Croatian resignation

At a hastily arranged press conference, the 56-year-old conservative leader of the country's ruling Croatian Democratic Union (HDZ), said he had "decided to withdraw from active politics and not to run for the presidency."

"My work is done, my political life is over," Sanader told reporters on Wednesday. "I have decided that I have done my part - now, it is time for others."

The country has faced growing economic troubles due to the global downturn, but Sanader said this had not prompted his move. "I never ran away from problems," he said.

Sanader, who claimed he is in perfectly good health, said he would propose that his deputy, Jadranka Kosor, take over the government as his immediate successor.

Local media earlier had speculated that Sanader might step down as prime minister to run for president in early 2010. He entered officeafter the HDZ took power from the Social Democrats in 2003. He still had two years to go before his second term was to expire.

EU membership on hold

Sanader's key political goals have been to lead Croatia into the European Union and NATO, becoming a member of the latter in April. A border dispute with neighboring EU member Slovenia, however, has slowed down accession talks with the EU after a Stabilization and Association Agreement with the bloc came into force in 2005.

How the EU and Croatia address the border dispute will be a deciding factor in future relations, according to Srecko Matic of Deutsche Welle's Croatian Service.

"Croatia is cooperating with The Hague, it is making real improvement in negotiations about justice, the economy, and all the other open questions," he said. "The only open and big question is the dispute with Slovenia about the border and the sea."

The long-standing dispute concerns the Bay of Piran, some 20 square kilometers of water in the northern Adriatic Sea. Both of the two former Yugoslav republics claim ownership of the bay, which has no clear border demarcation.

Sanader has said he would not trade Croatian territory to become the 28th EU nation.

As speculation continues over the reasons behind the sudden resignation, the prime minister indicated the stalled EU membership talks might have played a role.

Meanwhile, EU Commission president Jose Manuel Barroso has made it clear that Brussels is determined to make Croatia a member. On Wednesday, the first day of its six-month EU presidency, Sweden urged Slovenia and Croatia to jointly solve their border dispute.

db/gb/dpa/AP/Reuters/AFP

Editor: Sean Sinico