Reuters International

Tomislav Karamarko speaks in Zagreb, Croatia, November 9, 2015. REUTERS/Antonio Bronic

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By Igor Ilic

ZAGREB (Reuters) - Croatia's opposition on Wednesday filed a no-confidence motion against Deputy Prime Minister Tomislav Karamarko and a state body said it would investigate an alleged conflict of interest posed by a business deal between his wife and lobbyist friend.

A newspaper alleged last week that the lobbyist hired the public relations company run by Ana Karamarko for a 60,000 euro project over two years ending 2015.

In addition, the lobbyist works for Hungary's MOL, the biggest shareholder in Croatia's energy company INA. The Croatian government is INA's second-largest shareholder, and the two sides are at odds over management rights and INA's investment policy, and are fighting each other in two international arbitration cases.

The ruling coalition has been arguing over how to proceed with the disputes, with Karamarko in favour of abandoning arbitration for fear of financial losses for Croatia.

Karamarko, who leads the conservative HDZ party, the biggest party in the coalition, has repeatedly denied that his wife's business dealings with a long-time friend and a MOL contractor, presented any conflict of interest.

Wednesday's motion was filed by the main opposition party, the Social Democrat (SDP). The vote must take place within a month. Relations within the ruling coalition have been strained by disputes over political appointments and reform plans.

"I expect that the deputies will see this as an unacceptable relationship and people entering such arrangements should know it is unacceptable," SDP leader and former prime minister Zoran Milanovic told reporters.

The State Commission for the Resolution of Conflicts of Interest, a body appointed by parliament, announced it would start an investigation into the accusations against Karamarko. The commission can impose fines on officials found to have conflicts of interest.

Karamarko told reporters that he had always kept private and public matters separate.

"I do not have any conflict of interest and I expect it to be proven," he said before a government session on Wednesday.

Political analyst Davor Gjenero who is based in Zagreb said he expected the opposition to struggle to muster sufficient votes to force Karamarko's resignation.

But "surprises are always possible," he said.

(Reporting by Igor Ilic; Editing by Raissa Kasolowsky)

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