Zeljko Glasnovic – Launching Real Croatian Economy Changes Campaign

Zeljko Glasnovic
Member of Croatian Parliament for the Croatian Diaspora
Pakovo Village, Drnis region ,Croatia
Photo: Screenshot

Saturday 16 December 2017, Member of Croatian Parliament for the Croatian diaspora, has launched a campaign evidently with a view to accelerating changes needed for a robust economic growth in Croatia, which process, according to this campaign, needs to bring in real changes in legislation and economic stimuli that favour increased productivity and investments (particularly from the Croatian diaspora) and hence, creation of new jobs. While the video released for the campaign (see below) is in the Croatian language these are the words spoken in it by Glasnovic, translated into the English language:

Here we are in the Drnis region, on a family agricultural enterprise and we are with people who work every day. They’ve preserved the Croatian tradition and they need stimulus, state tax reliefs … also, they need simple laws, transparency and security for their investments…Communism has destroyed not only the souls and the intellect of people but also the agriculture. Today, in Croatia, we have half a million hectares of uncultivated agricultural land and that is an embarrassment, We have all the potentials needed to work at what needs to be done, to move forward, but, unfortunately, the socialist bureaucracy inhibits us … The time has come for us to take advantage of the whole of the global potential of Croatia – Croatian diaspora, the homeland and Croats of Bosnia and Herzegovina. The rule of law needs to be established. Someone needs to start governing by decree and above all leadership and courage are needed; that have been missing from Croatian politics up till now.

 

Launching the campaign on his Facebook page also, Glasnovic writes:

It is time to move away from the hollows of the Balkans, it is time to create a functional state. Instead of being Singapore of Southeast Europe, the state has been transformed into a country resembling the bad social experiment called SFRY (Socialist Federative Republic of Yugoslavia). Same people, with same mentality lead the country. The transition of society from socialism into a modern society was stopped because of war, and after the war a partial transition of part of state administration was carried out. The pension, health and school systems remained in the socialist framework (“cost-free”). Freedom of the labour market has remained within a socialist framework of political prerequisites (obedience) because of the public servants within those sectors. There can be no democracy and free society. We are in a semi-socialism – Croslavia. God and Croats

Campaign video:

 

Reflecting on the above it needs to be said that Croatia has so far failed to implement seemingly forever urgently necessary structural reforms (which undoubtedly depend on tailored to market needs legislation) that could boost its competitiveness and growth potential. An obstructive bureaucracy, cumbersome legislation, and rigid labour markets undermine the country’s business climate. The habits and mindset of the former communist come socialist regime has meant that procedures as well as paraphernalia of doing business inherent to those failed regimes is still poisoning real progress. In spite of ongoing deleveraging efforts by companies and households, largely foreign currency denominated debt levels remain elevated, depressing domestic demand and exposing the private sector to refinancing risks. Public debt dynamics remain worrisome, as the government after government failed to rein in budget deficits. Absent successful structural reforms, which would improve the competitiveness of Croatia’s private sector, growth is therefore likely to remain modest at best and insufficient to stop the exodus of people looking for work elsewhere around the world.

Croatia’s governments have in the past two decades, at least, pledged to boost the investment climate and yet nothing much has really changed. Legal uncertainties and administrative burdens continue to deter foreign firms from pouring in money; continue to deter its very own diaspora from pouring money in as well. It is beyond a shred of a doubt that the problem lies in the fear of being swallowed and stifled by the communist mindset instilled in much of the public administration. It is beyond a shred of a doubt that successive governments in Croatia over the past two decades have not addressed this fear objectively nor embarked on uprooting it with view to opening up impediment-free the foreign investment pathway.

Croatian business and economic environment suffers from legal uncertainty and frequent changes of the regulatory framework an investor is faced with, foe example. Despite the several reforms which have eased the pressure on businesses, the tax take is still high, while many non-taxation fees bring an additional burden, and stimulus to business growth and maintenance is in many cases inadequate or nonexistence. Croatia’s business growth will remain meagre and inconsequential  unless business-friendly changes, to which pivotal ones Glasnovic’s campaign refers, are swiftly ushered, with no mercy to those who occupy the relevant public administration and service positions with their stubborn business unfriendly customer approaches as well as to hostile to healthy business growth processes and procedures. Ina Vukic

Croatia: HDZ Sets Entrepreneurial Tone For Reforms To Drive Economy

 

Tomislav Karamarko Leader of HDZ/Croatian Democratic Union

Tomislav Karamarko
Leader of HDZ/Croatian Democratic Union

Croatia’s largest political party in opposition – HDZ (Croatian Democratic Union) – had Monday 29 June released its platform or program for economic recovery (employment growth and investments …) and that, in itself, one could say is nothing special – we’ve seen it all before, especially during pre-election times and Croatia is heading for elections either end of this year or early 2016.

However, although all details have not been presented at this time, this particular initiative by HDZ contains the contours of very promising elements, placed at the helm of the program, that could noticeably revive the sluggish, dying economy to a buzzing atmosphere of doing business in Croatia. In particular, propping up and supporting small and medium size business, as a priority, through new avenues of financial subsidies and sources, and de-institutionalising and reforming public administration and government front-line services – making them more user-friendly – are two elements that stand out as promising! While the current Social Democrat led government had in its election campaign of 2011 relied on the so-called Plan 21, which contained some of the elements of HDZ’s economic platform, it would seem that HDZ’s platform has a better chance of achieving real outcomes as goals are more focused and better defined while the similar goals put out by Social Democrats were in fact too generalised and lost among too many goals and aims.

Current Croatian Government's Failed Plan Of Economic Recovery And  Public Structure Reforms

Current Croatian Government’s
Failed Plan Of Economic Recovery And
Public Structure Reforms

When the Social Democrat led, Zoran Milanovic government came to power in December 2011, it held a fairly progressive, albeit too wide to my thinking, policy aim to rekindle economic growth and create a more equal society. For this, a vibrant investment program was to be created to raise capacity and improve productivity, as well as some redistribution to the lower wage earners that would boost consumption and demand. But the government went about achieving fiscal consolidation as a priority (sacked its finance minister  Slavko Linic, mid-stream, who preferred structural reforms to fiscal consolidation) and most of the economic growth goals fell by wayside and weren’t getting picked up by anyone, not in any sense that would produce noticeable results. Hence, in the atmosphere of persistent recession, this approach added to increasing loss of production capacity particularly through company winding downs or bankruptcies. The danger of continuing with the current government’s policy in that the resulting lower level of output and productivity engendered by the long recession coupled with an incompetent government may become a permanent feature of the Croatian economy and Croatia will never get on stable and solid feet economically.

The bright point in HDZ’s newly released economic platform, which gives priority to stimulating small and medium business growth, is that such a path can not only preserve the existing capacity to produce but also cause growth in production capacity which, in turn, would respond positively to a path of resumption of economic growth in Croatia and the EU. Zoran Milanovic’s government simply did not offer adequate attention to developing the small and medium business sector but let that idea slide. Perhaps because that is not in the left-wing ideology or belief (?).

Small and medium business enterprises are seen as agents that stimulate domestic demand through job creation, innovation, and competition, which makes them a driving force behind a resilient national economy. Access to finance is a critical factor in the development of small and medium business enterprises upon which a country’s economy relies. HDZ seems to have recognised this challenge and in their economic platform address new sources of financial stimulation and support for small and medium business, including smart and invigorated path in the usage of available EU funds.

Overall, the current centre-left government has had a dismal record in managing the Croatian economy, which has continued to drag in recession for over six years, far longer than most European countries. One would have thought that the recession itself would have been motive enough to get up and work harder at bettering the Croatian economy – but this did not seem to be the case with the government in Croatia. So, the picture we have now is this: an increasing number of young people are neither in education, employment nor training, leaving Croatia in search of work, while the proportion of people at risk of poverty and social exclusion has increased to levels significantly above the EU average. During the last six to seven years Croatia has lost above 13 per cent of its gross domestic product. Unemployment is above 17 per cent of the workforce, and among young people the rate is close to 50 per cent.

This is a social disaster enveloped in an inefficient public sector that keeps people in jobs that serve no obvious public purpose beyond disguising true levels of unemployment. Not much different to what it used to be under former Yugoslavia – multitudes of jobs without real purpose, without real productivity, without earning the wage through sales of products produced. This is a problem that is magnified by a severe shortage of private sector companies capable of creating jobs by competing successfully in EU markets.

The objective of the economic program of the Croatian Democratic Union (HDZ) is to launch employment, instigate a serious economic growth and deal with everyday problems Croatians are faced with. According to HDZ the backing for this enviably bold platform includes new investments and new finance sources for entrepreneurs. The German Munich-based IFO Institute was reportedly engaged by HDZ to contribute in the drawing up of the program.
If we win government, our tax policy will be directed towards stimulating small and medium business, that is, stimulating the creation of new jobs,” said Tomislav Karamarko, leader of HDZ.

HDZ thinks, it seems, similarly to Carlos Pinerua, head of the World Bank’s office in Zagreb, who recently said that the main problem was the poor business environment, stifled by frequently changing regulations and red tape, particularly on the local level, which made it difficult to set up businesses.

Such an unfavourable climate especially hurts small- and medium-sized enterprises and they should become the main growth and employment driver,” Pinerua said.

It’s blatantly clear that the Social Democrat led, centre-left, government lacks the energy, desire, ideology, self-belief and self-confidence to carry out essential reforms such as shaking up the state-owned sector in such a way that it becomes the true servant of the public, propelling a strong injection of opportunities for the development and establishment of private sector small to medium businesses and making business conditions attractive for foreign investors. Privatisation programs are going nowhere and suffer terrible history of corruption, which breeds increasing distrust and unrest among the working people. The conservative opposition, HDZ, had been in government before, just like the Social Democrat, centre-left, had been and each have and will blame the other for any and every economic woe that comes our way. But one and only one thing is for certain: it is most strongly in the conservative blood that driving private business and entrepreneurship runs, not in the left wings of economic politics. Hence, if it raises its front-lines with more truly professional and experienced managers and public administrators and ditches the “I-know-everything-and-I-know-best” personalities (more often than not inherited from the old communist-socialist power-wielding Yugoslav atmosphere) from its establishment, HDZ may yet deliver the breath of fresh air that Croatian business environment so badly needs. Ina Vukic, Prof. (Zgb); B.A., M.A.Ps. (Syd)

Croatia: Major Cabinet Reshuffles To Stifle Progress

Zoran Milanovic These glasses are not rosy-coloured, but it sure feels like it! Photo: Goran Mehkek/Cropix

Zoran Milanovic
These glasses are not rosy-coloured,
but it sure feels like it!
Photo: Goran Mehkek/Cropix

 

The current Social Democrat (SDP) led government started at the end of 2011 with a huge stick of high ambition for serious reforms; they vowed with their so-called “Plan 21” to rid Croatia of the “bad” effects the previous Croatian Democratic Union (HDZ) had according to them inflicted upon Croatia’s economy; they vowed that they would turn Croatia’s economy around and reduce significantly unemployment rate.

At beginning of June 2014 (referring to its March 2014 paper) the European Commission had handed down its first analysis of Croatian economy, with recommendations, since Croatia became EU member state in July 2013. The Commission’s analysis shows that Croatia (its government) has been dragging its feet when it comes to achieving critical reforms and hence, suggests a need to continue monitoring Croatia’s performance in areas identified with the frame of EU membership. Around the same time an IMF’s assessment said, “Croatia remains stuck in an unusually drawn out recession”.

Croatia’s seemingly strangely deluded Prime Minister Zoran Milanovic, who – as if in a state of a trance – often appears as though talking to himself or trying to convince himself of what he’s saying is right, reacted to the Brussels assessment as a “very good” one!

 

What a fool!

At the same time his relationship with his finance minister Slavko Linic was brewing into a mighty scandal that had the potential of bringing down the government. Milanovic failed and still fails to see that any political bickering and blame game will only deteriorate the country’s perspective to exit from the crisis.

The recent almost manic changes, shuffles and reshuffles within the government, under the guise that these are needed so that the government “can get on with its job, properly” (Prime Minister Zoran Milanovic’ words June 2014, Croatia HRT TV news) undoubtedly leads one to scratch one’s head in bitter anger and say: What have (!) you been doing all this time while in office?

Despite the huge efforts SDP had been investing in trying to appear unified and focused on the job of implementing its “Plan 21” roses aren’t blooming from their court for Croatia or for the Party. Indeed, panic and intolerance started to show especially few months back when relations between Prime Minister Zoran Milanovic and Finance Minister Slavko Linic poked their ugly face out – under a cloud of corruption allegations the latter was May/June finally ousted from his position as minister as well as from his membership in SDP (Slavko Linic was replaced with Boris Lalovac). Then few days later two other major portfolio ministers are ousted and replaced – albeit under a cloud of incompetence as one could conclude nothing less from the reason given by Milanovic “they are replaced due to their large workload”! (Rajko Ostojic minister for Health replaced with Sinisa Varga and Zeljko Jovanovic Education minister replaced with Vedran Mornar). After his dismissal, Ostojic (who is said to have supported Linic rather than Milanovic in the SD Party room) said he did not at all feel tired, on the contrary – he is full of energy and strength!

As Milanovic suddenly pushes an unconvincing line of wanting to be surrounded by experts rather than politicians it is surely unrealistic to expect groundbreaking reforms in the remaining less than two years of this government; besides the fact that the government obviously lacked and still lacks the expertise it boasted about at the very beginning of its mandate, the country will soon again enter an election phase because of the presidential election later this year.

Actually, Social Democrats have proven this week in the Croatian Parliament to be working hard at diverting the public’s attention from their party’s internal hostilities and visible incompetence at governance to a renewed vigour in pointing the finger of “shame and blame” at the Croatian Democratic Union (HDZ) as some criminal organisation because its former leader and Prime Minister Ivo Sanader was convicted of serious corruption. The current president and a future presidential candidate Ivo Josipovic, an SDP loyal and musician, has labeled this corruption as high treason; playing the tune Social Democrats will undoubtedly dance to during his presidential campaign as well as in regurgitating the mantra from the initial phase of their rise to government, which they hope will get them out of boiling hot waters: it’s HDZ that is to blame for everything!

The way things are looking right now is that the Social Democrats will for sure end up as the government that deals mainly with internal party battles, engaging in political bickering and recriminations against HDZ designed to prop-up Josipovic’s chances at getting a second presidential mandate, while dragging its feet with needed reforms. Indeed, the last couple of days have seen Josipovic unleash a sharp, rather hateful tongue against HDZ who has put forward a tremendous presidential candidate in Kolinda Grabar-Kitarovic, whose mere presence seems to rattle Josipovic and have him shaking in his boots.

Were Josipovic a president whose main concern is in the delivery of needed boost to the Croatian economy he would steer away from fueling political bickering between the two major parties (HDZ and SDP) and show a way out of the rut Croatia is in, in more ways than one. But, then again, the Social Democrat led political bickering does camouflage incompetence in governance and I trust that the voters will recognise this in both the presidential and, later, in the general elections. Political bickering does leave a sense of abandonment in voters; a sense that nothing is more important to the government than its personal political survival.

While reshuffles within a cabinet are not uncommon they are usually done to favour progress. And even if Milanovic says he wants experts in his cabinet it is more than clear that his latest string of reshuffles are primarily serving political survival and not real progress in achieving economic and other needed changes. If he were serious about making progress then his reshuffles would have come earlier (it’s not as if he hasn’t reshuffled before or as if he did not know the job his government was to do before) and would have cast a wider net over available expert talent in the country (and from abroad). Ina Vukic, Prof. (Zgb); B.A., M.A.Ps. (Syd)

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