Zagreb Pacifies Mutinous Province

The Croatian government has been forced to make dramatic concessions after moves to close a regional bank threatened to re-ignite mutinous tendencies in the north-western province of Istra.

And it is thought that this latest outburst of partisan feeling could push the authorities towards adopting territorial reforms aimed at devolving power from Zagreb.

Crisis loomed after the Bank of Istra, unable to collect on a series of high-risk loans, announced that it was teetering on the brink of collapse. The National Bank of Croatia promptly sent in an interim director who suspended all payments and froze the bank's assets. Account holders were told they would be unable to withdraw their savings for at least three months.

In a part of Croatia which has always resented interference from the central government, the political implications of the bank's impending ruin were far-reaching. Ivan Jakovcic, president of the Istra Democratic Union (IDS), said that the crisis could spark off a new wave of anti-Zagreb feeling in the province and lead to calls for regional autonomy.

Jakovcic promptly threatened to resign from his government position as minister responsible for European integration.

Although the IDS president later retracted his statement, the reaction took Croatia's new government by surprise. Since the country became independent in 1991, more than 10 Croatian banks have declared themselves bankrupt and the authorities have consistently refused to bail them out. But, faced by the prospect of growing unrest in Istra, Zagreb approved a government loan to the struggling bank which was able to open again for business on April 10.

Istra's mutinous tendencies came to the fore during Franjo Tudjman's presidency. For years, the ruling HDZ party demonised the IDS faction which it accused of championing the bid for greater autonomy.

Tudjman set up a special commission to administrate the "defiant peninsula" but he was unable to crush the IDS which consistently scored resounding victories at local elections.

Located on the border with Slovenia and within easy reach of Trieste, Istra is among the most developed regions in Croatia and has traditionally resisted territorial claims from the north and south.

The Austrian Emperors ruled Istra for more than a century until the province was granted to Italy in the aftermath of the First World War. The Belgrade government approved the arrangement in the Rapall agreement of 1920.

At the end of the second war, however, Istra was occupied by Yugoslav partisans under Marshal Tito and the region was officially recognised as Yugoslav territory in a memorandum issued from London in 1945.

In the wake of Croatian independence, the Tudjman regime made concerted efforts to establish a centralised administration in Zagreb. As a result, the bulk of government investment was ploughed into the capital and the slogan "Zagreb=Belgrade" became a common sight on the walls of rival Croatian towns.

Anti-Zagreb feeling was especially intense in Istra, ensuring overwhelming support for the IDS which openly discussed the issue of autonomy in its manifesto.

In 1998, one of the party's founders, Ivan Pauletta, unveiled a political programme entitled, "The Nation of Istra", which HDZ officials saw as an attempt to create "a Luxembourg on the Adriatic", a de facto republic divorced from Croatia and enjoying economic ties with Italy.

Ivica Racan's new Croatian government is understandably sensitive to the unrest provoked by Tudjman's policies in the nation's remote provinces.

Istra was not alone. In the heyday of the HDZ regime, the Dalmatian Action party managed to secure several seats on the Zagreb parliament but was later split by political infighting. The Croatian Party of Slavonia-Baranja still boasts a single parliamentary seat.

The uncertain situation has prompted calls for territorial reforms in Croatia, which would reduce the overall number of regions (21 including Zagreb) and municipalities (around 500). It is thought the reorganisation would slash administrative costs by creating bigger political units and free up more funds for regional development.

Preoccupied with ongoing economic problems, the new government has yet to come up with concrete proposals but political analysts speculate that, if traditional boundaries are preserved, the number of regional administrations could be decreased to five.

The ongoing struggle for regional autonomy was one of the main reasons for the collapse of the former Yugoslavia. Zagreb will have to ensure that state revenues stay where they are generated if it is to avoid outbreaks of civil unrest in the outlying provinces.

Drago Hedl is a correspondent for the Split-based Feral Tribune and a regular contributor for IWPR