(Zagreb) Croatia has adopted the euro and joined the Schengen area of free movement, two major steps for this small Balkan country which joined the European Union nearly a decade ago.
At midnight (6 p.m. EST) Saturday, Croatia said goodbye to its currency, the kuna, to become the twentieth member of the euro zone.
It becomes at the same time the 27e State to join the Schengen area, a vast area within which more than 400 million people can travel freely without internal border controls.
For the daily Vecernji List, these two events are the “crowning of the accession to the EU” of Croatia.
“It’s a time of new beginnings, and this is the case in Croatia more than anywhere else in Europe,” tweeted European Commission chief Ursula von der Leyen as she arrived in Croatia to mark the event.
The European official met Croatian Prime Minister Andrej Plenkovic and Slovenian Head of State Natasa Pirc Musar at the border between the two countries, before going to Zagreb.
Croatia, in the European Union since July 2013, declared its independence from Yugoslavia in 1991 and the ensuing conflict (1991-1995) claimed some 20,000 lives.
” Strategic targets ”
Croatian leaders regularly stress the benefits that they believe their 3.9 million compatriots will derive from joining the euro zone and the Schengen area.
For experts, the changeover to the euro will help protect the Croatian economy, one of the weakest in the EU, in the face of galloping inflation, a serious energy crisis and geopolitical insecurity since the beginning of the February 24 Russian invasion of Ukraine.
French President Emmanuel Macron, in a video message on Sunday, welcomed Croatia’s adoption of the euro, a “stable and solid” currency that contributes to Europe’s resilience in the face of this conflict.
In November, inflation reached 13.5% in Croatia, against 10% in the euro zone.
Eastern European countries that are members of the EU but have not opted for the euro, such as Poland and Hungary, proved to be even more vulnerable to inflation.
For the governor of the Croatian central bank (National Bank of Croatia, HNB), Boris Vujcic, the abandonment of the kuna, put into circulation in 1994, is the “only reasonable policy”.
“The euro certainly brings economic stability and security”, confirmed to AFP Ana Sabic, an official of the HNB, adding that all actors in society will benefit from it.
Experts cite in particular the elimination of exchange risks and better conditions for borrowing.
PHOTO DENIS LOVROVIC, AGENCE FRANCE-PRESSE
Customers wait in line outside a bank in Zagreb as Croatia makes the euro its official currency on Sunday.
“Elite club”
The Croats, for their part, have mixed feelings: if they generally welcome the end of border controls, the change of currency inspires mistrust.
In recent days, customers have lined up outside banks and ATMs to withdraw cash, fearing liquidity problems in the aftermath of the transition period.
Early on Sunday, the central bank governor symbolically withdrew euros from an ATM in Zagreb.
Many Croatians fear that the introduction of the euro will lead to higher prices. “It’s going to be difficult, the prices are already high and they will go up further,” fears Ivana Toncic, a teacher from Zagreb.
But for Marko Pavic, an employee of a tourist agency, “Croatia is joining an elite club”.
And “nothing changes the 1er January, everything has been calculated in euros for two decades anyway,” adds Neven Banic, another employee.
About 80% of bank deposits were already denominated in euros in Croatia, its main partners are in the euro zone and tourism, which constitutes 20% of its GDP, is supplied by a large European clientele.
boost to tourism
Croatia has welcomed four times more tourists this year than it has inhabitants and the entry into the Schengen zone will give a boost to this sector.
On Sunday, 73 border posts will close. In airports, the change will take place on March 26, for technical reasons.
At the same time, the situation at Croatia’s borders with its non-EU neighbors – Bosnia, Montenegro and Serbia – will hardly change: it already applies the rules of the Schengen area there.
On the other hand, the repression of illegal immigration remains a major challenge. Since joining the EU, Croatia has inherited the heavy task of protecting an external land border over 1350 km long, most of which is shared with Bosnia.
It is on the so-called Western Balkan route used by migrants, but also by traffickers of arms, drugs and human beings.
Croatia registered 30,000 irregular migrants in the first ten months of 2022, an increase of 150% compared to the same period of the previous year.
