Croatia goes for technocrats and Jaguars: A war-weary nation is looking to rebuild, writes Marcus Tanner in Zagreb

AT THE packed Cafe Kic in central Zagreb the new owner, Tomislav Javorcic, surveyed a Bohemian-looking crowd with satisfaction. 'I am reserving a few tables for the gay and lesbian crowd,' he whispered. 'My place is so popular I fear the Zagreb queens could take over if I don't pen them in.'

Only weeks after opening night at Cafe Kic, Mr Javorcic hopes to rake in several thousand dollars monthly - not bad for the once penniless organiser of cultural events at Zagreb university. 'I am thinking of buying a Jaguar, as Mercedes are so common.'

After two years of independence, and a ruinous war with the Serb-led Yugoslav army, the Croatian capital is once again 'a happening city'. Streets lined with sandbags for air-raids are clogged with new cars. Shops burst with foods that housewives in sanctions- hit Serbia can scarcely remember. Western chain stores have mushroomed on the once shabby Ilica Street, where gloomy Austro-Hungarian facades are being restored after decades of neglect.

Mr Javorcic was happy about the recent congress of President Franjo Tudjman's ruling Croatian Democratic Union, the HDZ, where ultra- right nationalists were trounced by centrist technocrats under the Prime Minister, Nikica Valentic, whose priority is to repair Croatia's war- shattered economy.

But not everyone has climbed into the class of get- rich entrepreneurs. Fifty miles east of Zagreb, in the frontline town of Pakrac, grey- faced and bedraggled people queue in streets reduced to gutted and blackened shells for desperately needed Red Cross food parcels.

Only a handful of shops are open. Most buildings still have not been repaired almost two years after the worst fighting with breakaway Serbs ended. Posters displaying the face of Pakrac's former Serbian Orthodox bishop - embellished with the words 'Wanted dead or alive' - prove bitter ethnic passions still run high.

Even in Zagreb there are 50,000 unemployed. Families earning an average salary of 300 German marks ( pounds 125) a month can afford food and electricity bills but often depend on church and international charities for clothing.

'The war with the Serbs slashed our annual GNP from dollars 15bn ( pounds 10bn) to just over dollars 8bn,' said the Foreign Minister, Mate Granic. 'Tourism and and communications have all been ruined, the Serbs still hold a quarter of our best agricultural land and international aid to Croatia shrinks by the day.'

He predicted that the economy would recover to pre-war levels in three years if the Serb- held Krajina region, embracing one-quarter of Croatian territory, is peacefully reintegra ted, but admits a solution to the crisis is elusive.

The government has launched a drastic anti-inflationary programme designed to cut price rises to 10 per cent a month while Mr Granic labours to ward off international sanctions by repairing ties with Bosnia's alienated Muslim leaders.

The quiet ascendancy of moderates such as Mr Granic has acted as a fillip to Mr Tudjman - who is accused by opposition intellectuals of running not a government, but a royal court where all important decisions are taken outside parliament in a kitchen cabinet composed of loyal cronies and his son Miroslav.

The liberal journalist Ines Sabalic complains independent Croatia has a tamer press today than during the last lax years of Yugoslav Communism, and that television devotes too much time to ceremonies inside Mr Tudjman's Banski Dvor - the former Habsburg vice-regal lodge that houses the President's office.

A left-wing intellectual, Zarko Puhovski, accuses the government of plotting draconian new laws to fire ideologically suspect lecturers from the universities, and of doing nothing to stop the harassment of ethnic Serbs.

But even he is against President Tudjman dropping the reins. 'While Tudjman is in power no one is going to knock at your door in the middle of the night - at least in Zagreb,' he said.