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When clouds gather around the lower slopes of Monte Titano, San Marino feels like an island in an ocean of fog. Italy, which surrounds it completely, is invisible beneath breakers of silver mist. In San Marino’s highest district, the negotiable world is shrunk to a few cobbled, silent sandstone streets overseen by stern medieval watchtowers fenced by castellated fortifications. On days like these it is easy to see how San Marino has ended up taking a distinct and detached view of the world.

You have to really want to come to the Most Serene Republic of San Marino to rejoice at its official name. It doesn’t have an airport or a railway station. It’s a 30-minute car or bus ride from the Italian seaside resort of Rimini, where an international airport caters to tourists largely from Russia. There are no border formalities as you enter the country but once you complete your ascent the tourist office on Contrada Omagnano will, for a €5 fee, stamp your passport with a useless but glamorous visa.

The clerical compound of the Vatican City aside, San Marino is the smallest country in Europe by population – just 33,000 people, give or take. Though it can claim to occupy more space than Monaco, it is still just 61 sq km. If San Marino’s entire population moved en masse to Rome, few Romans would notice. If a national outing was undertaken to see AC Milan or Internazionale play at home the complete cohort of Sammarinese citizenry would barely fill one end of the San Siro.

Nevertheless, San Marino has 17 centuries of national history and claims, plausibly, to be the world’s oldest republic. It wields the trappings of statehood – a national broadcaster, representative sports teams, a post office – and commands a place on the world stage, with memberships of international bodies and relationships with other countries. These are currently the responsibility of Nicola Renzi, San Marino’s secretary of state for foreign affairs. Renzi operates from the 17th-century Palazzo Begni, once the seat of San Marino’s government, and still appropriately grand: the gaps between its gleaming floors and high ceilings are filled with epic murals and venerable paintings.

Renzi, like a statistically unusual percentage of his fellow citizens, has also taken a turn as head of state. San Marino has two at any given moment – the first pair of Captains Regent were appointed in 1243 and are now elected every April and October from the ranks of San Marino’s parliament, the Grand and General Council, which sits in the late-19th-century Palazzo Pubblico. The job comes with a car and driver, and the right to be temporarily addressed as “your excellency”. “Liberty and peace are the two values included in our coat of arms,” says Renzi. “San Marino has always remained independent and sovereign. We share a language and culture with Italy but feel a very strong national pride.”

San Marino is not a member of the EU, though it does use the euro. (Sammarinese euro coins depict San Marino’s towers and its founder, Saint Marinus.) In 2013, San Marino’s citizens had a referendum and rejected a proposal to begin EU accession talks. Renzi says that his priority now is concluding the Association Agreement with the EU that’s currently being negotiated by San Marino and fellow microstates Monaco and Andorra. This would allow complete access to the single market while recognising, as Renzi puts it, San Marino’s “peculiarities”.

“The fact that we are small,” says Renzi when asked to name them, “and that we have a tradition of independence that goes back to 301 AD. So free movement of people, for example, would be a red line. We would need clauses to regulate that because of our size.”

Renzi nevertheless enthuses about San Marino’s new elective residence programme, which offers a path to (eventual) citizenship through investment, either in real estate or banks. The latter, he insists, have now emerged fully from the murk for which they were legendary during San Marino’s decades as a tax haven, when its infamously undiscriminating banks stashed dubious deposits from Italy and elsewhere. Following the 2008 financial crisis, when San Marino’s banks were effectively embargoed by Italy and “grey-listed” by the oecd, the house was briskly cleaned and San Marino signed a tax-transparency agreement with the EU in 2015. “Ten years ago San Marino was an offshore state with 12 banks; today there are five,” says Alessandro Carli, editor of financial newspaper San Marino Fixing. “The sector has become much smaller and much more transparent – this was what Europe decided for San Marino.”

Renzi characterises San Marino’s foreign policy over the centuries as one of “active neutrality”. It does take sides sometimes: in 1861, in the spirit of outreach to a fellow democratic republic, San Marino offered honorary citizenship to US president Abraham Lincoln; he accepted and has since featured at least once on a series of San Marino’s much-collected postage stamps. But San Marino sat out the world wars as far as possible, though battles were fought on Sammarinese soil. It also took in more than 100,000 refugees, more than six times its then population, as the Allies advanced through Italy in 1944 and 1945. In another example of its active neutrality stance, today San Marino does not adhere to EU sanctions against Russia.

This independence is guarded, symbolically at least, by a military that makes up in the splendour of its dress uniforms what it lacks in firepower. San Marino’s oldest military formation, the Crossbow Corps, traces its history back to 1295 and is now a voluntary organisation that performs on national holidays. Membership is a significant commitment: Stefano Ugolini, chairman of the Corps, explains that a new crossbow from a Sammarinese workshop, once emblazoned with coats of arms and other personal touches, can cost up to €12,000. “We are fond of crossbows,” says Ugolini solemnly. “They are defensive, they are not an assault weapon.”

San Marino’s official security apparatus comprises three professional corps – the Gendarmerie, the Civil Police and the Uniformed Fortress – as well as several voluntary outfits. “We have no strategic military power,” says Colonel Corrado Carattoni, inspector-general of the voluntary Uniformed Militia (in keeping with the multitasking necessitated by a tiny population, he’s also San Marino’s non-resident ambassador to Greece). In the event of serious outside menace, San Marino’s defence is the responsibility of Italy, which has been generally hospitable to this geopolitical quirk in its landmass. “But if Italy attacked,” says Carattoni in a tone suggesting that he doesn’t consider this likely, “we couldn’t defend ourselves. Our role is not defending the state but the traditions of the state – its institutions and its history.”

Which is fair enough: only these institutions and history distinguish San Marino from any other pretty Italian town. Sammarinese speak Italian, are by and large Catholic and their food is generally similar to that which might be found anywhere in Emilia-Romagna. “That’s the most important thing,” says Nicoletta Corbelli, director of the San Marino Tourism Board. “The fact that we are the most ancient republic in the world is what defines us. You can feel that history when you visit.”

San Marino’s historic centre was World Heritage-listed by Unesco in 2008 and retains a romance that transcends the grim souvenir emporia and weirdly plentiful replica-gun shops that have sprouted in its ancient alleys. It is impossible to hike the battlements up to the Guaita fortress, the oldest of San Marino’s castles, without feeling a knightly swash in one’s buckle.

San Marino’s modern identity is more difficult to pin down. When you ask, Sammarinese will tell you that it’s a remarkably pleasant place to live: it has one of the world’s highest life expectancies and little crime (Colonel Maurizio Faraone, high commander of the Gendarmerie, confirms that assaults and robberies are unusual and that “there isn’t a mafia problem”). They also speak of the mixed blessings of citizenship of a country that few know anything about – and which many have never heard of. It amounts to membership of an exclusive club, balanced against occasionally having to persuade sceptical foreign passport officials that you’re not having them on.

San Marino’s national football team has often been the biggest namecheck for the nation even if, in 27 years of trying, it has never won a competitive match (and may never unless Uefa admits Legoland). “I believe it’s a sense of belonging that inspires our players,” says Marco Tura, president of the San Marino Football Federation. “And it’s a way to promote our country throughout Europe.”

On nights when the weather around Monte Titano is clear you can see an impressive amount of the world that San Marino has thus far risen above. Looking northeast from its upper reaches you can see all the way to the twinkling seafront lights of Rimini and the ships bobbing in the Adriatic beyond. It’s a view that reassures that it will take more than an EU Association Agreement to bring San Marino into more frequent contact with Earth.

But Michele Chiaruzzi, an assistant professor at the University of Bologna’s department of political and social sciences, thinks it might – and that it should. Chiaruzzi also co-ordinates the international relations research centre at the University of San Marino (and is the ambassador to Bosnia-Herzegovina). “For the past five centuries the basic concept of Sammarinese foreign policy was ‘Known to us, unknown to others,’” he says. “It has been an excellent concept – all other city-states have disappeared and visible parts of the Italian and European political system have been immersed in wars. So the past was about managing our isolation. But everyone knows what you do now so that’s impossible.”

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