Croatian government at risk as opposition calls for confidence vote in Deputy PM Karamarko

Croatian government at risk as opposition calls for confidence vote in Deputy PM Karamarko
By bne IntelliNews May 13, 2016

Croatia’s main opposition party, the Social Democratic Party (SDP), plans to demand a vote of confidence in Deputy Prime Minister Tomislav Karamarko, according to a May 12 party statement. The SDP’s announcement came after Karamarko refused to resign over allegations in the local media that his wife had business links with a lobbyist working for Hungarian state-owned energy company MOL.

The move puts further pressure on the coalition between Karamarko’s party, the Croatian Democratic Union (HDZ), and the Bridge of Independent Lists (Most). Croatia’s technocratic Prime Minister Tihomir Oreskovic recently ruled out a snap election, but there are still rumours of an upcoming reshuffle. Should a vote of confidence take place, some Most deputies may vote against Karamarko amid growing tensions between the two parties.

MOL owns a 49% stake in Croatian oil and gas company INA and is also in charge of INA’s management. The Croatian government, which holds a 44.85% stake in INA, has been locked in a dispute over the company’s management and investment strategy for several years.

Speaking to journalists on May 12, SDP leader Zoran Milanovic said Karamarko “would have to decide whether to engage in public or private business. Both are legitimate and good, but they cannot go together.”

He claimed there was a “triangular relationship” that indicated a “very fruitful business relationship between the Karamarko family, the biggest lobbyists for MOL in Croatia and MOL, against which the Croatian government launched an arbitration process some time ago."

While he did not accuse Karamarko of criminal activity, he said the situation was “politically impossible” and called on Karamarko to resign.

Croatia’s independent State Commission of Conflicts of Interest announced also on May 12 that it will investigate the alleged relationship between Karamarko and MOL, Reuters reported.

In a statement on his Facebook page, Karamarko rejected the allegations and said he would refrain from any decisions involving INA until a decision had been made by the State Commission of Conflicts of Interest. He said the move was to avoid media attacks on himself and his family.

Oreskovic said on May 12 that he was convinced Karamarko had done nothing against Croatia’s interests, according to a government statement. The prime minister also said that he would soon appoint a team to restart talks with MOL over INA's future, without awaiting the results of an international arbitration in which both MOL and the government have been involved.

"INA is a strategic company for Croatia and I will get much more involved in this entire process," he added.

Croatia’s centre-right coalition government, which came into power in January following the November 2015 elections, managed to turn the first corner by receiving parliamentary approval for its draft budget. However, the coalition between the Patriotic Coalition (led by the HDZ) and Most holds only 76 seats in the 151-seat parliament, giving it a very slim majority especially following Most’s loss of four MPs.

London-based consultancy Teneo Intelligence commented on April 28 that the ruling coalition appeared to be on the brink of a cabinet reshuffle, which will likely keep Oreskovic in office and early elections off the table. Progress on structural reforms that have finally been adopted by the cabinet after months of coalition wrangling could slow down due to political uncertainty, according to Teneo Intelligence.

However, the government is continuing to initiate reforms despite the uncertainty over its future. On May 11, the government decided to remove eight companies, including flag carrier Croatia Airlines and food giant Podravka, from the list of companies of strategic interest, in order to start the process of privatising its stakes in the companies.

Oreskovic also announced on May 12 that Croatia will soon sell its minority stakes in several companies, including electrical concern Koncar, hotelier Suncani Hvar and insurer Croatia Osiguranje.