TNI | 26 June 2020

What is Dubrovnik today?

by Igor Lasić

A long-winded legal and political battle over a controversial golf course
and property development project in Dubrovnik (Croatia) has become
symbolic of the city’s struggle with the tourism industry. Faced with the
resistance of local civil society, the private investor has initiated an investment arbitration procedure (ISDS) against Croatia. Can free trade agreements deprive cities and their inhabitants of a say over their own future?

Here is what a striking postcard of the Adriatic at the beginning of the
third millennium might look like: a crowd of tourists barely managing
to move forward on Stradun, the most well-known Croatian street,
while the business and political elite gleefully rub their hands together
in a corner of the picture. On another, a film scene with swords is being shot under
the medieval Dubrovnik walls, while a protest is in full swing in front of City Hall,
citizens carrying signs with bloody golf clubs.

What is Dubrovnik today? Even the denizens of this city on the East coast of the
Adriatic Sea would find it hard to answer that question, let alone the tourists,
even those with some awareness of Dubrovnik’s past and present. And yet, the
city is one of the most internationally renowned Croatian toponyms. Dubrovnik
in the 21st century is, first and foremost, a big brand, with an autonomous market
value. And this global popularity has altered the commercial value of Dubrovnik,
determining almost every single aspect of the city’s existence.

A city caught in the grip of the tourism industry

In order to get a better grasp on the branding of Croatia, we need to wind the
clock back a few decades. Before today’s invasion of cruise ships and the diktats of the property world, the whole of newborn Croatia went through a post-so-
cialist transition – in other words, the restoration of capitalism. For Dubrovnik,
this meant subjecting all its accumulated natural and cultural assets to the crude
goal of harvesting as much profit as possible, as quickly as possible. Tourism was
self-evidently the ideal solution. In the Socialist Federal Republic of Yugoslavia,
the most southern prefecture of Croatia was already an extremely popular tourist
destination. Today, Dubrovnik boasts more than five million visitors per year.

But the war that struck Croatia in 1991 was a game-changer. In the socialist economy, the tourism industry was mainly built on well-developed, publicly-owned
hotels. The war, having destroyed the hotels, as well as the livelihoods of most
Dubrovnik families, played a significant role in the great number of houses and
apartments that were subsequently sold. Owners, bankrupted by the increase in
the cost of living, were often forced to accept the prices offered. And after the flats
and houses were sold off, city-owned and state-owned public spaces were also
offered to potential buyers.

At the same time, public infrastructure, natural resources and social priorities
were channelled towards the intensive needs of the tourism industry. At the turn
of the millennium, a new, much bigger category of property developers appeared
on the scene. For them it was not enough to simply accrue small individual hotels.
Their business model called for a much greater vision. One investor found a way
to acquire a massive plot of land on a hill above Dubrovnik, where he had plans to
build hundreds of rental properties, as well as hotels and luxury villas. In order to
make this project reality, the plan was to first build a golf course, a sport that had
never been played in Dubrovnik. A golf course requires hundreds of hectares of
land, and this land-consuming aspect, combined with its connection with predatory
property developers, has made this sport widely unpopular worldwide.

To return to our initial question, what is Dubrovnik today? Dubrovnik is a brand,
a tourist destination, a lucrative property market and, last but not least, a movie
set. The city has hosted the shootings of Game of Thrones, Star Wars, Knightfall, to
mention just a few recent examples. But behind the blockbuster trailers lurks a far
less glamorous social reality: the locals are brutally subjected to the requirements
of companies which, in collusion with fundamentally estranged local authorities,
exploit their natural, historical and infrastructure resources. In addition, the basic
needs of the local population, from electricity and transport to education and
healthcare, are regularly overlooked.

When a golf course becomes a symbol of dispossession

The golf course would come to epitomise this story, becoming the very symbol of
Dubrovnik’s ill-fated public space and assets. The name of the first investor has
since been forgotten, as has the name of the second, who took over the project just
to sell it to a third investor several years later. For a town that was small in terms
of demographics (only about 50,000 inhabitants) but which played a big role in
history, this was is a turning point in the town’s collective memory.

Until this point, the golf course project had always seemed relatively contained,
taking up just 100 hectares on the plateau of Mount Srđ, a 450 m-high mountain
just behind the city. But by the end of 2005, this had increased to 310 hectares in
local urban planning documents, encompassing most of the Srđ plateau. Local and
national authorities approved the extension, even though the main development
plan then in force still only provided for 100 hectares.

Other than Dubrovnik’s main urban centre, Mount Srđ is the only area that would
allow for any extension of the city. Any other potential areas are further afield,
like the district of Nova Mokošica, an exclave built in the early eighties , several
kilometres out of the city centre. This is due to Dubrovnik’s location and surroundings: a narrow strip of coast overlooked by steep hilltops, with very little room
for any alternative urban development solutions. Yet the local, regional and state
authorities have decided to deprive Dubrovnik of any possibility of extending the
city – all in the name of golf.

Political influence

The golf course and its accommodation facilities have been publicly and fervently
backed by two mayors of Dubrovnik, three of Croatia’s Presidents, four Prime Ministers, as well as a lengthy list of Ministers and politicians from both so-called
right- and left-centre parties. The first famous name on this long list was Prime
Minister Ivo Sanader, who expressed support for the project just after the surface
area of the golf and real estate project was extended. Three and a half years later,
he would abruptly leave office, before found guilty of corruption. But his words
are still remembered: the Srđ project, he said, was “of outstanding interest for the
Republic of Croatia.” But interest was not mostly Croatia’s, actually. With the larger
surface area, the project’s potential value rocketed. In 2006, the second owner sold
the project to Israeli businessman Aaron Frenkel. He remains the owner today.

The Srđ project was initially worth €70-80 million. The latest publicly-known figures
are around €1.1-1.2 billion, a decent share of which, it would seem, has already
been spent on not-so-legal forms of lobbying and public relations. One of the first
examples dates back to the early phase of Frankel’s ownership of the project, when
the Croatian media discovered that a certain law firm linked to the businessman
had paid for the living expenses of Sanader’s daughter while she was studying
in the US.

In the meantime, the urban development plans were adapted to accommodate the requirements of the golf project, capitalising on the dissolution of
the county council and the appointment of a government commissioner for Dubrovnik.
Not only were illegal processes legalised, but it turns out that the commissioner didn’t actually have the legal power to amend the plans as he did. A few civil society associations turned to the Constitutional court. Over the coming
years, judges at various levels would repeatedly annul documents such as the
amended urban development plan, the environmental impact assessment and the
land use permit, despite being pressured by several authorities to allow the golf
project to proceed. However, in every single case, national and local authorities
would disregard the judge’s rulings, producing new and equally questionable
documents, which would supposedly allow them to proceed with the project with
renewed alacrity.

In the spring of 2007, the Croatian President Stipe Mesić named Aaron Frenkel
Honorary Consul of Croatia in Israel. A year and a half later, the Croatian Parliament
voted in a law on the golf course, unequivocally favouring big business over the
interests of the wider social community, as well as those of small landowners, mostly farmers, all of whom would be harmed by the project. The law was abolished four years later, but in the meantime, land-management plans all over Croatia had
been amended to comply with it.

In 2009, the mayor of Dubrovnik signed a contract with the investor, the
company “Razvoj golf” (“Golf development”), selling 47,000 city-owned square
meters on Srđ, for the ridiculously low price of under €8 per square meter. The same
investor had bought the surrounding land from private owners for €20 per square
meter. This mayor lost office in the next elections, and was replaced by a politician
opposed to the golf course. That is, he was opposed, only until his election victory
and his first days in office. His justification for this turnaround was that: “The value
of Dubrovnik space and land has grown so much that we can no longer handle it.”

“Don’t build a golf course next to this city, or any other city.”

The citizen campaign “Srđ je naš” (“We own Srđ”) that was initiated at the time
would become the life force fighting against the usurpation of Dubrovnik public
goods. The mainstream Croatian media – including the largest private media group
in Croatia, Europress holding (later renamed Hanza) openly and increasingly sup-
ported the investor, even announcing a new, larger surface area for the golf project:
410 hectares. Changes in political leadership at both regional and national level
brought diverging views on the golf project, with several cases involving conflicts
of interest and PR firms working for both Razvoj Golf and for political parties.
The celebrity architect Zaha Hadid was tasked to design some of the 400 villas
planned for the Srđ, along with a hotel and 1,600 apartments intended for sale.
However, all the leading Croatian and Dubrovnik architecture firms were opposed
to the golf project. Even Taleb Rifai, then Secretary-General of the United Nations’
World Tourism Organisation, after spending some time in Dubrovnik on his summer vacation, felt the need to declare: “Don’t build a golf course next to this city,
or any other city.”

The investor finally managed, in 2012, to produce a positive environmental impact
assessment, but only after the third extension of the initial deadline (despite the fact
that the law only allowed for one extension). The local community, however, did not
give up. “Srđ je naš” began to prepare a local referendum against the golf course.
Not only was the “city above the city” property development project an outright
confiscation of a public good for the sake of private profit, it also represented a serious ecological threat. Scientific studies revealed that the intended complex, with a number of non-native plants requiring huge quantities of pesticides, fertilisers and clean water, would drastically disrupt the balance of the Mediterranean ecosystem of Srđ and its surrounding area.

The referendum took place in 2013, but the political atmosphere was rife with lies, and
the media complicit in intimidating and threatening citizens, citing the potential compensation that would be claimed by the investor. Almost a third of the local population nevertheless made it to the polls, 85% of which voted against the project. The result, however, was not legally binding. In Croatia, turnout must be at least 50% for local referendums to be binding. And yet in the 2011 referendum on the accession of Croatia to the EU, less than 50% of voters actually went to the polls, but in this case the desire
expressed by two-thirds of these voters to join the European Union was deemed
representative enough...

The fight goes international

Even UNESCO joined in the fight, as Dubrovnik had been listed as a World Heritage
site for forty years. But international pressures went both ways: the President of
the European Commission, José Manuel Barroso, after a meeting with the Israeli
President Shimon Peres, informed the Croatian Prime Minister Zoran Milanović
that he had heard about the “difficulties beyond understanding” that Aaron Frenkel
was facing in Dubrovnik.

Croatian politicians had already predicted what would happen should the golf
project fail. The Vice President of the Croatian government Branko Grčić, for instance, declared in 2013: “The alternative to the project is that the investors will sue
Dubrovnik or the Republic of Croatia, and most certainly get massive compensation
at international level! (…) If the Land management plan has been adopted, if local
urban development plans have been adopted following a democratic procedure,
and if the investor has painstakingly bought the land plot by plot, thus spending
40 million euros and making certain people rich in the process, who has the right
to stand in its way?” Indeed, in 2017, the company Razvoj golf filed a complaint
against the Republic of Croatia with the International Centre for Settlement of
Investment Disputes (ICSID), in Washington, claiming a compensation of half a
billion euros for preventing its business in Dubrovnik from going ahead.

This only increased political and media pressure. At the end of 2017, Zelena Ackija
(Green Action), the biggest Croatian NGO for environment protection, and its
partner, the initiative Srđ je naš, were even threatened with lawsuits due to a poster
produced by Zelena Akcija showing a golf club dripping with red paint, The slogan
read: “Racket, not golf.” Hanza’s daily paper Slobodna Dalmacija interpreted the
message as antisemitic towards the Srđ investor, even if neither Zelena Akcija nor
any other organisation had made any such implication. It was just another low
blow among the many attempts to sway public opinion.

As if this was not enough, it has been established that some Dubrovnik public
funds have been used to benefit private investments. In several cases, the main
infrastructure costs (roads and transport, energy or water supply) of the golf course
and its facilities will have to be covered by the city’s budget, that is by taxpayers,
with tens of million of euros involved.

The local community rises up

Despite the severe imbalance of power and the undemocratic processes that political
and economic leaders have instigated, it is an ongoing battle. The city of Dubrovnik
is also facing other painful side effects of the tourist industry. Admittedly, the current local administration doesn’t seem to be as openly in favour of golf courses
and cruise ships as previous administrations, but it doesn’t seem willing either to counter the devastating greed for public goods. The privatisation and rebuilding of
the Gruž harbor in order to host more cruise ships, which would result in extremely
predictable consequences, are for now on hold due to procedural flaws. But let’s not
be naïve: the Franco Turkish group Global Ports Holding and Bouygues Bâtiment
International, which almost got the green light for the building of megalomaniac
and oversized terminals, won’t miss the next opportunity.

Meanwhile, Dubrovnik is slowly suffocating due to the chronic neglect of its public
goods. The city’s infernal traffic jams, the inadequate parking and pedestrian lanes,
the derelict municipal infrastructure and the recently liberalised taxi market are
just a few examples. These last years, it appears that the city’s ecological health is
also under threat: pollution in the Dubrovnik bay has reached dire levels on several
occasions, due to the overwhelming discharge of wastewater from the increasing
amount of tourist accommodation along the coast. And it’s no coincidence that
housing is one of the biggest issues faced by those who call Dubrovnik home. The
increasing trend is that rental prices are dictated by online tourist accommodation
platforms such as Airbnb and Booking.com, which, of course, don’t pay taxes in
Croatia.

Locals are keenly feeling the consequences of these companies’ activities, as well as
of Croatia’s inadequate social housing policies. There is a shortage of both doctors
and nurses at Dubrovnik’s general hospital (30 doctors and 60 nurses), with some
hospital departments even being closed, and others merged. There are almost no
applicants for vacancies in the public sector. Even the cheap imported workforce
doesn’t want to spend almost all their salary on rent.

Yet another effect of Srđ’s tourist invasion and deregulated property market, which
threatens to turn a unique landscape into luxury resort, is that the local community
has been roused to take action and fight against these blatant encroachments that
are jeopardising centuries of people’s work and care for the environment. The end
of this story is, of course, impossible to predict. But there are grounds for hope: in
addition to the progress and developments mentioned in this article, Dubrovnik
has also become a city thriving with collective activism, making authentic portraits
of the city which are more beautiful than anything on a postcard.