National Agenda : Croatia Igniting Controversy With Its New Currency : Paper money is named after animal that the Nazi puppet regime displayed on its World War II bills.

It is named after a weasel, evokes memories of the Nazi quisling state, glorifies Croatian nationalism and reinforces the conviction of Serbian rebels that they will never find peace in an independent Croatia.

Croatia’s new currency, the kuna, has managed in a few short weeks to rekindle doubts about this country’s commitment to democracy and human rights just as it was disengaging itself from a diplomatically devastating campaign for a Greater Croatia.

Because of the controversy that has whirled around the brightly colored bank notes since their introduction late last month, economists are concerned the kuna will be so burdened by politics it may hurt rather than help an already shaky program for economic recovery.

“This was a mistake by all measures. I don’t know what goes on in the brain of this man,” lamented noted economist Drazen Kalodjera, referring to President Franjo Tudjman, who unilaterally changed the name of the new currency just before it was printed.

“It is not just a name. In very influential circles throughout the world, including banks, people will connect this decision with the former fascist regime of World War II,” warned Kalodjera, who served in Tudjman’s original Cabinet as privatization minister until leaving two years ago in protest of political manipulation of the national economy.

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The kuna, which replaces the dinar that was grossly devalued by two years of hyper-inflation, was originally to be named the kruna, or crown, recalling coins used during this region’s era of rule by the Austro-Hungarian Empire. But on the advice of some right-wing radicals within the ruling Croatian Democratic Union, Tudjman changed the printing order at the last moment.

Kuna means marten --a weasel-like animal whose pelt served as a basis for trade during the Middle Ages. The kuna was commemorated on paper money only during the 1941-45 existence of the Independent State of Croatia, a Nazi puppet regime whose leaders executed thousands of Serbs, Jews and Gypsies in eager conformance to the fascist drive for ethnic purity.

Like the checkerboard shield that adorns Croatia’s flag and national emblems, revival of the kuna has upset liberals and minorities who connect it with the darkest chapter of Croatian history.

“Every time I open my wallet, I feel freshly offended,” said Ivo Goldstein, a history professor at Zagreb University and an active member of Croatia’s small Jewish community.

Zarko Miljenovic, director of the State Institute for Macroeconomic Analysis and Forecasting, dismissed the likelihood of damage to the currency’s stability because of the controversy.

But he conceded there remain strictly economic concerns about the timing of this currency replacement.

“If there is a destabilization of this currency, the consequences are much worse than if we still had the dinar,” the government analyst said, noting that what is intended as a permanent currency cannot absorb the damage that hyper-inflation could do to its image as easily as a transitional currency could. “This has to be stable, because we don’t have room to play around.”

Although the government succeeded in reining in hyper-inflation of more than 2,000% a year by strictly tightening the money supply and freezing wages last fall, no other indicators suggest the Croatian economy is on the upswing.

Unemployment remains among the highest levels in Europe, estimated between 17% and 20%. Monthly income has plummeted to an average of little more than $120. The state still owns 90% of industrial assets and its privatization program has been strangled by corruption. Gross national product has been shrinking at an alarming rate for three years and interest rates are so high that investment has been brought to a standstill.

The last thing the currency needed as it was launched into such social and economic insecurity was the political baggage of a Nazi-era connection, independent economists such as Kalodjera say.

Many in the Croatian mainstream are also unhappy with the kuna scandal that burdens their new bank notes, but take the view that the damage has been done and correcting it would be too costly.

Design and printing would cost millions of dollars in hard currency that the country needs to put to better use in reviving an economy that has been declining rapidly since the 1991 vote for independence from the former Yugoslav federation and the shattering six-month war that followed.

Croatia is still technically at war with much of its own Serbian minority, which has conquered one-third of the country and refuses to let non-Serbs who fled the war zones three years ago return to their homes. Like the rebel occupiers of much of Bosnia-Herzegovina, Serbs holding the disputed Krajina region want independence and eventual union in an emerging Greater Serbia.

Moderates in the Serbian minority denounce the kuna as a foolish and insensitive choice for the name of a currency that is supposed to unite a fractured country.

“The introduction of the kuna has certainly not made the prospects better,” Milorad Pupovac, head of the moderate Serbian Democratic Forum, said of the talks aimed at eliciting economic cooperation that would benefit both sides. “On the contrary, this is being regarded as yet another example of how the Croatian government disregards the concerns of Serbs in Croatia. Just look at the figures on the bills.”

All of the historical personalities featured on the bank notes are Croats and most are rather obscure political figures or poets whose fame never extended beyond Croatia.

One of the most famous natives of Croatia was scientist Nikola Tesla, whose omission Pupovac attributes solely to the fact he was a Serb. Other figures whose accomplishments might be expected to suggest them for commemoration were disregarded for having been devoted to the Yugoslav federation, like late President Josip Broz Tito, or because they were not ethnically pure Croats.

The most valuable of the new notes, the 1,000-kuna bill, depicts 19th-Century nationalist Ante Starcevic, whose philosophy is thought to have inspired the Nazi-era Ustashe movement.

In attempting to justify his decision against such widespread opposition, Tudjman argued that the kuna’s use during the fascist era was “not a good reason against it.”

“Germany had the mark, Italy the lira, and they didn’t change the name,” Tudjman told journalists when the new notes were distributed.

He described the kuna as the traditional currency, as goods traded among medieval merchants were sometimes valued in marten pelts.

“When the United States introduces the beaver to replace the dollar because 200 years ago trappers and Indians conducted commerce in hides, then I suppose it would be appropriate for Croatia to use the kuna,” economist Branko Horvat observed sarcastically.

“Until then, it has to be regarded as a primitive action by primitive people.”