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Croatian report
by Euro Reporter
2014-06-16 11:22:15
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Regionalism breeds strange alliances in Croatia

Croatia only joined the European Union in July last year, so this week will see Croatians elect MEPs for the second time in just over a year. Whether this could explain the current lack of interest in the EU elections is not clear. According to a poll conducted in January only 42.4% voters knew there would be elections for the European parliament in May. The first Croatian election for the EU parliament was held in April 2013 and the outcome was a clear victory for the centre-right coalition led by the Croatian Democratic Union (HDZ) who emerged with 6 of 12 seats earmarked for Croatian MEPs. The HDZ is a member of the European People’s Party (EPP) in the European Parliament and is currently the main opposition party nationally.

Although European elections are generally seen as second-order elections across all member states, the turn-out of 20.84% in Croatia was especially low, but the often-heard explanation that parties did not invest much time or money in getting the vote out for a one-year term simply does not hold water. Both the governing Social Democratic Party (SDP) and the HDZ consider the European Parliament election not only as a way to gauge their current support, but also as an opportunity to improve their standing on the national political scene. One of the peculiar outcomes of the 2013 election was the election of an extreme right-wing MEP from the Croatian Party of Rights (HSP-AS), Ruža Tomašić, in the HDZ coalition list. Tomašić is not necessarily a Eurosceptic but is a hardcore nationalist who argues that “Croatia is for Croats” while “everyone else is a guest”.

Tomašić promptly joined the right-leaning European Conservatives and Reformists (ECR) as opposed to the EPP group that the rest of the HDZ MEPs joined, drawing criticism from Joseph Daul, EPP’s leader in the European parliament. But HDZ president Tomislav Karamarko, who leans further to the right than most in the EPP, has added Tomašić to its coalition list in this election as well. Another curiosity is the inclusion of a diaspora representative stemming from HDZ’s branch in Bosnia and Herzegovina to represent all the Croats still living there. Further on the right is the Alliance for Croatia which is dominated by the Croatian Democratic Alliance of Slavonia and Baranja (HDSSB) whose leader, Branimir Glavaš, is currently serving an eight-year sentence for war crimes. Opinion polls reflect their strong regional base, predicting they will win one seat in the EU election.


The SDP staggers after defeat in EU elections

Crushing defeat for the Social Democrats of Prime minister Milanović. The HDZ, currently in opposition, ranks first party in the country for only two hundred votes, Croatia did not elect a far-right deputy to the European Parliament. The Alliance for Croatia, a coalition of eight parties led by war-crimes convict Branimir Glavaš' HDSSB, did not manage to elect its own deputy in Strasbourg. On Sunday evening, celebrations in the headquarters started as soon as the first election results appeared – it seemed that one of their representatives would get a seat in the EP. However, at the end of the ballot count, the deputy of the Alliance for Croatia was passed by the sixth candidate on the HDZ list for just 203 votes. Main opposition party HDZ therefore won 6 seats in the European Parliament together with its coalition partners, beating the coalition led by the Social Democrats (SDP) of Prime Minister Milanović, that only got four seats.

The big surprise of these European elections was Orah, the party of former Minister of the Environment Mirela Holy. The small party, founded only six months ago, managed to attract the left-wing voters disappointed and dissatisfied by prime minister Zoran Milanović (SDP), therefore earning a seat in the European Parliament, where its representative will join the group of the European Greens. The HDZ obtained the 41.42%, followed by the SDP with 29.93% and OraH with 9.42%. These results were more or less consistent with the opinion polls conducted during the past few months. The question was just whether the Labour Party, until recently the third political force in the country, would get a seat. Because of its commitment to the rights of workers, the Labour Party used to be among the favourites of left-wing voters. However, things have changed with the appearance of OraH, currently seeming much more convincing in upholding social democratic principles. In addition, Mirela Holy also wore the halo of victim: Prime Minister Milanović had removed her first from the post and then from the party. The dissatisfaction with the SDP and the possibility of an alternative led by a prominent former member of this party were the winning combination for OraH. The turnout was only slightly higher than last year when, just before joining the EU, Croatia elected its first deputies with only a 25.24% turnout. This time Croatia's turnout (25.25 %) overcame only those of Poland, Slovenia, Czech Republic, and Slovakia. Without the catastrophic floods that plagued South Eastern Europe shortly before the elections, however, voter turnout would have definitely been higher.

The results of the European elections will have long-term consequences on domestic politics. The opposition, led by the HDZ, will seek to maximize the win. The demand for early elections (the regular ones are planned for the end of next year), so far sporadic and tenuous, could now become more insistent. The HDZ will try to take advantage of the victory in the upcoming presidential election as well, scheduled for the end of this year. At present, the HDZ has not officially announced its candidate yet, though the media bet on Kolinda Grabar Kitarović, former Foreign Minister, then Croatian ambassador in the U.S., and currently Assistant to the Secretary General of NATO. Although current president Ivo Josipović remains Croatia's most popular politician according to all the polls, most analysts believe Kolinda Grabar Kitarović could be his most dangerous rival. Josipović was an SDP candidate in the last elections, but the party's loss of popularity did not seem to affect him. The turbulent situation within the SDP will only get more complicated after the defeat in the European elections. The party's rating has been falling steadily. Although the HDZ was hit hard by the corruption trials of his former leader and Prime Minister Ivo Sanader – and was even sentenced for stealing money from the state coffers – the SDP has not taken advantage of the opportunity. Shortly before the European elections, polls showed that the HDZ enjoyed a solid advantage, and that if the elections were to be held now, it would get 23.3% of the vote, while the SDP would stop at 18.9%. Some minor corruption scandals involving low-level SDP officials, but also the inability of prime minister Milanović and his ministers to restart the economy, increase revenue, and decrease the number of unemployed, cost Social Democrats the citizens' support.

Prime Minister Milanović, however, has another problem within the party. The recent removal of Finance Minister Salvo Linić visibly shifted the balance of power within the SDP, creating a united front of the powerful lobby of the Rijeka SDP against Milanović. With the electoral defeat also came doubts about the direct responsibility of Milanović, and things are further complicated by the fact that Tonino Picula (former Foreign Minister), marginalised by Milanović who had placed him fifth in the electoral list for the European Parliament, obtained the highest number of preferences. Time ago, many saw Picula as the possible successor to Milanović. After the triumph in the European elections (Picula got 48% of votes in the SDP list), this possibility becomes much more concrete.


MF expects Croatian fiscal tightening to continue

Croatia took a “significant step” toward fiscal consolidation and further efforts should spur confidence and maximize gains from European Union membership, an International Monetary Fund official said. “The Excessive Deficit Procedure for Croatia is moving forward, the EU accepted the revised 2014 budget, and I believe fiscal consolidation will continue in 2015 and 2016,” Johannes Wiegand, the IMF head of mission for Croatia, said in an interview in Dubrovnik, Croatia.

The European Commission said on June 2 Croatia has taken “effective action” in reducing the budget deficit for this year in line with the bloc’s recommendations. Prime Minister Zoran Milanovic’s government, whose debt load is lower than for the euro area, has vowed to cut the deficit to below the EU limit of 3 percent of GDP in 2016 from 4.4 percent this year. The other “key component” in consolidation is structural policies, Wiegand said. It “would be good if overall government measures would include reform of local government, as it is tied to health reform, investment issues, as well as the system of subsidies and social transfers,” Wiegand said.

He also reiterated Croatia’s funding structure is stable as the Croatian government covers about 80 percent of its needs from domestic sources. “It’s hard for me to see circumstances in which Croatia would be cut off from funding in general,” he said. The government expects the economy to stagnate this year, while the EU predicted a 0.6 percent contraction, the sixth annual drop in a row. The IMF said in May that the economy will contract “almost 1 percent” this year due to low exports and subdued domestic demand.


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