May 16, 2020 — Brodosplit launched the polar expedition ship “Ultramarine”, a €106 million symbol of Croatian shipbuilding’s switch to sophisticated specialized vessels. The new niche within the industry is becoming the country’s largest export, according to government officials.

“All those who think Croatia does not need shipbuilding, this is the real counter to their argument,” Economics Minister Darko Horvat said at the launch.

The “Ultramarine” was the third ship funded by a state guarantee, a new means of keeping Croatia’s shipping industry afloat after the collapse of the Uljanik shipyard in Pula.

American company Quark Expeditions contracted the Split-based shipyard to build the vessel in 2018, with work starting last year.

“Brodosplit proves that shipbuilding in Croatia can be profitable,” Minister Horvat said. “On this ship, the Croatian Bank for Reconstruction and Development has earned interest, the local community and the state budget has benefited, as well as other public services.”

Andrea Mutak, member of the Angels Association which cares for children with physical disabilities and developmental difficulties, served as the ship’s godmother.

The “Ultramarine”, 128 meters long and 21,5 meters wide, can hold up to 200 travelers and 140 crew members. Work is on schedule so far. Brodosplit expects the vessel completede and delivered by the end of the year.

The luxury cruise ship follows the Scenic Eclipse, another polar cruiser which the Uljanik shipyard completed last year.

Croatia’s Bank for Reconstruction and Development provided the loan for the “Ultramarine” in 2018, with the Croatian government providing state funds as collateral.

The financing model is a variant of the state-backed assistance that kept Croatia’s shipyards operating until new European Rules limiting government backing left the industry on the verge of bankruptcy. 

Now, the government finances individual projects instead of shipyards.

Brodosplit benefited from the model as it danced with insolvency. The shipyard received €150 million in guarantees, used to finance two vessels and paid back in full.

Quark Expeditions will add the “Ultramarine” to its fleet of specially equipped boats and icebreakers, which travel to remote locations not accessible by ordinary cruise ships.

The luxury vessel’s first voyage follows the footsteps of the Endurance crew’s Antarctic expedition, Ernest Shackleton’s tragic final trip.

Brodosplit remains one of the few shipyards left standing from the Adriatic’s once-dominant shipbuilding industry. It operates at a fraction of its intended capacity, while many of its former competitors along the Dalmatian coast slow down or shutter. Eighty percent of its work is now for foreign firms.

ZAGREB, April 29, 2019 - A delegation of China Shipbuilding Industry Corporation (CSIC) that was briefed about the situation in the Uljanik and 3. Maj shipyards at a meeting with Croatian Prime Minister Andrej Plenković on Monday, said they would voice their opinion about the docks after touring them.

The chairman of the CSIC Board of Directors, Hu Wenming, said PM Plenkovic presented the situation in the two docks in detail.

"We will tour the shipyards and we will give a serious thought to it" Hu said after the meeting, adding that they realise the two shipyards are an important topic in Croatia.

Hu also said the CSIC delegation also included lawyers and investment bankers.

Croatian Economy Minister Darko Horvat said the talks with the Chinese delegation were very constructive, adding however that details had not been discussed. "We will have an opportunity to discuss details after Wednesday," Horvat told the press when asked about today's talks. Asked if he was optimistic, the minister said he had been optimistic for the past year.

Uljanik Management Board president Emil Bulić said today's meeting was aimed at getting to know potential investors in Croatia. "The prime minister presented the situation thoroughly and in detail. In a way, it was an introduction meeting," Bulić said.

Earlier this month, Plenković announced that executives from a Chinese shipbuilding company will visit two Croatian shipyards to explore possibilities for cooperation.

The announcement came after a high-level Chinese delegation, led by Premier Li Keqiang, visited Croatia earlier in April as part of the summit of 17 Central and Eastern European countries and China in Dubrovnik.

More news about shipyards can be found in the Business section.

ZAGREB, March 22, 2019 - The situation at the ailing Uljanik shipbuilding group from Pula, whose workers on Thursday went on strike again, was calm on Friday, and the striking committee decided to send letters to the prime minister, the president and the parliament speaker and to the owners of a dredger and a polar discovery cruise ship that are being built at Uljanik, in yet another attempt to make the government finally make a decision on the shipyard's future.

"We have asked the prime minister to urgently hold a government conference call to make a decision on Uljanik. We have called on President Kolinda Grabar-Kitarović... to visit Uljanik and see for herself the workers' agony and on the parliament speaker to hold a parliamentary discussion on Uljanik and seek support for the shipyard," the head of the striking committee, Boris Cerovac, said.

He added that the striking committee had also written to Jan De Nul, owner of a dredger that was being built in the shipyard, to give up on its plan to take the vessel and have it completed somewhere else.

"We cannot accept that and believe that Uljanik workers are capable of completing the ship. It is a highly sophisticated vessel, the world's biggest dredger, and we are willing to complete it as soon as the government makes a decision that will be positive for us. We have also written to the Scenic group, owner of the polar discovery cruise ship, asking for patience. We are behind deadlines but workers cannot work if they are hungry," he said.

Cerovac stressed that decision-making on the shipyard's fate was taking too long, that workers were physically and mentally exhausted and they had lost dignity.

Union representatives said on Thursday that workers demanded that the government adopt a restructuring plan for Uljanik or obtain a loan to pay workers their wages which they haven't received for the past seven months.

More news on Uljanik can be found in the Business section.

ZAGREB, March 20, 2019) - The majority of political parties making up the ruling coalition with the Croatian Democratic Union (HDZ) said on Wednesday, ahead of a meeting focusing on the Uljanik group, that bankruptcy was a better solution than restructuring.

Croatian People's Party (HNS) leader Ivan Vrdoljak said that he wanted to see concrete figures as to what both bankruptcy and restructuring would mean for citizens as well as what the continuation of production would bring and whether it was possible in a bankruptcy.

Darinko Kosor of the Croatian Social Liberal Party (HSLS) warned that it was the government and not the coalition that would decide between bankruptcy and restructuring while the coalition partners could express their opinions.

Kosor said that he would ask where the 7-8 billion kuna siphoned out of Uljanik over the past 10 years had ended up, who was responsible for that and what the Interior Ministry had done in that regard.

Kosor also wondered who would pay a further 5-6 billion kuna which he believes is the cost of restructuring and whether that money has been secured in the budget and who will pay further guarantees for the construction of ships.

Asked whether he supported the option of bankruptcy, he said that "figures speak for themselves."

Petrinja Mayor Darinko Dumbović, who is a member of the Reformists, said that he favoured bankruptcy, based on the lessons learnt from the collapse of the Sisak ironworks and refinery and of the Petrinja-based Gavrilović meat industry, which had resulted in the loss of 30,000 jobs.

Kazimir Varga of Milan Bandić's Work and Solidarity Party and independent MP Ivan Mišić said that bankruptcy was the best option while Italian minority MP Furio Radin said that he had always advocated restructuring.

Branko Hrg of the Christian Democrats, too, said that bankruptcy was the only option for him.

According to Hrg, 15.5 billion kuna had been "pumped into the two shipyards (Uljanik and 3. Maj) and no one has answered for that."

The ministers of economy and finance, Darko Horvat and Zdravko Marić respectively, have different opinions on the fate of the Uljanik group.

Horvat said that initially numbers would show that bankruptcy was cheaper but that, in the long run, this was not certain.

Marić said taxpayers had the right to see how much had been paid for Uljanik so far and how much more had to be paid. "Things are very serious. We have paid hefty amounts so far. A few days ago, I said 3.1 billion kuna had been paid in enforced guarantees so far for the building of mainly non-existent ships," Marić said.

"The financial aspect has to certainly be taken into account because it is not small. I'm not just looking at the financial aspect but at the bigger picture - the significance, value and importance of the shipbuilding industry. We are all saying that that is a strategic branch, the statistical bureau's figures and some other figures shed a different light and that all has to be taken into account," Marić said.

More news about Uljanik can be found in the Business section.

ZAGREB, February 26, 2019 - A hearing in the process of determining preconditions to launch bankruptcy proceedings at the 3. Maj shipyard that was scheduled for Tuesday at Rijeka Commercial Court, was adjourned until March 12, when it should be known whether workers at the dock will receive their unpaid wages, otherwise bankruptcy seems inevitable.

If by March 12, the question of workers' wages isn't settled, then bankruptcy is likely. If it is resolved by then, there is some room for a solution, Judge Liljana Ugrin said.

According to the court, the dock's account has been blocked due to a debt of 87 million kuna, yet yesterday for example that blockade amounted to HRK 76 million. Workers are seeking 11.9 million kuna for their overdue wages, suppliers are demanding 46 million kuna and the state's receivables amount to 21 million kuna, but the situation regarding those amounts is changing day in and day out.

Workers' representatives and Uljanik's management agreed to the adjournment as did representatives of the Strojopromet company which in fact lodged the request for bankruptcy proceedings along with the FINA financial agency.

The Rijeka-based dock is part of the ailing Uljanik Group in Pula.

Responding to reporters outside Government House earlier on Tuesday, Economy Minister Darko Horvat said that he cannot foretell the court's decisions however the government is trying to provide the relevant information in order to give a little more room so that bankruptcy proceedings can be deferred for a few days or weeks, he said.

He added that negotiations are underway with a client, the Jan De Nul Group and Brodosplit's owner, Tomislav Debeljak, as Uljanik's strategic partner and that he is convinced that in the next few days, he will make an appropriate decision and present a restructuring plan however "clear guarantees are necessary to verify that the strategic partner is currently financially prepared to follow the restructuring process."

"At the moment the key is - does the strategic partner have that ability. This is exactly the same question we asked the former strategic partner. If that verification is clear then that will be good news, if not, then I'm afraid there is no help," said Horvat.

Asked whether the strategic partner has been set a deadline to prove its financial capacities, Horvat said that the strategic partner was asked a few days ago about the matter.

I'm certain that this week is enough time for the strategic partner to clearly define whether he want to and can, after that the state will react, the minister said.

More news about Croatian shipbuilding industry can be found in the Business section.

ZAGREB, February 19, 2019 - The European Commission has nothing against the government and the strategic partner participating 50:50 in the interim financing of the Uljanik shipbuilding group until a restructuring programme is drawn up, Croatian Economy Minister Darko Horvat said on Monday.

"The European Commission does not explicitly ban interim financing but still insists that it be 50:50. This interim financing would be part of the restructuring programme and will be part of the total volume once it is adopted," Horvat told Croatian reporters after a meeting at the Commission.

He estimates that 600 million kuna is necessary to revive the Uljanik and 3. Maj docks, which would include unfreezing their bank accounts, completing the ships under construction, and the payment of three overdue salaries.

About 107 million kuna is necessary to unfreeze 3. Maj's account, 65-68 million kuna to unfreeze Uljanik's account, 100 million kuna for overdue salaries, and 300 million kuna for completing four ships.

Horvat said a decision on how to find the 600 million kuna would be adopted in the next few days.

On Sunday, a meeting was held with Luxembourg's JDN group, which commissioned one of the ships for which the government issued a 124 million guarantee. At the end of January, the group cancelled its contract with Uljanik because the dock could not deliver the ship as agreed. About 30 million euro is necessary to finish the ship. If finished, the state guarantee would not be enforced.

Horvat said a memorandum of understanding would be hammered out over the next three weeks with JDN. Under the memorandum, JDN would provide 8 million euro, while the Uljanik Group, its strategic partner and the government would put up 22 million euro.

He said that after last Sunday's meeting, JDN decided the ship would stay at the Uljanik dock in Pula to be finished.

Asked if the government could take part in the financing without the European Commission's permission, he said they were told at today's meeting that "any damage reduction would be considered a positive effort made by the Croatian government". "We have no other option but to come up with a financing model together with the client," he added.

"We realise now that the European Commission will not have a rigorous position, that Croatia, if it can, has the right to reduce the damage to the national budget. We know how much it would be if we did nothing. It's very pragmatic and justified businesswise to invest 120 or 130 million kuna to salvage 970 million kuna," said Horvat.

As for an overhaul programme, which Uljanik's management must come up with together with the strategic partner, he said it would be ready in about a month, after which the Commission would need three to five months to analyse it.

Asked how long the government would finance shipyards with taxpayers' money, Horvat said these were old projects for which guarantees were not given by the incumbent government.

"This government has said it very clearly - enough. These aren't new projects, this is dealing with the situation that was encountered and problems left by some past governments. As a responsible government, we must pay all the guarantees given by past governments," he added.

The meeting in Brussels was also attended by Tomislav Debeljak, owner of the Brodosplit dock, which Uljanik's management selected as the group's strategic partner.

More news about Uljanik can be found in the Business section.

ZAGREB, January 28, 2019 - The CEO of the Uljanik shipyard, Emil Bulić, and the Minister of Economy, Darko Horvat, on Monday confirmed receipt of offers for the Uljanik Group, but did not specify their number or the names of potential strategic partners, saying that the bids were being evaluated.

"We will be able to discuss the bids more specifically after the completion of talks with the bidders," Bulić told the press at the Ministry of Economy, adding that consultations were under way with the Supervisory Board, representatives of the Ministry and social partners.

Asked how many offers had been submitted, Bulić said that their number was irrelevant. "Talks are in progress, and that is very sensitive information," he said, adding that the number of the bids would be revealed after their evaluation in the coming days.

Bulić expressed hope that the offers would be evaluated this week, but noted that the process would last until a consensus was reached.

Asked about the selection criteria, Bulić said that these were sustainable shipbuilding at the 3. Maj shipyard in Rijeka and the Uljanik shipyard in Pula, and the provision of liquidity for the functioning of the system.

Minister Horvat announced talks with all interested parties for Tuesday, adding that Uljanik's management would be given the next few days to analyse the offers and inform the Ministries of Finance and Economy about their details. "The final decision rests on the management," he said.

Earlier in the day, the Uljanik management reported via the Zagreb Stock Exchange it had received offers from interested potential investors, without specifying how many and from whom.

The management recalled that due diligence had been conducted at the company from December 27 to January 24, and that the deadline for the submission of bids had expired at 8pm on January 25.

The management continues the process of selecting a strategic partner. Together with the supervisory board, it is considering the offers and is in consultation with potential investors, social partners and state institutions involved in the restructuring process, it said in a statement.

Unofficial sources said on Sunday that apart from the Italian shipbuilding group Fincantieri, Australia's Scenic Group and the Maritime Institute of Split were also interested as potential strategic investors.

More news on the shipbuilding in Croatia can be found in the Business section.

ZAGREB, January 26, 2019 - Brodosplit, in partnership with Italy's Fincantieri Group, has made an offer for the restructuring of the ailing Uljanik shipbuilding group, the Split-based shipyard announced on Friday evening.

"We can confirm that Brodosplit, in partnership with the Fincantieri Group, today submitted a bid for the restructuring of the Uljanik Group," Brodosplit said in a brief statement.

The company said it could not discuss details of the offer before it was examined by the management of the Uljanik Group and relevant state institutions. Brodosplit has earlier signed several cooperation agreements with the Italian group.

The CEO of the Pula shipyard, Emil Bulić, said earlier on Friday that six companies had conducted due diligence at the shipyard, based in the northern Adriatic city of Pula. The process was completed at 6pm and the deadline for the submission of a binding offer expired at 8pm on Friday.

Uljanik's management are expected to present the offers to Economy Minister Darko Horvat on Monday.

More news on the Croatian shipbuilding industry can be found in the Business section.

ZAGREB, December 30, 2018 - Social Democratic Party (SDP) leader Davor Bernardić criticised on Saturday the government's treatment of workers in the shipbuilding industry.

"The announcement of bankruptcy proceedings in the 3. Maj shipyard is the worst possible New Year's message from the government," Bernardić said at a meeting with SDP members in Novska.

The Financial Agency (FINA) has filed a request with the Rijeka Commercial Court to launch bankruptcy proceedings in the Rijeka-based shipyard, which is part of the Uljanik shipbuilding group, after its account was blocked for 120 days due to unsettled claims amounting to slightly more than 72 million kuna.

Union representatives at 3. Maj have said that bankruptcy is not an acceptable option and that a sustainable solution should be sought for the shipyard instead. They also believe that 3. Maj is not responsible for its current situation and that its current situation is due to 3. Maj having lent more than 523 million kuna to the Pula-based Uljanik, the other shipyard in the Uljanik shipbuilding group.

Bernardić said the government had been avoiding dealing with the Uljanik situation for a year and that he believed this was so because it was in somebody's interest.

"Maybe someone has their eye on the land (shipyard premises) in Pula. It is clear to everyone that the bankruptcy of 3. Maj will pave the way for the bankruptcy and liquidation of Uljanik itself," Bernardić said.

More news on the situation in Uljanik can be found in our Business section.

Years pass, but some things never change in Croatian politics. The year which is about to end has again been full of drama and scandals, and just occasional good news. Remarkably, many of the same issues which you will read about here have featured prominently in our reviews for 2016 and 2017 as well, which just shows that most problems in Croatia are just swept under the rug and never solved. What follows is Croatian Politics 2018, a review of events which will be remembered from the past year, as reported by TCN.

The year began with tensions in the Bay of Piran, part of the Adriatic Sea which Croatia and Slovenia both claim. In late 2017, Slovenia decided to implement the decision by arbitration tribunal which awarded Slovenia most of the bay. However, Croatia has refused to accept the decision, saying that the arbitration process was compromised by Slovenian government representatives who were in collusion with a supposedly independent arbitrator. The tensions raged for a few weeks, with MEPs proposing military solutions and war veterans talking about organising a rather provocative regatta. Eventually, reason prevailed, and the tensions died down. However, the issue is still unresolved, despite assurances to the opposite, with Croatia calling for negotiations and Slovenia insisting on the implementation of the arbitration decision. You are sure to read about this dispute in our 2019 review as well, particularly given Slovenia’s decision to file a lawsuit against Croatia.

Relations with Serbia are always in the focus of interest, and this year was no exception. In January, the government was surprised to hear that President Kolinda Grabar-Kitarović had invited Serbian President Aleksandar Vučić to visit Croatia officially. After a short argument over who is really leading Croatia’s foreign policy, Vučić arrived in Zagreb. While the visit mostly went well, the relations between the two countries deteriorated steadily throughout the year and the debate about whether Vučić should have been invited at all continued. Another turn for the worse took place in April when a Croatian parliamentary delegation’s visit to Belgrade was cut short after an incident in the Serbian parliament caused by a notorious Serbian MP and war criminal Vojislav Šešelj. Tension rose again in August when the anniversary of Operation Storm is traditionally celebrated, marking Croatia’s liberation of previously occupied territories in 1995. Serbian President Vučić gave a series of provocative statements, including comparing Croatia to Hitler.

As for the economy, January brought the first worrying signs about the future of Croatian shipyards, a low number of new orders, and about the government’s apparent unwillingness to continue to cover shipyards’ losses. Later in the year, the crisis in the Uljanik shipyard in Pula and its 3. Maj branch in Rijeka would feature prominently in our reporting. Workers spent months striking due to unpaid wages. As the year ends, the situation is still dire and “strategic partners” which the government hopes to find are nowhere to be seen.

“Reforms” is one of the most popular words of Croatian politicians. Every year in January we can hear officials saying that the year ahead is “the year of reforms” which will make Croatia much more prosperous. Needless to say, these promises are never fulfilled, and 2018 did not disappoint. The issue served the president well since she was able to attack the government for lack of reform efforts whenever it suited her.

Ideological debates and historical revisionism attempts continued in 2018 as well. In February, the government-appointed historical commission published its recommendations on issues related to the authoritarian regimes from Croatia’s past, but the conclusions did not satisfy anyone, except for the prime minister, who likes to pretend that the recommendations have solved the problem.

The year which is about to end has again brought us the problem of censorship, questions about media freedoms, warnings about the rise of the far right, separate commemorations held in Jasenovac, the parliament refusing to sponsor anti-fascism events, people destroying flower beds because they reminded them of communism, historical revisionism on the public television, assaults on journalists, satirists receiving death threats, “suspect” politicians being assaulted, photos of Tito slipping from under Croatia’s coat of arms, former prime ministers being sentenced for corruption, and media regulators receiving death threats.

The Catholic Church is undoubtedly part of the political life in Croatia, so it is no wonder that rumours about changes coming to its leadership draw considerable attention. While nothing has been confirmed, it is expected that the Archbishop of Zagreb, Cardinal Josip Bozanić, could be replaced in the new year. In the meantime, the church has continued to receive vast amounts of money from the state budget, meddle in politics, as well as advise the government on the new abortion law, 

The demographic crisis continued, with high emigration and low birth rates bringing down the number of inhabitants. The president and the government argued about who and what was to blame. The president even presented her measures to solve the problem, which were soon forgotten, and demanded a special session of the government, which never took place. Proposals were presented on how to convince people not to move, as many sectors faced a lack of workers, while many schools started closing down. The extent of the crisis was such that even Serbian President Vučić became "worried." The only “good news” came at the end of the year when reports claimed that the emigration wave was calming down because everybody who wanted and could have left already did.

One of the issues we write regularly in these annual reviews is the construction of Pelješac Bridge, which will connect the Dubrovnik area with the rest of Croatia without the need for travellers to pass through a short stretch of Bosnian territory. After many years of delays, the project has finally moved into the implementation phase. Early in the year, a decision was made to award the tender for the construction to a Chinese consortium, despite protests made by Bosnia and Herzegovina that the bridge could not be constructed before the border between the two countries in the area is defined. The decision to award the contract to a Chinese bidder also brought about a marked change in relations between Croatia and China, which were later further improved by high-level meetings and visits.

Another perennial issue is the future of INA, Croatia’s national oil company, which is owned jointly by the Croatian government and MOL, Hungarian national oil company. In 2016, the prime minister announced that Croatia would buy back MOL’s share of INA. Two years later, nothing has changed. Earlier this year, the government selected financial advisors for the buyback, but the contract with them was never signed. One of the main issues is the future of the INA refinery in Sisak. While in January the relevant minister said he was optimistic about the refinery’s future, by the end of the year he apparently changed his opinion. Another issue is Croatia’s arrest warrant for MOL’s CEO, which Hungary does not want to implement.

Another year has passed, and the supposedly “strategic” project of an LNG terminal on the island of Krk has again gone nowhere. Multi-year delays have continued. The government announced two tenders trying to find out who would be interested in using the terminal once it is built (if that ever happens), but the results were dismal. Just two government-owned companies applied, presumably after receiving a nudge from officials to send their applications and help the government avoid a total disaster. While the project receives verbal support from foreign governments, no one seems to be interested in sending binding offers to use its capacity.

One piece of good business news was the apparently successful conclusion to the worst part of the crisis in Agrokor, one of Croatia’s largest and most important companies. The agreement between creditors was concluded, thanks mostly to Russian banks, although not without an accompanying scandal about high fees paid to consultants, some of whom actually took part in the secretive process of writing the special law which the government adopted to save the company from collapse. The scandal took out Deputy Prime Minister Martina Dalić and government-appointed commissioner Ante Ramljak, who had to resign under pressure. E-mails were published which showed that the prime minister knew more about the dealings than he initially admitted, but he managed to escape more or less unharmed. Agrokor’s former owner Ivica Todorić, who fled earlier to London to avoid arrest, was extradited to Croatia late in the year, after multiple delays and court proceedings. Even Tony Blair’s wife could not help him. He has since been released on bail and is currently awaiting possible indictment. The legal proceedings are expected to last for many years.

Good economic news brought us the first upgrade in Croatia’s credit rating since 2004. Unemployment numbers were also down, although more due to mass emigration than to economic revival. Good tourism results, especially in the pre-season and post-season, helped Croatia achieve planned economic growth for 2018 (still among the lowest in the EU). Slightly more moderate growth is expected in 2019, with the lack of reforms being the main culprit. The budget recorded another good year, with spending and revenues being more or less balanced, while the public debt has continued to decline. The year ended with another round of tax cuts and pension reform. Croatia has also announced plans that it will adopt the euro as its currency. The process is expected to last many years.

The ratification of the convention on preventing violence against women, the so-called Istanbul Convention, somewhat unexpectedly turned into a crisis for the government in April when a large group of HDZ MPs decided to vote against the proposal, despite prime minister’s insistence that it should be ratified. While the convention was easily adopted thanks to opposition support, it turned into another attempt by HDZ’s right wing to weaken or possibly topple Plenković as party leader and prime minister. Just like several other similar attempts, it did not succeed.

A national security issue which has drawn a lot of media attention throughout the year is the acquisition of military fighter jets. The decision was first delayed for years, then it was supposed to be made in 2017, but again delayed first to early 2018, and then beyond. After much lobbying, the government finally decided to buy 12 F-16s from Israel. The questions about the deal persisted, with many asking why Croatia was “rejuvenating” its air force with ancient aircraft. By the end of the year, the contract for the deal has not yet been signed, amid disputes between the United States and Israel about what equipment Israel can legally sell to Croatia. Grand plans about “strategic cooperation” with Israel also appear to be on hold. Defence Minister Damir Krstičević has invested a great deal of personal effort in the deal, but the acquisition is still in question, and its final fate is yet to be determined.

As expected, the political circus took a break in June due to the World Cup in Russia. While the break was initially expected to last just a couple of weeks, until the Croatian national team is eliminated in the first phase of the competition as usual, its spectacular success extended the political break to a full month and more. Of course, leading politicians did not miss this opportunity to travel to Russia and have their picture taken with footballers and fans. Needless to say, even this occasion, which was supposed to unite the country, brought divisions, primarily due to an appearance by a controversial singer at the homecoming ceremony, which was attended by hundreds of thousands of people.

The Istanbul Convention ratification prompted one of this year’s two referendum initiatives to be launched. The other effort involved proposed changes to the election laws, which would substantially reduce the rights of national minorities to elect their MPs. The government was against the referendums, while the president seemed to be of a different opinion. While both initiatives claimed they had gathered enough signatures for the referendums to be held, the government checked the signatures and conveniently found enough irregularities to lower the number of accepted signatures below the required threshold. This was just one of several attempts to pressure the government from the right.

One of the rare reforms which have begun, at least nominally, is the reform of Croatia’s education system, the so-called “curricular reform.” The issue has caused conflicts between coalition partners, with HNS repeatedly threatening to leave the government if their proposals are not accepted. Their threats were not taken seriously by anyone since it is clear that early parliamentary elections would probably bring about an end for the party.

A scandal broke in September whose consequences are still unclear at this time. A ministerial driver was arrested under suspicion that he had informed a suspect about a police investigation against him. Interestingly, the driver is a close friend of Milijan Brkić, HDZ deputy president and Prime Minister Plenković’s chief intraparty nemesis. While Brkić has denied having any role in the scandal or leaking the information about the investigation, he has been conspicuously absent from public affairs in recent months. Other scandals involving Brkić have also resurfaced, prompting allegations that his opponents were trying to eliminate him politically. On the other hand, some potentially embarrassing documents about him suddenly disappeared. The scandal has even reached the president’s office, with the national security advisor resigning in December under still unclear circumstances.

Relations between Croatia and Bosnia and Herzegovina, as well as the connected issue of the status of Croats in the neighbouring country, were at the forefront of Croatia’s foreign policy efforts in 2018. With October elections looming, the year began with Bosnian Croats warning that the election law was unfair and that it could lead to a Croat representative in the Bosnian presidency being elected by more numerous Bosniaks. That is precisely what happened, with candidate Željko Komšić winning the post, although he apparently did not have the support of the majority of Bosnian Croats. This prompted Croatia’s government to launch a campaign within the EU to pressure Bosnia into changing its election law, which then brought accusations about meddling in internal affairs of the neighbouring country.

One of the potentially most explosive events of this year was a war veterans’ protest held in Vukovar in October. The veterans complained about the lack of prosecution of persons suspected of committing war crimes against Croats in the Vukovar area in 1991, which was a problem which they discussed earlier in the year as well. However, many believed that the protest was actually just a guise for a right-wing attempt to bring down the government led by moderate Prime Minister Andrej Plenković and replace him as HDZ president with a more extremist candidate. Plenković and his team appeared at first worried that the attempt might succeed, but with time they managed to limit its consequences. Once held, the protest passed without incident and has been more or less forgotten, except when occasional arrests in the area do happen, which then draw condemnation from local Serbs who say the police is arresting then just to satisfy the Croat war veterans. In the meantime, tensions in the town continue.

Throughout the year, rumours about impending ruling coalition reshuffle and/or early parliamentary elections continued. However, unlike in 2017, which brought about a change in the ruling coalition composition, with MOST being replaced by HNS, this year the government was more or less stable. One potential candidate for another reshuffle was Zagreb Mayor Milan Bandić, whose parliamentary group somehow manages to “convince” previously opposition MPs to switch parties and cross to his side. Numerous legal proceedings against him have not made him any less desirable patron. The substantial Zagreb city budget which he controls probably has something to do with it. In two years, he has managed to increase the number of his MPs from 1 to 12, with additional expansion of his parliamentary group expected early in the new year. The fact that people did not vote for his party did not discourage him at all. There are rumours that Bandić will use the increase in the number of his MPs, who are crucial for the parliamentary majority, to demand several ministerial posts in the new year.

As for the opposition, turmoil in SDP continued, with several attempts being made to topple the party president and “the leader of the opposition” Davor Bernardić. Fortunately for SDP opponents, these attempts have been unsuccessful, so Bernardić remains in his seat while his party’s popularity continues to plummet, with the latest polls showing it dropping to the third position, behind HDZ and Živi Zid. An increasing number of SDP MPs are leaving the party, with some of them joining the government ranks.

The migrant crisis continued, particularly on the border with Bosnia and Herzegovina, with the police employing ever harsher measures to control the borders and NGOs publishing increasingly critical reports about the alleged police violence and irregularities. The police have repeatedly denied any wrongdoing, despite video evidence to the contrary.

The migration issue also brought us another controversy, this time with the signing of the Global Compact for Migration in December. President Kolinda Grabar-Kitarović, who this year marked three years in office, initially supported the agreement, but then suddenly changed her mind, announcing she would not travel to Marrakesh where the UN conference was held. The government immediately said that Croatia would support the declaration nevertheless, which caused protests from right-wing circles. In the end, the non-binding resolution was supported by Croatia, but no-one really expects it will be implemented.

The final few days of the year brought us another major scandal, whose consequences will become clear in the following months. The president decided to dismiss her domestic policy adviser Mate Radeljić, who many believed had influenced the president to take a more critical position towards the government. After he was dismissed, Radeljić said he was threatened by a Security-Intelligence Agency (SOA) official not to try to damage the president politically after being dismissed. He was allegedly told that the agency was ready to run into him with a car if necessary. The president’s office and the SOA issued statements saying they had acted legally, but interestingly they did not outright deny all of Radeljić’s claims. It is expected that Radeljić’s dismissal will result in better relations between the president on the one side and the government and HDZ leadership on the other, just in time for the presidential elections next year.

Another exciting political year is ahead of us. It will include at least two elections (for European Parliament in May, and for president probably in December), and there is always a possibility the early parliamentary elections might take place. Stay with TCN for all the latest political and business news.