Guy Norton in Zagreb -

Barely two months after Pope Benedict XVI drew massive crowds on his visit to Croatia and delighted audiences with his promotion of Croatia as the perfect next candidate for EU entry on the back of its loyal adherence to Roman Catholicism, Zagreb now finds itself at odds with its religious master in Rome over a seemingly minor dispute that potentially threatens to open a multi-million dollar Pandora's box concerning property rights.

For the best part of a millennium until 1991, Croatia was effectively ruled by a succession of rulers from Italy, Hungary, Austria and Serbia. In the intervening period, one of the few instances when the country garnered any international recognition at all was in 1519 when Pope Leo X proclaimed Croatia to be the Antemurale Christianitatis - the Bulwark of Christianity - in acknowledgement of it repelling the attacks of the Muslim-led Ottoman Empire. That recognition is arguably a key reason why the country is generally such a loyal follower of the fiats issued by the Vatican, which was one of the first international organisations to recognise its succession from the former Yugoslavia n 1991.

Generally being the operative word. In recent days, the actions of the authorities in Rome have elevated what at first glance might seem to be a minor kafuffle over an historic religious site into a major dispute over who really - that's to say legally rather than morally - owns what in Croatia.

Front and centre in the property between Roma and Zagreb is the Dalja monastery and associated estate built in 1841 by an Italian nobleman Federico Grisoni. Grisoni bequeathed it in perpetuity to the Italian Benedictine order under the 19th century equivalent of a modern day "use it or lose it" clause. As such, the Benedictines faced the prospect of being disinherited if they ever left the property. That "event option", to use modern financial market argot, came to pass in the later stage of the World War II when the Benedictines shut up shop in Croatia in the wake of the overthrow of Benito Mussolini, the Italian fascist dictator who supported the establishment of the Independent State of Croatia in 1941, a puppet regime which rivalled Nazi Germany for its callous treatment of both political and religious opponents. It's testament to the strength of support for the Roman Catholic Church in Croatia that the Yugoslav leader Josip Tito agreed to the signing of the Osimo Accord in 1975, under which the Benedictines received 1.7bn lira for the confiscation of their property in Istria.

With the establishment of an independent Croatia in 1991, the monastery and its surrounding lands were restored to the pastoral care of the Croatian arm of the Roman Catholic Church in 1999 to do with it want that they wanted. Until recently, that included the sale of part of the land for commercial usage such as golf courses and vineyards, something which even in a country where roughly 90% of the population declares themselves to be Roman Catholic proved to be controversial. Ilija Jakovljevic, chancellor of the Poreč-Pula diocese, which hitherto managed the monastery and estate recently, defended those sales in the local press, telling Istrian daily Glas Istre that among other things the proceeds of the land sales were used to build a new students home and a pastoral centre.

Controversy over the use of the estate by the Croatian Episcopal authorities has paled into insignificance, however, following the revelation that the Vatican has effectively ordered local church leaders to hand back the property to the Benedictines. When the Poreč-Pula Bishop Ivan Milovan had the temerity to refuse to accept the decision of the pontifical commission in Rome, he was summarily suspended from his position and replaced by Spanish bishop Santosa Abrila y Castella, who signed the handover agreement in his stead. The revelation of the Vatican's highhanded actions have provoked a political storm in Croatia, where strong support for the Roman Catholic Church notwithstanding, the potential restitution of property to former imperial owners - whether they be from Italy, Austria, Germany, Hungary et al - threatens to further undermine the foundations of an already flaky real estate market that has been decimated by the absence of cheap, plentiful financing in the wake of the global credit crunch.

For his part, Croatian President Ivo Josipovic, a legal professor who unusually in a nation of apparently fervent Catholics is a self-confessed agnostic, is less than enamoured by the Vatican's actions. As he told Croatian news agency Hina: "The Osimo Accord is part of the internal legal system of Croatia and cannot be changed from outside intervention."

Josipovic did, however, call for mediation between the Rome and the Croatian government over the best future use of the Dalja monastery and its land in an effort to maintain the historically good diplomatic relations between Croatia and the Vatican.