Recently a minehunter boat for croatian navy has been completed, scrawny lil thing of 25 m length. It costed almost 12 million dollars to complete. You can bet a missile boat with modern sensor and weapon systems costs over a hundred million.
Croatian defense budget just can't sustain those things. Currently, after all the salaries have been payed and all the costs of running the existing army have been met - the money left for procurement of new weapons is just tens of millions of dollars. The plan is to get that up to some 100 million in 2008 with finally getting to 20% of entire budget to be used for purchasing new equipment around 2010, which could then amount to 150 million dollars. Compared to situation today when there's barely enough money to go around to keep stuff working it's a big improvement, but realistically, its miniscule amount of money for ambitious plans like a fleet of missile boats, fleet of new fighter planes, new air defense systems, new IFVs, etc. Something will have to be overlooked and in my opinion - navy would be most cost efficient choice.
And while one has to look into the future and keep an eye what the neighbor does, one should not do the first move and start an arms race. If serbia for whatever reason starts building up its navy, thats when croatia should build up its forces more. Enemy can't hide its procurement of new weapons, its a process that takes years. Also, with possibility of montenegro separating from its union with serbia, the whole point becomes moot as serbia will lose its access to sea and montenegro on its own has no need to attack anyone and even if it did its way too small to afford any kind of force.
