The Croatian Election result: What now?

The left wing Kukuriku coalition has won the elections, gaining 80 seats – giving them a majority in the Croatian parliament. The HDZ gained 47 seats. As we pointed out, the HDZ are usually underestimated at polls, and they did indeed gain more seats than some polls predicted. However, given the scale of the defeat, it is effectively negligible and will be of scant comfort to them. Indeed, it is their worst result ever.

The question now is how will be coalition govern? They have implied that they will make strong spending cuts and go to the IMF for help. The ratings agency Fitch has said that the government will have to sort out debt, effectively placing more pressure on the government to make spending cuts.

Amongst all this, little is being said about how to stimulate business in Croatia. How will small and medium businesses be helped to grow and expand? Such businesses keep the country going –whether it is a small guesthouse or a new technology firm.

One looming issue is the EU referendum, due in February. Whilst Croats are likely – grudgingly – to vote to join, events in the Eurozone could yet have a major impact. That aside, the coalition should deepen, maintain and extend links with European states, especially traditional partners such as Germany, Austria and so on. President Josipovic has appeared more concerned with forging links with poorer Serbia, to no discernible benefit. Given the economic situation, it is to be hoped that the coalition will not follow Josipovic’s lead. Despite the current crisis, the EU remains a wealthy market for Croatia – a lack of focus there would not be helpful, but a greater one may produce rewards.

As for the HDZ? Whilst they may blame their result on media coverage, their defeat is self-inflicted. Had there been no corruption issue, they would not be in the situation they are in.  Power was thrown away in favour of – at the very least – less than transparent dealings. The spectacle of Ivo Sanader first suddenly resigning, then being extradited from Austria to face corruption charges had its impact. Croats are essentially conservative with a small ‘c’ – such incidents do not go down well with people who prefer stable and respectable governments.

That said, the HDZ should not be underestimated, they have shown a capacity for reinvention and renewal. They will need to swiftly sort themselves out corruption wise and not fall into factions. However, should the Kukuriku coalition prove simply to be competent, the HDZ may have a long spell in opposition.

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