ZAGREB (AFP) - It took 10 years for Croatia to become the newest member of the European Union and it has taken just three months for Zagreb to fall out with Brussels in a burgeoning row over the bloc's extradition and arrest rules.

The dispute has placed Croatia at the risk of sanctions, losing EU aid money and tarnishing its reputation among its new partners.

At the heart of what political analysts have dubbed a "futile and senseless" quarrel is Zagreb's decision to amend its law - just three days before it became the 28th member of the EU on July 1 - to apply the use of the European Arrest Warrant (EAW) to crimes committed only after August 2002.

That was the date the EAW, which regulates extradition between EU member states, was originally introduced.

But the 2002 deadline, claims Brussels, is contrary to the bloc's laws and has to be changed. A brazen Zagreb initially refused, then partially backed down while at the same time provoking the anger of its biggest ally in the EU, Germany.

"This seriously affects Croatia's credibility as a new EU member state," European integration expert Visnja Samardzija of the Institute for Development and International Relations, told AFP.

"We have barely entered the bloc and have already slipped over an issue which falls within the rule of law," she added.

"Losing credibility is more serious than suspension of funds in question."

The main opposition conservative HDZ party accuses Prime Minister Zoran Milanovic's centre-left government of amending the law to prevent the extradition of a former intelligence official to Germany.

Mr Josip Perkovic, a former Yugoslav secret service agent and former head of Croatia's intelligence services after its independence in 1991, is sought for involvement in the 1983 murder of a Croatian dissident in Germany.

Local media speculates that Zagreb is reluctant to extradite him as he may hold confidential and compromising information on influential people within Croatian politics and society.

"They are protecting their biographies, interests and concrete power," said historian Ivo Banac.

The government vehemently denies any links between the case - in Croatia dubbed Lex Perkovic - and the amendment to the law, claiming its intention was to protect veterans of the 1990s independence war from being investigated by the EU.

Zagreb has also complained that it has received different treatment than other EU members, all of whom have changed their EAWs, including Austria, France, Italy, Luxembourg, Slovenia and the Czech Republic.

"We are just demanding that all EU members be equal," Mr Milanovic said, adding that he would not "allow the wiping of the floor with Croatia".

However, the Commission argued that Croatia should have advised Brussels of the change beforehand during membership talks, claiming Zagreb has betrayed its trust.

The issue has soured Croatia's ties with traditional ally Germany to such an extent that Chancellor Angela Merkel was a no-show at ceremonies marking Zagreb's EU entry.

After initially refusing to back down, Zagreb then pledged to amend the law claiming it would come into force by mid-July 2014. This, though. was rejected by the Commission as an "unjustifiably long delay".

Mr Milanovic's government is also under fire at home, including from a junior coalition partner, President Ivo Josipovic, the media and a large part of public opinion.

Analysts warn that the Prime Minister has failed to provide rational and clear arguments for his moves.

"Either he is simply stubborn and wants to prove himself right, which is politically irresponsible, or he cannot say publicly that he is protecting someone," political analyst Berto Salaj said.

Croatia can avoid sanctions if it complies with EU demands within the next two weeks and launches a procedure to amend the law.

Many here warn that a small EU newcomer should rather behave upon the 28-nation club's rules.

Enthusiasm of Croatians for EU membership was rather mild, with surveys puting it just above 50 per cent. Many Euro-sceptics argued that the nation of 4.2 million was too small to have any influence within the bloc.

"The government is now fighting for a wrong cause, but EU is patronising us as if we were not a member now. They would not treat France or Germany in a similar way," said Ms Snjezana Vukicevic, a 28-year-old clerk from Zagreb, commenting on the row.

"The Commission has the upper hand. Even if Croatia is right... it should have presented stronger arguments. It all seems irrational," estimated analyst Zarko Puhovski.

Ms Samardzija stressed that whatever the government's reasons might be "it is essential to respect what we have negotiated and agreed upon".