1er January, Croatia will become the 20e member country of the euro zone. Its welcome in the monetary union is a confirmation of the significant economic progress of this state of former Yugoslavia since its entry into the European Union, nine years ago.
“The introduction of the euro will make our economy more resilient and increase the standard of living of our citizens in the long term. Membership of the euro zone provides Croatia with greater security in the crisis,” Prime Minister Andrej Plenković commented in Croatian on Twitter on July 12, when the last stages of the process had just been completed. allowing his country to adopt the euro as its official currency.
At the same time, Croatia will join the Schengen area, which allows free movement of its citizens in 26 other European countries.
“For this eastern country, it is considered an achievement, since it confirms the stability of its financial system and its ability to control its borders”, indicates Frédéric Mérand, director of the Department of Political Science at the University of Montreal and specialist in European political economy.
To achieve this result, Croatia had to meet economic convergence criteria: consumer price stability, a deficit and public debt that do not exceed certain limits and the stability of the exchange rate of its currency, the kuna . Its financial markets also needed to be well regulated. Moreover, its GDP has increased almost continuously, if we exclude the pandemic period of 2020, to reach a level per capita that is close to that of Greece.
“If you look at Croatia’s economic indicators, for a country that was at war 27 years ago, it’s quite remarkable,” said Mr. Mérand. According to the professor, this catch-up can be explained, among other things, by the European Union’s support for the country’s development and its openness to European consumers and investors.
The advantages are very real for the newcomer, whose borrowing capacity should be strengthened. “A creditor will more easily lend to a country that has the euro. The reason is that a country which has the euro will inevitably be saved by the European Central Bank if there were a financial problem”, explains Mr. Mérand.
This situation can therefore turn against the other countries of the euro zone if one of the members carries out “fiscal splurges”. The Greek public debt crisis, fifteen years ago, is an example of this. “This is the reason why the measures of control, surveillance and therefore intrusion into national sovereignty have been greatly reinforced over the years”, underlines the expert.
Heartwarming welcome
The President of the European Central Bank, Christine Lagarde, has also sent a message to Croats on Twitter this summer. “We are proud to welcome you to the euro club. It’s a shield, it has its rules and we all play by those rules,” she said in a video.
The previous eurozone member was Lithuania in 2015. The next addition doesn’t seem to be coming soon, although all EU members have an obligation to eventually adopt the euro. . None of the seven members who still use their own motto are on track to meet the criteria anytime soon. For some, like Bulgaria and Romania, it is because their economic situation is not yet sufficiently stable for the taste of the European Union. Denmark benefits from an exemption clause. Others, such as Sweden and Poland, do not seem to be in a hurry to move forward, either because they do not see the economic interest or because they are reluctant to abandon a part of their sovereignty, explains Mr. Mérand.
In addition, the context of the war in Ukraine gives a particular flavor to the arrival of Croatia in the euro zone, estimates the professor of the University of Montreal. He says he observes a “shift of the EU’s center of gravity to the east”, which was once under the influence of the Soviet Union. “We see that the countries of Eastern Europe have a greater influence. They have arguments to put forward in relation to the threat of the Russian bear,” said Mr. Mérand, while specifying that Croatia’s integration process has not been accelerated for this reason.
Remember that Ukraine, Georgia and Moldova, former Soviet socialist republics, formally submitted their candidacy to the European Union in February and March 2022.