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Croatia and Slovenia have agreed on how to resolve a long-standing banking row that has threatened to hold up Zagreb's EU admission, Croatian Prime Minister Zoran Milanovic said here on Thursday.
"We have agreed with our Slovenian colleagues to bring the story on (Croatia's EU treaty) ratification to an end," Milanovic told a government session.
"Now we have effectively removed this obstacle for our EU entry" which is due to take place in July, he added.
Around 430,000 Croatians held accounts in Slovenia's Ljubljanska Banka (LB) before the former Yugoslavia collapsed in the 1990s and the bank closed down its operations in Croatia.
Croatia wanted Slovenia's state-owned Nova Ljubljanska Banka, the successor to the LB, to stump up 270 million euros ($352 million) to cover deposits it paid back to a majority of the account holders in the 1990s.
Earlier on Thursday, Foreign Minister Vesna Pusic and Slovenian state secretary Tone Kajzer initialled a memorandum of understanding according to which the dispute would be resolved within internationally-brokered talks on the distribution of assets owned by the former Yugoslav republics.
Milanovic said he would sign the memorandum with outgoing Slovenian Prime Minister Janez Jansa on Monday in Mokrice, Slovenia.
According to the document, the governments of the two former Yugoslav republics pledged to find an "overall solution for the issue as soon as possible .... and thus continue with active talks under the auspices of the Basel Bank for International Settlements (BIS)."
In addition, the memorandum said that Zagreb pledged to withdraw suits it had filed against the Nova Ljubljanska Banka, through its two major banks, while Ljubljana committed itself to "immediately launch the procedure to ratify Croatia's EU accession treaty" in its parliament.
Croatia is set to become the European Union's 28th member on July 1, but it still needs all member states to ratify its accession agreement.
So far 21 EU members have ratified the treaty.