Cancerous capitalism in Croatia

I wasn’t expecting to find such nerviness on a four-day getaway.

Losinj (say it “losheen”) doesn’t hurry. This Croatian island, out on a limb at the unfashionable northern end of the Adriatic, is the definition of far-flung. Zagreb is a continent away. Even from the little sweatbox airport nearby at Pula it’s still a three-hour drive on mostly single-track country roads, while falcons scrutinize open scrubland on the wing and you wait for the lazy ferry to unload for the crossing.

I see a couple of speed-walkers on my woodland stroll into town from the hotel, fifteen minutes away on the other side of the island, but they’re German. In the alleys, shining morning faces with satchels bicker. A lemon yellow vest ambles out of a discount supermarket. One coiffed head bends to water her geranium window-box. Yards from the harbourfront, a few wobbly-eyed characters nurse breakfast beers at Café Pierrot.

Outsiders, if they know Losinj at all, know it for its microclimate. In 1892 local botanist Ambroz Haracic was the first to document that Losinj – almost the last in a line of islands emerging from Croatia’s enclosed Kvarner Bay – is sunnier and warmer than its neighbours. His observations prompted the imperial Austro-Hungarian government to declare Losinj a health resort. Tourism followed. The Viennese architectural echoes I thought I’d imagined among the villas at Cikat and further round the coast in Veli Losinj were real.

Veli is Croatian for “big” – odd, since it’s a pocket-sized hamlet of red roofs and dozy grandpas, much smaller than Mali Losinj (mali means “little”), which someone told me is the biggest town on any Croatian island (population 9,000).

Behind a marble counter on a warm, quiet morning in Mali Losinj’s fish market, Nives leans on a crate of pulpy octopus.

“My daughter’s a teacher – she won’t do this,” she says. “It’s better. There’s no money in this anymore.”

I can believe it. Every morning Nives comes here to sell whatever her husband has landed overnight. In a town as slow as Mali, it must be an uncertain livelihood.

But she is quick. One minute she’s selling spiny grouper to a trilby-hatted gentleman in Croatian, the next she’s slipping into Italian (“ciao, signora, tutto bello tutto fresco!”) to offload some nice pieces of hake to a wrinkle-elbowed, gimlet-eyed grandmother.

Until 1947 Losinj was in Italy. That year, along with most of Istria and neighbouring islands, it was transferred to Yugoslavia under the Communist dictator Tito. Many of Losinj’s oldtimers still instinctively favour Italian. I wonder how Nives knows when to speak which language to which customer – but then Mali is small. I think she can tell just by looking.

Within a day I’m picking up a sense that the town’s air of somnolence is misleading. Changes are afoot here. Losinj’s biggest employer – controlling, by some estimates, three-quarters of the island’s economy and employing roughly the same proportion of islanders – is the Jadranka hotel and tourism group. I’m staying in one of their hotels myself, a shoreline behemoth built in 1977 under Tito and now revamped into a Euro-family resort. Jadranka runs ten hotels and guesthouses on the island, as well as campsites, the marina, food producers and distributors, even a radio station.

This year the group was bought out by Russian brothers Alexei and Dmitri Ananiev. They founded Promsvyazbank in 1995. Promsyvazbank is now one of Russia’s largest private banks, with assets of 680 billion rubles (roughly $20bn). Nobody I talked to had seen the Ananievs; indeed, the story was that they had, essentially, bought Losinj without ever having set foot here. Unknown here a year ago, the brothers are now – or, once everything has been added up, probably will be – Croatia’s biggest foreign investors.

“Oh yes, we publish negative stories sometimes.”

I’m talking to Sladana Vignjevic, Losinj-based reporter for the Croatian newspaper Novi List, wondering how she can do her job effectively when so many people on the island rely on Jadranka.

“But,” she continues, “if something happens [connected with Jadranka] I call my colleagues in [the mainland city of] Rijeka and they come over to write it.”

The big news of the moment concerns Losinj’s tiny airport, part-owned by Jadranka and currently suitable only for private jets. After the Russian buyout, it has emerged that the airport is to undergo a $46m upgrade over the 2014-15 winter. The plan is for Losinj to become a destination for short-haul commercial aircraft from next summer, flying in from places such as the UK, Scandinavia and – as the Jadranka PRs told me – Moscow.

Losinj is about to become known.

Jadranka has already announced plans to build a golf course and a new marina.

“The airport is good for the town, but we won’t feel it,” says Nives, in the fish market. The manager of one of the Jadranka hotels told me they do buy some fish locally, but Nives demurs. “They buy it all frozen from Tunisia or Holland or somewhere,” she smiles.

Just off the tiny harbour at Veli Losinj, I sit with Dr Peter Mackelworth, conservation director at the Blue World Institute of Marine Research, an EU-funded project employing eight people year-round – with more in summer – to study Losinj’s population of 150-200 bottlenose dolphins.

“The big problem we face is underwater noise pollution,” he tells me. “Private tourists driving private yachts. They see fins and start chasing the dolphins around.”

He explains that Losinj has recently become popular with owners of superyachts – particularly, he says, Russians – but, with no procedure to licence dolphin-watching excursions with the Environment Ministry, there is only a voluntary code of conduct currently in place. A significant proportion of the institute’s budget goes on public education, directed both at tourists and locals.

“The new airport will actually reduce pressure,” he says. “More structured tourism is better for us. It will become easier to strategise. But Jadranka is not transparent, and that’s why everybody is nervous. Nothing has been built here for 15 years. It would be nice to see investment in the local community. There are real fears they will start to close public beaches. There is a grey area in relations between state institutions and major economic players.”

One afternoon I have lunch with one of the Jadranka PRs at an old lighthouse near Mali Losinj that has been converted into a waterfront restaurant. Under a piercingly blue sky, the transparent Adriatic crashes repeatedly onto jagged rocks below our table. It’s heart-stoppingly beautiful. And the PR is surprisingly candid, telling me older Jadranka staff are already being offered voluntary redundancy.

“Jadranka employs hundreds of people on Losinj. Sometimes in summer you have whole families employed by Jadranka,” she says. There is a pause, and she looks at me.

“Whenever there’s something new you’re a little bit sceptical, I suppose,” she says, and reaches for her glass.

Edi Bilic is 40, a young guy, energetic, self-employed in tourism (who isn’t, round here?). His business is successful, he speaks three or four languages.

“Eighty percent of people want to go back to socialism,” he tells me. “This kind of capitalism isn’t good for old people. People liked their lives under Tito.”

He sniffs and looks away.

“Cancerous capitalism,” he says.

On the way back to the airport, a sign crests the top of a wooded ridge, with “TITO” picked out in huge, blocky white letters, visible from across the valley. It’s almost like Hollywood. Some 35 years after the dictator’s death, I wonder why it’s still there.