Italy buries old animosity for EU deal with Slovenia

Slovenia should have been the easiest of the former Eastern Bloc countries to bring into the European fold. Since it won its independence from the former Yugoslavia in a 10-day war in 1991, it has rapidly established itself as one of the front-runners in central Europe, moving rapidly to democracy and a market economy, such that it is considered a leading contender for membership in both the EU and Nato. It conducts more than two-thirds of its trade with the EU, shares borders with Italy and Austria, and has a higher per capita income than either Greece or Portugal.

Today, it will apply for membership of the European Union, the latest in a long line of states to sign up for membership. And yet the association agreement with the EU which Janez Drnovsek, the Prime Minister, and Zoran Thaler, the Foreign Minister, will sign in Luxembourg has been an excruciating four years in the making - four years marred by Italian obstructionism, neo-Fascist sabre-rattling and, latterly and most surprisingly, British mad cows.

The fact that the agreement is being signed at all is largely thanks to the new centre-left Italian government, which has wasted no time in lifting a long-standing veto against an accord. Until now, Italy has refused to countenance an association agreement because of a property dispute stretching back to the inter-war years when the Istrian peninsula was under Italian rule.

The veto was most vigorously pursued by the 1994 government led by Silvio Berlusconi, which also included members of the neo-Fascist National Alliance. On one occasion the National Alliance's leader, Gianfranco Fini, led a rally on the Italy-Slovenia border in which hundreds of bottles were thrown into the sea bearing the message: "Istria, Dalmatia and Fiume - we will return."

Such nostalgia for the days of Italian expansionism under Mussolini gravely damaged Italy's relations with its Balkan neighbour, and isolated the country within the EU. It also complicated negotiations on what is a genuine property dispute. Claims have been outstanding for years on thousands of homes in the Istrian peninsula that were abandoned in the early 1950s by Italians who preferred to move back within their country's new borders rather than be absorbed into Tito's Yugoslavia.

Slovenia offered compensation as early as 1983, but Mr Berlusconi's government demanded outright restitution, a demand that Slovenia flatly rejected as a covert attempt to flood Istria with a new wave of Italian nationalists.

Since the fall of Mr Berlusconi's government, the problem has inched towards a solution. At the end of May, days after taking office, the new number two at the Foreign Ministry, Piero Fassino, hammered out a deal in Ljubljana obliging Slovenia to allow foreigners to buy up property on its soil within four years and securing special rights for Italians once resident there. The compensation issue will be addressed once the EU association agreement is in place.

It was impressively speedydiplomacy, not only because it cleared one of the EU's longest-standing problems, but because it happened under an Italian EU presidency. "The first thing we have achieved is to bring Italy out of its isolation," Mr Fassino said this weekend.

Right to the last, however, the affair risked ending in tears. Even after Mr Fassino's coup, the accord almost ran aground because of Britain's non-co-operation on EU business. But last week Italy - once again - promised to help Britain in its campaign to lift the beef ban, and in exchange Britain agreed to save the Slovenia accord.