What if the tourists never come?

July 5: Croatia Parliamentary Election

Croatia is among the European countries that appears to have successfully contained the virus, with only 2,249 Covid-19 cases and 106 deaths registered to date. Yet the country is only just beginning to reckon with the immense economic costs of the lockdown.

Tourism is the backbone of the Croatian economy. It accounts for approximately 20% of the Croatian GDP, as well as almost 150,000 jobs. Almost 80% of tourists are foreigners - German citizens represented 16.7% of the total tourist arrivals in 2019, followed by Slovenes, Austrians, Poles and Italians. Saving the economy means bringing visitors back to the country, despite the risk of a new outbreak. The IMF has predicted a decline of the country’s GDP by 9.0% and the Croatian government by 9.4%. Some 23,000 people in the country of 4 million lost their job in March and April, according to the figures published by the Croatian employment center, and the predictions for the job market in 2020 remain dire.

Currently, the citizens of ten European countries can enter Croatia without restrictions. Other European citizens need to have documentation which confirms they have accommodation booked, that they own real estate or can sleep in camping vans, or have an invitation to a business meeting. They are not required to submit negative test results for the virus or to quarantine upon arrival.

Loosening restrictions, however, might not be enough to bring foreign tourists to the Croatian coasts in great numbers. The country saw a 81.7% drop in international arrivals in May alone.

In many destinations across Croatia, streets, bars and restaurants are still empty. On the island of Hvar, normally a popular destination, the officials were quoted saying that the tourist numbers in early June represented 1% of tourism traffic from the previous year. One local told the daily Slobodna Dalmacija that nobody has been following the recent protests in the US like people in Hvar. “We are thinking all the time - what will Trump do [next]? If [the protests] doesn’t stop, we will lose even those couple of American [tourists] that could come here later in the year,” he said.

Hvar is only one of the destinations that has greatly benefited from the rise in low-cost flights to the nearby city and airport of Split, which opened the Croatian tourist market to guests from Australia, the UK and the US. This year, many low-cost companies, such as EasyJet, Ryanair and Eurowings, have postponed all flights until July.

It is hard to predict what the tourism figures will look like by the end of summer—traditionally the tourist season doesn’t peak before and August—but consultants employed in tourism assume that, in the best-case scenario, Croatia could see only half of the tourists it saw last year. Most likely, the number of arrivals will drop by 70 or even 80%.

As of March, the government decided to implement a set of measures that could help tourism workers survive the immediate aftermath of the Covid-19 pandemic. Individuals renting out their rooms, apartments, summer houses or providing accommodation on their family property will be exempt from paying a lump sum tourist tax this year. The campsites will also see a part of their concession fee for the use of tourist land scrapped, and the Ministry of Tourism and the Croatian Bank for Reconstruction and Development concluded an agreement which enables tourism businesses to get an interest-free loan. All employers whose activity has dropped by 50% will get a subsidy of almost $600 per a full-time employee per month, to prevent corona-induced layoffs. (The gross minimum wage in the country is $606)

Certain critical voices – political commentators, analysts and journalists - say that the government rushed to reopen borders for political, rather than economic reasons.. The regular parliamentary elections, normally due in September (or later), were called earlier this year. The ruling Croatian Democratic Union (HDZ) party is hoping to capitalize on the general approval of its handling of the pandemic before a full blown recession hits the country. The Croatian Parliament was dissolved on May 18. Elections will take place on July 5. The government has said that they will implement safety measures by limiting the number of people in polling stations, but they have not yet revealed guidelines. 

 A University of Oxford study on governmental responses to the coronavirus showed that in April, the measures in Croatia were among the “most stringent” outbreak responses in the world relative to the number of confirmed cases.

But the government may now be suffering from the economic effects of these lockdowns. More recent polls are now showing that Prime Minister Plenković's conservative government may see challenges from other parties. According to a recent poll, the left coalition RESTART led by the Social Democratic Party, SDP, (also the party of the current president of the country, Zoran Milanović) is now the first choice of 27.2% of those polled, while 2.6% of voters support the current ruling party, HDZ. The newly formed right-wing, nationalist block coalition Domovinski Pokret (Homeland Movement), gathered around folk singer and one of the presidential hopefuls in the January presidential election, Miroslav Škoro current comes in third place, at 13.5%. (In my previous piece for The Ballot, I talked about Škoro’s Holocaust revisionism.)

The government’s handling of the Covid-19 crisis hasn’t come without controversies. Catholic priests who openly defied the ban on gatherings didn’t face any repercussions except for weak criticism from the National Headquarters of Civil Protection (the main national institution in charge of emergency management). The Catholic church is traditionally supportive of the ruling conservative party. When journalists started questioning the political background of key experts involved in the work of National Headquarters, they found that these experts, too, were members or supporters of the HDZ. (The chief epidemiologist had supported the HDZ with a video message during last January’s elections.) Similarly, after the virus broke out in a nursing home in the city of Split, the director of the institution, a HDZ cadre, was absolved of any responsibility by the Ministry of Health.

HDZ’s decline in popularity may also have to do with a recent corruption scandal. On May 29, Croatian State Prosecutor's Office for the Suppression of Organized Crime and Corruption (USKOK) arrested a number of state officials and business people on suspicion of corruption using their political influence in return for a payment. The arrests drew public attention to the party’s problematic record on corruption. Last December, the former party leader and prime minister Ivo Sanader, who resigned in 2009, was found guilty for accepting a bribe of 10 million euros to grant a Hungarian oil and gas company a majority stake in the Croatian energy company INA back in 2008. In January 2020, then Minister of Health Milan Kujundžić was sacked after the media revealed he misrepresented the value of his property in the official declaration of assets. In 2019, Croatia plunged to its worst ranking since 2012 on Transparency International’s annual index of perceived corruption.

But despite their surge in the polls, so far neither the SDP nor the Homeland Movement has fully managed to take advantage of the political opening.

All the three parties have presented similar economic programs. They've promised a speedy post-corona economic recovery, pledged to increase minimum and average salary and pensions, to lower VAT and income taxes, to digitalize the public sector and boost national agricultural production (all without explaining in detail where they hope to find the money to finance the reforms). Some of these changes, such as a lower VAT, would, politicians hope, help with the tourism industry.

But while the center-left coalition has traditionally embraced values of social liberalism, Plenkovic's HDZ ideology is infused with liberal conservatism, support for Catholic and family values, patriotism and immigration restrictions.

At the moment, neither of the two major parties, the HDZ and SDP, look like they can win an outright majority in July. A coalition between these two traditional rivals seems very unlikely. The ruling HDZ and Škoro’s Homeland movement have both rejected the idea of a coalition between their groups, but in an interview, Škoro said that he is a man “who never says never.” He also seems a more likely ally for the HDZ, which has taken a more conservative turn over the years, despite Plenković’s efforts to push the party’s moderate faction forward. A coalition with Škoro's Homeland movement –insisting on “family values,” condemning the country's "communist past,” and adopting nationalist rhetoric – could potentially deteriorate the rights of minorities and women, and result in stricter migration laws and policies. The summer may not bring new tourists, but, no matter what happens, it will bring political change.