Croatia's EU accession talks were held up because the country's most prominent war crimes suspect, Gen Ante Gotovina, remained at large until 2005.
Gen Gotovina was finally convicted by the UN War Crimes Tribunal in the Hague in April 2011, and shortly after this, Croatia successfully completed its EU accession negotiations. It is due to become the EU's 28th member state in 2013.
At the time of President Tudjman's death in December 1999, the country was still in a parlous state.
Its citizens suffered from government-backed attacks on their civil and political rights. The governing party, the HDZ, was mired in corruption and the economy was in severe difficulties.
Presidential and parliamentary elections at the beginning of 2000 ushered in politicians who pledged commitment to Croatia's integration into the European mainstream.
The constitution was changed to shift power away from the president to parliament. Croatia joined the World Trade Organisation and pledged to open up its economy.
However, organised crime and associated violence continued to be a major concern, and the government had to demonstrate that it was serious about tackling the problem so as not to jeopardise its EU membership bid.
A dispute with Slovenia over sea and land borders dating back to the break-up of Yugoslavia also threatened to derail Croatia's journey to EU membership until June 2010, when a Slovene referendum cleared this outstanding obstacle to Croatia's EU accession.
The country's EU accession treaty was finally signed in December 2011, after years of tortuous negotiations, and endorsed at a referendum the following month.
Croatia was badly affected by the global financial crisis of 2008-9, which hit its tourism-oriented economy hard, and the country has mostly been in recession since 2009.
President: Ivo Josipovic
Social Democrat Ivo Josipovic was elected for a five-year term in January 2010. He pledged to fight corruption and help Croatia achieve EU membership.
The role of the president is largely ceremonial. He proposes the prime minister but it is for parliament to approve the nomination. The president can dissolve parliament and call elections.
Prime minister: Zoran Milanovic
Zoran Milanovic became prime minister after his four-party centre-left coalition bloc defeated the conservative Croatian Democratic Union (HDZ), which had ruled the country for the previous eight years, in elections in December 2011.
Riding a tide of popular anger over government corruption and economic stagnation, the Kukuriku ("cock-a-doodle-doo") bloc won 81 seats in the 151-seat national assembly. Mr Milanovic's own Social Democratic Party (SDP) took 61 of those seats.
Mr Milanovic's chief election pledges were to revitalise the struggling economy and prepare Croatia for EU membership in 2013.
The prime minister faces a tough challenge in his efforts to cut the budget deficit and rescue Croatia's credit rating, which by the end of 2010 had deteriorated to just a notch above junk status.
His government will have to adopt stringent austerity measures if it is to avoid a further downgrade in the country's credit rating, revive industry and attract foreign investment. New jobs are vitally needed if unemployment - which by October 2011 had climbed to nearly 18% - is to be brought down.
Zoran Milanovic joined the SDP in 1999 and became the party's president in June 2007, in an election that followed the death of the party's founder, veteran Croatian politician Ivica Racan, two months earlier.
He then led the SDP into the November 2007 general election, which it narrowly lost.
He was born in Zagreb in 1966 and after studying law at university embarked on a diplomatic career. In 1994, he went to Nagorno-Karabakh on a peace mission on behalf of the Organisation for Security and Co-operation in Europe (OSCE), and was the first Croatian citizen to serve in this role.
He is married, and has two sons.
Croatia's media enjoy a high degree of independence. However, Reporters Without Borders said in 2009 that aspects of Serbo-Croat relations were off-limits for the media.
Croatian Radio-Television, HRT, is the state-owned public broadcaster and is financed by advertising and a licence fee.
Public TV is the main source of news and information. National commercial networks and dozens of private local TV stations compete for viewers. Croatia hopes to complete a transition to digital TV broadcasting by 2011. The cable and satellite market is well developed.
The radio landscape comprises three national public networks, four national commercial channels, regional public channels and more than 130 local and regional radios.
In the newspaper sector, there are six national and four regional dailies. Austrian and German concerns have large stakes in the print media.
Around 2.4 million Croatians are online (Internetworldstats.com, 2010). There are an estimated 22,000 registered websites in Croatia. The telecommunications sector is the most developed in the region.