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Miodrag Šajatović: Croatia Needs a Ministry of Industry and Foreign Trade

At first glance, the business community in Croatia should be pleased that the winners of the parliamentary elections, HDZ and Most, are primarily fighting over ‘who will get’ the Ministry of Economy. Unfortunately, it quickly becomes apparent that this department is contentious only due to controlling the processes in INA and the rest of the energy sector. It is particularly noteworthy to observe the statement of an unnamed member of Most in Jutarnji list that ’85 percent of activities in the Ministry of Economy are related to energy’. If this assessment is accurate, and long-term experience suggests that it is, then it should not be surprising that the Croatian economy is in its current state. No one is systematically taking care of its real interests. Therefore, it is high time to create several scenarios for a different structure of the economic part of the ministries within the Government. We have a separate analytical topic on this in this issue of Lider.

Copying the Most Successful At this moment, signals are coming from HDZ that it might be good to establish a Ministry of Energy. Most responds that there is no need to separate something that already accounts for 85 percent of the activities of the existing ministry. Fine, then the Ministry of Economy should finally be renamed to the Ministry of Energy. In that variant, the first draft solution suggests simply merging the remaining 15 percent with the existing Ministry of Entrepreneurship and Crafts. However, that would only be a cosmetic improvement. Croatia needs different solutions. It is necessary to establish a Ministry of Foreign Trade. Radical as we are when it comes to promoting exports as the highest quality generator of GDP growth, we would prefer a Ministry of Exports, but a more realistic and useful variant is the concentration of some future government on foreign trade. In the Ministry of Foreign Trade, all the most important interests of the economy would be concentrated. Someone would finally start dealing with the essence. On one hand, systematically encouraging exports, on the other hand, non-prohibited forms of protecting domestic producers in the domestic market, and on the third hand, non-prohibited forms of linking companies and countries that want to sell something in Croatia with the possibility of providing Croatian exporters with fair access to the markets of those countries in return. I can already hear my economist friends with neoliberal beliefs protesting that this would be an interference in the free market. But it would only be about practices that would be copied from some other countries in encouraging exports, protecting domestic production, and linked trade. Given that I have yet to come across a text in which any of them criticizes such a policy in the USA, Germany, Sweden, Singapore, Ireland, Austria, or elsewhere, I conclude that the practices encountered by Croatian exporters are not in contradiction with the beliefs of local neoliberals, libertarians, or whatever they prefer to be called.

‘Economy’ for Confusion If the Ministry of Foreign Trade is too great a revolution for the local political and economic public, there are also intermediate solutions. Successful Poland, for example, has a Ministry of Industry and Trade. Here, trade does not refer to the domestic trade sector, but precisely to foreign trade. Many countries have exactly that name: Ministry of Industry and (Foreign, note) Trade. Why shouldn’t Croatia have that too? Instead of the convoluted generic name ‘economy’. If we have a Ministry of Tourism (which is part of the economy), why not have a Ministry of Industry and Foreign Trade? Of course, a prerequisite is that the prospective Plenković government clearly declares that industry, exports, and non-prohibited protection in the domestic market are priorities of economic policy. Changing the form without changing the focus makes no sense. Many countries also have a third solution. Ireland and Hungary, for example, have a Ministry of Foreign Affairs and Trade (foreign trade, it goes without saying). Theoretically, the Croatian Ministry of Foreign Affairs could be renamed to the Ministry of Foreign Affairs and Trade. But knowing the struggles, and even humiliations, that those who have tried to direct diplomacy towards economic tasks have endured in the MFA for years, it is better to build from scratch somewhere else. I fear that a quarter-century of misdirected diplomacy (with exceptions) has become too ossified for foreign trade to be ‘vaccinated’ here. It is better to plant that idea in more fertile soil. It might be wise for the prospective mandate holder Plenković to long-term hand over the Ministry of Energy to Most, which desires it so much (okay, experiences with the previous HDZ were not good), and focus on establishing a Ministry of Foreign Trade or at least a Ministry of Industry and Foreign Trade.