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The border city of Vukovar underwent a three month siege — the Battle of Vukovar — during which most of the city buildings were destroyed and a majority of the population was forced to flee. The city fell to the Serbian forces in late November 1991. Soon after, shocked with atrocites commited by Serbs, the foreign countries started recognizing Croatia's independence. By the end of January 1992, most of the world recognized the country.
Subsequent UN-sponsored cease-fires followed, and the warring parties mostly entrenched. The Yugoslav People's Army retreated from Croatia into Bosnia and Herzegovina where war was just about to start. During 1992 and 1993, Croatia also handled seven hundred thousands of refugees from Bosnia, mainly Bosnia's Moslems.
Armed conflict in Croatia remained intermittent and mostly on a small scale until 1995. In early August, Croatia started the Operation Storm and quickly reconquered most of the so-called "Republic of Serbian Krajina", leading to a mass exodus of the Serbian population. An estimated 200,000 Serbs fled shortly before, during and after the operation. A few months later, as a result, the war ended upon the negotiation of the Dayton Agreement. A peaceful integration of the remaining Serbian-controlled territories in Eastern Slavonia was completed in 1998 under UN supervision.
President Tudman died in late 1999. In February 2000, Stjepan Mesic was elected president, ending the HDZ's rule. The country underwent many liberal reforms beginning in 2000. An economic recovery as well as healing of many war wounds ensued and the country proceeded to become a member of several important regional and international organizations. The country has started the process of joining the European Union, but a perceived lack of co-operation with the International Criminal Tribunal for the former Yugoslavia concerning the tracking down of the indicted general Ante Gotovina long formed difficulties. After Gotovina's capture on 7 December 2005 the road now seems clear for Croatia to join the EU, although no sooner than 2009.
Source http://en.wikipedia.org/wiki/History_of_Croatia
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