Zdravko Maric – Croatia, the War, and the Future

Averting Yet Another Collapse Of Croatian Government

April 29, 2017 by inavukic 27 Comments

Croatian Prime Minister
Andrej Plenkovic
Photo: Damjen Tadic/ Hanza media

When upon my return from Croatia a few weeks ago I wrote about my observations on the state of the country one thing that rattled me a great deal was the extent to which the threatening bankruptcy of one private company (Agrokor) was shaking-up the whole country. Subsequently, Croatia was faced with an almost unprecedented, possibly ill-conceived move by the government to rush in new legislation that would enable it to take over the administration of the same company. Be that new law as it may, the Agrokor affair has created a monster that has reeled everyone into a storm of political possibilities and impossibilities.

As the phenomenon of turbulence would have it a rush of new wind either intensifies or stops devastation. The public revelation few days ago that Croatia’s finance minister Zdravko Maric is Agrokor’s former Executive Director for Strategy and Capital had sent the wheels of political winds into a wild spin, threatening the collapse of the government.

Presently, Croatian Prime Minister Andrej Plenkovic is making last-ditch attempts to save the country’s government from collapsing second time in six months after sacking three ministers from its government coalition MOST (Bridge coalition of independent lists) partner amidst their, as well as MOST’s parliament speaker Bozo Petrov’s insistence that minister Maric could no longer enjoy parliament’s confidence and must go. They allege that Maric was in the know about the appalling financial situation in Agrokor and may have contributed to the threatening bankruptcy while working in Agrokor and Prime Minister Plenkovic stands firmly behind his finance minister, prepared for an all-out political combustion that may swallow his government into the cavern of no return. Ministers summarily dismissed/sacked are Interior Minister Vlaho Orepic, Justice Minister Ante Sprlje and Environment and Energy Minister Slaven Dobrovic. But, these sacked ministers are digging their heels in and refusing to go quietly – spurred on undoubtedly by their MOST leader Bozo Petrov who – wrongly to my view – insists that Prime Minister has no powers to sack ministers and that such sacking is tantamount to breaches of the constitutional order.

It needs to be said that the current Croatian Democratic Union/HDZ led government was constructed on sharp and deep fault lines that include coalition with the MOST whose political currents had trailed a path of seeking reforms on basis of criticising the HDZ majority rather than putting forth concrete submissions for reforms through camaraderie and reasonable compromise if need be. Furthermore, MOST and its leader Petrov were instrumental in the bringing down of Croatia’s former government in June 2016. So, the current Government was always going to be susceptible to dramatic shifts in the political landscape particularly if one considers the real possibility that MOST and Petrov are about bringing instability to Croatia – a reminder of the way UDBA/ Yugoslav secret service operated and still operates even if Yugoslavia has ceased to exist more than a quarter of a century ago.

Whether the aftershocks of the current political crisis in Croatia will cause the government to collapse is yet to be seen, but one expects that Prime Minister Plenkovic will do the utmost in his power and knowhow to avoid it. It’s too early to say whether the parliament will render a vote of no confidence in finance minister Maric driven by Petrov, but even if it does a collapse of government does not necessarily follow.

Amidst current trade-offs and talks to avoid a government collapse indications are that any new HDZ’s minority government and its stability will depend on whether similar fault lines to the ones that are currently causing epic tremours appear in new coalitions away from MOST. Given the political leanings on the scene the players in a new refurbished government may come from an available political mosaic of smaller parties such as HNS (Croatian People’s Party) and perhaps the unpredictable HSS (Croatian Peasant Party), some lone political party such as Milorad Pupovac from SDSS/Independent Democratic Serb Party as well as the independent members of parliament.

The prospect of Milorad Pupovac from the Serb party entering into a new government coalition is, frankly, frightening and utterly destructive. The overwhelming sentiment among the Croatian people is that a Serb associated with still unresolved condemnation of Serb aggression against Croatia in 1990’s that had as one of its tasks to stop the creation of an independent Croatia should not be in government. This sentiment is completely justified in this era when Croatia must turn a page and start living as a truly independent Croatian state that gives no leverage of success to any undermining coming particularly from Serb leaders, who are more loyal to Serbia than to Croatia.

Should HNS/Croatian People’s Party be the one to boost the government’s survival prospects then one would expect that its former president Vesna Pusic retracts her past statements in which she falsely and maliciously accused Croatia of aggression against Bosnia and Herzegovina during the 1990’s. Otherwise, any coalition between HDZ and HNS forming a government will be poisoned by Pusic’s extraordinarily evil statement. HDZ is the late president Franjo Tudjman’s party, it is the party that victory and Croatian independence are indebted to – a political marriage between that party and the party that still houses Pusic is unthinkable without Pusic’s public retraction of her vicious and false statement about aggression against Bosnia and Herzegovina; and without her public apology.

If alliance between HDZ and HNS ensues without resolving the Pusic statement then this is likely to be a scenario when civil unrest becomes really dangerous. That would be the time when everything begins to get truly confusing and crazy. It will defeat a great deal of needed and possible reforms and ensure a crash and burning of political and economic climate starting in 2018.

An unthinkable prospect of Social Democratic Party/SDP forming alliances with view to forming a new government, thus avoiding new and snap general elections sits like a dagger in the chest.

“We will seek new partners to continue the government and ensure political and economic stability,” Prime Minister Plenkovic told reporters in Zagreb. “Should in the next days there be no possibility to form a new parliamentary majority, we are ready for new elections.”

In the 1960’s British Prime Minister Harold Wilson coined the phrase “a week is a long time in politics” and currently in Croatia it feels like an unpleasant, tense eternity. A government collapse at a time when a third option amidst two major parties’ leads has not yet clearly appeared on the horizon as a shoe-in, a certain winner at elections, would spell more of the same and fuel the vicious political circle that has not brought the reforms or changes needed for Croatia. It is at times of collapse that party loyalties become stubborn, no room nor will to look the other way and embrace new political forces even if these may hold the biggest yet promise that Croatia will survive as an independent Croatian state, free, determined and wilful in creating the economic atmosphere for prosperity and well-being. Ina Vukic

Filed Under: Uncategorized Tagged With: Agrokor, Andrej Plenković, Bozo Petrov, Croatia, government collapse, Milorad Pupovac, political crisis in Croatia, Vesna Pusic, Zdravko Maric

Croatia’s Tax Reform: More Not Paying Income Tax And Sugar Not As Sweet

November 2, 2016 by inavukic 22 Comments

Croatia 2016 Tax Reform
Income Tax Thresholds
Photo: Screenshot TV news

Croatia’s PM Andrej Plenkovic and finance minister Zdravko Maric unveiled Thursday 27 October 2016 the new government’s tax reforms they’ve been keeping under wraps for weeks. They say that the new tax system, encompassing tax reforms, the government is bringing in from 1 January 2017, will be simple and transparent and fairer. Well, as far as the issue of transparency is concerned there’s no need to raise it simply because in these cash-poor days savvy and “street-wise” consumers suss out any hidden taxes pretty quickly – taxes can never be non-transparent for too long.

From a bird’s eye view having a drink at a bar in Croatia is just about to hit your pocket by a whole 12% of extra VAT (PDV in Croatia) and the sugar you add to your coffee or make a cake with is going to do the same. Perhaps the only cheering squad for these increases will be the health costs for the bodies of those vulnerable to or on the verge of contracting liver cirrhosis or diabetes…Going to the movies will slug you an extra 10% VAT so you’ll be choosing the movies to go and watch at the movie theatre much more carefully as you reluctantly find less and less difficulties in waiting a year or so for the movie to show on TV.

But there are mercies in this tax reform, too: your seeds, seedlings, fertilizer and pesticide will cost less as VAT/PDV for these products slides downward from 25 to 13%. The VAT on electricity supply, baby car seats, rubbish removal, coffins and ash-urns is also going down by the same 12%.
Come 1 January 2018, as VAT/PDV goes down to two brackets only – 25% and 12% – and the 5% bracket vanishes from the VAT formula – 5% VAT on milk, bread, orthopedic aids, medicines, newspapers and books jumps to the magical new flat rate of 12%.
When it comes to income tax the current 3 brackets: 12%, 25% and 40% will disappear and be replaced by 2 brackets as one becomes a tax-free bracket from 1 January 2017. So this is how you will or will not be paying income taxes in Croatia from 1 January 2017:

Income per month:
0-3,800 kuna (506.5 Euro) – No income tax
to 17,500 kuna (2,331,00 Euro)- 24% income tax
17501 kuna + – 36% income tax
These income tax rates, of course, do not include tax surcharges or surtax that are imposed on wages in many towns and cities in Croatia. Some surcharges can climb up to 12% and one can come across two people doing the same job in the same workplace but be receiving a different net wage.

Prime Minister Andrej Plenkovic
Photo: Patrik Macek/Pixsell

“The current tax system in Croatia has certain negative characteristics which have led to its lack of competitiveness. It is too complicated in comparison with other countries around us. The high tax burden, a large number of exemptions, and frequent changes are the reasons why the tax reform has featured as one of the most important reforms to be implemented during the term of this government”, said PM Plenkovic, that frequent changes in tax laws have created a climate of mistrust and uncertainty for businesses and investors.

“This tax reform is complete and comprehensive. It shall seek to achieve the following goals: economic growth and employment, strengthening of competitiveness of Croatian economy, encouragement of demographic renewal, social justice, promotion of small and medium enterprises and agriculture”, said Plenkovic.

Croatian Finance Minister
Zdravko Maric
Photo: Patrik Macek/Pixsell

Finance Minister Zdravko Marić noted that the general corporate tax rate would be reduced from 20 to 18%, while corporate tax rate for farmers and businesses with revenues of less than 3 million kuna per year would be 12%. He also announced the abolition of tax relief for reinvested profits due to relative lack of use of this tax relief.

“In the current system, about 900,000 people do not pay any income tax, and with the proposed changes that number will increase by another 560,000 people, so ultimately, in the new system, about 1.5 million people will not pay any income tax”, said the Finance Minister.

Well, that’s about as many people as there are in employment. About 1,660,000 people work in Croatia. With the minimal wage hovering over about 3,200 kuna there are some 10% of the employed earning a minimum wage, not paying income tax; then a few percent more on low wage between minimal and 3,800 kuna. There are about 1,320,000 pensioners in Croatia and probably half of those have the pension that falls within the income tax-free bracket. All in all it seems that there are quite a lot of people on income not paying income tax, which cannot be good for the country in economic dumps. It can’t be good for the individual either because being in tax-free bracket means your income is barely enough to survive on. Soon the tax paying won’t be able to sustain the pensioner incomes and trouble rises fast. Social catastrophe everywhere as minimum or low wage earners find it harder and harder to have ends meet, regularly needing to make hard choices even between eating a meal or going without some other necessity of life.

Property tax has finally been overhauled in Croatia and is reportedly to be ushered in with the New Year. “First home buyers of established/used home/property are now free from property acquisition tax, but not so the buyers of new homes…we are suggesting the general reduction of those taxes, ” said minister Maric.

Croatian Government Meeting
27 October 2016
Photo: Patrik Macek/Pixsell

According to finance minister Maric the entire tax reform is worth 2 billion kuna (266 million euro) and the money will be circulating and turning around from year to year so that there is more money around and the bigger the personal expenditure the better it is for the GDP.
The high unemployment and low labour participation rates highlight the need for further reforms of the labour market and benefit systems, said a 2015 IMF report. This in essence means that there needs to be serious reforms to public administration, including employment, pension and benefits regulations – all these would increase labour participation in the economy, including tax revenue. To have notable effect on the sinking economy, to lift it up, these reforms need to occur at the same time as the tax reforms and yet there are no significant public administration reforms in sight yet. In fact, public administration machinery seems to have increased under this new government despite its announcement some weeks back that it would reduce it, so, without significant public administration reforms it will certainly be interesting to see what benefit, or damage, the tax reforms will wage upon the ordinary battler battling to survive, nothing extravagant, just decently. Ina Vukic, Prof. (Zgb); B.A., M.A. Ps. (Syd)

Filed Under: Uncategorized Tagged With: Andrej Plenković, Croatia, Croatia Tax Reforms, Zdravko Maric

Which Way Croatia: Liberal or Illiberal Democracy?

June 12, 2016 by inavukic 33 Comments

Front: Tomislav Karamarko, HDZ president
Back: Milijan Brkic, HDZ Deputy-president
Photo: Goran Stanzl/PIXSELL

Next week seems set to shed light as to whether Croatia’s Prime Minister Tihomir Oreskovic has indeed been a weak Prime Minister, failing to adequately implement the needed reforms that were promised to the voters of Croatia at last elections, late 2015, and whether he has, as Croatian Democratic Union/HDZ claims, been more preoccupied with his own political niche and agenda that is in contradiction with the technocratic, professional role (towards implementing set reforms) he was appointed as Prime Minister to pursue.

Croatian parliament will, during the coming week, entertain the subject of HDZ’s (Croatian Democratic Union/ majority party in coalition government) motion for vote of no confidence against Prime Minister Tihomir Oreskovic and Oreskovic will, as announced, step before it in an effort to defend himself. Hence, the end appears nigh for the current lot of tortuous speculations, allegations against specific members of Croatian government and endless sensationalism served by the media. Next week, then, is likely to deliver some reprieve to the confused, angered and tortured public. Furthermore, the Croatian independent authority deliberating on whether there had been a conflict of interest to pin against Tomislav Karamarko, leader of HDZ and the First Deputy Prime Minister, has announced it would publish its findings around noon Wednesday 15 June.

Hopefully, then, next week is likely to shed some further directional light as to the source/s of the staged political crisis Croatia has been exposed to ever since February 2016 or earlier when vicious attacks began against HDZ’s ministers and leaders.

Many Croats in Croatia and probably all Croats living in the diaspora had, as they fought and supported Croatia’s efforts to secede from communist Yugoslavia and grow into an independent democratic state, did so in the expectation that Croatian democracy would be modeled on the so-called Western democracy:

• On Liberal democracy that protects the rights of the individual and has those rights generally enshrined in the law;
• On Liberal democracy that defends and increases civil liberties against the encroachment of governments, institutions and powerful forces in society;
• On Liberal democracy that restricts or regulates government intervention in political, economic and moral matters affecting the citizenry;
• On Liberal democracy that increases the scope for religious, political and intellectual freedom of citizens;
• On Liberal democracy that questions the demands made by vested interest groups seeking special privileges;
• On Liberal democracy that develops a society open to talent and which rewards citizens on merit, rather than on rank, privilege or status;
• On Liberal democracy that frames rules that maximise the well-being of all or most citizens.

Indeed, on 30 May 1990, at the inaugural assembly of the Croatian Parliament, Croatia’s first president Franjo Tudjman said: “The new Constitution of Croatia must be free from all ideological dissents; it must be based on experiences of creating a Croatian state and in the spirit of the most democratic traditions of modern Europe and North American reality and science of law.”

This month. 25th June 2016 will mark 25 years since Croatian parliament voted for secession from communist Yugoslavia and thus, put in place the Liberal democracy its 1990 referendum sealed as its future path. Croatians have always considered themselves as being more Central European in culture and geography than being Balkan. Hence, the democracy they voted for, by a staggering 94% vote, in the 1990 referendum, was a Liberal one modeled on the “West” rather than some hybrid of democracy which could amount to an Illiberal one; the one reminiscent of government or significant elites’ controls they experienced under communist regime in Yugoslavia.

Tihomir Oreskovic
Croatia’s Prime Minister
Photo: Marko Lukunic/Pixsell

The Financial Times’ recent article by Tony Barber widened my concerns about the slow and communist heritage stifled direction of democratic development in Croatia. Comparing the efforts signaled in 1990 for a Liberal democracy to the current and staged political crisis in Croatia one may indeed ask as to whether the crisis is associated with some political push to move Croatia further away from Liberal and closer to an Illiberal democracy, which has been taking hold of Poland, Hungary and perhaps Slovakia in Eastern Europe? Illiberal democracy “means a type of government that preserves the forms of democracy but falls well short of North American or Western European standards of freedom.”
So far Croatia has struggled in achieving the standards of Liberal democracy but the witch-hunt against individual HDZ members of the government and the feeling one gets that the Social Democrat opposition and its coalition as well as the Prime Minister appear to ignore and even downplay the individual’s right to a defense and due process against alarming allegations does make one question whether in fact there is a background truth in the thought that Illiberal democracy may indeed be at Croatia’s door, if it already hasn’t permeated in. One’s suspicions of this are ever more strengthened by the fact that the Catholic publication “Glas Concila” published 12 June a political commentary by priest Ivan Miklenic, Editor in Chief of that publication, which includes the following: “When the affair ‘the consultant’ (meaning HDZ’s leader’s wife’s consultancy business dealings with Hungarian MOL company prior to him being elected into current government) broke out in public and when it became more than clear that regardless of whether there was guilt under the law or responsibility, moral and political responsibilities unquestionably arose and instead of making moves that serve real common good came the moves that meant the saving of only one man (meaning Tomislav Karamarko, leader of HDZ) at all costs, at all high costs. There was no inclination nor will in the largest political party for the acceptance, the understanding and the realization of common sense reasoning in accordance to which neither a political party, or the Government, or Croatia cannot be a hostage to the interests of one person or one project… The question why the strongest political party, that has large merits for the creation of independent Croatia, is suddenly becoming incapable of recognising what it is that serves the common good, serves Croatian interests and what brings down that party and damages Croatia is likely to remain unanswered once again…”

Regretfully, it appears that this priest, the Chief Editor of the Catholic Glas Concila publication does not consider the rights of individuals as legitimate, as the most important rights Liberal democracy must uphold! This individual the above Glas Concila article refers to is indeed a member of the political party in government but in the eyes of the public he is still an individual with rights to due process that are same as the rights of individuals not in government. Indeed, to my view, the individuals in government must uphold and fight for the rights of individuals (including self) under any and all circumstances otherwise the door to illiberal democracy is wide open. How close reported Opus Dei activists in Croatia who are said to be among advisors to the Prime Minister Tihomir Oreskovic (e.g, formerly New York based Stjepo Bartulica) are associated with this appalling commentary in the Catholic Glas Concila is anyone’s guess, but certainly the guessing game does become easier once matters of possible influence are placed in the context of Liberal versus Illiberal democracy; the latter being considered as acting against rights of individuals and promoting pressure from political or other elite groups.

Zdravko Maric
Croatia’s Finance Minister
Photo: hrt.hr

If we look deeply into the fight Karamarko and HDZ are fighting right now it certainly is not about some conservative nationalism one sees in Poland, Hungary or Slovakia but it is more about individual rights as the cornerstone of Liberal democracy Croatia lost rivers of blood for in the 1990’s Homeland War. Those rights are of Croatia’s national interests and not some nebulous national rights those attacking HDZ and Karamarko are spitting out daily. Indeed, the faith in HDZ as a guardian of the cornerstone of Liberal democracy appears further justified by the fact that the party has Saturday 11 June decided to put forth Zdravko Maric, current finance minister, as the next Prime Minister of Croatia, hence demonstrating that its fight in the political crisis has not been about one individual’s position – Karamarko’s – but about the principles of individual rights and due process. Ina Vukic, Prof. (Zgb); B.A., M.A.Ps. (Syd)