13 MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE Political instability and authoritarian drift The first of the triple threats is political instability. According to the Rule of Law Report (European Commission, 2025a), perceived judicial independence in Croatia is among the lowest in the EU. Only 24% of the public and 16% of companies rate judicial independence as “fairly or very good.” A significant driver is the belief—reported by more than 70% of citizens—that the government and politicians interfere with or pressure the courts (Kubat & Miljević, 2021). The near-total collapse of trust creates a vacuum that populist rhetoric readily fills. Without perceived neutrality, citizens disengage from democratic processes. The European Commission (2025a) report warns that Croatia’s judiciary faces a critical challenge in achieving a full rule of law system, noting that a functional democracy is undermined when public faith in judicial independence remains among the lowest in the Union. Otherwise, voters favor authoritarian drift and strongman tactics over a legal system seen as utterly broken. The experiences of Hungary and Poland show that prolonged distrust in courts can ease the way for leaders who promise to bypass corrupt elites and centralize power in the executive, at the expense of judicial independence (Group of States against Corruption, 2014; Kovács & Scheppele, 2018). Economic impairment as a hidden tax The second threat is economic. Fear of judicial capture can act as a barrier to growth and foreign investment. Investors avoid jurisdictions where contracts are perceived as unenforceable against politically connected competitors. Domestically, institutional distrust acts as a hidden tax on small and medium enterprises. Instead of focusing on innovation, businesses must divert resources to managing legal uncertainty. The economic setback is reflected in the divergent investment landscapes between Croatia and its regional neighbors. Croatia’s stock of inward foreign direct investment is significant, at approximately 66% of GDP, but the investments concentrate in real estate and services. Its ability to attract investment in advanced manufacturing and technology lags behind its peers with stronger rule-of-law reputations (OECD, 2023). For example, only 28% of the Croatian public perceives the judiciary as independent (European Commission, 2025a). Countries such as Slovenia and the Czech Republic consistently maintain higher institutional trust scores, which correlate with higher GDP per capita and more robust venture capital ecosystems. When a startup fears that a competitor with veze can overturn a valid patent, the hidden tax of legal uncertainty effectively slows down the nation’s economic potential (Sabir et al., 2019). Erosion of social cohesion and meritocracy The third and most subtle threat is the erosion of meritocratic norms. According to the European Commission (2025a), the primary reason for low judicial trust in Croatia is the perceived interference from politicians and economic interest. This environment reinforces the view among professionals that advancement depends on connections rather than competence, driving brain drain and social alienation. These impressions are amplified by the fact that 85.8% of those found guilty of corruption offenses were not imprisoned; most received suspended sentences. Such impunity suggests a judicial environment lacking ethical standards, fueling broader social challenges, such as brain drain among professionals who no longer believe in the integrity of domestic institutions (Kubat & Miljević, 2021). When connections determine who decides right from wrong, many citizens see no meaningful reason to seek justice, even if not every decision is truly corrupted. When citizens stop seeking justice Equally damaging is the effect on everyday citizens’ willingness to seek justice. When citizens avoid the justice system, crimes are unreported, perpetrators act with impunity, and the state’s ability to protect its people diminishes, all resulting in tangible effects, particularly for victims of violence. A Council of Europe report found that many women do not report domestic violence because they believe institutions will not protect them, citing wariness of police, prosecutors, and courts as a major barrier to seeking help (Women’s Network Croatia, 2022). Social work research similarly documents that systemic institutional weaknesses and lack of confidence in authorities reduce women’s willingness to disclose abuse or pursue legal remedies (Kujundžić, 2022). The fear of corruption harms those needing legal protection, even where individual judges or prosecutors might act impartially. In this way, judicial distrust undermines Croatia’s social cohesion, safety, and stability. Rebuilding trust through institutional reform Restoring trust in Croatia’s judiciary requires more than symbolic reforms; it requires changes that citizens can perceive in how transparent courts are, how they work, and how people are held accountable.
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