By his own account, Mesic agrees that the major challenges and tasks in foreign policy are to adjust to European standards in order to qualify for membership in the European Union (EU), and to restructure the nation's armed forces to qualify for membership in the North Atlantic Treaty Organization (NATO). Croatia was granted observer status in NATO Parliament in April 2000, and the EU began negotiations on an Agreement for Stabilization and Association with Croatia in the same month. Croatia is also a member of the NATO-linked Partnership for Peace. Croatia was admitted to the Organization on Security and Cooperation in Europe and the UN in 1992, and to the Council of Europe in 1996.
Croatia has been pressured into cooperating with the International Tribunal for War Crimes in The Hague, turning over several officers accused of atrocities in the war in Bosnia.
Despite intense international coordination in the restructuring mission of the Balkans, Croatia and its neighbors have retained their territorial animosities. Croatia and Italy are still arguing over property rights on the Dalmatian coast from World War II and earlier. Slovenia wants a part of Croatia that will give it direct access to the sea in the Adriatic. Serbia and Montenegro dispute Croatia's claim to the Prevlaka Peninsula in southern Croatia because it is the entrance to Boka Kotorska in Montenegro. On 5 December 2002, the two countries approved a provisional border agreement in the Prevlaka Peninsula dispute. Croatia maintains that the agreement is not final and a compromise in which they ceded their rightful water boundaries. There are also a growing number of ethnic Serbians reentering Croatia who will demand adequate representation in the Croatian government or look to Serbia for freedom.
In 2002 an agreement on terms of investment and the use and dismantling of the Krsko nuclear power plant was ratified with neighboring Slovenia. The agreement was controversial in Croatia because it gives Slovenia the right to shut the plant down without consulting Croatia.
Relations with the United States and the EU focus on implementation of the Dayton Accords, the Erdut Agreement, ethnic reconciliation, facilitation of the return of refugees and displaced persons, and democratization. The Croatian government has also come under scrutiny for slow progress in implementing broader democratic reforms. Current government control includes restrictions on freedom of speech, one-party control of public TV and radio, and repression of independent media, to name a few. The United States has offered financial support to Croatia through the Southeastern European Economic Development Program (SEED). In 1998, SEED funding in Croatia totaled US $23.25 million. More than half of that money was targeted toward programs encouraging sustainable returns of refugees and displaced persons. About one-third of the assistance was used for democratization efforts, and another 5% funded financial sector restructuring.
In his 2002 address to his government, Mesic established his commitment to focus on initiatives that will continue to develop, create, and strengthen full democracy, civil society, and rule the of law.