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CROATIA: HDZ might govern alone after convincing victory

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The ruling center-right Croatian Democratic Union (HDZ) achieved a convincing victory in the 5 July general election and is expected to govern alone, relying on the support of national minority MPs and the informal backing from smaller parties. The strengthened HDZ mandate and the fragmentation of the opposition bode well for the stability of the government, which will continue to focus on reviving the country’s tourism-dependent economy.

With 99.9% of votes counted, the HDZ secured 66 mandates in the 151-seat unicameral parliament, which puts it well ahead of its main rival, the Restart Coalition led by the opposition Social Democratic Party (SDP) with 41 mandates. As expected, the Miroslav Skoro Homeland Movement (DPMS) will be the third-largest parliamentary group with 16 mandates, ahead of the center-right Bridge of Independent Lists (Most) with eight seats. The Green-Left Coalition secured seven mandates, while the SSIP-Smart-Focus coalition won three seats. The Reformists party and the Croatian People’s Party (HNS) will also enter the new parliament with one seat each. No major electoral violations were reported. Turnout was historically low at 46.9%, which favored the HDZ.

CROATIA: HDZ might govern alone after convincing victory 1The constellation of seats in the new parliament leaves virtually no alternatives to an HDZ-led government. President Zoran Milanovic (independent, formerly of SDP) is expected to give the mandate to form a new cabinet to incumbent Prime Minister Andrej Plenkovic (HDZ), who will then have 30 days to win the vote of confidence in parliament. If necessary, this period may be extended by another 30 days by the president.

The winning center-right party has several options to reach the required 76-seat majority in parliament. The first – and most likely – scenario is that the HDZ will seek to govern alone without formal coalition partners. The ruling party is expected to start talks with eight national minority MPs and one HNS deputy. Both groups support the current Plenkovic cabinet and are likely to continue this cooperation. The HDZ will also seek informal backing from some smaller parties in parliament or at least some of their deputies. Under this scenario, the formation of the new cabinet would be relatively swift.

A less likely option would be for the HDZ to open coalition talks with the populist right-wing DPMS. While this could give Plenkovic a stable majority in parliament, the DPMS may prove a risky coalition partner as it has little political experience, and there are questions about the party’s cohesion. Moreover, DPMS leader Miroslav Skoro has been critical of Plenkovic remaining as head of the government, which may lead to unnecessary frictions.

The new government will face the challenging task of reviving the country’s tourism-dependent economy, with GDP expected to drop by 9% this year, according to IMF. To stimulate domestic consumption, the HDZ’s electoral program foresees lowering the personal and corporate income tax rates as well as cutting the VAT on food products. The reconstruction of the capital Zagreb after the March earthquake will also be important for the recovery.

Over the longer-term, HDZ aims for increasingly Croatia’s self-sufficiency in food and energy production, which suggests greater investment into agriculture and renewables. At the same time, the HDZ’s positive track record in terms of managing public finances points to fiscal consolidation. Finally, the HDZ-led government would remain firmly pro-EU, seeking to adopt the euro and join the Schengen area.

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CROATIA: HDZ might govern alone after convincing victory

The ruling center-right Croatian Democratic Union (HDZ) achieved a convincing victory in the 5 July general election and is expected to govern alone, relying