Croatia Votes in Tight Election After Six Years of Recession

  • Ruling Social-Democrats hold slim lead over opposition HDZ
  • Neither side seen winning majority, complicating reforms

Croatians are voting in a general election to decide whether to re-elect a government criticized for being too slow to end a record economic recession or replace it with an opposition party whose former leader was jailed for graft.

Prime Minister Zoran Milanovic’s Social Democrats held a razor-thin lead in opinion polls over the opposition Croatian Democratic Union, emphasizing they steered the Balkan state into the European Union and ended six years of economic contraction. The opposition party, known as HDZ, argues the recovery comes too late and Milanovic has bungled the handling of hundreds of thousands of migrants trudging through the country in Europe’s refugee crisis. Voting started at 7 a.m. on Sunday and finishes at 7 p.m.

Led by former intelligence chief Tomislav Karamarko, HDZ is fighting for renewal after it plunged into a political abyss when it was censured for corruption two years ago and its former leader and Prime Minister Ivo Sanader was jailed for bribery and abuse of power. Appealing to patriotism and promising job growth, it has countered Milanovic’s pledge to build on the first economic expansion since 2008. Neither party is poised to win a majority, and whoever leads the next government will need partners to rule.

“The ruling coalition that will eventually be formed will gather at least 10 political parties,” Vuk Vukovic, a lecturer at the Zagreb School of Economics and Management, said by phone. “This will involve huge trading of seats, ministries, supervisory boards, public companies and agencies, and all that spells bad news for much-needed reforms.”

Turnout was 46.5 percent by 4:30 p.m., according to the Electoral Commission. An Ipsos PULS poll released by Nova TV on Thursday indicated the Social Democrats will win 60 seats in the 151-member parliament, versus 57 seats for HDZ. The survey showed Milanovic’s party clawing back from September, when the same company, using a different methodology, said HDZ led 30 percent to 25 percent.

Record Recession

Croatian bonds have fallen this year, with the yield on the country’s euro-denominated debt due in 2025 trading at 4.292 percent on Friday in Zagreb, from 3.246 percent when it was issued in March.

After leading the Adriatic state into the European Union in 2013, Milanovic’s administration fought to rebuild sagging support this year, passing laws forgiving debt of the poorest Croats and allowing Swiss-franc loans to be converted to euros to relieve 53,000 households hurt by the strengthening Swiss currency. His government argues it’s dragged the country out of a downturn that wiped 12 percent off the economy, with Finance Minister Boris Lalovac raising the government’s 2015 growth forecast to 1.5 percent on Tuesday.

“Until now it was just play,” Milanovic told reporters after casting his vote in Zagreb on Sunday. “Now the real work begins.”

Still, public debt will climb to 91.7 percent of gross domestic product in 2016, according to the European Commission, and the government estimates a budget deficit of 4.5 percent of GDP this year, above the EU’s 3 percent limit.

“They are all making promises, but no one says how they’ll fulfill them,” said Matej Krivic, a 28-year-old economist from Zagreb. He said he invalidated his ballot, voting for no one.

HDZ ‘Catharsis’

HDZ received a boost last month, when Croatia’s Constitutional Court overturned a conviction against Sanader, ruling he and his party -- which was found guilty of corruption and fined in 2014 -- must be tried again over charges of embezzlement and abuse of office. While Sanader, who has maintained his innocence, remains in jail, his former interior minister, 56-year-old Karamarko, says the party has undergone a “catharsis.”

Karamarko has pledged to bring in more investors and reduce unemployment that reached 16.2 percent in September. His party has also campaigned on the role it played splitting the Adriatic state from the former Yugoslavia following the fall of communism.

HDZ has criticized Milanovic for his management of the more than 330,000 migrants who have passed through Croatia since September. While the government has pledged not to build a fence and to care for the vulnerable, President Kolinda Grabar-Kitarovic, a HDZ candidate who unseated Social Democrat-backed incumbent Ivo Josipovic in a January presidential election, has called for the army to be deployed. Another 30,000 migrants are on their way from Greece to Croatia, state radio reported on Sunday.

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