes a certain amount of perverted sense: Croatia’s economy is like a beautiful, but derelict house. The supports have been buckling for more than six years, and the owners have done little to fix it. Populist policies amount to setting the house on fire. Then, perhaps, someone will call in the fire department, in this case the International Monetary Fund, to save the house. The harsh measures needed to keep the house from burning to the ground could be blamed on the IMF, and everyone would carry on under the new regimen.

The populists are not that clever, though, and that’s the scary part, especially if they can carry their momentum into this year’s parliamentary elections.

Populist political movements rely on emotions for support. They feed on public dissatisfaction and point to a common enemy as the cause of the problems. The scapegoats for most major populist parties in Europe are immigrants – especially eastern Europeans – but for Sinčić and his followers, it’s the capitalists.

Excessive capitalists are indeed evil. Over the past decades they have developed a cult of greed with no room for social or community responsibility. Driven by personal greed, they brought down the global economy in 2008. On a smaller scale, they care little about worker conditions, the environment, or the future.  And governments everywhere have failed in controlling these excesses.

But to label all capitalists as evil, as the populists imply, is like saying all Muslims are terrorists. It sounds good and strikes a populist chord, but both assertions are blatantly and absolutely false. Capitalists built today’s modern economies from Beijing to London, largely by balancing profits with social responsibility. As with all systems, there has always been sickening outliers, but these are countered by people like Henry Ford and Bill Gates, capitalists who understand the importance of community. And credit – that wicked weapon wielded by these capitalists – is a cornerstone of economic growth. I suspect if Sinčić lent someone his beard trimmer, even he would want it back eventually.

By presenting capitalists as the bogeymen responsible for all of Croatia’s problems, Sinčić and his populist movement distract the country from the real work of fixing the economy. The 16 percent who supported his crash-and-burn agenda underline the urgency of solving these problems, not the solutions themselves. There is still time to let the economy grow before Croatia really has to worry about excessive capitalism.

[Follow Roger Malone on twitter at @ExpatinZagreb or at www.expatinzagreb.blogspot.com]

2014 fireworks and five reasons for hope in Croatia

(The Croatian version of this article ran in today's Jutarnji List, Croatia's largest daily newspaper.)

An Expat in Zagreb

By Roger Malone

From my living room window as 2014 began, I could watch fireworks along the ridgeline in the direction of Sljeme. All along the hills, people were lighting rockets, individually and from packages, sending bursts of white, yellow, orange, green and red across the horizon. Even before midnight struck, those with little patience or perhaps small children were already celebrating. The same was happening across the country.

Those rockets reminded me of my optimism for Croatia.

As 2013 drew to a close, the reasons to give up on Croatia seemed to pile up like cars at the border in ski season. At least from a foreigner's viewpoint, there was little good news coming out of the country. The economy remained stagnant with no data suggesting a change on the horizon. The same-sex marriage referendum and Šimunić's distressing display at Maksimir made the country look backward and Balkan, in the worst sense. Hardliners blocked the heads of government and foreign dignitaries from paying their respects at Vukovar.

Even Mother Nature seems to have turned her back, with the Snow Queen skiing competition cancelled for lack of snow.

As one overseas Croat commented on an earlier blog post, "I don't think Croatia and Serbia are going anywhere. They simply exist and that's that. There's no miracle wand to wave and alter mentalities. Best to indulge in the wanton fatalism otherwise you won't get out alive or sane."

But despite the impression my blog entries and articles might give some readers, I see many reasons to be optimistic for Croatia, if not confident. They include:
 

• Croatian: This is an incredibly difficult language. For instance, in English there are four ways to say the word “play” – play, plays, played and playing. Just four. No more are hidden out there. I lose count when I try to conjugate “igrati.” And I thought German was difficult. Any country that masters this language must be prepared to succeed with the most complex of tasks. A good example is Rimac Automobili outside Zagreb, which is trying to market a super expensive, high performance electric car.
• Passion: Most of my Croat relatives and friends are passionate souls. They will take a position and argue about anything, as I discovered early on when I mentioned once that geographically Croatia is a Balkan country. Focusing that passion on innovation, business and civil good would create an unstoppable force. Look at the 2Cellos. I can imagine they hated cello lessons when they were young. Leonard from Big Bang Theory noted that a cello sounds like a “suicidal bumble bee,” and in Steven Sondheim's A Little Night Music, cellist Henrik is begged to practice something "a little less gloomy." But Luka Šulić and Stjepan Hauser took their cellos and made something exceptionally creative.
• Persistence: Early in my marriage, I learned not to interfere with my wife when she’s zeroing in on that perfect restaurant table, sofa or hotel room. Insisting on the best – whether by examining every available option or badgering the desk clerk – could quickly give Croatia the reputation for quality that creates a clear competitive advantage. Croatia’s entry into the EU is nothing if not a triumph of persistence.
• Tenacity: Many Croats I know are great at finding creative ways to solve problems or overcome obstacles. Sports fans come to mind. In the US, professional sports are a family affair: you pack up the spouse and kids to see a baseball or American football game with no fear of being hit by a flare or some other bodily harm. In Zagreb, I'm warned by family and friends not to think of seeing a Dinamo or Croatia football game in person. It's sad, but then there's Medveščak ice hockey. I've gone to several Zagreb games, and children, adults and seniors cheer the home team together in a terrific atmosphere. Ironic, when you think that ice hockey is known for its on-rink violence. 
•  Vibrancy: The energy you feel walking among the cafes in the city center is unmatched in most places around the world. The rockets along the ridgeline in Zagreb weren't fired by sulking pessimists. Again, harnessing and focusing that energy in a positive direction could go a long way toward overcoming obstacles that are holding back the country.

The course of Croatia's economic growth and democratic development will not be smooth or straight. If it were, it would be without peer in economic or political history. But there are clear reasons to believe that eventually Croatia will move forward, albeit at its own pace. 
[Follow Roger Malone on twitter at @ExpatinZagreb or at www.expatinzagreb.blogspot.com]

How much is gay tourism worth to Croatia? Crunching some numbers

An Expat in Zagreb

By Roger Malone

Everyone's talking about gay tourism in Croatia now. Indeed, in an article in today's Jutranji list, I suggested it was ridiculous to put gay tourism dollars and, perhaps, Croatia's future at risk for what amounts to a meaningless change in the national constitution.

To which someone on Facebook told me:

"This is funny! Right. The gays are the future! I agree, no gays, no fun clubs. We will die and perish without dancing gays!"

At first, of course, I was stunned. Some of my gay friends are pretty boring, so the idea that all her gay friends are all-night partiers was astonishing. I felt left out.

Then I started wondering what gay tourism is really worth to Croatia. The number would be relevant to a country that relies on tourism for about a fifth of its GDP. In an earlier blog, I wrote the figure could be about a billion euros. That estimate was a quick back-of-the-envelop calculation.

So, let's look at the numbers. The Gay European Tourism Association (GETA) in a 2012 report estimated that openly gay Europeans spend about 50 billion euro a year on travel in Europe. In essence, the group said it arrived at this figure from data on overall population, the openly gay population and travel figures from the European Commission. Any number from a special interest group tends to be on the high side, but GETA's estimate is the best that I've found.

Meanwhile, a report from the UN's World Tourism Organization shows that Croatia's tourism receipts were about 8.8 billion euros in 2012, about 2 percent of 458 billion euros for all of Europe. (I'm using UN figures for consistent data across countries.) Assuming gays follow the same travel pattern as anyone else, 2 percent of 50 billion euros is 1 billion euro, which would be Croatia's share of the gay travel money.

The GETA report also puts gay tourism in Europe at about 8 percent of the total market. This is higher than the proportion of openly gay individuals in Europe, the group says, because gays generally don't have children or the expenses associated with child rearing and therefore have more disposable income. Eight percent of Croatia's tourism revenues, based on the UN figures, would be about 700 million euros.

This puts European gay tourism in Croatia between 700 million and 1 billion euros. Even assuming GETA numbers are on the high side, it's probably safe to assume gay tourism accounts for at least 500 million euros a year in Croatia. More millions are spent here by gays from outside Europe, families and friends of gays and closet gays, which aren't captured in GETA's figures.

That's what was risked by passing the marriage referendum: gays booking hotel rooms and holiday houses, eating scampi and pizza, renting cars, scooters, boats and bikes and, yes, dancing and drinking in clubs.

The Tourism Ministry is now trying to keep gays coming to Croatia. "I invite all, like up until now, and even more to come. As Minister of Tourism, I guarantee them a good time in Croatia," the minister said. (As an aside, I wish someone could guarantee me a good time when I travel.)

In essence, the ministry is saying: Dear gay community, please ignore that awkward vote we just had. You weren't supposed to notice. We asked, and about one in three people here will probably be friendly to you. So, please come and spend, spend, spend.

I really hope my Facebook correspondent is right, and gays give Croatia a break. They would be showing the country much more spiritual generously than they've been given.

[Follow Roger Malone on twitter at @ExpatinZagreb or at www.expatinzagreb.blogspot.com]

Bucking the trend, Croatia embraces ‘tradition’ and risks its future

(The Croatian version of this article ran in today's Jutarnji List, Croatia's largest daily newspaper.)

An Expat in Zagreb

By Roger Malone

When George W. Bush won a second term as president of the United States in 2004, Thomas Friedman started his column in the New York Times, “Well, as Grandma used to say, at least I still have my health.” I’m not sure Croatia has its health anymore.

Watching the results of Sunday’s referendum was like watching a beloved relative with cancer who refuses to give up smoking. Actually, the metaphor is understated. In Croatia’s case, the patient takes up smoking in the middle of treatment.

Croatia’s economic problems are profound and complex. But, if the experience from successful emerging markets is any guidance, part of the solution includes building effective democratic institutions, defining a positive vision for the future and creating an attractive climate for foreign investment.  Like putting down the cigarettes, these prescriptions are straightforward and generally accepted.

Instead, despite almost five years of economic misery with little hope for immediate recovery, Croatia in Sunday’s vote bypassed such common-sense approaches. In a thinly veiled attack on gays orchestrated by a Catholic group, it chose to defend a traditional definition of marriage that was never under threat. As President Josipović suggested, the vote Sunday may establish Croatia as a country of intolerance at a time when the global trend is toward tolerance. Even Pope Francis has warned against the church’s obsession with conservative issues including gay marriages.

The referendum did no one any good and changes nothing for most Croats. Only gays, the target of this oppressive measure, will feel a slight sting. (“Slight” because “marriage” is just a word. The Sabor can still define civil unions any way it sees fit with whatever rights it deems appropriate.) If the referendum had failed, no one was going to force a straight Croat to marry someone of the same sex. Ever.

Yet the potential for harm is vast. "While many countries have not legalized gay marriage, Croatia here seems to go out of its way to be negative to gay people," Paul Barnes, head of communications for the Gay European Travel Association (GETA), told Bloomberg News. "Even though the proposed change to the constitution doesn't take away any existing gay rights, it will be seen as a negative moment, and a setback like this can act as a catalyst that mobilizes the gay community."

GETA estimates that gays spend about 50 billion euros a year on travel in Europe and has recommended more than 50 gay-friendly hotels in Croatia. The potential of a travel boycott by gays, their friends and families might just be bluster, but was the risk worth it for a backward measure that means little? It will be impossible to calculate how many months or years -- if any, of course -- passing the referendum will delay Croatia's economic recovery. Tourism numbers next year will offer only a hint.

But Croatia might not have to wait that long to feel the repercussions of the referendum's victory. From an AFP story, Zeljka Markić with In the Name of the Family, the group behind the referendum, said soon after the votes were counted, "This time (it was) for the protection of marriage, and next time for something else of the same importance." The only thing missing was a melodramatic laugh at the end, bwa ha ha ha. Her group barred respectable media outlets from its headquarters on referendum day, illustrating its regard for democratic institutions such as a free press.

Some people I've talked with will see the referendum as a victory for democracy, for majority rule, It's not. The majority of Croats were simply apathetic. Also, "majority rule" is the easiest concept of democracy to grasp. A much more difficult concept is that in a mature democracy the majority must also protect the rights of the minority, even and especially those it might not like. Croatia still seems to be working on that part. Maybe as more people are caught by "something else of the same importance" to Markić the idea will start to sink in.

[Follow Roger Malone on twitter at @ExpatinZagreb or at www.expatinzagreb.blogspot.com]

Croatia’s marriage referendum threatens more than gays

(The Croatian version of this article ran in today's Jutarnji List, Croatia's largest daily newspaper.)

An Expat in Zagreb

By Roger Malone

The marriage referendum set for Dec. 1 offers Croatia another chance to shoot itself in the foot.

Granted, it’s not surprising that some people feel somehow threatened by the overt proximity of different individual identities. More than 700,000 people have signed a petition to force a referendum on whether to include a conservative definition of marriage in the country’s constitution, effectively banning gay marriages. Armchair psychologists might theorize this implies a lack of confidence in the institution of heterosexual marriage, since it suggests that acknowledging alternatives could lead to nothing but irresistible temptation.

Personally, I’m close friends with several gay couples and even attended the wedding of one pair without any jolts to my sexuality or values. This is just anecdotal evidence, of course, and could be the exception to the rule. Perhaps I’m just strong willed.

What is surprising, though, is how easy the Croatian Constitution can be changed, opening the door for single-issue juggernauts like the conservative In The Name of the Family group that’s pushing its definition of marriage. A constitutional referendum in Croatia must be called if about 450,000 people sign a petition. That’s a significant threshold, but well within reach for hot-button issues backed by an organization like the Catholic Church. The referendum itself needs just a simple majority of participating voters to pass. If turnout is low, a small fraction of Croatian voters can change the constitution.

(Some friends have suggested they might boycott the referendum in protest. Such a strategy just makes it easier for the anti-gay bloc to win: the lower the turnout, the fewer votes they need to win a simple majority.)

In the US, as a counter example, a constitutional change requires a two-thirds majority of both houses of Congress and approval by three-quarters of the states. It’s a complicated process, and it didn’t prevent Prohibition, a disastrous decision to ban alcohol in 1919 until it was repealed in 1933. On the other hand, it proved insurmountable for sensible efforts like the Equal Rights Amendment, which would have put men and women on an unquestionable equal standing before the law. But, by and large, it has served the country well.

National constitutions should essentially be statements of basic rights and an outline of the organization and operations of government. The Croatian Constitution throws in a brief history lesson, but generally follows this pattern. It includes many declarations of rights that seem to contradict a narrow definition of marriage that would exclude a segment of the population. Human rights groups have already said they would try to block the referendum in the constitutional court.

If constitutional change in Croatia is indeed up for grabs, issues trivial and profound could be put on the table. Anyone for a referendum making wine chateau the national dessert? Or one that taxes dog ownership? How about one barring ethnic minorities or some other group from public office or public jobs? The potential for abuse is troublesome.

The particular question facing Croatia Dec. 1 is both homophobic and ridiculous in that it’s based on an imaginary threat. It should be defeated purely on the grounds of human rights and equality. But beyond the obvious moral considerations, economics also speak against approving the change.

The Gay European Tourism Association estimates that European gays spend 50 billion euros on tourism in Europe each year, and gay Americans traveling to Europe add billions more. Assuming gay travel parallels travel trends generally, such levels likely represent about a billion euros in tourism receipts for Croatia. Can a country that depends so heavily on tourism afford to alienate such a large market segment? Notice that with the 2014 Winter Olympics around the corner, Russia is facing a public relations nightmare after it enacted anti-gay laws this past summer.

Croatian President Ivo Josipovic has asked, “The question is: Do we need this kind of a referendum? I think that determining marriage between a man and a woman does not belong in the constitution. A nation is judged by its attitude toward minorities.”

With untold billions of kunas being stolen from Croatia through corruption and tax avoidance, a public debt burden that is growing and could become unbearable within a year, and youth unemployment rates that are scary, worrying about whether what Ivan and Josip have going can be called a marriage should be low of the list of national priorities. Even in good times, it shouldn’t even make the list.

Within hours of the Sabor vote, headlines about the referendum circled the globe from Washington to Singapore. The last time Croatia got this kind of international attention outside sports was when it battled Brussels over the European Arrest Warrant. It would be great if the next time the world’s attention turned to Croatia it would be to report that the country reaffirmed its commitment to human rights for everyone.

[Follow Roger Malone on twitter at @ExpatinZagreb or at http://expatinzagreb.blogspot.com/]

Poker as a metaphor for Croatia

(This is an edited excerpt from comments I gave to eStudent, the student association of the University of Zagreb, on Oct. 10, 2013. Thanks to Hrvoje Tkalec for inviting me and to the students who attended.)

An Expat in Zagreb

By Roger Malone

Does anyone here play poker? Poker is all about the players and the odds. For instance, in one variation of poker called Texas Hold ‘Em, if you’re given two aces at the start you have about an 80-percent chance of winning your hand against one other player. But you also have a 20-percent chance or so of losing. New players -- "fish" in poker jargon -- if they know the odds at all, feel that 80 percent is close to a sure thing. It's not, and in the wrong game you can lose everything despite the favorable odds. 

(I was once in the first hand of a live, low-stakes tournament. Three players bet everything right away, and when they showed their cards one had two kings, one had two queens, and one had two tens. The kings were the favorite, but the tens won the hand, sending the other two players home.)

When you lose a hand despite the odds, it's called a "bad beat." And when fish fall victim to a bad beat, they curse the world. They fume at how stupid the other player was for staying in the hand. They glare at the dealer. They shake their fists at the poker gods somewhere up there in the sky. And most important -- especially if they still have chips and you're sitting at the table -- they play really bad poker for a while. They throw easy chips into the pot and squander any opportunities that may come their way. In poker terms, it's called going on "tilt," like when you bang against an old pinball machine because the ball dropped directly between the flippers.

The best players learn not to go on tilt. They forget about the bad beat from the last hand and move on with a clean slate and whatever chips they have left. They focus on the new odds, the new cards, and the other players. They focus on rebuilding their stack of chips and winning the game.

Sometimes it seems that Croatia is on national tilt, still focusing on how unfair that last hand was and moving forward carrying a grudge that can blind it to the future: Slovenia had it easy when it broke from Yugoslavia and took some advantages and cash. Some people got rich when state property was privatized in the 1990s. Atrocities were committed during the war, and ancient hatreds linger. There’s truth in all of this and unfairness … and a lot of excess baggage.

A while ago, I was working on the draft of an English response to some criticism that had been included in a report about Croatia. To my eyes, the criticism was a little over the top, but not exceptionally so. I was told several times by smart people, though, that the reason the report was critical was because the organization that issued it had a Serb secretary on its staff. I tried to pass it off as a joke, but it was clearly not meant to be one. True or not, focusing on a Serb secretary in part blinded my client to any valid criticism worth considering from the report and, perhaps more importantly, colored the way it wanted to respond to the report in a way that the response would have lost some credibility.

Here’s the question for you: Is it time for Croatia to shake off the tilt, pick up the cards it has and make the its best plays as the game moves forward? Yes, prosecute individuals if the evidence is there. Yes, remember the personal and collective sacrifices made as Croatia struggled for independence. And yes, take care of those who made those sacrifices. But move ahead without the delusion that all the wrongs of the past can be magically wiped away?

I obviously don't have the answers, and I don't pretend to. Sometimes, I don't even know whether I understand the questions. But I know one thing. Your generation is key. Your generation has the opportunity to disconnect from the past. Your generation has the power to insist on leaders that can articulate a modern vision for the future. Your generation has the ability to stop keeping score, to stop trying to balance a ledger that can never be reconciled. That is your opportunity, and that is Croatia’s opportunity.

At least Croatia’s government isn’t shutting down

(The Croatian version of this article ran in today's Jutarnji List, Croatia's largest daily.)

An Expat in Zagreb

By Roger Malone

If Croatians ever despair over the quirks of their government, they can glance across the seas and take heart. In today's world, there is no government more broken than Washington. The US government is so out of order that it’s shut down, and if it’s not fixed, the ripples could soon be felt even in Croatia.

When people learn I’ve lived outside America for decades, they often ask what I miss most by being overseas. I usually dance around the question, but the truth is that my one real regret is not having the opportunity to participate directly in the political system. I yearn to beat the pavement for politicians and causes I support, and at one point I even imagined running for office if I ever moved back. Taking cheap shots at Tea Party conservatives on Facebook just doesn't fill the gap.
 
(I also miss a handful of consumer goods, like Old Bay seasoning, cling wrap that tears easily from the box and cheddar cheese.)

But I haven’t missed what passes for politics these days in America. Once there was a civil conversation of opposing views; today there are sound bites inspired by talking points found on the Internet. The tone has been hijacked by a group of extreme conservatives centered on the Tea Party and convinced of their righteousness. Now the hijackers have taken hostages: 310 million Americans, and perhaps even all the world.

Some Croatian officials might be corrupt. Some might be incompetent. And some might even be self serving. But as far as I can see, no elected official in Croatia is as terrifyingly delusional as this select group of Republicans in the U.S. House of Representatives. My mother was a precinct worker for Richard Nixon, a Republican president who resigned just before being forced out of office, and even she would be appalled by today’s party.

So what happened? Soon after being elected president in 2008, Barrack Obama tackled one of the most embarrassing problems of the US system: the absence of universal health care. For the world’s biggest economy, the fact that nearly 50 million Americans had no health insurance was immoral. The Affordable Care Act—better known as Obamacare—was a first step toward fixing the problem and was itself a compromise with conservatives who opposed a more extensive approach.

After Obamacare was passed, Republicans in Congress tried 44 times to repeal or dilute Obamacare. They failed. A Supreme Court lawsuit challenged its constitutionality. It failed. Republicans opposed Obama’s re-election in 2012, in part by promising to reverse Obamacare. They failed.
Now, a small band of Republican diehards, led by House Republican Leader John Boehner, is getting desperate. As Democratic Senator Elizabeth Warren said, “For the right wing minority, hostage taking is all they have left.”

In the US, a president can’t spend a dollar unless it’s approved by Senators and Representatives. The Senate has approved continued spending; the House of Representatives hasn’t. The House passed a measure that would cripple Obamacare in the process, but the Senate rejected it. Ironically, an unencumbered budget measure would likely pass the House easily if it came to a vote, but Boehner, as leader of the House, has refused to put one up for a vote. He fears that a couple of dozen extreme house members would rebel, and as last year’s presidential election showed, the Republican Party is suffering. Alienating its right wing could make winning future national elections impossible.

Federal budget authorization ended Oct. 1, and the US government shut down. About 800,000 federal workers—roughly the population of Zagreb—were sent home without pay and no guarantee of keeping their jobs when the government reopens. Another million are working without pay. The military and other essential services got an exception, but parks and other federal offices have locked their doors. Even the NASA’s Mars explorer Curiosity was turned off.

The US federal government has shut down before, in the mid-1990s, and then reopened a few weeks later with little long-term impact. Then, the economy was booming. This time the United States—and much of the world—is still struggling through a fragile recovery from the 2008 global economic crisis. And this time, another political battle, this one over the US debt ceiling, is only weeks away. Without an agreement on the debt ceiling, which the Republican right also opposes, there could be sharp US spending cuts and the possibility of defaulting on US bonds.

Economists have argued that a prolonged US government shutdown coupled with an impasse over the debt ceiling could send the country back into recession. Paul Krugman, at the New York Times, wrote that a US debt default could “create a huge financial crisis, dwarfing the crisis” of 2008. (Croatia is still looking for economic recovery, and another global crisis could destroy any hope it has.) Boehner and his cohorts are willing to risk all this because they don’t like Obamacare, which has withstood every legal test, and because they really don’t like Obama.

Meanwhile, Obama and the Democrats are unlikely to budge, either. First of all, they played Boehner’s game to disastrous results last time the debt ceiling came to Congress. Next, Obamacare is rightfully the legacy of its namesake’s presidential tenure. And finally, as others have written as well, bowing to Boehner would threaten the very fabric of democracy. Really. Democracy is based on majority rule—without oppressing the minority—and if you don’t have the votes, you don’t have the votes. You don’t resort to desperate tactics. You work to win the next election.

Compared to shutting down the government and possibly bringing the world to the brink of another financial crisis, taking some money from a contractor here or giving cousin Pero a job are playground antics. So, if you ever look at the Sabor in misery, just repeat to yourself, at least we're not America.

[Follow Roger Malone on twitter at @ExpatinZagreb or at http://expatinzagreb.blogspot.com/]

Pointing 20,000 nearly retired civil servants toward the exit

(The Croatian version of this ran today in the Croatian daily, Jutarnji List.)

An Expat in Zagreb

By Roger Malone

My mother worked well into her 70s before illness handed her a pink slip. She was a middle manager at a large hotel in Texas, and every day she'd show up and keep her crew in line, much as she tried to keep her five children in line earlier in life. By the time she retired, I suspect she was more of an icon at the hotel than a top performer, but you can allow that in the private sector.

The public sector is much different, and here and now in Croatia the stakes are much higher.

As Croatia’s leaders work to find a path toward economic growth, about 20,000 civil servants across a wide spectrum of professions are clinging to their jobs beyond their eligible retirement age. That’s a little less than 10 percent of the state payroll. JutarnjiList calculated that urging these workers out of their jobs could save the government 400 million kuna a year, even if the state hired 10,000 younger workers to fill some of the positions.

I try to imagine myself as one of these civil servants. Although I’m sure there are exceptions, I’m guessing my children would have started their own lives already, my home is likely my own and I’m pretty set in my routine of family and friends. I’ve been at my job for decades, so there are few surprises or challenges there and little stress. I’ve also done my part—in some big or small way—to help build a new country.  Should I try to glide through my final few years in the workforce or take a pay cut to sit at home watching subtitled American sitcoms? No question: I’d stay at the job.

The calculation changes if the job is stressful or carries significant responsibilities. I’d be sorely tempted to pack up my desk, say goodbye to ungrateful citizens and spend more time fishing, especially if my ongoing expenses were manageable. (My mother would have made a different decision.)

In prosperous times, there would be no reason to question these individual decisions. But Croatia is far from prosperous at the moment. Losing 10 percent or even 5 percent of the public workforce through natural attrition would advance the government toward its stated goal of cutting civil service by 30 percent. Further, saving 400 million kuna would be a significant step toward cutting the deficit. Hiring some new workers to replace some of the retirees could put a dent in a youth unemployment rate that is higher than 50 percent, more than twice the overall rate. And then there are the benefits of bringing fresh blood to government service.  

Most of the public workers ripe for retirement are older than 60 years. In the late-1960s, when this cadre was wrapping up its formal education and joining the work force, Leonid Brezhnev was leading the Soviet Union, Josip Broz Tito was building the Non-Aligned Movement and Czechoslovakia had gambled and lost on the Prague Spring. The Beatles were at the top of their game, with John Lennon remarking infamously that they were more popular than Jesus. Touch-Tone telephones and 8-track tape players were among the hottest home gadgets, and the first handheld calculators, which could double as paperweights in a hurricane, were just being developed.

A lot of water has passed under the bridge since then. The Soviet Union, Yugoslavia, Czechoslovakia, the Beatles, Touch-Tone phones and 8-track tapes have all moved on. And it might be time for most of the 20,000 at the edge of retirement to move on as well. There are times when national interests should come before those the individual, and this might be one of those times in Croatia. It’s a hard story for the government to sell, especially to a generation that has gone through so much already.

Leaders should find ways to encourage and ease this transition, which could be very difficult for many. My mother worked into her 70s because she had been at one job or another since she was a teenager in Germany. She knew no other life and was lost when she finally had to put away working shoes. Often, less money is not the only obstacle to retirement; a loss of purpose can be just as difficult to endure.

One option could be programs like SCORE in the United States. Originally known as the Service Corps of Retired Executives, SCORE puts retired business people together with owners of small and mid-sized enterprises. Counseling and mentoring are provided free by these executive volunteers to help a new generation of business leaders build the economy. Since its inception in 1964, the program has expanded to include active executives who also volunteer their time.

Senior public servants have a wealth of knowledge and experience in a variety of fields that could be harnessed after retirement with a similar association. Some skills from the public sector like leadership, planning and organization would be extremely valuable if passed on to young entrepreneurs. Specialists, such as engineers and scientists, could guide young minds either in innovative private businesses, advanced research programs or their own positions in the relevant ministries. Some could even be helped to start their own small companies.

Outside business, similar associations of retired civil servants could also be imagined that would, for example, provide free tutoring for struggling pupils and students based on need or offer home visits to the infirm or others challenged by physical or mental illness. Paid or unpaid directorships at private companies could also be an option for some.

No one should be forced into retirement as long as performance isn’t an issue, but officials should seek ways to encourage these 20,000 to step down. Incentives to make the financial impact easier would be helpful, but the government isn’t in a strong position to sweeten the pot. Instead, it should create opportunities for them to continue their useful contributions to society. Senior civil servants would benefit from such programs, and, more importantly, Croatia would as well.

 [Follow Roger Malone on twitter at @ExpatinZagreb or at http://expatinzagreb.blogspot.com/]

Saying adieu to Croatia’s dysfunctional obsession with tourism

(This is the English verison of a column that ran in the daily newspaper Jutarnji List today.)

An Expat in Zagreb

By Roger Malone

Croatia should end its obsessive affair with tourism. It’s a dysfunctional relationship that has only left the country in tears.

And by tears, of course, I mean economic doldrums that have lasted for more than five years, even as most other countries recovered from the 2008 global economic meltdown. I mean a government struggling unsuccessfully to contain public debt and expenditure. And I mean an economy with few private jobs that can absorb the number of workers that need to be kicked from the public payroll.

Croatia is unusually blessed by its cultural heritage, landscape and climate. Scenic drives along the Adriatic are as beautiful as those along the Amalfi Coast in Italy, the Pacific Coast in California or the Gold Coast in Australia. The vistas in the Istrian interior rival those in Tuscany. Croatian islands regularly appear on global lists of must-see destinations. And Gorska Hrvatska, while not quite as spectacular as the Alps or the Rockies – is beautiful nonetheless.

Croatia’s cultural heritage spans an unusual range of civilizations, from early man to the empires of antiquity and through some of the most brutal conflicts of the 20^th Century. Domestic products, from wine and olive oil to Kraš chocolates, could hold their own in any market.

But Croatia must turn its back on tourism.

First of all, Croatia doesn’t treat this mistress too well. It takes her for granted, assuming she’ll always be there waiting with her heaving bosom and glistening lips.

Sometimes it seems Croatia does everything possible to put obstacles in front of the tourists who would love to come here and spend their money. Croatia has had almost two decades of peace to figure out how to cater to the tourists who directly and indirectly feed more than a quarter of the country’s GDP. And still, it seems clueless. It’s the Mediterranean as it once was before consumer focus groups.

Among the quirks that baffle tourists are restaurants and other businesses that don’t accept credit cards or charge an additional fee disguised as a “cash discount,” ferries that don’t accept reservations and lack basic customer service standards, a shortage of English-language newspapers (new this year, by the way), few food options that go beyond the troika of grilled meat, grilled fish and pizza and a travel industry focused on private cars that pollute the environment and create massive traffic jams. And, outside the view of most tourists, I’d add an overall environment hostile to tourist investment by foreigners.

Many of these shortcomings are relatively easily remedied with thoughtful policy that goes beyond clever marketing. Croatia doesn’t need more tourists; it needs tourists who spend more. Croatia may attract five times more tourists a year than Slovenia, but each tourist in Slovenia spends about 50 percent more than those in Croatia. If Croatia wants to replace cars full of tourists who bring everything with them but a sink with more tourists who bring nothing with them but a credit card, it has to rethink the offering.

But this love affair with tourism not only leaves visitors wanting, it also leaves Croatia sick and pallid.

In 1996, I wrote an article for Dow Jones under the headline, “Croatian Recovery Leans Heavily on Tourism Revival,” and I could probably do the same again today. Tourism has made Croatia economically lazy. Much as in the oil-rich Middle East and other resource-rich economies, the low-hanging fruit of tourism has made Croatia less aggressive on international markets and overly reliant of revenues from a single source to support a bloated bureaucracy as completing factions fight for control of the inflows.

Between 2005 and 2010, Croatia’s exports grew more slowly than those from any other Central or Eastern European country. Part of the problem is that services comprise nearly half of Croatia’s exports, compared with less than 20 percent for the region as a whole. In Croatia, tourism alone accounts for more than 40 percent of total exports.  Economic growth in other emerging markets has invariably been supported by manufacturing exports. India is known as the world’s back office because of its large outsourcing and offshoring industry, but even there services only account for about a third of total exports.

Indeed, benefits abound from a development and growth model based on services. Modern service industries tend to be less polluting and create more value for each hour worked or dollar invested. China, heralded for its rapid growth in recent decades, is working to shift its economy away from manufacturing into more services. But I don’t know of any country that has succeeded without a solid manufacturing export base. In recent years several countries have prospered as services growth has outpaced manufacturing growth, but success stories have been built generally around IT services and transportation, not tourism.

Relying on tourism is also problematic because so many factors are beyond the control of the Croatian government or businesses. Unlike mineral resources such as oil or diamonds, there are no “known reserves” of tourists lying under Croatia that can be tapped regularly each year. Croatia is competing with scores of other destinations for the same pool of international travelers. While it can improve the offering and tweak the marketing, the country can do little to impact global travel trends, economic conditions, weather conditions and other reasons behind tourist decisions on when and where to travel. And, alone, any growth in tourist arrivals or spending is unlikely to produce the economic momentum the country needs.

Tourists, of course, will always have a special place in Croatia’s economic heart, and the country should make reasonable efforts to appease their fickle nature. But rather than waiting breathlessly each summer for this mistress to arrive – counting on her to support of the economy and public budget for one more year and grieving like a jilted lover when she doesn’t meet expectations – Croatia should play the field a little more. Invite tourists, woo them and give them what they like, but also cheat on them a bit with manufacturing and other service industries.

[Follow Roger Malone on twitter at @ExpatinZagreb or at http://expatinzagreb.blogspot.com/]

What cars full of tourists in Croatia don't bring ... money

Driving back and forth to the Adriatic Coast over the summer, I joined the annual migration of cars filled to the brim with suitcases and plastic bags. It's amazing how much food and other consumables foreign tourists bring with them as they head for their holiday rentals on the coast and the islands. It's equally amazing how quickly Croatia's new, modern highways can be packed to capacity.

But it's stunning how little these tourists spend in the country.

Back in Zagreb, I came across a 2013 report from the UN World Tourism Organization that underscores this point, Looking at countries listed among Mediterranean and Southern European destinations, Croatia was ranked No. 5 in terms of arrivals in 2012, but was No. 10 in terms of receipts per arrival. Here's a chart I threw together from the UN agency data:

Portugal is best in class. It attracted about three quarters the number of foreign tourists as Croatia last year, but, since each tourist spent so much more, its total receipts from tourists were about 25 percent more. Imagine taking away about a quarter of the cars from Croatian highways each summer, but still gaining massive tourism revenues.

One can dream. (Unless, of course, you're the highway operator.)

 

Shocked, shocked by the contracts they signed

Croatian daily Jutarnji List ran my column today on the Swiss franc judgement in Croatia, which revisited some of the points in an earlier blog. Here's the link to the Croatian version.

And here's the English:

An Expat in Zagreb

We’re shocked, shocked that exchange rates change

By Roger Malone

In the eyes of Judge Radovan Dobronić, Croatian borrowers tempted by the favorable interest rates on loans linked to Swiss francs have a lot in common with Capt. Louis Renault. In the classic film “Casablanca,” Renault is a habitual gambler at Rick’s Café, and, after being forced to shut down the casino, he declares as he gathers his chips, “I'm shocked, shocked to find that gambling is going on in here!”

Judge Dobronić said, in essence, that Croats who took these loans were so shocked that exchange rates change that the contracts they signed with the banks are invalid and must be rewritten retroactively on terms much more favorable for the borrowers.

Now, if the borrowers were Americans, I could also understand the shock. Americans can go all their life without touching a piece of foreign currency or crossing an international border. Many couldn't tell the difference between a Swiss franc and a frankfurter, much less understand the posted rates at a money exchange office. For most, the idea of borrowing in a foreign currency would be harder to comprehend than the seven cases of Croatian grammar.

But the borrowers weren't Americans. They were Croats. And I struggle to understand what vital piece of information was withheld from them by eight reputable international banks, which the ruling suggests somehow spontaneously began deceiving their customers in the same way at the same time on the same products.

Croats routinely cross international borders and exchange money, whether to buy a bookshelf at IKEA, ski down the Alps, or collect from foreigners who rent their holiday homes. Because so many big-ticket items are priced in euros, they watch the euro-kuna rate closely. Does anyone taking out a mortgage here really not understand that the Swiss franc is not the euro?

The court noted that the banks failed to tell borrowers about an ancient IMF opinion that the franc could strengthen if the euro were introduced. The IMF and everyone in the financial industry write mountains of reports, often contradictory and speculative, and the euro went into circulation more than a decade ago. Even assuming the banks expected a general strengthening of the franc, no one expected the 2008 global financial crisis, the European credit crisis and the chaos they would bring.

Not only did the crises lead to an exceptional strengthening of the Swiss franc, they had another impact on these loans. Tightening global credit made borrowing more expensive for everyone, including banks, and since these mortgages and loans were variable-rate instruments, the banks were within their rights to pass on the increased costs.

Borrowers took these loans because the interest rates were lower, not because it was exotic to have a Swiss-franc loan. And just as if they were buying a car that’s cheaper from one dealer than another, it’s partly their responsibility to understand why. The loans were cheaper because the borrowers were taking on two elements of risk, both quite clear in the terms of the loan. First, they were linked to a foreign currency, so there was the exchange rate risk, and next they were variable-rate loans, so interest rates could change based on a formula written into the contract. Where is the nontransparency that Judge Dobronić found so heinous that thousands of contracts were invalidated?

No one expects the worst case scenario or the black swan. If it arrives, it’s only natural to look for a culprit. But I struggle to understand in this case what these eight banks did wrong in selling what at the time was seen as a legal financial instrument. (And if these loans were carried on the banks’ books in Swiss francs, they wouldn’t have even profited from the situation.)

Many, many people were hurt by the global financial crisis. I sympathize with the borrowers who took out loans linked to Swiss francs. They were squeezed from both sides during the crises. They are totally justified in throwing the dice and suing the banks. But the ruling itself is hard to comprehend, which is a fundamental problem.

While court cases must be decided on individual merits, before Croatia celebrates this great victory for the consumer, it should consider the broader implications of the decision. By legitimizing the riddle, “When is a contract not a contract,” the court sends a chilling effect on international investment as the country is trying to battle its way out of economic doldrums.

Even before the ruling, foreign companies bemoaned the uncertainties of coming to Croatia. Million-dollar projects that seemed on a clear path could suddenly face additional fees or even public referenda. Returns on investment can be delayed by populist protests. The rules of the road can be ambiguous. And while Croatia’s EU entry helped remove some of that uncertainty, the court’s ruling is a stark reminder that things—including contracts—aren’t always what they seem in this country.

Croatia’s financial system could be weakened, if not hobbled, by the immediate impact of the ruling. By invalidating these loan contracts, the court increased the risk financial institutions face in doing business in Croatia. Some banks might think twice about coming here, new instruments may not be offered, and the products that are available could be slightly more expensive to cover the higher risk. A healthy financial system is a prerequisite for economic success. Consumers—as well as banks—must be responsible for their own decisions.

Judge Dobronić’s ruling will certainly be appealed. If the higher court continues to find that the banks were at fault, based on the merits of the case, it must be compelled to answer how exactly borrowers were mislead, what reasonable and available information was withheld, and how eight banks spontaneously and simultaneously made the same mistake.

 [Follow Roger Malone on twitter at @ExpatinZagreb or at http://expatinzagreb.blogspot.com/]

How to hobble a banking system

The good news, I guess, from today's court ruling in Croatia on mortgages and other loans linked to the Swiss franc is that there is a word for "consumer protection" in Croatian. That should come as a relief to domestic and foreign property buyers alike.

Beyond that, though, there's not much good here.

In a nutshell, the court ruled that is was unacceptable for eight banks to sell variable-rate loans linked to the Swiss franc in Croatia. Most of these loans were mortgages, and as the franc strengthened in the wake of the 2008 global economic crisis and the EU credit crisis, the principal and contractual payments in kuna terms ballooned excrutiatingly. Interest rates also rose as global credit tightened. The eight international banks that offered these loans were nontransparent, the court said, and the borrowers paid the price.

The ruling and logic trouble me on many levels. To start, if the loans were unacceptable on their face--two variable elements, the principal (in kunas) and the interest rate--why did the Central Bank allow them in the first place? One of the fundamental tasks of the Central Bank is to supervise the banking system, and it was no secret that these loans were being offered. It seems nothing at the time triggered any red flags.

More fundamental to the ruling, I struggle to understand what information was hidden from borrowers. That exchange rates move around? Croatia is not like the US where people can live their whole lives and not touch another country's currency. Domestically, the kuna-euro exchange rate is watched closely because most big-purchase items was negotiated in euros, although kunas eventually change hands. Croats are accustomed to crossing national borders and exchanging money, even if it's just to IKEA to buy some bookshelves.

Or was it that the interest rates were variable? These were variable-rate loans. I would be astonished if the mortgage contracts didn't explain what would trigger a change in interest rates. In contracts I've seen--though admittedly outside Croatia--the rate is usually tied to a specific, publicly available rate outside the control of the individual bank, like a country's prime lending rate. If the contracts for the Swiss-franc loans said the banks would change the rates "whenever we darn well please," maybe there's a case. The defense would be that whoever signed such a loan should be deemed unfit to enter a legally binding contract.

Or maybe the borrowers weren't informed that a huge, global economic crisis was on the way and that a handful of European states would teeter on bankruptcy? That's a tough one. Even if the banks forecast a general strengthening of the Swiss franc against the euro, no one expected the magnitude or the longevity of the global crisis. I was hurt by it; you were hurt by it. We have to live with that.

So what vital information was withheld?

Borrowers took these loans because they had lower interest rates than other loans on the market. If they were buying a boat from one dealer that was cheaper than the same boat from another dealer, they would wonder why. The "why" on these loans was because the borrowers were taking on the risk of exchange rate fluctuations and changing credit costs (even if they didn't think about it in such terms), and they discovered risk can be expensive. It's like deciding whether to buy an extended warranty on an appliance: it's cheaper if you assume the risk of your fridge breaking down yourself.

Finally, the ruling implies the eight international banks of sound reputation spontaneously (or worse) decided to mislead their customers in the same way on the same products at the same time. That seems a little far-fetched to me.

I sympathize with anyone hurt by the global and European crises, which is most of us to some degree. But while some bank practices (particularly in the US) can be blamed for the meltdown, I fail to see what the banks did wrong in this case. And if these loans were carried on their books in Swiss francs, they wouldn't have even profited from the situation.

Court decisions should be based on the facts of an individual case and not on its wider consequences, but the broader implications of this ruling should be considered before the country celebrates too strenuously. The ruling could hobble Croatia's banking system and its attempts to restart its economy. Credit is the foundation for commercial and individual investment, and the spectre that a loan that's good today being changed dramatically by some future court is likely to dampen the willingness of banks to loan here. Banks without a presence here will think carefully about expanding into Croatia. And if a lack of transparency is the problem, the solution isn't posing the riddle: When is a contract not a contract?

Even when Croatia's on the radar, it's near invisible.

Nothing new or beyond the superficial in this New York Times op-ed piece on Croatia's entry into the EU, but it underscores a point I've made in the past. The best op-ed contributor the NYT could find for Croatia's joining is an energy professor from City University London? (And not a word here on energy policy.) Few people out there are actively thinking about Croatia, and the country should work with those who do, seek out those who might, and make the case that many more should. It can't just sit back and wait for the phone calls to start coming in like a lonely teenage girl on a Saturday night. Get out there and boogie!

Zašto Amerikancima ne treba dozvoliti putovanje svijetom

'Čak je i Paul Krugman, dobitnik Nobeolove nagrade i kolumnist New York Timesa, tijekom nedavnog predavanja u Rovinju priznao da vrlo malo zna o situaciji u Hrvatskoj u koju je došao'

Nedavni posjet Judith Reisman Zagrebu podsjetio me na to zašto se Amerikancima možda ne bi trebalo dopustiti da putuju u inozemstvo.Kad sam živio u Singapuru, pratio sam američki televizijski reality show "The Amazing Race" (Čudesna utrka). Riječ je o suvremenoj, pojednostavljenoj verziji putopisa Marka Twaina "The Innocents Abroad". U njemu 11 parova slijedi tragove koji ih vode po svijetu. Putujući od zemlje do zemlje, izvršavaju pomalo blesave zadatke, jedu njima egzotičnu hranu, surađuju s lokalnim stanovništvom i na kraju epizode nastoje ne stići posljednji na cilj, nakon čega obično slijedi ispadanje i gubitak šanse za nagradu od milijun dolara.

Producenti su pametni ljudi - natjecati se smiju samo državljani SAD-a i, iako se povremeno nađe neki simpatičan par za koji vrijedi navijati, to uglavnom znači da se show gleda tek kako bi se vidjelo koliko Amerikanci mogu biti glupi kad se suoče s drugim kulturama.

U jednoj od epizoda, natjecatelji su morali pronaći diskoteku. Jedan je izgubljeni par samouvjereno krenuo upitati za smjer ženu koja je izgledala kao da se spremila za izlazak, no ispostavilo se da je riječ o prostitutki. Svejedno su je nastavili slijediti zajedno s kamermanom, iznenađeno utvrdivši da joj njihova pozornost baš i nije sjela. U jednoj drugoj epizodi, par je poticao mlade seljane da im pomognu u njihovu zadatku uporno vičući: "Još love!" Stalno se ponavlja isto: iako se parovi nalaze usred Tajlanda, Brazila ili Etiopije, čudom se čude što nitko ne govori engleski ne bi li ih usmjerio na idući trag. Nekolicina parova koji su mi prirasli srcu potrudila se naučiti reći "hvala" na lokalnom jeziku, što im je omogućilo dobrohotnu prednost. Jedan se par s lakoćom kretao prema pobjedi, dok ih je njihov suparnik posprdno nazivao hipijima, proklinjući njihovo poznavanje jezika.

Križarski rat

I konačno, prošle godine, tijekom još jedne čudesne utrke - one za predsjednika SAD-a - Mitt Romney je spakirao kovčege i otišao u London gdje su ga lokalni tabloidi istog časa prozvali ''Mitt the Twitt'' (Glupi Mitt) nakon što je uvrjedio organizatore londosnkih Olimpijskih igara, prekršio diplomatski protokol i svojim domaćinima dijelio titule po vlastitom nahođenju. Posjet Judith Reisman vratio mi je sva ta sjećanja. Potaknuta osobnom tragedijom, Reisman je objavila Križarski rat protiv pornografije i svega povezanog s Alfredom Kinseyem i njegovim proučavanjem ljudske spolnosti. Mažalost postala je iskrivljena karikatura sme sebe pokušavajući izvući što je više moguće slave i časti iz svojih ekstremnih stavova. Pozvati nju kao sudionicu javne rasprave jednako je pozivanju floridskog pastora Terryja Jonesa na raspravu o vjerskoj toleranciji. Ako neke stvari koje ima za reći i imaju smisla, on se gubi u kakofoniji i hiperboli.Međutim, dok god ne poziva na oružani otpor ili viče "Bomba!" u prepunom kazalištu, pravo slobodnoga govora nalaže da joj treba omogućiti da kaže što god želi. Slobodni govor također dopušta dosadnjakovićima da dosađuju dok ih se ne isprati iz dvorane, ispitivačima dopušta kritičnost, a TV postajama omogućuje odlučivanje o tome hoće li bolju gledanost imati njezine ideje ili, pak, cirkus koji se zbog nje odvija. Poput većine sloboda, slobodni govor ne odnosi se samo na stvari s kojima se slažete, što je katkad teško za prihvatiti.

Komunističko okružje

Jedna je primjedba Judith Reisman uzrokovala popriličnu buru. U razgovoru s publikom - uključujući i jednu studenticu koja će, bez sumnje, ubuduće imati lagane teškoće sa spojevima, barem onima koji uključuju poziv u kino - uzrujana je spisateljica izjavila: "Dolazite iz komunističkog okruženja pa me vaša indoktrinacija ne čudi." Kako, molim? Kao što je dekan Nenad Zakošek naglasio, većina prisutnih studenata rođena je u slobodnoj, kapitalističkoj Hrvatskoj.

Američko neznanje o ve-ćini stranih stvari i gotovo svemu hrvatskome možda jest tužno, ali ne iznenađuje. Paul Krugman, dobitnik Nobelove nagrade i kolumnist New York Timesa - nedvojbeno pametniji i šireg svjetonazora od Romneyja, Reisman ili natjecatelja u reality showu - u listopadu je održao predavanje u Rovinju te priznao da zna vrlo malo o situaciji u Hrvatskoj. Bilo je to razočaravajuće za čuti jer Krugman uistinu zna mnogo toga o mnogim stvarima.

Sve je to simptomatično za širu istinu: otkad je rat završio, svijet baš i ne mari za Hrvatsku. Nitko ne grije stolac studirajući hrvatski na Harvardu kako bi završio diplomski studij i osvojio jugoistočnu Europu. Nijedan ulagač iz Silikonske doline ne planira gospodarski pothvat koji počinje u Varaždinu.Hrvatska će u srpnju hrabro zakoračiti u globalnu ekonomiju učlanjenjem u Europsku uniju. Hrvatska bi to trebala iskoristiti agresivno se namećući i ugovarajući poslove. U razdoblju preostalom do učlanjenja, trebalo bi zaboraviti kukanje o tome kako se lokalne tvrke ne mogu nositi s velikim igračima, iako ovo na neki način jest sredina koja zatomljuje sposobnosti. Trebalo bi poticati i širiti programe učenja engleskog jezika kao što su međunarodni nastavni programi u OŠ Matije Gupca i XVI. Gimnaziji.

I najviše od svega, ova zemlja mora naći načina da izrazi dobrodošlicu stranim biznismenima koji uistinu vide pravi potencijal Hrvatske te su zainteresirani za ulaganje.

Gdje ima više nasilja

To ne znači da im treba dati odriješene ruke kako bi opustošili krajolik ili uništili okoliš - treba im ponuditi transparentnu, stabilnu poslovnu klimu koja im omogućuje da dobro procjene rizike i isplativost ulaganja vlastitog novca u Hrvatsku. Kad već spominjem ulazak Hrvatske u Europsku uniju, to me podsjetilo na još jedan komentar Judith Reisman: ''U životu nisam vidjela toliko nasilnika koliko ovdje u Hrvatskoj''. Očito da još nije posjetila Sloveniju.

(Originally published in 21. Stoljece, on Feb. 9, 2013.)