Croatia Revives `Buy Local` Campaign That Irked EU

Croatia has proposed to freeze wages in 2009, but trade unions in the public sector have rejected the proposal.

Croatia, worried about fallout from the global financial crisis, is risking European Union ire by reviving a campaign urging people to buy local goods.

All leading daily newspapers in the EU candidate country were published on Saturday with a special cover carrying the slogan "Let's Buy Croatian".

The campaign, managed for years by the Chamber of Commerce, has been somewhat subdued since the European Commission criticised it in 2006 as a form of protectionism that went against the principles of free market competition.

But it gained new momentum this week after Prime Minister Ivo Sanader warned that Croatia might face considerable job losses next year because of the global downturn.

"At a time marked by financial crisis, we must choose Croatian products to protect jobs, pensions and the prosperity of future generations," the Chamber of Commerce said in a statement released on Saturday.

A Chamber official told Reuters they expected no problems with the EU this time. "Now it is financed by the Chamber, not from the state budget, so it should be fine," the official said.

Croatia, which hopes to conclude EU membership talks by the end of next year, has proposed to freeze wages in 2009 so as to reach a zero budget deficit, but trade unions in the public sector have rejected the proposal.

Its financial sector has been so far been shielded from the crisis, but growth is forecast to slow to 2 percent in 2009 from some 3.5 percent this year. Some analysts believe thousands of jobs could be cut in the country of 4.4 million people, where the average monthly salary is some 700 euros ($906).

Sanader said this week Croatia could not deal with the crisis by boosting consumer spending, which has been one of the main growth drivers in the past decade.

"It would only help imports to rise and boost deficits," he said. Croatia's current account deficit is expected to hit some 10 percent of gross domestic product this year.