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.
15 Comments
About 15 years we had a holiday in Croatia, with our Czech family. The interesting thing then was that people renting out accommodation even then wanted to be paid in Euros, rather than Croatian crowns. So joining the Euro is not as big a deal for Croatia as it was countries like France and Germany.
“…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/
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.
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…
@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..
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.
Barry, Croatia have been EU members since 2013.
They’ve now joined the Eurozone and Schengen area.
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
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/
“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.
Finally. Welcome!!!
I detect a certain amount of ‘take back control’ in the above comments, but it should be remembered that this control has to be paid for by the taxpayers of the country concerned to provide the resources of running a central bank and an economic policy that results in a stable exchange rate. Several small countries have found being within the Euro more comfortable than managing their own currency. The Irish Free State/Republic just used Sterling for about half a century and then floated its pound (punt); it was a fairly early adopter of the Euro. After the Velvet Divorce, Slovakia decoupled its Crown from that of the larger Czech Republic; it immediately fell a bit; Slovakia also joined the Euro in due time. Croatia seems to be following a similar pattern.
‘Taking back control’ has been oversold to the British people. Even with one’s own respected Central Bank and economic policy,, the limits on our control were demonstrated to us emphatically by the Truss/Kwarteng ‘budget’ debacle. The final say is often that of the people who lend you money and those who buy and sell your debt ( otherwise known to Harold Wilson as ‘the Gnomes of Zurich’)
@ 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………..
‘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.