Government Pressure on Allianz – Condemn the Case Lightly, Strongly Support the Approach!

Reactions to the articles in the Financial Times claiming that the Croatian government pressured the German insurance company Allianz and threatened it with regulatory measures after the local pension fund under Allianz’s control withdrew from the agreement for pension funds to purchase 42.5 percent of shares in Fortenova are not calming down.

What is inappropriate pressure?

The Croatian government stated in a press release that ‘media speculation about the Government’s interference in the implementation of the transaction for the acquisition of Sberbank’s shares in Fortenova by pension funds is completely unfounded and untrue.’ From Prime Minister Plenković‘s office, they deny that there were ‘inappropriate pressures on German Allianz.’

The opposition in Croatia, as expected, seized the opportunity to condemn the behavior of Plenković and Foreign Minister Grlić Radman. The majority of the general public joined in. However, this example should serve for a constructive discussion about whether and how the Croatian state should engage in important business situations. Should diplomacy pressure foreign companies? Should Croatian regulatory institutions be more diligent towards uncooperative foreign companies? Should the Croatian government, when a foreign company wants to pursue its interests in Croatia, condition permission on the government of the country from which that company comes allowing Croatian companies to pursue some of their interests abroad in return?

Come on, let’s not pretend to be naive! In the modern world of politics and business lobbying, pressures and tied trade are the main tasks of national diplomacy. Not clarifying geopolitical issues about the war in Abyssinia in a tavern at Žnidaršić’s. For example, once again, Hungary has a Ministry of Foreign Trade and Foreign Affairs. In that order!

Therefore, in the case of Allianz, we should not immediately condemn the pressures exerted by the Croatian side. The small problem is that in this case, the tails of the Borg affair are being dragged. If that conflict of interest is set aside, there is actually no affair. The Croatian government did nothing that engaged diplomacies do every day across the globe. The ambassador in Germany, Gordan Bakota, argued via videoconference to Allianz representatives, as an FT journalist states in an interview, ‘how important Fortenova is for the Croatian economy… and asked Allianz to help resolve this issue.’ What is problematic about that?! Then, again according to the FT journalist’s statement, ‘Gordan Grlić Radman obviously asked for a conversation with a member of the Management Board of Allianz SE.’ What is scandalous about that?! In the end, Hanfa’s control in Allianz was ‘understood as an open threat’ by Croatia.

From many conversations with former Croatian prime ministers and ministers over the last couple of decades, I have heard far more dramatic forms of pressure. Details about how a German telecommunications operator quite cheaply bought a Croatian telecommunications company would suffice. And what methods the German side used. Or what the American administration did to ensure that the Croatian side purchased American warplanes.

Just without corruption!

There is hardly a week that foreign ambassadors do not visit Croatian ministries, exerting pressure to push something for the interests of companies from their home countries. In discussions regarding Allianz, the phrase ‘inappropriate pressure’ is mentioned. It would be useful to have a serious discussion about the difference between ordinary and inappropriate pressure.

For example, it is known that some foreign retail chains in Croatia show modest profits despite operating excellently. But through internal, so-called transfer prices, via inflated costs, they transfer profits without paying taxes to the parent company. Should inspectors be sent to them a little more often? And those more diligent ones. If we have a foreign hotel chain that distinctly refuses to procure goods from Croatian companies, while taking those from companies in its own country, can some kind of pressure be applied here? The kind that numerous Croatian exporting companies face when playing away?

Of course, for some Croatian government to gain tacit support for diplomatic pressures, it should announce quality priorities of national economic policy (and prevent corruption). Then engage precisely in such cases. All in all, when it comes to the Allianz affair, the slogan should apply: ‘Condemn the case lightly, strongly support the approach!’.