Croatian Prime Minister Tihomir “Tim” Oreskovic has robustly defended his government in exclusive comments to bne IntelliNews, but his administration looks ever more fragile after months of infighting and controversy.

Oreskovic tells bne IntelliNews in emailed comments that his priority remains economic reform and lowering Croatia’s debt after six years of recession. He also mounts a forceful attack on the Croatian left and “external forces” for attempting to blacken the government’s name by accusing it of heavy-handedness with the media and sympathies with the rehabilitation of Croatia’s fascist wartime past.

“I accepted the privilege and challenge of the office of Prime Minister to focus on strengthening the economy, reducing debt, increasing investments and improving prosperity for all Croatian citizens,” Oreskovic says in an email to bne IntelliNews. “Our priority is to focus on the economy and to stimulate economic growth and job creation. Our main focus is on improving the living standards of all Croatian citizens. Croatia came out of a six year recession last year, we have much work ahead of us.”

Oreskovic asserts that a recent assessment of Croatia’s reform programme by the European Commission (EC) was positive, noting the government’s plans on a wide range of areas including public finances, the public administration, pensions, the business environment, and healthcare. “The European Commission commented that the reforms were ‘ambitious’, which reflects the effort and commitment the government has to improve the economy and make a meaning difference to the lives of Croatian citizens. Croatia is expecting 2% GDP growth, a deficit of 2.6% [of GDP] and we expect 2016 to be the first year where we see a reduction in our public debt to GDP ratio. We have already begun privatizing select companies to free up some €200m to reduce the debt this quarter.”

“The positive endorsement of the EC reflects the joint effort of our coalition partners and we have begun execution of our plans.”

Croatia’s economy is certainly accelerating, achieving 2.7% year-on-year growth in the first quarter, as private consumption and investment picked up, and the external demand environment remained favourable. However, the extent to which this is due to new economic impetus catalysed by a reforming government is questionable.

Oreskovic says that €100mn-plus investments have already been committed to the pharmaceutical sector, to be followed by further announcements in the near future.

Despite some confusion over which minister will take oversight of the energy portfolio – a major focus of the previous economy minister Ivan Vrdoljak – Oreskovic insists that a proposed liquefied natural gas (LNG) terminal on the Adriatic island of Krk would go ahead. The terminal would make a modest but potentially strategically significant contribution to the region’s energy supply, but has been hamstrung by politics and concerns over the original proposed site, owned by Austria’s post bad-bank “wind-down company” Heta.

“We consider the LNG project as a strategic priority in our energy policy, in line with the EU strategy of diversification of the supply routes,” the PM tells bne IntelliNews. “I believe it would be of great importance not only for Croatia but also for the European Union. To this end my government has shifted the strategy to a floating LNG terminal, which will allow us to enter the market sooner. We have many investors ready to finance this strategic initiative.”

Oreskovic adds that the government had a “strong focus on strengthening our oil and electricity investments”. Until relatively recently, offshore oil and gas development was seen as a potential boon for Croatia. Now, though, it remains to be seen how that can be squared with the plunge in oil prices and two state offshore exploration projects being put on hold.

Snap election?

In any case, there are increasing questions about whether Oreskovic will be around to oversee the reforms and investments that he champions, with his government teetering on the brink and a snap election increasingly likely.

Oreskovic is a technocrat raised in Canada who was a surprise choice for prime minister after weeks of negotiations following the inconclusive November general election. The former pharmaceutical executive has endured a difficult tenure since becoming premier on January 22. That he was initially mocked for his rusty Croatian and making his first presentation to parliament with a PowerPoint presentation rapidly became the least of his problems.

On June 3, Oreskovic called on his two deputy prime ministers to step down as an influence scandal threatened to topple the administration. Deputies Tomislav Karamarko of the conservative Croatian Democratic Union (HDZ), the largest party in government, and Bozo Petrov of the putatively reformist junior coalition partner Bridge of Independent Lists (Most) have been at each other’s throats over revelations that Karamarko’s wife received money from a lobbyist for Hungarian energy company MOL. MOL owns the largest stake in Croatian counterpart INA, and is locked in a bitter dispute with the Zagreb government, the second-largest shareholder.

Karamarko faces a no-confidence vote by June 18 that could bring the entire government down. Fresh elections would probably mean the end of Oreskovic’s brief stint as prime minister.

While the HDZ might be able to cobble together enough votes to save its leader, that may not be the end of the government’s problems. The scandal is merely one of the most serious to rock a government already hobbled by tension between Karamarko and Petrov. Disagreements and confusion already reigned over the appointment of a new security chief and a new minister for veterans, with Karamarko and Petrov calling rival press conferences at one stage. The first ministerial departure came after just six days, with the first veterans’ minister to be appointed resigning after calling for a “register of traitors” to the Croatian national interests.

More minor embarrassments came from the HDZ speaker of parliament taking a police convoy on a skiing trip days after his appointment, and claims (since refuted) that the economy minister was once sacked for stealing a Styrofoam cup.

Ustasha undertones

Internationally, the government has come under harsh media scrutiny for its alleged tolerance of the rising rehabilitation of Croatia’s 1941-44 Nazi-puppet Ustasha regime, which massacred hundreds of thousands of Jews, Serbs, Roma, and others. Culture Minister Zlatko Hasanbegovic in particular has been accused of calling for a “Greater Croatia” including Bosnia & Herzegovina and parts of Serbia, and praising Ustasha fighters.

The government has also been accused of intolerance of media freedom after changes at the national broadcaster and Hasanbegovic’s ministry responding to an assault on a journalist by saying that “this case reminds us about the importance of responsibility for words spoken and/or written in public”. The culture ministry has also axed funding for independent media and NGOs that tended to be left-aligned.

Finally, a recent demonstration against abortion, and pressure from conservative groups to recast the school curriculum at all ages to reflect “patriotism, national and traditional values”, have led some opponents to claim that Croatia is looking to copy nationalist-conservative models tinged with authoritarianism seen in Hungary and Poland.

Oreskovic has defended Hasanbegovic, saying that the minister has condemned the Ustasha since coming to power. He tells bne IntelliNews that attacks on his government had been orchestrated by “internal and external forces which have different agendas and wish to paint a distorted picture of Croatia”.

The prime minister also launched a scathing attack on Croatia’s left. Croatian politics are deeply divided between left and right, largely on cultural and historical issues rather than economics. The dates of 1945, when communist partisans committed massacres of Ustasha fighters and innocent refugees, and 1991, when Croatia split from socialist Yugoslavia, loom large.

The opposition Social Democrats have traditionally taken a more sympathetic view of Yugoslavia than the HDZ, and Oreskovic seems to side with the conservatives’ interpretation, which sees communism as equally criminal as the Ustasha regime. “My government's position is in line with mainstream Europe which repudiates all totalitarian regimes, communist as well as fascist,” he says. “Unfortunately, much of the Croatian left still resists accepting the totalitarian nature of the communist Yugoslav regime. It is sad that some still live in the past and cannot move forward. We can still hear, for example, in the Croatian Parliament, ‘Death to Fascism, Freedom to the People’, the rallying cry of the Communist partisans. Croatia remembers very vividly the times when the communists tried to intimidate their opponents by labelling them as fascists. It is also clear to me that all forms of totalitarianism whether they be fascism, Nazism or communism have scarred humanity and must be condemned.”

Robin Harris, a conservative historian and author close to the Croatian right, backs Oreskovic, saying the prime minister had “done what he can”. He agrees that Croatia has been unfairly maligned by the international media and domestic left, and that the latter has yet to come to terms with massacres committed at the end of World War II, or the economic legacy of communism.

“Comparisons with Hungary and other Central European countries are misplaced,” Harris, a former advisor to British Prime Minister Margaret Thatcher, tells bne IntelliNews. “Far-right parties get very few votes – unlike for example in Hungary. There are a few racist shouts and provocative slogans, but no more than you’d hear in Britain. There is no strong anti-immigrant feeling in Croatia either.”

But critics maintain that the HDZ’s lack of economic direction has encouraged it to slip back to nationalist tub-thumping, while Oreskovic and Most have had their lack of high-level political experience exposed.

Former HDZ Prime Minister Jadranka Kosor – premier between 2009 and 2011 – has joined the chorus of disapproval, slamming the government and Oreskovic in no uncertain terms. “This government is the largest and most unpredictable political experiment ever attempted in Croatia,” she tells bne IntelliNews in emailed comments. “To make the experiment even stranger, the government is headed by a person who did not take part in the election process.”

The coming days will reveal whether the “experiment” will continue and Oreskovic will be given an opportunity to push reform further. A snap election seems unlikely to bring a radically different result from November’s – and is even less likely to address Croatia’s deep-seated economic challenges.