Croat HDZ, Bridge Say They Made Progress in Coalition Talks

  • Winner HDZ faces conditions set by smaller partner for support
  • Plenkovic says some of Bridge’s demands need legal analysis

The conservative Croatian Democratic Union, which scored a surprise victory in Sunday’s snap general elections, moved closer toward forming a government with the third-placed Bridge party as they seek to end the political deadlock that has stalled an economic overhaul.

The Democratic Union, known as HDZ, won 61 of parliament’s 151 seats, defeating the Social Democrats who had led opinion polls before Sunday’s ballot. HDZ leader Andrej Plenkovic held the first round of talks with Bridge, which won 13 seats, to form another coalition after a tie-up between the two collapsed in June amid a conflict-of-interest scandal.

“We are working on a long-term agreement for a stable majority in parliament and a stable government,” HDZ leader Andrej Plenkovic told reporters after five hours of negotiations in Zagreb on Tuesday. “This is a small step toward future cooperation. We agree on the goals.” 

HDZ must regain the support of Bridge, a thorny task since the implosion of their previous cabinet after almost six months in power left more than 60 economic reform laws stuck in parliament. The third-placed party has made clear on Monday it won’t sell its cooperation cheap, with its leader, 36-year-old psychiatrist Bozo Petrov, giving potential partners five days to meet a list of demands or forfeit its support.

Bridge Demands

Bridge, a grouping of independents and city mayors that won support from voters disillusioned with dominant political forces, made a similar ultimatum following the November 2015 election by demanding a three-party government before backing down to rule only with HDZ.

Plenkovic said HDZ would address some of Bridge’s conditions, but others, such as creating an exclusive economic and fishing zone in the Adriatic Sea, “required legal and expert analysis.” The party has called for more oversight on the central bank, a proposal the European Central Bank said may undermine its independence, which would conflict with Croatia’s commitments to the European Union, which it joined in 2013.

The previous government’s collapse derailed a plan to overhaul the economy after it shrank 12 percent in a 2008-2014 downturn. Annual economic growth of 2.8 percent in the second quarter has helped the Adriatic state regain some ground. HDZ has pledged to cut income and value added taxes and reduce public debt that has reached 87 percent of gross domestic product.

Petrov said he hoped the two teams will continue to talk in the same spirit as in the first negotiation session. “The atmosphere was good, we need to build trust,” he said.

The HDZ and Bridge would together control 74 seats, still short of the 76 needed for majority in the 151-seat parliament. HDZ official Gordan Jandrokovic said on Monday the party will also reach out to other small factions and to eight minority deputies, who often align with the coalition builders. The next round of talks between HDZ and Bridge is scheduled for Monday.

If HDZ and Bridge cooperate, they can try to continue their efforts to heed EU recommendations by reducing the budget deficit, which Finance Minister Zdravko Maric has said will be lower than the planned 2.6 percent of GDP this year.

“Whoever enters the government will have to work hard in an economy in a dire need of restructuring,” Hrvoje Stojic, chief economist at the Croatian unit of Addiko Bank AG. “More positively, the new government will ride on the wave of a stronger macro backdrop, with stronger-than-expected growth this year, of around 2.5 percent, a much lower-than-expected 2 percent of gross domestic product budget gap and stabilizing public debt.”

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