Monday, 4 February 2019

Ježić Testifies against Former Prime Minister Ivo Sanader

ZAGREB, February 4, 2019 - The key prosecution witness in the retrial in the INA-MOL bribery case against former Prime Minister Ivo Sanader at Zagreb County Court on Monday repeated his previous testimony, saying that he had received 5 million euro to his company's account that the Hungarian MOL oil company was to have deposited to be handed over to Sanader.

"In early 2009, Sanader told me that he expected transaction of 10 million euro from MOL and instructed me to see how to arrange the receipt," Ježić said. After that, nothing happened until May 2009 when, the witness alleged, he saw MOL's CEO Szolt Hernadi and oil consultant Josip Petrović in Government House who had met with Sanader before him.

Ježić said that in that occasion he told Sanader that "nothing has been agreed to yet," after which Sanader presumably called Petrović, who returned to the prime minister's office together with Hernadi. Ježić said that he was in the adjacent room but recognised Petrović's voice and a few minutes later when they left, Sanader told Ježić that "everything was alright," and that part of the money would be paid immediately and the rest would be paid by the end of the year.

Two Cyprian companies deposited a total of 5 million euro, Ježić said and added that after Sanader had stepped down and when the media started reporting about the relationship between his government and MOL, Ježić realised what this was about.

He allegedly told Sanader then that he refused to accept the other 5 million euro, which Sanader "took calmly."

The retrial against Sanader and Hernadi, in absentia, opened on October 23 last year, with Sanader dismissing all the charges, just as he had the first time around. Hernadi had not been charged in the original trial.

More news about the former prime minister Ivo Sanader can be found in the Politics section.

Wednesday, 30 January 2019

“Amendments to INA Privatisation Law Protect Croatia's Interests”

ZAGREB, January 30, 2019 - Energy and Environment Protection Minister Tomislav Ćorić said on Wednesday that a bill of amendments to the law on the privatisation of the INA oil company, which the government recently sent to parliament, safeguarded Croatia's interests to the maximum amount.

On 23 January, the government tabled the bill which aligns the INA law with European Union legislation and protects Croatia's energy interests as well as the state's interests in INA, as stated by the government on that occasion.

However, the opposition has criticised the Andrej Plenković cabinet about the detrimental effects of the latest proposal, and in his response to the press Minister Ćorić today dismissed the criticism.

Ćorić said that during a parliamentary debate on the proposed bill, he would explain how the bill protected Croatian state interests.

As for a report by the weekly newspaper Nacional that the Office of for the Suppression of Organised Crime and Corruption was analysing some segments of the bill, the minister said on Tuesday that the ministry was open to all who wanted to get information about the bill, and that he had not heard before that USKOK was interested in the matter.

Today, Ćorić told the press that it was in the government's interest to have a strong and efficient INA, and that by entering the EU Croatia took over certain responsibilities, one of them being the adjustment of the domestic legislation with the EU acquis.

The INA Privatisation Act went into force in April 2002, stipulating that the state retained certain special rights in the company - the exclusive right to control changes in ownership, the right to veto certain management decisions, and the right to pre-emption of all or part of the company's property at market value in case of liquidation. Since those provisions are not in line with the EU acquis, the European Commission launched an EU law violation procedure and decided to file a suit at the EU Court of Justice in July 2017.

That's why the Environment Protection and Energy Ministry proposed amendments to the INA Privatisation Act, stipulating the obligation of a stock buyer to submit a long-term management and business plan, withdrawing the government's consent for stock acquisition and the right to buy shares and pay compensation in the event of a serious threat to safe, reliable and regular energy supply and to the protection of the energy supply infrastructure.

The amendments also propose that, as long as the state has one or more shares in INA, the government can appoint two representatives who will attend management meetings without the right to vote. Also proposed are penalties and protection in case management adopts a decision seriously bringing into question the safety of energy supply and its infrastructure.

As for the opposition's criticism about the previous procedure of INA's privatisation, Ćorić said today that one of the lawmakers "has clearly stated that HDZ-led (Croatian Democratic Union) governments have not sold any share of INA to Hungary's MOL." He recalled that under the 2002 law on privatisation, the first package of 25% of the stock was sold to MOL in 2003. At the time, the SDP-led government was in power.

More news on the INA-MOL situation can be found in the Business section.

Tuesday, 15 January 2019

INA Restructuring and LNG Terminal Remain a Priority

ZAGREB, January 15, 2019 - Environment and Energy Minister Tomislav Coric said on Tuesday that the government wanted a successful and profitable INA, adding that this required restructuring of this oil company's refineries. He also spoke about the LNG terminal.

"The aim of the government is to ensure a successful, profitable and vertically integrated INA. A successful and efficient INA has no alternative," Ćorić told a press conference dedicated to energy issues.

He, however, added that this wish does not correspond with the present state of INA's oil refineries, as the one at Rijeka operates at 70 to 80 percent capacity and the one at Sisak at 30 percent.

Ćorić said that the planned transformation of the Sisak plant would ensure the largest possible employment and that it was tied to investment in the Rijeka refinery and other business segments. He noted that the conversion of the Sisak refinery into an industrial centre has been decided by INA's management and supervisory boards and it "has no alternative, regardless of the size of the government stake in INA."

Asked if he had any message for the workers at Sisak, he said that their future would not be uncertain and that under the business plan 40 to 50 percent of them would be retained at the Sisak complex.

Ćorić said that the government had not abandoned its idea to buy back the Hungarian energy group MOL's stake in INA, noting that this was a very complex process.

Asked if the proposed legislative changes could make it possible for MOL to acquire a majority stake in INA, Ćorić said that if MOL or any other company had such an intention it would first have to present its long-term plan for INA to the government to see that this would not have an adverse effect on the country's energy stability.

The proposed amendments to the INA Privatisation Act are under public consultation until January 22. Their purpose is to align this law with EU legislation.

When explicitly asked if there was a deal with the Hungarians to leave INA to them, Ćorić replied in the negative.

Speaking of Croatia's plan to build an LNG terminal on the northern Adriatic island of Krk, Ćorić recalled that the state-owned power company HEP had booked 520 million cubic metres of the terminal's capacity, while the booking of 1.5 billion cubic metres was required to make the terminal profitable, and that two letters of intent had come from Hungary inquiring about the possibility of entering the ownership structure of the future terminal.

Despite the modest interest in the booking, Ćorić said that "as long as this government is in office, the LNG will be without an alternative the dominant energy project."

He announced further talks with the Hungarians, saying that this was a strategic project, not only for Croatia, which could become increasingly dependent on gas imports, but also for Europe, especially for countries such as Hungary and Ukraine.

Asked about the possibility of renewing oil and gas exploration and exploitation in the Adriatic, Ćorić said that there were indeed indications of considerable quantities of gas existing in the Adriatic, that he was "neither in favour nor against" and that a consensual decision should be taken on this issue.

More news on the LNG terminal project can be found in the Business section.

Thursday, 3 January 2019

Minister Hopeful about Future for Sisak Oil Refinery Workers

ZAGREB, January 3, 2019 - Environment and Energy Minister Tomislav Ćorić said on Thursday, while commenting on the business transformation of the INA oil company, that the government was insisting that as many Sisak oil refinery workers as possible should be retained.

He dismissed claims that he and State Assets Minister Goran Maric disagreed on the issue of the Sisak refinery.

"What Minister Marić said in 2016 and what we have been saying all long is that INA should be a vertically integrated company. We believe that modernisation of INA's refining business has no alternative and an investment of between 3.5 and 4 billion kuna that will be made in that regard is necessary," Ćorić told the press outside the government headquarters.

"There are no differences of opinion between us. It was necessary to insist on maintaining employment in Sisak-Moslavina County. Marić's statement should be viewed in a wider context. The question of the refining business in 2016 and in 2018 is not the same," he added.

Marić said in 2016 that he would not allow the closure of the Sisak oil refinery because of its importance for the local economy. "I would sooner leave politics than allow its closure," he said then.

Under its business plan for 2019, INA will concentrate its oil refining business at the Rijeka refinery, while the Sisak refinery will be converted into an industrial centre focusing on other activities.

Ćorić said that the Sisak plant was currently operating at about 30 percent of its capacity, while the Rijeka refinery was operating at 70 percent. "Croatia needs INA as a strong energy company. It needs an efficient and successful INA that will be competitive and profitable," he added.

Asked what would happen with workers at Sisak as part of INA's business transformation, Ćorić recalled the conclusions of the business plan adopted at the end of last year, under which between 40 and 50 percent of workers at Sisak would remain in the plants that would continue operating.

As for the rest of the workers, a comprehensive redundancy programme has been prepared by the management and they will also have an option of working in other business areas of INA, the minister said.

More news on the INA oil company can be found in our Business section.

Wednesday, 2 January 2019

State Assets Minister “Forgets” His Election Promise

ZAGREB, January 2, 2019 - State Assets Minister Goran Marić said on Wednesday that neither the government nor he could do anything about the closing of the refinery in Sisak because that was the decision of the INA oil company's management, adding that he was still advocating for not closing the plant.

"The state assets minister and the government can't make business decisions for any company," he told reporters when asked if the government had done enough to prevent the closure of the Sisak refinery.

Asked if he would keep his promise from the 2016 election campaign that he would leave politics if the refinery was closed, Marić said he was still advocating for not closing the plant.

He said he was politically advocating that contractual obligations be met, that management consider whether the closure was justified, but added that business decisions in any company were made by management and the supervisory board. "As a minister, I can't exert pressure on anyone," he stressed.

Asked if INA was a state asset in any way, he said it was not and that the government only had shares in it, reiterating that business decisions concerning INA were made by the management and the supervisory board.

Marić said he would continue to insist on the adoption of decisions in Croatia's interests, and that not closing the Sisak refinery was in Croatia's interest.

Asked if the government and Prime Minister Andrej Plenković were pushing hard enough for what he was pushing for, he said that as an economist he mostly supported production and that during the election campaign they pushed for salvaging the Petrokemija fertiliser manufacturer and against closing the Sisak refinery.

He said Petrokemija was salvaged and that "the State Assets Ministry had a crucial role in its recapitalisation, but it certainly can't have decisive influence on the closure of the refinery."

More news on the Sisak refinery can be found in our Business section.

Thursday, 27 December 2018

Croatian Politics 2018: A Year in Review

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.


Saturday, 22 December 2018

Sisak Refinery Closure Criticised by Opposition

ZAGREB, December 22, 2018 - The MOST party said on Friday that by "stalling and abandoning plans for INA's buyout, the Plenković cabinet is making it possible for Hungarian oil and gas group MOL to blackmail Croatia into the announced closing of the Sisak refinery."

Asking Prime Minister Andrej Plenković what his Hungarian counterpart Viktor Orban had blackmailed him with, MOST wonders in a statement what "Croatia will get if Plenković has allowed Hungarians to close the refinery in Sisak and let them enter Petrokemija's management. They will soon start exporting INA's gas to themselves and who knows what else is in the offing? Isn't the price of Hungary's merciful blackmailer involvement in the LNG terminal, whereby Plenković is showing his commitment to the EU by seeking a future office in the Commission, too high?"

MOST further says that Prime Minister Plenković has personally appointed the Croatian members of the management of the INA oil company (jointly owned by Croatia and MOL) but that they are not representing INA's interests.

In the shareholders agreement on INA, MOL has undertaken to be a strategic partner but it has taken over INA's market and turned the company into an oil retailer, MOST says, claiming that Hungary is protecting its interests in a sovereign way while the Croatian government is incapable of organising a tender to buy back MOL's stake in INA.

SDP president Davor Bernardić visited Sisak to meet with Predrag Sekulić, unionist and spokesman for Sisak refinery workers, for talks on the current situation in the refinery following a decision by the INA oil company to stop refining oil in Sisak.

INA, which is owned jointly by Croatia and the Hungarian oil and gas group MOL, announced on Wednesday that it would concentrate its refining business in Rijeka, while the Sisak refinery would be converted into an industrial centre focusing on other activities.

"Had Plenković stuck to his pre-election promise of two years ago and restored Croatian ownership of INA, the Sisak refinery would not be facing closure. This government has not done anything in that regard and will be remembered for making the workers of Uljanik, 3. Maj and the Sisak refinery jobless," Bernardić said.

The SDP leader also wondered if the closure of the Sisak refinery and possible dropping of an indictment proposal against MOL executive Zsolt Hernadi had been agreed at recent talks between Plenković and Hungarian Prime Minister Viktor Orban in exchange for Hungary's withdrawal of an arbitration lawsuit against Croatia in the INA case.

More news on the INA-MOL case can be found in our Business section.

Friday, 21 December 2018

Sisak Oil Refinery Workers Confused by Reports about Closure

ZAGREB, December 21, 2018 - The news that production at the Sisak oil refinery will be closed, although expected, disquieted workers on Thursday, and their spokesman Predrag Sekulić said they were "confused by the absence of a clear reaction from the government."

The arguments given by the INA oil company in favour of discontinuing production at Sisak are unconvincing and unilateral, he said, adding that workers are not surprised by the news.

"This is just a confirmation of our claim that the acquisition of INA by the Hungarian energy group MOL was a hostile takeover. We, however, are confused by the absence of a clear reaction from the government, whose representatives have said several times that they will push for the continuation of production and survival of the Sisak refinery," Sekulić told Hina.

He said that the union and workers were meeting on Friday to discuss their further steps.

INA announced on Wednesday that it would concentrate its refining business in Rijeka, while the Sisak refinery would be converted into an industrial centre focusing on other activities.

If the Sisak refinery is shut down, it will lead to further emigration and dying out of the local economy and other sectors, President Kolinda Grabar-Kitarović said in Varaždin on Thursday.

Asked if she could join in efforts to deal with the planned closure of the Sisak oil refinery, which could also be seen as a matter of national security, Grabar-Kitarović said that she would become involved, in line with her constitutional powers, because she was not authorised to make any decisions in that regard.

"I will definitely be in talks with both the Croatian and the Hungarian side with a view of keeping the refinery running because those jobs really need to be saved. Otherwise we will face further emigration and dying out of the local economy and other sectors," she said.

Varaždin County Prefect Radimir Čačić, who met with the president, said that the MOL oil and gas company had been planning for a long time to close down the Sisak oil refinery and that there was a conflict of legitimate Croatian and Hungarian interests in that case.

The Sisak refinery is part of INA, which is owned jointly by the Croatian state and the Hungarian oil and gas group.

"Under the initial agreement, Hungarians could in no way close down the refinery. Moreover, they undertook to upgrade and develop it further. The terms of those initial agreements have evidently been changed and the incumbent government lacks the strength to prevent the closing down of the plants," Čačić said, adding that the closure of the refinery was more a matter of the loss of a vital type of production than a matter of job loss.

"Most of the workers will probably get decent severance packages, retire or... there will be a switch to alternative production – the processing of the already processed oil products and their storage. The number of workers will not be reduced significantly. This is first and foremost about the loss of strategic production, that's the problem," said Čačić.

More news on the INA-MOL case can be found in our Business section.

Thursday, 20 December 2018

INA to Close Down Sisak Refinery

ZAGREB, December 20, 2018 - Energy Minister Tomislav Ćorić commented on Thursday on oil company INA's business plan for 2019, saying it was about an investment cycle that would lead to the necessary modernisation of the refining business and that the transformation of the business in Sisak was the path INA should take. The plans call for the closure of Sisak refinery.

Responding to questions from the press ahead of a cabinet meeting, Ćorić said the company's management and supervisory boards had supported a plan to transform the business in Sisak. "I think INA should first and foremost become a business case and less a subject of politicisation."

Asked if that meant the end of refining in Sisak, Ćorić said the transformation of the business there had been analysed by management and that it was "simply the path INA should take."

INA plans to concentrate its refining business in Rijeka, while the Sisak refinery would focus on other activities, the company said on Wednesday.

Asked about Hungarian energy group MOL's withdrawal of a suit it brought against Croatia before a Washington district court, Ćorić said the suit was groundless as all of MOL's receivables from Croatia were paid over a year ago.

More news on the future of INA can be found in our Business section.

Thursday, 20 December 2018

Prime Minister Not Surprised by Withdrawal of Lawsuit in INA-MOL Case

ZAGREB, December 20, 2018 - Prime Minister Andrej Plenković said on Wednesday he was not surprised by the decision by the Hungarian energy group MOL to withdraw its lawsuit against Croatia in INA-MOL case.

Asked by the press whether the move was a sign of goodwill or was connected with his recent meeting with Hungarian Prime Minister Viktor Orban, Plenković answered that "this decision was made well before the Hungarian prime minister's visit to Zagreb." "We are trying to resolve the accumulated problems which, because of the INA-MOL file, burden relations between Croatia and Hungary," Plenković told reporters.

Asked why Croatia had still not bought back MOL's stake in the Croatian company INA, given that he had announced this plan two years ago, and whether there was enough money for this given that contracts with consultants had not been signed yet, Plenković said that money and consultants were two different things.

"Consultants have been selected after several tenders. The dilemma here is who is responsible for what based on the tender issued. The government and the selected consultants have different opinions," he said, adding that this was a technical issue which was being dealt with by two ministries.

Večernji List newspaper said on Wednesday that MOL had unexpectedly and without any explanation withdrawn its lawsuit against Croatia, filed with a Washington district court.

Last year the Hungarian company asked the US court to recognise and accept a ruling by the United Nations Commission on International Trade Law (UNCITRAL) in Geneva which two years ago ruled in favour of MOL and against Croatia. The lawsuit in that case was launched in 2014 by the Zoran Milanović government, and Croatia requested UNCITRAL to annul changes to a 2009 agreement on management rights in the INA oil company, jointly owned by MOL and Croatia, as well as a master gas business agreement, signed during the term of the Ivo Sanader government.

According to documents from the Washington court, MOL asked that the United States confirm, recognise and apply UNCITRAL's final ruling of 23 December 2016, referring to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, of which Croatia is a signatory.

This would mean that the US judiciary should treat the Geneva tribunal's ruling as if it had been made by a US court and its enforcement was subject to US laws.

In the first version of its lawsuit, MOL also asked that Croatia should pay 14.5 million euro in costs it was ordered to pay by the court, which Croatia did, after which MOL confirmed that Croatia had settled the debt but not the interest and proceeded with the case.

The US court on 13 November 2017 informed the Croatian Economy Ministry that a lawsuit had been filed against it.

The penultimate document on this case from the US court was released on April 18, 2018, when Croatia was given an extension of the deadline until 28 September to prepare for the case, but five days before the deadline expired, on September 24, information arrived from the court that the plaintiff had voluntarily withdrawn the complaint, Večernji List says, stressing that MOL officials did not want to comment on the withdrawal of the lawsuit.

Many see the withdrawal of the lawsuit as a tactical move whereby MOL wants to additionally strengthen its position in ongoing arbitration proceedings it launched in Washington in 2013.

Croatia's launching arbitration proceedings before UNCITRAL in 2014 was a response to MOL's arbitration lawsuit.

Following the decision by UNCITRAL to dismiss Croatia's motion to nullify the 2009 agreement on management rights in INA and the master gas business agreement, Prime Minister Plenković said that the government had decided to claim back full ownership of INA by buying MOL's stake in it.

More news on the INA-MOL case can be found in our Business section.

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