On 1 July 2013, Croatia became the 28th member state of the European Union, but it is yet to join the single currency or the Schengen Area. The accession takes place at a time of economic difficulty when Croatia is in fifth year of recession with 21% unemployment, and amid the European sovereign-debt crisis. Croatia joining the EU, exited her from the Central European Free Trade Agreement (CEFTA).
Croatia’s euphoria at acceding to the European Union risks overshadowing the real economic problems the country faces. When Croatia joined the European Union in early July, the capital Zagreb’s Central Square was packed with what looked like New Year’s celebrations.
But, like all New Year’s parties, the festivities will soon fade away, and the partygoers will sober up. Many Croatians have been eagerly waiting their country to join the EU – but the celebrations may be premature. Croatia’s economy is in the doldrums, and there are many reasons to be concerned for its future, whether in the European Union or not.
Croatian society can be best described through two events that coincided with its accession to the EU. Firstly, a civic initiative opposing gay marriage, called “In the Name of Family”, collected more than 500,000 signatures in two months. The initiative calls for a constitutional amendment defining marriage as a union between a man and a woman. The signature collection campaign sparked a major public debate, which included very ugly disputes between the Catholic Church and the government.
It is often said that the democratic nature of a society can be measured by how it treats its minorities, and Croatia can proudly say that its national and religious minorities have been provided the most rights in the region by far. But now concerns are being raised about Croatia’s treatment of its sexual minorities, and these concerns will surely continue with merciless ferocity after the accession to the EU.
Second, before entering the EU, the skeleton of the “Perkovic case” was pulled out of the closet. Josip Perkovic is a former secret agent for the notorious Yugoslavian secret police. Though suspected of the assassination of a Croatian dissident in West Germany in the 1980s, the Croatian government has passed a law that would prevent his extradition to Germany for trial.
Although Germany has been among the staunchest supporters of Croatia’s path to EU membership, German Chancellor Angela Merkel did not participate in celebrating Croatia’s accession. Some chalked this up to the Perkovic affair, though this was denied by Merkel’s spokesperson.
FEARS OF THE UNKNOWN
Croatia’s accession to the EU has piqued the ire of right-wing nationalists like Ruza Tomasic, a former anti-drug activist who won election to the European Parliament in April 2013.
She has portrayed herself as a politician whose goal is to protect the Croatian national identity and interests, and has stated that only God and Croats rule Croatia – and that others are guests. Some Croatians are afraid of that which is unfamiliar and new, such as the EU, and nationalist politicians often feed that fear to score political points.
Although Croatia is culturally and geographically European, fear of joining the European Union began in the 2000s, when many Croats worried that the country’s cultural products and heritage could be lost by joining. Unfortunately, the eurosceptics appear not to have noticed that the EU invests very heavily in promoting its member states’ cultures.
Furthermore, many Croatians are more concerned about their basic amenities and economic needs rather than whether foreign European companies will buy Croatia’s few remaining state-owned factories, whether the state highways will be privatised for a pittance, or whether their country will sell off its enviable natural resources and beauty. Fear of losing one’s livelihood, therefore, trumps the fear of losing one’s heritage.
Others fear that Croatia will end up like Greece or neighbouring Slovenia, which after eight years in the European Union is suffering from severe financial problems and troubled banks.
The biggest winners of Croatia’s accession could be the country’s farmers. Many rural farmers, who had opposed EU membership, changed their mind after learning about the generous amounts of money the EU distributes to support agriculture.
Croatia’s EU membership will boost investors’ confidence in the country’s financial wellbeing, causing money to flow into its economy. Furthermore, membership in the EU will help solve Croatia’s problems with a bloated public sector, inflexible labour market, rising unemployment, unfavourable climate for business and poor diversification of the economy.
And by joining the EU, Croatia will finally realise its long-cherished dream of distancing itself from the so-called “backward Balkans”. Croatia earns about $1.5bn during the summer season, and the Balkan countries’ economic dependence on one another means that Croatia’s accession to the EU may soon bring neighbouring Serbia and Bosnia and Herzegovina into the Union.
Croatia’s GDP has declined by 0.7 per cent this year, and its debt-to-GDP ratio is expected to reach 62 per cent by 2016 – above the 60 per cent limit mandated by the European Union’s Maastricht Rules.
A recent analysis by DB Research predicts that Croatia’s entry into the eurozone will occur only at the end of the decade, at the earliest, and European Commission statistics estimate that informal or underground markets make up a large share of the Croatian economy.
Croatia may have already passed the most demanding and difficult hurdles to becoming an EU member state, and it seems that most Croatians are optimistic that economic and social progress will ensue.
But all indications are that the Croatian government has no answer for solving the country’s multi-year recession, and promises that the situation will become better overnight are empty.