The parliamentary election in Croatia on September 11 failed to resolve the continuing political crisis of the youngest EU member state. The massive rejection of the entire political elite by the population was expressed in mass abstention. Only 54 percent, slightly more than half, of eligible voters took part in the election, 10 percent fewer than in the last election 10 months ago.

The nationalist conservative Croatian Democratic Union (HDZ) won the most votes. According to the official results, it won 61 seats, slightly more than the Social Democrats (SDP), who won 54 seats. The “Most” party (Bridge) achieved third place, winning 13 seats. HDZ and Most won a combined total of 151 seats, not enough to form a majority government.

The Party “zivi zid” (Living Wall) also achieved parliamentary representation. It won votes with its criticisms of the big parties and the raging corruption and privatizations in the big cities. Party members were recruited from the civil rights movement, and from small nominally “left” groups and former members of the SPD. It is pro-capitalist and calls for the Croatian Central Bank to play a larger role in order to strengthen “competition.”

The regional party IDS (Istrian Democratic Assembly), the party of Milan Bandic—who was mayor of Zagreb for many years and who faces an ongoing trial on charges of bribery and organized crime— also made it into parliament. The fascistic HDSSB led by the war criminal Branimir Glavas also secured a seat. Eight seats went to representatives of national minorities.

Under the circumstances, building a ruling coalition is viewed as an extremely difficult task. Due to extreme tensions between HDZ and SDP, a grand coalition is unlikely, so the HDZ will need at least two coalition partners. The Most party, which was also part of the last government, is viewed as a possible coalition partner.

On the night of the election, Most head Bozo Petrov voiced his conditions for joining a coalition. He said that he would only consider joining a coalition if it really carried out “reforms.” Most wants a massive reduction in taxes for corporations and “smaller management,” in other words, mass layoffs in the public sector. Petrov gave the HDZ and the SPD five days to address his demands. In this way he said he hoped to avoid a long political impasse.

New elections became necessary in Croatia after the ruling coalition government led by the non-party pharmaceutical manager Tihomir Oreskovic collapsed in June, after only four months. Oreskovic, the former head of a North American pharmaceutical company, had headed a coalition of the HDZ and the right-wing neo-liberal Most. The aim of his government was to carry out “hard reforms” in Croatia.

The election in November 2015 had led to a stalemate between the HDZ and the SDP. Most became a kingmaker and agreed with the HDZ to name Oreskovic as prime minister.

The economic crisis in the former Yugoslavian state has continued unabated since it joined the EU in 2013. After six years of recession, the official unemployment rate is 14 percent overall, while youth unemployment stands at 43 percent. A study performed by the IFO Institute in Munich draws attention to the extremely high cost of living in Croatia and, above all, the high cost of food. Because of the precarious living conditions for large segments of the population, increasing numbers of people are leaving Croatia to seek employment abroad. The number of young and well-educated Croats who have left has risen by 33 percent.

In its last country report, the IMF had called for wide-ranging cuts, primarily on the public sector. Some 12 percent of the Croatian working population are employed by a state-owned enterprise, twice the average in the EU as a whole. This is a thorn in the side of the international financial elite.

Both the HDZ and the Social Democrats also advocate further attacks on the working class. The HDZ is led by Andrej Plenković, an experienced politician who, unlike his predecessor Tomislav Karamarko, enjoys a good reputation in Brussels and is expected to follow a strict course of reforms. Plenković is a jurist and former diplomat and has been a member of the European Parliament since 2013, when Croatia joined the EU. For years, the EU has demanded that Croatia reduce its state debt and budget deficit and improve conditions for foreign investors.

The ruling class has reacted to the social, economic and political crisis by encouraging extreme nationalism, which raises the spectre of a renewal of conflict in the Balkans. According to the Financial Times, the relationship between Serbia and Croatia has deteriorated to its lowest point since 1995. Open nationalism has now become “political mainstream” in Croatia.

The election on Sunday was preceded by a vile campaign in which the parties strove to outdo each other with their nationalism. Both of the big parties vehemently defended the closing of the so-called Balkan route for refugees. They also fuelled tensions between the former Yugoslavian states.

The SDP and its lead candidate, former head of state Zoran Milanovic, outdid all the others. At a meeting of the Croatian veterans of the war from 1991 to 1995, he called Bosnia a “failed state.” He called neighbouring Serbia a “wretched” gang that “wants to rule half the Balkans.”

Belgrade and Sarajevo reacted immediately. Serbia’s President Tomislav Nikolić compared Milanovic’s statements to those of the fascist Ustasha regime. Bosnian Foreign Minister Igor Crnadak reacted just as sharply, rejecting the insults levelled at Bosnia and Serbia. Previously, Serbia’s Foreign Minister Ivica Dacic had called Croatia the greatest disgrace of the EU.

Croatian Foreign Minister Miro Kovač (HDZ) recently worsened relations between Croatia and the other Balkan states when he blocked a new round of negotiations between the EU and Serbia. At a meeting with war veterans, Milanović announced that he would continue and intensify this policy.

Immediately before the election, Branimir Glavas, who in 2009 was judged guilty of the murder of Serbian civilians in Osikek in 1991, was rehabilitated and acquitted by the Supreme Court. The self-avowed fascist used his acquittal to propagandize against Serbia during the election. The suspension of the 1946 sentence of Alojzije Stepinac, the former Cardinal of Zagreb, also created a stir. By supporting the fascistic Ustasha at the beginning of the 1940s, Stepinac shared responsibility for the murder of Serbs in the 1940s.