Croatian Corruption Probe Won't Derail EU Bid, Josipovic Says

Croatian President Ivo Josipovic said a widening probe of government corruption won’t derail the country’s drive to join the European Union in 2012.

Opposition leaders yesterday filed a motion of no- confidence in Prime Minister Jadranka Kosor’s government after at least 20 senior members of the Croatian Democratic Union, including former ministers, were placed under investigation for crimes ranging from misappropriation of funds to embezzlement.

“There is a consensus in Croatia among all the main political parties that EU entry is our chief political aim,” Josipovic said in an interview in Zagreb. “All the corruption affairs that need to be resolved add extra weight to the situation where there already is an economic crisis, a general lack of efficiency and inadequate civil-rights protections.”

The European Commission has demanded that Croatian authorities do more to stamp out corruption and strengthen the judiciary before approving the country’s bid to become the second former Yugoslav republic to join the EU after Slovenia.

Croatia is also struggling to pull out of recession, with the economy forecast to shrink 1.5 percent this year. While the government expects gross domestic product to expand 1.5 percent in 2011, Josipovic said the administration hasn’t done enough to pare bureaucracy that’s damping growth.

Photographer: Elvis Barukcic/AFP/Getty Images

Croatian President Ivo Josipovic, seen here, said, “There is a consensus in Croatia among all the main political parties that EU entry is our chief political aim.” Close

Croatian President Ivo Josipovic, seen here, said, “There is a consensus in Croatia... Read More

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Photographer: Elvis Barukcic/AFP/Getty Images

Croatian President Ivo Josipovic, seen here, said, “There is a consensus in Croatia among all the main political parties that EU entry is our chief political aim.”

“The government’s measures to improve the economic situation have not shown results so far,” Josipovic said Oct. 19. “The government still has to undertake some crucial reforms, such as a radical overhaul of the tax system, as Croatia’s income taxes are among the highest in the world.”

‘Duty to Speak’

The 53-year-old composer and law professor was elected Croatia’s third president in January after pledging to protect civil rights and eradicate corruption. His duties include ensuring the stability of the government, as well as leading the armed forces and working with the prime minister to oversee foreign policy.

“I don’t meddle with the government’s work, but when the state of the country is at stake, then it is my duty to speak,” Josipovic said. “We all talk about the reforms, but the attitude is: Not in my back yard. Not in my town, in my ministry, in my court of law.”

If parliamentary elections were held today, the Social Democratic Party would win with 35 percent of the vote, followed by the Croatian Democratic Union at 26 percent, according to an Oct. 1 poll by IPSOS Puls d.d. The survey of 1,000 people had a margin of error of 3.1 percent.

Corruption Probes

The Social Democrats, led by Zoran Milanovic, have 55 lawmakers in the 153-seat parliament. The Croatian Democratic Union, which rules in a coalition with the Serb minority party, has 83 seats.

The corruption investigations began after Kosor took office in July 2009, replacing her predecessor, Ivo Sanader, who resigned saying he had decided to leave politics.

Kosor, who was Sanader’s deputy, has criticized her former boss for trying to “undermine” the government.

Lawmakers last month opened an inquiry into how Sanader’s government transferred control of oil refiner INA Industrija Nafte d.d. to Budapest-based Mol Nyrt. in January 2009. Terms of the contract that allowed Mol to increase its stake in INA to 47.2 percent haven’t been released.

Sanader testified in parliament on Oct. 12 that the sale of INA was a “collective decision” by the government and the ruling party. Kosor, who was Sanader’s vice-premier, denied she had any role in the transaction.

Restoring Confidence

Mladen Barisic, a former treasurer of the Croatian Democratic Union, was arrested Sept. 29 in connection with alleged siphoning of funds from state companies to the party. He remains in custody after bail was denied. His lawyer, Ante Madunic, declined to comment when contacted by Bloomberg News.

In early September, the Office for the Suppression of Corruption and Organized Crime indicted former Deputy Premier Damir Polancec and seven former executives of Podravka Prehrambena Industrija d.d., Croatia’s largest food producer, on charges of embezzling about $71 million. Polancec was a member of Podrovka’s board at the time. Calls to his lawyer, Anto Nobilo, weren’t returned.

“This creates a certain lack of trust in the government and the institutions of power,” Josipovic said. “The only way to overcome this and regain the people’s confidence is through hard and honest effort.”

To contact the reporter on this story: Jasmina Kuzmanovic at jkuzmanovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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