For Croatia and Its Neighbors, Teachable Moments on Ethics in Politics

In 2002, Paddy Ashdown, then the High Representative for Bosnia, removed the Bosnia Federation’s Deputy Prime Minister Nikola Grabovac. While acknowledging that Grabovac was not personally responsible for the misappropriation of public money, Ashdown nevertheless urged Grabovac to step down in order to accept moral and political responsibility for the failures of his staff to oversee the responsible use of the public funds (Chandler 2002). When Grabovac refused, Ashdown dismissed him in the name of European democratic standards, and the dismissal caused anger in Bosnia and beyond (Chandler 2002).  Much of this resentment was triggered by the perceived high-handedness of the international administration that was broadly interpreting its peacemaking responsibilities under the Dayton Peace Agreement (Chandler 2002; Knaus and Martin 2003). But it is also true that, by sacking an elected official who was not legally accountable or personally involved in the corruption scandal, Paddy Ashdown shocked the Bosnia elites. As David Chandler noted, Ashdown was projecting on Bosnia “an idealized view of Western politics” (Chandler 2002). Back then and now, the Balkans generally fell  short of the West’s ideal of governmental responsibility and political culture in which high officials, even if personally or legally not responsible, may still resign over ethical issues such as disgraces  involving their junior officers or else potential conflicts of interest.

Now in 2016, a scandal providing political ethics lessons shook Croatia, the neighboring state to Bosnia and Serbia that joined the European Union in 2013. Having initially resisted calls for resignation over a conflict of interest, Tomislav Karamarko, the leader of the conservative Croatian Democratic Union (HDZ), was eventually forced out of his party leadership. But his resignation came after the major damage had already been done: in his eagerness to maintain power, Karamarko had helped engineer the downfall of the Oreskovic Government that the HDZ strongman himself had handpicked and helped install barely five months earlier (EurActiv with AFP 2016a; Orovic 2016). The fall of the Oreskovic Government came at the bad times for Croatia, as the country needs political stability to dig out of its economic troubles (EurActiv with Reuters 2016a; HINA 2016l; Matic 2016). Nevertheless, the fairly recent events in Croatia still represent a positive development in the region by providing teaching moments for Croatia and its neighbors in South East Europe, lessons showing the importance of ethics and accountability in the public life.

The stage for Croatia’s current political crisis was set by the last year’s inconclusive parliamentary elections which did not hand a clear victory to one of Croatia’s major political parties (BBC 2015; HRT 2015a). A relative political winner that displaced Croatia’s left leaning Social Democrats (SDP) in the 2015 elections, the conservative HDZ could not form a parliamentary majority without the Bridge of the Independent Lists (MOST), a newcomer to Croatia’s political scene (BBC 2015; HRT 2015a; Milekic 2015a). Before stepping on Croatia’s national scene, MOST’s leader Bozo Petrov had earned nationwide respect as a mayor of a small town: Petrov cut the city’s debilitating debt while making its officials accountable and willing to work for a small compensation (Milekic 2015b). As a right-of-the-center alliance committed to reforms and fiscal responsibility, MOST has brought together citizens of different political orientations and varying degrees of political experience who have been united, nevertheless, in their disdain for Croatia’s political establishment on the right and the left, criticizing both HDZ and SDP for a lack of reforms and the neglect of the public good (HINA 2016h).

In Europe’s parliamentary democracies, the leader of a political party that wins the majority or the plurality of parliamentary seats usually becomes a prime minister. However, MOST opposed Karamarko’s nomination for premiership, even though HDZ had won most of the delegates in the November 2015 regular parliamentary elections.  Instead, while HDZ had embraced, at least rhetorically, the reforms as demanded by its junior coalition partner (MOST), Petrov demanded that HDZ propose a non-partisan, reform-minded technocrat for a new prime minister (EurActiv with Reuters 2015; HRT 2015b). Authoritarianism has been deeply engrained in the HDZ party leadership, most notably under the late President Franjo Tudjman. Furthermore, Ivo Sanader, an ex-HDZ leader and Croatia’s former prime minister, is now serving a jail sentence in Croatia for using his political power for personal enrichment (Bilefsky 2012). Finally, the new generations of Croatian politicians are weary of centralized parties and autocratic leaders for fear of ending up in another centralized “party state” reminiscent of  the Communist past.

Since the 2015 elections produced a hung parliament, and HDZ therefore could not form the parliamentary majority without MOST, Karamarko had to give in, settling for the position of the First Deputy Prime Minister, while proposing Tihomir Oreskovic for Croatia’s most powerful political office (DW 2015; EurActiv with Reuters 2015; Milekic 2015a; PF/DP/HRT 2015). A dual Croatian-Canadian citizen, Oreskovic was a political novice who had not been elected to the Croatian Parliament (EurActiv with AFP 2016a). Still, his experience as an internationally successful manager was relevant to the declared goals of cutting Croatia’s public debt and increasing its economic growth (EurActiv with AFP 2016a ; PF/DP/HRT 2015). Oreskovic was a godsend for HDZ: a non-partisan, reform-minded prime minister was necessary to reassure MOST to form a coalition government without which HDZ could not come to power after the 2015 elections (EurActiv with Reuters 2015; Milekic 2015a).

Composed of HDZ’s and MOST’s ministers, the Oreskovic Government took office in late January 2016 with Karamarko’s blessing (DW 2015; EurActiv with AFP 2016a; Milekic 2015c). The Government was plagued, nevertheless, by political divisions in Croatian society at large, triggered, among others, by the appointment of the controversial Minister Hasanbegovic, a favorite of Croatia’s revisionist far right (Milekic 2016a). The Oreskovic Government immediately got down to its primary objectives – fiscal reforms and economic growth – and in late spring, Prime Minister Oreskovic happily noted that Croatia’s economy was finally showing some signs of recovery after many years of recession (HINA 2016e; HINA 2016i; HRT 2016b).

The Oreskovic Government rested on an uneasy coalition, with lingering mistrust and tensions between the coalition partners, HDZ and MOST. It also appears that Karamarko, a former spy chief, grew disaffected after Oreskovic had demonstrated independence in nominating Croatia’s new intelligence chief against Karamarko’s wishes, thus bringing the intelligence services out of the HDZ party control (Milekic 2016b). But it was Karamarko’s escalating conflict of interest as related below that caused the HDZ-MOST tensions to flare up, eventually leading to the fall of the Oreskovic Government and Karamarko’s own downfall (EurActiv with AFP 2016b; EurActiv with AFP 2016c; EurActiv with AFP 2016d; Matic 2016).

A conflict of interest describes a situation resulting from an individual’s complex relationships or multiple obligations that might lead one to make prejudiced or self-serving decisions. In the sphere of government, such situations can lead to ethical dilemmas–elected officials might make biased decisions serving their own personal interests rather than the public good (Nadler and Schulman 2006). Therefore, the potential conflict of interest situations are of concern to all those who believe in the importance of a good government serving the common good and being worthy of the public trust.

However, while government ethics is increasingly important these days, the idea itself is as old as the Ancient Greece, where the well-known philosophers such as Socrates, Plato, and Aristotle discussed, among others, the truth, justice, and human motivations, including the need to control one’s “appetites” for material gain (Frede 2013, under 3.1 “The needy nature of human beings” and 3.2 “Virtues of state and soul”). These early Greek deliberations on the human nature and virtuous motivations lay foundations for one of the major Western approaches to ethics focused on moral character and education: virtue ethics (Hursthouse 2013, under 1. “Preliminaries” and 2. “Virtue, practical wisdom and eudaimonia).

With respect to Europe and Croatia, some observers have already noted that ethics standards vary from one country to another, while the Code of Conduct for the Members of the European Parliament on conflicts of interest is weaker than what is allowed in some EU member states, including Croatia (De Clerck 2016). One should wonder why Croatia would be mentioned in the context of having higher standards than some European institutions considered the beacons of democracy. After all, it used to be the case that Croatia was repeatedly slammed for falling below the European standards, and the country had to work hard on implementing multiple political, economic, and judicial reforms, including the arrest of the indicted war criminals, before it was finally allowed to join the European Union in 2013 (BBC 2013; Judah 2013). Most importantly, Croatia’s publics and politicians have been on the learning curve in the recent years, as the country went through several high-profile corruption and ethics scandals, the developments that have had bearing on the events of 2016 discussed here.

As mentioned previously, formerly one of Croatia’s most respected and admired politicians, Ivo Sanader ended up in jail (Bilefsky 2012; Judah 2013). The judicial proceedings exposed the appalling levels of his personal enrichment and corruption, shocking the publics in a country where most citizens struggle economically. Among others, Sanader took large bribes in exchange for permitting the Hungarian energy company MOL to take an effective control of the Croatian public company INA (Bilefsky 2012).  Expectedly, because of this evidence of corruption, Croatia’s politicians began advocating a review of the MOL agreement with the aim of recapturing the control of the Croatian oil company INA.

Therefore, Croatian government has been in the arbitration process with the Hungarian MOL over the INA management rights. However, HDZ chief and Croatia’s First Deputy Prime Minister Karamarko was urging Croatia to get out of the arbitration process, allegedly for fear of high financial costs of the arbitration (Ilic 2016a; Ilic 2016b). At the same time, the media revealed, in spring 2016, that Karamarko’s wife used to have business relations with the Hungarian MOL and had earned about 60,000 Euros in the consultant fees prior to 2016, while Karamarko himself had personal ties with another MOL lobbyist (EurActiv with AFP 2016d; HINA 2016a; Ilic 2016a; Ilic 2016b). These revelations led to the calls for Karamarko’s resignation from his position of the First Deputy Prime Minister (EurActiv with AFP 2016d; Ilic 2016b). Nevertheless, Karamarko refused to step down, claiming he was innocent of any wrongdoing and was not acting under the influence of any personal ties when he was urging the Croatian government to get out of the arbitration process (EurActiv with AFP 2016d; Ilic 2016a; Ilic 2016b).

Unlike the infamous Sanader case, where the former prime minister and HDZ chief got large bribes from MOL, there was no evidence of any criminality on Karamarko’s part. However, the situations involving conflicts of interest can lead to ethical dilemmas even in the absence of any legally liable actions. Therefore, to maintain the public trust and protect the decision-making for the sake of the collective good, public officials should remove themselves from the potentially conflictual situations. As Markkula Center for Applied Ethics maintains, it is not enough for elected officials to acknowledge the existence of conflicts of interest—they “must (also) take themselves out of the decision-making process altogether,” be it discussions, public statements, or voting (Nadler and Schulman 2006).

Croatia’s ethics watchdog reached a conclusion along the similar lines, though its decision, as explained below, came too late to diffuse the growing crisis. According to the Conflict of Interest Commission, which is Croatia’s independent governmental body charged with preventing conflicts of interest, Karamarko should not be involved in any decision-making regarding the MOL arbitration because his private interests might influence his decisions (Croatia Povjerenstvo 2016; HINA 2016b). As Stipe Mesic, Croatia’s ex-President clarified, Karamarko was not criminally liable but was still “morally and politically responsible,” for when he discouraged the arbitration, Karamarko should have remembered that his wife had been lobbying for those “demanding the same” (Mesic quoted in HINA 2016d). In other words, Karamarko should have resigned immediately from the Oreskovic Government because there should be no place for a deputy prime minister with the MOL ties in the government involved in arbitration against Hungarian MOL.

Faced with Karamarko’s stubborn refusal to resign, the opposition (SDP) demanded a parliamentary vote of no confidence aimed at removing Karamarko from the Oreskovic Government (Ilic 2016b). More importantly, having built its support on a promise of clean politics, MOST found it impossible to stay in the coalition government with Karamarko. MOST won impressively in the 2015 elections thanks to its reform-minded, anti-corruption platform and a promise to make the mainstream parties, HDZ and SDP, accountable. Therefore, Bozo Petrov, MOST’s leader and the Second Deputy Prime Minister, urged HDZ to distance itself from Karamarko and propose another HDZ politician to replace Karamarko and thereby preserve the Oreskovic Government (HINA 2016f). Eventually, MOST said it would support the SDP calls for a vote of no confidence against Karamarko, thereby threatening to remove the HDZ chief from his position as the First Deputy Prime Minister (HINA 2016g). This threat brought in the specter of early parliamentary elections. Still, Karamarko refused to resign. At that point, some prominent HDZ conservatives began urging Karamarko to resign as they wanted to avoid the snap elections. They worried that voters would punish HDZ because the public opinion was negative towards Karamarko and the HDZ that was supporting him (HINA 2016j; HINA 2016k).

Finally, Prime Minister Oreskovic asked Karamarko to step down; however, Karamarko responded by threatening to remove Oreskovic from the premiership (EurActiv with Reuters 2016b). In contrast to the American presidential system, where the separation of powers tends to produce a stable, but divided government in a gridlock, a European parliamentary democracy depends on the fusion of powers between the executive and the legislative branches of government. A European prime minister must be able to rely on a solid parliamentary majority to pass legislation and lead the government; when this support crumbles, a prime minister either steps down or is removed through a parliamentary vote of no confidence. Oreskovic was, as explained previously, a technocratic premier who had never been elected, and who depended on the support of Karmarko’s HDZ and its junior coalition partner, MOST. Therefore, once HDZ withdrew its support, Oreskovic could no longer hold onto the premiership (Ilic 2016a; Milekic 2016b).

Karamarko had a choice of resigning from the Oreskovic Government while still remaining an influential HDZ leader and a member of the Croatian Parliament. However, instead of stepping down, Karamarko whipped his party into supporting the no-confidence vote against Oreskovic. Karamarko argued that he was innocent and the Conflict of Interest Commission should rule in his favor (HINA 2016c; Ilic 2016b). Furthermore, even though their coalition partner MOST strongly opposed the motion against Oreskovic, HDZ believed their leader when Karamarko argued he would be able to secure a new parliamentary majority and thereby form a new HDZ-led government after removing Oreskovic (EurActiv with AFP 2016c; EurActiv with Reuters 2016b; HINA 2016c). HDZ went along with Karamarko because the conservatives wanted to save their party chief from humiliation and hoped to regain power by replacing the “dysfunctional” Oreskovic Government with a new government under a firm HDZ control (EurActiv with Reuters 2016b; Ilic 2016a).

However, a day before the vote of no confidence in Prime Minister Oreskovic, the Conflict of Interest Commission found that Karamarko had a conflict of interest (Croatia Povjerenstvo 2016; HINA 2016b). Moreover, it soon became clear that, without MOST’s backing, Karamarko and HDZ could not form a new HDZ-led government (EurActiv with AFP 2016c). Nevertheless, by that time, HDZ had already committed itself to removing Oreskovic for the alleged inefficiency, failure to implement reforms, and autocratic control; given this rhetoric, it would have been impossible for HDZ to suddenly reverse its course without losing credibility. Desiring to profit from the snap elections when the conservatives seemed to be losing on the public support, the SDP opposition joined the HDZ conservatives in the motion against Prime Minister Oreskovic. As the Oreskovic Government fell, credit agencies anticipated lowering Croatia’s rating, thus further complicating the path of recovery in one of the European Union’s weakest economies (HINA 2016l; Matic 2016).

In passing a vote of no confidence against Prime Minister Oreskovic, Karamarko and his HDZ scored a Pyrrhic victory.  MOST refused to support HDZ in forming a new government, and the Croatian Parliament voted in favor of early parliamentary elections, now to be held in September. Furthermore, following the expected failure to secure a new parliamentary majority that would vote in a new HDZ-led government, Karamarko faced major criticism from within his own party ranks and was forced to resign from the HDZ leadership (EurActiv with AFP 2016c).

Karamarko has become one of the most unpopular public figures in Croatia (HRT 2016a). His refusal to step down and his motion against Prime Minister Oreskovic exposed Karamarko’s blatant drive for power, even at the cost of dragging the country into the chaos and snap elections, thereby undermining Croatia’s political stability critical to its economic recovery. Meanwhile, because of its prior support for Karamarko’s scheming, HDZ lost on the public support so that the opposition Social Democrats (SDP) now lead in the polls ahead of the snap elections (EurActiv with Reuters 2016a; HRT 2016a). To arrest the declining support and improve its public image, HDZ eventually had to opt for electing a more moderate leader as the new HDZ chief–Andrej Plenkovic, a member of the European Parliament, who publicly opposed Karamarko (EurActiv with Reuters 2016a). This choice of pro-European Plenkovic shows that the Karamarko’s party learned a lesson in ethics and democracy, leading to a revitalized public life and political responsibility in Croatia.

Some observers have concluded that the Oreskovic Government was a “failed experiment,” with some voices from SDP and HDZ laying blame on the “insurgent” MOST for demanding a non-partisan prime minister (Kuzmanovic 2016; Less 2016).  It is indeed true that, in a well-functioning European democracy, a prime minister must have a solid support in the parliament, and that the Croatian story told here confirms this wisdom. However, politics in European democracies can be “messy,” producing minority governments and unstable coalitions; there is no guarantee that the upcoming Croatia elections will bring in a strong parliamentary majority, thus avoiding the pitfalls of weak coalition governments. Therefore, it is comforting to know that Croatia demonstrated, after its recent history of war and violence, that its democracy is maturing, able to withstand internal pressures (Raos 2016).

But the Croatia story is more than an account of a fragile coalition government and the downfall of a technocratic prime minister removed by the party that brought him to power barely five months earlier. The story is also about the important ethical issues that prompted the demise of Croatia’s weak coalition government, serving as a lesson on ethics in politics for politicians and their electorates in Croatia and beyond, especially the wider region of South East Europe. In recent years, it has become evident that the Croatian publics are no longer willing to tolerate the politicians mired in illegality and corruption, and now we see that at least some sections of Croatia’s society demand ethical behavior, too. As Croatia now proves at the cost of its political stability and the stalled economic reform, regardless of an individual’s legal responsibility for the acts of commission or omission, the ethics do matter, and the best course of action for politicians accused of ethical conflicts is to step down–for the sake of their party, for the benefit of their country, and, after all, for their own sake.


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