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Dalmatia was returned to Austria in 1815 following the Congress of Vienna, with the Istrian coast and the island of Lošinj developing into favourite resorts for the well-heeled Austrian elite, while ship-building boomed in Rijeka and Mali Lošinj. However, the ongoing imposition of Hungarian language and culture in Croatia, and the fact that most upper-class Dalmatians spoke Italian, led to the rise of the Illyrian Movement, with calls for the teaching of Slavic language at schools, and for the unification of Dalmatia with Slavonia (inland Croatia, which was now under Hungarian control again).

With the collapse of the Austro-Hungarian Empire at the end of the First World War in 1918, a Croatian delegation made an agreement with the Serbian government for the establishment of a parliamentary monarchy ruling over the two countries, and in December 1918 the first communal Yugoslav state, the Kingdom of Serbs, Croats and Slovenes, was founded. It was to last until 1941, although it was never recognised by the Treaty of Versailles. However, the Treaty of Rapallo in 1920 gave Istria, Zadar and a number of islands to Italy, and a new constitution abolished the Croatian sabor (parliament) and centralised power in Belgrade, leading to opposition to the new regime.

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