A significant day (or not?) for Croatia

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Christmas is always a good time to catch up with the family. I am Polish, however my wife comes originally from Croatia, a truly spectacularly beautiful country in the southern part of Europe. I had a chance to live in Croatia for a number of years between March 2001 and November 2004, when I was studying and conducting research for my Master’s Degree.

On 1st January 2023, Croatia joined the Eurozone and the Schengen Area. During the Festive Season, at least on a couple of occasions, this was one of the main topics of our conversations; would my friends and family members be worried about some of these changes? How will they affect their lives and/ or their standard of living?

Croatia and Bosnia and Herzegovina in particular have suffered a lot in recent years. The war in the former Yugoslavia has left many people dead, misplaced and hugely traumatised. The Dayton Agreement, which was signed in 1995, put an end to the three-and-a-half-year-long Bosnian War. However, many people have criticized the agreement, which created a weak democratic structure and which has not resolved several complex issues such as borders, cultural, social and faith heritage as well as the political inheritance of the diverse post-Balkan nations.

Whilst Croatia and Slovenia, some will argue, have moved on, other countries are still trying to find a clear pathway to economic stability. Slovenia joined the European Union in 2004 and Croatia in 2013. Croatia in particular has become a traveling destination for many tourists from Europe. It is worth saying that this relatively small country with 3.8m people has a stunning coast, which attracts many visitors each year. Moreover, in 2019, just before the pandemic, tourism revenue contributed 21% of Croatia’s GDP.

So what do these most recent changes mean in practice? Many experts hope and argue that this significant milestone will strengthen Croatian economy, in particular its tourism industry. Others worry that the residents of Croatia, due to the currency change, will lose its “spending power” and to some extent, its monetary sovereignty.

The Schengen Area now consists of 27 member states, 23 of which are EU member states e.g. Norway is not a member of the EU, however it is a member of the Schengen agreement. This also means that the border control between Croatia and other Schengen area countries is a “story of the past”. In addition, the Eurozone will now consist of 19 member states and 347m people will share the common currency.

My personal view is that, due to the war in Ukraine, high inflation and soaring prices, it will be probably quite difficult to predict the exact outcomes of these transformational changes in Croatia, however I hope that overall, this is a step in the direct direction for a country, which is very close to my heart.

 

* Michal Siewniak is a Lib Dem activist and councillor for Handside ward, Welwyn Hatfield.

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15 Comments

  • Peter Martin 7th Jan '23 - 8:59am

    “…and to some extent, its monetary sovereignty.”

    It is to every extent, I’m afraid. Yanis Varoufakis explains why Croatia shouldn’t adopt the euro. Too late now, though!

    https://diem25.org/yanis-varoufakis-why-croatia-shouldnt-adopt-euro-german-politics-and-much-more/

  • Mick Taylor 7th Jan '23 - 9:33am

    The only real argument for keeping the pound is given by modern monetary theory. If a country issues its own fiat currency then it has complete freedom to spend on public services as long as it keeps inflation under control. That might well have benefited Croatia, though the argument has to be weighed up against the very real benefits of being in a strong currency that is relatively stable.
    Of course – and I have already seen this issue raised on LDV – the argument about rejoining the EU will quite likely be fought to a greater or lesser extent on the issue of joining the Euro, because the government’s freedom of manoeuvre would be reduced by giving up the pound. In every other respect the anti EU brigade would completely reject MMP and argue for lower taxes and cutting public spending.

  • Martin Gray 7th Jan '23 - 11:52am

    For a country that craved independence – it’s now handed fiscal responsibility to the ECB ..
    As we’ve seen with Troika , we know how those financiers treat those at the bottom – with utter ruthlessness…

  • Martin Gray 7th Jan '23 - 11:57am

    @Mick Taylor..

    “the argument about rejoining the EU will quite likely be fought to a greater or lesser extent on the issue of joining the Euro”

    Mick there will be no argument – the British public would never accept eurozone status ..
    Anyone who thinks otherwise has obviously never canvassed..

  • Barry Lofty 7th Jan '23 - 1:04pm

    Having spent a lovely holiday in Croatia many years ago I will always remember the beautiful scenery and welcoming people and I am sure they will gain more than they will lose in joining the EU.

  • Chris Moore 7th Jan '23 - 3:33pm

    Barry, Croatia have been EU members since 2013.

    They’ve now joined the Eurozone and Schengen area.

  • Barry Lofty 7th Jan '23 - 4:05pm

    Chris: Thanks for putting me right on that, I should have thought about it about it before replying, that will teach me! They must have been happy with the taster though?😊

  • Barry Lofty 7th Jan ’23 – 4:05pm:
    They must have been happy with the taster though?

    Adopting the euro is a condition of joining the EU….

    ‘Who can join and when?’:
    https://economy-finance.ec.europa.eu/euro/enlargement-euro-area/who-can-join-and-when_en

    All EU Member States, except Denmark, are required to adopt the euro and join the euro area. To do this they must meet certain conditions known as ‘convergence criteria’. […]

    The Treaty does not specify a particular timetable for joining the euro area but leaves it to Member States to develop their own strategies for meeting the condition for euro adoption. Eight of the thirteen Member States who joined the EU since 2004 have already joined the euro area, most recently Croatia on 1 January 2023.

    Their politicians may be happy, the Croatian electorate not so much…

    ‘Is Croatia a nation of Eurosceptics?’ [May 2019]:
    https://unherd.com/2019/05/is-croatia-a-nation-of-eurosceptics/

    …when Croatia was finally to be admitted, in 2013, the electorate was already showing signs of scepticism. Less than half of registered voters turned out for the referendum on EU accession, meaning only 37% of the total population actively voted to join. […]

    In the latest Eurobarometer polls (held last month), a mere 17% said they’ll cast a ballot, compared to an EU average of 35%. The poll also suggested that, if a referendum on leaving the EU were to be held tomorrow, only 52% of Croats would vote to remain.

  • Peter Martin 8th Jan '23 - 9:42am

    “The only real argument for keeping the pound is given by modern monetary theory. ”

    Long before MMT came into existence there was an instinctive understanding that harnessing together many countries with a common currency, all at different stages of economic development, and with vastly different economic histories, could be similar to harnessing thoroughbred and farm horses in the same team. MMT has added an additional perspective to this, but the concept of: one country, one government, one currency is nothing new.

    Those Federalists within the EU, who are unlikely to be enthusiastic MMters, would probably also have a similar view. Their solution to the euro’s problems makes perfect sense. The EU too would need to be one country with a single Federal government.

  • Massimo Ricciuti 8th Jan '23 - 2:40pm

    Finally. Welcome!!!

  • Peter Martin 9th Jan '23 - 7:55am

    @ Ian Sanderson,

    The recent debacle you refer to didn’t prove any lack of control. We all have control over our own actions but if we do something stupid………..

  • CJ WILLIAMS 10th Jan '23 - 8:35pm

    ‘Croatia and Bosnia and Herzegovina in particular have suffered a lot in recent years. The war in the former Yugoslavia has left many people dead, misplaced and hugely traumatised’
    There will be many in the Balkans that will take issue with this statement. The Ustaše formed and led by Ante Pavelić, Jacenovac Concentration Camp condemned by the SS as being to cruel and the13th Waffen Mountain Division of the SS Handschar (1st Croatian) are evidence that Balkan hidtory goes way beyond 1995.

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