The Ustaše was led by the Poglavnik[note 2] The regime targeted Serbs, Jews and Roma as part of a large-scale campaign of genocide, as well as anti-fascist or dissident Croats and Bosnian Muslims.

It bordered Nazi Germany to the north-west, the Kingdom of Hungary to the north-east, the Serbian administration (a joint German-Serb government) to the east, Montenegro (an Italian protectorate) to the south-east and Fascist Italy along its coastal area.

The Independent State of Croatia had four levels of administrative divisions: great parishes (velike župe), districts (kotari), cities (gradovi) and municipalities (opcine).

In addition, on 29 October 1943, the Kommissariat of Sušak-Krk (Croatian: Građanska Sušak-Rijeka) was created separately by the Germans to act as a buffer zone between the NDH and RSI in the Fiume area to "perceive the special interests of the local population against the [I]talians"[35] In 1915 a group of political emigres from Austria-Hungary, predominantly Croats but including some Serbs and a Slovene, formed themselves into a Yugoslav Committee, with a view to creating a South Slav state in the aftermath of World War I.

[citation needed] In January 1929, King Alexander responded by proclaiming a royal dictatorship, under which all dissenting political activity was banned and the state was renamed the "Kingdom of Yugoslavia".

With their support, retired lieutenant-colonel Slavko Kvaternik, deputy leader of the Ustaše, declared the creation of the Independent State of Croatia (Nezavisna Država Hrvatska – NDH) "in the name of Croats and the header [sic] (poglavnik) Ante Pavelić".

[46] Acceding to the demands of Benito Mussolini and the Fascist regime in the Kingdom of Italy, Pavelić reluctantly accepted Aimone the 4th Duke of Aosta as a figurehead King of the NDH under his new royal name, Tomislav II.

Meanwhile, Mussolini used his long-established support for Croatian independence as leverage to coerce Pavelić into signing an agreement on 18 May 1941 at 12:30, under which central Dalmatia and parts of Hrvatsko primorje and Gorski kotar were ceded to Italy.

Jozo Tomasevich in his book, War and Revolution in Yugoslavia: 1941–1945, states, "never before in history had Croats been exposed to such legalized administrative, police and judicial brutality and abuse as during the Ustasha regime."

The peace negotiations in 1919, however, influenced by the Fourteen Points proclaimed by US President Woodrow Wilson (1856–1924), called for national self-determination and determined that the Yugoslavs rightfully deserved the territory in question.

Hitler disagreed with his commanders, but pointed out to Pavelić that the NDH could create a completely Croat state only if it followed a constant policy of persecution of the non-Croat population for at least fifty years.

The Gestapo report to Reichsführer SS Heinrich Himmler, dated 17 February 1942, states:[60] Increased activity of the bands is chiefly due to atrocities carried out by Ustaše units in Croatia against the Orthodox population.

The number of the Orthodox that the Croats have massacred and sadistically tortured to death is about three hundred thousand.According to reports by General Glaise-Horstenau, Hitler was angry with Pavelić, whose policy inflamed the rebellion in Croatia, thwarting any prospect of deploying NDH forces on the Eastern Front.

During the talks, Hitler stressed the necessity and desirability of deportations of Slovenes and Serbs, and advised Pavelic that NDH, in order to become stable, should carry on ethnically intolerant policy for the next 50 years.

When the Ustaše needed more recruits to help exterminate the Serbs, the state broke away from Nazi antisemitic policy by promising honorary Aryan citizenship, and, thus, freedom from persecution, to Jews who were willing to fight for the NDH.

They were overpowered and the advance of Tito's Partisan forces, joined by the Soviet Red Army, caused a mass retreat of the Ustaše towards Austria and effectively an end to the Independent State of Croatia.

After the capitulation of Italy, Pavelić became the head of state in the place of Aimone, Duke of Aosta (also known as Tomislav II)[citation needed] and retained the position of Prime Minister until September 1943, when he appointed Nikola Mandić to replace him.

Aimone initially refused to assume the crown in opposition to the Italian annexation of the Croat-majority populated region of Dalmatia, however he later accepted the throne upon being pressured to do so by Victor Emmanuel III; however he never moved from Italy to reside in Croatia.

During the course of World War II in Yugoslavia, it was supplemented with several hundred new or overhauled German, Italian and French fighters and bombers, until receiving the final deliveries of new aircraft from Germany in April 1945.

[102] Despite these difficulties, the army, along with the German-commanded XV SS Cossack Cavalry Corps, was able to assist the Wehrmacht to hold its lines in Syrmia, Slavonia and Bosnia against the combined Soviet, Bulgarian and Partisan offensives from late 1944 to shortly before the NDH collapse in May 1945.

[110] Constant printing of money was a way of financing huge government spending, especially on the upkeep of German and Italian troops in the NDH, which could not be covered by increased taxation and long-term borrowing.

[136][full citation needed] On the first day of his arrival in Zagreb, Ante Pavelić proclaimed a law that remained in effect during the entire period of the Independent State of Croatia.

[149][full citation needed] The dominant power was Nazi Germany, which demanded supplies of raw materials from the NDH in order to support the German economy and its war effort.

[150][full citation needed] The German and Italian authorities did not coordinate their respective policies towards Croatia, resulting in overlapping and conflicting demands which further burdened the Croatian economy.

[154] The new economic system promised by the Ustaša was heavily inspired by Italian Fascist corporatism and went by several different names; Ustaše theoretician Aleksandar Seitz called it "Croatian socialism".

The bauxite mines in Hercegovina, Dalmatia and western Bosnia, were in the Italian zone of occupation, but their total production was earmarked for German needs for the duration of the war under the German-Italian agreement of 1941.

[160][full citation needed] Other Croatian industrial assets utilized by the Germans included the production of brown coal and lignite, cement (major plants in Zagreb and Split), oil and salt.

The most important commodities manufactured in Croatia for German use were prefabricated barracks (utilizing the large Croatian timber industry), clothing, dry-cell batteries, bridge construction parts and ammunition (grenades).

The Zenica mill, in turn, supplied the state arsenal in Sarajevo and the machinery and railroad car factory in Slavonski Brod, both of which produced various items for the Wehrmacht during the war, including grenades and shell casings.

On 29 April 1941 the Decree on building Croatian workers' family homes was issued which resulted in the development of so-called Pavelić neighbourhoods in the state's larger northern cities: Karlovac, Osijek, Sisak, Varaždin, and Zagreb.