Key Challenges

Weak rule of law, problematic corruption
Croatia’s greatest challenge of all lies in changing the governance structure itself. Over the years, the combination of a weak rule of law and relatively high levels of public spending – at least in relation to the low level of economic and political development – have deepened the problem of clientelism and corruption. Corruption and serious misconduct scandals comprising top public officials occur frequently, and citizens’ show a level of trust toward state institutions, politicians and their compatriots that is among the EU’s lowest. Clientelism permeates almost all of Croatian society, and it is especially visible in the pattern of employment in public administration and the territorial organization of the country, which is fragmented according to the political imperative of the political elite, as well as in the way in which social expenditure is targeted at certain social groups such war veterans and pensioners.
Political power too concentrated
Moreover, there are the issues of negative selection among the political elite, and the poor state of intra-party democracy. Political power is excessively centralized in the core executive headed by Prime Minister Andrej Plenković, with very poor coordination with line ministries. The government has enjoyed remarkable stability despite having only one member of parliament more than the minimally required majority of 76 members. However, this stability might be compromised over the longer-term horizon by sheer policy inertia. All of this suggests that governance in Croatia would significantly benefit from stronger accountability mechanisms, greater transparency and greater independence of supervisory institutions.
Dissatisfaction remains inchoate
Although over two-thirds of citizens indicate they are unsatisfied with the governance of the country, their dissatisfaction has not been channeled into a large-scale peaceful protest movement and/or a strong opposition party offering an alternative to the status quo. Every consecutive cycle of elections leads to reduced voter turnout, and the share of citizens who feel unrepresented by any political party is on the rise. This constellation has led to the emigration of young and productive citizens, thereby further sapping economic dynamism and jeopardizing the sustainability of major social systems. Even though there is a potential demand for change, the supply side of the political equation is in serious disarray. The opposition remains divided and enfeebled, both within and among the parties themselves.
Corruption, clientelism
must be addressed;
healthcare policy
inertia persists
Unfortunately, neither the National Resilience and Recovery Plan nor the National Development Strategy identify the social pathologies of corruption and clientelism as key impediments to economic progress and political development. Unless those issues are lifted to the level of highest political priority, the fulfillment of the goals espoused in both key national development documents are likely to remain a distant reality. The commitment to implementing structural reforms was unsatisfactory even before the onset of the pandemic, as evidenced by the low proportion of the European Semester country-specific recommendations that were implemented by successive governments. The persistence of policy inertia was also visible in 2021, and can be seen most clearly in the dire state of the healthcare system. The reform of this system has been announced several times, but there has not been any progress beyond sporadic financial injections that are akin to kicking the can down the road. This is all the more perplexing since the time for reforms is currently ideal; there are no major elections in sight until 2024, and all reform activities would be underpinned by large sums of money flowing from both the NextGenerationEU (NGEU) program and the regular EU budget. The previously mentioned slack in designing and implementing sustainable policies might be overcome with the aid of moderate to high levels of conditionality imposed by the European Commission and European Council. However, it is unclear whether major EU institutions are willing to sacrifice their precious political capital and limited resources in pushing those policies over the finishing line in weaker-performing countries.
Pace of green transition too slow
Beyond the above-mentioned challenges, which are first and foremost of domestic political origin, there are some additional challenges, such as the pace of the green transition and the current wave of inflation sweeping across the world. The latter problem may or may not be transitory in nature, but the green transition and a lack of qualified workers will constitute major sets of long-term threats and opportunities, requiring a carefully thought-out policy response.

Party Polarization

Government stable despite small majority
There are no credible alternatives to Prime Minister Andrej Plenković and the ruling HDZ (Croatian Democratic Union) among the ranks of the opposition. The government remains very stable in spite of being able to count on only one member of parliament above the required minimal majority of 76 members. The state budget proposal for 2022 and all other legislative proposals were smoothly adopted by votes of either 76 or 77 members of parliament (before the Croatian Party of Pensioners switched its allegiance and joined the ruling majority). The four interpellations launched by various oppositional parties were easily defeated.
No benefit to new elections; lack of credible opposition a concern
If snap elections for the Croatian parliament were to happen tomorrow, the HDZ would definitely emerge as a clear relative winner, but with a relatively narrow coalition potential. However, all parties in the opposition would have even worse chances of successfully cobbling together a ruling majority. No political party in the ruling coalition (which includes the HDZ, six junior partners and representatives of national minorities who regularly align with the majority) have any interest in provoking snap elections, which would be a risky proposition. Some would not be able to pass the electoral hurdle of 5%. Therefore, government stability is not threatened in any significant way in the medium run. Nevertheless, excessive stability and the lack of a coherent and credible opposition will have a deleterious impact on the quality and sustainability of public policies in the long run. Interestingly, if “undecided voters” were a political party, it would be the second-strongest in Croatia. Their share has almost doubled since July 2021 and had climbed to 17.6% by the end of the review period, a good illustration of the prevailing level of dissatisfaction with existing political representation in Croatia.
Governing party well
in the lead
Over the course of 2021, the HDZ consistently enjoyed an immense advantage over the opposition, with its support varying between 27% and 33%. The strongest opposition party, before it fell into internal disarray, was the Social Democratic Party of Croatia (SDP), with support ranging from 15% to 21%. There are only three other parties able to pass the electoral threshold: the leftist platform Možemo (8%-15%) and two parties covering the conservative and right-wing populist part of the political spectrum: The Bridge (Most; 6%-11%) and the Homeland Movement (Domovinski pokret; 5%-9%). (Score: 7)
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