THIS month Dubrovnik, Croatia’s picturesque Adriatic port city, has been a favourite destination not only of the habitual cruise-ship tourists but also of foreign dignitaries. Within a few days, Angela Merkel, Germany’s chancellor, senior officials from Russia, China, America and New Zealand and almost every single regional foreign minister and president dropped by. Credit for the flurry of visitors goes to Vesna Pusic, Croatia’s foreign minister, who is seen at home as a candidate for secretary-general of the UN.

Yet, however popular a travel destination, Croatia is not well. The economy is now in its sixth consecutive year of recession. When Zoran Milanovic, the Social Democratic prime minister, took over in December 2011, his government promised painful but necessary reforms. Since then little has happened. Joining the European Union a year ago did not result in the hoped-for boost, partly because the reforms Croatia still needs to do were not the ones required to join the EU, says Senada Selo Sabic, an analyst.

Ever since the end of the war in 1995, successive governments have pledged to cut Croatia’s bloated public sector, and its far too numerous local authorities. But, despite some minor reforms, not one, including the current government, has been willing to take on powerful interest groups such as trade unions, who resist any change affecting them. The latest fight is with public-service cleaning staff who oppose a plan to outsource their work. Tenders for research for oil and gas in the east and drilling in the Adriatic, may yet yield riches, but not for years to come.

Croatia is stagnating, says Emil Tedeschi, the head of Atlantic Grupa, one of the few big Croatian companies still expanding, although most of its growth comes from its business outside the Balkans. The country is short of management skills, he says, is overtaxed and the government lacks courage. It has fought corruption and increased tax revenues, but has done nothing to cut bureaucracy or red tape.

Liquidity is a huge problem. In a restaurant in Zagreb a wine merchant thanks the owner for paying him. “You are the only one,” he says. A man in his mid-thirties, he was full of hope a year ago. Now, he says, he is planning to emigrate to Italy. He will not be alone. Medical staff and other qualified professionals are leaving.

Mr Milanovic has a reputation for intelligence but not for his political skills or communication. He commiserated with victims of the disastrous floods in May by telling them about a burst pipe he once had. A conflict in his cabinet led to a spectacular bust-up with Slavko Linic, then minister of finance. After getting the sack, Mr Linic went on the attack, accusing the prime minister of laziness, nepotism and running the country from restaurants.

A row with Mirela Holy, another former cabinet minister, ended with Ms Holy leaving the Social Democrats and starting her own environmentalist party. The new party came in third at European elections in May, taking 9.4% of votes. Mainly thanks to the split of the left, the parties of the governing coalition were trounced whereas the main opposition, the Croatian Democratic Union, did well. Yet in the eyes of voters all sides are tainted by corruption and most of them are fed up with what they see as a political elite unwilling or unable to extricate their country from the mess it is in.