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July 2, 2020

CROATIA: HDZ better positioned to form coalition government after Sunday’s poll

BY Andrius Tursa

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The Restart Coalition led by the opposition Social Democratic Party (SDP) will likely win the most mandates in the general election scheduled for 5 July, but the ruling Croatian Democratic Union (HDZ) – expected to come in second – has better chances of forming a new coalition government. The policy agendas of the SDP and HDZ are similar, although the latter would likely be more business-oriented, while the former could be expected to put more emphasis on social, education, and health policies.

Out of 151 seats in the unicameral parliament, 140 are elected through a proportional system in ten constituencies with a 5% hurdle. Eight mandates are reserved for ethnic minorities and three for Croatians living abroad.

Pre-election opinion polls indicate a tight race between the center-left Restart and the center-right HDZ, both polling at around 29-31%. The recently established right-wing Miroslav Skoro Homeland Movement (DPMS) is placed third with around 12-13%, followed by the Bridge of Independent Lists (Most) with 4-6%. Other parties that could win seats in parliament include the Green-Left coalition, right-wing Human Shield (ZZ) as well as the centrist Pametno-Fokus-led alliance.

HDZ-DPMS coalition most likely

Neither of the parties is expected to secure an absolute majority of seats (76 out of 151), but Restart is likely to win a plurality of mandates, narrowly outperforming the incumbent HDZ. However, based on pre-election rhetoric and ideological differences, Restart is unlikely to cooperate neither with DPMS nor with Most. Support from some smaller parties such as the Green-Left coalition and independent deputies might not suffice to form a majority government.

Meanwhile, the ruling HDZ has not ruled out potential cooperation with the DPMS despite some heated pre-election exchanges. To reach the necessary 76 mandates, the HDZ-DPMS coalition would probably need the backing of a few more independent deputies or small parties to reach a majority, but this would likely be a manageable feat. Nonetheless, the HDZ-DPMS coalition is not a foregone conclusion, and their post-election talks may be complicated and protracted.

Besides the two core scenarios – the HDZ-led government (50% probability) and the SDP-led cabinet (30% probability) – a grand coalition remains an option. However, this is highly unlikely (10% probability), given the polarized nature of Croatian politics. If none of the parties manages to form a government with the support of an absolute majority of deputies, new elections would be called (10% probability).

Policy implications

Regardless of who leads the next government, the post-Covid-19 economic recovery will be the priority. Both parties are likely to extend some of the existing support economic measures, promote job retention/creation schemes, and attempt to lower taxes on labor and consumption. The reconstruction of the capital Zagreb after the March earthquake will be important in reviving the economy a well. In the longer-term, both parties also aim to downsize the bureaucratic apparatus and focus on the digitalization of public services. No significant foreign policy changes are expected, with membership in the OECD, the Eurozone and the Schengen zone remaining among the main objectives. In general terms, the HDZ-led government could be expected to be slightly more business-oriented, while the SDP-led cabinet would likely focus more on social, education, and health sectors.

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