"The negotiations are burdened by problems, but I am an optimist," Josipovic said in response to questions from the press.

The long duration of the negotiating process itself causes "certain dissatisfaction", but the discontent is also due to "fears about EU rules", said Josipovic.

"I believe that the state leadership as well as all pro-European forces in Croatia have the duty to tell the citizens that Croatia's prospects are not good without entry to the EU," said the President.

Josipovic arrived in Split today for a three-day visit at the beginning of which he presented retired Croatian Navy Admiral Vid Stipetic with a decoration bestowed on him in 2002 by the then president, Stjepan Mesic. Stipetic was Navy Commander from 1996 to 2002.

Josipovic then held a meeting with Split County Prefect Ante Sanader and his associates which focused on the economic situation in the county.

Asked to comment on Prime Minister Jadranka Kosor's statement of today that industrial output and export were growing and the reporters' remark that nonetheless there was a hole in the budget, Josipovic said that he had not heard about the PM's statement, but that he was happy about every good indicator.

"The hole in the budget can only be patched with higher revenues and it is the government's task to secure them."

Asked to comment on Serbian President Boris Tadic's statement that Serbia was willing to withdraw its genocide lawsuit against Croatia, what Croatia would do and if there was any pressure from the EU in that regard, Josipovic said there was no pressure from anyone.

"The (mutual) lawsuits are the result of the problems that we have, and if we solve the problems, the lawsuits will probably become unnecessary," he said.

"However, it is uncertain whether conditions have been met to withdraw the lawsuits and the act of withdrawing the (Croatian) lawsuit is up to the government, it decides on the matter," he added.