The Economy of the Slovenian Minority in Italy

Compared to the historiography of the Slovenians in Italy, which is well documented (Bajc Reference Bajc2004; Wohinz and Pirjevec Reference Wohinz and Pirjevec2000; Pirjevec Reference Pirjevec1985; Reference Pirjevec2008; Pirjevec, Klabjan, and Bajc Reference Pirjevec, Klabjan and Bajc2006), the literature on their economy is scarce and mostly preceding Slovenia’s accession to the EU.

A small number of studies provide a general overview (Cupin Reference Cupin1982; Waltritsch Reference Waltritsch1982; SKGZ 1985; Jazbec Reference Jazbec, Dimic and Jazbec1996; Gulič Reference Gulič2005; Brezigar Reference Brezigar, Bogatec and Vidau2017). Giulio Sapelli’s (Reference Sapelli1990) economic history of Trieste is a valuable addition, as it cursorily looks at the minority from the Italian viewpoint.

The most comprehensive work is Milan Pahor’s (Reference Pahor1998) monograph, which covers 150 years of economic history, from 1848 to 1998, investigating most branches of Slovenian entrepreneurship, such as crafts and banking. It emphasizes the role played by the organized economy in the postwar period, leading the reader through the most important events for the minority’s economy: from the gradual opening of the border between Italy and Yugoslavia to the demise of the banks Tržaška kreditna banka (TKB) in Trieste and Kraška banka (KB) in Gorizia.

Maksimiljan Gulič (Reference Gulič2005) presented a less extensive, but methodologically different and therefore complementary, study at the Program Conference of the two main political organizations of the Slovenian community in Italy, the left-leaning, former pro-Yugoslav umbrella organization the Slovenian Cultural and Economic Association (Slovenska kulturno-gospodarska zveza, SKGZ) and the Catholic counterpart, the Council of Slovenian Organisations (Svet slovenskih organizacij, SSO), which were discussing the minority’s future after the 1990s crisis. In it, Gulič analyzes a survey conducted among Slovenian companies in Trieste and Gorizia. The questionnaire covered many characteristics of Slovenian companies, their expectations and plans regarding future activities (partly related to Slovenia’s EU accession), and membership in trade unions, Slovenian organizations, etc.

In 2017, the Slovene Research Institute (Slovenski raziskovalni inštitut, SLORI) published an edited book, covering topics important for the existence and development of the minority. Among the contributions, the analysis by Sara Brezigar (Reference Brezigar, Bogatec and Vidau2017) focused on the state of the minority’s economy and its financing. The author notes that, after the demise of the organized economy, the Slovenian community’s entrepreneurship is so integrated with the Italian one that it is undistinguishable, with three exceptions. First, agriculture and agritourism is in the hands of Slovenian farmers, who have specialized in top-quality products. Second, Slovenians still own large portions of the land around urban centers, thus having easy access to mortgage loans. Third, knowledge of the Slovenian language represents an advantage when doing business with ex-Yugoslav republics, although English is playing an increasingly important role as the new lingua franca.

Several specific economic topics have also attracted attention among scholars. The liquidation of the TKB has been the subject of much research, which, however, often relies on theories that cannot be falsified. The demise of TKB is understood by the authors as a consequence of both Slovenian and Italian intrigues (Jazbec Reference Jazbec, Dimic and Jazbec1996; Pellarini Reference Pellarini2006). Vojmir Tavčar’s (Reference Tavčar2011) contribution addresses the topic more academically, trying to prove that many mistakes have originated within the bank.

Rise (1954–1991)

Tensions between Italy and Yugoslavia eased after 1954, the year of the definitive partition of the Free Territory of Trieste. During the following 20 years, the political institutions governing cross-border relations and, hence, the minority’s organizations consisted of a number of agreements regulating trade and the movement of people between the two countries. In 1975, the Osimo Treaty finally settled the border, calculated reparations for (part of) the Italian refugees that left Yugoslavia, and discussed the future statuses of the Slovenian minority in Italy and the Italian one in Yugoslavia.

Starting in 1954, when the control over the bulk of Yugoslav property in Italy was handed over to the Slovenian minority, the situation regarding the access to economic resources changed abruptly. Economic success was the product of three concomitant developments.

First, the left-wing, Yugoslav-oriented part of the minority that gravitated around the umbrella organization Slovenska kulturno-gospodarska zveza organized efficiently into what has been often termed a state within a state or, more dramatically, the fifth column of Yugoslavia. The minority itself called it družbeno or organizirano gospodarstvo, that is, the social or organized economy. It adopted a system of fiduciary ownership—unbeknownst to Italian tax authorities—which comprised two major banks (Kmečka banka and Tržaška kreditna banka), a financial holding (Società anonima finanziaria per i traffici internazionali, SAFTI) representing over one hundred small- and medium-sized companies in manufacturing and services, some involved in military technology, a number of real estate holdings (Dom, Società impianti sportive, and Alpe), and a lucrative publishing company, that is, Založba tržaškega tiska (ZTT) in Trieste. On the operational front, the organized economy relied on sophisticated economic reporting, carried out by the Economic Committee of the SKGZ. Its reports, of which the five-year economic plan (1986–1990) is the most detailed (SKGZ 1985), not only thoroughly analyzed the minority’s overall economic situation but also strategically delineated future employment, housing, research, and spatial as well as developmental policies for all major sectors in which the minority was involved.

Second, the core of this system hinged on the reopening of trade between the capitalist and socialist blocs in the mid-50s. So-called autonomous accounts, a type of clearing account allowing for the international exchange of goods and services in the framework of agreed lists, was the economic institution that strictly regulated all financial transactions between the two countries. The abovementioned banks and a number of import-export companies under the aegis of SAFTI became the de facto monopolists in the financial and physical exchanges taking place between Italy and Yugoslavia. (This position rent created resentment among the Catholic-oriented part of the community, represented by the umbrella organization Svet slovenskih organizaciji, which was excluded from the lucrative business.) Between the 1960s and 1980s, these cross-border norms favored the minority’s economic organizations. The ensuing economic growth provided the Slovenian community with enormous material wealth and, together with the available resources, real political power. Before the heightening of the Yugoslav crisis around 1988, the organized economy reached its peak: according to informal estimates, it directly employed up to 1,500 people and generated 800 million Deutschmarks in revenue (720 million euros in 2020) with an average of 17 billion lire in profit per year (some 20 million euros).

Finally, the survival of such structure amid increasing political tensions with the Italian majority relied both on the persistence of favorable legislation and on external Yugoslav protection. Not only were there multiple, fortunately failed, right-wing terrorist attacks targeting Slovenians in the 1970s, but also the anti-Yugoslav, anti-Rome Lista per Trieste, a distant precursor to Lega Nord (Northern League), ruled the political space between 1976 and 1993. As a counterpoint, the Communist Party of Italy (Partito comunista Italiano, PCI) provided limited internal support by guaranteeing the representation of Slovenians in the Italian parliament since 1963.

The role of Yugoslavia is still underresearched. Yet, several accounts point to the fact that the Socialist Federation stood behind the rights of the Slovenian minority and that its central bank backed Slovenian banks in Friuli-Venezia Giulia. Moreover, the left-wing part of the minority received from Yugoslavia millions in today’s euros to finance its cultural and political organizations. Most observers believed that the minority would not have been able to build its economy successfully without such a strong external sponsor.

In terms of the theoretical framework, as shown in figure 2, until 1991, the Slovenian minority enjoyed increasing de facto political power through the accumulation of economic resources, mainly thanks to favorable cross-border legislation and through Yugoslav’s help. Despite being ruled by the Yugoslav-oriented members of the minority, the organized economy engaged in strategic planning for the whole community and sponsored inclusive endeavors, such as the employment of Slovenians to prevent mass emigration or Italian assimilation as well as the financing of cultural and sport associations. These clashed with primary economic objectives, such as the reinvestment of profits and organizational strengthening of enterprises. Not only did Slovenian firms help the reconstruction of those minority-populated territories in Friuli that were most damaged during the 1976 earthquake, but also politically bold moves were at the time possible. In the early 1980s, the minority explicitly demanded that the (promised, yet unwritten) Protection Act be extended to the entire territory of Friuli-Venezia Giulia, where Slovenians live, including to the mountainous regions that had been part of Italy already since 1866, a requirement that would have been unimaginable only 15 years earlier.

Figure 2. Rise (1954–1991).

Fall (1991–2001)

In the early 1990s, some economic sectors controlled by the Slovenian minority were rapidly expanding, such as banking and foreign trade (Pahor Reference Pahor1998, 124). Less than a decade later, only ruins remained. The dissolution of Yugoslavia represented a structural break that recast most political and economic institutions affecting the Slovenian minority in Italy. The collapse of Yugoslav markets bankrupted the import-export sector, that is, the backbone of the minority’s economy. Unencumbered by the political weight of the Socialist Federation, the Italian central bank, Banca d’Italia, carried out, mainly in 1994, under the first center-right Berlusconi government, a number of inspections of Slovenian banks (chiefly looking for illegal shareholder agreements between Slovenian trustees).

Irregularities were found in both Kmečka banka and Tržaška kreditna banka (Tavčar Reference Tavčar2011). The TKB board of directors pursued a questionable credit policy that was often illegal (connected to the financial restrictions during the Yugoslav breakup). Many loans were granted without adequate guarantees, and the management decided not to publish on the balance sheet guarantees for loans for which it could not comply with Banca d’Italia’s requirements. The inspectors, who declared all loans to Slovenia and Croatia as nonperforming (for Kmečka banka), were relentless. At a time when Banco di Napoli was saved by the Italian Treasury, which injected 2,283 billion lire of fresh capital, the end result of the inspections was the absorption of Kmečka banka into an Italian bank and the liquidation of the much bigger Tržaška kreditna banka. The beheading of the minority’s capital structure prevented the access to credit to the ailing companies of the SAFTI group, whose credit rating was downgraded to junk. By 1997, widespread bankruptcies and layoffs put an end to the organized economy.

Although existing analyses vary widely, commentators (e.g., Jazbec Reference Jazbec, Dimic and Jazbec1996; Pahor Reference Pahor1998; Spetič Reference Spetič, Battello, Spetič, Pellarini and Tito2006; Tavčar Reference Tavčar2011; Pavšič and Žiberna Reference Pavšič and Žiberna2020) agree that there were several reasons for the downfall of the Slovenian economy.

These were internal and external, both economic (the almost simultaneous crisis in Italy and Yugoslavia, plus the uneconomical operations within the organized economy) and political (the disintegration of Yugoslavia, without which the minority no longer had external protection against Italian attempts at normalization, coupled with growing frictions between the minority and independent Slovenia).

On the economic front, the Socialist Federation was sinking into an ever-deepening crisis during the 1980s (the International Monetary Fund intervened already in 1983). Trading with Yugoslavia became increasingly risky after 1988 (Pellarini Reference Pellarini2006). The outbreak of the war immediately halted all international exchange. Tourist flows dried up as did Yugoslav costumers in Gorizia and Trieste. The key economic institution that had driven the minority’s economic growth, that is, the autonomous accounts, became completely uninteresting, sounding the death knell to the whole import-export sector. Due to the Yugoslav market’s fragmentation, the companies of the SAFTI group were deprived of their primary outlet. The riskiness of bank loans to the former Yugoslav republics increased sharply.

At the same time, Italy experienced its worst economic crisis in the postwar period. Public debt doubled between 1980 and 1993, to 115.7 percent of the GDP. Annual inflation was at least 5 percent. International investors shunned Italy. On September 16, 1992, Black Wednesday, the lira depreciated by 7 percent against the Deutschmark and was withdrawn from the European Monetary System. Shortly afterward, the mani pulite (clean hands) corruption affair swept away the whole Italian domestic political class (Capussela Reference Capussela2019).

As far as the Slovenian minority was concerned, internal economic problems intensified due to the uneconomical functioning of the organized economy, unpreparedness to confront the challenges of the post-Yugoslav period, and an inadequate ownership structure. Boris Siega (Reference Siega1997) argues that a minority with limited economic resources could in no way pursue a policy similar to French dirigisme. As already mentioned, economic goals were subordinated to the two priorities of the SKGZ that were duly spelled out in its strategic plans: the creation of jobs for the Slovenian minority and redirecting about a third of net revenues to cultural and sports organizations.

Hence, maximizing employment (a goal usually set by a country) and social responsibility (at most a subordinate goal of an entrepreneur) were more important than establishing, consolidating, and adequately capitalizing as many successful and healthy companies as possible. The maintenance of firms in the mountainous areas of Friuli-Venezia Giulia and, partly, in the Goriška region, whose main raison d’être was the retention of Slovenian workers, who would otherwise inevitably move elsewhere, required “soft loans” (Kornai Reference Kornai1986, 3). The organized economy thus financed unprofitable projects in the name of higher national ideals.

An additional flaw was excessive specialization. Even before the outbreak of the war, trade between Italy and Yugoslavia became stagnate, while Slovenia was already preparing for a market economy. Yet, most minority entrepreneurs underestimated the danger of a Yugoslav breakup and were not sufficiently aware that, in addition to import-export activities, diversification and support for other business models had become necessary. As North (Reference North2005) puts it, reducing uncertainty in the face of novel situations would have required restructuring collective beliefs. Instead, the Slovenian minority chose to disregard the possibility that a structural break may occur. Consequently, the organized economy was completely unprepared when Yugoslavia collapsed, as the minority was almost entirely dependent on trade with the Socialist Federation and its material support. In short, the fragility of the foundations, on which the minority (and local Italian) economy rested, fully revealed itself, as Sapelli (Reference Sapelli1990) had warned a few years earlier.

Similarly, the trustee ownership structure shifted from guaranteeing the existence and smooth functioning of the organized economy in a hostile Italian environment to a ballast that prevented flexible adaptation to new economic and political conditions. It attracted the attention of financial supervisors and gave the Italian authorities a justification to strike down what remained of the minority’s economic organizations. After the entry into force of the Maastricht Treaty in 1993, updated Italian rules on financial and banking operations required greater transparency in the trustee-based ownership structure (Tavčar Reference Tavčar2011). In principle, most shareholders agreed that the appropriate solution was the creation of foundations holding the trustees’ shares. Yet everything remained on paper, mainly due to the fear of losing control over the organized economy.

In addition to economic difficulties, the two political organizations that offered external and internal support (Yugoslavia and Partito comunista Italiano, respectively) collapsed. Political attacks on the Slovenian minority intensified after the fall of the Berlin Wall. The SKGZ’s traditional reliance on the Communist Party was a double-edged sword. On the one hand, the communists were the only leftist alternative, as the Socialist Party of Italy (Partito socialista italiano, PSI) allied with the anti-Slav Lista per Trieste. On the other hand, it was difficult to expect the Italian state, ruled for decades by the Christian Democracy (Democrazia Cristiana, DC) and PSI, to grant any additional rights to the slavocomunisti (Slav communists) (Spetič Reference Spetič, Battello, Spetič, Pellarini and Tito2006).

The party that suffered the most since the collapse of the Soviet Union was indeed the PCI. As a result, the SKGZ sought the support of the socialists and Christian Democracy, while TKB began to engage more intensively with Italian partners, in order to prove that the minority was not the fifth column of Yugoslavia. The crisis that followed the mani pulite corruption scandal wiped out the entire pentapartito—that is, the five parties that ruled Italy in the 1980s, including the DC and PSI. Shortly after, the Party of Communist Renewal (Partito della rifondazione comunista, PRC) seceded from the renewed left. The organized economy thus lost most domestic political backing.

External protection faded with the dissolution of Yugoslavia. International relations between Italy and the successor republics changed abruptly. The Italian right saw the independence of Slovenia and Croatia as an opportunity for the possible return of Istria and Dalmatia to Italy (the latter assigned to Yugoslavia after the First World War). When the Osimo Treaty was ratified with the Republic of Slovenia, the Lista per Trieste, Istrian refugee organizations, and the far-right Italian Social Movement (Movimento sociale italiano, MSI) started attacking the last Christian Democracy government of Giuliano Amato. Relations between Slovenia and Italy cooled rapidly, as Italy began to condition Slovenia’s accession to the EU, Slovenian minority rights on the return of real estate to Italian refugees that fled Yugoslavia after the Second World War, and greater protection of Italian minorities across the border. Slovenians in Italy found themselves again under the heel of Italian nationalism and chauvinism (Kosin Reference Kosin1998).

The attack intensified in 1994 under Silvio Berlusconi, who won the elections as leader of the coalition Pole of Freedoms (Polo delle libertà), composed of the parties Forza Italia, Lega Nord, and the National Alliance (Alleanza nazionale), the successor to the far-right MSI. For the first time in the postwar period, neofascists led by Gianfranco Fini took part in an Italian government. His party called for a radical reduction in subsidies to the Slovenian minority. The aggression was short-lived, and Fini’s acolytes soon backtracked. The aggravation of relations between the two countries severely damaged Italy’s reputation in the European Union—which offered some minimal protection to the minority—and jeopardized its strategic position in Central Europe. A relative thaw came in October 1994 with the Aquileia Declaration, by which Italy undertook to finalize an agreement with Slovenia and to settle the minority issue.

Still, the gradual détente, which began at the end of 1994, was chiefly political. As mentioned above, the economic organizations that formed the building blocks of the organized economy—that is, Kmečka banka, Tržaška kreditna banka, and SAFTI—had no protection left against the discrediting campaign that was by then already in full swing.

The relations between the minority and the independent Republic of Slovenia were ambiguous as well. Slovenian politicians (for example, President Milan Kučan, Premier Lojze Peterle, and Minister for Foreign Affairs Dimitrij Rupel) officially committed themselves to its protection and formally protested against the alleged violations of minority rights (Kosin Reference Kosin1998). At the same time, the mood soured between the left-wing sections of the Slovenian minority and right-wing spring parties—the Demos coalition (Democratic Opposition of Slovenia, Demokratična opozicija Slovenije) led by Lojze Peterle—which had been elected to the National Assembly in April 1990 and led Slovenia to independence. Janez Janša’s Slovenian Democratic Party (Slovenska demokratična stranka, SDS) was ideologically uninclined to the SKGZ and the organized economy. The transactions by SAFTI and the TKB in Slovenia represented an undesirable interference in the republic’s internal affairs. A disparaging media campaign erupted, in which the minority leaders were branded as collaborators of Yugoslav’s secret services (udbomafijci) and accused of being involved in money laundering, arms smuggling, bribery of Italian politicians, and more. Although there was no basis for these accusations, their escalation, which followed the logic of internal disputes in independent Slovenia (Tavčar Reference Tavčar2011), had a double negative effect.

On the one hand, the Slovenian government began to distinguish between whites and reds in the minority. This deepened the split between the two umbrella organizations, that is, the left-wing SKGZ and the Catholic SSO, to the extent that a unified approach was no longer possible. The former communists were blamed for the gradual collapse of the organized economy. At the most critical moment, after the Tržaška kreditna banka went into receivership in 1996–1997, SKGZ leadership collectively resigned, and the very existence of the organization was brought under question. Under the temporary presidency of Rudi Pavšič, which was later confirmed at the regular congress, the SKGZ came back to life again.

On the other hand, such conduct in the home country showed that independent Slovenia—although TKB selflessly came to the rescue during the country’s initial financial blockade—would not strenuously defend the left-wing sections of its minority, should they come under attack by the Italian authorities (Bernard Reference Bernard, Dimic and Jazbec1996). It is an open question whether such weakness depended entirely on the negative attitude that Slovenian governments, including left-wing ones, had toward the individuals and companies involved in the organized economy. Yet, it is indisputable that Slovenia, also due to its small size, would have had to invest much greater political capital to protect the minority than former Yugoslavia had to, without, most probably, achieving similarly successful results.

Viewed through the lens of our theoretical framework (figure 3), the collapse of Yugoslavia and the PCI represented a structural break in the internal and external political support to the Slovenian minority, which was promptly exploited by parts of the Italian majority. The impact on Slovenian political and economic organizations was strikingly uneven.

Figure 3. Fall (1991–2001).

On the political front, right-wing animosity gradually subsided, mostly because it was interfering with the accession process of Slovenia to the European Union (at a time when the Yugoslav wars were still raging on), which lent limited external support to the minority. The gradual normalization of relations between Italy and the Republic of Slovenia that started in 1994 stabilized the de jure political power enjoyed by Slovenians in Italy. However, the thaw did not apply to the organized economy, which, through the accumulation of material resources, had provided increasing de facto political power to the Slovenian minority.

This crumbled under the weight of Italian chauvinism and due to the collapse of Yugoslav markets, which deprived the key economic institution—that is, the autonomous accounts—of its purpose. As Rudi Pavšič and Marjan Žiberna (Reference Pavšič and Žiberna2020) write, attempts to weaken the material standing of Slovenians in Friuli-Venezia Giulia were made by Italian liberal nationalists throughout the postwar period. They achieved their goal when it became clear that, after the disintegration of Yugoslavia, there was no one left who would defend the economic organizations and interests of Slovenians in Italy. Since the second half of the 1990s, the minority lost most of the economic advantages it enjoyed since the beginning of the thaw between Italy and the Socialist Federation. The cultural and sports organizations that were financially dependent on the organized economy fell into an epochal crisis, which was resolved through heroic collective efforts (e.g., the cooperative that saved the daily Primorski devnik) and through the Protection Act that was passed by the Italian parliament in 2001.

Dependence (2001–2020)

At the local level, the political détente between the Slovenian minority and Italian majority started already in the autumn of 1993, when Riccardo Illy, a coffee entrepreneur, was elected as first center-left major of Trieste in the postwar period. At the national level, Berlusconi’s government was replaced by the technical government of Lamberto Dini in early 1995, which immediately gave the green light to start the accession negotiations between Slovenia and the European Union. Moreover, in 1996, the center-left coalition Olive Tree (Ulivo) came to power under the helm of Romano Prodi with the outside support of the Party of Communist Renewal. The fractious alliance governed until 2001 and was throughout the period more sympathetic toward the Slovenian community. In practical terms, for example, property rights stabilized, as land expropriations became less common.

The second structural break in the political institutions governing the relations between the Italian majority and Slovenian minority in Friuli-Venezia Giulia came in 2001. Twenty-five years after the Italian parliament formally agreed to adopt a Protection Act for the Slovenian minority, this became law in February 2001 (against the obstruction of Alleanza nazionale) and was followed by the respective Regional Protection Act in 2007.Footnote ⁴ Together with the Act on the Protection of Historical Minorities,Footnote ⁵ these three laws regulate the fundamental rights of the Slovenian minority in accordance with the Italian Constitution as well as European and international legislation (Vidau Reference Vidau, Bogatec and Vidau2017). The aim of the legal framework is primarily to ensure the cultural autonomy of the minority by guaranteeing the public use of the Slovenian language, the functioning of a bilingual education system, and an independent organizational structure. Provisions on the minority’s economy are limited to state funding, which is managed by the Autonomous region of Friuli-Venezia Giulia under the Regional Protection Act, and the recognition of minority unions and business associations.

Despite the shortcomings, the Protection Act represents the main source of de jure political power for the minority, and thus its implementation requires constant monitoring. In particular, if the Friuli-Venezia Giulia regional electoral law designates a Regional Council seat to a Slovenian representative, at the national level no such provision yet exists (despite being mandated by the Protection Act). Until now, the Slovenian community had to rely on the goodwill of the Italian Communist Party and its successors to be represented in the Chamber of Deputies or the Senate (a situation that will be exacerbated by the curtailment of MPs approved through a 2020 Constitutional referendum). Similarly, the Slovenian community has not yet been able to take advantage of all the opportunities offered to it, especially with regard to the penetration of its brightest cadres into the higher levels of the Italian bureaucratic and political apparatuses. Additionally, due to a reorganization of the chambers of commerce, industry, crafts, and agriculture under Matteo Renzi’s center-left government in 2015, the two main Slovenian business associations (Slovenska deželna gospodarska zveza and Kmečka zveza) have all but lost their representatives at the regional level. Hence, the de jure political power has barely translated into de facto power.

Both in terms of economic resources and organizations, the current situation is very different from the times of Yugoslavia. The organized economy’s success is partly to blame. While trade and other businesses were booming, Slovenian entrepreneurs did not plan any contingent measures in the event of economic, financial, and political crises.

The Slovenian community now has substantial problems with the availability of labor and capital and long-term difficulties with the management of their own land due to the many bureaucratic and legislative obstacles (a complex system of limitations to agricultural activities exists on the Karst).

While unmeritocratic staffing within the organized economy led to the suppression of the entrepreneurial spirit of the Slovenian youth, its short duration prevented the buildup of a critical mass of educated people. Two additional problems have arisen. First, the Slovenian community is shrinking, and its schools are being propped up by children from linguistically mixed households, which does not bode well for the future use of the Slovenian language or for these students’ attachment to Slovenian organizations and traditions. Second, the long-term stagnation of Italy as well as the limited involvement of Slovenians in the most productive sectors of the local economy (which emerged with the exponential growth of the port of Trieste and the development of the sistema Trieste—that is, a diversified network of high-tech firms and research institutes as well as state-of-the-art R&D—mean that the best cadres tend to emigrate.

The suppression of the two main Slovenian banks (Kmečka banka and Tržaška kreditna banka) was recently compounded with the crisis of the financial company KB 1909 in Gorizia (the legal successor of Kmečka banka). According to Mitja Stefancic (Reference Stefancic2019), managerial mistakes that led to reckless and insufficiently planned investments were exacerbated by the global financial crisis in 2009—2011. Its liquidation (currently on hold) represented another blow to the Slovenian minority’s capital base. For the time being, the only noteworthy financial player left is the cooperative bank Zadružna kraška banka (ZKB) in Trieste (Waltritsch Reference Waltritsch1998). The bank is sizeable for local standards as it manages more than a billion euros in loans and deposits. Yet, it has none of the freedoms to act as a proper investment bank as was the case with KB and TKB under the organized economy.

The lack of their own capital has been substituted by the introduction of legally guaranteed state contributions to minority organizations. Since 2015, the Protection Act systematically earmarks 10 million euros per annum to primary and secondary cultural, sport, and economic organizations within the community. Other Italian laws provide generous financing for multiple daily newspapers (e.g., Primorski dnevnik, Novi Matajur), the theater (Slovensko stalno gledališče), regional TV programming in Slovenian, and, especially, to Slovenian schools and their staff. Other sources of financing are contributions from Slovenia, regional and European structural funds, and so on.

Yet, Italian subsidies are an imperfect substitute to the minority’s own resources, thereby undermining the de facto political power of the Slovenian community. First, the community is now subordinated to the legislator’s goodwill. The past experiences with funding shortages provide a stern warning that nothing can be taken for granted. Second, the limited capacity of the community to autonomously manage these funds implies that there is almost no room for maneuver to allocate resources to other ends. The punctilious distribution of funds creates an insolvable conflict of interest. As each organization and each job post is now tied hands and feet to an external authority, the Slovenians in Italy have, in the words of Pavšič and Žiberna, “lost the foundations of their independence” (Reference Pavšič and Žiberna2020, 36).

At the level of economic organizations, with which the minority coordinates its economic interests, little has changed, at least formally. Slovenska deželna gospodarska zveza and Kmečka zveza offer excellent union, legal, and economic services to their members, as does the consultancy Servis for the whole business community and the strategically oriented, developmental agency Local Action Group Karst (Lokalna akcijska skupina Kras, LAS Kras).

However, beneath the surface, the decay of the trustee system left a gaping vacuum. The network of entrepreneurs and their political sponsors, which gathered within the SKGZ’s Economy Committee, disappeared together with the organized economy. Thus, during the 1990s, the systematic and periodic analyses of the minority’s economic situation as well as strategic developmental plans ceased to be published and were later substituted by less ambitious, ad hoc surveys (e.g., Gulič Reference Gulič2005). These are, however, hardly suitable for the complex problems facing Slovenian entrepreneurs and farmers. A notable exception to the general trend and an example of how strategic planning should be carried out is the well-researched masterplan for local rural development, produced in 2011 by LAS Kras (GAL Carso – LAS Kras 2011).

Finally, two major factors make it naive to expect that any of the existing political or economic organizations will simply take over such strategic leadership. The two umbrella organizations, the SKGZ and the SSO, never sufficiently emphasized the essential role that entrepreneurship plays in the development of the Slovenian community (the SKGZ’s Economy Committee was only the formal framework through which the trustees operated). The organizations themselves require an overhaul as they are both relics of the postwar period, out-of-tune with current electoral trends. At the same time, the business associations Slovenska deželna gospodarska zveza and Kmečka zveza are ill-equipped to take the lead. Back in the days of the organized economy, the available data were easier to obtain due to the relative concentration of Slovenian entrepreneurship (and to a certain extent farming in cooperative farms). Under the current conditions of spatial and market dispersion, such analyses are much more complex and require often unavailable data, which has negative consequences for the long-term development potential of the minority.

Summing up, under more favorable political circumstances and pressured by the EU, the Italian parliament approved the Protection Act for Slovenians in 2001. In line with Acemoglu, Johnson, and Robinson’s (Reference Acemoglu, Johnson, Robinson, Aghion and Durlauf2005) theoretical framework, as indicated in figure 4, the law can be seen as a structural break in the political institutions governing the relations between Italians and Slovenians in Friuli-Venezia Giulia. The act compensates the lost de facto political power enjoyed by the Slovenian minority before the dissolution of Yugoslavia by granting smaller gains in de jure political rights, thereby providing the community with a certain degree of equal participation in political decision-making. It moreover offsets the foregone resources accumulated through the organized economy by earmarking reasonably generous state contributions to minority organizations. Yet, such quid pro quo hardly restores the actual political or economic power enjoyed beforehand, as it legally restricts the autonomous economic management of the minority’s resources. On top of that, a coordination mechanism that would substitute the strategic planning under the organized economy has not yet emerged, further jeopardizing the community’s growth potential.

Figure 4. Dependence (2001–2020).