, July 06, 2005
Croatia has got the entire world by the neck
Here are a series of six articles written in a
special supplement to the Financial Times about
Croatia in their "World Report" supplement, published
on June 7 2005:
Fashion: Strong ties boost cravat business
By Eric Jansson
Published: June 7 2005 10:45 | Last updated: June 7
Along with many small countries, Croatia forever
dreams of making its mark in the world.
But few make claims as grand as those issued on
Croatia's behalf by Marijan Busic, a Zagreb-based
sociologist and businessman. Mr Busic says this
country, slung around the western rim of the Balkan
region, has got the entire world by the neck.
Only the rest of the world does not know it yet.
Mr Busic says his secret is the necktie, or cravat,
which he describes as 'Croatia's contribution to the
History and language are on his side. The word
'cravat' stems from the Croatian root for Croat,
'hravat'. The necktie itself originated as a kerchief
worn around the necks of Croat soldiers fighting for
the Hapsburg empire during the Thirty Years’ War, in
the 17th century. The style caught on, spreading from
Paris to Britain, then via the British empire around
Mr Busic bemoans the fact that many people mistakenly
believe the necktie originated in Italy or France. But
in their ignorance he has identified a business
opportunity, manufacturing and selling 'original'
Croatian cravats as co-owner of a fashion house,
This he does in parallel with his work as director of
Academia Cravatica, a non-profit organisation that
aims to tie the cravat to Croatia in the world’s
collective imagination - just as champagne, the
bubbly, is linked to Champagne, the region.
Croatia’s government is jumping on the bandwagon,
giving Croata ties to visiting dignitaries and
sponsoring some of Academia Cravatica’s projects. From
the company’s launch at the dawn of Croatian
independence until today, so many of Mr Busic's
neckties have been handed to visiting officials that
'by now all the politicians in Europe have a few,' he
The history-laden sales pitch behind Mr Busic's luxury
product and the Croatian state’s official effort to
brighten its image combine to fuel a formidable
marketing operation. Bozo Biskupic, the culture
minister, gushes that the necktie is 'a sign of
civilisation and mutual respect.'
In Croata’s biggest stunt to date, Mr Busic elbowed
his way into the Guinness Book of World Records by
fastening an enormous red polyester cravat around an
ancient Roman amphitheatre in the coastal city of
He confesses mild embarrassment about the vast length
of polyester, big enough to produce 100,000
low-quality neckties. Croata uses silk as a rule. But
at the cost of €60,000, the Pula stunt was a bargain,
says Kresimir Spajic, the company’s marketing
assistant. 'I would estimate that 1bn people saw that
Pula tie on television, through CNN and other
networks. You can’t say that’s not a marketing
After selling 150,000 neckties last year, Croata aims
to boost sales by 30 per cent in 2005. Most of its
ties, scarves and related products sell domestically,
but 40 per cent last year sold through a combination
of direct exports or sales to foreign tourists
Croata exemplifies a host of trends commonly seen in
successful Croatian businesses.
First, the company is taking advantage of inexpensive
marketing opportunities, trading product for exposure.
Croata succeeds in making itself ubiquitous in the
eyes of targeted consumers, despite its relatively
small marketing budget.
Second, the company positions itself in the luxury
market and aims to compete directly against leading
west European firms. Labour costs are higher in
Croatia than in many other post-socialist countries.
The company identifies its comparative advantage as
quality, not quantity or price. A similar trend is
seen in tourism, with moves away from mass tourism
toward boutique and luxury options, emphasising
Third, to keep labour costs down, the company works
where wages are low. Zagreb is the company’s sales
centre, but design and production are located in a
small village outside Slavonski Brod, in a less
wealthy region halfway between the capital and the
Serbian border. Most of its employees are women.
Fourth, keeping an eye on production costs, Mr Busic
defiantly refuses to yield to cheaper imports. Croata
imports Chinese silk, but the company plans to start
its own local silk production in the near future. A
risky plan perhaps, but Croatia’s entrepreneurs have
not learned to succeed through risk avoidance.
Finally, the company benefits by cultivating a
friendly working relationship with state officials.
The advantages of this are real if hard to define.
Beyond Croata's bottom line, Mr Busic presents himself
as a true believer in his product. 'If you call us
just a tie company, it's offensive to us. Just
producing ties is nothing. This is something very
special,' he says.
He and other board members describe Croata's goal in
quasi-revolutionary terms. Croatia needs the necktie
in its new democratic era to find a balance between
dictatorial order and the responsible exercise of
liberty, they say.
'If you look at the people who refuse to wear ties -
hippies, New Age people - these are people who want
full freedom and refuse to accept responsibility. On
the other side, you have responsibility without
freedom - dictators, tyrants, those who would control
you and who incidentally always wear ties. Between the
two, the tie is a perfect democratic symbol of
restraint, of dignity, responsibility and freedom.'
It sounds like pure marketing drivel. Claiming
authority as a sociologist, Mr Busic insists it is
New middle class takes the helm
Dozens of gleaming white sails skim across an
aquamarine horizon, watched by lunching tourists at
Zadar, an ancient walled city on Croatia’s Dalmatian
Visible for miles along the shoreline and dwarfing all
the other sails, an enormous spinnaker hurries into
the distance. Swelled by Adriatic sea-breezes, it
hauls the Madex, a racing yacht, to a regatta down the
coast at Split.
At the boat’s helm stands Damir Majetic, a middle-aged
citizen of Zadar and lifelong sailor, his face
permanently bronzed by the sun, the ends of his
moustache curled by the wind.
As the boat’s new owner and captain, Mr Majetic is
just beginning to make his mark on Croatia’s racing
scene. Fellow sailors at Zadar’s private yacht club,
Uskok, where he moors the 65ft carbon-fibre racer,
already admire him for prising several coveted
trophies away from Split’s longer-established
But whatever he wins at sea, Mr Majetic’s greatest
victories have come onshore in the world of business.
He is part of a growing class of entrepreneurs that
increasingly drives economic growth and prosperity in
this country of 4.3m people, across the water from
Italy. Economists in Zagreb, the capital, hail the
arrival of a new era of private business led by
nimble, lightweight companies.
'Small and medium-sized enterprises are a strong
segment of the economy now. These people are all
middle class. This is the source of a new strata of
society. It’s vibrant and getting bigger,' says Zarko
Miljenovic, chief economist at Zagrebacka banka, the
country’s biggest bank.
The good life Mr Majetic enjoys as a yachtsman has not
come cheaply. It is the fruit of years spent running a
small private company, Madex, named like the boat for
'Majetic, Damir: Exporter'.
'I work hard to make money so I can sail,' he says.
The story of his rise to modest wealth, and many
others like it, began more than a decade ago, in 1993,
while Croatia remained submerged in war against Serbia
and during the non-transparent privatisation process
Croats now sneeringly call 'tycoonisation'.
At the time, the newly-independent country’s leaders,
politically weak in a moment of national crisis,
placed hundreds of state-owned companies in the hands
of a close circle of loyalists. These new 'tycoons'
amassed private fortunes in a flurry of dubious
transactions that distressed ordinary Croats and
consigned once-viable companies to commercial ruin.
Mr Majetic could have cashed in then. As former
director of a state-owned kitchen appliances
manufacturer, he received an offer to acquire the
company cheaply from the state. 'But it felt immoral,'
Opting instead to work alone, he scraped together
loans from friends worth the equivalent of €10,000 and
opened a shop manufacturing paint rollers.
It seemed reckless then, but it looks wise now. As
Croatia’s new middle class gains strength, the bloated
tycoon class’s influence dwindles. Entrepreneurs
control a growing piece of the economic pie.
'The private sector is taking over, giving us a new
base. It has in some cases emerged from the old
structures, but it isn’t based on them. This new
economy now accounts for 50-60 percent of the
picture,' Mr Miljenovic says.
As new entrepreneurs start up, they add variety to the
growing private sector, and this yields security.
'Because the economy is not dominated by any
particular sector, or just a few sectors, the risk of
sudden turnarounds is reduced,' says Martina Dalic,
state secretary at Croatia’s finance ministry.
Growth in the country’s gross domestic product (GDP)
slowed to 3.8 per cent last year, but Croatia’s
fundamentals appear stronger than at any time since
the collapse of Yugoslavia, 15 years ago. Debt
sustainability in public and private sectors, long a
problem, is beginning to stabilise. Inflation remains
below 4 per cent annually.
Some concerns remain. For example, Zeljko Rohatinski,
the central bank governor, says the heavy flow of
foreign cash into the country places growing pressure
on the kuna, Croatia’s currency, to appreciate. This
could jeopardise the kuna’s managed peg to the euro,
which holds movement against the euro within a price
'corridor' of 15 per cent.
'In order to stop appreciation, we inject into the
system higher and higher amounts of kuna. The system
is sustainable, but the costs of sustaining it are
higher and higher,' Mr Rohatinski says.
At the same time, Croatia’s government under Ivo
Sanader, the prime minister, must try to cut state
spending this year. Potential targets include the
politically-sensitive pensions system,
heavily-subsidised shipyards and railways. Without
such cuts, post-socialist transition remains
incomplete. The state still doles out subsidies
greater than twice the European average, as measured
Despite these challenges, private companies already
benefit from an improved business climate,
characterised by freer trade and a gradual reduction
of red tape - a world away from the economy of a
Companies like Mr Majetic’s were once underdogs in a
world of socialist-era behemoths. But whereas many big
state-owned companies now struggle with losses, Madex
It survived a difficult start, thanks to the war’s end
in 1995, when homeowners undertook post-war renovation
and paint-rollers sold briskly. Now, with 40
employees, turnover of €4.5m in 2004 and projected
sales growth of 11 per cent this year, Madex is
changing rapidly. No longer content to sell
paint-rollers, the company imports paint and painting
equipment and aims to evolve into a larger-scale
manufacturer and exporter. A new subsidiary, Madex
Marine, also manufactures and repairs sails while
trading boating paraphernalia.
Mr Majetic says several key changes have helped make
Croatia’s business environment much healthier than it
was five years ago.
First, policymakers are ushering former black
marketers into the tax system. This levels the playing
field for others. 'Fewer and fewer firms deal
illegally,' he says.
Also, despite continuing problem with backlogged cases
in the judiciary, 'the courts are doing a faster,
Crucially, banks are opening their doors to small
companies, as the foreign banks that dominate the
sector diversify their portfolios and compete by
pushing down interest rates.
Finally, Mr Majetic cites cultural evolution.
'Transition from socialism to capitalism is not easy.
But our mentality is changing. People finally are
beginning to understand that they have to do things
Croatia’s conservative political elite could learn
from the country’s more flexible private sector.
Mr Sanader’s government was stung in March when the
European Union called off eagerly-awaited accession
negotiations, stalling Croatia’s effort to join the
bloc. The move gave teeth to a formal protest from
Brussels against Zagreb’s failure to deliver Ante
Gotovina, a fugitive war crimes indictee, to the
United Nation’s International Criminal Tribunal for
the former Yugoslavia.
The disappointment demonstrated how leaders in Zagreb
could do more to eliminate the war-related political
risk that, though vastly diminished, still frustrates
Kolinda Grabar-Kitarovic, the foreign minister, says
that by postponing negotiations indefinitely, the EU
risks promoting 'adverse effects, rising
Euro-scepticism and a feeling among citizens that the
EU doesn’t want us.'
But, broadly, Croatia already stands politically and
economically apart from slower-reforming neighbours in
the western Balkans, such as Serbia and
In a victory for Croatia’s liberals, Stipe Mesic, the
president, a rival to Mr Sanader and his ruling
Croatian Democratic Union, won a second five-year term
earlier this year. The president carries enormous
credit for advancing democratisation during his first
term, and he praises Croatia for its progress.
'Democracy continues to mature. The last elections
were the first ones in which rival parties did not
accuse each other of being against Croatia,' he says.
But as a former member of the country’s socialist-era
elite, even Mr Mesic, a proven reformer, faces popular
criticism from Croats who want faster change. Stubborn
patriots, they fear the pain further economic reforms
could bring, but they also ridicule politicians seen
as too self-interested to make genuinely hard choices.
Unlike today’s politicians, since winning independence
from Yugoslavia few ordinary citizens have known the
luxury of avoiding risk - least of all the new
entrepreneurs, who are among the most credible
advocates of swift reform.
'I love my country. Croatia has great potential. It
will have a great future if the people who build it
truly love it, whatever it takes,' says Mr Majetic.
Croatia’s leaders say they are eager to see the
country succeed as part of a united Europe. To follow
through in 2005 they must clear the present diplomatic
logjam with the EU, start accession negotiations, and
move forward with economic reforms - whatever it
Big issues remain to be addressed
>By Eric Jansson
>Published: June 6 2005 15:57 | Last updated: June 6
With its vast coastlines and harvesting rights in the
Adriatic sea, Croatia would seem a perfect paradise
for placing high-quality seafood on the dinner table.
Workers in the central Croatian town of Daruvar,
piling deep-frozen octopi into lorries at the start of
a lengthy distribution chain, know the truth is more
When Agrokor, the country’s biggest private company,
acquired the Daruvar deep-freezer and its fish farms,
its managers already knew from their ice cream
business that distributing perishables in Croatia is
no mean feat.
Though small in population and geographical area, for
practical purposes this is a big country.
Sickle-shaped with a long, thin coastline - the
'blade' curving south to Dubrovnik - and an oblong
'handle' in central Europe, mountainous Croatia poses
headaches for businesses reaching for a nationwide
market. Hot summers further complicate the problems
food distributors face.
Ljerka Puljic, Agrokor’s senior executive
vice-president, says the company’s frozen foods arm,
Ledo, manager of the Daruvar deep-freezer, requires no
fewer than 12 distribution centres. 'All our
manufacturing companies need their own distribution,
because transport in Croatia is tremendously
difficult,' she says.
But a hard push by the government to renovate and
expand the country’s motorways promises to shrink the
geography of a country that, for transportation
purposes, remains one of Europe’s most awkward.
Already travel times between the capital and the coast
have fallen on some roads from seven hours at the end
of the 1990s to fewer than three - offering important
new logistical efficiencies to help thriving retail
and tourism industries.
Mrs Puljic says Agrokor stands to save 'tens of
millions of euros' annually if Croatia’s transport
network continues to improve.
Stanislav Brodnjak, director in Croatia of an
important competitor to Agrokor in retail trade,
Slovenia’s Mercator, which is expanding into the
country, says improved transport links already have
enabled him to scrap expensive plans for multiple
distribution centres once considered essential.
With their successful motorways project approaching
completion, government ministers in Zagreb can afford
to gloat a little. Faster roads boost efficiency in an
area of the economy that has long been a drag.
However, they must also face the uncomfortable reality
that, in other areas, there remains much room for
Athanasios Vamvakidis, resident representative for the
International Monetary Fund, identifies a raft of
major tasks for 2005. First comes a technical issue,
improving the accuracy of state revenue projections,
habitually inflated and used to justify deficit
Then come the big spending cuts: re-indexing state
pensions, curbing costs in an 'over-consuming' public
health sector, reducing payments to the state-owned
railways and cutting subsidies to loss-making
industries such as shipbuilding.
'All these problems are problems the authorities
understand,' Mr Vamvakidis says.
IMF officials congratulate Ivo Sanader, the prime
minister, and his team for major accomplishments
racked up during the past 12 months. Croatia’s
external debt began to fall in early 2005 after years
of constant growth. The current account deficit fell
below the IMF’s target, contracting to 4.6 per cent of
GDP on the strength of export growth and tourism
revenues during 2004.
The state squeezed its budget deficit down to 5 per
cent from 6.3 per cent in one year, and the government
unveiled medium-term reform plans for the railways and
But the most politically-sensitive items on the IMF’s
list remain untouched.
'The question is whether the government can afford to
address these issues politically. These things have
very big implications for Croatia’s economy in the
medium and long terms,' Mr Vamvakidis says.
'Pension re-indexation is a perfect example of what
the government would really like to do but they cannot
because of political constraints in the coalition
Mr Sanader’s Croatian Democratic Union (HDZ) holds
power in co-operation with a junior coalition partner,
the Pensioners’ Party. Together the two parties
directly control fewer than half the seats in
parliament, but their minority government stays in
office with extra support from a handful of small
Mr Sanader’s government agrees in theory with the
IMF’s insistence that heavy state spending on
pensions, currently 14 per cent of GDP, must go down.
The way to do this, Mr Vamvakidis says, is to re-index
pensions according to real wage growth rather than the
current standard, nominal wage growth. But the HDZ’s
political arrangement with the Pensioners’ Party means
a move in this direction could blow apart the ruling
Fixing the shipbuilding sector will not be any easier.
Dominated by state-owned yards on the coast, the
industry posts perpetual losses while absorbing large
subsidies. The state pays for 10 per cent of costs on
every ship manufactured in the yards.
Hit hard by the high prices of steel and the euro in a
dollarised industry, the shipbuilders fail to turn
profits, despite job cuts that reduced the workforce
from 30,000 workers 15 years ago to 9,500 today, not
counting some 7,000 subcontractors.
'Production is at the same level now as when we had
30,000 workers. Still, the number needs to go down,'
says Mladen Corluka, commercial director for the
Croatian Shipbuilding Corporation, a government
A government plan to privatise one of the most
successful shipyards, Uljanik, located in the port
city of Pula, could point the way forward if it
succeeds this year. But other yards may be more
difficult to sell.
As state experts work out final details of a plan to
save the industry, Mr Corluka says Croatian
shipbuilding’s fate 'will become clear in the next two
to three months.'
At the root of these challenges lies a cultural
dilemma. Croatia’s economy has long enjoyed success in
comparison with neighbours to the east. Traditionally,
it has been buoyed by a strong inflow of tourist cash
and a large sector of small private enterprises -
previously part of a 'grey market', now legitimised.
Such wealth during the socialist era underwrote the
development of heavy industry and encouraged many
Croats, like western Europeans, to place faith in a
consumer-friendly welfare state.
Banking: New problems emerge as security is restored
>By Eric Jansson
>Published: June 6 2005 15:57 | Last updated: June 6
Bolted to the neoclassical rooftops above Zagreb’s Ban
Jelacic Square, the names of the foreign-owned banks
that dominate Croatia’s banking sector spell security
for millions of depositors once scared off by
Zagrebacka banka, owned by Italy’s Unicredito, and
Privredna banka Zagreb (PBZ), owned by Italy’s Banca
Intesa, together control 45 per cent of the market.
Other big players include Austria’s Raiffeisen, Erste
SteirmĂ¤rkische, Hypo Alpe-Adria and Germany’s HVB.
Foreign banks combine to control 91 per cent of total
assets in the sector.
Central bankers praise these banks for reinvigorating
Croatia’s once lacklustre banking sector, and
depositors show their approval by voting with their
wallets. Overall time and savings deposits in the
sector trebled from 2001 to today. Demand deposits
more than doubled. Foreign currency deposits grew by
61 per cent.
The banks have responded by modernising Croatia’s
financial world. Some 6m charge cards circulate among
a population of 4.3m people, says Bozo Prka, president
of the managing board at PBZ, making consumer payments
easier in Croatia than anywhere else in the western
But while good news abounds, new problems arise.
Central bankers have begun to complain that Croatia is
paying a heavy price for the bank sales. 'These
foreign banks are great for clients, but from a
monetary policy point of view they treat Croatia like
a cheap market,' says one central bank analyst.
Zeljko Rohatinski, governor of the central bank, says
the European mother banks of local institutions, eager
to expand business in Croatia, are flooding the market
with foreign currency, mostly the euro. This boosts
their local branches’ lending volume. But it also
encourages the kuna, Croatia’s currency, to
In response, the central bank must inject kunas into
the market, guarding the managed peg to the euro - a
pillar of monetary policy - which permits the kuna to
change value against the euro only within a price
'corridor' of 15 per cent.
The managed peg, a source of confidence that Croatia
can eventually adopt the euro without difficulty,
could be jeopardised, Mr Rohatinski indicates. 'To
stop appreciation we inject into the system higher and
higher amounts of kuna. The system is sustainable, but
the costs of sustaining it are higher and higher.'
Mr Rohatinski acted last month to curb the trend,
raising banks’ marginal reserve requirements from 30
to 40 per cent, aiming to slash yields on external
borrowing. He justified the move on May 18, saying: 'I
do not believe that the current mechanism (the kuna’s
link to the euro) can be preserved under the current
Mr Rohatinski says the frequency of central bank
intervention has increased sharply in the past 12
months. Asked if Croatia would be able to adopt the
euro by 2010, as some economists say the country
should do, Mr Rohatinski defers. 'Five years is a long
time,' he says.
Mr Rohatinski acknowledges that Croatia’s
foreign-owned banks are only following commercial
instincts. 'The economic cycle in Italy and Germany is
quiet modest right now, so quite logically they export
their capital to other countries. In Croatia, their
yield on capital stands at 16.5 per cent, and yield on
assets stands at 1.7 per cent, which is better than
they can do in their home markets.'
Croatia’s central bank has acted previously to
restrain foreign-owned banks, capping their annual
lending growth at 16 per cent in 2003. This
restriction was dropped last year, but it demonstrated
the monetary authority’s readiness to intervene.
Boris Vujcic, Mr Rohatinski’s deputy governor, assures
investors that the central bank intends to keep the
managed peg in place until Croatia fulfils its goal of
adopting the euro.
Mr Vujcic ascribes pressure on the kuna not uniquely
to foreign banks, rather preferring to emphasise
'financial markets and adjustments in the country’s
current account deficit.' New government bond issues
and brisker sales on the Zagreb Stock Exchange also
raise demand for Croatia’s currency.
Mr Prka of PBZ cites a new trend. 'Until recently the
financial system has been bank-centric. Since the end
of last year there is a trend toward capital markets.'
But this trend does not relieve the central bank of
its dilemma. It also traces back to the foreign-owned
banks, all major players in the country’s developing
Sport: After Goran, new stars court fame
>By Eric Jansson
>Published: June 6 2005 15:57 | Last updated: June 6
Few tennis fans can forget Goran Ivanisevic’s victory
in the 2001 Wimbledon men’s final. For devotees of the
game, it was as gratifying an upset as they have ever
seen. The Croat player, then 29, injured and ranked
125th in the world, battled through five sets to
snatch victory from Patrick Rafter, the favoured
For Croats, the victory transcended tennis. Riveted by
the spectacle of Croatia’s chequerboard red and white
flag waving in Wimbledon’s centre court, a delirious
nation imagined its own apotheosis being transmitted
by satellite to the watching eyes of the world.
Miroslav Blazevic, then coach of Croatia’s national
football team, solemnly but absurdly compared Mr
Ivanisevic to Jesus Christ, testifying that he had
witnessed 'another resurrection'.
The champion returned home a national hero. Greeted in
the seaside city of Split by 150,000 fans, he stripped
to his underwear, raised his fists and declared: 'We
are the craziest people in the world.'
'After that, kids appeared with rackets in the
streets, in the parks, playing tennis everywhere. It
was a fairytale,' says Gordan Gabrovec, a leading
tennis journalist in Zagreb.
But televised apotheoses have a way of fading. Mr
Gavrovec says the country’s national system for
developing tennis players is weaker than it should be.
Still known to every Croat as 'Goran', the local boy
made good, Mr Ivanisevic is now retired and living in
Monte Carlo. Croatia lives in the year 4 A.G., longing
for a new alter Christi on the men’s tour.
If there is life after Goran, it comes at the moment
in the form of Ivan Ljubicic, a Croat player ranked
ninth in the world by ATP, the men’s professional
tennis association, and rising.
Mr Ljubicic crashed out early at the French Open in
Paris last month. But he remains an interesting figure
to watch, not least because he bears little
resemblance to the erratic Mr Ivanisevic.
Judging from Mr Ljubicic’s performance, recent changes
on Croatia’s tennis scene mirror broader changes in
the national character.
Mr Ivanisevic, an emotional player prone to temper
tantrums, was forever ridiculed by commentators who
saddled him with two nicknames - 'good Goran' for his
moments as a graceful charmer, 'bad Goran' for his
episodes as a foul-mouthed prima donna.
Commentators in the US and Europe did not always
restrain themselves from drawing comparisons between
the shaggy, bearded star and Croatia as a whole, a
nation known equally during the 1990s for its
delightful Mediterranean scenery and the war crimes
too often committed in its name.
By contrast, the shaven-headed Mr Ljubicic, 26, is a
portrait of discipline and calm. He quietly disposes
of his opponents, then swiftly shifts his focus to the
'Maybe my life experience is already a bit too rough
for me to be wild,' he explains in fluent, literate
English, which he speaks along with Italian.
A war refugee from Banja Luka, the Bosnian Serb
headquarters during the Bosnian war and ever sinceÂ¸ Mr
Ljubicic moved with his family to Italy. By the age of
14, he was living alone and managing his own home.
Mr Ljubicic’s success is a reminder that everyone can
become a refugee. Some of the nation’s brightest
lights were among those forced to flee the Balkan
wars, though it may take some years for others to
attain a similar level of prominence to Croatia’s new
Mr Ljubicic says he is pleased to be a new ambassador
for his country, which is nowhere more visible beyond
its borders than in the world of sport. 'We simply
seem to be really good at sport, whether it’s tennis,
football, skiing, handball, whatever. We are
physically big, tall and strong, and we are a sports
country. Open any newspaper and you will find 15 pages
totally dedicated to sport.'
Tennis fans longing for a new glimpse of Mr
Ivanisevic’s fire might invest some hope in
21-year-old Mario Ancic, another Split native, whom
ATP currently ranks 18th in the world. Lanky, erratic
and fond of tossing his racket, Mr Ancic knocked
Britain’s Tim Henman out of Wimbledon in 2004 before
losing in the semi-final.
Whence comes that fire? 'Dalmatia,' says Mr Ljubicic,
referring to Croatia’s coastal region. 'There’s
definitely a difference. The Dalmatians show their
emotions. They want to win at any price. The rest of
us are calmer. I am calmer.'
Tourism: Tension between two visions
>By Eric Jansson
>Published: June 7 2005 09:38 | Last updated: June 7
The boat drifted by one morning and lingered just
offshore. On board, a Russian businessman - a magnate
of some stature if not quite an oligarch - gazed
coolly toward the land. His eyes settled on a bright
yellow villa ornamented in Venetian gothic floral
patterns, built in 1905 for a wealthy Italian family.
Days later, there was a knock on the door. The Russian
wanted the villa and would pay €1m. 'No' came the
answer from Vjeko Martinko, the owner, who now enjoys
telling this story.
A few days passed, and again the Russian’s assistant
arrived with an offer, higher into the millions. 'No'
Once more the man visited, raising his offer. Mr
Martinko says he turned him down flatly, with some
advice. 'I’m sorry, but some things in life are
priceless. Some things cannot be sold. This place is
one such thing.'
Mr Martinko’s view of his private property, Villa
Astra in the seaside retreat of Lovren, which he runs
as a boutique hotel and gourmet restaurant, bears
little resemblance to the view Croatia’s rulers once
took of assets along the country’s splendid coastline.
Under Yugoslav Communist rule, prize coastal
properties became gifts to Party loyalists - including
those who once inhabited Villa Astra - while most of
the shore became a playground for the proletariat.
Crowds jammed into countless campsites and
cement-block hotels. The state clung jealously to the
land, as private owners like Mr Martinko now do, but
it also cheapened it by opening it to all comers.
In the new era, tension between these competing
visions - one of total exclusivity and one of total
accessibility - defines the struggle for the future of
The stakes are high. Croatia attracted 9.8m foreign
visitors last year. Tourism accounted for more than 20
per cent of gross domestic product (GDP), with
receipts worth €5.7m attributed directly to the
industry, according to state statistics.
The London-based World Travel and Tourism Council
calls Croatia’s tourism market the fifth
fastest-growing market in the world and predicts that
tourism will account for 30 per cent of the country’s
GDP by the year 2015.
To stay on track, Croatia must continue its balancing
act, accommodating both high-end and low-end
holidaymakers. For years, the former have holed up in
grand hotels around Dubrovnik, while the latter make
do in campsites and rooms-for-rent.
But critics add that the country must also plug an
important hole in its market - the very-high end.
With its vast shoreline and more than 1,000 islands,
Croatia possess ample space to provide super-rich
guests - stars of business, sport and Hollywood - the
privacy they require. But the country’s existing
high-end hotels, mostly massive resorts and
self-catering villas, cannot always do the job.
Such shortcomings drive the country’s wealthiest
visitors on to the water, where they spend catered
holidays on private holiday yachts, landing only
occasionally in secluded harbours to stretch legs.
Some of these, like the aspiring Russian buyer, later
seek ways to buy their own exclusive properties.
Spotting a business opportunity, a small but growing
number of entrepreneurs aim to fill this gap.
Among those tipped for success are Mr Martinko, with
his Villa Astra and other properties near Lovren, and
the Turkish proprietors of the Pucic Palace, the first
luxury boutique hotel to open within Dubrovnik’s old
Benefiting from exclusivity and privacy, both options
offer delights found at none of Croatia’s luxury
mega-hotels, including the newly refurbished 139-room
Hilton Imperial Dubrovnik, the Hilton Group’s first
step into the market.
At the Pucic Palace, guests sip cocktails on a
exquisite stone porch overlooking Dubrovnik’s famous
tiled rooftops. Rather than inducing claustrophobia,
as the sometimes-crowded walled city can do, the
location provides a soothing escape even in the heart
of the city. Soundproofed walls block out the noise of
the walking streets below.
By contrast, Villa Astra, in the northern region of
Istria, capitalises on a quiet location directly on
the shore and exploits synergies with Mr Martinko’s
other retreats, including a nearby hilltop farm. By a
serene pool, guests eat sumptuous meals made of
locally harvested ingredients - scampi, mussels, wild
asparagus, strawberries and nettles.
'This is the future of tourism in Croatia,' Mr
He blasts both old-style mass tourism in Croatia and
the tendency of today’s top-end guests to hide
themselves away on hired yachts. Such tourism is 'an
industry with no human element.'
'There is so much capital floating around in the
world, targeting Croatia. We must focus it on what is
Some of the world’s most exclusive boutique hoteliers
aim to enter the market, among them Singapore-based
Amanresorts International, whose only other effort in
Europe to date operates in Courchevel, France.
With new entrants like these, Croatia’s image could
soon change for the better.