Published in Nacional number 766, 2010-07-20

Autor: Marko Biočina

Suker no longer has anyone's support

The president recently harshly criticized the Minister of Finance; business people consider him responsible for the difficult economic situation, and other ministers in Government have turned their backs on him, including Prime Minister Jadranka Kosor herself.

IN THE OPINION of his party colleagues Ivan Suker has poor public relations skills and reacts to any criticism nervously and angrilyIN THE OPINION of his party colleagues Ivan Suker has poor public relations skills and reacts to any criticism nervously and angrilyCroatian Finance Minister Ivan Suker is the most isolated man in Croatia in recent days. Along with the harsh public criticism directed at him in recent months and accusations that, by taking on new debt, he has put future generations in arrears - a sentiment now echoed by President Ivo Josipovic - Suker's colleagues within the governing party and the Government itself have turned their backs on him in recent days. Namely, among top HDZ officials there is a growing feeling that Suker has become a heavy burden for both the party and Government, and that because of his capabilities and poor public image he is no longer able to rationally shape Croatia's economic policy. For months now this same opinion has been shared by respected Croatian businesspeople who feel that Suker is not acting like the head of the ministry most important to Croatia's development, but is instead behaving solely as the taxman, without any understanding for the needs of the real economy - directed all of his energies at finding new ways of maintaining the current situation through debt and taxation, and thereby avoiding the necessary reforms.

In fact, even some of his party colleagues feel that Suker is an obstacle to reform, adding that he is currently one of the most unpopular people in the country and that even if he wanted to implement reforms, he would be unable to pool the public support needed to apply the unpopular measures the reforms require. According to Nacional's source, a person close to the top echelons of Government, Prime Minister Kosor is also increasingly more displeased with Suker's work. In this situation the minister has in recent weeks almost entirely isolated himself from his colleagues in Government. "Suker's communication with the public is very poor, he reacts to every criticism of his work angrily and nervously, and in recent months he has completely distanced himself from the Prime Minister's team of economic advisors. Following last week's announcement that Croatia would be going further into debt, it is evident that Suker's public image is very bad, and this is a problem for the Prime Minister. There is no question as to whether or not the new debt was required, after all it was foreseen by the legislation on the state budget. Suker however, made no effort to inform citizens about the new debt and explain what was at stake, and in that way partially cushion the negative reaction that after all, could have been foreseen. As a result he is now in a position in which each of his future decisions, whether they are justified or not, will be the target of harsh public criticism, and it is impossible to function in that kind of atmosphere. The Prime Minister is aware that a new face at that function could bring a certain amount of credibility for the further implementation of reforms. However, this would have to be a person that enjoys a certain prestige in the public eye, and as yet such a candidate does not exist. This comes as no surprise - given the situation the country finds itself in, it makes sense that not a single competent expert is even considering the possibility."

Despite the fact that the new debt had been planned in advance in the state budget, there was not a single media in Croatia that failed to sharply criticize Suker's announcement that he had sold 13.4 billion kuna in state bonds. However, the reason behind the great public dissatisfaction was not that Suker had made a new loan arrangement, but rather his statement during a Government session that he felt the new line of credit was a success. That statement stirred up a lot of negative reactions amongst the public. Many experts said that it was unbelievable that Suker, as a competent expert himself, could call an arrangement by which Croatia will over the next ten years pay nine billion kuna in interest a success. This example is just one in a series whereby Suker has, by his own public statements, irritated the public and which have in large part contributed to his current unpopularity. In fact, today it seems as though there isn't a single segment of Croatian society that is happy with Minister Suker's work. For a significant number of citizens, he is a spendthrift who through debt is spending what future generations will earn. Following the failed negotiations regarding the new labour law, unions declared him the defender of the interests of investment capital, while among capitalists he is viewed as a political bureaucrat who does not understand the needs of the business sector. All in all, public support for the work of Minister Suker is lower than ever before. He is more and more viewed as the leader of a catastrophic economic policy that Government has been implementing for years. There is growing doubt as to his ability to be the main creative force behind Croatia's economic development, which is what he should be based on his position in Government.

Economic analyst Damir Novotny feels that the primary problem with Suker is the fact that his starting point is that of a politician. "Suker is a politician, and that is never a good place to start when money is involved, regardless of whether it is a finance minister or the head of a bank. In all developed western European countries and the United States, the post of finance minister is held by people with high standing in that profession, and that is even more important given the current crisis. The minister must be in a position to ward off and even stand against the often unrealistic plans of Government that are based on political goals. With Suker the situation is exactly the opposite, he is functioning on the basis of political reflex and his behaviour changes based on the needs of day-to-day politics. Without a firm position it is difficult to save ones credibility. On the other hand, that kind of approach hinders an objective viewing of the situation in the country, and that has been shown to be the key condition for economic recovery. All countries that have realistically summarized their problems have moved forward, from the United Kingdom to Greece. This however, is not happening in Croatia, most likely because that kind of approach would result in some kind of political loss."

WOLFGANG SCHAUBLE, the German Finance Minister, holds a doctorate in law and has been a member of the German federal parliament since 1972WOLFGANG SCHAUBLE, the German Finance Minister, holds a doctorate in law and has been a member of the German federal parliament since 1972The primary complaint with regards to Suker's work over the past seven years is now in fact that he has rendered the legitimacy of the economic profession subordinate to political goals. During that time Suker has reduced his function to maintaining order in public finances, but never had an opportunity to directly create the country's economic policy. Quite the contrary, as opposed to large western European countries, where the post of Finance Minister is considered to be a kind of development portfolio, and where the minister through fiscal measures and tax policies practically determines the orientation of the real economy, in Croatia Suker has for years functioned as the state treasurer and accountant, making sure that public finance can withstand an entire swath of megalomaniacal projects conceived of by former Prime Minister Ivo Sanader. That made Sanader the creator of economic policy, while Suker was nothing more than the executor, without any possibility of opposing those plans. That lack of political strength is most likely one of the primary differences between Suker and well-known western European finance ministers, such as Giulio Tremonti of Italy, Wolfgang Schauble of Germany and the United Kingdom's George Osborne.

Along with their professional standing, each of them also enjoys respect within their own political party, and despite the opinion of Damir Novotny that a finance minister should not be a politician, the fact of the matter is that political clout is to a large degree a prerequisite for success as a finance minister, because without it, the minister is hard pressed to adequately stand up to the prime minister when that is required. Suker's problem was always that he never possessed that kind of political power. Despite the fact that he has been a member of the HDZ practically since its inception, he never figured as a particularly important cadre. This is partly as a result of the fact that he comes from Velika Gorica, where the HDZ's local branch was never among the more important branches within the party, and partly because in 2000 when Ivo Sanader and Ivic Pasalic were fighting for control of the party, he was considered to be a Pasalic sympathizer. It was even claimed that Suker was the author of Pasalic's economic program, and that after Sanader assumed the party reigns his political future would be in danger. This however, never came to be and in 2003 when the HDZ won the parliamentary elections he was named finance minister. This advancement was based largely on the fact that Suker had spent practically his entire career working in public finance and the tax office, first as the chief accountant for the budget of the Velika Gorica municipality, and later as the head of the tax office for that city. For Sanader he was a good candidate for that post, he had enough knowledge to lead public finance, but at the same time had a very low political rating, forcing him to rigidly follow all of Sanader's wishes.

An example of that came in February of last year when Suker and Sanader publicly announced the reform of the pension system by which the state would assume control of the assets of the pension fund, valued at roughly 23 billion kuna. That announcement, as could have been expected, evoked catastrophic reactions from the domestic financial market and in only one day stocks on the Zagreb Stock Exchange dropped by 5.63 percent, which translates into losses in the millions for investors. Croatia business leaders claimed even then that this was evidence that the domestic economy was being led solely according to the needs of the governing party, and that minister Suker was did not grasp the most basic elements of economics. They feel that from the onset of the crisis he has done nothing to lower public expenditures, and that all of his moves can be boiled down to raising taxes. In this way the VAT was raised to 23 percent, a crisis tax and series of new excise taxes, such as the special tax on telecommunications services, were introduced. Funds he couldn't gather through the introduction of new taxes, Suker collected abroad in the form of new debt, presenting each of these transactions as a great success. On the other hand, Suker during that time did not implement any of the private sector's demands, not even the measures aimed at stimulating private business and the real economy, in other words lowering the acquired rights of some privileged social groups. Every attempt to negotiate the lowering of the rights of those employed in the public or agriculture sectors failed as a result of a lack of political decisiveness.

With regard to eliminating massive parafiscal taxes, which the Employers' Association has been requesting for more than one and half years now, nothing has been done. Nor has anything been done with regard to the introduction of tax breaks that would stimulate investment. The biggest criticism on Suker's account has always been that he does not act like a minister, but rather as single-minded taxman, without any measure of feeling for the needs of the real economy. In response to these accusations, Suker has always said that his key assignment is to introduce order into public finance. It is very questionable whether or not he has succeeded in doing so. Within the first two months of this year the budgetary deficit already stood at approximately 3 billion kuna, based largely on a 1.19 billion kuna increase in expenditure. From this it can be concluded that the minister was unsuccessful in his announced plan to control state spending, and he was no more successful in regard to state owned companies, which many in the business sector consider to be the primary source of illiquidity in the country. Suker has never acknowledged the frequent appeals directed towards him by the business community that he introduce an obligation shortening the period within which state owned companies must pay their liabilities as an attempt to curtail growing illiquidity. On the contrary, he recently stated that, "never in the history of the Croatia state have state owned companies been as liquid as they are today," which among experts was characterized as a frivolous statement at best. It is precisely because of these kinds of statements that many business people today do not consider Suker to be a serious collocutor, and meetings with him are described as "autistic discussions" at which government representatives first ask employers to provide them with concrete measures, and then present the most unbelievable reasons as to why those measures cannot be implemented.

The head of the Croatian Employers' Association Damir Kustrak, says that Suker's main problem is that in his public statements he relies too heavily on political rhetoric. "Suker has two forms of rhetoric, one he uses publicly, and the other at closed door meetings. When we meet with him he is calm, restrained and constructive, and truly exudes the feeling that he is a person who has all of the relevant data and knowledge on the issue. However, when he speaks publicly he behaves much differently. Why that is, is a question for him."

Pasalic and Sanader fighting for control of the HDZ - Suker is considered to be Pasalic's man and the author of his economic programPasalic and Sanader fighting for control of the HDZ - Suker is considered to be Pasalic's man and the author of his economic programThese kinds of public statements have put Suker in the position of being one of the most unpopular members of Government, whose every move is greeted by the public with criticism, regardless of whether or not this is an objective assessment or not. In this kind of situation, his work, and the work of Government itself, is hindered, making it increasingly more difficult for Government to muster public support for unpopular measures. Therefore, the idea that a new face in Suker's place would secure a growth in support for the implementation of reforms is understandable, but there is no one currently willing to assume Suker's post.

After all, Suker at one time described his job like working in a mine. "What is it like to be Finance Minister five years running? It is like working in a mine. The deeper you dig, the less coal there is - and winters just keep getting colder." There obviously isn't any more coal, and the winter is terribly cold, so it is no wonder that no one wants to takes Suker's shovel out of his hands.

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