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December, 2000


Only a year after gaining its independence in 1991, Slovenia made it its goal to become a full member of the European Union; the decision rested on political, economic, cultural and security reasons. In 1993 Slovenia and the EU signed a co-operation accord which envisaged the possibility of an early signing of an Europe Agreement. The negotiations were launched later that year and the terms under which the talks were to be conducted were put forward by the European Commission at the beginning of 1994, but were not endorsed by the EU member states as certain demands of Italy towards Slovenia were to be settled first. The main claim was that Slovenia should grant the right to purchase property to Italian citizens who had lived on its territory but opted for Italy after WW II.


After Slovenia's government pledged that, before signing the Europe Agreement, it would propose a constitutional amendment to bring the provisions concerning the right of foreigners to purchase property in line with those of the EU, Italy agreed to accept the negotiating terms. The signing of the Europe Agreement was again blocked by Italy's demands related to foreigners' right to property, so in the summer of 1995 the EU presidency, which was then held by Spain, put forth a proposal to break the deadlock, which became known as the Spanish compromise. Slovenia accepted the Spanish compromise as set down in Annex XIII to the Europe Agreement at the end of 1995. Slovenia signed the Agreement with the 15-nation bloc in Luxembourg on June 10 1996, and submitted the request for full membership on the same day.


By accepting the Spanish compromise, Slovenia made a commitment to grant to the citizens of the EU member states who have permanently resided on the present territory of Slovenia for a period of three years, on a reciprocal basis, the right to purchase property from the day that the Europe Agreement stepped into force. The property market will open up further by the end of the fourth year after the Agreement has taken effect, when Slovenia will have to grant the right to purchase property in Slovenia to all citizens of the EU member states, on a reciprocal and non-discriminatory basis.


The Europe Agreement was ratified by Slovenia's parliament more than a year after its signing on July 15 1997, after a series of internal political obstacles posed by those who feared that under the Spanish compromise Slovene land would be sold off to foreigners. As the Constitution did not allow foreign citizens to own property, it had to be changed before the ratification of the Europe Agreement. That was made possible with an agreement on co- operation in accession towards the EU signed by parliamentary parties.



The Implementation of the Spanish Compromise Set Down in a Special Law


On account of lengthy ratification procedures the Europe Agreement did not enter into force before 1 February 1999, almost a year after Slovenia and the EU had launched membership negotiations. As the Agreement took effect, the country had to lay down the procedure for establishing the conditions of reciprocity and three-year residence on the Slovene territory. Reciprocity is established under the Reciprocity Establishing Act, which stipulates the strictest form of reciprocity, i.e. reciprocity in kind. This means that a citizen of an EU member state can acquire the right to own property in Slovenia provided that Slovene citizens and companies seated in Slovenia can acquire similar property in a similar area in the country of the EU citizen. The existance or non-existance of reciprocity is established by the Ministry of Justice, which records all properties owned by foreign citzens. The condition of three-year residence is established on the basis of technical instructions laid down by the Ministry of the Interior.


The first decision establishing reciprocity was issued by the Ministry of Justice more than six months after the relevant law became effective on behalf of an Austrian citizen who also satisfied the condition of three-year residence. Almost 21 months after the law entered into force six rulings establishing reciprocity have been issued to three nationals of Austria, two nationals of Italy and a German national. In the period a total of 49 requests were filed, most of them, 24, by German nationals, 13 by Austrian nationals, nine by Italian, two by Dutch and one by a Greek national. Several requests have been filed by citizens of countries that are not members of the EU, but these were not dealt with.


Slovenia's property market will be liberalised further as of February 1 2003, when all citizens of the EU member states will be allowed to purchase property in Slovenia, on a reciprocal and non-discriminatory basis, rather than just those who have been permanently residing on the territory of Slovenia for a three-year period. Should Slovenia become a full member of the EU before that date, the property market will open to EU citizens a month earlier. Once Slovenia becomes a full member of the Union, its property market will be fully liberalised for EU citizens and the condition of reciprocity will no longer apply. In the negotiations with the EU Slovenia may be granted concession to retain the condition for future member states: if any candidate country negotiates a transitional period or deregulation in liberalising the property market, Slovenia will implement the condition of reciprocity for such a period or deregulation.