Croatia: Major Corruption Scandal Silenced, Judiciary Paralysed

The just passed three-day slot, 21, 22 and 23 July 2023, was a historic moment for the Croatian Parliament in that for the first time in more than 30 years of its existence the President of the country (Zoran Milanovic) has called for, convened an extraordinary session of Parliament, making this a precedent of modern Croatian parliamentarianism.

Insults, “hits below the belt”, recriminations, and even grubby personal offences hurled across the chamber of the Croatian Parliament. While hopes for clear resolutions were widespread among the people it was clear from the start that this was not going to solve anything for the better for the people or the country, especially given that President Zoran Milanovic and Prime Minister Andrej Plenkovic have done nothing jointly for the nation except cause distress and alarm due to their inability and/or unwillingness to work with each other as a matter of constitutional protocol and people’s expectations. For the first two days of the extraordinary session insults against the government flew at the empty seats usually occupied by the ruling HDZ party and their coalition parliamentary representatives. Then on Sunday 23 July 2023, in the morning part of the sitting these seats were occupied, almost every one of them and insults hurled both ways – it was when voting on the opposition motion, behind which President Zoran Milanovic stood, was to occur. The vote was for the furthering of clarification of culprits in the massive corruption affair of state-owned HEP selling gas reserves ridiculously cheaply: “that the Government undertake to determine within 15 days who is responsible in the ‘gas for a cent’ affair”, and, “that the government ensures the orderly functioning of the judiciary”. Of course, the vote did not go in favour of the motions or conclusions of the proponents – majority of HDZ and coalition partners came to vote and then go back to sunbaking on some beach or swimming pool.  

With majority 77 votes, President Milanovic’s motion/conclusion (presented to parliament via government opposition parties) was rejected by which the Government would undertake to immediately, and within 15 days at the latest, take all necessary measures to ensure the orderly functioning of the judiciary in Croatia. The motion of the President of the Republic, which would oblige the Government to determine within 15 days which institutions and persons are responsible for the financial damage caused to HEP, the state-owned power utility, in the implementation of the Regulation on eliminating disturbances in the domestic energy market, was also rejected.  

The conclusions of the ruling majority were, of course (!), accepted, stating adamantly that the convening of an extraordinary session by the President of the Republic of Croatia was unnecessary because the Government is taking all necessary measures to ensure the orderly functioning of the judicial authority, as well as all necessary measures to determine the circumstances in the implementation of the Decree on eliminating disturbances on the domestic energy market. Parliament also rejected the conclusions proposed by the entire opposition, that the Government should be tasked with making a decision by which civil servants and employees will be paid for all days spent on strike, and that within three working days, the members of the HEP board, the members of the HERA board (Croatian Energy Regulatory Agency), the HROTE board (Croatian Energy Market Operator), and the State Secretary for Energy in the Ministry of Economy, Ivo Milatic, would be dismissed. The opposition proposal to pay the strikers wages for the days on strike received 67 votes, and 74 voted against. Unlike the voting on other points, three representatives of the SDSS (Independent Democratic Serb Party) did not participate in the voting for this proposal at all.  

As I wrote in my last article, a huge corruption story implicating the involvement, either by omission or active role, of government officials or ministers in the abominably damaging low-price sale of surplus gas reserves by government-owned HEP mainly to private company PPD, seemingly enjoying government favouritism and, hence, destroying any changes of a truly free trade in Croatia, is shaking Croatia. To add to this crisis is the standstill or paralysis of the judiciary amidst unresolved claims for higher wages is also shaking Croatia, the rattling of a massive political crisis seeking the demise of those from the government responsible for this situation. The judiciary is already swamped with hundreds of thousands of unprocessed cases, causing the notoriously frustrating and unreasonable delay of ten to fifteen years in the processing of claims and this standstill due to industrial action of protests will surely list Croatian judiciary as the worst bastion of inefficiency and corruption in a democratic country’s judiciary operations. For months now the protest of the judiciary has lingered on with untold damage to the people and economy. Only matters of life and death are being heard by the courts and everything else is at a standstill for months, even thousands of applications for new business registrations!  

During the marathon debate that ensued in the parliament at the weekend, the opposition stated that the Government satisfied judges’ and doctors’ claims for higher wages, while ignoring judicial officers’ and administrative staff ‘ claims without whom the judiciary cannot function. It was pointed out that they work for miserable wages on which they cannot survive, and that Prime Minister Andrej Plenkovic “trains strictness on the weakest, tramples women on strike, that he doesn’t care”. The opposition claims that the judiciary is paralysed, the rule of law does not work, that Croatia now has a constitutional crisis, and that the situation is extraordinary.  

As expected, HDZ party members, on the other hand, emphasised that the situation is neither extraordinary nor true that the judiciary is not functioning. Their frequent criticism was that President Milanovic did not appear at the session, even though he is the proposer, calling him a coward and that he aligned himself with the opposition. They defended the government that in recent years it has continuously increased wages and that it is not true that the government is doing nothing or that it has no will to pursue resolution of the judiciary strike situation. They are convinced that the Government will resolve the situation as it has until now and ultimately increase the salaries of civil servants by adopting the new Law on Salaries in Public Administration and regulations.  

Government defending its actions was to be expected but the significant unity achieved at this extraordinary session of parliament was not in the votes against President Milanovic’s motions delivered by the ruling HDZ party and its coalition but rather in the almost perfect government opposition unity on display.  Rarely has almost the entire Croatian government opposition been united in the past thirty years on issues that are important to citizens and the country as a whole: anti-corruption and the functioning of the judiciary. While the fact remains that Croatia is, ahead of the 2024 mega elections year, well into the pre-elections campaigning, the accentuation of intolerable markers of corruption at high levels in the country as well as the disfunction of the judiciary that must be addressed remain pressing topics for Croatia that is still and visibly struggling to transition fully from communist Yugoslavia.  

In Croatia, which was created independent by 94% people vote at May 1991 referendum and the consequent bloody Homeland War that defended such a strong people vote from Serb and Yugoslav Army aggression, nothing significant has changed in relation to the government-owned companies’ management model that what was had in the one-party communist system of former Yugoslavia. The corruption scandals that keep plaguing the public space in Croatia all these years since the secession from communist Yugoslavia have uncovered repeated chaos and robbery in public goods, repeated attempts to bury corruption scandals before they are unravelled and culprits punished – all in all, chaos, and robbery in public administration appear at all levels. If such an odious track record is to continue then the summer break, until parliament sitting restarts in September, will do nothing to address and answer the question people, not just government opposition, are asking: who is responsible for the shocking loss to the public purse due to the perversely cheap sale of government surplus gas to private companies and what are the consequences for the culprits? Whose hands, if anyone’s, have exchanged cash under the table?  Ina Vukic  

Croatia: Political Heads’ Pursuits As In “All Quiet on the Western Front”

President Zoran Milanovic (L), Prime Minister Andrej Plenkovic (R) (Portrait photos: Pixsell)

The much-lauded German adaptation of the classic war novel “All Quiet on the Western Front” by Erich Maria Remarque, clinched the Academy Award for best international feature film in March of this year with its timely anti-militarist message as far as current war in Ukraine is concerned but also as far as the destiny of war veterans of the Croatian Homeland War of the 1990’s is concerned. Remarque’s novel, published in 1929, paints a portrait of a generation that leaves school for the front and ends up perishing in World War I from 1914 to 1918. Come 2023 in Croatia. With the relentless intolerance and increasingly aggravated brawls between Croatia’s Prime Minister Andrej Plenkovic and the country’s President Zoran Milanovic the above Oscar-winning movie is eerily topical – their evident pursuit of nerve-pulling populism digs a grave, deeper and deeper, for the heroes that fought for Croatia’s independence and secession from communist Yugoslavia! Here and there, each will throw around some symbolic gesture or phrase in respect and crucial for freedom of the 1990’s Homeland War but, in reality and essence, their intentions and efforts rest in erasing it and resurrecting former communist Yugoslavia, even though they may, falsely, label it antifascist.  Constant conflicts intrusively played out in the public arena, fortunately verbal, but no less exhausting and ominous, mark almost the entire period of overlapping mandates of the two leaders of Croatian politics, President of the Republic Zoran Milanovic and Prime Minister Andrej Plenkovic. The recently delivered President Milanovic’s speech to the nation and the reaction of Prime Minister Plenkovic suggest that this conflict will certainly last until the summer of 2024, and probably until the beginning of 2025; the entire mega elections year approaching. Whether it will continue after that period largely depends on whether the two, the Head of State and the Government, by their own will, and especially by the will of the voters, retain the positions they hold based on the election results.

Given that, in their positions, neither appears politically threatened by anyone – neither is anyone currently profiled as a potential presidential candidate, nor does the diluted and, therefore, weak opposition offer a more serious prime ministerial candidate and program nor does any palpable fraction within the ruling HDZ party. In short, it suits both men to counter each other – it keeps them both on the frontlines of conversation in all homes and around all coffee shop tables! While I have written before about the alarming political crisis in Croatia that has its roots in both the Office of the President and the Cabinet of the Prime Minister, the sickening lack of collaboration and extreme intolerance, as far as the public eye can see and the Croatian nation pulse can feel, between the country’s President Zoran Milanovic and its Prime Minister Andrej Plenkovic continues. This cancerous situation, metaphorically speaking, is evidently purely political and perhaps agreed upon behind the curtain or under the table to the dire detriment for the country and its citizens who spilled rivers of blood during the 1990’s for its independence. Each blames the other, each expects an apology from the other, and neither gives “a farthing” for their duty as the elected leaders of state to communicate effectively on important matters of the state.  

Among other things, in his speech to the nation on June 6, 2023, President Milanovic said the following: “since the Croatian Constitution – to which I swore an oath – obliges me to take care of regular and coordinated activities, as well as the stability of the state government, I decided to warn the Croatian public to the serious threat to the constitutional-legal and democratic order that the Government of Andrej Plenkovic is preparing.   Yesterday I was informed that the Government, in defiance of the Constitution, intends to place the Military Security Intelligence Agency under the direct management of the Ministry of Defence.   Instead of following the constitutional procedure for appointing the director of the Military Security Intelligence Agency and contrary to the established democratic practice, the Government prepared an unconstitutional solution according to which the temporary head of the Agency would be appointed and dismissed by the Minister of Defence.   I want to be clear: it is Andrej Plenkovic’s political attack on the constitutional order and democracy, which returns Croatia to the era when the intelligence services were under the direct control of the ruling party.”

On June 7, 2023, Prime Minister Andrej Plenkovic referred publicly to the above-mentioned statements of the President of the Republic, saying that due to the form of the address, he first asked himself whether a war or a new epidemic had broken out, whether there had been a major earthquake, a huge flood, a fire, a terrible accident in Croatia, and that the Government had not heard about it. It appears that Plenkovic may in fact be the one to blame for the appalling and non-existent communication between the Prime Minister and President (Plenkovic had that streak or evident arrogance when Kolinda Gabar Kitarovic was President, for she complained in public about it and her helplessness in establishing a working relationship with Prime Minster Plenkovic ) that forced President Milanovic, faced with Plenkovic’s repeated rejection to meet with Milanovic, in making a speech, a cry, to the nation about it (?).   “Then I wondered if maybe it wasn’t a holiday? When it’s not Christmas, it’s not even New Year’s, and it’s not National Day either. Nothing of what is usual for the form of address by reading from a meter in a few minutes,Plenkovic said, commenting the (to him) extremely unusual form of address by President Milanovic. “He (Milanovic) assumed that this way of addressing avoided the risk of eliminating the presence of some journalists from certain newsrooms or the risk of answering possible questions….”! How arrogant of Prime Minister Plenkovic. Not only does he seem to adorn himself as a mind-reader but attempts to denigrate the very important facility of a President’s Address to the Nation. Reminding that cooperation cannot continue as if none of this had happened, Prime Minister Plenkovic said that communication between institutions can be done in numerous ways. It can be done directly, he added, but there are prerequisites for that – cultural, normal, and cooperative communication at the level of what is appropriate for behaviour in the public political space. Since there is no such thing, then there are no direct contacts, he said. Communication can be in written form, as well as through associates, and that communication, he asserted, exists.   Prime Minister Plenkovic asserted publicly  that there is no constitutional crisis, but there is a “false thesis of the President of the Republic who pretends to be the head of the opposition“.   President Milanovic had on 6 June invited the Prime Minister Plenkovic to an urgent meeting at which they could seek to agree on a candidate for the new director of VSOA/Military Security Intelligence Agency and the next day Plenkovic stated that such a meeting will not take place until Milanovic apologises! Given that he, yet again, expressly rejected what the president asked of him, Prime Minister Plenkvic obviously blames the conflict exclusively on the President, his messages and behaviour, and apparently, he does not even need cooperation with him because this type of conflict with this type of opponent it fits him personally, not Croatia, perfectly in the political and other collateral senses.  

Today, their verbal conflict is, in fact, a real political war, a Cold War, which has recently gained a very violent extension, eagerly fanned by the media and other actors that stand at a decent distance, except in protocol situations, in which the poles of this conflict pretend that they do not exist with each other, in the same space or country. Even the blind can see that a major shift upwards in the numbers of eligible voters actually voting in 2024 elections is the only tool that will rid Croatia of this political vermin at the head of Government and Office of the President. The Cold War between them has translated into a real war (by stealth ?) that is attacking Croatia’s demography and chasing rivers of young people out, bankrupting the economy, concealing horrific and widespread corruption, belittling the independence-bearer, the Homeland War…The anger and disappointment on the streets is almost paralysing and I hope that such a “paralysis” will fixate the masses into strong and successful action for change for the better, if not lustration! Ina Vukic              

Croatian Government Issues Bonds Amidst Initiative For Recall of Prime Minister!

While televised street interviews of citizens on Croatia’s news TV programs during the past week have yielded reticence, caution, rejection, and enthusiasm, regarding the imminent and historic issue of government bonds it is, at the same time, officially touted as an avenue of much needed investment boost to Croatia’s economy and national goals. 

Croatian citizens and residents have been given the priority and opportunity to register for Croatian state bonds between 22 February and March 1, 2023; 500 euro being the minimum amount a citizen can deposit.

On 3 March 2023 corporations and institutional investors will be given the opportunity to purchase the bonds, however this opportunity will last only one day. The maturity period is two years. The interest rate is 3.25%.

Minister of Finance Marko Primorac said that the target value of the bonds issue is one billion euros, and the goal is to increase savings that citizens have in banks at relatively low interest rates and also enable citizens to participate in the public debt market.

“However, the goals are also of a broader nature, that is, through the active participation of citizens on the primary market, and then on the secondary, to further develop the capital market, encourage financial literacy, as well as other positive effects that such an issue can have,” said Primorac.

He emphasised that the minimum interest rate on bond issuance is 3.25%. The market interest rate is determined according to market circumstances, but 3.25% is the minimum coupon interest that citizens can expect, and it can be slightly higher in accordance with market circumstances.

According to the Ministry of Finance of the Republic of Croatia registration for the government bonds will be done in more than 500 bank branches which are the leading agents of the bonds issue – Erste&Steiermärkische bank, OTP bank, Privredna banka Zagreb, Raiffeisenbank Austria, Zagrebačka bank – as well as the Hrvatska poštanska banka (Croatia Postal Bank), which, at the same time, is the co-issuer of bonds together with the government. Citizens do not need to hold a bank account with any of these banks to qualify for registration and purchase of government bonds.

First round investors may be natural persons of legal age who are Croatian citizens, as well as legal persons, foreign citizens, who are residents of the Republic of Croatia. Ministry of Finance and the Zagreb Stock Exchange website are to carry important information about government bond issues and subscriptions, including for those citizens who are not clients of one of the banks that are the leading agents and co-arrangers of the issue, said Primorac, who directed citizens to the online brochure on bonds published by the Croatian Chamber of Commerce (HGK).

Upon registration, citizens can pay the desired amount of bonds immediately, they can also do it later, up to March 1, and Primorac advises that it is better to do it as soon as possible. Ministry of Finance webpage https://mfin.gov.hr as well as the Zagrebačka burza/ Zagreb Stock Exchange webpage https://zse.hr are holding all necessary information for people wishing to purchase Croatian government Bonds. It is envisaged that once sold the bonds will be listed on the stock exchange market.

The maturity of the bond will be two years.

If by any reason citizens who purchased the bonds cannot hold them until maturity and want to sell them on the secondary market, they may reportedly be faced with price changes. In that case, there is a certain minimal risk that they will not receive the amount they initially invested.

Prime Minister Andrej Plenkovic pointed out that this issue of government bonds aims to dynamise the domestic capital market, as well as send a message of confidence in government bonds, in domestic public finances, and everything that has been done through systematic work and responsible management of public finances in the past years.

Whilst generally government bonds are among the safest forms of investment because of the alarming state of the economy and quite a bit of distrust in the government, there is loud scepticism on the streets of Croatia. The release of government bonds comes at the time of continued series of corruption scandals involving government ministers, of deposing old and naming new minister for development due to scandalous inaction in the past three years in reconstruction of earthquake devastated areas despite ample funds available from EU coffers, of parliamentary opposition initiatives for Prime Minister Andrej Plenkovic’s recall. At this stage, it seems that the parliamentary opposition’s call for the recall, sacking, of the Prime Minister is doomed for failure for the simple reason of there being “too many political cooks” and too little tangible “incriminating” evidence that usually justifies sacking or recalls. Besides that, the parliamentary opposition is in the parliamentary minority and there are no significant numbers of representatives from the ruling majority party willing to cross the floor on the matter.  

Croatians living in Croatia are not used to bank term deposits like people living in the West; they are ¨”used to” the so-called current bank accounts.  Investing in government bonds can in a way be compared to bank term deposits and this idea alone may frighten off some people who may be reluctant to place their money out of reach for two years. Hence, one may expect that most government bond buyers will be corporate or institutional investors.

When we look at the economic and political situation in Croatia, two years if there are no major disasters are very safe. The current push from the parliamentary opposition for Prime Minister’s recall does not help nor does it provide the citizens with serenity that their money will be safe if they invest it for two years. The almost precarious financial and economic situation in Croatia, at the bottom of Europe, does cause distrust in people even if the situation as seen as stable and likely to remain stable for the coming two years or so. Being a country that depends heavily on income from tourism a successful issue of government bonds will provide a boost towards betterment and realisation of national goals. But with the President of the country, Zoran Milanovic, publicly announcing he and his family will not for various reasons be buying any government bonds one’s trust in the whole process and issue is surely shaken. That is such an awful move by a country’s president, almost an attempt to sabotage the issue of government bonds. Milanovic did not have any duty as president of the country to publicly talk of what he and his family will or will not do with their personal bank savings. He revealed it to spite the government, I’m quite certain of that. A nationally bitter and destructive vantage point indeed! Ina Vukic

Disclaimer, Terms and Conditions:

All content on “Croatia, the War, and the Future” blog is for informational purposes only. “Croatia, the War, and the Future” blog is not responsible for and expressly disclaims all liability for the interpretations and subsequent reactions of visitors or commenters either to this site or its associate Twitter account, @IVukic or its Facebook account. Comments on this website are the sole responsibility of their writers and the writer will take full responsibility, liability, and blame for any libel or litigation that results from something written in or as a direct result of something written in a comment. The nature of information provided on this website may be transitional and, therefore, accuracy, completeness, veracity, honesty, exactitude, factuality and politeness of comments are not guaranteed. This blog may contain hypertext links to other websites or webpages. “Croatia, the War, and the Future” does not control or guarantee the accuracy, relevance, timeliness or completeness of information on any other website or webpage. We do not endorse or accept any responsibility for any views expressed or products or services offered on outside sites, or the organisations sponsoring those sites, or the safety of linking to those sites. Comment Policy: Everyone is welcome and encouraged to voice their opinion regardless of identity, politics, ideology, religion or agreement with the subject in posts or other commentators. Personal or other criticism is acceptable as long as it is justified by facts, arguments or discussions of key issues. Comments that include profanity, offensive language and insults will be moderated.
%d bloggers like this: