Last week, the complex political situation in Croatia just got more interesting. In the government meeting last Thursday, PM Plenkovic dismissed three ministers belonging to his coalition partner Most. This was in response to their lack of support to his Finance Minister Maric, of whom Most has been openly critical lately.

However, the move hit the paper wall before the ink dried on the dismissals, as Most immediately questioned PM’s authority to do that. From expert reactions it would appear that there are only questionable legal grounds in Croatian law for a PM to dismiss ministers. One school of thought thinks they can resign, or the Parliament can vote them out of office (and among others the Government can propose that, with majority of votes), but there seems to be no legal grounds for immediate dismissal¹. The other claims, along with the PM, that he can dismiss his ministers as he wishes, as he was the one proposing them in the first place. Speaker Petrov claims he needs to countersign, and constitutional experts, politicians and commentators differ in views. This could have grown into a full-fledged constitutional crisis, but then Most ministers decided to submit their resignation, therefore avoiding what could have become a protracted legal battle.

However, HDZ immediately made it clear that the intent was not to replace these three ministers (or rather, four, as DPM Kovačić resigned in the meantime) with new ministers from Most, but to get rid of Most altogether. Thus the HDZ collected 79 signatures to dismiss Speaker Petrov, and asked him to “behave responsibly”, that is to resign. The trouble seems to be that the person deciding when to put the vote of no confidence in the speaker on the agenda is the speaker himself. And Petrov has 30 days to do so. However, the SDP request to vote on Marić arrived sooner and can be discussed sooner. And that seems to be Petrov’s plan – to have a vote of confidence in Marić first, and force Plenković to come up with enough votes to defend Marić and to get a new minister through. Most claims Plenković simply does not have the hands, because some of the deputies who had given their signatures for the minister’s dismissal already stated that this does not mean they would support the HDZ government or the new HDZ parliament speaker. Most resistance in the Parliament is somewhat surprising since the party had given up on the legal detail on dismissal of the ministers, but perhaps this is a part of their strategy for local elections coming up in three weeks. By that time, all of these issues should be resolved.

Until then, this situation has the potential to stall more or less all processes in Croatia that depend on Government majority.

The main reason for Plenković’s decision was ostensibly Most’s position on Government support to MFIN Marić. The SDP asked for a parliamentary vote of confidence in Marić, and the Government prepared a position paper responding to this and refuting all allegations. When it came to the vote on this response, three Most ministers voted against, and PM Plenković promptly asked the Government Secretary to prepare the paperwork for their dismissal.

Plenković explained his decision in a press conference, mainly saying that he expects colleagues to support each other and, if Most ministers were not willing to support their colleague, they should not be in the Government.

Speculations abound as to what might have motivated this move, ranging from Agrokor to new elections. But it could be a combination of factors. The Agrokor crisis seems to be only starting, with unforeseeable consequences including possible criminal investigations, mass layoffs and a serious drop in the GDP with all that goes with it. On the election side, HDZ’s main political opponent, the SDP, is lagging at least nine points behind (with HDZ at around 31% and the SDP hovering around 22%), and the pool of potential small partners seems wide enough. So PM Plenković already announced that he will try to form a new majority, or, if that does not work out in a week or so, to go for new elections. This might be the last possible moment before Agrokor consequences start to bite and the general vote turns into protest vote. HDZ and Most did not seem able to find neutral grounds in local elections, as in some counties and cities they seem to be fighting for the same electorate, and Most continues its practice of accusing its competitors of poor practices.

In retrospect, it now seems clear that Plenković’s intention was to get rid of Most. Most is already publicly saying that this is because its Interior Minister, Orepić, may have been poised to uncover unsavory details in Agrokor investigations, which Plenković wants to cover up. The strange thing is that Plenković did not need Most to form the government to begin with. But the numbers now look slightly more problematic, as some of his own deputies seem less than fully committed to his support. So elections seem an odds-on proposition, and that also might have been the intent.

On the opposition side, the SDP does not seem to have fully recovered from the change of leadership last year. Its occasional political initiatives seem erratic, and it seems less than well prepared for even the local elections (which everyone knew were coming this May), let alone extraordinary general elections. Its campaign in Zagreb seems lacking, and its support for a candidate that actually stands a chance of winning came late and lukewarm. Whether this is by design or default is hard to guess from the outside, but by now it is clear that SDP will not have a mayor of Zagreb, where it could not field a candidate, and will struggle in other local elections to keep its seats. Other opposition parties are keeping their hands mostly to themselves for the time being, with occasional statements to the effect of not being supportive of the government in general but leaving their options open in the future. So the HNS, formerly the main SDP partner in the previous government, now provided votes to recall Petrov but stated that they would not support any new HDZ government. Most has already called that a lie, claiming the HNS is just waiting to get over local elections, and the HNS, the SDP and the HSS formed coalitions in several local elections.

For Mr Plenković, this may also be a good moment to consolidate his power over the party where he is reported to face continuing challenges from more radical right-wing members, led by his vice president Brkić and people like former minister of culture Hasanbegović. Thus Hasanbegović openly supported an independent candidate for the mayor of Zagreb, regardless of the fact that the HDZ has its own candidate. And HDZ fielded Drago Prgomet as its candidate, apparently because he enjoys support in Zagreb (although his numbers of around 5-6% support certainly do not justify that statement), but also to avoid not having a prominent candidate for the capital city. Also, this might be a covert punishment for dissident Prgomet, who left HDZ to join Most two years ago and returned under Plenković, as it seems that the party machinery is yet to get engaged on his behalf. A few lukewarm statements by his colleagues were as far as it got by now.

The Government crisis comes at a moment when the Government is facing worsening problems on a growing number of issues, including difficulties in foreign policy, quietly boiling political problems of nationalism and radicalism in the country, but primarily economic problems that had started small but grew big enough to swallow the Government entire.

So far, the Plenković government did not demonstrate overwhelming capacity to handle nationalistic problems inherited from the previous HDZ-Most government. The main thing it was able to accomplish thus far was to establish a Commission to deal with the heritage of totalitarian regimes, intended to provide an “independent, expert view” on whether old Nazi-time salute should be banned or not. This problem of nationalism and rigid conservatism has grown over the past several years, and was generally linked to support to HDZ and opposition to the socialist government. But now the HDZ government, trying to distance itself from the radical heritage but not from the radical votes, found itself in need of a skillful balancing act. For now it does not seem that the Government was able to reign it in completely, and reactions seem mostly to consist of attempts at ignoring the issue whenever possible. This apparently did not go unnoticed, as this year the domestic civil society and the international community (including the US ambassador) sent a strong signal by boycotting the official ceremony at Jasenovac, instead attending a separate one, organized by minority groups and descendants of actual survivors.

Problems with the neighbors started growing once right-wing governments came into power in all countries of the region. Although there was some hope that conservative governments could speak to each other better, problems in communication with Serbia and Slovenia did not go away and have recently escalated on issues related to Agrokor and Slovenian border controls. The Slovenian border crisis revealed several other interesting aspects. Slovenia started controlling each individual passenger leaving Slovenia to Croatia on the basis of the EU 2017/458 on „reinforcement of checks against relevant databases at external borders” of the European Council, which Croatia voted for. Although the regulation itself allows for targeted checks² as an exception, Slovenia decided to implement the full controls. This led to dramatic delays at the Slovenian border, which Croatia took as an assault on its main industry, tourism, and therefore as political pressure. At that time, Croatian President Grabar-Kitarović decided to send a letter to Commission and Council Presidents Juncker and Tusk, denouncing Slovenian behavior and demanding EC action. This letter raised a few spectators’ eyebrows, as most commentators would consider it more appropriate to seek resolution through diplomatic channels and direct contact first, before resorting to formal complaints on the level of head of state. It would appear that the Government is already going down the diplomatic road as Plenković announced new contacts with Slovenia and the EC noted its intention to use margins of upcoming meetings to seek resolution in contact with Slovenia and Croatia. The whole affair left a bad aftertaste and appearance of mishandling from the start. But the problem is not yet resolved and it might have negative political and economic effects in the future.

In addition, the Agrokor situation threatens to spoil relations with Slovenia and Serbia even further, as both countries announced possible new legislation aimed at preventing capital drain from Agrokor-owned companies in Slovenia and Serbia to the mother corporation in Zagreb. Apart from economic consequences, any such development would certainly have political consequences and might include protracted legal proceedings on government level. In the meantime in Zagreb, while everyone was watching the government crisis, Agrokor decided to announce “irregularities in its financial reporting³” and asked everyone not to rely on its financial reports. Although this could mean that the company’s debt is lower than expected, it seems more likely that it means the exact opposite. So the extent of the crisis is not yet known, and neither are its potential effects on fledgling economic recovery which only started this year. Agrokor, INA and tourism form a significant part of Croatia’s GDP and problems in any one of the three could have serious consequences for economic stability, and consequently for the budget, growth and social stability.

This situation took over almost every other issue, so there have been no statements over the past several weeks on, for instance, buyout of INA or the HEP – INA deal on retail gas prices.

We expect events to now start unfolding rapidly, as local elections will soon be followed by a summer break. The government crisis could stretch into the early summer, and Plenković seems to be well-positioned to dictate the timing of events.