Croatia switches to the euro, enters Europe’s passport-free zone

Zagreb:

Croatia switched to the euro on Sunday and entered Europe’s passport-free zone – two major milestones for the country since joining the European Union nearly a decade ago.

At midnight, the Balkan nation bid goodbye to its kuna currency and became the 20th member of the eurozone.

It is now the 27th country in the passport-free Schengen Zone, the world’s largest, which enables more than 400 million people to move freely around its members.

Happy New Year – and a very special day for #Croatia,

Today we proudly become the 20th member #euro area and 27th member of #schengen Area

In our 10th year of EU membership, Croatia is now part of a closer EU integration benefiting our citizens and economy. pic.twitter.com/ub8EzpxVNJ

– Croatia in the European Union (@CroatiaInEU) December 31, 2022

EU chief Ursula von der Leyen arrived in Croatia to mark the occasion, tweeting: “It’s the season of new beginnings. And nowhere in Europe is this more true than in Croatia.”

She met with Croatian Prime Minister Andrej Plenkovic and Slovenian President Natasa Pirk Musar at the border crossing with EU member Slovenia, and then proceeded to Zagreb.

Experts say adopting the euro will help prop up Croatia’s economy at a time when worldwide inflation is rising after Russia’s invasion of Ukraine, sending food and fuel prices skyrocketing.

But feelings among Croatians are mixed.

While they welcome the end of border controls, some fear the euro switch will increase the cost of living as businesses increase prices when they convert them.

“It will be difficult. Prices that are already high will get even higher,” said Ivana Tonic, a teacher in Zagreb.

– ‘Elite Club’ –

But tourist agency employee Marko Pevic said Croatia was joining “an elite club”.

“The euro was already a value measure – psychologically it is nothing new – whereas entering the Schengen is fantastic news for tourism,” he told AFP.

Euro use is already widespread in Croatia.

Croatians have long valued their most valuable assets, such as cars and apartments, in euros, reflecting a lack of confidence in the local currency.

About 80 percent of bank deposits are denominated in euros and Zagreb’s main trading partners are in the eurozone.

Officials have defended the decision to join the eurozone and Schengen, saying that the country thus completes its full EU integration.

Croatia, a former Yugoslav republic of 3.9 million people that fought for independence in the 1990s, joined the EU in 2013.

Experts say that the adoption of the euro will reduce the borrowing position amid the economic crisis.

Croatia’s inflation rate reached 13.5 percent in November, compared to 10 percent in the eurozone.

Analysts say eastern EU members with currencies outside the eurozone, such as Poland or Hungary, are even more vulnerable to rising inflation.

French President Emmanuel Macron on Sunday praised Croatia’s switch to the euro, describing it as a “stable and solid” currency that had contributed to Europe’s resilience in the face of the consequences of the war in Ukraine.

– Promotion of tourism –

Earlier on Sunday, the governor of the Croatian National Bank, Boris Vujcic, symbolically took out euros from a cash machine in downtown Zagreb.

In recent days, fearing payment problems soon after the transition period, customers have queued up at banks and ATMs to withdraw cash.

As the clock struck midnight, a series of events were held at Croatia’s borders with its EU neighbors to symbolize barrier-free travel.

Foreign Minister Gordon Grlick-Redman attended a ceremony with EU member Hungary at a crossing point where the countdown to the New Year ended with the lifting of a traffic barrier.

A similar ceremony was held on the Slovenian border, attended by Interior Minister Davar Bozinović and Slovenian Minister of Public Administration Sanja Ajanović Hovnik.

“Tonight we are celebrating a new year, a new Europe with Croatia in Schengen,” Bojinovic told reporters.

Croatia’s entry into the Schengen borderless area is expected to boost the Adriatic nation’s major tourism industry, which accounts for 20 percent of its GDP.

The previously long queues at the 73 land border crossings with Slovenia and Hungary will be history.

But due to technical issues, the border checks at the airports will end only on March 26.

And Croatia will still enforce strict border checks along its eastern border with non-EU neighbors Bosnia, Montenegro and Serbia.

The fight against illegal migration remains a major challenge in protecting the EU’s longest external land border at 1,350 kilometers (840 mi).

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)