CROATIA SPELLS CONFLICT OF INTERESTS (October 3, 2008)

Politically and administratively, Croatia is a bizarre country. Only consider the key players in Motovun’s golf development, which is currently being vetted by the state, regional, and local authorities. This is a protracted and complex process, but one of its features is abundantly clear.

The investor is Jupiter Group, a fund management company from London. Used to development in risky places such as the Caribbean and Russia, they hired the Croatian Civil Engineering Institute (Institut Gradjevinarstva Hrvatske) from Zagreb to produce the environmental impact study of the proposed development. The Institute’s director, Jure Radic, used to be Franjo Tudjman’s minister of construction. He teaches at the Civil Engineering Faculty of the University of Zagreb. The Institute straddles the academia and commerce, and it is one of the most profitable commercial outfits in Croatia with strong performance on the Croatian Stock Exchange. Not surprisingly, it is believed to be the center of the Croatian construction lobby.

Next, the environmental impact study is submitted to the Croatian Ministry of the Environment, led by minister Marina Matulovic-Dropulic, who is one of the Institute’s commercial partners and owner of a large segment of its shares. Following the law, she puts together a commission to vet the study, but she soon intervenes in its work to ensure that the investor’s interests are not jeopardized by expert judgement about development in a very sensitive place like Motovun. Although the commission is ultimately split, the study is deemed by the minister to have been successful.

The environmental impact study then comes to Motovun, where it is open to the public for scrutiny and discussion. The mayor of Motovun, Slobodan Vugrinec, also serves as deputy mayor of Vrsar on the western coast of Istria, thus effectively holding two jobs and spending too little of his precious time in Motovun. The town council that will ultimately decide what to do with golf development includes many members who stand to gain directly from it by the sale of their land. This is why the mayor has selected them for the council in the first place. One way or another, the mayor and the council will do their best to limit and marginalize public discussion of golf development in a town considered for inclusion in UNESCO’s World Heritage sites together with its historic surroundings.

Parenthetically, Jupiter Group plans to build a settlement with five-hundred beds within sight of Motovun, whose historic core now holds three-hundred permanent inhabitants. Among other strategic resources, the new settlement will use a large amount of water in a region increasingly susceptible to drought on account of rapid climate change. Golf itself will use agricultural land of high quality, which will be subjected to a plethora of herbicides and pesticides right next to Motovun Forest along the Mirna river, which is famous for its rare white truffles, as well as a wide variety of wild animals.

Before it moves to detailed urban planning, golf development will also be vetted by the regional authorities. Governor of Istria, Ivan Jakovcic, will be directly involved in this process. It was he who had placed the mayor of Motovun in his post to promote golf development, and it is he who has promoted it for at least a decade in the context of the privatization of state land. In major developments, such as golf in Motovun, the state land is leased for a period of many years, while the private land adjoining it is sold outright to foreign investors. The spatial or physical planning process preceding individual development projects is widely used in the region to ensure that leasing and sale go hand in hand. In accordance with the Croatian law, agricultural and urban land use can be switched in the planning process without informing the owners. This holds in spite of the fact that the value of agricultural land is about ten times lower than that of urban land.

Croatia is a bizarre country, indeed. Foreign investors and state, regional, and local politicians regularly collude to achieve their joint objectives, which are carefully hidden from public view. In the process, conflict of interests is rife. In fact, Croatia spells conflict of interest.