GENERAL ECONOMIC SITUATION IN CROATIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00457R000300650002-9
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: November 9, 2016
• Document Release Date: December 14, 1998
• Sequence Number: 2
• Publication Date: November 1, 1946
• Content Type: IR

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COUNTRY ibeoalavia
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CENTRAL INTELLIGENCE GROUP
INTELUGENCE REPORT
SUBJECT General Economic Situation
in Croatia
25X1A6a
25X1X6
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INF0.11
Dia . February 1947
maRAFircorencsi
SUPPLEMENT
General Economic Situation
L. The general economic situation in Croatia continues to deteriorate da114-?
Basic factors accountable for this are: (1) the poor harvest; (2) industrial
production which is quantitively and qualitatively below expectations; And
(3) low purchasing power of the population.
7'
11,0 Food: Of the food supply available to the population, 30% is obtained
..from..7Government-operated enterprises and 70% is supplied by farmare
in the free market. Plans for 1947, however, call for 75% of the food
supply's being administemilby-the Oovernment on a ration basis, In
Zagreb the price index for fbod available on the free market rose from
100 to 225 over the period August through 31 October 1946. In the same
period the proportion of food supplied from Government sources dropped
from 30% to 17%, Irbil* the price index for goo supplied from such sources,
Mee from 100 to 130. This is accounted for by the farmers' withholding
their produce from Government procurement agentso The farmers' attitude'
is based in part, on the lack of industrial products available for farm
conausption. This, in turn, may traced to the increased export to
the USSR of industrial products needed for domestic use.
B. Evart Trades Besides 30% of the total Yugoslav cement production, other
exports to Russia include luMber, textiles, corn copper, and copper
sulphide. During the month of 4ptember 1946, Croatia alone exported
about 40,000 tons of all products with an official Valais of 320 million
dinars. Since export prices to the USSR are frequently considerably-lower
than prices to other countries,Ruasians are able to buy imported Yugoslav
products at a lower price than Yugoslavia can buy-them domestically.
The profit made by Russia on such transactions is supposed to go into
a fund for foreign Communist Parties. An example of such transactions
is the resale by Russia to Switzerland of hard lumber, originally
purchased by Russia from Yugoslavia. Farther, along the same line, _
Yugoslavia refused to sell hard lumber to Italy because of the fear
that Italy -would likewise resell it to Switzerland, thus entering into
conpetition with the Soviet Won.
Document No. OO.- ti LTIAL
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C. Difficulties in Foreign Trade: Special efforts are
being made to export to the Netherlands, because the
Netherlands offers in exchange seed - which Yugoslavia
needs . and electrotechnicel material for the new
Slemens factory in Zagreb. Exports to Czechoslovakia
include copper, chemicals, and fruit. Through pacts
with Czechoslovakia, the Netherlands and Poland the
volume of foreign commerce has increased considerably.
Principal difficulties are the lack of export products
and the prices obtained therefor at the official exchange
rate. This to this unfavorable exchange rate between
the dinar and foreign currencies, Ingpslav export
products are priced disproportionately high and, in
retaliation, foreign countries set the prices for their
own products at figures considerably above their actual
value.
IndustWo Situation:
A. Textiles: The capacity of the textile industry, in
Croatia, which is the most effective of those currently
in operation, amounts to about 70% of the pre-war production.
However the total cost of the goods (in terms of the
resale Price) produced in any given period of time at
present will represent 160% of the price charged for the
whole production in a similar pre-war period. The industry
a profit of nearly 100 million dinars, although, in
the opinion of source, this is not actual profit of the
year's operations but rather the result of general
Government orders that all industries Must show a profit.
B. labor: Production of the lueber industry in Croatia
amounts to 35% of the pre-war output. Of this figure,
75% is being exported, and the remainder is available
for the domestic market. Profits during 1946 are
supposed to amount to some 80 million diumi.s.
C. Electrotechnical: It is intended that next to lumber the
main induatry in Croatia will be the electrotechnical
industry. The Siemens factory in Zagreb is being expanded
to handle 700% of its pre-war capacity. The necessary
buildings are being constructed, and the machinery has
been ordered from Csechoslavakia. At present Siemens
is building only electric motors up to 4 MI.X. but in
the future it is expected that the new plant Will be
equipped to build any type of electrical machinery and
equipment. To build and finance the new factory, the
Croatian Government is investing 200 million dinars
and the central Government is appropriating 350 million
dinars. (Figures are not yet definite and are still
pending approval). The total planned goverment
investment in Croatian inchuMalrfor 19h7 is foreseen at
about 10 billion dinars. This type co: information is
being kept very secret, however, and the official budget
may reflect an entirely different figure.
-CoNT1l0L 11.S.OFFICIALS ONLY
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CITRAL =TOXIC:MRCS CRUM
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A. Budget: A reliable appraisal of the financial situation
cannot be made until all planned expenditures are?
and the budget review is scheduled for 1 January 3.rcried
The budget of the Federal Republic of Croatia for 1947
is foreseen as about 23 billion dinars.
B. Tames It is anticipated that the budget for Croatia for
Mr-win show a deficit of some three billion dinars,
which amount is supposed to be made up by a loan from the
National Bank. This deficit will probably be a false
reflection, however, because all government enterprises
were ordered to submit financial statements showing
profitable operation, whereas cost of them are artually
25X1 X6
Co'
t; The budget ol the Central tioverrnment
is equivalent to the combined budgets of the Federal
Republics plus the adadnistrativis expenses of the
Central Government and plus the eximinditure of
Goverrxesat-sponsorod enterprises under Central
Goverraent control.
By 30 September 1946 taxes collected in Croatia amounted
to only 30% of estimated receipts and siere collected
mainly from Goverment enterprises, which are almost
exclusively non-profit organisations.
C. Currency Circulation: The total figure for maw in
circulation in Yugoslavia amounted to 9,386,412,000
dinars on 31 October 1946. This represents an increase
of three billion dinars over the figure given for 1 Jay
1946 and is accounted for by: (1) the decrease in government
revenues due to the stoppage of sales of UNRRA goods, and
(2) the decreased purchasing power of the city dwells=
accompanied by the accumulation of large sums of =nay
in the hands of the farmers, which sums are not being spent,
owing to the lack of UNRRA. goods and the poor quality and
quantity of Yugoslav industrial products.
D. Throat of Inflations Anka Berm, Mance niniater of the
ISORMIOZSM'iMernnent, stated before a meeting of
Government officials: "Danger exists in the threat of
inflation, but in the opinion of the Communist Party,
it will not seriously harm the national economy because
of rigid price controls and the plumed eomomy. The
main danger would be that of certain persons' beaming
very rich, which eventuality we must prewent at all costs."
B. Bank RO iOnt Effective 1 January 1947 a re-
organize n the banking system will take place.
Besides the National Bank, only two other banks will
exist: one for investments and long-term credits, and
the second for short-term credits. The central offices
of these banlas will be in Belgrade, and each federal
let:obit:: rill have a main branch,, which will operate
independently within the adminiotrative framework
of the federal republic. Provinaal branches :11111
be established in all communities where Area National
Committees (Okrusa Narodni Odbor) are located, and,
if necessary, in towns having District National
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Committees (Noterski Narodmi Cor). All banks are
to be financed by the Naticaal Bank independent of the
federal budget. Thus the Government aspects to aduinistar
its credit system awe efficiently and to check an increase
in the amount of mow in circulation. Depending on the
nooses of this system, the Government hopes to limit
cash transactions to those of salaries, tames, and small-
scale purchasing: while a.U. other transactions will be
effected thmugh banking /Motions. One drawback to the
system is the lack of trained bank personnel, according
to Finance 2inistry officials.
14. Agricultural Situations
A. Potatoes: The potato crop this year fell seriously
etratirthe expected harvest. In all of Yugoslavia
five million tons were anticipated whereas only
1,500,000
were delivered, and of these the Goverment
purchased 570,000 tone.
_ents The actual _total is probably
in MOWS of r*500,000 tone, because farmers
have withheld as much of their crops as possible.
The projected planting of potatoes for Croatia in
1947 i.e 194700 hectares, with an expected harvest
of 900,000 tons. The price of potatoes rises steadily;
On the black market one kilogram of potatoes costs
15 to 20 dinars, and the official, price was raised from
3.50 to 5 dinars. The Goverment tried to exchange
corn for potatoes but was unmoor:WU, not only
because of the shortage of corn, but also because the
fermem had consumed the potatoes or sold them on the
black market. Potato seed requirements for all of
Yugoslavia for 1947 total 500,000 tons,
E. Corns Due to dry weather in Croatia, the corn harvest
ve;rws oar )10% of the supected total, so that the whole
or% totaled only 500,000 tons, which is insufficient
to supply domestic needs, therefore making it necessary
to import corn from Vojvodina. The projected planting
of corn for Croatia in 190 is 321,284 hectares, with
an expected yield of 1,000 kilos per hectare.
Industrial_ Basic Products: Strong emphasis is being
placed on tise planting of crops 'which represent industrial
rem materials. The harvest in Croatia of these products
fell far short of the expected totals for the current season:
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Mow beets*
Be
flenfkmers s
Flax
Tobacco s
60% below the pre-rear normal
70% below the pre-war normal
40% below the prevr normal
Practically no harvest
20% above the pre-war normal
S4T-CoNTFOL U.S.oFFICIALS ONLY
CIPISAVAL
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The wet serious difficulty eonnectad with the raising of these
crops is the shortage of seed and the resistance of farmers to
government contracts *latch require them to plant a specified acreage.
The Miming tibia indicates the projected plantings in 1947 of
industrial basic commodities. (*Contracted* represents the figure
assigned to all farmers collectively for planting: Kincaotracted*
indicates the tutticipated number of acres which will be planted on
a voluntary basis):
Planted amputated
Oentracuteul Uncontracted In 1939 Tial....clm.lia.
3,737 Hectares 13,725 Hectares 6,779 900 kg.
14000 II 8,787 ? 10,000 4000 *
Scribeeme 400 a .110.11.110ft 5,070 860 sr
Omator-oil seeds 400
Chicory 1,200 ?
Sunflowers 18,000 ?
auger Deets 21,000 *
Tobacco 2000
%Wise 0?01101111011Nla
011 Deets
Herb (basic
ingredient of
intaucticide) 576
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165
5,329
0
980
hi*
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D. Vedder: The acute shortage of fodder has made it necessary to slaughter
lagra. Exact statistical data are not available because the farmers
do not report them, but in all Yugoslavia only forty tons of red clover
seed could be obtained. The following table shoes the mmber of hectares
planted in 19166 and the yield per hectare in Croatia for each of six
fodder crops. Also indicated are the projected plantings of each crop
for Isla and the anticipated yield:
?002111DL U.S.OWICLUS ONLY
efftmeik
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Grtm
lover
ned Clover
Hay
iiuckeheat
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? 1947
t
1%6
140-tieef.arew.
35020
35,000
72,000
650,000
2,000
8,300
per Hectare
irojeaea
Ple2_2t.lece
Yield
2,000 Kilos
2ADO
2,300
600 rt
500
1,200
39,809
49,600
86,100
441,e00
1,806
10,200
3,080 Kilos
ft
3,730
tl
3,580
2,214
720 a
ft
1,620
core4prsdnese Following figures and estimates were given on
fitittiirgrain crops in Croatia:
to seteres
Grain Planted 19W
.389,000 (Yield 600
kllos per
ifinc.15046)
Projected Expected
357,253 1,000 Kilos
Barley
9.2C0
33,852
47,500
7,700
41,400
45,475
lso50
760
1,000
a
ft
hwies of ?sbeatby the Goverment in Croatia for this year's
.05.0. ware estimated to total 180,000 tons, but by 16 November 19146,
t50,000 tons had been collects?u
044-ser Grope.*
Total Production
Croatia 1946
rit
?lung ,
839,833 Quintals
Apples
430,392 n
fears
177,373
wuts
77,000 a
Cherries
ft
1
06,000
Currants
47,000
Apricots .. .
i6s000
Peaches
65,000 a
Figs (dried)
101,000 ft
chestnuts
tT
35,000
Grams
2,581,362
to.-1"-CONTRM U.S.OFFICIALS ONLY
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umonz is t: Source specified *quintals" as the unit of
measure. possible that "kilos* vas- interaled.
G. _Livestock Situation: Following are comparative figures Of
qua1tIe8 of Alres ck in Croatia for the years 1939 and 1914,
exclusive of livestock in hands of the Amoy:
RE 19146
Horses
3314,000 head
239,000 head
Donkeys
38,000
*
.300300
"
guise.
' IMOD
"
9,000
A
Cattle976,000
:
692,000
0
Sheep
1,300,000
7150300
*
Pigs
791,000
?"
529,000
0
,
H. Unt Productions Following are figures on meat production in
Irroatia for Va.
Cattle 12,000 Tons (of 'ditch 70%
Piga 22500 " (" I'
Other 14,00 A
Went for Army consumptioni
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