As for remarks from Brussels regarding the appointment of politicians to state-run companies' supervisory boards, the Croatian premier said that his cabinet would not renounce that right under any circumstance.

"It is our decision not to renounce under any condition our obligation towards Croatian citizens that, in special circumstances, we can appoint politicians to supervisory boards," Milanovic told a news conference after the Commission released the monitoring report.

He described the Commission's objection to politicians' appointments as "slightly odd", explaining that the matter has nothing to do with the European acquis and that the same practice was present in some of the EU member-states.

"Therefore, it would be an interesting discussion at the EU General Affairs Council where at least ten countries would be faced with the fact that they do the same thing," the Croatian premier said.

He emphasised that his cabinet would appoint professionals to public companies' supervisory boards and that he would not give up the right to intervene in other ways as well, as "we have strong arguments".

According to Milanovic, the provision about the non-appointment of politicians to supervisory boards was imposed on the previous government led by his predecessor, Jadranka Kosor, which he said was encumbered with corruption.

"This is a different government, it is not corrupt, this is a left, expert and democratic government," he said.

Croatia has reached a considerable degree of alignment with the acquis communautaire, and the European Commission has identified a limited number of issues requiring further efforts, the Commission said in its first monitoring report on Croatia's accession preparations in the three toughest negotiating areas.

"First steps taken by the new Government concerning conflict of interest rules are a cause of concern, in particular as regards supervisory and management boards of public companies. Earlier provisions on criteria for membership have been overturned," reads the document.

When asked whether they found it absolutely unacceptable for government ministers to sit on the Supervisory Board of the INA oil company, Commission officials did not reject that possibility a priori, but stressed that an effective system should be created to prevent conflict of interest in such cases.

Asked by reporters what he planned to do regarding other remarks from the report, Milanovic said that it was not clear to him what the Commission meant when it mentioned the need to continue with the privatisation of the INA oil and gas company and the Telecom, and he announced the continuation of the privatisation of shipyards.

"As regards free movement of capital, further attention must be paid to the amendments to the Act on Privatisation of INA and the Act on Privatisation of Telecom; efforts to implement the action plan against money laundering must continue," reads the monitoring report.

"The main monitoring report will be released this autumn. This is a transitional period we have been given and this is very good," Milanovic said.