Croatian Political and Business News Bulletin: March 10

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The latest political and business news, with analysis, from Croatia on March 10, 2016, part of the TCN premium content project. We will be publishing tomorrow’s bulletin and Monday’s only on the site. If you would like to sign up for a free trial for a week and have the newsletter delivered to your inbox by 09:00 each weekday morning, or subscribe, contact us on [email protected] 

Zagreb, March 10, 2016.

Politics 1
Business 2
Analysis 3
Bulletin 3
Daily Agenda 4


Prime Minister Orešković Holds News Conference

Prime Minister Tihomir Orešković held a news conference on Wednesday and spoke about the decision of the European Commission not to institute corrective measures for Croatia and about other issues. He described everything that the government had done in the past two weeks in order for Croatia to avoid corrective measures by the European Commission due to excessive macroeconomic imbalances. “The EC confirmed our plan and budget, so I think we have received a very positive message. I would like to thank all the Ministers, especially Finance Minister Marić. In two weeks, a lot has changed and everything turned out positive for Croatia,” said Orešković. “I have asked each Minister for proposals to be presented at a session of the government. In two or three months, I will ask for new proposals to increase efficiency. Ministers will get to know their Ministries better and discover better opportunities,” said Orešković. Regarding the migrant crisis, the Prime Minister said that, at the EU summit on Monday, Croatia, Slovenia, and Austria advocated the closure of the Balkan migrant route and the result is that yesterday not a single migrant entered Croatia. “We will see what will happen on the ground and then we will react. It is clear that we need to provide assistance to Macedonia and Greece,” said Orešković. He also commented on his relations with First Deputy Prime Minister Tomislav Karamarko. “Karamarko and I have good relations. He has his own opinion and everyone is entitled to their own views. I will make the decisions after I investigate everything. We will solve everything,” concluded Orešković, referring to the issues of the dismissal of Security Intelligence Agency director Dragan Lozančić and appointment of the new Veterans Affairs Minister.

New Measures Introduced at the Border

The Slovenian Interior Ministry announced late Tuesday new rules for the entry of foreigners into the country, which in effect means that the Balkan migrant route has been closed. That was also confirmed by Croatian Interior Minister Vlaho Orepić. “Clearly, Europe has decided to enter a new stage of solving the migrant crisis. We came to the conclusion that the borders of the Schengen area have to use the Schengen rules. While Croatia is still not a member of the Schengen area, there is virtually no difference in measures taken,” said Orepić. “It is important to assess the position of Croatia in all of this. The focus of problems which may arise from this decision are concentrated on the Macedonian-Greek border.

There could be problems in that area. On our borders, we will not resort to any extraordinary measures. However, we are ready to respond if necessary,” said Orepić.

More Than 300 Migrants Accommodated at Slavonski Brod Refugee Transit Centre Image

The consequences of the closure of the Balkan migrant route are already visible at the refugee transit centre in Slavonski Brod. There have been no new arrivals since Saturday, but currently there are 320 people who cannot continue onward to Western Europe. “We have adapted some of our operations, since people now stay here for longer periods. There is more work for our psychosocial aid team and we have expanded workshops for children. The biggest problem is that people do not know what will happen. Our teams are trying to calm them down,” said Ivan Usmiani, the coordinator of the Emergency Response Team of the Croatian Red Cross.

Orešković: New Veterans Minister to Be Appointed by Early Next Week at the Latest

Prime Minister Orešković met on Wednesday with representatives of several Homeland War associations. After the meeting ended, he said that the name of the new Veterans Minister can be expected by Friday or by the beginning of next week at the latest. He added that he had the opportunity to listen about veterans’ problems and that he got a clear message that he should appoint the new Minister as soon as possible. Orešković said that on Tuesday he talked with Milijan Brkić who had been proposed as a candidate by HDZ and some veterans’ associations, adding that he would talk with several other candidates for the position.

Prime Minister Orešković Meets with Presidency of Bosnia and Herzegovina

Prime Minister Tihomir Orešković met on Wednesday with members of the Presidency of Bosnia and Herzegovina. They expressed readiness to organise a joint session of the two governments. Orešković, BiH Presidency Chairman Dragan Čović, and members Bakir Izetbegović and Mladen Ivanić, assessed that the two countries have excellent bilateral relations, announced the government. They discussed the steps needed to resolve remaining outstanding issues, as well as ways to enhance economic cooperation, especially in the sectors of infrastructure and energy. Croatia has once again confirmed its support for Bosnia and Herzegovina on its path towards membership of the European Union and NATO. They also discussed the issue of the migrant crisis, with a special emphasis on future cooperation in border control and protection.

HDZ Secretary General’s Message to Serbian National Council President Causes Controversy

Comments made by HDZ secretary general Milijan Brkić about Milorad Pupovac, president of the Serbian National Council and Member of Parliament, drew criticism from Pupovac and others. On Tuesday, Pupovac presented the bulletin of the Serbian National Council which claimed there was a significant increase in the number of cases of ethnically motivated violence, threats, and hate speech directed against Serbs in Croatia. Brkić reacted later by saying that “the Croatian public and citizens should not be contaminated with the paranoia of fear because no one is being threatened, including Pupovac.” Brkić continued, “If he is, he should go where he will not be threatened.” Pupovac replied that he had not looked for a safer place and that he would not start looking for it, “this is my country also, as well as of those I represent. In it, we have fought and we will fight against such discourse, whatever power (Brkić) may represent,” said Pupovac. “These words, of a candidate for a Ministerial position, are exactly like the ones which we have documented in our bulletin. Mr. Brkić, wherever he may be, in the government or somewhere else, will be included in our bulletin next year,” concluded Pupovac.


Finance Minister Comments on EU Decision Not to Initiate Corrective Measures against Croatia

In an interview with Croatian Radio, Finance Minister Zdravko Marić said that he was pleased with yesterday’s decision by the European Commission not to initiate corrective measures against Croatia. “A lot of things have been done. We have decided to communicate very clearly with the European Commission, and not to ask for any additional time. The budget is not the only thing, we have made a step forward and sent to the European Commission our plans,” said Marić. He pointed out that the government was aware that the public debt was one of the main macroeconomic risks, particularly the speed of its increase. “The goal with this budget and with the activation of unused state assets is to stabilise public debt levels, because it is one of the main factors affecting our credit rating,” said Marić. “The budget deficit this year will amount to 7.5 billion kuna, and when we include some arrears from previous periods it climbs to 9.2 billion kuna. That is the amount Croatia will have to borrow this year. The government is planning to raise the money in April, on both international and Croatian financial markets,” the Minister said.

Croatia Expects More Tourists from Germany This Year

According to advance bookings and forecasts, Croatia can expect to see 5 to 6 percent more German tourists this year, said Tourism Minister Anton Kliman on Wednesday at the ITB in Berlin. ITB is the world’s largest travel trade show, which this year brings together more than 10,000 exhibitors from almost 190 countries. Speaking to reporters, Kliman discussed the issue of the Tourism Ministry budget for this year. “Like all other Ministries, the Tourism Ministry will give its contribution and reduce its allocation by approximately ten million kuna compared to last year, so we should receive around 170 million kuna,” said Kliman.

European Commission Sends Early Warning to Croatia

The European Commission sent an early warning to Croatia and five other member states on Wednesday with regards to their obligations under the Stability and Growth Pact. Croatia has until the end of April to send to the Commission its national reform and convergence programme. Based on these documents, the Commission will present in May proposals for a new set of recommendations aimed at solving key challenges.

Exports of Goods Increase by 11 Percent

Croatia’s exports of goods reached 87.8 billion kuna last year, which is 11 percent more than the year before, according to data published by the State Bureau of Statistics. Imports have increased by 7.7 percent to 140.7 billion kuna, so the foreign trade deficit amounts to 52.9 billion kuna. The trade deficit was higher than in 2014, when it amounted to 51.6 billion kuna. The export-import ratio stands at 62.4 percent, which is 1.9 percentage points higher than in 2014. Expressed in euros, exports last year amounted to 11.5 billion euros, which is 11.2 percent more than the year before, while imports rose by 7.9 percent to 18.5 billion euros. The foreign trade deficit amounted to 7 billion euros.

Public Sector Unions Demand Salary Increase

Unions of state and public services will not abandon their demand for a salary increase of six percent, which they were supposed to receive if GDP grew by more than two percent in two consecutive quarters. They expect to start negotiations with the government, on this issue, at a meeting scheduled for 21 March, said Boris Pleša, the president of the Trade Union of State Employees, on Wednesday. “Although 1.8 billion kuna needed for the increase of salaries in public services have not been planned in this year’s budget, we are not going to forget about our six percent increase, because that is our right guaranteed by agreement,” said Pleša.

Ericsson Nikola Tesla Signs a Contract in Moldova worth 56 Million Kuna

Ericsson Nikola Tesla and Moldovan operator Interdnjestrecom (IDC) signed a contract worth nearly 56 million kuna for the construction of 4G/LTE network with associated services and necessary software upgrades, announced Ericsson NT on Wednesday. The contract was signed by the CEO of Ericsson Nikola Tesla Gordana Kovačević and CEO of IDC Sergey Nikolayevich Ganzha. Ericsson’s LTE radio access networks currently enable download speeds of up to 450 Mb/s in commercial operation.


Government to Cut 560 Million Kuna from Social Transfers

Goran Penić writes about the budget proposal to be unveiled at the government meeting on Thursday (published in Jutarnji List on 10 March 2016).

The government plans savings in the amount of 560 million kuna on social transfers, which will be achieved via means testing. Although details are still not known, means testing will reportedly be applied to all forms of social transfers (allowances, disability benefits, maternity benefits, veterans’ benefits, active labour market measures, etc.). The government will also penalise early retirements, with the threshold for early retirement probably being increased from 60 to 62 years of age. Additionally, such retirees will receive smaller pensions, which is one of the demands of the European Commission. The budget does not include the six percent increase in salaries for state and public sector employees. The total budget revenues will amount to 114.9 billion kuna, which is about 5 billion more than in 2015. Cuts will include almost all parts of the budget, with the exception of salaries and pensions, and the government has secured funds for pension indexation. Total savings in the budget are expected to amount to about 2.5 billion kuna.

Karamarko is the One Going Solo, Not Orešković

Dražen Ćurić analyses relations between Prime Minister Orešković and Tomislav Karamarko (published in Večernji List on 10 March 2016).

Karamarko and HDZ are very angry at the Prime Minister. They do not even try to hide it and are attacking him from all sides. Someone who might not know better would think that Orešković and Karamarko are on opposite sides and not close associates. While HDZ’s anger can be understandable, their criticism is completely off the mark. What does it mean that the Prime Minister is going solo? How is it possible that someone who leads the government and is a boss to all the Ministers and Deputy Prime Ministers can go solo? Ministers and Deputy Prime Ministers can go solo, but the Prime Minister cannot. As long as he is the Prime Minister, everything he does is government policy, which should be followed by all of its members, including Karamarko. HDZ know very well how they can stop this – by bringing the government down in Parliament. But, they will not do that, since they know that early elections would not be good for them. Even worse would be to enter a coalition with HNS after Ivan Vrdoljak becomes HNS president. But, even that would make more sense than HDZ’s wish for Orešković to be some kind of shapeless mass which would just execute orders given by Karamarko.


Acting HRT Director General Appoints New Programme Director

Acting Director General of Croatian Radio Television (HRT) Siniša Kovačić named Jozo Barišić as acting Programme Director, after he dismissed Saša Runjić, announced HRT. Barišić is a long-time HRT journalist and editor who has been involved in numerous HRT news programmes.

President Grabar-Kitarović Meets with Macedonian Defence Minister

President Kolinda Grabar-Kitarović met on Wednesday with Macedonian Defence Minister Zoran Jolevski with whom she discussed the upcoming NATO summit in Warsaw and the migrant crisis, announced the Office of the President. In preparations for the NATO summit to be held this summer, it is expected that the activities of the countries of the US-Adriatic Charter (A5) in support of Bosnia and Herzegovina and Macedonia will intensify. The President praised Macedonian efforts to solve the migrant crisis. During the talks, it was pointed out that the real answer to the migrant crisis can only be given by Europe as a whole and that problems must be solved where they occur.

USKOK Rejects Criminal Complaint against Tomislav Karamarko

The Office for the Suppression of Corruption and Organised Crime (USKOK) rejected a criminal complaint brought against HDZ president and First Deputy Prime Minister Tomislav Karamarko due to alleged illegal activities of the company Soboli. The complaint was filed by the Partnership for Social Development. “It was found that in this case there is no reasonable suspicion that any crimes had been committed,” announced USKOK.

HSS President Denies There Will Be Early Elections

HSS president Branko Hrg dismissed speculations made by his rival for another term as party president and current HSS vice president Krešo Beljak that the Patriotic Coalition and MOST would not last much longer in power. Hrg said that the ruling coalition would not collapse, since “such things have never collapsed so far… In Croatia, we cannot even remember when we had early parliamentary elections.”

Parliament Debates Semi-Annual Report by Croatian National Bank

Members of Parliament used the semi-annual report by the Croatian National Bank (HNB) for the first six months of 2015, which was presented by Governor Boris Vujčić, to criticise and question the role of the Central Bank. Ivan Lovrinović (MOST) compared the report to the Titanic, “where everything appeared to be fine while it was slowly sinking.” Lovrinović claimed that the Croatian monetary system was eurofied, with the goal of speedy introduction of the euro. “You are trying to scare the public that a greater role for the kuna would cause inflation and return us to the times of former Yugoslavia,” said Lovrinović to Vujčić. Irena Petrijevčanin Vuksanović (HRID) accused HNB of being “a state within a state.” “You are not protecting the interest of citizens, you are helping banks and big businesses,” she said.

Homeland War Associations Demand Dismissal of Croatian Audiovisual Centre Director

Homeland War associations announced that they would ask Culture Minister Zlatko Hasanbegović to dismiss Hrvoje Hribar, Director of the Croatian Audiovisual Centre (HAVC), for mistakes made in financing the Danish documentary film “15 Minutes – The Dvor Massacre,” which dealt with the murder of ten disabled persons in August 1995 near the base of the Danish battalion of UNPROFOR, which in turn failed to prevent the crime for which the film blames the Croatian forces. Josip Jurčević, founder of the Defence Ministry Central Archives, said that “many facts indicate that the crime was committed by Serbian aggressors and that various parties, such as the Danish battalion, want to blame the Croatian side for the crime.” According to Jurčević, HAVC co-financed the production of the documentary to the amount of 250,000 kuna.

INA Halts Gas Deliveries to Petrokemija in Kutina

At the beginning of March, INA stopped its deliveries of gas to Petrokemija in Kutina. “We have reached an agreement with Petrokemija management about a temporary suspension of deliveries so that unpaid debt to INA would stop increasing,” said INA in a statement. The debt has reportedly reached almost 400 million kuna. Still, the decision will not cause Petrokemija to stop its production since its management has reached an agreement with Prvo Plinarsko Društvo. According to unofficial sources, the decision to stop gas deliveries was actually made by MOL, in order to pressure the government. INA is reportedly interested in buying Petrokemija, but MOL demands that, in return, the oil refinery in Sisak should be closed down.

Daily Agenda – Thursday

The government will hold its regular meeting and present the 2016 budget and budgetary projections for 2017 and 2018.

Parliament will continue its second session. It will debate the “Report on the Implementation of the Constitutional Law on National Minorities and the Expenditure of Funds Allocated for the Needs of National Minorities.”

Croatian Veterans Day will be marked in Vukovar. The ceremonies will be attended by Tomislav Ivić, the envoy of Prime Minister Tihomir Orešković and Deputy Defence Minister.

The Ministry of Labour and Pension System will present an invitation for proposals for grants from the European Social Fund.

Vilim Ribić, president of the Association of Croatian Trade Unions, will hold a press conference discussing the session of the Economic Social Council, the 2016 budget, and negotiations about the base salary.

A press conference will be held about a grant in the amount of 141 million kuna from EU funds for the construction of the University Campus in Varaždin.

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