Croatia adopts the euro and enters the Schengen area
It becomes the twenty-seventh state to enter the Schengen zone and the twentieth member of the eurozone.
Croatia adopted the euro and joined the Schengen free movement zone, two big steps for this small Balkan country that joined the European Union nearly a decade ago. At midnight on Saturday (23:00 GMT), Croatia bid farewell to its currency, the kuna, to become the twentieth member of the eurozone. It also becomes the 27th country to join the Schengen zone, a vast area where more than 400 million people can travel freely without internal border controls.
Local newspapers hailed the two events on Saturday, with daily Vecernji List calling them “The culmination of EU membershipPresident of the European Commission, Ursula von der Leyen, is expected to visit Croatia on this occasion on Sunday. The country, which has been in the European Union since July 2013, declared independence from Yugoslavia in 1991, and the ensuing conflict (1991-1995) left an estimated 20,000 people dead.
Croatian leaders regularly emphasize the benefits that their 3.9 million compatriots will gain from joining the euro zone and the Schengen area. Experts say the switch to the euro will help protect Croatia, one of the EU’s weakest economies, amid soaring inflation, a severe energy crisis and geopolitical uncertainty since Russia’s invasion of Ukraine began on February 24.
In November, inflation reached 13.5% in Croatia against 10% in the Euro zone. Eastern European countries that are members of the EU but do not favor the euro, such as Poland and Hungary, have proven to be more vulnerable to inflation. Abandonment of the kuna introduced in 1994 for the governor of the Croatian Central Bank (Croatian National Bank, HNB) Boris Vujcic “only reasonable policy“.
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“The euro certainly brings stability and securityeconomic, HNB official Ana Sabic confirmed to AFP, adding that all the actors of the company will benefit from it. Experts note, in particular, the elimination of currency risks and better conditions for borrowing.
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Croats, for their part, have mixed feelings: if they generally welcome the end of border controls, the currency change creates mistrust. In recent days, customers have lined up outside banks and ATMs to withdraw cash, fearing post-transition liquidity problems.
Early Sunday morning, the head of the central bank symbolically withdrew euros from an ATM in Zagreb. Many Croatians fear that the introduction of the euro will lead to higher prices, especially if companies round them up during conversion.
But for Marko Pavic, a travel agency employee, “Croatia has joined the elite club“. However, “nothing changes on January 1, everything has been calculated in euros for two decades anywayadds Neven Banich, another employee. Almost 80% of bank deposits are already denominated in euros in Croatia, its main partners are in the eurozone, and tourism, which accounts for 20% of its GDP, is supported by a large European client.
At midnight, Interior Minister Davor Bozinovic and Slovenia’s Minister of Public Administration Sanja Ajanovic took part in a short ceremony at the Hovnik border crossing where the barrier was lifted on both sides of the border. “Tonight we celebrate the New Year, the new Europe in Schengen with Croatia“, greeting Davor Bozinovic in front of the press and describing the event as “The final confirmation of our European identityForeign Minister Goran Grlic-Radman, in turn, participated in a similar ceremony at the checkpoint with Hungary, another member of the EU.
Croatia received four times more tourists than its population this year, and entry into the Schengen zone will boost the sector. Long queues at its borders with EU neighbors Slovenia and Hungary will be a thing of the past. 73 border posts will be closed on Sunday. Airports will change on March 26 due to technical reasons. At the same time, the situation on Croatia’s borders with its non-EU neighbors – Bosnia, Montenegro and Serbia – is unlikely to change: there it already applies the rules of the Schengen zone.
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On the other hand, repression against illegal immigration remains a major problem. After joining the EU, Croatia inherited the difficult task of protecting its external land border, which is more than 1,350 km long, most of which is shared with Bosnia. It is on the so-called Western Balkan route, which is used by migrants as well as arms, drug and human traffickers. After a decrease in illegal crossings linked to the health crisis, Croatia recorded 30,000 illegal immigrants in the first ten months of 2022, a 150% increase compared to the same period of the previous year.