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timeline 19 Oct 17

Croatian Gov’t Marks Year of ‘Survival’

The first year of Croatia’s HDZ-led government saw old alliances severed and new friendship forged, amid a setting of troubled companies, irate neighbours and a fascist legacy.

Sven Milekic
Croatian PM Andrej Plenoic. Photo: Anadolu Agency.

The Croatian government led by Andrej Plenkovic’s Croatian Democratic Union, HDZ, is marking its first year in power despite an ongoing struggle to stay afloat.
However, in the beginning, the government stood solid, with a very strong support base of 91 MPs out of a possible 151. It proposed several possible changes.

One of them was tax reform, aimed at lowering income taxes for ordinary people and companies to encourage spending and economic growth. When it was first announced in October 2016, experts expressed scepticism about whether it would have a positive effect.

The new government also experienced a shaky start in terms of its relationships with neighbouring countries, reacting strongly to the arrests of Bosnian Croats in the Northern Bosnian town of Orasje in November 2016.

Bosnian authorities then filed criminal charges against Croatian Defence Minister Damir Krsticevic. The former commander of the Croatian army, Kristicevic was connected to war crimes committed in Bosnia in 1995. Krsticevic visited Bosnia, also in November 2016, rejecting all media accusations.

Trucks at the border between Croatia and Serbia.

Unstable relations with neighbours lasted throughout the year. Relations with Bosnia once again deteriorated in August 2017, when Bosnia refused to grant full support to a construction project. Croatia sought to connect two pieces of Croatian territory via the Peljesac Bridge. They are currently divided by a 14-kilometre stretch of the Bosnian coast.

Relations with Slovenia also deteriorated in June this year when the Permanent Court of Arbitration in The Hague ruled in favour of Slovenia following a territorial dispute over waters in the Piran Gulf.

The Croatian government maintained the position of its predecessors, which was to claim to arbitration process was compromised. In July 2015, Croatia revealed recordings of unauthorised phone conversations between Jernej Sekolec, the Slovenian judge on the court, and Simona Drenik, the representative of the Slovenian government.

This tension continued to have a negative impact – both Slovenia and Hungary later vetoed Croatia’s accession to the Organisation for Economic Co-operation and Development, OECD, which was one of the government’s key strategic aims.

Although Plenkovic arranged a meeting to resolve the Piran Gulf issue with his Slovenian counterpart, Miro Cerar, in September, the meeting was cancelled after Plenkovic’s statement that the court’s decision “compromised impartiality” before the UN.

Piran Gulf. Photo: Wikimedia Commons.

Relations with Serbia also occasionally sunk to a low level. Agriculture Minister Tomislav Tolusic managed to rouse the ire of Croatia’s southeastern neighbours in August, by raising fees on the import of fruit and vegetable in August. The Croatian government was forced to renege on its decision after ministers from Serbia, Bosnia and Herzegovina, Macedonia and Montenegro threatened countermeasures.

Croatia has also been struggling with problems in terms of its domestic companies. At the end of 2016 it lost its management rights with the energy company INA to Hungarian energy company MOL before the UN Commission on International Trade Law, UNTRAIL, in Geneva.

Croatia sued MOL in January 2014, claiming that MOL’s management rights over INA, incorporated into the 2009 shareholders’ agreement, were the result of corrupt activity between MOL’s chair Zsolt Hernadi and Croatia's former Prime Minister Ivo Sanader.

The government said that it would buy back the 49.1 per cent of INA’s share owned by MOL, without increasing the public debt. However, the issue remained unsolved.
From the beginning of 2017, the issue of the ailing Croatian company Agrokor – which employed over 40,000 people, with revenues corresponding to 16 per cent of GDP – took centre stage.

The government decided to draft the Law on Procedures for Extraordinary Management in Companies of Systematic Significance, better known as ‘Lex Agrokor’ which enabled state management of the company for 15 months. The law was passed in April.

Agrokor's logo at the company's buling in Zagreb. Photo: Beta.

Agrokor also caused rifts in government, starting when the opposition Social Democratic Party, SDP, initiated vote of no-confidence against Finance Minister Zdravko Maric in April. The opposition said Maric, who held a senior position in Agrokor before becoming Minister, should quit because he had not declared a potential conflict of interest and voted for ‘Lex Agrokor’.

Plenkovic demanded the resignations of three ministers from the junior governing coalition, the Bridge of Independent Lists, MOST, after they did not vote in support of Maric during a government session.

The departure of MOST from the coalition government paved the way for a two month long period of instability, during which the government attempted to find a new junior partner to secure a new majority in parliament.

Meanwhile, Maric barely survived the May vote. But the government temporarily mustered a new majority in parliament.

Croatian Finance Minister Zdrako Maric. Photo: Beta.

After local elections in late May and early June, the government finally found a new partner, the liberal Croatian People’s Party, HNS. The new partnership prompted some shuffles within the government and caused some surprise as HNS was one of HDZ’s biggest critics and the traditional partner of the SDP.

The government also sought to introduce new property laws, which would introduce new tax rates for all real estate, even private homes. After receiving a backlash from citizens who gathered over 130,000 signatures against the tax, the government decided in August to postpone its implementation indefinitely.

“The government wanted to introduce the law in a dilettante way … since this is a law to which citizens react emotionally, you can’t introduce it without presenting the estimated results of the law, without clearly presenting how much the citizens will pay,” economic analyst Josip Tica told BIRN.

Once again the coalition government fell into an abyss in September, with both HNS and national minority MPs threatening to leave the government unless the it resolved the issue of a controversial memorial plaque for Croatian soldiers killed in the 1990s.

The plaque was installed back in November 2016 near the site of the WWII concentration camp Jasenovac, which was led by the Croatian fascist Ustasa movement.

The plaque displayed the Ustasa chant ‘Za Dom Spremni’ (‘Ready for the Home[land]’), which was also part of the officially recognised coat of arms of the association of former fighters of the Croatian Defence Forces, HOS.

From the beginning, the government acknowledged the issue was complicated and and formed the Council for Dealing with the Consequences of the Rule of Non-Democratic Regimes in March. The council, made up of experts, sought to regulate the use of totalitarian symbols.

In the end, the situation was temporarily resolved by removing the plaque and moving it to the nearby town of Novska. The council is set to present its expertise and resolving the issue by March 2018.

“I think that the government mostly dealt with its survival … the only success the government had is that the government didn’t fall. Basically, Plenkovic was only dealing with this issue,” political analyst Zarko Puhovski told BIRN.

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