Zagreb originally consisted of two medieval hillside settlements: the bishopric of Kaptol, and Gradec, a secular community. In the 19th century a boom in commerce and industry and the coming of the railway led to the need for expansion, so the suburbs laid out below the hillsides were reorganised, rebuilt (in many cases by the same architects who built cities such as Budapest) and the new commercial centre was born. This central district is known as Donji grad, or the Lower Town, while the older parts on the hill are, appropriately enough, called the Upper Town, or Gornji grad.

Following the Second World War, rapid urbanisation led to the city’s expansion south of the River Sava and the tower blocks of Novi Zagreb grew up. Zagreb became the capital of an independent Croatia in 1991, and the war that followed precipitated a slump. In recent years, the city has been picking up confidence again, albeit more slowly than many locals would like.

POLITICS

Croatia is a parliamentary democracy, according to the constitution of 1990.

The last parliamentary elections at the end of 2003 were a colourful affair, with about 150 parties entering the fray (a result of the party-list electoral system). The centre-right Croatian Democratic Union (HDZ), headed by prime minister Ivo Sanader, won back the mandate it had lost three years before. In the separate presidential elections in 2005, Stipe Mesic (of the liberal HNS party) was elected for a second term. The Croatian political scene is becoming a rather gentler affair as the painful war of 1991-95 recedes into the past, and now that the government appears set on joining the EU. In October 2005, Hague chief prosecutor Carla del Ponte deemed that the Croatian government had met its obligations in cooperating with the tribunal, opening the way for EU negotiations to begin.

RELIGION

The predominant religion in Croatia is Roman Catholic. Church attendance is quite high and most shops and businesses are closed at weekends, except for in tourist areas during high season. Of other religions, Muslim and Orthodox Christian are the most numerous due to the closeness of Bosnia and Serbia, and followers of these faiths are entitled by the constitution to observe their holy days. At the last census in 1991, 87% of Zagreb citizens were Catholic, 2% Orthodox and Muslim, and there was a grand total of 323 Jews. Agnostics made up 4% of the population and non-believers 3.54%.

ECONOMY

More than 60% of Croatia’s annual GDP is generated by tourism. Other key industries, such as manufacturing and shipping, suffered during the war and from the transition to a market economy. Although GDP growth is good (between
3.5% and 4.5% in the last three years) and inflation is stable, fiscal problems in the 90s led to a decline in industry and a negative balance of trade. Croatia is currently saddled with foreign debt of around 80% of GDP.

Efforts are being made to stimulate the manufacturing industry, but it’s a tall order in a country with a great deal of rebuilding still to do. Many companies and properties have been sold off to foreign buyers—90% of the banking industry is in foreign hands. Entrepreneurial and free zones are being set up to attract greenfield investment, and legislation is slowly adapting to create a more favourable investment climate.

Many multinationals have joined well-established local companies in a small market, resulting in vicious competition. Large, ultra-modern office complexes, hypermarkets and shopping centres, the incredible number of luxury cars on the streets and the expensively dressed populace are more a testament to dependence on credit and lack of planning ahead than to a burgeoning economy.

As in many aspects of life here, glossy appearances often belie turbulent depths.

POPULATION

Zagreb is a fairly heterogeneous city without a large international community but with a large number of 'local’ immigrants from neighbouring Bosnia and Herzegovina, usually also ethnic Croatians. At the census in 2001, ethnic Croats made up 96.2% of the population of Zagreb county. Serbs made up 0.88% of the population, followed by Muslim Albanians and Bosnians at just under
0.3% each. Other nationalities mainly represented citizens of other countries of Central and Eastern Europe.