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News 12 Sep 17

Grabar Kitarovic Claims Hungary ‘Isn’t Blackmailing’ Croatia

President Kolinda Grabar Kitarovic said that Budapest’s decision to block Croatia from joining the Organisation for Economic Co-operation and Development was a move to protect Hungarian business.

Sven Milekic
BIRN
Zagreb
Kolinda Grabar Kitarovic and Viktor Orban in Budapest. Photo: BETAPHOTO/HINA/MTI/Prime Minister Cabinet/Balazs Szecs/DS

Grabar Kitarovic said on Tuesday that Hungary’s decision to block Croatia’s membership of the Organisation for Economic Co-operation and Development, OECD, was not made to “blackmail” Croatia over an ongoing legal dispute about Hungarian energy company MOL.

“It is about protecting Hungarian business interests because the OECD is not a political but an economic organisation,” she said in Budapest, after meeting her Hungarian counterpart Janos Ader and Hungarian Prime Minister Viktor Orban.

After Slovenia announced last Wednesday that it will block Croatia’s membership of the OECD, the Hungarian Foreign Ministry said last Friday that it will do the same.

All members of the OECD, an intergovernmental economic organisation that aims to boost trade, may oppose any new country from joining.

The Hungarian Foreign Ministry explained that the reason was Croatia’s relations with the partially state-owned Hungarian energy company MOL and its chairman Zsolt Hernadi, who is wanted by the Croatian authorities for alleged corrupt activities.

Hernadi is linked to the long-running, high-profile corruption trial of former Croatian Prime Minister Ivo Sanader.

MOL went to two separate arbitration processes with Croatia over management rights to Croatian energy company INA, in which the Croatian state holds 44 per cent of shares, and over INA-Croatia gas business contracts.

Grabar Kitarovic explained that Hungary is dissatisfied about the “INA-MOL case”.

But she said that the Hungarian prime minister and president had insisted that the decision to prevent Croatia joining the OECD “is not about blackmail, but about protecting the investment climate”.

After taking over the presidency in February 2015, Grabar Kitarovic has forged good ties with the Hungarian political leadership. Hungarian President Janos Ader visited Zagreb in April, while Grabar Kitarovic visited Budapest in October 2015 and April 2016.

Although Croatia-Hungary relations improved after late 2015, when the two countries quarrelled over the refugee crisis, the issue of the Croatian energy company INA remained unresolved.

The Croatian government revealed on Christmas Eve that Croatia had lost its arbitration process against MOL before the UN Commission on International Trade Law, UNTRAIL, in Geneva. The government then said that Croatia would buy off MOL’s share in INA.

Croatia sued MOL in January 2014, claiming that MOL’s management rights over INA, incorporated into the 2009 shareholders’ agreement, was the result of corrupt activity between MOL’s Hernadi and Sanader.

Croatia's Supreme Court jailed Sanader for eight-and-a-half years in June 2014, but the Constitutional Court quashed the verdict in July 2015, citing procedural errors.

Croatian media reported in September that Hernadi had filed a lawsuit against Croatia at the European Court of Human Rights.

Hernadi claims that Croatia’s arrest warrant for him – which Interpol made public in 2013 and removed in 2016 – breached his freedom of movement.

Hungary also announced last Wednesday that it will block Romania as well, due to the closure of a Hungarian-language Catholic school in Transylvania.

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