VZCZCXRO5803
RR RUEHAG RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHVB #1232 2841252
ZNR UUUUU ZZH
R 111252Z OCT 06
FM AMEMBASSY ZAGREB
TO RUEHC/SECSTATE WASHDC 6773
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS ZAGREB 001232 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PREL HR IT REGIONAL ISSUES
SUBJECT: CROATIA RESOLVES BILATERAL ISSUE WITH ITALY; STILL 
WORKING ON SLOVENIA 
 
 
¶1. (U) Removing a bilateral irritant and potential obstacle 
to EU membership, the GOC announced October 9 that it would 
acknowledge by exchange of diplomatic notes with Italy that 
Croatian citizens face no obstacles buying real estate in 
Italy, and it will extend the principle of reciprocity to 
Italian citizens seeking to buy property in Croatia.  The 
press reported that having "verified Italian statements" 
about the unimpeded ability of Croatian citizens to buy 
property in Italy, the Croatian MFA indicated that the 
domestic real estate market would henceforth be open to 
Italian citizens. 
 
¶2. (SBU) MFA State Secretary Biscevic confirmed the 
reciprocity agreement to the Ambassador October 9.  He also 
noted that in addition to resolving the immediate bilateral 
problem and meeting EU requirements for the free flow of 
capital, the deal overcame longstanding Italian political 
objections to accepting USD 34 million in Croatian 
compensation for property seized from Italian citizens (the 
"Esuli") after World War II. COMMENT: The market is still 
not fully liberalized.  All foreigners wishing to purchase 
property need Justice Ministry approval, a slow process. To 
avoid this, many foreigners, including Italians, are already 
buying property by incorporating shell companies. END 
COMMENT. 
 
 
¶2. (U) Meanwhile, the Croatian press reported on a similar 
request for reciprocal treatment from the Slovenian 
government, following the adoption in June of a law to 
permit Croatian citizens to buy property in Slovenia.  The 
Croatian MFA announced that it would investigate the 
conditions under which Croatian citizens actually exercise 
ownership rights (as it had done with the Italian 
assertions) and had asked the GOS for additional information 
before making a determination about reciprocity. 
 
Bradtke