Croatia, Corruption, and Serb Ethnic Minority Terror

Prime Minister of Croatia Andrej Plenkovic (Front); Back row from Left to Right: Deputy Prime Minister Boris MIlosevic, Minister for Pension System, Family and Social Policy Josip Alardovic, (former) Minister for Construction and Public Property Darko Horvat (arrested), former minister for Agriculture Tomislav Tolusic

Identifying and processing corruption in Croatia that defined Croatia under communist Yugoslavia as well as all these past thirty years since the secession from communism still yields the impression of governments playing peekaboo or hide and seek game. Whether it be the HDZ (Croatian Democratic Union) or SDP (Social Democratic Party) led government, fighting corruption had not been consistent nor determined. Undoubtedly, the reason for this lies in the fact that many former communists and their family members had indulged in corruption and theft of public goods or the practice of either hiding the crimes of corruption and theft or being heavily involved in it continued. And so, every once in a while, the Croatian government had seemingly gladly permitted the processing by public prosecutor, government attorney, or anti-corruption authority of crimes perpetrated by some current or ex-high-government functionary so as to leave the (false) impression how the government is serious about fighting corruption. However, the office of public prosecutor has evidently never in the past thirty years been independent of government in its activities of pursuing processing of crimes and suspected crimes just as this was the case under the communist party regime in former Yugoslavia.

Everyone will agree that to successfully transition from communism into democracy (or any totalitarian regime for that matter) it is essential to shed habits and behaviours practiced especially by authorities and their collaborators at all levels – local, regional, and national – that were shaped and condoned under the communist regime. Croatia has failed miserably at this, and the failure appears purposeful. Too many people in important or powerful positions or their family members have had, and still have, their fingers stuck in the proverbial cookie jar. Corruption exists in all countries, however, in the developed democracies it does not define a nation and its governments like it does Croatia – still.

On Saturday 19 February, another case of corruption probes surfaced in Croatia when the police began searching the apartment of the government minister for Construction and Public Property Darko Horvat in Donja Dubrava, Zagreb. Furthermore, and at the same time, the police broke into his house in Medjimurje County (North of Zagreb) due to suspicions of his connection with the abuse of power by his former assistant, and now the suspect in crimes of corruption – Ana Mandac. According to Croatian media Horvat is suspected of 2.6 million kuna in illegal incentives. Reportedly Horvat requested funds (non-refundable) from the program ‘Development of small and medium enterprises and crafts in areas inhabited by persons belonging to national minorities’, i.e., to benefit some companies and people who were not entitled to those funds, this time of Serb ethnicity.

Soon after the search of Minister Darko Horvat’s house he was arrested and taken away by the police for further questioning. Almost immediately, Horvat reportedly requested from the Prime Minister Andrej Plenkovic that he be removed from his duties as government minister and Plenkovic did relieve Horvat of his ministerial duties late Saturday afternoon 19th February.

“If someone is arrested, he cannot be a minister, it is clear as day. Especially if he stays there,” Plenkovic said at a press conference in Banski dvori Government Offices convened over Horvat’s arrest and an investigation into several other current and former state officials. Officials, including some ministers…Someone had a motive for this timing to be right now. To me, that timing doesn’t seem neutral. Neither the State Attorney’s Office nor anyone else will overthrow the Government, but this is interesting,” Plenkovic said.

Well, it is evident that the current government in Croatia is all about timing and control of corruption revelation and processing of those crimes. Why else would Prime Minister question the timing of these arrests!? Did he, himself, in fact know of possible corrupt practices but did nothing about them because “it was not the right time”!? Or is Plenkovic so odiously arrogant that he dares to question the timing of arrests for suspected crimes or is he sinking further into a political mudslide that will see him disappear into oblivion of power-hold.

Shady and unsavoury business of politics indeed.

In addition to Horvat, the Croatian mainstream media reports that the police and USKOK (Office for the Prevention of Corruption and Organised Crime) also hold suspicions against the current Minister of Pension System, Family and Social Policy Josip Aladrovic, Deputy Prime Minister Boris Milosevic and former Minister of Agriculture Tomislav Tolusic. Aladrovic is suspected of suspicious employment in the period from 2017 to 2019, when he was the director of the Croatian Pension Insurance Institute. Milosevic and Tolusic are suspected of awarding grants to small and medium-sized enterprises in 2017 and 2018, while Ana Mandac was Horvat’s assistant, and they both allegedly lobbied for Serbian entrepreneurs who had no right of access to these funds.

Whether Prime Minister Andrej Plenkovic reaction to his minister Horvat’s arrest and suspicions of corruption being aired against two of his other ministers and a former one is associated with his fear that his HDZ-led government is experiencing fatal crumbling is not clear. There are strong indications that his, HDZ’s, coalition as minority government with the SDSS (Independent Democratic Serb Party in Croatia) is experiencing continued heavy blows from the public or voter body, including within HDZ party itself. A coalition with Serb minority party would most likely never have been a problem had that Serb party in Croatia been made up of Serbs living in Croatia who fought with Croatians (not against) to defend it from Serb aggression in the 1990’s Homeland War but SDSS is closely and personally associated with the 1990’s rebel Serbs and those Serbs who committed horrendous crimes against Croatia and its people. The fact that, say, a brother or sister or niece of a rebel and murderous Serbs are part of current government coalition in Croatia is simply unthinkable and unacceptable to most people. Besides heavily damaging and thwarting the implementation of Homeland War values such a coalition increases the chances of successful equating of victim with the aggressor. This simply cannot be permitted for a nation that lost rivers of blood in defending itself from Serb and communist Yugoslavia aggression.

Having the above bitter reality in mind, minister Horvat’s arrest pending further investigation into corruption is a heavy blow to both the government and HDZ Party; it may rattle and shatter both to the core. Reported suspicions of influencing government subsidy funding to companies owned by members of Serb minority population in Croatia who had no right even to apply for such funding, the fact that Boris Milosevic. Deputy Prime Minister of Serb minority extraction in parliament, is suspected of favouring certain persons during the awarding of grants from the program “Development of small and medium enterprises and crafts in areas inhabited by members of national minorities” – corruption and nepotism favouring Serbs associated with rebel Serb politics during Serb aggression against Croatia in the 1990’s is enough to make one both ill and angry, as well as bitter. Such outpours of corrupt politics have been known in history to ignite people to (political) arms.

Obviously HDZ as the leading political party in government will need to reinvent its governing strategies and its coalition choices very quickly if it intends on surviving this time. Post minister Horvat’s arrest some opposition parties are calling upon Prime Minister Plenkovic to disband his government and call for new general elections. It is close to mid-term in its government mandate and HDZ constantly continues to experience and/or generate scandals that have the capacity of paralysing the nation into political crises, one after another. These scandals and crises bring about not only possible new elections, shakedown of government coalitions and loyalties but also the likelihood of causing more voter fatigue, which always brings about further reduction of voters turning up at next elections. Of course, the electoral legislation in Croatia needs changes but its current and past panorama has seen an ever-decreasing number of voters turning up to cast their vote. In such a climate some party has and will always win a relative majority, but such lack of voter number strength creates significant illegitimacy of representation within the nation and deeper insecurities for livelihood and living within it. Minorities, including the Serb one in Croatia, simply do not have strong potential of contributing to increasing decisively voter numbers in Croatia. On the other hand, other “right wing” or conservative political milieu has those potential numbers which could strengthen HDZ chances at winning minority government in the next elections. I say this because it is, to the regret of many, still not possible to even imagine the “right wing” or conservative political milieu to win the next government without HDZ being a part in that winning formula, however seemingly leftward HDZ may have drifted. Relatively narrow spans and directions of political activities engaged in by these smaller patriotic political parties on the right are the reason why perhaps they scrape into the parliament with a limited number of seats that, even if joined, could not form a government, not even a minority one. If things will shift away from the current HDZ politics in government, it is essential for HDZ party itself to shift its internal politics towards working with patriotic right-wing parties and not parties that condone Serb aggression and actively engage in any form of equating victim with the aggressor.

Obviously, the Serb minority leadership in Croatia, in coalition with HDZ government is heavily compromised with these new revelations of possible corrupt and criminal activities syphoning government funds to benefit Serbs in Croatia that have no right of access to such government funds. It is a form of sheer and intolerable corruption. One would see it logical for HDZ at this time to recalibrate its weapons of ideological political values and rid itself of the coalition with the SDSS, that is so directly associated with politics against independent Croatia in recent past.

There is no doubt in my mind that HDZ would do well to consider “changing horses midstream” at this time – extinguish its coalition with SDSS and enter a new one from the pool of patriotic political parties represented in the parliament. Otherwise, all that Croatians have to look forward to, for the remainder of this government’s mandate, is more poison being fed into the values of Croatian Homeland War and standard of living generally. The imminent entry into the Eurozone in January 2023 when Croatia plans to swap its kuna currency with the euro will dawn with distressing political crises and thousands more living below the poverty line.

Certainly, the terror over the Croatian nation caused by ethnic minorities having parliamentary representation seats, needs to stop. It is unnatural, it is damaging. Instead of allocating seats in the parliament (where a seat can be earned at elections with merely a few dozen of votes) government departments/offices ensuring ethnic minority rights and services as is the practice in fully functioning democracies should be opened to cater for minority needs. Ina Vukic

Croatia – Historic Day For Small And Medium Business

 

From left: Minister Darko Horvat Minister Tomislav Tolusic and Vjeran Vrbanec, president HAMAG-BICRO

From left: Minister Darko Horvat
Minister Tomislav Tolusic and
Vjeran Vrbanec, president HAMAG-BICRO

A long awaited lift to the prospects of desperately needed boost to small to medium business enterprise in Croatia has finally surfaced, promising to prop-up the dying economy and revitalise job numbers, create new jobs there where it counts when it comes to preventing people leaving Croatia in search of jobs elsewhere. Small and medium business has always been the backbone and sustenance of a stable and solid economy – it’s taken Croatia many years to actually help the idea of this fact infiltrate what occurs on the ground and, so, this is great news.

The official signing of an Agreement on financing between Croatia’s ministry of regional development and EU funds, Croatian agency for small business, innovations and investments (HAMAG-BICRO) and EU funds was held in Zagreb on Thursday 30th June 2016. This Agreement relates to the implementation of financial instruments within the framework of the operative program known as “Competitiveness and Cohesion” 2014 – 2020.

The main aims of the Competitiveness and Cohesion program are to boost economic competitiveness, support alignment with the EU environmental acquis, invest in transport infrastructure (TEN-T) and network infrastructure. The EU allocation amounts to EUR 6.88 billion (4.3 billion from the European Regional and Development Fund (ERDF) and 2.56 billion from the Cohesion Fund).

Almost 60% of the ERDF allocation is aimed at strengthening the economic competitiveness of Croatia. It’s said that it will support national efforts to develop an innovation-driven economy, primarily by building-up scientific excellence, encouraging Research/Development/Innovation investment and technology transfer in the business sector. Next generation network (NGN) broadband will be further extended and e-public services developed. Competitiveness and innovation in Small and Medium sized Enterprises will be supported through increased entrepreneurship, better access to finance and the development of high-quality business services.

Drawing available EU funds for Croatian business development has been pitiful since Croatia became EU member three years ago – one would be justified in thinking that this was due to the formal Social Democrat government’s inability or sabotage – or even both. It’s almost unthinkable that a government of a country with serious economic problems would not even come up with processes for utilising the EU financial assistance, let alone draw on available funds to the full. Well, that is exactly what happened in Croatia during the past two years – creating the economic hopelessness that sent significant numbers of skilled and qualified Croats abroad and lowered living standards of those that remained.

Based on 2014 the results of international research (Global Entrepreneurship Monitor, Doing Business, Global Competitiveness Report, Corruption Perceptions Index), in which Croatia has been involved for many years, the key development problems of the small and medium enterprise sector in Croatia have been identified: insufficient level of new business venture start-up activity, small share of growing enterprises, limiting administrative barriers to implementation of entrepreneurial activity, insufficient development of the financial market, and lack of education focused on the development of entrepreneurial knowledge and skills.

 

Small and medium enterprises (SME) are the most important driver of the economy, and the important role of this sector is particularly evident through their share in employment, in total realised income and exports. Successful performance of the SME sector is more important than ever.

 

Growing small and medium enterprises are an essential part of the solution to the problem of long-term high unemployment in Croatia and the shedding of essential talent through increased emigration as a result of a poor employment market. Survival and development of Croatian small and
medium enterprises in the European Union’s single market depend on their ability to compete successfully and adaptation to the demanding market and fierce competition.

 

The Agreement signed in Zagreb last Thursday has for the first time ever in Croatia enabled access for small and medium business entrepreneurs to the EU structural and investment funds via financial instruments.

 

This is fantastic news!

 

The Agreement represents the most significant reform in business entrepreneurship and trade – new finance instruments with maximum credit potential, which will secure favourable guarantees for business projects that include most favourable conditions in the business market and exceptionally low interest rates – notes the website of Croatia’s Ministry of Regional Development and EU Funds. Micro and small business loans, individual and portfolio guarantees as well as the interest rates subsidy are said to significantly lighten the entrepreneurs’ access to financing in the coming period.

Minister Tomislav Tolusic Photo:Patrik Macek/Pixsell

Minister Tomislav Tolusic
Photo:Patrik Macek/Pixsell

Entrepreneurs will have at their disposal loans at lower interest rates than those offered by banks and they will be able to secure favourable guarantees. The financial instruments that entail significantly reduced or smaller administrative requirements also enable a much simpler access to EU funds for entrepreneurs in Croatia,” said minister Tomislav Tolusic.

There are four new financial products that will be kicked-off as a result of this Agreement: “Micro Credits”, “Small Loans”, “Limited Portfolio Guarantee” and “Individual Guarantees”. These will be administered by the Croatian agency for small business, innovations and investments (HAMAG-BICRO). This sweep into significant business reform has already guaranteed the sum of almost 1.2 billion kuna (160 million euro) for small and medium business. HAMAG-BICRO Board president Vjeran Vrbanec said that the activation of these financial instruments through the four said financial products will realise small and medium business loans to the value of some 600 million euro – which is quite significant for the size of Croatian economy at this stage.

HAMAG-BICRO will head the implementation of micro and small loans between 25,000 and 50,000 euro to business applicants; interest rate will reportedly be from 0.5 to 1.5% for investment projects and up to 3.5% for trade financial resources. On the other hand, said Vrbanec, assurances to commercial banks will include guarantees that the entrepreneurs who have borrowed funds from them will in fact repay their loans. The Agreement also enables interest rate co-financing.

Vjeran Vrbanec HAMAG-BICRO Croatia Photo: nezavisni.hr

Vjeran Vrbanec
HAMAG-BICRO Croatia
Photo: nezavisni.hr

If the banks will be so flexible that they lower the interest rate for each individual entrepreneur, we are then prepared to a further reduction of the interest rate for those entrepreneurs. If, for instance, the interest rate on some loan is 4% it can be lowered to 1 or 0,5% and in some situation to even 0%,” claims Vrbanec.

Minister Tolusic said that the loans will be available from August this year and involved guarantees by the end of this year. If negotiations succeed, large companies could also be able to access similar loans at favourable interest rates through the Croatian Reconstruction and Development bank, says Tolusic.

 

Minister Darko Horvat Photo: HINA/ Daniel KASAP / dk

Minister Darko Horvat
Photo: HINA/ Daniel KASAP / dk

Minister for small and medium-sized business, Darko Horvat, has pointed out that the potential of some 13 billion kuna (165 million euro) has already been identified for project proposals of micro, small and medium trading companies/businesses. He said that 10 billion kuna investments raise the GDP by 1% and, hence, it’s expected that the GDP will increase this year by that percentage.

The new financial instruments are an another indication of this government’s persistent efforts to remove barriers in the business environment, its efforts in securing of strong business establishments within the Croatian economy and its efforts in creating a healthy investment environment. With this reform we have succeeded in relocating the intensive support for small business from the Croatian government budget to the EU budget,” stated minister Horvat.

As this government is only in care-taker mode and with general elections due in September this year a keen eye needs to be kept on the actual implementation of the Agreement signed last Thursday that offers small and medium business a real chance of life and success. It doesn’t take much to stuff things up in Croatia when it comes to the implementation of major reforms – it’s still suffering within the former communist Yugoslavia non-entrepreneurial and a largely anti-private-business environment at the grassroots or at trade activity level. However, with the continuance and increase of targeted education and support that steer successful business development – a vibrant and well-endowed economy may indeed be possible in Croatia. Ina Vukic, Prof. (Zgb); B.A., M.A.Ps. (Syd)

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