After the democratic elections in Croatia in the spring of 1990 and the victory of Croatian Democratic Union (HDZ), the new Croatian Government faced the Serbian insurgency which expressed approval for the Milošević’s Greater-Serbian policy. The insurgency was supported by the Yugoslav People's Army (JNA) that had disarmed Croatia just after the elections in May 1990. In the summer of 1991, the Yugoslav crisis aggravated. Previous occasional and sporadic conflicts between Croatian police forces and the Serbian insurgents escalated into the open aggression of Serbia, Montenegro and JNA against Croatia. In such conditions, Croatian leadership was conflicted about the defense policy. The disagreement caused the appearance of some fractions in the parliament parties, especially in HDZ. Some participants of Croatian politics in the early 1990s today assert that there were at least two main fractions in HDZ – the “moderate” one that supported Tuđman’s policy based on avoiding head-on conflict with JNA, and the “radical” one that wanted to declare JNA and Serbia the aggressors on Croatia and to fight back. Some claim that the “radical” fraction even wanted to bring down Tuđman and replace him with someone else. There isn’t enough evidence to verify such statements. It probably was the case of dissatisfaction with the situation on the battlefield. Some write about wide discontent and criticism of Tuđman regarding his defense policy, which was evident at the meetings of the main Board of HDZ in the middle of July, Supreme State Council in the end of July and parliamentary session in the beginning of August 1991. Regarding the attitude towards Tuđman, there is a widespread and simplified opinion that his party turned its back on him and that the opposition expressed him support. Exactly the opposite, the opposition, especially heads of the parties Croatian Social-Liberal Party (HSLS), Croatian democratic party (HDS), and Croatian People’s party (HNS) expressed equal, or even more severe, criticism of Tuđman’s defense policy. In that kind of atmosphere, the reconstruction of the Government resulted in the national consensus – Democratic Unity Government was formed. It was the third democratic Government and the first multiparty Government after the democratic elections. It is an example of a Grand coalition formed during the war in many countries. The main goal of the new Government was to create more effective defense policy that would gather all the necessary political and military structures and establish the unified command structure. That resulted in entering of the Crisis Staff into the Government and forming of the General Staff of the Croatian Army. In the first two months of its mandate, the Government proposed and adopted measures for emergency readiness in order to organize life in the crisis areas. One of those measures included the blockade of the JNA barracks which Tuđman approved September 13 1991. With the blockade, the previous measured and careful attitude of the Croatian leadership towards JNA shifted from passive to active. One part of the research discussed the role of the Government in defense of the cities of Vukovar and Dubrovnik. Regarding Vukovar, there are some controversies embodied in widespread claims that Croatian leadership “betrayed” and “sacrificed” Vukovar by not sending enough weaponry and ammunition. However, available sources, primarily transcripts and records of the Government sessions, suggest that Vukovar was the priority in the supply of weaponry and ammunition. Furthermore, some members of the Government and other representatives of the Croatian leadership visited Vukovar and Eastern-Slavonian battlefield. In the context of all the crisis areas on the Croatian battlefield, Vukovar was the most dominant topic at the Government sessions. At the session held November 17, the Government adopted a series of decisions pertaining to the protection of Vukovar civilians. In the appeals to the international organizations, Vukovar and Dubrovnik were the two most mentioned cities. As was the case with Vukovar, the Government sent weaponry and other military equipment, transported humanitarian aid to Dubrovnik and appealed for help. It is worth mentioning convoy “Libertas” which supplied humanitarian aid to the surrounded Dubrovnik and broke the naval blockade. Also, some Government members came by the convoy to Dubrovnik to show their support. At the end of November 1991, Government sent three of its ministers to Dubrovnik where they had to represent the Government and facilitate its operation in Southern Dalmatia, maintain contacts with the international organizations, negotiate with the JNA representatives and maintain communication with the Croatian Army. The three ministers Davorin Rudolf, Petar Kriste and Ivan Cifrić were situated in Dubrovnik during its heaviest attack and the day after they agreed to a truce with the JNA representatives. The Government supported the negotiations between the city military and civil representatives and JNA because it wanted to procrastinate with the attacks and buy some time to strengthen the military and international position of Croatia. On the other hand, the Government and Tuđman strongly opposed to intentions of “demilitarization” of Dubrovnik which would surrender its arms to the JNA under the supervision of representatives of the international community, i.e. surrender of the city to the aggressor. Second most important task of the Government was the struggle for international recognition. The establishment of the Ministry of Foreign Affairs showed all the problems of the political structures that young democratic state had to face. Such problems refer to lack of experience as well as technical and financial resources. The Government cooperated with the European Community and the United Nations. Although, Tuđman was the designer of the Forreign Affairs and the Government often had to put into action his decisions, during the Conference of peace in Hague it showed some differentiation, such as declaring it would abort the attending of the Conference unless JNA left Croatia. After the arms embargo in September 1991, the Croatian Government deprived of the right of representation of Croatia in the UN Budimir Lončar and Darko Šilović, due to their role in instigating the decision of the UN regarding embargo. The Government Memorandum, addressed to ministerial Council of the EC in November 22, stated that economic sanctions of the Roman declaration of November 8 would affect mostly Croatia. Such view showed a certain degree of independence of the Democratic Unity Government. The Government accepted the Vance plan but argued the methods of its implementation. The activity of the Government in Forreign Affairs reflects in numerous official and unofficial meetings and encounters with various politicians and statesmen. The main task of the Government members was to appeal to stop the war and recognize Croatia, but they also had to struggle against Serbian propaganda which spread lies about rehabilitation of Ustasha and Independent State of Croatia (NDH) and portrayed president Tuđman and the Croatian Government as anti-Semitic. In that context, some think that the Croatian Government and leadership in general, provided insufficient to the international public. In this research, I also analyzed social politics of the Democratic Unity Government, that is, politics towards Croatian displaced persons and refugees as well as Bosnian-Herzegovinian refugees during 1991 and 1992. At the very beginning of the aggression against Croatia, new Croatian Government had to face refugee crisis. Forcible relocations of the Croatian civilians, among which some moved into safe areas in Croatia, while others left the country, induced Government to, with the term “refugee”, which refers to those persons who had to emigrate their own country, introduce another one – “displaced persons”, which referred to those civilians who hadn’t left Croatia, only were displaced to some other territory within the country. Government also adopted some measures to secure accommodation for the displaced persons and refugees by emptying hotels and resorts and founding of the Office for the displaced persons and refugees in November 1991. Funds for the displaced persons and refugees Government secured mostly from the state budget, while all requests for financial help from the international community were unsuccessful. Consequently, in that period Croatia funded also Bosnian-Herzegovinian refugees from its budget, while the international community helped only with humanitarian help. In this chapter the Government activity in prevention of persecution of the civilian population was discussed through several examples. In that aspect, its activities were mostly limited to addressing the international community. In the case of Ilok, from where in October 1991 approximately 10.000 people were banished, Government founded the Commission of the Parliament and Government to try to stop the persecution, but it failed to achieve its goal, since the persecution had already begun. After the fall and occupation of Vukovar in November 1991, the Government organized evacuation of approximately 15.000 people, but it was carried out only partially. The Government didn’t have control over the war zone, which means that its opportunities for safe and efficient evacuation were highly limited. One of the main plans for the displaced persons and refugees was Government’s Return Program, which began its realization only after the end of the war and peaceful reintegration of Podunavlje in 1998. Economic politics of the Democratic Unity Government was reflected in its independence from Serbia. Following measures and decisions of the previous Croatian Government, on the day of its establishment, Democratic Unity Government broke off economic relations with Serbia, however only partially. Those companies with strong business ties with some companies in Serbia, had liberty to continue their cooperation. The export to Serbia and Montenegro was limited only to some “strategic” raw materials and products, such as petroleum. The Government also introduced its own currency, hrvatski dinar (HRD). One of the main achievements of the Government was that it avoided the transit to “war economy”, in spite of the increased military spending. Since priority of the Croatian Government was determined by war, its activities gravitated towards repair of the enormous war damage in transport, utility and residential infrastructure. In the end of 1991 the Government established the Ministry of Reconstruction, while in the first half of 1992 the Government composed the Reconstruction Program and its Financial Plan that was adopted by the Croatian Parliament in June 1992. Nevertheless, because of the status quo imposed by the UNPROFOR, located on the occupied territories in Croatia, the reconstruction of the country began after the war had ended in 1995. Analyzed activities of the Government in the Defense policy, Foreign Affairs, as well as its Social and Economic policy raise the question of the Government’s independence regarding Tuđman and Croatian Parliament. Considering the semi-presidential system, the Government was the executive authority of the president of the Republic and Croatian Parliament. Government also had legislative powers authorized by the Parliament, because in the wartime a great number of important decisions had to be made in a very short amount of time. The Government was not only the executive body of the President, but it also functioned as his close associate. That manifests mostly through the measures for emergency readiness in August and September 1991. Sometimes, the Government had to step out of its Constitutional powers if developments on the battlefield required it to, for example regarding the decisions about Vukovar, November 17 1991. Regarding activities of the Government in the researched areas, it can be concluded that Democratic Unity Government had a high level of autonomy, taking into account the existing semi-presidential system. Nevertheless, the powers of the Government were limited in the Defense policy and Forregin Affairs, while on the other hand, it had complete autonomy in Internal Affairs, in this case, in its Social and Economic politics. An issue that requires special consideration in this research regards the opposition in Croatia during the mandate of the Democratic Unity Government. Some claim that with forming of the multiparty Government, the opposition in Croatia “disappeared”. The remark is understandable considering that all the parliament parties signed the Agreement of Democratic Unity Government, which marked their transition from the opposition to coalition partners. But, did the opposition really “disappeared” form Croatian political life? Numerous public appearances of various representatives of opposition parties and parties in general, indicate otherwise. Activity of the opposition at the Parliament sessions from October 1991 to May and June 1992 shows agility of the opposition life in Croatia. From the beginning of the Democratic Unity Government in August till October, the opposition parties didn’t raise any questions in public about some decisions of the Croatian leadership, but from October began severe criticism towards Tuđman and the Government. Discontent was expressed primarily to the acceptance of the Carrington’s arrangement in Hague. Criticism of Foreign Affairs arose also after the acceptance of the Vance plan. In the last six months of its mandate, the Government was exposed to various pressures from the opposition and from one part of the HDZ, which reinforced especially after the international recognition at the beginning of 1992. Some opposition and nonpartisan ministers left the Government, whereas in April 1992 there was the reconstruction of the Government which changed significantly the personnel composition of the Government, resulting in the increase of the HDZ members. It was obvious that it was not the exact same Government from the beginning of August 1991 and that its end was near. In the new elections held August 2 1992, the HDZ defeated its opponents and ten days later, new, One-party Government was formed. Establishment and presented activities of the Democratic Unity Government is the proof of the democratic system in Republic of Croatia at the beginning of 1990s and counter-argument for theses about Tuđman’s authoritarian style of rule. A multiparty Government, whose prominent members were opposition representatives, couldn’t have been formed in an undemocratic or authoritarian system. Forming of the Grand Coalition merely one year after HDZ had won the elections, provides a valuable contribution to the study of Tuđman’s policy, shows larger picture of the Croatian leadership and opens the door for further research of Croatian political life in the early 1990s.