Croatia is in the western Balkans, bordering Hungary and Slovenia to the north, Serbia to the east, Bosnia-Herzegovina and Montenegro to the southeast, and the Adriatic Sea to the southwest. Settled by Croats around the seventh century, Croatia's main geographic challenge has been its proximity to regional powers, including Hungary, Austria and Turkey. This, combined with a lack of clear borders, mountainous geography and ethnic divisions, forms a threat to Croatia's sovereignty. Its capital, Zagreb, is Croatia's most populous city and industrial center. Zagreb's access to the Sava River and its vicinity to the Adriatic coast make it a suitable connection hub for trade between Central Europe and the countries along the Mediterranean Sea, making the area one of the most prosperous in the western Balkans. In the northeastern part of the country, the Sava and Drava rivers fertilize the Pannonian Basin, creating lands suitable for agriculture and livestock. Because of its fertile lands, this area has been a traditional zone of dispute. Modern-day Croatia controls only the western border of the Pannonian Basin and most of it currently belongs to Hungary. The Danube River forms part of Croatia's border with Serbia. As Europe's second longest river, the Danube forms a key trade route between east and west. In the west, the Dinaric Alps separate the lowlands from the Dalmatian coast and Croatia's islands. As a result, Dalmatia has often had closer economic and political ties with Italy. Centuries of invasions and the presence of rugged mountain ranges resulted in several ethnic and religious groups living in the western Balkans, including the Croats, Serbs, Albanians and Bosnians. This ethnic diversity characterizes the Balkans and has often led to violence and tensions between Croatia and its neighbors.

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