Copenhagen, 16 April 1996

Conclusions on the various Reports concerning the state of Local and Regional Democracy in Croatia

Rapporteurs: Mr G. Martini (Italy) and Mr J.-M. Chevrot (France)

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The Congress Bureau,

A. Having discussed the state of local democracy on three occasions in the light of various reports;

1. report on the first mission dispatched to Croatia from 21 to 27 July 1996 (doc. CG/BUR (2) 22 revised), provisionally approved by the Bureau on 23 September 1995 (Rapporteurs: MM Martini (L) and Chevrot (R));

2. report on the second mission dispatched to Croatia from 9 to 12 January 1996, visiting Eastern Slavonia and the Knin district together with the town of Zagreb (doc. CG/BUR (2) 72), adopted by the Bureau on 26 February 1996, following which a press release was made (see appendix) (Rapporteurs: MM Martini (L) and Chevrot (R));

3. appendix to the second report mentioned above, drawn up by the consultant Mr Hoffschulte.

B. Having noted the latest developments regarding the election of the Mayor of Zagreb, symptomatic of serious democratic malfunction arising from the dual office vested by law in a single person, viz: President and Prefect of the Region; Mayor of Zagreb and Prefect owing to the city's special status, and aware that the basic principles of representative local democracy are not complied with;

C. Having noted with interest the draft opinion approved by the Political Affairs Committee of the Parliamentary Assembly and in particular the undertakings made by the President of the Republic and the President of the Sabor (lower house of Parliament) which embody the following obligations as regards local and regional democracy:

1. signature and ratification, within one year following accession to the Council of Europe, of the European Charter of Local Self-Government and the European Charter for Regional or Minority Languages;

2. strict compliance with the obligations stipulated in the Basic Agreement on the Region of Eastern Slavonia, Baranja and Western Sirmium, and co-operation with the United Nations Transitional Administration (UNTAES) for the region;

3. continuation of the procedure for electing a Mayor of Zagreb in accordance with the Constitution and laws of the Croatian Republic and with due regard to the recommendations of the Council of Europe (see recommendations in paragraph F);

4. compliance, well before the next elections, with the recommendations made by observers from the Council of Europe and other international organisations at the last elections, particularly as regards a voting block for the diaspora, minority representation, electoral registers, secret ballot, necessary consolidation of the independence of the radio and television organisation (HRT) and the earliest possible population census, conducted under international supervision;

D. Noting with satisfaction the statements made by the Deputy Prime Minister Ms Ljerka Mintas-Hodak on 28 March to Mr Chénard, Vice-President of the Congress, to the effect that the government would make moves by the end of the first half of 1996 to revise the Local Administration and Autonomy Act in the light of the proposals presented in the various reports by Congress delegations, both as regards the necessary distinction between the concepts of Prefect and President of the Regional Assembly and as regards recognition and clarification of the right of local and regional authorities to engage in transfrontier co-operation;

E. Further considering Ms Ljerka Mintas-Hodak's explicit resolve to consult the Council of Europe experts on this Local Administration and Autonomy Act revision bill sufficiently in advance of its second reading in Parliament;

F. Would reiterate in this context the main conclusions of the successive missions to Croatia, with specific reference to the following:

The Constitution

1. The Croatian Constitution provides for two levels of self-government: communes (towns and municipalities) and districts of towns (Article 129) on the one hand, and _upanije (regions, Article 131), on the other. Both are described as "units of local administration and self-government". Large cities can also be _upanije (which makes them similar to county boroughs).

The Local Administration and Autonomy Act

2. The powers of local authorities are defined in a rather general manner in Article 13 of the Local Administration and Autonomy Act. In theory, towns have the same powers as municipalities, but under Article 14 town authorities are permitted to undertake additional duties provided these are not the responsibility of another authority. Consequently towns, unlike municipalities, have a sort of general competence. This distinction could explain the high number of localities applying for town status. Clarification seems necessary as regards the powers of municipalities and towns.

The scope of powers is considered to be satisfactory by all those involved in local life. However, the mayors of towns did stress the need to make these powers more effective, in other words to give local authorities the means to carry out the duties for which they have competence. They also ask that the State agree to delegate other powers to the towns (for example civil status procedures), and want a clearer distinction from the powers of counties (_upanije).

Functioning of local self-government

3. In view of the particularly difficult situation in Croatia caused by its disturbed environment, the conditions of local self-government, subject to the improvements suggested herein, are considered fairly satisfactory apart from the conflict-affected areas (former Krajina, Western Slavonia, Eastern Slavonia) and the case of the Mayor of Zagreb discussed above. Croatia should therefore accede to the European Charter of Local Self-Government as early as possible in accordance with its stated intention.

4. The question of local and regional finance does not seem to pose quantitative problems in Croatia.

The system is essentially based on shared receipts from four major taxes, according to fixed rates. 25% of income tax receipts goes to towns or municipalities and 5% to the regions. Similarly, 20% of profits tax goes to the towns or municipalities, with 10% going to the regions. 50% of lottery and gambling tax goes to local authorities. Finally, 60% of property sales tax is distributed to towns and municipalities.

This redistribution, at least of income tax which is the main source of tax revenue, is carried out not according to the taxes actually collected in each authority, but per capita throughout the country, and thus constitutes a sort of de facto equalisation. For instance in the region of Istria, which is particularly prosperous compared with the rest of the country, it is reported that the local authorities receive 6.0% of tax receipts and the region 1.8%, instead of 25% and 5% as indicated above. This means that the inhabitants of the "rich" region of Istria contribute around 22.2% of their receipts for the purposes of equalisation with less fortunate local and regional authorities. This somewhat obscure form of equalisation does not appear to enjoy unanimous support from either the beneficiary or donor regions. It seems needful to introduce a fairer and more refined financial equalisation system modelled on the modern systems established in countries where local and regional taxation is income-based (Germany, Switzerland and Scandinavian countries for instance).

In the light of the various elements before it, the Congress considers that the tax system in Croatia operates in accordance with the principles defined in the European Charter of Local Self-Government and papers and recommendations on the subject proposed by the CDLR.

5. The existence of personnel qualified in the democratic and effective administration of local and regional authorities is one of the keys to success in the transition to democracy. Consequently, the Congress urges the Croatian authorities and the associations of local authorities and of regional authorities, once set up, to co-operate with foreign partners with a view to transfers of experience. To this end, it invites the Croatian authorities to make use of the co-operation programmes which exist in both the Council of Europe and the European Union as well as the international associations of towns and municipalities (Council of European Municipalities and Regions and Assembly of European Regions) to develop training programmes, and to collaborate with the European Network of Training Organizations (ENTO) created under the auspices of the Council of Europe. ENTO should be asked to respond to the requests for training assistance from the representatives of the Croatian Government.

Control over local self-government

6. The general provisions relating to control over acts of government and elected representatives, and to relations between the central government and the local and regional authorities, appear to be in line with the European Charter of Local Self-Government (Article 8), but doubts persist as to the interpretation of Article 80 of the Local Administration and Autonomy Act regarding the supervisory authority's remedies against general acts (especially statutes) of local and regional authorities.

If the government can, on the basis of Article 80, decide at any time to challenge the legality of an act adopted by local or regional authorities - as would appear to be the case from an instruction addressed to the Prefect of Istria requesting him to review all the statutes of the municipalities of Istria - then this provision violates the principle of legal certainty. It would therefore be expedient to have this interpretation of the law clarified. Articles 81 and 82 refer to the supervision the government can exercise over the organs of local authorities in certain cases of serious and repeated violations. The possibility of dismissal is limited to specific cases, where the law makes no mention of any element of expediency. In the case of Article 81 the way is open for the lodging of appeal before the Constitutional Court, which must give a decision within 7 days. The legislator should extend this appeal to the cases provided for in Articles 82 to 84 of the Act.

Functioning of regional autonomy and relations between regional and local authorities

7. In addition to a number of problems associated with the actual functioning of _upanije (regions), the Congress holds that the very conception of such a level of government needs to be revised. Indeed, the dual role of the region and even more of some of its organs creates confusion which appears to impair the functioning of regional autonomy. Furthermore, the definition of regional powers - compared with local authorities in particular - appears to pose certain problems with regard to their implementation by regional bodies. Finally, a number of contacts thought that there were too many _upanije and that it would be preferable to have fewer regions with greater powers. It all events, the Congress considers that the creation of such regions ought not to interfere with local self-government and the subsidiarity principles. Reference is made in this context to the five historical regions whose emblems figure on the Croatian flag.

8. The powers of the _upanije as self-governed territorial authorities are defined in Article 15 of the Local Administration and Autonomy Act. Essentially, they amount to a co-ordinating role with regard to the interests and activities of local authorities within the region. However, the Constitution and the law state quite clearly that the municipalities are not in any way subordinate to the regions, but are merely territorial authorities at a different level. Consequently, interfering acts such as the occupation of Osijek Town Hall by the "_upan" and his administration constitute unacceptable encroachments on the town's autonomous local administration in the absence of a state of war. The town of Osijek should be supported in its request for return of the Town Hall for its own use.

The Congress concludes that the responsibilities of the municipalities, as distinct from those of the _upanije, should indeed be clarified and that the Prefect, as is customary in most countries, should not be allowed to "co-ordinate" local affairs, but only to co-ordinate the activities of the local state services. Conferring such extensive co-ordinating powers on the Prefect conflicts with Article 130 of the Constitution, which only provides for supervision of the lawfulness of decisions taken by the municipalities and their consistency with the subsidiarity principle. It follows that the _upanije should have powers of their own clearly defined by law, thereby making them regional authorities with full capacity.

Necessary redefinition of the function of the _upan (regional President and Prefect) and the Mayor of Zagreb

9. _upanije are defined in the Constitution (Article 13) as "natural self-government units" and "units of local administration and self-government", whose functions and responsibilities are to be determined by law. Clarification is needed to ensure that the legal transfer of functions and responsibilities does not affect the constitutional status of this (second) municipal self-government level, because the Constitution did not intend such authorities to be mere branch offices of the state administration. This is bound to have direct effects on their autonomy and independence in both the political and administrative fields.

10. At the time of the observation of local and regional elections in February 1993, the Congress already expressed strong reservations as to the terms of the clause whereby the President of the Republic must approve the _upan elected by the Regional Council and the Zagreb Municipal Council. The Congress found that the refusal to approve the three Mayors successively elected by the Zagreb Municipal Council without objective reasons was a blatant contradiction of the election results and thus infringed the basic principles of local self-government and pluralist democracy.¹

11. According to the Croatian authorities, the government's or President's legal power to approve the election of heads of administration in the _upanije and in the capital Zagreb corresponds to the transfers of state functions provided for in the Constitution. Such a power of approval is especially acceptable where the Zupan's central government functions substantially outweigh the regional ones. The Congress points out that, were this the case, the power of approval would entail a clear legal definition of the criteria for confirmation or rejection. In order to prevent party-political interference or arbitrary acts, respect for majority decisions by democratically elected municipal representatives should be expressed by restricting the power of approval either to an examination of the lawfulness of the choice of the Mayor or _upan or an objective appraisal of his/her qualifications, thus precluding any party-political evaluation.

The loyalty to the government which is expected by the _upan in carrying out state functions can be ensured by means of the review or supervision of legality exclusively laid down in Article 130 of the Constitution. The specialist supervision and the right to give instructions stipulated in Article 130, para. 3 is sufficient to cover the transferred functions. Arbitrary or party-political rejection of local elections is incompatible with the Council of Europe's European Charter of Local Self-Government. In the event of a conflict between the outcome of voting and the President's decision, the ultimate decision must either be given by an administrative court or the Constitutional Court or be submitted to a majority decision by the democratically elected Council, which would then dismiss the presidential objection.

12. The Congress therefore considers it imperative that the conditions and rules set out in paragraph 11 above are introduced and applied in the event that the Croatian authorities decide to retain the dual office of appointed Prefect/elected President. If, however, as seems probable, they opt for separation of the functions of Prefect and President of the Regional Assembly, a solution in keeping with the principles of regional autonomy, they should take special care to vest the authority holding "self-governing" powers at regional level with clearly defined separate powers, both from the Prefect as representative of the State and from the grassroots local authorities. The rules on the Prefect's exclusively legal oversight of local authority acts set out in paragraph 6 above (Article 79 para. 1) should likewise apply to government supervision of regional authority acts (Article 79 para. 3.

Status of Zagreb

13. Sections 20 to 22 of the special Zagreb City (Municipal Self-Government) Act of 1990-95 reproduce the substance of Sections 31 to 33 of the (general) Local Administrative and Autonomy Act of 29 December 1992.

14. The Congress considers it essential and urgent to reconsider the status of the City of Zagreb and of its Mayor as outlined in paragraphs 11 and 12 above concerning clarification of the _upan's function. In addition, the status of the City of Zagreb should be reconsidered with a view to clarifying the powers held at municipal and regional level, together with the procedures for election, by the Municipal Council and Regional Council respectively, of the Mayor and/or the President of the Region.

The territory retaken by the Croatian Army in the _upanije of Knin and Glina and part of Sisak _upanija and Western Slavonia

15. The Congress expresses its outrage at the scale of the systematic destruction and burning of towns and particularly villages, even after the fighting, committed by the Serb militia in general and by "uncontrollable Croat forces" where certain villages of the Knin district are concerned. The Congress asks that the perpetrators of these atrocities be arrested, tried and, if found guilty, sentenced to severe penalties by the courts. The Congress accordingly notes with interest the undertaking made by the representatives of the Croatian Government to co-operate with the Prosecutor of the International Criminal Tribunal at The Hague.

16. The Congress expresses apprehension as to the repopulation of the areas, which apparently alters the initial facts to a significant extent and sanctions the main objectives of the "ethnic cleansing" policy. Every effort must be made by the international community, including the Congress, to prevent such an aberration.

17. The emergency measures and the administration of these territories by decree should be progressively lifted, beginning with Western Slavonia, which has been liberated for upwards of a year. Likewise, plans and deadlines for organising local and regional elections should be stepped up. There will probably be considerable difficulties in drawing up electoral registers for the first free municipal elections owing to the imponderables vis-à-vis the return of groups of persons who, under the Croatian Constitution, should take part in the elections as protected groups or minorities. The Council of Europe should offer assistance and advice in this matter, inter alia in the interests of the confidence-building measures advocated by the Croatian Government for ethnic minorities.

Reincorporation of Eastern Slavonia, Baranja and Western Sirmium

18. The systematic destruction, especially in the emblematic town of Vukovar, and in many villages and towns by the Serb militia has reached alarming proportions; the culprits must be tried and sentenced to severe penalties by the International Tribunal for war crimes at The Hague.

19. The Serb and Croat sides alike must co-operate closely for the success of the Transitional Administration for these regions set up by the United Nations (UNTAES). The Congress, as evidenced by the preliminary contacts, intends to co-operate with UNTAES either directly or via the Osijek Local Democracy Embassy, for the following purposes in particular:

i. building confidence between the various ethnic communities with the aim of retaining the area's original Serb population and securing the return of the Croats who were compelled to leave;

ii. setting up local and regional structures suited to the situation, within which the various ethnic elements can each have a rightful place and an adequate degree of autonomy;

iii. preparing electoral rolls and arranging free local and regional elections under international supervision once the essential preliminary stages have been covered.

Local and regional elections in the areas recovered and reincorporated into Croatia

20. The Congress will need to send observers for the local and regional elections due to be held in the regions of Knin, Glina, the southern part of Sisak province, Western Slavonia, Eastern Slavonia, Baranja and Western Sirmium.

Status of Istria

21. A statute for the _upanija of Istria must be adopted as quickly as possible. The Congress is gratified that the Assembly of the _upanija of Istria intends to propose a new statute. While it is absolutely necessary that this statute comply with the Croatian Constitution so as to progressively achieve the regionalisation of the country in accordance with the principles of regional autonomy as recognised throughout Europe, and in particular

with reference to the experience of some Spanish and Italian regions holding special self-governing status. The Council of Europe remains at the disposal of the Croatian authorities in order to provide its technical assistance.

Protection of minorities and minority or regional languages

22. The Congress underlines the importance of Croatia's ratifying the Framework Convention for the Protection of National Minorities and the European Charter for Regional or Minority Languages, as its authorities have undertaken to do. These ratifications should help build confidence so that the retaken or reincorporated regions can return to normal.

23. National legislation should also contain provisions to ensure that wherever a large group of speakers of a minority language exists in a local or regional community, the authorities and the local or regional administration as well as the state authorities in those municipalities and regions must also be able to work in those languages. The national legislation should also allow non-speakers of a minority language, living in an area where the language is in use, to learn this language if they so wish. This could apply in particular to Istria following the example of the regions of Aosta, South Tyrol, Catalonia, Galicia, etc.

Transfrontier co-operation

24. Cross-border co-operation is of particular importance for numerous regions of Croatia, because 16 of the 21 _upanije share borders with foreign countries. As a result, the Congress invites the Croatian Government to ratify the Council of Europe Outline Convention on Transfrontier Co-operation between Territorial Communities or Authorities and, in collaboration with the elected representatives of interested local and regional authorities, to devise mechanisms and procedures to foster the development of cross-border co-operation. The Council of Europe has a special role to play in terms of co-operation and assistance in bringing peace to the new frontiers, drawn after 1990, of what are now independent States. Transcending these new frontiers through cross-border co-operation will be an important precondition for the different regions' economic development. Croatia's present geographic situation makes ongoing cross-border co-operation a necessity for the country's economic growth and for peaceful development throughout the region.

25. While it condemns the violent attacks directed at transfrontier co-operation by the President of the Republic, the Congress nevertheless welcomes the intentions of the Croatian authorities to establish the right to transfrontier and inter-territorial co-operation by local and regional authorities , and the relevant procedures, when revising the Local Administration and Autonomy Act.

Local Democracy Embassies

26. The action of the Congress and to some extent that of the Council of Europe should be founded on the possibilities offered by the network of Local Democracy Embassies (LDEs) already formed and being created or extended in Croatia. The LDEs must above all develop their action in the regions which have been retaken or reincorporated into Croatia:

. the Osijek LDE is to open branches in Eastern Slavonia (Vukovar and Belli Monastir) and in Western Slavonia.

. the Sisak LDE is to extend its range of action to the adjacent areas of the southern county of Sisak and Glina.

27. The role of the LDEs should relate to the operation of local democracy, confidence-building measures for co-existence between different ethnic groups and cultures, liberalisation of the media, and local development.

28. The LDEs should, as far as possible, also foster transfrontier co-operation, a function which is top priority for the LDE at Verteneglio/Brontigla in Istria.

Reconstruction aid in the conflict-affected areas

29. As was decided by Recommendation 15 and Resolution 25 of the Congress adopted on 22 November 1995, it rests with the Congress, with help from the programme of emergency measures ordered by the Committee of Ministers, to organise a town/town and region/region partnership in order to assist reconstruction in the regions affected by the conflict.

30. For the sake of effectiveness, it would be expedient to single out a few pilot projects located in the various sectors worst affected by the fighting, which cover villages or towns where there is still a chance of preserving or restoring a multi-ethnic situation or which, in combination with other projects, are conducive to return of populations driven out by the conflict.

Associations of local and regional authorities

31. Where there is an association of Croatian towns and municipalities and an informal association of towns, whose co-operation can be expected to increase, the _upanije have no association as yet. This can probably be partly explained by the weakness of their executives, which are also representatives of central government. Nevertheless, the suggestion put forward by the Congress to create an association of regions has met with approval. In that sense, the idea to be developed is the existence of two distinct Associations: one jointly representing towns and municipalities, the other exclusively representing regions. This separate representation would have the advantage of adapting the representatives of territorial entities to that which exists in most of European countries and to the international organisations uniting towns and municipalities on one hand, and regions on the other hand. It must be pointed out that no legal obstacle would hinder the implementation of that scheme.

32. As to the appointment of Croatian representatives to the Congress, a proper balance will need to be struck between local and regional elected representatives.

G. In conclusion expresses its concern about the following problems arising with local and regional democracy in Croatia:

33. appointment by the President of the Republic of the Mayor of the city/region of Zagreb and the President's authority under the law to appoint the Presidents of the regions in the same way, such appointment and authority being contrary to pluralist democracy and the principles of local self-government (see paragraphs 8, 9, 10, 11, 12, 13 and 14).

34. the President of the Republic's violent attacks on transfrontier and inter-regional co-operation (see paragraphs 24 and 25).

35. the status of bilingualism in Istria, an advantage and a cultural asset which must not be jeopardised (see paragraphs 22 and 23), and the need to adopt a regional statute suited to this situation of bilingualism (see paragraph 21).

36. the importance for the regions recently restored to Croatia of recovering a multi-ethnic population comparable with the earlier situation and of being in a position to hold local and regional elections as soon as possible (see paragraphs 15, 16 and 17).

H. Considers that the Council of Europe's stance in respect of Croatia will have an impact on the other countries in the region and must therefore be viewed in the light of the international community's efforts to engender a state of peace in the countries originating from the former Yugoslav Federation.

I. Brings the above problems to the attention of the Parliamentary Assembly and the Committee of Ministers and invites them, when they examine Croatia's accession to the Council of Europe, to seek appropriate guarantees from the Croatian authorities that the necessary reforms will be implemented within a given time-limit.

J. Considers it necessary for the Congress to monitor the evolution of local and regional democracy in Croatia and in particular the implementation of the recommendations made in F. above. In so doing, the Congress can rely on the Local Democracy Embassies and in addition arrange periodical missions by Congress delegations. In due course, by the end of 1997, the Congress should organise a major Conference on the progress of local and regional democracy in Croatia, an idea which has already gained the support of the Croatian authorities and which will allow a final assessment of the issue.

K. Faced with the delicacy of the situation, the CLRAE expresses its willingness to participate in the construction of local and regional democratic institutions in the countries of the former Yugoslav Federation. To this effect, it will intensify its activities, in particular via the intermediary of the Local Democracy Embassies and via special missions which it will organise.

¹ The Zagreb Municipal Council has elected a fourth Mayor and refuses to accept the Mayor provisionally appointed by the President of the Republic. Thus there is every indication that unless the President of the Republic confirms the fourth elected Mayor in office, the conflict will be resolved by fresh elections.