EU country briefing: Croatia

[Photo :Robert Steenland]

The following article is a part of a series of brief country profiles for the EU-28 ahead of the European elections in May.

Croatia is the EU’s youngest member, and the one with the most turbulent recent history, having fought a war of independence from Yugoslavia in 1991-95. It only joined the bloc in July 2013, following a referendum in which 66% voted in favour.

Zagreb’s membership was considered an important step for stabilising the Balkans after a turbulent decade of ethnic conflicts in the region in the 1990s.

The road to membership was complicated by a land and sea border dispute with Slovenia over the Piran Bay in the northern Adriatic, which prompted Ljubljana to block Zagreb’s progress for more than a year in 2008-09.

The two countries eventually agreed to international arbitration but Croatia rejected the outcome, citing irregularities of the process, which has frustrated its accession into the Schengen area

Croatia has publicly stated its aim to join the eurozone during the next decade and its prime minister said he hoped it would join the European Exchange Rate Mechanism (ERM II) before it takes over the EU’s rotating presidency in 2020, although it still does not meet all the criteria.

Croatia’s population is around 4.2 million, 0.93% of all EU citizens (without the UK). In this year’s European Parliament (EP) elections, twelve (1.7%) out of the 705 Members of the European Parliament (MEP) will be elected in Croatia.

During the last EP elections in 2014, only 25.2% of people turned out to vote in Croatia, well below the EU average of 42.6%. While more people believe the EU is a good thing (44%) rather than a bad thing (14%), this is also below the EU average (62/11).

Moreover, many Croatians are indifferent about their country’s EU membership, with 41% considering it neither a good or bad thing. This also makes Croatia the third most Eurosceptic country after Italy and Czechia.

A majority of 66%% feel they are EU citizens now, but just 40% support joining the monetary union, compared to 56% against.

Economy:

Croatia suffered six years of recession from 2009 to 2014 that wiped out more than 12% of its overall output. Since then, it has enjoyed some momentum, confirmed by the EC’s latest autumn and winter forecasts, but has been generally criticised by analysts and investors for a sluggish pace of market reforms.

Croatia’s economy grew by 2.6% in 2018, according to the state statistical bureau, and is expected to expand around 2.7% in 2019, but there is fresh downside pressure because of the poor economic performance of Italy, Croatia’s main trading partner.

Croatia’s total GDP was around €49 billion in 2017, around 0.4% of total EU27 GDP (without UK). In 2017, Croatia finally reached its pre-crisis real GDP per capita level of €11,500, which is now the third lowest in the EU after Romania and Bulgaria. In purchasing power standards (PPS) the per capita GDP corresponds to 62% of the EU28 average.

The unemployment rate was expected to be 9.1% in 2018, and forecast to drop to 6.6% by 2020. While this is above the EU28 average of 7% (2018) and 6.3% (2020), it is a remarkable improvement from the 17.4% rate in 2013. Likewise, the youth unemployment rate that stood at 24.5% in 2018 (above the EU28 average’s 15.6%), is half of 2013’s 50%.

Political context and direction

Croatia’s current political system is based on the 1990 constitution, enacted after the first democratic elections, that established it initially as a semi-presidential republic. It became a parliamentary republic following constitutional amendments in 2000/2001, which reduced the president’s competences.

The most important political figure is now the prime minister, who shares power with the president, who is a largely ceremonial figure with a limited say in defence and foreign affairs.

Since declaring independence in 1991, the centre-right political space has been dominated by the conservative HDZ, which has led all but two of Croatia’s governments. In the centre-left camp, the main party is the social democrat SDP, who ruled between 2000-2003 and 2011-2016.

However, since 2015, the political scene has become much more fragmented and unpredictable, particularly on the centre-left, as SDP’s popularity continued to plunge and a number of small, new parties have sprung up. 

The liberal-conservative Most (the Bridge) became a notable third political force and joined the short-lived HDZ-led technocrat government of Tihomir Orešković in 2016. But it was Most that triggered a successful no-confidence motion, prompted by concerns over corruption and conflicts of interest, that brought the government down.

The HDZ, under its new leader, former MEP Andrej Plenković, won a snap election in late 2016 and formed a coalition government with Most and several smaller parties, which gradually shifted to the right, amidst a rising nationalism and deterioration of press freedom.

A major challenge for the new cabinet was the 2017 debt crisis at Agrokor, the country’s biggest retailer, which employs nearly 60,000 people and had revenues that amount to almost 15% of the country’s GDP. It had to be put into state-run administration to reach a deal with creditors, including Russia’s Sberbank, and avoid bankruptcy.

A government minister resigned after the crisis, and Most left the ruling coalition.

Meanwhile, the Eurosceptic anti-establishment Human Shield (Živi Zid – ŽZ) quickly gained ground in public opinion polls and closed the gap with Most. Human Shield has linked up with Italy’s Five Star Movement and three other parties for a joint Eurosceptic programme for the European elections. 

Predictions

Based on most recent polling, it is expected that the conservative HDZ will maintain its pole position with 27.6% of the vote, translating in five MEP seats for Croatia (down one) for the European People’s Party (EPP). While this is just one seat less, it’s a big drop of the share it achieved in the last EP (41.4%) and national (36.3%) elections.  

The social democrat SDP also lost significant support and now polls around 16.7% (down from 29.9% in the last EP elections and 33.8% in national elections), suggesting it could win three MEP seats (down one) for the Progressive Alliance of Socialists and Democrats (S&D).

It will be interesting to see how well the Human Shield (ŽZ) will perform. It is now estimated to win one MEP seat with 9.6% of the vote, especially as it is poised to join a new Eurosceptic group in the European Parliament with Italy’s M5S.

Moreover, Most (6.5%) and a new centre-left coalition called Amsterdam (8.2%), composed of several mostly left-wing parties, is expected to win one seat each. Croatia’s last MEP seat will either go to HDZ or SDP, depending on their performance.

Croatia’s European election should confirm the fragmentation of the local political scene, with both mainstream parties, the HDZ and SDP, losing some ground in favour of Eurosceptic ŽZ, but also of new political parties, including those of the Amsterdam Coalition.

Turnout will be crucial here, given that just a quarter of Croatians bothered to vote in the last EP elections.  

Zoran Radosavljevic is the managing editor of Euractiv.

Robert Steenland works as an evaluation and research consultant in EU policies, as well as an analyst in EU politics.  He holds a double degree master in European Governance.

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