Croatia Political, Business and Analysis Bulletin: March 9, 2016

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A summary of the key political and business news in Croatia, part of the Total Croatia News premium content project – delivered to inboxes each weekday morning by 09:00. 

Zagreb, March 9, 2016.

Politics 1
Business 2
Analysis 3
Bulletin 3
Daily Agenda 4


President Grabar-Kitarović Meets with Members of BiH Presidency

President Kolinda Grabar-Kitarović met on Tuesday with members of the Presidency of Bosnia and Herzegovina (BiH). She said the talks were constructive, held in an atmosphere of friendship, cooperation, and optimism. At a press conference after the talks with Bakir Izetbegović, Mladen Ivanić, and Dragan Čović, the Croatian President said they discussed Euro-Atlantic integration and bilateral issues. “I have sent a very clear and strong message of support from Croatia and myself personally (to Bosnia and Herzegovina on its road to EU membership),” said the President.

“Croatia is particularly interested in the status of the Croatian people in Bosnia and Herzegovina, as one of the three constitutive and equal peoples, in its political, economic, and overall progress,” she continued. Dragan Čović, Chairman of the BiH Presidency added that “although there are some outstanding issues, the atmosphere indicates that the relations between the two countries are more than friendly and we should continue in this direction.” He said that his country will very quickly deal with resolving its internal issues and that legitimate representatives of all three peoples must find a solution to open issues. Talking about the refugee crisis, the Croatian President said that she was encouraged by the agreement made in Brussels and expressed hope that the European Union will soon focus on the root causes of the crisis.

Prime Minister Expects More Candidates for Veterans Affairs Minister

Talking about the selection of new Veterans Affairs Minister, Prime Minister Tihomir Orešković said that he hoped there would be several candidates for the post. “On Friday, I met with the veterans. I hope to have several candidates like I had before, but I will not communicate the names of the candidates because I do not think it would be fair. At the end, when we finally select the Veterans Affairs Minister, then I will communicate that to you,” said Orešković, when asked by reporters to comment on the candidacy of Branko Borković, who was yesterday proposed as the new Minister by veterans’ associations from Vukovar. Asked whether the name of the new Minister would be known by the end of this week, Orešković answered: “As soon as possible.” Meanwhile, HDZ president and First Deputy Prime Minister Tomislav Karamarko said that HDZ secretary general Milijan Brkić was the best candidate to become Minister and that HDZ stood firmly behind him. Brkić said on Tuesday that Prime Minister Orešković had still not invited him for an interview, but that he expected the invitation. He pointed out that Orešković had the right to ask for more than one candidate. “Democracy demands procedures and processes. For some it may last longer, but that is how it is,” he said.

Prime Minister Orešković Reacts to EU-Turkey Summit

Talking about the results of the EU-Turkey Summit, Prime Minister Orešković said that EU leaders have agreed on the principles for mutual agreement to manage the migration crisis and tasked the European Council President Donald Tusk to negotiate the details with Turkey in the next ten days. “Turkey has proposed a specific plan. Today we have agreed a common framework and gave the possibility to President Tusk to negotiate with Turkey and I hope that we will then have something more specific to put in writing,” said Orešković after the summit ended.Image

Elections for HDZ President to Take Place on 17 April

The elections for HDZ president, which will be conducted according to the principle of ‘one member one vote’, will be held on 17 April. Party congress will take place on 28 May, when delegates will choose all other party officials, HDZ secretary general Milijan Brkić said on Tuesday. He stressed that this was the first time in the HDZ history that the party president will be chosen in this way. Candidates for party president have 13 days to collect 5,000 signatures of support from party members. Asked if he knew whether there would be any other candidates for party president in addition to current president Tomislav Karamarko, Brkić said he did not know, but that he personally would not run for the post. Damir Krstičević, a highly respected party member who was often mentioned in the media as a possible rival to the incumbent party president, also announced he would not run.


Croatia Avoids Corrective Measures for Macroeconomic Imbalances

European Commission announced on Tuesday that Croatia has for now avoided corrective measures due to macroeconomic imbalances, and that it will in May reconsider its assessment in order to take into account the level of ambition of Croatia’s national reform programme, which must be submitted by the end of April. Croatia is one of five EU member states with macroeconomic imbalances, together with Bulgaria, France, Italy, and Portugal. The Commission concluded that Croatia has excessive imbalances and that weaknesses are associated with high levels of public, corporate, and external debt in the context of high unemployment. “Modest economic recovery is expected to facilitate corporate deleveraging, while the improvement in the balance of the current account should also contribute to the reduction of external liabilities, but it is expected that public debt will continue to grow. In the banking sector, loans in arrears are still high, and its profitability is low. Further efforts are needed in the area of fiscal management as well,” the Commission said. Finance Minister Zdravko Marić said he was satisfied with the conclusion of the European Commission and added that the Commission has recognised the efforts, plans, and the reform programme of the government.  “The European Commission wants us to continue and accelerate the implementation of structural measures, which we in any case plan to do,” said the Minister. The government is expected to present the 2016 budget on Thursday.

Industrial production increases by 9.3 percent in January

Industrial production in Croatia in January increased by 9.3 percent year on year, which is its biggest jump since March 2007 and significantly higher than expected. The State Bureau of Statistics announced on Tuesday that industrial production, according to seasonally adjusted data, increased by 3.2 percent compared to the previous month and by 9.3 percent when compared to January last year. This is significantly faster growth than a month ago, when industrial production, according to the revised data, increased by 0.6 percent. January represented the 12th consecutive month of growth of industrial production on an annual basis, which has not happened since 2007.

Croatia and Latvia Only EU countries with Quarterly Decline in Economic Activity

Among EU countries, only Croatia and Latvia have recorded a decline in economic activity in the fourth quarter of 2015 compared to the previous three months, according to a report published on Tuesday by Eurostat. In the last three months of last year, Croatia recorded a decline in seasonally adjusted GDP by 0.5 percent compared to the previous quarter, when economic activity increased by 1.4 percent, Eurostat said. In the period from October to December 2015, Latvia also recorded a decline in economic activity on a quarterly basis, by 0.3 percent. According to Eurostat, the best results were achieved by Sweden, which grew by 1.3 percent. On an annual basis, the Croatian economy grew by two percent in the fourth quarter of 2015.Image

Žito Continues with Integration into Podravka Group

The Supervisory Board of Žito elected Zvonimir Mršić, CEO of Podravka, as its new President on Tuesday, reported Podravka, noting that the full effects of the integration of Žito into the Podravka Group are expected in 2019. Podravka recently became the 100 percent owner of Žito. In April last year, Podravka bought a 51.55 percent stake in Žito for 33.03 million euros. In October, it announced a buyout bid for all outstanding shares, which was accepted by 4,291 individual shareholders who sold an additional 35.25 percent of shares. In mid-January this year, Žito made a decision about the exclusion of minority shareholders from the company. All Žito shares were transferred to Podravka, while minority shareholders received 180.1 euros per share.

Zagreb to Host Europe’s Largest Gathering of Business Angels and Investors

In late November, Zagreb will host the largest European conference of business angels and investors – EBAN Winter University 2016, which is expected to bring together more than 1,500 participants, it was announced on Tuesday at a press conference organised by the Croatian Business Angels Network and the City of Zagreb. The conference will take place at the Vatroslav Lisinski Concert Hall on 29 and 30 November.  Zagreb Mayor Milan Bandić said that the aim of the conference was to gather in one place young entrepreneurs, investors, and business angels. The Conference was launched by the European Business Angel Network, which facilitates the cooperation of investors focused towards start-ups and companies in the early stages of development, and brings together more than 250 organisations of business angels and more than 20,000 investors.

HDZ Elections Are Important for Orešković As Well

Suzana Barilar writes about the growing tensions between Prime Minister Orešković and HDZ (published in Jutarnji List on 9 March 2016).

After a series of disagreements between Prime Minister Tihomir Orešković and First Deputy Prime Minister and HDZ president Tomislav Karamarko, it seems that the Prime Minister has realised that, if he wants to remain in power for a while, he must surround himself with his own people and be firm towards Karamarko and HDZ. His advantage at the moment is that Karamarko needs him more than he needs Karamarko, and that MOST and Božo Petrov are giving him their support. But, Orešković is certainly aware that that could change soon. Karamarko will not put up with blackmailing from MOST. If he did not have intraparty elections soon, he would have already risked new elections. But, as long as he is fighting for another term in the party, he needs to remain in power. That is the reason why Karamarko is tolerating this government. If he tried to remove Orešković now, he knows that MOST would not accept him. Orešković will certainly not leave on his own, but he will also not allow himself to be politically executed. He has decided to strengthen his position in government, bringing together into his inner cabinet people who are loyal to him personally and patiently building a strategic partnership with Petrov. But, his destiny could become uncertain once the elections in HDZ are behind us.

If the European Commission Does Not Punish Us, Then Markets Certainly Will

Frenki Laušić writes about the decision by the European Commission not to introduce corrective measures against Croatia (published in Jutarnji List on 9 March 2016).

Fears about the decision of the European Commission turned out to be unfounded; Croatia has not been punished. The most probable reason why Croatia avoided any corrective measures is the fact that it belongs to a group of countries which includes France and Italy, which are somewhat more important in the EU. However, the situation is serious, which has been confirmed by the news that the EC will re-evaluate Croatia and Portugal in May. Therefore, Prime Minister Orešković and the rest of his cabinet should switch gears and use measures large and small to speed up economic growth. Although we already know the outline of the budget, we should know more details on Thursday, when the 2016 budget will be officially presented. We will be able to see whether there are any serious changes in government spending. That fact that Croatia has stayed away from the EC corrective mechanism does not mean that we have not remained in the market’s corrective mechanism, which can best be seen in the interest rates which Croatia pays for its debt. If we lose that battle, European Commission penalties will be the least of our worries.


Slovenia Introduces Stricter Rules for Migrants Coming Through Croatia

The Slovenian Interior Ministry announced on Tuesday evening new rules to be implemented from midnight which will in effect bring a stop to the influx of migrants through the Balkan route. The Ministry added that, under the new rules, Slovenian police will no longer implement the provisions agreed in a joint statement signed in Zagreb on 18 February by police directors of countries on the Balkan route. The Interior Ministry said that Slovenian Interior Minister Vesna Gjerkeš Žnidar discussed the issue on Tuesday with colleagues from Croatia and Austria. Slovenian Prime Minister Miro Cerar said early Tuesday that the so-called Balkan migrant route practically did not exist anymore after the conclusions agreed by EU leaders at a summit in Brussels on Monday evening.

Serbian National Council Warns about a Significant Increase in Cases of Ethnically Motivated Violence

Last year there was a significant increase in the number of cases of ethnically motivated violence, threats, and hate speech directed against Serbs in Croatia, according to data published in the bulletin of the Serbian National Council (SNV). Milorad Pupovac, SNV president and Member of Parliament, said that the main causes were growing nationalism, historical revisionism, and militarisation of public space and consciousness. According to the SNV data, while in 2014 there were 82 cases of ethnically motivated violence, threats, and hate speech, in 2015 there were 189 such cases.

HSS Vice President Predicts Parliamentary Elections in Autumn

HSS vice president and candidate for the party president Krešo Beljak said on Tuesday that he believed that the Patriotic Coalition and MOST will not last much longer in power. He predicted that new parliamentary elections could be held as early as this autumn. “There is no way they could last until the end of the term. We all know that, as soon as intraparty elections in all the major parties are over, and that will happen in autumn or by the end of the year at the latest, we will then have new parliamentary elections,” said Beljak. HSS is a member of the Patriotic Coalition.

Kulturnjaci2016 Initiative Warns about Growing Atmosphere of Intolerance

The Kulturnjaci2016 initiative warned on Tuesday about the strengthening of atmosphere of intolerance in Croatia, which has already in some cases resulted in threats to prominent Croatian cultural figures, and called on relevant institutions and political subjects to condemn messages of hate and intolerance. “We express outrage over avalanches of intolerance and aggression which culminated in the recent break-ins at the homes of the Croatian National Theatre in Rijeka director Oliver Frljić and his girlfriend, as well as in announcements about confrontations with opponents, supported by the highest state officials,” reads the letter sent to the government, Parliament and President Kolinda Grabar-Kitarović.

More Than 233 Million Kuna to be Invested in the Renovation of Student Dormitories in Zagreb and Osijek

A signing ceremony for contracts on co-financing the renovation of student dormitories worth over 233 million kuna was held in Zagreb on Tuesday. Minister of Science, Education, and Sports Predrag Šustar thanked the Ministry of Regional Development and EU Funds, adding that the project will help socially disadvantaged students, as well as give impetus to the arrival of students from the European Union to Croatia. The dormitories in question are Stjepan Radić and Cvjetno Naselje in Zagreb (220 million kuna), and the dormitory of the University of Osijek (13.5 million kuna).  Eighty-five percent of costs are being financed from the European Regional Development Fund.

Croatian Women Entrepreneurs Gather at Their First Congress

Entrepreneurship is an important element of economic development, and the role of women in it is indisputable, it was said at the 1st Congress of Self-Employed Women Entrepreneurs of Croatia, organised on Tuesday by the Women’s Virtual Entrepreneurship Centre. Sanela Dropulić, head of the Centre, pointed out that the aim of the Congress was to encourage the exchange of knowledge, technology, and innovations, and encourage women to become more entrepreneurially oriented. Minister of Entrepreneurship Darko Horvat said that his Ministry wanted to be a partner to women entrepreneurs.

Daily Agenda – Wednesday

Members of the Presidency of Bosnia and Herzegovina will continue their official visit to Croatia. They will meet with Prime Minister Tihomir Orešković.

Parliament will continue its second session. MPs are expected to debate the Croatian National Bank’s report for the first half of 2015.

Prime Minister Orešković will meet with representatives of war veterans associations. The meeting will also be attended by First Deputy Prime Minister Tomislav Karamarko and Deputy Prime Minister Božo Petrov.

Prime Minister Orešković will participate in the 200th session of the Economic and Social Council.

The parliamentary caucus of MOST will organise a roundtable discussion on the “Sustainability of the Second Pillar of the Pension System in the Context of Imbalance”.

Minister of Science, Education, and Sports Predrag Šustar will visit Vukovar-Srijem County. In Vukovar, the Minister will visit Nikola Andrić Elementary School and the Vukovar Memorial Homeland War Cemetery. The Minister will also visit the Ovčara Memorial Centre and the location of a mass grave at Ovčara. In addition, the Minister will visit Korođ Elementary School.

The Zagreb branch of the Croatian Association of Disabled War Veterans, Association of Widows of Croatian Veterans, and the Documentation-Information Centre will hold a press conference about the Danish documentary film “15 Minutes – The Dvor Massacre.”

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