Croatian Prime Minister resigned

Sanader's Sudden Exit Shocks Croatia

Economic experts say the Croatian economy is in worse shape than the public realises. That was named as one of the possible reasons why their PM resigned in such important moment. Sanader hesitated to take painful but necessary measures to counter the recession and brought Croatia to the verge of bankruptcy


By DRAGO HEDL
from Zagreb, CROATIA
Story from www.balkaninsight.com


Prime Minister may be blamed for leaving at worst possible moment, as economic problems threaten to overwhelm the country. Ivo Sanader's decision to resign as Croatian Prime Minister and HDZ leader, along with assurances that he will not run for president in next year's elections, has shocked the Croatian public.

Even President Stjepan Mesic only found out about Sanader's plans just an hour before he announced them to the nation at a televised press conference, prompting him to return to Zagreb from a visit to Istria.

"Thank God I'm not ill," Sanader said, implying this was not a reason for leaving office. He rebuffed speculation that he was ditching his premiership in favour of a position in a European institution. This was, more or less, all he had to say about his reasons.

Sanader's gesture, seen as unusual in international political practice where politicians usually leave high office on the grounds of deteriorating health or involvement in a scandal, came entirely unexpected.

The fact that Croatia is facing the hardest economic situation since the 1991/2 war for independence further compounds the impression of inappropriateness. Sanader did not seem like a character that would jump ship the minute water started coming through the hull.

Analysts, meanwhile, have speculated on the possible reasons for his sudden departure. One might be a rift in the HDZ, where a right-wing faction seems to be gaining the upper hand.

A parliamentary probe into an affair over army vehicle procurement has been cited as another.

The decision to step down could well have been prompted by Croatia's serious economic situation and 6.7 per cent drop in GDP in the first quarter of 2009, coupled with a standstill in Croatia's EU accession talks because of a border dispute with Slovenia.

Political commentator Davor Butkovic says Sanader may have felt outmanoeuvered by right-wing rivals in the HDZ such as Andrija Hebrang, Ivan Suker and Bozidar Kalmenta.

Against this, however, was Sanader's testament that he was leaving the Prime Minister's post to Jadranka Kosor, 56, his most devoted associate in government, Butkovic adds.

Kosor's appointment could well be the outcome of a compromise within the HDZ, all the more likely, since he singled out Hebrang as his candidate to replace Mesic in next year's presidential elections.

The affair of the procurement of military vehicles, which has been in the public spotlight for a while, involving former defence minister Berislav Roncevic, has created a rift in the ruling HDZ, according to unofficial sources.

An investigation led by deposed police chief Vladimir Faber allegedly showed that the state paid 1.5 million euro more than the trucks were worth. While Sanader demanded that the affair be cleared up, Hebrang allegedly challenged this.

Croatia's dire economic situation is mentioned as another likely reason for his decision to resign. Economic experts say the economy is in worse shape than the public realises. A dramatic decline in GDP, a direct consequence of Sanader's hesitation in taking painful but necessary measures to counter the recession, has brought Croatia to the verge of bankruptcy.

Sanader set up an Economic Council comprised of Croatia's finest economic experts to provide solutions to the crisis but he consistently rejected its recommendations. These would have been painful for the public and Sanader was wary of the political consequences.

Meanwhile the budget is short of 2 billion euros, and the government has already announced it has run out of money to fund pensions and wages in the public sector. After just two months, the budget will have to be re-balanced again, since the government cannot apply for more loans, with a staggering 40 billion euro of foreign debt already weighing on the economy.

On top, Croatia has failed to resolve the Slovenian blockade to its EU membership talks, which has had an adverse effect on the country's credit rating. Some close associates say Sanader feels he has been abandoned by Croatia's allies, Germany and Austria, who he feels have done nothing to help.

Brussels, on the other hand, has voiced dissatisfaction with the pace of reforms in the Croatian judicial system and with its feeble efforts to fight corruption and organised crime.

Zoran Milanovic, opposition leader and president of the Social Democratic Party, SDP, has already called for early elections. "New elections are necessary in these times of crisis," Milanovic said, hours after Sanader stepped down.

"The leader who crucially contributed to Croatia's current crisis cannot leave a sinking ship. If illness is to blame, he should find strength to say this, call elections and appoint a new government," the leader of the Croatian People's Party, Radimir Cacic said.

However, economic experts fear new elections could hurt Croatia at this point. Months would be lost in the process of forming a new government during which time the country would be left without leadership.

"The economic crisis is at its peak, we are late in taking necessary counter-measures and now there is no one to implement them with sufficient speed and efficiency," Damir Kustrak, president of the Croatian Union of Employers, said.

Analysts also question the value of appointing Jadranka Kosor, whom Sanader recommended to succeed him as Prime Minister. She is not seen as having the mettle to take the serious and painful, but necessary, measures the country needs. Several major investment projects will have to be cut, including highway construction and the building of the Peljesac bridge.

Sanader's departure has revived the idea that the IMF should be called in to assist with measures to counter the crisis. However, what the IMF is likely to suggest is exactly what Sanader has avoided doing in order to maintain social peace. The IMF will insist on sharp cuts to welfare spending, public expenditure and to investments, experts warn.

Croatia thus enters a politically volatile period at the worst possible time. Problems are mounting, decisive measures are late in coming and meanwhile the captain has jumped ship.


(Published: 18.07.2009.)