In 1990, the first free elections were held. A people's movement called the Croatian Democratic Union (HDZ) won out by a relatively slim margin against the reformed communist Party of Democratic Change (SDP), led by Franjo Tuđman (former general in Tito's Partisan movement) and Ivica Račan (former president of Croatia's League of Communists, the SKH ) respectively. However, Croatia's British-style first-past-the-post election system enabled Tuđman to form the government relatively independently. The HDZ's intentions were to secure independence for Croatia, contrary to the wishes of a part of the ethnic Serbs in the republic, and official politics of Belgrade. The excessively polarized climate soon escalated into complete estrangement between the two nations and even sectarian violence.
In the summer of 1990, Serbs from the mountainous areas where they constituted a majority rebelled and formed a new entity, the so-called Autonomous Region of the Serb Krajina (later the Republic of Serbian Krajina); neither were recognised by a single country outside of their proposed borders. Any intervention by the Croatian police was obstructed by the Yugoslav People's Army (JNA), now containing a significantly larger percentage of Serbs. The conflict culminated with the log revolution, in which the Krajina Serbs blocked the roads to the tourist destinations in Dalmatia.
The civilian population fled the areas of armed conflict en masse: generally speaking, hundreds of thousands of Croats moved away from the Bosnian and Serbian border areas, while thousands of Serbs moved towards it. In many places, masses of civilians were forced out by the Yugoslav National Army (JNA), who consisted mostly of conscripts from Serbia and Montenegro, and irregulars from Serbia, in what became known as ethnic cleansing.
The border city of Vukovar underwent a three month siege — the Battle of Vukovar — during which most of the city was destroyed and a majority of the population was forced to flee. The city fell to the Serbian forces on November 18, 1991 and the Vukovar massacre occurred.Some historians believe that the city could have been spared and defended, but was left to "fend for itself" to gain sympathy from the west.
Subsequent UN-sponsored cease-fires followed, and the warring parties mostly entrenched. The Yugoslav People's Army retreated from Croatia into Bosnia and Herzegovina where a new cycle of tensions were escalating: the Bosnian War was to start. During 1992 and 1993, Croatia also handled an estimated 700,000 refugees from Bosnia, mainly Bosnian Muslims.
Armed conflict in Croatia remained intermittent and mostly on a small scale until 1995. In early August, Croatia embarked on Operation Storm, this action, though illegal under the UN, would not have been initiated if not for the approval from the United States. The Croatian attack quickly reconquered most of the territories from the Republic of Serbian Krajina authorities, leading to a mass exodus of the Serbian population. An estimated 90,000-350,000 Serbs fled shortly before, during and after the operation. As a result of this operation, a few months later the war ended with the negotiation of the Dayton Agreement. A peaceful integration of the remaining Serbian-controlled territories in Eastern Slavonia was completed in 1998 under UN supervision. Majority of the Serbs who fled from the former Krajina have not returned due to fear of being killed, and the Croatian government has done little to encourage Serbs to return.
From an economic view, the Republic (as well as the remainder of Yugoslavia) experienced a serious depression. President Tuđman initiated the process of privatization and de-nationalization in Croatia, however, this was far from transparent and fully legal. The fact that the new government's legal system was inefficient and slow, as well as the wider context of the Yugoslav wars caused numerous incidents known collectively in Croatia as the "Privatization robbery" (Croatian: "privatizacijska pljačka"). Nepotism was endemic and during this period many influential individuals with the backing of the authorities acquired state-owned property and companies at extremely low prices, afterwards selling them off piecemeal to the highest bidder for much larger sums. This proved very lucrative for the new owners, but in the vast majority of cases this (along with the separation from the previously secured Yugoslav markets) also caused the bankruptcy of the (previously successful) firm, causing the unemployment of thousands of citizens, a problem Croatia still struggles with to this day.
This was all helped, not just by the (allegedly purposeful) inadequacy of legal restrictions, but also by the apparently active support of the new Croatia's authorities, ultimately controlled by Tuđman from his strong presidential position. In the end this shed an increasingly negative light, and cast a shadow on his notable successes as a strategist and wartime statesman. Excluding the mostly rural rebel-occupied areas (the so-called Republic of Serbian Krajina), in the last two years of Tuđman's first tenure the detrimental effects of "wild" and unrestricted capitalism had become strikingly visible, with more than 400,000 unemployed citizens, and a significant drop in the GDP per capita, problems Croatia struggles with to this day.
Croatia in the 1990s - Republic of Croatia
The modern period in Croatian history begins in 1990 with the country's change of political and economic system as well as Declaring independence from Yugoslavia in 1991, and obtaining it in 1992.
Following the end of the war, Franjo Tuđman's government started to lose popularity as it was criticized (among other things) for its involvement in suspicious privatization deals of the early 1990s. In 1995, the opposition surprisingly won in the capital of Zagreb, which led to the Zagreb Crisis when Tuđman refused to accept this victory.
Croatia became a member of the Council of Europe on November 6, 1996. 1996 and 1997 were a period of post-war recovery and improving economic conditions.
The remaining part of former "Krajina", areas adjacent to FR Yugoslavia, negotiated a peaceful reintegration process with the Croatian Government. The so-called Erdut Agreement made the area a temporary protectorate of the UN Transitional Administration for Eastern Slavonia, Baranja and Western Sirmium. The area was formally re-integrated into Croatia on January 15, 1998.
Tuđman died in 1999 and in the early 2000 parliamentary elections, the nationalist HDZ government was replaced by a center-left coalition, with Ivica Račan as prime minister. At the same time, presidential elections were held which were won by a moderate, Stjepan Mesić.
The new Račan government amended the Constitution, changing the political system from a presidential system to a parliamentary system, transferring most executive presidential powers from the president onto the institutions of the Parliament and the Prime Minister. The new government also started several large building projects, including state-sponsored housing and the building of the vital Zagreb-Split Highway.
The country rebounded from a mild recession in 1998/1999 and achieved notable economic growth during the following years. The unemployment rate would continue to rise until 2001 when it finally started falling. Return of refugees accelerated as many homes were rebuilt by the government; most Croats had already returned (except for some in Vukovar), whereas only a third of the Serbs had done so, impeded by unfavorable property laws as well as ethnic and economic issues.
The Račan government is often credited with bringing Croatia out of semi-isolation of the Tuđman era. Croatia became a World Trade Organization (WTO) member on November 30, 2000. The country signed an association agreement with the European Union in October 2001, and applied for membership in February/March 2003.
In late 2003, new parliamentary elections were held and a reformed HDZ party won under leadership of Ivo Sanader, who became prime minister. After some delay caused by controversy over extradition of army generals to the ICTY, in 2004 the European Commission finally issued a recommendation that the accession negotiations with Croatia should begin. Its report on Croatia described it as a modern democratic society with a competent economy and the ability to take on further obligations, provided it continued the reform process.
The country was given EU applicant status on June 18, 2004 and a negotiations framework was set up in March 2005. Actual negotiations began after the capture of general Ante Gotovina in December 2005, which resolved outstanding issues with the ICTY in the Hague. However, numerous complications stalled the negotiating process, most notably during Slovenia's blockade of Croatia's EU accession from December 2008 until September 2009.
Further issues notwithstanding, the Croatian government and the European Union expect Croatia to become a member of the EU between 2011 and 2012.
In August 2007, Croatia experienced its worst post-war tragedy. During the fires that ravaged its coast, 12 firemen died as a result of a fire on Kornat island.