'The time has come for Croatia to question itself and change what is not good,' Josipovic said after taking the oath of office.

He attacked corruption, saying 'state officials must eliminate any doubt of conflicting interests' and blaming some of the current economic difficulties on 'sometimes criminal transformation' of the economy.

'We will not stand by ... while dirty money buys diplomas and resources,' said Josipovic, 52. The 'justice we still seek' should create equal opportunity for 'every citizen to have an education and a job,' he said.

Josipovic formally assumes the presidential office at midnight, taking over from Stjepan Mesic, who served the maximum two five-year terms.

Josipovic won the elections in January by a landslide, soundly defeating populist Zagreb mayor Milan Bandic. He promised a 'new justice' to Croats, who became wary of failed promises and rampant corruption.

“Peaceful policy has no alternative and the present generation of politicians has no right to leave the problems to future generations,” Josipovic said in his inaugural speech in the Croatian capital, Zagreb.

The ceremony was attended by 70 state delegations, including 10 heads of state from Balkans and central European countries.

Serbian president Boris Tadic, however, boycotted the event, because Kosovo president Fatmir Sejdiu was invited to the ceremony.

Croatia has recognized Kosovo, which declared independence from Serbia two years ago. Tadic refused to attend the ceremony because Sejdiu was there.

Relations between Croatia and Serbia are believed to be crucial to the Balkans' stability and Josipovic said he was looking forward to meeting Tadic.

Playing down the strain, Josipovic said the ties between Croatia and Serbia 'should not be measured by relations we have with other countries.'

“The development of good relations with the regional countries will be of strategic importance and a priority of Croatia’s foreign policy,” Josipovic said.