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Economic woes threaten to spoil Croatia's EU party

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(Globalpost/GlobalPost)

Croatia is preparing lavish celebrations to mark its historic entry in the European Union on July 1, but tough economic times mean that many here are wary of cracking open the champagne too soon.

While fireworks will light up the sky over Zagreb and other major cities as European dignitaries fly in to mark the culmination of Croatia's 10-year bid, EU membership has lost its sparkle for many.

Like many other eastern Europeans, Croatians embraced the idea of joining the EU as a way to anchor themselves to the West after years of being ruled from Belgrade as part of the former Yugoslavia and the bloodshed of the 1990s Balkan wars.

Dijana Ivascanin firmly supported EU entry when Croatia's bid was launched in 2003, but the crippling eurozone debt crisis has since sown seeds of doubt in her mind.

"I look at Greece and I'm scared," said the 41-year-old architect, as Athens labours under its sixth year of recession.

"The economic situation will not change for the better and it can only get worse. Everything will be more expensive and we will have less money," she said.

According to the most recent surveys, support for Croatia's EU entry was some 56 percent. Last year's referendum passed with 66 percent of the vote, but turnout was 43 percent.

Heavily dependent on tourism revenue from its stunning Adriatic coast, Croatia's economy has been either in recession or stagnant since 2009. Forecasts show it will contract by 0.4 percent this year.

The nation of 4.2 million will be joining a bloc that is struggling with unemployment at 10.9 percent, nine countries in recession and a eurozone debt crisis that shows little sign of abating.

Croatia's economy has suffered from the legacy of the 1991-1995 war, but it managed in the early 2000s to achieve some growth through foreign loans, state investments and household spending.

But the 2008 financial crisis in the EU, which accounts for 60 percent of Croatian exports, sent the economy in a tailspin.

To meet the criteria for joining the EU, Croatia passed a series of painful measures.

These included extraditing to a UN war crimes court Croatia's top officers, considered heroes by many at home, and improving minority rights for ethnic Serbs, with whom relations have remained strained since the war.

Loss-making shipyards were shut down or restructured and a major clampdown on corruption ensued.

Former prime minister Ivo Sanader was jailed for 10 years for corruption and several ministers and ruling party officials were also convicted for graft.

Croatia is the second of the six countries that emerged from the collapse of former Yugoslavia to join the EU, after Slovenia in 2004. Serbia is vying for a date to begin accession talks.

The Croatian government hopes that EU membership will attract investors and is eyeing 11.7 billion euros ($15 billion) in EU financial aid to boost the economy.

Many, however, fear that the country might lack the capacity and efficiency to meet Brussels requirements to get most of the money.

But former president Stipe Mesic, one of the architect's of Zagreb's EU membership bid, told AFP he was looking on the bright side.

"July 1 will mark the end of a long journey," he said.

"We definitely moved away from narrow-minded nationalism that marked the first years of our independence and accepted European standards," said Mesic.

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http://www.globalpost.com/dispatch/news/afp/130529/economic-woes-threaten-spoil-croatias-eu-party