Croatia's rightwing government falls

Zagreb (AFP) - Croatia's government fell Thursday after Prime Minister Tihomir Oreskovic lost a confidence vote in parliament, in a serious blow to the country's nationalist rulers after only five months in power.

The vote will delay planned reforms in the European Union's newest member, whose economy -- which only last year emerged from a six-year recession -- remains one of EU's weakest.

Cobbled together after indecisive November polls, the fragile coalition has been beset by internal disputes, amid concerns over Croatia's shift to the right.

Speaker Zeljko Reiner said that of those present 125 deputies in the 151-member parliament backed the no confidence motion while 15 were against and two abstained.

If a new government is not formed within 30 days, parliament will be dissolved and the president will call snap elections.

Oreskovic, a former pharmaceutical executive with no party affiliation, came to power pledging to undertake badly-needed economic reforms.

"Initially we all arrived with a common goal to get the economy going," Oreskovic, 50, told reporters after the vote voicing regret over its outcome.

The political crisis, deepened by constant squabbling between the main HDZ party and its junior partner, Most, escalated last month with a conflict of interest affair involving Tomislav Karamarko, the powerful HDZ head and deputy premier.

Most demanded his resignation, while the prime minister called for both Karamarko and Most leader Bozo Petrov -- another deputy premier -- to quit as the coalition descended into chaos.

Oreskovic also rejected a call by HDZ for his own resignation, and the party filed the no confidence motion shortly after, accusing the premier of trying to boost his own political power, instead of dealing with economy.

But, Oreskovic rejected the accusations, saying the motion was tabled as a result of "interests of individuals" -- meaning Karamarko.

"I tried to prevent that. That's my only guilt," he told lawmakers.

- Snap elections -

Considered a key figure in government, Karamarko stepped down on Wednesday saying the government's "disfunction is unsustainable".

His resignation came just hours after a national ethnics watchdog ruled he had a conflict of interest due to a business deal between his wife and a lobbyist for Hungary's oil group MOL.

MOL is currently in arbitration with Croatia over its national oil group INA, where it is a major shareholder.

Oreskovic accused HDZ of toppling him because he wanted to resolve the dispute and protect the national interest.

The conservative government, which took over after a four-year rule by the Social Democrats, has come in for strong criticism from local activists over a growing climate of intolerance.

Critics say the authorities have turned a blind eye and even contributed to concerns over a far-right surge, including nostalgia for a pro-Nazi past, which has seen increased pressure on ethnic minorities and the media.

The HDZ, whose popularity ratings have been hit by the oil affair, has expressed confidence it would be able to form a new parliamentary majority, although analysts estimate this could be difficult.

"If by a miracle HDZ succeeds to form a new one it will last only through the summer and there will be snap elections in November," political analyst Zarko Puhovski told AFP.

The opposition was on Thursday pressing for elections to be held as soon as possible and collecting backing among MPs for an immediate dissolution of parliament.

Opinion polls showed that around 60 to 70 percent of Croatians backed an early vote.

Meanwhile, President Kolinda Grabar-Kitarovic was on Friday due to open talks with parliamentary parties to name a new prime minister-designate.

HDZ said earlier their candidate would be outgoing Finance Minister Zdravko Maric, an independent. But, analysts warn that the former top executive with food retailer Agrokor, Croatia's biggest private firm, like Oreskovic lacked political experience.

Earlier this month Croatia suspended the issuing of its eurobonds, with the finance ministry citing "domestic political uncertainties" as the reason.

Also, political risk consultancy Eurasia Group said it was downgrading Croatia's short-term trajectory to negative because the government was likely to collapse in coming weeks, which would lead to a new election in September.