For years, the imbalances created can no longer be kept under control. A price must be paid. The only question is whether the inevitable social unrest will be managed or will it explode uncontrollably.
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Written by: Miodrag Šajatović |
Šuker admitted to HUP members that illiquidity is ‘a huge and terrible problem’. However, he shifted the responsibility to the courts and the Ministry of Justice. |
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Welcome to purgatory! You have been honored to witness the beginning of the harshest phase of recession in Croatia! Such a ‘welcome’ could be wished to all entrepreneurs, managers, still employed, unemployed, and users of the state budget, in short, all citizens before the spring of 2010. The unraveling has begun. The imbalances created over the years can no longer be kept under control. Spending beyond means and neglecting exports are coming due. A price must be paid, one way or another. The only remaining question is whether purgatory will be at least somewhat controlled, whether social unrest will explode uncontrollably or not, and whether fraudulent, poorly managed, and hopeless companies will be removed from the market if someone must disappear, or whether once again the bad will drag the good into the abyss. There is ‘a ton’ of evidence for such claims, and the crown jewel is the shocking statement by the Minister of Finance and Deputy Prime Minister for Economy Ivan Šuker. At a working lunch with small and medium-sized entrepreneurs gathered at HUP, Šuker uttered a sentence that was previously unimaginable for him: ‘Illiquidity is a huge and terrible problem’. Copernican Šuker The minister who for years responded to the lamentations of the business community that non-payment is an increasing problem by saying that the state has nothing to do with it because it regularly pays its obligations, and that entrepreneurs should be careful with whom they do business, has now made a Copernican turn. Of course, it would be too much to expect him to admit any personal guilt for hyper-illiquidity in the economy. He shifted the blame to the commercial judiciary and the Ministry of Justice. Nevertheless, even a partial admission is evidence of the severity with which the recessionary storm has hit the national economy. At the time when Šuker was telling employers that the state pays on time, his colleague, Minister of Agriculture Petar Čobanković, was announcing a 40% reduction in subsidies to farmers, so it is clear that the state treasury is also shaking. Which has, as vividly stated by HUP President Damir Kuštrak, been in disproportionately better shape than the treasuries in the real sector. It will be interesting to follow the reactions of the gray eminence of Banski dvori, HSS leader Josip Friščić. His coalition blackmail, it seems, no longer holds water. It is true that the leadership of HSS has been pacified, but the blow to farmers, to whom too much has been promised and given from the budget in recent years, could lead to a rebellion within the Peasant Party. And that could then shake the ruling coalition and make early elections quite more likely. Entrepreneurs have now turned the page. They no longer expect salvation from the state and have now turned against each other. In every industry, there is an attempt to eliminate the weakest in order to ensure that at least some survive in the dramatically reduced market. While there were resources for everyone, those who competed unfairly were somehow tolerated, knowing in advance that they would not pay taxes and contributions and that they would later leave unpaid bills and establish a new company in the name of their mother-in-law or grandmother. Now patience has run out, and the more honest part of entrepreneurs is asking the state to help in eliminating fraudsters. Hungry Baby and Kerum’s Ferrari The government of Jadranka Kosor is trying to calm the storm by promoting rescue funds. At this stage, approving loans at an average rate of five percent seems useful, but it is not enough. The unavailability of credit is not the biggest problem for entrepreneurs. Banks can give them as much credit as they want, but if there is no solvent consumer demand in the market – not much has been accomplished. The funds will be O.K. until their use is compromised, but to pull the country out of recession, along with determination and resources, the most needed is a vision of an unconventional package of measures. And that is still lacking. The President of the State, Ivo Josipović, has gathered a broad economic council, but it remains to be seen whether a proposal can be offered based on the ideas of the members that will be feasible and appropriate for the moment. I fear that after listening to the selected composition of council members, they will forget their good inaugural mantra that the national economy must be transformed from import-dependent to export-oriented. Time is passing quickly, and the storm is getting fiercer. On one side is a young father whose baby is crying from hunger breaking into a nearby pharmacy to obtain medicine, and on the other side is the mayor-entrepreneur of Split, Željko Kerum, troubled by the potholes in the roads that damage his Ferrari. It could be very inconvenient if these two Croatias were to meet uncontrollably. |
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