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New Croatian president targets government over economy

ZAGREB (Reuters) - Croatia’s new center president signaled on Monday she meant to hold the Social Democrat-led government to account over the economy, in comments that could herald months of tense cohabitation before a parliamentary election.

Kolinda Grabar-Kitarovic of the opposition HDZ celebrates her victory in Croatia's presidential run-off election on the stage at her campaign headquarters in Zagreb January 11, 2015. REUTERS/Antonio Bronic

Kolinda Grabar-Kitarovic, who became Croatia’s first female head of state on Sunday after narrowly beating the government-backed incumbent, said she would demand an extraordinary cabinet session to discuss the parlous state of the economy.

In Croatia, the president is largely ceremonial, with some say on foreign policy and defense but no power to veto laws. The president has the right to seek and attend such a special cabinet meeting but the right has rarely been exercised.

“My absolute priority is to demand a cabinet session to discuss the economic and social situation and see if there are any solutions,” Grabar-Kitarovic, 46, a former diplomat, told the top-selling Vecernji List daily in an interview.

Croatia’s economy has been in recession for six years and unemployment stands at 19 percent.

Prime Minister Zoran Milanovic, whose Social Democrats trail the president’s center HDZ party in opinion polls, responded negatively to her demand for a special meeting.

“No president has ever dared demand that from the government, which holds sessions every week,” he said late on Sunday. “I can’t imagine what it would look like, what would be the agenda. It is practically inconceivable.”

Grabar-Kitarovic’s victory is unlikely to affect policy, but it increases pressure on the government, analysts said.

“If the government refuses her calls for a cabinet session, it may further tarnish its image, make it look like it does not want to cooperate,” said political analyst Ivan Rimac.

A second analyst, Zeljko Puhovski, said the HDZ now had “a positive political tide on its side” but was not guaranteed to capture the parliament in the election, due later this year.

“They (HDZ) will be the single strongest party, but we now see the electorate is split almost 50-50, so we have to see the coalition potential of each camp when the time comes,” he said.

Market reaction to the presidential election was muted, with the kuna and the Crobex stock index little changed.

“The two main camps are centrist parties, there are no big differences that could create uncertainties for the markets,” said Hrvoje Stojic, chief economist at Hypo Bank.

“I am more worried by the fact that in this country every reform dies in an election year, and the reforms have already been almost non-existent.”

Additional reporting by Igor Ilic; Editing by Gareth Jones