engleski

State Aid in Croatia: The Effects of EU entry on State aid enforcement and the National Budget

This thesis sets out to research the effects on the State aid expenditures in the Croatian national budget as a result of EU accession of the country. As Croatia is soon to become a new Member State of the European Union, a few issues remain to be solved, which includes the issue of State aid, which has been predominant in the pre- accession negotiation process. The issues that this thesis will be dealing with are those of high State aid expenditures to for the largest part sectoral State aid and how and if EU accession will bring about a positive trend towards less and better State aid as desired by the European Commission. Another issue that will be researched is how countries that were part of the 2004 enlargement round and showed similar State aid trends prior to accession fared after becoming a Member State. Additionally, research will focus on the extent to which State aid enforcement after accession played a role in these changes. Ultimately, based on the findings a prediction is made on the effects on the Croatian state budget after accession due to changes in State aid expenditures in the short to medium, based on provisions in the Accession Treaty. A long term prediction will be made based on current State aid averages in the EU as a whole as well as those in ‘new’ Member States after the 2004 accession round. This thesis concludes that the effects will be significant as the current level of State aid expenditures of 1.5% of GDP will drop to a level around 0.85% in the short to medium term after accession. This will have as a positive result the lowering of budget expenditures, which in turn would lower the budget deficit to underneath 3% of GDP, if all other economic factors remain equal. In terms of convergence from sectoral to horizontal aid, EU averages will not be met initially as too many uncertain factors remain, such as expenditures to radio and television as well as expenditures to transport. In the long term a reasonable prediction cannot be made but expectations are that by converging to the ‘European economy’ Croatia will follow in line with EU average and a further lowering of overall expenditures as well as an increased convergence to horizontal objectives will be seen. These conclusions were drawn by subjecting the current Croatian State aid situation to that of the EU average as well as implementing the likely results of EU State aid enforcement after accession as well as the provisions made in the Accession treaty to the case of Croatia.

State Aid; European State aid Policy; Competition Policy; Croatian National Budget; State aid enforcement; 2004 Enlargement; State Aid Action Plan; National Courts; Sectoral vs. Horizontal State aid; State aid convergence; Accession Treaty; Restructuring aid; Horizontal State aid objectives; European Commission

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