In his victory speech following Croatia’s September 11 general election, Croatian Democratic Union (HDZ) leader Andrej Plenkovic and likely future prime minister pledged that the next government would be stable. He also stressed that talks on the formation of the new government would start almost immediately.

With these comments demonstrating that he at least aims to quickly form a stable government, he addressed two of the critical issues for Croatians, who returned to the polls on Sunday just 10 months after the last election as the HDZ-Bridge of Independent Lists (Most) government collapsed following months of infighting.

Confidence in the HDZ’s new leader seems high, given that his party defied poll forecasts to become the largest party in the new parliament with 61 seats. Successive polls in the run-up to the election had put the rival Social Democratic Party (SDP) slightly ahead, though neither party was expected to gain enough votes to rule alone. Instead, the SDP lost some of its MPs, to take just 54 seats.

Even with its victory in the polls, the HDZ will have to find coalition partners. Most has 13 seats, down from 19 in the previous parliament but enough to put it again in kingmaker position; it is seen as the most likely partner for the HDZ, probably alongside a couple of smaller parties such as Zagreb mayor Milan Bandic’s new party.

The anti-establishment Zivi Zid, which followed Most in fourth place, did surprisingly well, probably indicating many Croatians’ disillusionment with politics in their country, which was further confirmed by the historically low turnout. However, Zivi Zid’s eight MPs are not seen as a natural fit for the HDZ, or for that matter the SDP.

There are also questions over the feasibility of a new HDZ-Most coalition, not surprisingly given the infighting that surrounded the collapse of their first coalition under technocratic Prime Minister Tihomir Oreskovic in June. However, things have changed over the last few months, not least with the resignation of former HDZ leader Tomislav Karamarko, whose relations with both Oreskovic and Most leader Bozo Petrov had deteriorated alarmingly by the time the coalition started to split.

Plenkovic, a soft-spoken former lawyer and European Parliament member, is a very different type of leader from Karamarko. Even before his appointment as party leader in July, he said he would reach out to Most, saying there was “space for a new page of cooperation”. Most, which clashed with the previous HDZ leadership over the slow pace of reform, is also expected to have become more willing to compromise following its experience in office.

“We assume that this time discussions between HDZ and Most could take less time as HDZ leader Mr Plenkovic has already expressed willingness to talk with Most about their initial requirements,” Raiffeisen analysts wrote in a September 12 note. “Although the preliminary results point to the relative fragile government, the outcome gives hope [for the] formation of a more stable government than the one in November 2015.”

Horse trading

When discussions get underway, Tim Ash of Nomrua forecasts that the first challenge for HDZ and Most will be deciding who will be the next prime minister. “In the last coalition the HDZ and Most were unable to agree a candidate from their own ranks and after weeks of horse trading, eventually a technocrat was chosen,” Ash wrote on September 12.

“However, this time around with HDZ exceeding expectations, Most losing seats, and the HDZ ‘win’ being seen as something of a personal triumph for Plenkovic I would assume he takes up the spot of [prime minister]. His moderate, more centrist tone would also suggest that he would make a more pragmatic leader, more able to lead a coalition.”

This also bodes reasonably well for reforms after the formation of a new government. The checklist includes privatisations, and the reform of the pensions system and the public administration, all of which are likely to face popular opposition, and will require a strong and united government.

A new HDZ-Most coalition is not a foregone conclusion; should talks between the two parties break down, the SDP will be waiting in the wings. However, SDP leader Zoran Milanovic - Croatia’s prime minister until the November 2015 election - stepped down on September 12, and his brief statement after the defeat became apparent gave little indication of the party’s intentions.

“This was not a happy day for Croatia. Croatia needs a stable government. What it will be we do not know,” Milanovic told supporters. He also made a jibe at the previous HDZ-Most coalition, commenting that “[for] eight months we have witnessed an experiment, but it cannot continue”.

Post mortems on why the result was so different from what polls predicted are inevitable. The most likely reason for the HDZ’s better than expected performance is Plenkovic’s reputation as a liberal, which is likely to have appealed to undecided voters in the centre. He also decided that the HDZ would stand alone rather than as the main player in the Patriotic Coalition, distancing itself from fellow rightwing parties.

GDP growth in Croatia accelerated from 2.7% y/y in Q1 to 2.8% y/y in Q2, and the HDZ also most likely benefitted from the strong performance of the economy in the first half of this year - somewhat unfairly since the HDZ-Most government did little in the way of reform and the SDP claims the groundwork was laid under the last Milanovic government.

Meanwhile, Milanovic appeared to be trying to win over HDZ leaders by ramping up his nationalist rhetoric - a surprising move from a politician generally seen as moderate on national issues, and one that seems to have backfired. In a conversation with veterans in August, he was recorded as describing Bosnia as “not even a state ... It’s a big shit” and accusing Serbia of wanting to “rule half the Balkans”.

“The HDZ ran outside its former Patriotic Coalition of right of centre parties, and I think this helped its new leader Andrej Plenkovic project a more moderate centrist image, which allowed the party perhaps to capture some more centrist-minded voters,” wrote Ash. “The fact that the leader of the Social Democrats, Zoran Milanovic, made some forthright and somewhat nationalistic comments, also likely helped the swing to Plenkovic and the HDZ.”

By contrast, while the HDZ also engaged in nationalist rhetoric in the run-up to the election, Plenkovic appears to have gauged the mood in the country better, and to have inspired confidence that he can deliver the long-awaited stable government. As negotiations with Most and other parties get underway, the next few weeks will show whether this confidence was justified.