InFocus Italy 2018

Italy 2018

ITALY AND CROTIA

GROWING TOGETHER

H.E. ADRIANO CHIODI CIANFARANI

Italian ambassador in Croatia

MARGHERITA LO GRECO Director Italian Trade Agency

INES OBRADOVIĆ

Croatian Chamber of Economy

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THE LONGEST LASTING REPUBLIC

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The Republic of Venice was founded in 697 and was dissolved

by Napoleon in 1797, exactly 1,100 years later.

This makes it the longest lasting republic in human history.

FERRARI IS SIMPLY THE BEST The Scuderia Ferrari is the oldest and most successful team left in the Formula One championship.

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There are thousands of traditional and regional Italian desserts.

However, the most famous one abroad, the tiramisù, was only invented in the 1970's.

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ACCOMODATION IS PLENTIFUL Italy has the most hotel rooms of any European nation. There should be no problem finding one, but carefully – it is flooded by tourists!

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PICK-ME-UP!

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PLENTY OF LANGUAGES!

There are 15 minority languages officially recognised in Italy, including native languages such as Sardinian and Friulian, and neighbouring countries' languages (Catalan, Occitan, French, Slovenian, Croatian, Albanian and Greek).

THE GREAT CHRISTIAN BUILDINGS! St Peter's Basilica in Rome is the largest Christian edifice in the world. Its construction took 120 years (15061626).

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LA MOSTRA & FILM

ANCIENT PIZZA? OR NAPLES?

There is evidence that some sort of pasta and pizza were already eaten in Ancient Rome. The world’s first pizzeria, Antica Pizzeria Port’Alba, opened in Naples in 1830.

The oldest film festival in the world, beginning in 1932, is the Venice Film Festival.

Italians have won more Academy Awards (Oscars) for Best Foreign Language Film than any other country (14 so far).

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Italy

GOOD MOMENTUM FEWER FLEXIBLE GREEN FOR FURTHER OBSTCLES, VEHICLES 06 20 28 COOPERATION BETTER COOPERATION EACH EVENT HAS ITS OWN MAGIC 30 WE MOVE BORDERS WE HAVE A SOLUTION FOR LACK OF 10 22 WORKFORCE VIVA V.E.R.D.I.!

32 ITALY AND CROATIA 12 GROWING TOGETHER GIANT FROM THE COFFEE: JUST A DRINK, 34 24 HEART OF EUROPE BUT A NOT WAY OF LIFE ON THE ROAD TO 14 RECOVERY OUR GIANT MYSTERIES WITHIN NEIGHBOUR, OUR 26 THE ITALIAN WALLS 35 GOOD FRIEND Ducati Komponenti d.o.o.

H.E. ADRIANO CHIODI CIANFARANI

HRVOJE GRENAC

Secretary General of the Association of Italian Entrepreneurs (UTPUH) in Croatia

Italian ambassador in Croatia

STEFANIA DEL BRAVO

Director of the Italian Cultural Institute in Zagreb

CLAUDIO CESARIO

General Manager and Vice Chairman of Managing Board of Zagrebačka banka

NEBOJŠA BIŠKUP

Country Manager ManpowerGroup Croatia and Slovenia

Culture

MARGHERITA LO GRECO Director Italian Trade Agency

Economy

Tradition

INES OBRADOVIĆ

Head of the Division for Bilateral and Multilateral Cooperation in the International Affairs and EU Sector at the Croatian Chamber of Economy (CCE)

Economic cooperation

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LINK BETWEEN ENTREPRENEURS FROM THE TWO COUNTRIES Association of Italian entrepreneurs (UTPUH) in Croatia

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HOW TO REDUCE INVESTMENT RISK

PETAR PETRIĆ Licentiate in Law

Spirit

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THE HIDDEN GEMS OF ITALY

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INTERVIEW

GOOD MOMENTUM FOR FURTHER COOPERATION

H.E. ADRIANO CHIODI CIANFARANI Italian ambassador in Croatia 6

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Political, economic and cultural relations between Croatia and Italy are increasingly strengthening.

Areas in which we can strengthen and intensify our cooperation are ranging from migration issues to economic and trade relations, to education and research

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he relations between Croatia and Italy are strong and manifold, with many new opportunities for further cooperation, says Ambassador of the Italian Republic to the Republic of Croatia, H.E. Adriano Chiodi Cianfarani.

first visit abroad of the newly-appointed Minister of Foreign Affairs and International Cooperation Prof. Moavero Milanesi. On that occasion, he had a productive bilateral meeting with the Croatian Deputy Prime Minister and Minister of Foreign Affairs Mrs. Pejčinović Burić.

On the basis of the Memorandum of Cooperation concluded in 2009, a Ministerial Coordination Board, covering different areas, was set up. After a seven-year recess and, for the first time since Croatia became a full-fledged EU member, the Board met up at the beginning of this year. Why was this meeting significant for the cooperation between the two countries?

— The traditionally strong political, economic and cultural relations between Croatia and Italy are increasingly strengthening. The meeting of the Coordination Committee presided over by the respective Ministers of Foreign Affairs, which took place last January in Rome, after over seven years since the last Committee, added further boost to this process.

On the bilateral level, the official visit of the President of the Republic of Croatia Kolinda Grabar Kitarović to Italy at the end of May enhanced this momentum.

On the multilateral level, the two countries are members of the EU, the NATO and also play a key role in various regional forums. 2018 is marked by the Italian presidency of the OSCE and the Adriatic and Ionian Initiative (AII) / EU Strategy for the Adriatic-Ionian Region (EUSAIR) and by the Croatian presidency of the Central European Initiative (CEI) and the Council of Europe. The CEI Ministers of Foreign Affairs Meeting held in Split on 11th June was the

The Joint Declaration that was made after this meeting tackled numerous issues of concern for both sides. Can you tell us which topics do you consider the most important for further development of the bilateral relations and cooperation?

ITALY AND CROATIA TOGETHER CAN MAKE A SUBSTANTIVE CONTRIBUTION TO THE DEVELOPMENT OF A EUROPEAN APPROACH TO THE MIGRATORY PHENOMENON — It is a comprehensive and elaborate document which reflects the two sides taking stock of the existing cooperation and identifying potential avenues for further common projects. Areas in which Italy and Croatia can strengthen and intensify their cooperation, ranging from migration issues to economic and trade relations, from education and research to environment, from transport to tourism, agriculture and fisheries. I am rather reluctant to establish pri-

orities among these areas as they are all crucial for the development of our societies. I would like to mention, however, two fields which I consider as key. On the one hand, education and research: investments in the education of new generations and in research and innovation are investments in the future which can be extremely beneficial. On the other, migration has been for years an important issue of the European agenda: Italy and Croatia together can make a substantive contribution to the development of a European approach to the migratory phenomenon based on the common principle of solidarity and shared responsibility.

The two countries have a number of common positions in terms of defence policy. In which defence policy segments is the cooperation between our countries particularly pronounced?

— Croatia shares with Italy the goal to strongly support and actively contribute to the efforts that the international community is investing in the stabilization process in the Region. In this regard, Italy is a key strategic partner for Croatia. Indeed, the Republic of Croatia is actively participating in KFOR in the Republic of Kosovo, a military operation which is currently under Italian leadership. Moreover, Croatia has recently decided to give its contribution in UNIFIL in Lebanon, offering an engineer company under the Italian Command in the Joint Task Force – Sector West.

The International Defence Cooperation also took place through a series of bilateral and multilateral activities related to the development of Defense Capabilities of the Republic of Croatia, through cooperation in strengthening

INVESTORS

THIS STRONG ITALIAN PRESENCE, PROVIDING A SOURCE OF STABLE EMPLOYMENT FOR OVER 20 THOUSAND CROATIAN WORKERS, IS FURTHER PROOF THAT CROATIA IS AN INTERESTING MARKET FOR OUR INVESTORS ITALY 2018

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stability, security and confidence in the Region, and through active participation in different international bodies, forums, organizations and initiatives.

Among these organizations, we cannot forget the DECI project, Defence Cooperation Initiative, led by Italy, which includes the participation of Croatia together with Albania, Austria, Hungary, Montenegro and Slovenia. DECI is a perfect example of how cooperative work may help to solve problems, since the aforementioned Croatian contribution to UNIFIL has been planned under this new framework.

IN SPITE OF THE COMPLEX DYNAMICS CURRENTLY INVOLVING THE EU, I BELIEVE THAT ITALY AND CROATIA, CAN HELP PAVE THE WAY TO REINVIGORATING MOMENTUM FOR THE INTEGRATION PROCESS

How would you rate the economic cooperation between the two countries and where do you see room for further development of economic relations and investments?

— According to official data, Italy ranks as one of Croatia’s top partners in terms of bilateral trade and investments. Italy is Croatia’s top export market and the second largest import partner behind Germany. In 2017, bilateral trade exceeded 4,7 billion Euro, evidence of a strong presence of Italian companies on the Croatian market, which in turn has contributed to the high level of collaboration and exchange

DEVELOPMENT

THE RELATIONS BETWEEN THE TWO COUNTRIES ARE ALREADY VERY STRONG AND MANIFOLD. HOWEVER, THERE IS STILL POTENTIAL FOR THEIR FURTHER DEVELOPMENT 8

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between the two countries. When it comes to investments, in 2017, Italy maintained its third position, behind The Netherlands and Austria. Italy’s share would be even bigger, if we consider that many Italian companies have invested in Croatia through their entities based in other countries.

Among the sectors in Croatia that have attracted most investments are the banking and financial sector, with two large domestic banks ZABA and PBZ being controlled by the two largest Italian banking and financial groups Unicredit and Intesa Sanpaolo, respectively. I would like to mention other important companies with a strong presence on the Croatian market, such as Eni, Edison and Saipem in the energy sector; Sol in the chemical sector; Olimpias, Calzedonia, Aquafil in the textile sector; Florian Legno in the woodworking industry; Danieli, Same Deutz Fahr, Ducati Energia, Wam, MEP and Adriatica in the steel and manufacturing industry.

What projects, especially those from the bilateral Croatia-Italy programme, have been contributing the most to the economic growth?

— Italy-Croatia Cross Border Cooperation Programme is a very important bilateral initiative not only because it is aimed at stimulating cross-border partnerships but, more importantly, because it focuses on achieving tangible changes, thus contributing to the increase of the prosperity and the blue growth potential. In September 2016, a kick-off meeting held in Venice marked the official launch of the programme. In the course of 2017 calls for proposals for both Standard and Standard+ projects were launched.

Considering that the general goal of the project is for regional and local stakeholders from two countries to exchange knowledge and good practises, to develop and implement pilot projecs, to test the feasibility of new policies, products and services and to support investments, it is still premature to talk about the tangible effects that recently undertaken activities or those to be undertaken might produce.

However, if we consider, by random selection, only one project, such as MOSES (maritime and multimodal transport services) aimed to enhance the accessibility and mobility of passengers in the Adriatic area through the development of new cross-border sustainable and integrated

transport services and the improvement of related infrastructures, it is clear that the full implementation shall have immediate impact and produce long-term benefits for the local community and the whole region.

How satisfied are you with the status of the Italian national minority in Croatia and what does the Italian government do to foster the rights of the Croatian minority in Italy?

— The respective native national minorities, the Italian one in Croatia and the Croatian one in Italy, are often referred to as a bridge bringing the two countries even closer to each other. Many events have been recently a testimony to it. For example, just let me mention the visit by the then Minister of Foreign Affairs Mr. Alfano and Minister of Health Mrs. Lorenzin to Pula in April

ACCORDING TO OFFICIAL DATA, ITALY RANKS AS ONE OF CROATIA’S TOP PARTNERS IN TERMS OF BILATERAL TRADE AND INVESTMENTS. ITALY IS CROATIA’S TOP EXPORT MARKET AND THE SECOND LARGEST IMPORT PARTNER

2017 as well as the visit to Rovinj and Pula by the Mayor of Rome Mrs. Virginia Raggi in March 2018 together with a group of high-school students from Rome. The delegations were always received in a cordial atmosphere by their Croatian counterparts and the local communities.

In this context, I would also like to recall that the representative of the Italian native minority, Mr Radin is the Vice-President of the Croatian Parliament; something that we should consider as a sign of appreciation for the contribution that the native Italian minority has always made to Croatia as a country.

In what segments can Italy and Croatia further their connection?

— The relations between the two countries are already very strong and manifold.

However, there is still potential for their further development. I would like to conclude by putting our bilateral relations in the common European context. In spite of the complex dynamics currently involving the European Union, I believe that Italy, as one of its founding Member States, and Croatia, as the latest State to join the club, in 2013, can help pave the way to reinvigorating momentum for the integration process; a process that needs to be in line with and mindful of the current expectations of the European citizens, thus reconciling their needs and concerns. In this framework, a successful Croatian term of the Presidency of the EU Council will be therefore critical.

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CORPORATE

WE MOVE BORDERS As part of the UniCredit Group, Zagrebačka banka offers both local expertise and international reach.

When our clients decide to internationalize and enlarge their business in different markets, they can count on a number of options at their disposal

CLAUDIO CESARIO

General Manager and Vice Chairman of Managing Board of Zagrebačka banka

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long with the growing optimism in CEE and Croatia, in particular, as well as the improvement in lending trends in corporate sector and among consumers, Zagrebačka banka is ready to offer new types of investments to its clients.

be in line with deposits' growth for the first time in almost a decade, providing there is some optimism in terms of shifting the economic region's attitude from savings to investment. The data on deposits support this, showing a peak in growth in 2017, which is now expected to start declining.

Can you give us an overview of the banking sector in Central and Eastern Europe and in particular, in Croatia?

— The banking sector across the entire CEE is in a more stable and sustainable position compared to past years, in terms of the lending dynamic but also funding and credit quality.

In 2017, lending activity in Croatia accelerated in the private sector, first in corporate segment and, later, in the household one. By the end of last year, volumes in the aforementioned segments increased despite the large bad assets sales volumes concluded throughout the year.

According to UniCredit Outlook, we expect that - in 2018 - lending in CEE will

AIM

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GUIDED BY ONE OF THE FIVE GROUP FUNDAMENTALS (CUSTOMERS FIRST), WE AIM FULLY SUPPORT THE CLIENT'S NEED TO ENJOY ALL GLOBAL OPPORTUNITIES IN THE BEST POSSIBLE WAY In line with the favourable economic trends, we expect to see faster lending growth in Croatia’s private sector.

Funding conditions for customers are continuously improving, thus helping

restoring demand for investment and consumer loans. We also notice the government’s efforts in improving the business and investment climate.

The signs of those improvements are visible in the 2018 Economic Sentiment Index in Croatia (released by the European Commission) that is close to its historical maximum, despite all the challenges Croatia still faces.

Considering this environment, what is Zagrebačka banka’s strategy?

— Zagrebačka banka is part of UniCredit Group, a simple, successful Pan European Commercial Bank, with a fully plugged in CIB, delivering a unique Western, Central and Eastern European network to its extensive client franchise.

Being part of UniCredit’s international network enables a simplified implementation of financial transactions and high flexibility.

Internationalisation and access to foreign markets are one of Group strengths. On one side, we have local expertise while, on the other, interna-

tional reach.

To our clients we offer advisory support and a wide range of products and services in line with the pillars of our Core Client Offer: corporate banking and transaction services, structured finance, capital markets, investment products and international business.

In which way does Zagrebačka banka support entrepreneurs that would like to invest abroad or foreign ones investing in Croatia?

— Zagrebačka banka is the largest bank in Croatia and the only one with a dedicated service model for international clients. Thanks to our team of top experts, we provide support when choosing banking products and services, tailor-made to individual needs from the opening of a transaction account to more complex structured financial solutions.

Our teams - located in three regions and having local presence in Zagreb, Split, Osijek, Rijeka, Varaždin and Poreč - are well-equipped to provide corporate finance advisory services related to mergers and acquisitions, capital structure or business strategies, capital markets advisory, as well as offering equity and debt financial instruments.

In interbank business, we rely on the correspondent network which includes leading banks around the world while we utilize a very powerful infrastructure.

Which is Zagrebačka banka Unique Selling Proposition for corporate customers?

— When our clients decide to internationalize and enlarge their business in different markets, they can count on a number of options at their disposal in UniCredit.

In particular, Investment Banking and Markets offer a broad range of specialized services. Whether they decide to carry out an M&A, a Joint Venture or their strategy forseen an organic growth in new markets, we always have tailor-made solutions for our clients.

Additionally, we are continuously engaged in on boarding mid-sized corporate clients in ELITE & UniCredit CEE Lounge. The Programme – supported by London Stock Exchange and Borsa Italiana - aims to help SMEs with embark-

ing on the next stage of growth by increasing awareness of capital markets and diverse funding options, while also granting them direct access to international investors.

How is Zagrebačka banka coping with digital disruption? How much are customers, both retail and corporate, inclined to use e-banking and m-banking solutions?

— Our digital journey is ongoing as we continue to develop and cover more initiatives reaching an increasing number of clients. Zagrebačka banka has the leading position in terms of market share in loans and deposits in the Retail and SME segments, which is the ideal environment to push digital banking forward.

In Zagrebačka banka, we invest in digitalisation and modernisation of the sales network and distribution channels in order to increase the availability of products and services for our customers.

Corporate clients recognize the advantages of digital channels and, as a result, we have a high percentage of e-banking users among corporate clients.

EXPECTATIONS

IN LINE WITH THE FAVOURABLE ECONOMIC TRENDS, WE EXPECT TO SEE FASTER LENDING GROWTH IN CROATIA’S PRIVATE SECTOR As far as Retail is concerned, account opening for new clients is now simple and fast as it can be done via a mobile phone. Clients recognise the advantages of digital channels; we have 550,000 online banking users and 360,000 mobile banking users, which represents an annual increase of 9%. The transactions executed through digital channels have been growing continuously, with mobile banking at the forefront the number of financial transactions increased by 42% on a yearly basis.

How much are customers open to new banking features such as investments

in open mutual funds? What type of investors you intend to attract?

— If you look at the profile of our clients, you will notice that they are rather conservative. Main reason for that is a steady financial literacy along with years of financial instability in the region and high interest rates on bank deposits in the last 20 years.

When they had to choose among different forms of saving, conservative clients would choose the safest one for them which is the classical bank deposit with low risk and good fixed interest rate.

Things have been changing in the last few years but the classical bank deposit is the foundation of the personal portfolio of each client. However, the key term here is a portfolio.

We intend to attract classical investors who would like to allocate funds in different assets classes (deposits, mutual funds, real estate etc.). With investing in mutual funds and long-term investment strategy, they intend to earn higher potential return and decrease potential risk that they would have with other classes of assets like hand picking stocks on their own.

If we look at the mutual funds market in Croatia, the total AuM has been constantly rising in the last few years so our conservative clients are transforming into more open-minded ones.

Apart from corporate clients, your private banking clients have the opportunity to invest into international funds too.

— Zagrebačka banka’s private banking clients have the opportunity to invest through the so-called Open Architecture concept, which means offering clients both proprietary and external products and services. This is characteristic for developed markets.

These investment funds run by the UniCredit Group's Preferred Partners structure are carefully selected based on their performance beeing close to the global investment strategy of UniCredit Group.

Guided by one of the Five Group Fundamentals (Customers first), we aim fully support the client's need to enjoy all global opportunities in the best possible way.

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ITALY AND CROATIA GROWING TOGETHER

The office of ICE in Zagreb was founded in 1956 and is one of the oldest offices in the world, well-known among Croatian companies. Office is also responsible for the territory of Bosnia and Herzegovina

INTERVIEW

MARGHERITA LO GRECO

Director Italian Trade Agency, office in Zagreb

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e have an extensive network of offices around the world – 79 in 65 countries – and our 900 employees sustain Italian firms in their internationalization processes and promote the image of the “Made in Italy” products around the world.

Can you tell us briefly about the ICE – Italian Trade Agency, and its role in foreign markets?

The Italian Trade Agency (ICE) is a government agency that was founded in 1926 with the goal of developing, facilitating and promoting Italian economic and trade relations with foreign countries, while focusing on the needs of SMEs. ICE has its headquarters in Rome and acts as a trade promotion section of the Italian embassies or consulates in its network of offices abroad. As a matter of fact, we, at ICE, would like to be considered by Italian SME's as their support office abroad.

What forms of support do you provide to Italian business people?

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— ICE provides its services through four core activities: information, support, promotional activities and education and training programs.

Our employees systematically monitor the state of affairs and trends in foreign markets and the possibilities of internationalization for Italian entrepreneurs - this is the first step that Italian companies take in selecting the market and an appropriate strategy to be implemented in foreign

EXCELLENT GEOGRAPHIC POSITION AND TRANSPORT LINKS, SUBSIDIES FOR INVESTMENT PROMOTION AND THE POSSIBILITY OF USING EU FUNDS FROM A 10-BILLION-EURO BUDGET BY 2020 ARE ALL GREAT ADVANTAGES OF CROATIA

markets.

We have a wealth of useful information, statistical data and sector analyses for all 65 countries we work in available on our website www.ice.gov.it .

Croatian companies and importers can get information and contacts from 55,000 Italian companies at www.italtrade.com and view 6,500 virtual products and services in Italy.

For example, we prepare the following analyses and publications for Italian entrepreneurs interested in the Croatian market: Investment and Business Guide in Croatia, Company Registration Instructions, Sectoral Analysis in Croatia (Energy, Agriculture, Infrastructure and Transport, Environmental Protection, Footwear Industry, Food Industry and others), databases of Croatian companies, information on current regulations, analysis of major macroeconomic indicators in Croatia, newsletter about EU funds and current news from the business world and the Agency’s activities.

In the next stage of internationalization, we organize meetings with local en-

trepreneurs on behalf of Italian companies in accordance with their specific needs, at which they can find potential partners, both for joint ventures and foreign trade, as well as to obtain information about international tenders launched in Croatia.

One of the most important activities of our Agency are promotional ones, so we launch annually more than 600 initiatives around the world promoting the most important Made in Italy sectors - fashion, food, furniture, mechanical engineering, automotive, industrial design, machine building and shipbuilding. For example, last year, our Zagreb office co-financed the visit of over 120 Croatian companies to the most important Italian trade fairs, covering various sectors, including: Salone Nautico Genova, Plast, EIMA, Vicenzaoro / Oro Arezzo, Cibus, Tuttofood, Cersaie, Host, Lamiera, Agrilevante, Xylexpo and others.

We have also organized numerous special events in Croatia. On three occasions, Zagreb hosted an Italian jewelry exhibition that brought together 80 buyers from European, Asian and African countries and 50 Croatian companies from the sector. We have also organized, with a great success, exhibitions of Italian cosmetic products, Italian eyewear exhibition and an exhibition of contemporary Italian architecture (Italian Urban Landscapes) in collaboration with the Faculty of Architecture in Zagreb.

Last but not least, one of our more important activities is certainly education and professional training that we have been doing since 1963. There are over 60 different education programs annually that we organize for export managers, economic diplomacy staff, and foreign entrepreneurs through workshops and sector specializations conducted by Italian experts.

Italy is an important trading partner for Croatia, but also an investor. How does an average Croatian consumer perceive the Made in Italy products, and what kinds of products Italy imports the most from Croatia?

— We export a wide range of products to Croatia. In the eyes of a Croatian consumer, the term/brand "Made in Italy" is most commonly associated with food products, consumer goods (primarily clothing, footwear, furniture and interior decoration products, ceramics, etc.) and cars, but we also export technology and capital products (wood

processing plastics processing machinery and equipment, technology used in food industry, construction, agriculture...).

In addition to raw materials (mostly wood and chemical products), we import semi-finished products (from wood and plastic) and products of the metal processing industry (semi-finished products and finished products) from Croatia.

As a special opportunity of economic co-operation, I would like to single out digital transformation segment, given the large funds that Italy invests under the

ICE HAS AN EXTENSIVE NETWORK OF OFFICES AROUND THE WORLD – 79 IN 65 COUNTRIES – AND OUR 900 EMPLOYEES SUSTAIN ITALIAN FIRMS IN THEIR INTERNATIONALIZATION PROCESSES AND PROMOTE THE IMAGE OF THE “MADE IN ITALY” PRODUCTS AROUND THE WORLD framework of the National Industrial Plan 4.0. Currently, in the second stage, we are focusing on increasing digital competence of employees by providing different subsidies to employers, educational institutions and Competence Centers, followed by increased investments in the development and commercialization of SME innovation.

Owing to the measures envisaged in the National Plan, Italy plans to launch investments totaling 9.8 billion euros.

Just like Italy, Croatia is also committed to boosting competitiveness of its innovation-based entrepreneurship based and to that goal, the country has allocated a billion euros towards bolstering economy via research, innovation and ICT technology in the period from 2014 to 2020, plus another billion towards high employability and labor mobility, as well as education and lifelong learning. I see great potential for establishing stronger cooperation between Croatian and Italian companies in this segment.

Speaking from the experience of Italian business people, what are the main advantages of doing business with Croatia and is there any room for improvement?

— Excellent geographic position and transport links, subsidies for investment promotion and the possibility of using EU funds from a 10-billion-euro budget by 2020 are all great advantages of Croatia.

Also, labor costs are one of the most important things that each investor looks at when considering investing in a country.

In Italy, the price of labor is twice as high as in Croatia, but the capacity of the Croatian labor force is indeed large and it has considerable potential.

What still needs to be done is certainly work on eliminating legal insecurity, insufficiently flexible labor market, parafiscal charges, and administrative and regulatory barriers, especially at the local level.

In the current financial perspective 2014-2020, EU funds are available for bilateral programmes of cross-border cooperation between Italy and Croatia.

What is the role of ICE in bilateral co-operation and how does it support Italian entrepreneurs who are applying for EU funds?

— Yes, that’s right! The Italian-Croatian Cross-Border Cooperation Programme, which is financed from the EU funds in the the 2014-2020 period, created additional opportunities for co-financing projects worth EUR 237 million for eight Croatian counties and 25 Italian provinces. During the first call, which took place last year and was worth 78 million euros, the Programme Leader - Veneto Region - approved projects focusing on the four priority Programme axes – strengthening (blue) innovation, bolstering environment quality conditions and climate change adaptation, protection of cultural and natural heritage and sustainable maritime transport development.

In addition to the already mentioned activities, ICE has been supporting Italian entrepreneurs in using EU funds since 2011. Thus, our office in Zagreb has the European Structural Funds Desk which task is to monitor EU tenders and programs to which both Italian companies as partners, suppliers or direct beneficiaries can apply, providing they are already registered as legal entities on the territory of Croatia.

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ON THE ROAD TO RECOVERY INTERVIEW

INES OBRADOVIĆ

Head of the Division for Bilateral and Multilateral Cooperation in the International Affairs and EU Sector at the Croatian Chamber of Economy (CCE)

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or a number of years Italy has been traditionally the number one external trade partner of Croatia.

However, after 2015, Germany pushed Italy into the second place. Despite this fact, Italy still remains the first among the countries to which Croatia exports its products which is why the Croatian Chamber of Economy is planning to boost its presence in Italy and thus facilitate Croatian companies in terms of doing business there – says Ines Obradović, Head of the Division for Bilateral and Multilateral Cooperation in the International Affairs and EU Sector at the Croatian Chamber of Economy (CCE).

What is the current volume of external trade between Croatia and Italy, and is it going to exceed the pre-crisis level any time soon?

— The total value of the Croatian-Italian external trade has been continuously growing until 2008, when it amounted to an unprecedented 5.4 billion EUR. As a result of the recession, in 2009, the value of the total external trade between the two countries has fallen to 3.7 billion EUR, after which it started growing again but it still hasn't reached the 2008 level.

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Considering the great interest shown by Croatian companies for the Italian market, we plan to open a representative office in Milan in the upcoming period. We believe that this will contribute to the bilateral economic co-operation between Croatia and Italy quickly surpassing the level from the pre-crisis period

In 2017, the Republic of Croatia's export to Italy amounted to 1.9 billion EUR. Compared to the previous year, exports to Italy increased by 12.7 percent. Imports from Italy last year amounted to 2.8 bln EUR, which, in relation to 2016, is a 14.1 percent increase.

The positive trend of trade growth continued in 2018, and we expect the external trade to reach the 2008 level in the next two to three years.

Regarding the export of services, the largest part, or about 85%, is tourism-related which is to be expected, while significant revenues are also generated from processing industry, transport, commerce-related, technical and other business services. The

IN THE PRE-CRISIS PERIOD, MOST OF THE CROATIAN EXPORTS TO ITALY WERE BOATS, HOWEVER, THIS EXPORT SEGMENT STILL HASN'T EXPERIENCED A SIGNIFICANT RECOVERY

total revenues from export of services to Italy in 2017 amounted to 1,180 million EUR.

How did Croatia's accession to the EU affect the total external trade and its structure?

— Following the country's accession to the EU, Croatian companies have recognized opportunities arising from the single EU market and many companies have directed their business internationalization activities to the EU countries. Namely, in 2012, the EU countries accounted for 58 percent of the total Croatian exports and 73 percent of the total Croatian imports. In 2017, the share of the EU countries in Croatian exports rose to 65 percent, and to 78 percent in imports.

The industries in which Croatia has the greatest potential for export, i.e. pharmaceutical industry, metal processing industry, production of electrical equipment, machinery manufacturing, IT equipment, food industry and furniture production are still in the focus.

To what extent have the Italian investments in Croatia affected the increase in external and in which products and services is this particularly noticeable?

— The Italian business people have established hundreds of companies in Croatia,

which are partially or fully owned by them.

Many Italian companies have recognized Croatia as an ideal business destination for starting a business, or investing in an existing company. The direct Italian investments in production capacities in Croatia have had the biggest influence on the increase of the external trade. We would like to point out that the investments made by the Italian companies Calzedonia, Finding Group (Lipik Glas), and Ducati Energia, which, through their direct investments in production, have created new, competitive export products.

Also, INA and the Italian company ENI have been collaborating on oil and gas extraction projects for many years.

Which segments have seen the largest share of the Italian investments in Croatia, and in which segments in particular would you like to encourage more Italian investments?

— In the period from 1993 to 2017, Italian companies invested 3.4 billion EUR in Croatia, making Italy the third most important investor to Croatia. 72 percent of the total Italian investments in Croatia are related to investments in the financial sector, followed by investments in the real estate sector.

We see the investment potential in the tourism sector, energy, infrastructure, industry and agriculture in Croatia. The priority is to stimulate investments in the production sector and create more value-added products with the potential for export. In order to attract the investors directly, the CCE has published a catalogue of private investment projects that have been prepared for foreign investments, with most of the projects coming from the field of tourism and transport infrastructure, industry and healthcare.

In which areas are Croatian products particularly competitive in the Italian market? How many of these products have those high added value, such as exports of ships?

— In 2017, Croatia mostly exported the products of lower and middle added value to Italy such as petroleum oil, wood, socks, pullovers, maize, fish, petroleum gases and wheat. Products with high added value do not have a significant share in the structure of the Croatian exports to Italy.

IN THE PERIOD FROM 1993 TO 2017, ITALIAN COMPANIES INVESTED 3.4 BILLION EUR IN CROATIA In the pre-crisis period, Croatia mostly exported to Italy ships, with some of them being temporarily exported for finishing touches, oil derivatives, gas and transformers. Exporting ships, petroleum products and gas in this period accounted for about 25% of overall exports to Italy. A somewhat smaller, but still significant part of exports, were medicines, wood, seats, cement, sugar, and cigarettes. A declining export of ships was the main reason for the reduced value of exports in relation to the pre-crisis period, because, in 2016, the value of exported yachts and boats was quite small while the value of the exported petroleum products was also significantly reduced.

In which areas can the Chamber exercise the strongest influence on improving the economic relations between Croatia and Italy?

— The CCE organizes numerous exhibitions of Croatian companies at trade fairs in Italy, in the joint national booth. Along with Germany, Italy is the most appealing to Croatian companies in terms of their direct promotion at trade fairs. Apart from fairs, the CCE also sets up direct and individual meetings of Croatian and Italian companies at many international gatherings, especially in the framework of Enterprise Europe Network. Also, we would like to mention the cooperation with research and development centres in Italy with the perspective of boosting the competitiveness of Croatian products and services.

Are you satisfied with the number of Italian tourists in Croatia? How much is the CCE involved in the promotion of Croatian tourism?

— According to HTZ data from 2017, 1,141,211 Italian tourists visited the Republic of Croatia, the same as the year before.

Italian tourists had 5,240,943 overnight stays, representing a decrease of 0.3% compared to the previous year.

The CCE conducts promotional tourism-related activities in Italy. For example, on 16th February, 2018, we successfully organized the "Apoxyomenos on the island of vitality" presentation in Trieste which showcased the tourist offer of the island of Lošinj and the Apoxyomenos Museum, as well as promoted inventive forms of tourism with an emphasis on underwater archeology in the Adriatic.

As part of the TTG Rimini fair in October this year, we are planning to hold an oenologic -gastronomic presentation (Cheese & Wine Meetup), along with promotion of Croatian wines under the common brand "Vina Croatia Vina Mosaica".

MARKETS

ALTHOUGH ITALY IS ONE OF OURS MOST IMPORTANT TOURIST EMITTING MARKETS, WE BELIEVE THAT THERE IS STILL SPACE FOR IMPROVEMENT IN THIS SEGMENT TOO ITALY 2018

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ASSOCIATION OF ITALIAN ENTREPRENEURS (UTPUH) IN CROATIA

LINK BETWEEN ENTREPRENEURS FROM THE TWO COUNTRIES

UTPUH has affirmed itself as a reference and starting point for Italian companies in Croatia; from their registration and launch of business in Croatia to networking and expansion of the members' businesses

U

TPUH's goal is to develop and improve relations between Italian and Croatian entrepreneurs and to encourage contacts and cooperation with local and state authorities with the aim of overcoming various obstacles in business and promote and develop cooperation between Italy and Croatia in the economic, commercial and cultural spheres.

In order to accomplish its goals, UTPUH carries out a wide scope of activities, ranging from providing information and legal, institutional, tax assistance to organizing seminars, congresses, trade fairs and roundtables and offering an array of services to its members, such as:

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• Advisory services on legal and tax acts and EU funds • Special reduced tariffs (consulting) for the Association's members • Renting one-to-one meeting / presentation rooms in Zagreb • Use of institutional, well-equipped meeting or reception rooms in other cities such as Rijeka and Pula • Advertising and sponsorship • Support in organizing events • Periodic informative bulletin on economy, policy and investment opportunities • Information and contacts at member's request The Association was established in close

cooperation with the Embassy of the Republic of Italy in Croatia and the ICE's office in Zagreb on 11th April, 2014 in Zagreb. The Association's HQ is in Zagreb's main square - 1, Josip Jelacic Square, to be precise. The Association is managed by the Steering Council comprising of 9 members and the Secretary General, while the Italian Ambassador to Croatia, H.E. Mr. Adriano Chiodi Cianfarani is its Honorary President.

The Association was established on the back of the Advisory Committee of Italian Entrepreneurship in Croatia and has been officially registered and acknowledged by the state administration as a legal entity.

The Association currently has 85 members, i.e. companies and individu-

als operating in Croatia and / or Italy, from various sectors such as banking, woodworking, textiles, agriculture, retail, metallurgy, gas, tourism, finance, information technology, transportation, mechanization and construction, which range from large international companies to small artisan shops. Each of them is treated as an equally important member which contributes to the economic development and economic cooperation between Italy and Croatia.

We are exceptionally proud of the fact that our members have recognized the importance of this institution and have been able to create a network of entrepreneurs, which functions almost as a family.

Through B2B social events, with the latest one taking place last month at Opatija Congress Center 25/7 under the auspices of the Italian Consulate General in Rijeka, we had the honour to play host to the President of the Croatian Chamber of Economy, Rijeka office, Mr. Vujić, who has also underlined the importance of UTPUH and the bilateral cooperation between our two countries.

At the beginning of each calendar year, we devise a detailed activity plan, so for this year, we have prepared several big events which aim is to increase the number of Italian investors in Croatia, and facilitate business operations of those Italian companies already operating in Croatia while encouraging them to invest even more.

We would also like to single out certain events such as the Round Table discussion on cooperation, organized with the Embassy of the Republic of Italy in Zagreb and the Ministry of the Economy, titled "INVESTMENTS IN CROATIA: CURRENT SITUATION AND FUTURE PERSPECTIVES" and another important event, held in cooperation with the Embassy of the Republic of Italy in Zagreb and the European Investment Bank under the auspices of Privredna Banka Zagreb, which is a meeting at the Double Three by Hilton Hotel in Zagreb, that saw European institutions offering different funding opportunties in cooperation with banks in the Republic of Croatia. Trade financing instruments were also the central topics of the meeting.

Last year, in December, at the The Westin Hotel, we held a Christmas meeting which was opened by the Italian Ambasador himself. We were honoured to to have a representative of the Zagreb government, Mrs. Renata Arara, a representative

of the Croatian Chamber of Economy, Mr. Marko Babić, Deputy Speaker of the Croatian National Parliament, Mr. Radin, and many other individuals as our guests.

In February, we organized a B2B business event, which was officially opened by Professor Ivanov with her presentation on the macro-economic situation in Croatia.

UTPUH is also focusing on culture as yet another important segment of the cooperation between Italy and Croatia.

We were sponsors of the award for the

THE ASSOCIATION CURRENTLY HAS 85 MEMBERS, FROM MAJOR INTERNATIONAL COMPANIES TO SMALL ARTISAN SHOPS. EACH OF THEM IS AN EQUALLY IMPORTANT MEMBER

best lateral work at the Global Italian Language Days, an event that was organized by the Italian Consulate General in Rijeka, and the sponsors of the exhibition called 'Italian Light', held at the Museum of Arts and Crafts, and organized by the Italian Institute of Culture.

We are always open for cooperation and input with the view of improving the conditions, and UTPUH is more than glad to accept invitations for guest appearances. We had the opportunity to be part of the 2017 Tax Conference, where our president, Cvečić Bole, presented our members' views on the issues of taxation in Croatia in a panel discussion.

For three consecutive years, we part-

nered with the Italian Consulate General at the International Franchise, Finance and Consultancy Services Fair in Opatija.

In regard to the ever trending topic of EU funds, we held lectures and workshops in collaboration with the Italian Trade Agency (ICE).

We also are proud to announce the event that is happening for the first time in Croatia.

With the support from the City of Zagreb and the Italian Embassy, we are going to hold, in September, an event called ITA CRO BUSINESS REWARD 2018 at which, for the first time ever, we are going to present the successful business results of Italian entrepreneurs in Croatia and will give away the prizes to the best of them, as decided by the expert commission.

UTPUH also joined an initiative in cooperation with the five Croatian chambers of economy.

In collaboration with our colleagues, who are representing the largest investor countries in Croatia, we are writing a joint study of the economic situation and the entrepreneurial climate which aims

to improve the conditions for foreign investors and facilitate the entry of foreign capital into the country.

We should also underline that UTPUH is a non-profit non-governmental organization funded exclusively from membership fees, sponsorships and approved projects. All of our funds are invested in our activities and we have only one full-time employee. The members of our Steering Council perform their duties completely voluntarily.

We are proud of our work, which has been growing year-on-year, and our desire is to position ourselves as the most important place for the development of Italian entrepreneurship in Croatia.

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FEWER OBSTCLES, BETTER COOPERATION The three biggest problems that Italian investors have encountered here are lack of human resources, excessive labur taxes and unequal treatment by tax administrations and inspections.

Nevertheless, as a neighbouring country, Croatia is extremely interesting to Italy in terms of investing

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talian entrepreneurs are highly appreciative of business opportunities in Croatia, but at the same time, aware of the many limitations that they are facing here says Hrvoje Grenac says, General Secretary of the Association of Italian Entrepreneurs (UTPUH) in Croatia.

How would you rate the business climate in Croatia?

— Based on the results of the analysis we recently conducted among our members, we got a clear picture of the situation which is also a response to your question.

Although we are faced with various business difficulties, overwhelming and lengthy administrative and bureaucratic processes, excessive parafiscal charges for employers, a shortage of workforce and constant labour emigration from Croatia, which is why it is necessary to implement reforms and improve the immigration policy, we still consider Croatia an interesting and convenient country for foreign investors, especially for neighbouring countries such as Italy. Of course there is still room for improvement, particularly in terms of untapped funds through EU

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INTERVIEW

HRVOJE GRENAC

Secretary General of the Association of Italian Entrepreneurs (UTPUH) in Croatia

projects, bearing in mind that the application procedures have been simplified and that these funds can help with bolstering the business climate in Croatia.

We hope for a dialogue and negotiations, through various initiatives, with the view of improving the economic situation and attracting more investors.

UTPUH PROVIDES A WIDE ARRAY OF SERVICES RANGING FROM COMPANY'S RESGISTRATION IN CROATIA AND ADVISORY SERVICES FOR OUR MEMBERS ON LEGAL AND TAX REGULATION TO THE USE OF FULLY-EQUIPPED INSTITUTIONAL HALLS ALL OVER CROATIA

What trends in the external trade between the two countries would you like to single out?

— It is a well-known fact that Italy is the second largest investor in Croatia, and that Italy is Croatia's biggest export partner, so, the external trade between these two countries is at a very high level - especially in the food, wood and textile industries.

According to the latest data from the Croatian Bureau of Statistics, external trade between our two countries is still growing. Our desire is to increase the export of goods and services, especially from those sectors that are not that much represented, such as the constantly growing IT sector and, of course, human resources.

What kind of inquries regarding investing in Croatia do the potential Italian investors have when they approach you?

— Before they register their companies and start operating in Croatia, most of the inquiries pertain to, naturally, conditions for doing business and business costs.

As a neighbouring country, Croatia is extremely interesting to Italy in terms of in-

vesting because the two countries share both the land and sea border which creates great opportunities for facilitated trade in goods. It is also a well-known that Italy is the second largest investor in Croatia after Germany.

Potential investors are bothered by a slow and complicated state administration and the inability to find adequate workforce, which we are trying to help with as much as can. We are also assisting them in registering their business in the Republic of Croatia, and finding an adequate site and workforce, as well as provide consulting services and help with conducting their business at a later stage.

What services does your association provide to Italian investors who are already doing business in Croatia?

— UTPUH provides a wide array of services ranging from company's resgistration in Croatia, advisory services for our members on legal and tax regulation and EU funds and administrative and legal changes to especially reduced fees (for consulting services) for the Association members, and the support in organizing their events - meetings, rental of meeting rooms at the Association's headquarters and use of fully-equipped institutional halls all over Croatia. Also, five times a year, we inform our members on all current topics through our newsletters that relate to economy, politics, investments...

The news on our bilingual website is updated daily, and businesses are given an opportunity to boost their visibility through advertising and sponsorship.

Another great thing is networking that allows members to do business with each other, and expand their operations and contacts.

How do you cooperate with other business associations and the Croatian government on improving business policy?

— In the past four years, UTPUH has achieved excellent cooperation with national institutions, such as the Croatian Chamber of Economy, the Croatian government and various similar associations. HUP is one of the most important organizations and many of our members are also HUP members. We had several interventions in various ministries that have demonstrated promptness and willingness to assist Italian investors, and we have also tried to affect

tax changes. Unfortunately, there are a lot of aggravating circumstances for foreign investeors, however, through various interventions and dialogue, we are trying to create a better business climate in Croatia.

We are currently in the process of drafting a study on the economic climate in Croatia, in cooperation with five other foreign chambers of commerce, which will present the real situation with foreign investors and will stipulate concrete suggestions and strategies to improve investment and business conditions in Croatia

What reform steps are your members advocating and what are their expectations from the Croatian government?

OUR DESIRE IS TO INCREASE THE EXPORT OF GOODS AND SERVICES, ESPECIALLY FROM THOSE SECTORS THAT ARE NOT THAT MUCH REPRESENTED, SUCH AS THE CONSTANTLY GROWING IT SECTOR AND, OF COURSE, HUMAN RESOURCES — As I have already mentioned, through drafting the study with our peers from other international chambers of commerce, we have identified key issues that are more or less troubling for Italian entrepreneurs in Croatia. As a result of our analysis we have identified three major problems that investors usually encounter. Unfortunately, no matter the wealth of natural resources that Croatia has, the most important resource in every business - human resources - remains a chronic problem in Croatia, but also throughout Europe. This is the biggest problem at present because, apart from the lack of workforce due to mass emigration, we have also noticed the problem of education, from high school to higher learning.

Namely, the education curriculum, as well as the lifelong learning programmes, are still not in line with the so-called e-centu-

ry. Some professions disappear completely because they are replaced by, and the education system lags behind these developments. This creates a critical mass of unemployed people without adequate education.

We advocate reduction in labour / income taxes. Also, it would be very useful to reduce the profit tax rate especially now, when the state budget is in surplus.

Likewise, it is necessary to abolish parafiscal charges and to simplify the procedures by switching to electronic business, starting from the registry of commercial courts, where all the functions, except keeping records, could be transferred over to public notaries. Also, relevant data, such as the one stored at the Bureau of Statistics, should be made electronically visible.

The situation in Italy is quite similar to that in Croatia. Furthermore, it is vital to change the way the tax administration and inspection operate, namely to prescribe the same procedures for them. The real economy and the private sector, which generate revenue for the state budget, should be respected more and not penalized the very first time inspection comes to visit.

We have also seen the media reporting about absurd examples such as penalizing companies for using small instead of capital letters or having a couple of kunas surplus in their cash register. These businesses should rather be helped in order to eliminate the irregularities. Additionally, simplifying the tax system would be beneficial too.

How much would the external trade between the two countries benefit from establishing new maritime delivery routes?

— Considering that the longest border between Italy and Croatia is the maritime one, there is certainly the possibility of improving transport lines between these two countries. Of course, establishing new lines for overseas trade would meant a lot for improving the business, and initiatives have been launched through the Adriatic-Ionian programs and ongoing EU competitions. We, as the Association, provide our absolute support to each such initiative and, along with our members, we are happy to participate as a partner. There is a lot of room for improvement, and we sincerely hope that the launched initiatives will reach their full potential.

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CORPORATE

NEBOJŠA BIŠKUP

Country Manager ManpowerGroup Croatia and Slovenia

WE HAVE A SOLUTION FOR LACK OF WORKFORCE Measures to remedy the situation are simple - eliminate unnecessary parafiscal charges and unnecessary regulations, reduce tax burden on labour, and last but definitely not least, finally implement the education reform

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T

he general impression is that, despite the unemployment rate of over 10%, there is a lack of workers in Croatia,, particularly in our most profitable industries such as tourism, construction and the IT sector. Manpower has shared with the Government plenty of information and experiences, but I'm afraid we are too late with that - says Nebojša Biskup County Manager in Manpower.

How can this problem be solved, both short- and long-term?

— In short-term, the problem can be alleviated (not resolved) by providing tax breaks for employers in order to increase employee wages and have more resources for business development. To that aim, a series of meaningless regulations and fees should be abolished. For example, in Croatia, the costs of using a company car, team building, having fruit, coffee and juices in the office are treated as a pay in kind on which em-

ployer payes taxes and contributions.

Additionally, unlimited import of labour from the countries which consider us 'the West' should be facilitated, i.e. both from the close countries in the region and the same language area, and from countries such as Ukraine and Romania, for instance. In the long run, the government has to implement changes in terms of the immigration policy, just

COMPETENCES CROATIA HAS MORE THAN 3 BILLION KUNAS OF EUROPEAN MONEY AVAILABLE FOR IMPROVING LABOUR COMPETENCES, BUT THE COUNTRY, UNFORTUNATELY, HAS NOT USED 2.5 BILLION KUNAS UP TO THIS POINT

like Slovenia did, which is now successfully relying mainly on people from the former Yugoslavia.

Another problem, partly stemming from the first problem but also from the insufficiencies in our education system, is the lack of talent. According to your experiences and information, how and where can Croatian companies find the best possible workforce and how can they prevent these people from leaving to work for their competition or abroad?

— The key lies in talent management and individual employee education, with a career development plan ranging from five to ten years in advance. It is necessary to continuously monitor the work, private life and business development of every person in the company. Additionally, employers' ability to recognize employee's personal needs is also important, as is the continuous availability of new technologies. It is also extremely important to provide employees with a space for independent proactive action that exceeds their job description.

The Millennials and Generation Z have brought a whole new set of issues to workforce. What do the experts from Manpower advise in terms of reaching out to these generations? What kind of approach should be used and how can we engage them?

— The Millennials have an app for everything. These are their tools for

dealing with the world they live in, and looking for employment is just one segment of it. On the other hand, job-advertising companies (such as LinkedIn, among others), have their own job ad search apps that make it easier for candidates to search and respond to job ads. So, my advice to companies that want to reach the talents of younger generations is to

TECHNOLOGIES

THE EDUCATION SYSTEM NEEDS TO RESPOND QUICKLY AND PRECISELY TO THE NEEDS OF THE MARKET AND KEEP UP WITH THE DEVELOPMENT OF NEW TECHNOLOGIES use technologies in communicating with them. Many companies in Croatia have not yet made the first step in this direction - they did not customize their websites so they could be more easily viewed on mobile phones.

What are your predictions for the immediate future of labour and employment in our country, say by 2025?

Could you elaborate on that in the light of the trends in the EU labour market in the same period?

— You do not need to be too smart to find out what the needs for workforce

will be in Croatia in the next five years.

One recent survey, conducted with the participation of our corporation, ManpowerGroup, says that 65 percent of today's occupations will soon disappear. This means that people who are now completing their education and still undergoing training will soon be almost unemployable because more than two thirds of these occupations will not exist. They will be transformed into something else. This process is already taking place, which means that the adaptation to these changes should start NOW. The key is in developing skills for the digital age.

In that context, what should the legislators in Croatia - both at the state and local level - do to change the situation in the labour market from the current demotivating one to stimulating one, in the long-term?

— The education system needs to respond quickly and precisely to the needs of the market and keep up with the development of new technologies.

What we should do here first is to set up competence and excellence centres, defined by market segments. At industry level, we should ascertain where it is possible to achieve synergistic effects for example, our IT industry, along with tourism, could be positioned as export brands. Furthermore, legislators should be much faster and more effectively involved in assisting employers when applying for EU funds.

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I GIANT FROM THE ECONOMY

HEART OF EUROPE Masters of design and machines

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taly always knew how to pack the product into the most beautiful packaging, and to make it the object of the desire of the whole world, be it shirts, cheeses or cars.

Everything is always visually appealing. But behind that perfect look, the reliability and the quality there are machines that will not let you down, the food of unrivaled taste, and the best-quality clothes.

There is a particular aspect about Italy that we cannot ascribe to superficiality. Many believe that the “northern origins� holds the responsibility, which Italy surely has, more than others.

NUMBERS SPEAK FOR THEMSELVES Italy's economy is the eighth largest in the world, with an absolute amount of gross domestic product (nominally) of $ 1,850,735,000,000 (Yes, almost two trillion!). At the regional level, the Italian economy is the third largest economy in the eurozone, behind Germany's and France's. In relative terms or purchasing power parity (PPA), the Italian living standard is also among the highest in the world. The secondary or industrial sector is the driving force behind Italian development and the current axis of its economy, unlike the service sector in other country, thus making the Italian economy more robust than others in Europe and the world. Although, Italy did have difficult time overcoming economic difficulties post-global financial crisis in 2008, it still managed to. If it didn't have such a strong secondary economy and production branch, just like Poland and Germany, the consequences would have been much harder. As with the economies of many European countries, the tertiary sector or the service sector also plays an important role in the Italian economy. The country is a member of the Organization for Economic Cooperation and Development (OECD), the G-7 Group and the G-8 Group, not without reason.

In the post-war period, Italy was transformed from an agriculture-based economy, which was seriously affected by the consequences of great wars, to one

of the most developed countries in the world and the leader in the design industry, international trade and world exports.

According to the Human Development Index, the country has a high standard of living and it ranks eight in the world regarding the quality of life according to The Economist. Italy is the third country in the world in terms of gold reserves and the third largest country by net contribution to the EU budget. The country is also known for its influential and innovative business sector, which makes it a highly industrialized nation (Italy is the second country in Europe after Germany in terms of goods production) and has a traditionally competitive agricultural sector (the country is the largest wine producer in the world).

As we have mentioned earlier, the country is known for its creative projects marked by high quality production

ACCORDING TO THE HUMAN DEVELOPMENT INDEX, THE COUNTRY HAS A HIGH STANDARD OF LIVING AND IT RANKS EIGHT IN THE WORLD REGARDING THE QUALITY OF LIFE ACCORDING TO THE ECONOMIST

NEW IMPULS

ITALY IS HUNGRY FOR INVESTMENTS, SO GENERATING PROFIT IN OTHER MARKETS, INCLUDING CROATIAN, IS AN IMPERATIVE FOR A NEW IMPULSE TO THE ITALIAN ECONOMY ITALY 2018

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in the automotive, maritime, fashion and household appliances industries. Italy is also the largest market of luxury products in Europe (third worldwide). Italians love luxury, apparently. One should not forget that they like to accumulate it too - the private wealth in the country is one of the largest in the world! Also, the country is considered the most suitable for children, it is beneficial for pensioners, and quite comfortable for workers. In the time of inhumane capitalism, some of these happiness factors are more important than ordinary growth figures. Italy, despite the aging of the population and low birthrate, has a soft approach to immigrants, especially from Eastern Europe and North Africa, and does not have to worry much about the attractiveness of its economy to foreigners.

THE OTHER SIDE OF PROGRESS Still, Italy needs investments and growing economy. The Italian economy will not return to the level it was before the 2008 financial crisis until the middle of the next decade, the analysis conducted by the International Monetary Fund (IMF) has shown, citing "two lost decades". On the other hand, by 2025, the economies of other eurozone members will have recorded between 20 and 25 percent growth relative to 2008. The IMF is now expecting

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THE COUNTRY IS CONSIDERED THE MOST SUITABLE FOR CHILDREN, IT IS BENEFICIAL FOR PENSIONERS, AND QUITE COMFORTABLE FOR WORKERS

that the Italian economy, the third largest in the eurozone area, will grow by less than 1 percent this year, which is very close to zero, which, in turn, burdens investment prospects. But this only means that Italy is hungry for investments, so generating profit in other markets, including Croatian, is an imperative for a new impulse to the Italian economy, which, despite the difficulties, is seen as very robust and it doesn't take down other economies with it during bad times, like the American.

CORPORATE

HOW TO REDUCE INVESTMENT RISK

Do your own due diligence. That means research your investments before you make them. Check out the investment's history, earnings growth, management team and debt load

PETAR PETRIĆ Licentiate in Law

I

n 2016. most foreign direct investment came from Italy, almost 1.918,57 EUR milion, followed by the Netherlands and Luxembourg.

How to enter the Croatian market?

There are many ways, including the establishment of a representative office, outsourcing production, founding a new company or setting up a production site.

An often overlooked way for small and medium-sized enterprises (SMEs) to establish or expand their business in Croatia is through investment in an existing Croatian company. The term investment is used here in a broad sense, including cooperation with a Croatian partner - either in a cooperative joint venture or an equity joint venture - as well as the acquisition of a Croatian company in the form of a merger or acquisition.

It is very important to evaluate risks carefully and prepare every step with the necessary due diligence involved.

Whoever invests into a business relationship, be it trade, cooperation or working together as one entity like in M&A situations, takes the risk of not getting what he expects or hopes to get out of this relationship.

How to reduce business risks?

To minimise business risks is the goal of due diligence, which is achieved by scrutinising the target company find out whether the other party is suitable

for this kind of relationship and whether it is likely to be able keep its part of the deal. After this investigation and the analysis of the results any investor will have sufficient data to determine if the proposed relationship is viable and what it will take to turn it into a sustainable business partnership. In any due diligence process the investing party will assess the abilities, trust and creditworthiness of the other party as well as the quality of its products or services. The general process of due diligence and its principles are the same for all business relationships. However, the process varies widely in intensity and content

FDI

FOREIGN DIRECT INVESTMENT IN CROATIA INCREASED BY 548,90 EUR MILLION IN THE FOURTH QUARTER OF 2017 according to the type of business relationship or transaction in question.

In general, due diligence should cover all areas that are important for the transaction as well as posttransaction integration and operation of the target. This is not limited to legal, financial and tax issues, but should also take include sound commercial and reputa-

tional due diligence as well as technical, environmental and risk management questions.

Modern due diligence contains the following elements: verification of the assets and liabilities of the company, determining and quantifying the risk, determination of risk protection, determining the benefits of acquisition, post-acquisition planning There are three main areas of due diligence investigations: 1) Legal Area: verification of contracts, ownership of property, determination of all real and potential legal problems 2) Financial Area: data checking, management and system overview 3) Commercial area: determining the market, the position of the companies on the market, the commercial future of the company

The due diligence team The due diligence team should consist of persons responsible for at least three main areas: legal, accounting and business-commercial. More than one of these areas may be combined in a single person, so long as each person has a clear understanding of his responsibilities.

Therefore, your due diligence efforts need to be handled by a knowledgeable and experienced team.

Modern due diligence is an investment in the future.

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ECONOMIC COOPERATION

OUR GIANT NEIGHBOUR, OUR GOOD FRIEND Inspiration comes from the West Adriatic

W

hen you are in the close geographical proximity to the one of the G-7 countries and one of the tourism, industry, design and service giants, that has to have a positive effect on you. Italy is for Croatia what is Germany for Poland - inspiration, partner and economic friend.

THE PARTNER, THE INVESTOR Italy is the first target market for Croatia and the second largest importer of Croatian goods and services after Germany. The goods that Croatia usually imports from Italy are usually the

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common household goods and especially durable ones. Italian products are wellknown and appreciated in the Croatian market. Italy is the sixth biggest investor in Croatia. However, we should mention that there is a good reason for such position. Italy fairs even better as an investor in Croatia than portrayed in the official data since many investments by Italian companies in Croatia are realized through developing countries. Generally speaking, the most attractive sector for Italian investors is financial intermediation (banking and insurance). The most important and most productive Italian investments in Croatia were those in energy, natural gas production, textile sector,

wood industry, mechanical engineering and electronic sector. The excellent bilateral economic relations are also bolstered by a series of bilateral agreements that Italy and Croatia have signed over the years, including the Agreement on Double Income Taxation and the Prevention of Tax Evasion with Additional Protocol (1999), the Memorandum of Bilateral Co-operation (2009) and the Memorandum of Understanding in Agriculture and Rural Development (2010).

AIIC TAKES IT A STEP FURTHER AIIC was formed on the back of the Italian Advisory Committee on Italian En-

trepreneurship in Croatia (CIIC), which operated from 2004 to 2014, under the auspices of the Italian Embassy. In line with the Italian Chamber of Commerce models abroad, the Association of Italian Entrepreneurs in Croatia (AIIC) represents the interests of Italian companies and companies that have trade relations with Italy in front of Croatian public and private institutions, in a direct and independent manner.

FACTS AND FIGURES In 2000, Italy was the biggest commercial partner of Croatia, a position it held until 2014, only to subsequently drop a place to second and make room for Germany as the No 1 commercial partner.

In 2017, the value of the bilateral trade between Italy and Croatia surpassed €4.7 billion (13% of total Croatian trade, with an increase of 13%). Italy still remains the main market for Croatian exports (with a value of Croatian exports to Italy amounting to €1.9 billion), but also remains the second largest supplier, even though in 2017, imports from Italy rose by over 13.2%, reaching €2.8 billion.

Italy is the third biggest foreign investor (after the Netherlands and Austria), with around €3.4 billion, or 10.4% of the total FDI in Croatia invested over the period between 1993 and 2017. Many Italian companies have invested in Croatia through financial triangulations where investments have been transited by third countries, as in the case of acquisitions in the banking sector (e.g. Luxembourg, Austria and the Netherlands).

As for the investment sectors, Italian FDI were made in banking and financial activities (totaling €2.4 billion, or 72% of the total FDI, thanks above all to investments

made in 2016), real estate assets, including equity investments in real estate (total €294 million, 8.6%), commercial activities (total €153.4 million, 4.5%), hotel services / housing (approx. €127 million, 4% ), and machine and equipment production (€103.5 million, 3%).

In the banking sector, which is almost entirely in the hands of foreign shareholders, Italy has substantial holdings in the Zagrebačka Banka (Unicredit Group 84.47%

MANY ITALIAN COMPANIES HAVE INVESTED IN CROATIA THROUGH FINANCIAL TRIANGULATIONS WHERE INVESTMENTS HAVE BEEN TRANSITED BY THIRD COUNTRIES

of the capital) and in the Privredna Banka Zagreb (Intesa-San Paolo Group, 97.47% of the capital ), namely the two main banks in the country which together have a market share of over 43%. Assicurazioni Generali has been operating here since 2004, through its subsidiary Generali Osiguranje, which has a market share of around 4% in the country. The other main Italian companies in Croatia are Eni, Saipem, Edison and Sol in the energy sector; Calzedonia, Benetton and Aquafil in the textile sector; Florian Wood in wood furniture; Same Deutz Fahr and Tang Group in the agricultural machinery sector; Danieli, Wam, Isoclima and Bisol in mechanics; Adriatic in the chemical sector; Ducati Energia in the electronics sector; and Policentro and Oviesse Group in the large-scale trade.

The 2017 data shows that the balance of Italian FDI amounts to €65.26 million.

Greater investments are recorded in financial services activities (€95.01 million), while the most significant disinvestments were in information services and other IT services (-€36.56 million).

INVESTING

FINANCIAL INTERMEDIATION (BANKING AND INSURANCE) IS THE MOST ATTRACTIVE SECTOR FOR ITALIAN INVESTORS ITALY 2018

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CORPORATE

FLEXIBLE GREEN VEHICLES

DUCATI KOMPONENTI D.O.O.

D

ucati Komponenti d.o.o. is an integral part of the large Italian group, Ducati Energia s.p.a. from Bologna, and has been operating in Ludbreg since 2005.

The group is known for the production of generators, engines, stators, outboard engine parts and other parts for all kinds of motorcycles, parking machines, and automatic toll collection machines. In its own production facilities, Ducati Komponenti produces rotors, stators, alternators, generators, wind generators, regulators, transducers and inverters. The production itself is divided into three parts: rotor, stator and electronics. In terms of the green economy, our production is divided into four basic groups: a small FreeDuck electric moped, electric vehicle batteries, small wind turbines and e-wheel called Copenhagen Wheel.

FreeDuck4 is an electric quadricycle for two people, which is produced in two versions: standard, with a 180 litre-trunk, and caravan with a 300-litre trunk. The maximum speed of FreeDuck4 is 45 km / h, and its travelling range, with only one battery charge, is approximately 60 km. It is ideal for city driving and is a great solution for delivery services, utility services, police, and airports, but also can be used for tourist purposes. Since it is officially designated as a moped, a category AM license

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Ducati Komponenti d.o.o. offers electric four-wheelers and bicycles, as well as bike sharing systems, ideal for avoiding traffic jams and facilitating an ecological approach to transportation. The company also offers electric vehicle charging stations for private and public use

is required, while the helmet and seat belts are not.

FreeDuck2 is an electric bicycle with all electrical and mechanical components integrated into the rear wheel.

The fact that the battery, engine and steering system are built into the wheel allows this wheel to be mounted onto any bicycle, to transform it from a classic to an electric one. The wheel functions are controlled by the screen

BICYCLE

FREEDUCK4 IS AN ELECTRIC BICYCLE AND A GREAT SOLUTION FOR DELIVERY SERVICES, UTILITY SERVICES, POLICE, AND AIRPORTS, BUT ALSO CAN BE USED FOR TOURIST PURPOSES mounted on the steering wheel, but also via the Bluetooth-enabled smartphone application. The bicycle travel range, on one charge of the battery, is about 60 km, and the maximum speed, achieved with auxiliary electric engine, is 25 km / h. Except for private purposes, FreeDuck2 is also suitable for use in bike sharing systems.

Bike sharing system is available

mainly in larger cities where modern lifestyle presents a lot of challenges like traffic jams, due to whcih you cannot move quickly through the city, and the need to become more physically active to counteract the sedentary lifestyle and work. The logic of using this system is very simple: the user simply chooses a station with available bicycles. You can log into the system in several ways – with the RFID card, entering a user password on the terminal, or using a special key.

The system unlocks the desired bike and the user is ready to ride. The bike has to be returned any station within the system before the predefined use period expires. Towns like ÄŒakovec, Koprivnica and Pula all use our bike sharing system.

Electric vehicle charging stations can be both for private and public use.

Those for private use have smaller dimensions and are suitable for wall mounting, while those for public use can be installed at any location because they have IP44 electrical protection and can charge multiple vehicles simultaneously. They are equipped with an RFID identification reader, liquid crystal display, GPRS connectivity device and local area network connection and are customized for charging all types of electric vehicles. With regard to power, there are 3.7 and 22 kW versions available, but also combinations of different connectors and power.

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EACH EVENT HAS ITS OWN MAGIC While the Croatian public is enjoying seeing Italian masters as well as new young artists, musicians, dancers and writers, the Italian Cultural Institute in Zagreb is busy preparing the next magnificent cultural season

INTERVIEW

STEFANIA DEL BRAVO

Director of the Italian Cultural Institute in Zagreb

I

taly and Croatia have been forging cultural links over the centuries, and they represent a fertile ground for today’s artistic exchange. The list of cultural works which the Croatian public had seen in the past years and those which are at present in the pipeline is impressive. There was the Caravaggio exhibition in the Museum of Art and Crafts, marking Croatia's entry into the EU, which was definitely one of the more memorable ones, with many others have followed. For example, last year, the public had an opportunity to see the splendour of Italian Baroque featuring Tiepolo, while at the end of this year, the Museum of Archaeology in Zagreb will become a setting for the virtual exhibition Master Giotto devoted to yet another Italian master. These cultural wonders are not reserved only for the citizens of the Croatian capital: many exhibitions, concerts and movies, which the Italian Cultural Institute in Zagreb has unveiling to the Croatian public for decades, are traveling all around the country. And while the immortal masters are always a

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delight for the eyes and soul, so are the young Italian artists who are presenting their talents to the Croatian fans of jazz, dance and written word.

In her interview for Diplomacy and Commerce, Stefania Del Bravo, the Institute’s Director, is already busy planning the cultural calendar for the next year. Although it is too early to speak about the

SEATED IN A DARKENED SPACE, WITH THE MUSIC

BY PAOLO FRESU PLAYING IN THE BACKGROUND, VISITORS WILL BE ABLE TO LISTEN TO A NARRATION ABOUT GIOTTO’S PAINTINGS AND EXPLORE THE SMALLEST DETAILS OF HIS PAINTING TECHNIQUES

programme in detail, she reveals some of the content to our readers.

How high is the cultural and scientific exchange on the list of Italy's bilateral priorities in relations with Croatia?

— Of course it’s very high up, due to the geographical proximity of the two countries and historical links.

The Roman Empire extended to Istria and Dalmatia (Split's core is located right in the huge Diocletian Palace), and in the 12th century, Venice took power over Zadar and other towns in Dalmatia.

We recently staged a four-day event in Zadar, emulating the ancient Silkroad, the long commerce route from Spain to China where differents cultures, languages, traditions and religions met and intersected, giving birth to very interesting cultural commissions. Venice was at the heart of the Silkroad in terms of its commerce and Zadar has been recently declared a part of the New Maritime Silkroad, so our event, which received very positive reviews and appreciation, has been really timely.

Dalmatia is a particularly fruitful territory for cooperation in the archaeological sector, and in the Roman site of Burnum (not far from the Krka Park) Bologna University has a very active archeological mission. Since last year, the Institute has been strongly supporting the mission which is trying to restore the Burnum amphitheatre (the whole site and the basilica) and virtually rebuilding it with sophisticated technologies.

Of course, we are working closely with the 5 Departments of Italian Language and Culture (Universities of Zagreb, Rijeka, Split, Pula, Zadar), trying to support and foster the Italian language studies, and devising a joint programme for the Italian Language Week in October.

We are in contact with the Italian communities, having an interaction with them, inviting them to our events and trying to distribute our yearly programme of events in the whole territory of Dalmatia.

The Caravaggio exhibition in the Museum of Art and Crafts was a loan from Italy to mark Croatia's entry into the EU. How often do you have the opportunity to present the artwork of the magnificent old masters to Croatian audiences?

— Last year we had a magnificient exhibition at the MUO called „The splendour of Italian Baroque“, showcasing the works of Giovan Battista Tiepolo, his son Giandomenico and many other painters of the Baroque period.

We closed the year with another great event in Moderna Galeria, devoted to the Macchiaioli school of painting on the two Adriatic coastlines.

Last March, at the MUO, we presented another very popular event focused on design. The exhibition „Italian Light“ showcased over 60 Italian design lamps, created by the most renowned Italian designers, from 1950 to 1990. Many visitors and designers came to see the exhibition and we had an extensive and positive media coverage.

Late this year, we are going to present another major initiative in collaboration with the Museum of Archeology in Zagreb. Master Giotto is a virtual exhibition devoted to one of the highlights of Italian paintings. The section we are presenting, focused on the „Scrovegni Chapel“ in Padua, is part of a lager exhibition which was first staged in Scuola

Grande della Misericordia in Venice last year. The exhibition makes use of very sophisticated technologies which cast lights on the smallest details of Giotto’s techiques. Seated in a darkened space, with the music by Paolo Fresu playing in the background, visitors will be able to listen to a narration about Giotto’s paintings on their earphones. We expect the project to be very successful.

How many opportunities do you usually create for young Italian and Croatian artists to get to know each other and interact with the Croatian audience?

WE TRY TO CREATE AS MANY OPPORTUNITIES FOR YOUNG ITALIAN AND CROATIAN ARTISTS TO GET TO KNOW EACH OTHER AS WE CAN BECAUSE THIS IS THE REAL PROMOTION OF CULTURE — As many as we can, because this is the real promotion of culture. It gave me a great pleasure to invite the young jazz pianist Enrico Zanisi, one of the best global emerging talents, to come to Zagreb and Zadar last November. Our doors are also open to young dancers that will perform at the Contemporary Dance Week in June, as well as to street artists participating in the Cest is Best festival. Also, young writers are very welcome.

Do people living in smaller towns also have the opportunity to see the cultural content you offer? What is your cooperation with smaller cultural institutions in Croatia like?

— We really strive to diversify our activities.

The Silkroad project was staged in Zadar because of its links with Venice. Next week, the Festival of the Mediterranean Cinema will open in Split with an Italian film and in December, we will play a central role in the Pula Book festival. We try to tour with our events, especially if they are related to cinema and music.

Which of your programmes in 2019 would you like to single out?

— For next year, we are finalizing several important projects. Of course, I cannot reveal them officially until they are completely done.

I can say that, between late March and April, we are preparing an important exhibition on futurism and design in Zagreb and talks are under way with the Museum of Archeology to support another special event in autumn.

Cinema will continue to have a central role, with the annual event called Venice in Zagreb (a selection of Italian films presented at the Venice Biennale) and participation in other festivals around Croatia.

Music and dance will also have a priviledged position in our activities, and we are finalizing our partnership on a European contemporary dance project called „Migrant Bodies“ focused on the problematic of identity and intercultural exchange.

Books and translation will also have a special place in our programme, and we had a great success this year with the launches of Italian books translated into the Croatian langauge.

Each year, half a million people take Italian language courses that take place all over the world. How many are there in Croatia and how big is the interest shown in these course?

— The Institute offers Italian language courses of all levels, managed by ABC School.

Notwithstanding the competition from other languages (German, Spanish, French), we had a sensible increase in the number of students last year, and, at the moment, there are close to 400 of them.

We also support Italian language laboratories in a number of elementary and high schools in Zagreb and TRANSLAB, an Italian-Croatian translation workshop which takes place every month at our premises.

How often do you support Croatian professors, experts and public figures if they want to go to Italy?

— The Italian Ministry of Foreign Affairs and International Cooperation offers an important though limited support to Croatian professors and experts invited by Italian Institutions. Some of these invitations resulted in visits this year.

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CULTURE

VIVA W V.E.R.D.I.!

Verdi's contribution to unification 32

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e have all heard of Verdi and his famous operas, but we have forgotten about the story how his music, in combination with strange grafitti popping up throughout Italy, helped in the final, although quite late, unification of this great and beautiful country.

Can you imagine any country today being in nation-wide mourning over the death of a classical composer? Hardly!

But that was possible in Italy over 100 years ago thanks to Giuseppe Verdi.

The composer was born 200 years ago and died in 1901, and yet Italy suddenly started mourning him. Hundreds of thousands of people went out into the

streets to sing his arias. Those were different times, but still that was so like Italy, the country of wine and opera. But, there's something else too.

The reason why the Italians came out in the streets is, in fact, quite non-musical – or rather it was much more than music.

Before the unification of Italy, which, unlike most European countries (other than Germany), was not united and spoke with one language, Verdi's operas were a kind of "soundtrack" for the country's unification movement. Namely, when Nabucco, Verdi's most popular opera, had its premiere in Milan's La Scala in 1842, "Italy" was just an antic geographical term. In reality, the territory was simply a group of geographically neighburing kingdoms and the principality with the common language as the only unifying factor.

When, during the funeral procession, the Italians were crying and shouting “Viva Verdi!”, this had a twofold meaning because, during the period of Risorgimento, V.E.R.D.I. was code for Vittorio Emmanuele Re D'Italia, the King of the united Italy in 6th century. And all of this was happening some forty odd years before the actual unification happened!

With the help of the Jewish Slaves Choir, Verdi not only gave voice to the cry of the disenfranchised Italians who identified with the Jewish slavery, but also, thanks to the power of his own name and the graffiti that were popping up all over Italian cities, he gave the foundation for the Italian nationalism and unification. It was Venice, which belonged to the Habsburg Empire, and Rome, the Eternal City and the Papal State were left out of the first phase of the declaration of the Italian unification in Turin,

because the Italian nationalists could not agree.

Verdi himself was wholeheartedly in favour of the unified Italy, as it was Garibaldi who advocated a a different, more militant approach and whose own country, paradoxically, was left out of the unification. In 1848, after the uprising in Milan, he wrote the following to his friend in

HIS GENIUS FOR DIPLOMACY AND THE WAY HE CONVEYED EMOTIONS REMAIN THE IDEAL FOR THE ITALIANS TODAY, AND HIS MUSIC, DESPITE SOME PEOPLE FORGETTING ITS LONG-STANDING POLITICAL SIGNIFICANCE, STILL CONQUERS HEARTS AND SOULS Paris, the opera librettist Francesco Piave:“Respect these heroes! Praise for all of Italy, which at this moment, is really great!

The time of its release is finally heard!“ He continued in a non-pacifist manner: „You speak to me of music! What's got into you?

Do you believe I want to concern myself now with notes, with sounds? There must be only one music welcome to the ears of Italians in 1848. The music of the cannon!”

Joining the Austrian-Prussian War in 1866, on the side of Prussia that defeated Austria, Italy won over Venice. Since then, the borders of Italy and Austria will

no longer be changed until the end of the First World War. After France's defeat in the war with Prussia and the overthrow of Napoleon III, who was a papal patron, on 20th September, 1870, the Italian army wandered into liberated Rome. All the unifying struggles had been brought to an end. The former powerful Papal state was reduced to a small territory in the centre of Rome called the Vatican.

Italy was united, and Rome became the royal capital. The special law regulated the relations with the Vatican, but the Pope did chose not to obey by it. He declined to retire to "voluntary slavery" in the Vatican, which will last until the Vatican's 1929 international recognition.

Italy became complete in 1870, to Verdi's great joy.

MUSIC MARRYING INTO POLITICS

It is not surprising that Verdi's contemporaries quickly understood the messages of his operas Nabucco, Ernani and Attila, and accepted the ideas of the Italian nationalism. Verdi had the talent to convey a political message in the form of superior art, while, at the same time, winning the hearts and souls of people with his subtle, hymn-like melodies, as well as also awakening them to patriotic action. He had a genius of a politician and an artist, all fused in the same person. He was a Republican in his soul, but he supported the king who was anti-clerical.

His genius for diplomacy and the way he conveyed emotions remain the ideal for the Italians today, and his music, despite some people forgetting its long-standing political significance, still conquers hearts and souls.

FOUNDATION

THANKS TO THE POWER OF HIS OWN NAME AND THE GRAFFITI THAT WERE POPPING UP ALL OVER ITALIAN CITIES, VERDI GAVE THE FOUNDATION FOR THE ITALIAN NATIONALISM AND UNIFICATION ITALY 2018

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TRADITION

COFFEE: NOT JUST A DRINK, BUT A WAY OF LIFE The aromatic beverage is by far, the most favoured habit in both Croatian and Italian culture, going back for centuries

C

offee in Italy is more than just a drink, it is a way of life. Introduced in the 1500’s, coffee has played a crucial part in the Italian culture as it is fundamental for its inhabitants. There is no better feeling than enjoying the perfect sips of coffee under the Italian sky. The nation has cultivated its passion with the creation of it’s various types.

Coffee was introduced to Europe in the 17th century. But it wasn't until the invention of a steam-driven, coffee-making machine in the late 19th century that Italy gave the world the “espresso”- very aromatic and intense, drank at all times; the cappuccino instead, is drank at breakfast and is prepared with milk, taking its name from the colour of the Capuchin friars' clothes. In addition, there is the macchiato, the caffe-latte, the long coffee, the shaken coffee and many more, every coffee can be cold, hot, or strong, according to the taste.

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When it comes to the rituality of drinking this fragrant beverage, Croatia and Italy hold numerous similarities and differences.

In accordance, both nations count coffee as a lifestyle, paying close attention to the way it is drank.The differences include the various types of coffee Italians have, compared to Croatia’s one and only, Turkish coffee. It is made with ground Arabica beans, without filter, which are placed into boiling water, after yet another process of boiling, the coffee is ready for tasting. It is

THERE IS NO BETTER FEELING THAN ENJOYING THE PERFECT SIPS OF COFFEE UNDER THE ITALIAN SKY

an indispensable drink and, as in Italy, it is served after lunch or for breakfast.

When you think Italy can’t get any further in showing it’s affection for the beverage, wait until you hear this: The nation is proud to have its own University of Coffee, based in Trieste! It is owned by the Illy Coffee Industry, and holds courses for baristas, coffee producers, and coffee bar managers. It is counted as a centre of excellence, created to promote the culture of high quality coffee through education and training.

An Italian person might find the preparation of coffee in Croatia very peculiar and long-lasting, (since it takes at least 10 minutes,) and for Italians this may be a bit too much, especially when the espresso is done within a few moments! However, we are glad to say that just as important coffee is for us, it is crucial for the Italians as well, making the two of us the coffee-holics of Europe!

SPIRIT

MYSTERIES WITHIN THE ITALIAN WALLS From the flourishing of the Renaissance talent to writing history

I

taly has given raise to numerous architectural structures and styles for the past centuries, some which include Renaissance, Roman, Gothic, and Neoclassical. The traditional image of old Italian towns, situated around piazzas, embellished with fountains and cathedrals runs as the countries greatest touristic spots as well as their local decorations.

Italy is home to one of the most famous wonders of the world, including the Colosseum as well as the Leaning Tower of Pisa.

Millions of tourists, each year, gather to witness the wonderful sights this country

has to offer, as well as dig deeper into the roots of the Italian history. Furthermore, Italy was among the first of the artistic and intellectual developments of the Renaissance, where famous artists and scholars expanded their talents and flourished through their love of art, and literature.

As a tourist, there are millions of things this country has to offer when it comes to cultural values, art, and architecture. From the Colosseum to Operas and museums, Italy is full of life and history, and it is in the Italian blood keep Europe's greatest cultural values.

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TOURISM

THE HIDDEN F GEMS OF ITALY Escaping Reality in Italy's most Alluring Holiday Sites 36

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rom famous attraction like Rome’s Colosseum to visiting Romeo and Juliet’s balcony in Verona, Italian tourism offers a wide range of experiences. The perfect combination of history, culture and food make this country the top holiday destination. Luckily, we have discovered yet another list of stunning, must-go-to locations in the nation of great cuisine and high fashion, which will take your breath away.

CINQUE TERRE

The place that is increasingly being talked about on Facebook is a complex of five towns on the coast of the Ligurian Sea, in the eponymous province of Liguria. If you are doubtful why is Liguria so green in the middle for summer when, for instance, the greenery in Montenegro or Greece is drying up, this is because Liguria is the place where the Alpine and Mediterranean air collides resulting in a lot of rain. All of this can spoil your

enjoyment, but not too much, since these five small towns, sitting on steep cliffs with colorful houses, are perfect for taking pictures! They are called, in geographical order, Monterosso al Mare, Vernazza, Corniglia, Manarola, and Riomaggiore, and together they are under the UNESCO protection and make the Cinque Terre National Park. If you are not caught up in the rainy weather, the climate here is ideal, but given the steep shores, the beaches are rather short and not really fit for long sunbathing. Regardless, Cinque Terre will take your breath away!

SARDINIA

Sardinia is a large Italian island in the Mediterranean Sea, which has almost 2,000km of coastline, pebble beaches and mountainous land that are criss-crossed by trekking paths. Its robust areas are decorated with thousands of nuraghes mysterious stone ruins from the Bronze Age which resemble beehives. One of the greatest and the oldest nuraghes is Su Nuraxi in Barumini, from 1.500 BC. Here, ancient civilizations such as Greek or Romean did not have much influence, but there are Phoenician and Roman colonies, such as Taros. Since low-cost carriers now fly to our country too, you can catch a flight to Alghero in Sardinia via Memmingen, and visit one of the westernmost points in Italy, where, believe it or not, Catalan is spoken.

It is a place of wild beauty, the place where you go if you want to be alone to enjoy the long beaches without many people around. Traditionally, this is the place that wealthy tourists frequent. It is populated by people who speak a very archaic language that resembles the Latin the most out of all the Romanesque lan-

guages. They have archaic customs, including making bizarre-looking cheese with live worms, and various other, lesser extreme specialties. The old town of Cagliari will surely impress you with its Italian, albeit somewhat exotic mysticism and breeziness, coupled with the strong pride of the Sardinians who have remained a deeply tribal society for centuries.

IT IS DIFFICULT TO SAY WHAT IS THE MOST BEAUTIFUL PART OF ITALY, BUT THE COMBINATION OF THE CLIMATE, CITIES, BEACHES AND MONUMENTS IN SICILY IS SIMPLY SPECTACULAR SICILY

Family is important in Sicily, as you already know, and this region is also the largest and the most densely populated island in the Mediterranean, as well as Italy's southernmost big island. Here, you can almost reach Africa while the Sicilian culture is a mixture of Latin, Norman, Greek and Arabic. Siciliy almost ended up like Malta, and its inhabitants almost adopted the Semitic Arabic language (Siculo-Arabic spoken a few centuries ago). In many respects, the Sicilians were closer to the Byzantines and Greeks than to Italians.

Although, during the rule of Augustus, he tried to introduce the Latin language, Sicily has remained Greek in ancient times in the

MOST DENSELY

FAMILY IS IMPORTANT IN SICILY, AS YOU ALREADY KNOW, AND THIS REGION IS ALSO THE LARGEST AND THE MOST DENSELY POPULATED ISLAND IN THE MEDITERRANEAN ITALY 2018

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cultural sense. Still, when this island, which can be reached via the once exotic Trapani low-cost or, the "classic" Palermo, relies on all its natural beauty, tourism and fascinating architecture. Part of it is deeply rooted in the tradition of Greater Greece (Magna Graecia) and it was inhabited by Greek philosophers, where Archimedes tested his scientific theories. Here, the talented Mr. Ripley met with his destiny in the imaginary town of Mongibello. Today's tourists are happy to see Taormina and Giardini Naxos, which sound Greek even 2,000 years later. It is difficult to say what is the most beautiful part of Italy, but the combination of the climate, cities, beaches and monuments in Sicily is simply spectacular.

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CALABRIA, PUGLIA AND BASILICATA

Tourism aficionados say that the most beautiful beach in Italy is in Calabria, in the

SARDINIA IS A PLACE OF WILD BEAUTY, THE PLACE WHERE YOU GO IF YOU WANT TO BE ALONE TO ENJOY THE LONG BEACHES WITHOUT MANY PEOPLE AROUND

town of Praia a Mar to be more precise, and that Calabria itself is a worthy successor of the Amalfi Coast, which is perhaps the most famous coastline in the entire Mediterranean. Those who love dry and disguised locations will usually choose Basilicata where the films like "The Passion of the Christ" was made, and where it feels as if time is standing still on its mountains and the beaches. Then there is Puglia, with the towns of Bari and Sannicola, with trullis (small huts) in Alberobello, and the oktagonal castle of Castel del Monte, where Umberto Eco set the story of his "The Name of the Rose", and towns like Ostuni which resembles Tunisia so much, which is, after all, just around the corner.

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