By Igor Ilic
ZAGREB (Reuters) - A new party that favors radical economic reforms may hold the key to Croatia's next government after the main conservative opposition won Sunday's parliamentary election by only a slim majority that raises the prospect of lengthy coalition talks.
The conservative Croatian Democratic Union (HDZ) and its allies won 59 seats in the 151-seat parliament, while the outgoing center-left coalition led by the Social Democrats won 56 seats, according to preliminary election results.
The three-year-old 'Most' party, whose name means 'bridge', won 19 seats. 'Most' says it is determined to overhaul Croatia's inefficient public sector and judiciary, but some political analysts question the coherence of a party that draws together people of diverse political backgrounds.
"If Most sticks to what it said before the election about not entering a formal coalition with (either of) the big parties, we may well end up with a minority government," said political analyst Nenad Zakosek.
Analysts say a broad-based coalition would be best placed to tackle the challenges confronting the ex-Yugoslav republic, which include safeguarding a fragile economic recovery after six years of recession and tackling the flow of large numbers of migrants transiting Croatia on their way to western Europe.
"The results of the HDZ are below their expectations, while the SDP can achieve around 65 seats with left-leaning deputies from regional parties and representatives of national minorities. We've yet to see how homogeneous 'Most' is," said political analyst Zarko Puhovski.
'Most', which has tapped into voters' dissatisfaction with the failure of the two main parties to tackle Croatia's economic woes, has said it will only support a government that is serious about reforming the country's bloated state sector, cutting its large debt load and improving the business climate.
"For each of those reforms we would set deadlines and if deadlines were not met, we would demand a parliamentary no-confidence vote," 'Most' leader Bozo Petrov, a psychiatrist by profession and the mayor of the southern Croatian town of Metkovic, said after the election results were announced.
'GRAND COALITION' UNLIKELY
But it remains unclear whether 'Most' can stick together.
"It is a group of people with various political profiles, spanning from right to left, and quite inexperienced in politics, so we've yet to see how they will manage to keep together," said political analyst Davor Gjenero.
However, a 'grand coalition' between HDZ and the Social Democrats remains very unlikely.
"A grand coalition would yield stable government, but the key obstacle to that are the leaders and political habits in those two parties," Gjenero said.
The nationalist-minded HDZ, which steered Croatia to independence from Serb-dominated Yugoslavia in 1991, favors stricter border controls to help manage the flow of migrants transiting the small Adriatic nation of 4.4 million.
Some 338,000 migrants have passed through Croatia since mid-September, crossing the border from Serbia at a daily rate of 5,000 or sometimes 10,000.
Few linger in Croatia, one of the poorest countries in the European Union, which it joined in 2013. Unemployment stands at 16 percent, well above the EU's 9 percent average.
The European Commission urged Zagreb last week to rein in its public debt, now about 90 percent of national output.
Croatia's economy is expected to expand this year by about one percent, yet it needs annual growth of two to three percent just to be able to afford the interest on its large debt pile.
(Additional reporting by Ivana Sekularac; Editing by Gareth Jones)