Dec. 4 (Bloomberg) -- Croatians voted in an election likely to replace Premier Jadranka Kosor with an opposition bloc that will have to adopt economic changes and root out graft to lead the country out of a recession and into the European Union.
The Social Democrats and three other parties that make up the Alliance for Change led with 42 percent backing, compared with 23 percent Kosor’s Croatian Democratic Union, according to a Dec. 1 IPSOS-Puls survey of 4,171 people.
No margin of error was listed. Based on the poll, the Alliance would win 79 seats in the 151 seat Parliament. Voting stations close at 7 p.m. in Zagreb, with exit polls from the main television stations expected to be released immediately after.
The Alliance will probably win because of “voter dissatisfaction with the shattered economy and a promise by Zoran Milanovic, the Social Democrat leader and probably the next premier, to eradicate corruption,” said Damir Grubisa, director of the European Studies Center in Zagreb.
“They’ll win an opportunity to execute radical reforms and save the economy. We’ll have to see if they have the courage to do it.”
Amid Europe’s sovereign-debt crisis, Croatia is taking longer than its Balkan neighbors to climb out of a recession that began more than two years ago.
The nation had its credit rating reduced in December to BBB-, one step above junk at Standard & Poor’s, which cited a “deteriorated fiscal position and continuously weak external financing.”
Croatia has also struggled since 2009 with a corruption scandal that led to the arrests of dozens of officials, including former Premier Ivo Sanader, who resigned that year and handed the reins of government to Kosor.
‘Fully Develop’
The country will be the second former member of the defunct Yugoslav federation to join the world’s largest trading bloc when it becomes the 28th member in July 2013, though the commission urged it to continue to “fully develop” its battle against corruption and make political financing and public procurement more transparent.
While the 57-year-old Kosor spearheaded the crackdown against graft, the campaign failed to boost her standing among the country’s 4.5 million voters, who were angered by the extent of corruption reported and the economy’s poor performance.
Kosor’s Democratic Union has ruled for 17 of 21 years since Croatia broke away from the former Yugoslavia.
Gross domestic product grew 0.6 percent in the third quarter and the October jobless rate, at 17.4 percent, is more than double compared with EU members such as Germany and the Czech Republic. The central bank forecasts GDP to rise 0.5 percent this year.
Exiting the Crisis
“I believe that the new government will do all it takes so we can exit the economic crisis,” President Ivo Josipovic said after casting his vote in Zagreb. About 16 percent of the voters voted by noon, the electoral commission said in an e-mailed statement.
Croatia still needs to strengthen the labor market and the “business environment,” the European Commission said on Oct. 12.
The country also needs to revamp its extensive welfare system and “shift from social welfare-type expenditure to growth expenditure,” a World Bank manager in Zagreb, Hongjoo Hahm, said in an interview on Oct. 14.
Pension Changes
In addition to stamping out corruption, the Social Democrats and the other three parties that form the Alliance for Change want to cut waste from the pension system and lure investments in energy, transport and tourism to create jobs and revive the economy.
“I voted for a better Croatia, so that we can live better and get rid of the thieves that have destroyed us in the last 20 years,” said Ljubica Tokic, an unemployed administrator and a mother of seven, who cast her vote in Zagreb.
Expanding the hydroelectricity and tourism industries, which account for more than a fifth of the Balkan country’s economy, and using EU funds to build rail lines and roads would help push growth to 2 percent next year, said Radimir Cacic, the head of the Croatian People’s Party and the probable next economy minister, in a Nov. 21 interview in Zagreb.
The next government faces a “serious” fall in industrial production and growing social pressure, “which will make it harder to execute reforms,” Vladimir Gligorov, a researcher at the Vienna Institute for International Economic Studies, said in a Nov. 30 interview in Zagreb.
‘Few Ideas’
“On both sides in this campaign, there are few ideas on how to generate growth as public funds are scarce and the price of borrowing is climbing,” he said.
The alliance, which adopted the rooster’s cry of Kukuriku as its name during the campaign, includes the Croatian People’s Party, the Istrian Democratic Party and the Croatian Party of Retirees. It wants to sell non-controlling stakes in state companies, abolish the 20 percent tax rate on reinvested profit and add a tax on dividend payouts.
It would also sell or lease about 21 million square meters (69 million square feet) of former military properties along the Adriatic Sea coast worth about 4 billion euros ($5.4 billion), help push growth to 2 percent next year, Cacic said.
The measures would cut the budget gap, now at 6.2 percent of GDP, in half over the next four years as the country integrates further into the EU, he said.
Positive Signal
“The change at the top should send a positive signal to investors as the new government will be under pressure to reduce the deficit,” said Damir Novotny, analyst at Zagreb-based T&MC Consultancy. “But we shouldn’t expect spectacular changes.”
Sanader is being investigated for funneling money from state companies into a fund used for party and personal needs.
He was also indicted for corruption and abuse of power in cases related to INA Industrija Nafte d.d. and Hypo-Alpe-Adria-Bank International AG. He has denied all wrongdoing. The public attorney is now also looking into whether the party itself can be prosecuted for criminal activity.
businessweek.com
The Social Democrats and three other parties that make up the Alliance for Change led with 42 percent backing, compared with 23 percent Kosor’s Croatian Democratic Union, according to a Dec. 1 IPSOS-Puls survey of 4,171 people.
No margin of error was listed. Based on the poll, the Alliance would win 79 seats in the 151 seat Parliament. Voting stations close at 7 p.m. in Zagreb, with exit polls from the main television stations expected to be released immediately after.
The Alliance will probably win because of “voter dissatisfaction with the shattered economy and a promise by Zoran Milanovic, the Social Democrat leader and probably the next premier, to eradicate corruption,” said Damir Grubisa, director of the European Studies Center in Zagreb.
“They’ll win an opportunity to execute radical reforms and save the economy. We’ll have to see if they have the courage to do it.”
Amid Europe’s sovereign-debt crisis, Croatia is taking longer than its Balkan neighbors to climb out of a recession that began more than two years ago.
The nation had its credit rating reduced in December to BBB-, one step above junk at Standard & Poor’s, which cited a “deteriorated fiscal position and continuously weak external financing.”
Croatia has also struggled since 2009 with a corruption scandal that led to the arrests of dozens of officials, including former Premier Ivo Sanader, who resigned that year and handed the reins of government to Kosor.
‘Fully Develop’
The country will be the second former member of the defunct Yugoslav federation to join the world’s largest trading bloc when it becomes the 28th member in July 2013, though the commission urged it to continue to “fully develop” its battle against corruption and make political financing and public procurement more transparent.
While the 57-year-old Kosor spearheaded the crackdown against graft, the campaign failed to boost her standing among the country’s 4.5 million voters, who were angered by the extent of corruption reported and the economy’s poor performance.
Kosor’s Democratic Union has ruled for 17 of 21 years since Croatia broke away from the former Yugoslavia.
Gross domestic product grew 0.6 percent in the third quarter and the October jobless rate, at 17.4 percent, is more than double compared with EU members such as Germany and the Czech Republic. The central bank forecasts GDP to rise 0.5 percent this year.
Exiting the Crisis
“I believe that the new government will do all it takes so we can exit the economic crisis,” President Ivo Josipovic said after casting his vote in Zagreb. About 16 percent of the voters voted by noon, the electoral commission said in an e-mailed statement.
Croatia still needs to strengthen the labor market and the “business environment,” the European Commission said on Oct. 12.
The country also needs to revamp its extensive welfare system and “shift from social welfare-type expenditure to growth expenditure,” a World Bank manager in Zagreb, Hongjoo Hahm, said in an interview on Oct. 14.
Pension Changes
In addition to stamping out corruption, the Social Democrats and the other three parties that form the Alliance for Change want to cut waste from the pension system and lure investments in energy, transport and tourism to create jobs and revive the economy.
“I voted for a better Croatia, so that we can live better and get rid of the thieves that have destroyed us in the last 20 years,” said Ljubica Tokic, an unemployed administrator and a mother of seven, who cast her vote in Zagreb.
Expanding the hydroelectricity and tourism industries, which account for more than a fifth of the Balkan country’s economy, and using EU funds to build rail lines and roads would help push growth to 2 percent next year, said Radimir Cacic, the head of the Croatian People’s Party and the probable next economy minister, in a Nov. 21 interview in Zagreb.
The next government faces a “serious” fall in industrial production and growing social pressure, “which will make it harder to execute reforms,” Vladimir Gligorov, a researcher at the Vienna Institute for International Economic Studies, said in a Nov. 30 interview in Zagreb.
‘Few Ideas’
“On both sides in this campaign, there are few ideas on how to generate growth as public funds are scarce and the price of borrowing is climbing,” he said.
The alliance, which adopted the rooster’s cry of Kukuriku as its name during the campaign, includes the Croatian People’s Party, the Istrian Democratic Party and the Croatian Party of Retirees. It wants to sell non-controlling stakes in state companies, abolish the 20 percent tax rate on reinvested profit and add a tax on dividend payouts.
It would also sell or lease about 21 million square meters (69 million square feet) of former military properties along the Adriatic Sea coast worth about 4 billion euros ($5.4 billion), help push growth to 2 percent next year, Cacic said.
The measures would cut the budget gap, now at 6.2 percent of GDP, in half over the next four years as the country integrates further into the EU, he said.
Positive Signal
“The change at the top should send a positive signal to investors as the new government will be under pressure to reduce the deficit,” said Damir Novotny, analyst at Zagreb-based T&MC Consultancy. “But we shouldn’t expect spectacular changes.”
Sanader is being investigated for funneling money from state companies into a fund used for party and personal needs.
He was also indicted for corruption and abuse of power in cases related to INA Industrija Nafte d.d. and Hypo-Alpe-Adria-Bank International AG. He has denied all wrongdoing. The public attorney is now also looking into whether the party itself can be prosecuted for criminal activity.
businessweek.com
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