Croatia is in the midst of pursuing a policy of greater Euro-Atlantic integration. In October 2001, Croatia took another step closer to membership in the European Union (EU) after Prime Minister Racan signed a Stabilization and Association Agreement with the EU. On February 25, 2003, Croatia formally presented its EU membership application. Croatia was admitted into the Partnership for Peace Program, which was designed by NATO member states in 1994 to strengthen Euro-Atlantic security on May 25, 2000, and, in May 2002, was welcomed into NATO's Membership Action Program, a key step toward NATO membership. On May 2, 2003, the United States joined Croatia, Albania, and Macedonia to sign the Adriatic Charter, in which the three NATO aspirants pledged their commitment to NATO values and their cooperative efforts to further their collective NATO aspirations. Croatia has been a member of the United Nations since 1992, and contributed troops to UN operations in Sierra Leone, Ethiopia, and Eritrea and Kashmir. It also sent a Military Police unit to support the International Stabilization Assistance Force in Afghanistan. Croatia is a member of the World Trade Organization and the Central European Free Trade Organization.

Although Croatia has made progress under Prime Minister Racan in implementation of the Dayton Accords and Erdut Agreement, the status of refugees displaced from the 1991-95 war; property restitution for ethnic Serbs; and resolution of border disputes with Slovenia, Bosnia and Herzegovina, and Yugoslavia remain key issues influencing Croatia's relations with its neighbors.