Ever since my move to Motovun, I have been eager to understand the nature of Croatian society. How does it work? The mystery is clearing only gradually, for the workings of this society are far from transparent. Here is a sketch only, but even this is a small step forward. Most Croatians are scratching a living in perfectly predictable ways. Many of them live off tourism either directly or indirectly, and the government taxes them heavily. There are few mysteries here. Other productive sectors are few and far between.  Agriculture and manufacturing are in shambles. Construction is still doing relatively well on account of a large number of infrastructure projects financed mainly by means of foreign debt. Services are growing, but not too many can afford them as yet.

However, a few lucky Croatians live off government activities. And the government is huge for a country Croatia’s size. This is where mysteries abound. Governments are normally financed from taxes, but the Croatian government is not yet properly equipped to collect them. For instance, taxation of wealth is still left without adequate legal foundations. In addition to foreign debt, the main source of government revenue is the sale of national assets, mainly to foreigners. The sale started with companies of all kinds, but it subsequently shifted to natural resources, including land. Government offices are stuffed with people who do nearly nothing, but who live very well from the massive sale. They form the social elite, which is concentrated in Zagreb. In terms of the standard of living, the difference between the capital and other parts of the country is staggering. The same is also true of central Zagreb and its periphery. The bulging elite engages in all forms of conspicuous consumption, for which it has ample time, as well. Central Zagreb is its stage.

Can the Croatian society continue working like this? Most likely it can, but only for a while longer. Sooner or later the sources of foreign debt will dry up, for there are limits to how much can be paid back. More important, there will be no more national assets to sell. The Adriatic coast is a limited resource, after all. And tourism will in the end remain the only productive activity worth talking about, but the rapacious government will threaten to snuff it out of existence through excessive taxation. The elite will not give up its privileges without a stiff fight. And when will all this end? In a decade at most, I reckon, but the economic crisis that is now gripping the world may speed up the demise by as many as five years. By its very nature, the Croatian society is unsustainable.