Croatian Prime Minister Ivo Sanader unexpectedly resigned on Wednesday, saying he has decided to withdraw from politics after 20 years.
At a hastily called news conference, Sanader told reporters: "My job has been done, my political life ends now."
Sanader, the country's prime minister since 2003 who won a second term in November 2007, said he would recommend to President Stipe Mesic to appoint the deputy prime minister, Jadranka Kosor, to replace him.
If Mesic accepts that, parliament will have to approve Kosor within 30 days. If that fails, new elections are called. Kosor ran unsuccessfully for president in 2005.
Sanader, 54, has been generally popular since taking over the Croatian Democratic Union in 2000, and his move came as a surprise.
Sanader insisted that the growing economic crisis and Croatia's deadlocked membership negotiations with the European Union did not affect his decision.
"I never ran away from problems and challenges," he said, adding that his successors "will find a solution" for current problems too.
"I have done my share; now it's time for others," he said.
He added that he is leaving "satisfied" since the country was admitted to the U.N. Security Council and NATO during his tenure and is "on the threshold" of the European Union.
Despite Sanader's upbeat comments, he leaves with the country in its worst economic state since the devastating 1991 war.
Gross domestic product fell 6.7 percent in the first quarter — the biggest drop in 10 years, the country's Statistical Office reported earlier this week. Finance Minister Ivan Suker said this week that the budget might be revised for the second time next month. Also, the tourism industry — the main source of foreign currency — is recording losses due to the global financial crisis.
In addition, Croatia's bid to join the EU — Sanader's goal for nearly a decade — has been stopped by neighboring Slovenia, which has blocked negotiations because of a border dispute.
Sanader acknowledged that the EU snag "played a role" in his decision to resign. He scolded EU leaders for tolerating what he termed Slovenia's "blackmail."
Asked whether he really is leaving politics for good, Sanader said that he "cannot exclude" making a return. Croatian media have speculated that he plans to run for president in elections early next year.
Sanader, born to a poor Roman Catholic family in the southern city of Split, spent most of his early years in publishing and theater. He entered politics in 1992 and took over the Croatian Democratic Union in 2000, after the death of the nationalist President Franjo Tudjman.
Sanader transformed the party — once a bastion of nationalism in the Balkans — into a Western-style conservative party.
Sanader has run his party and the Cabinet with a firm hand.