Ten years after joining the EU, Croatia has finally been given the green light to join the Schengen and Eurozone
On 1 January 2023, Croatians rung in the new year with their country joining the Schengen and the eurozone. The former Yugoslav republic, which gained independence in 1991, joined the EU in 2013 as part of the bloc’s first enlargement since 2007. A decade later, joining the Schengen and Euro zones are being touted as major milestones in the process of deeper European integration for the Balkan nation of 4 million people. The Schengen zone, covering 420 million people, is the world’s largest passport-free travel and borderless zone. Created in 1985 in the Schengen town in Luxembourg beginning with only five countries initially; the Schengen Agreement allows people, goods, and services to travel freely amongst its member countries, without having to pass identity checks at checkpoints by showing travel or customs documentation. The area covers 23 EU member states plus the four members of the European Free Trade Association - Iceland, Norway, Switzerland, and Liechtenstein, allowing citizens of these countries to work, study, visit, and live amongst any of these nations. Croatia’s entry as the 27th country into the Schengen zone is the first new entry in 11 years and will abolish all border controls between Croatia and other Schengen area countries for people crossing by land, rail, or sea. For people travelling through air, the checks will end on March 26, 2023. On 1 January 1999, the euro was launched as an electronic currency, with coins and banknotes launching later on 1 January 2002. The eurozone comprises those member states of the EU that have replaced their national currencies with the euro. Today, 347 million Europeans use the euro daily, as emphasised by European Commission President Ursula von der Leyen.
Joining the Schengen and Euro zones are being touted as major milestones in the process of deeper European integration for the Balkan nation of 4 million people.
After Lithuania’s euro adoption in 2015, Croatia becomes the 20th country to replace its local currency kuna with the euro. However, owing to low confidence in the kuna, the euro was already in widespread use even before, accounting for almost 80 percent of Croatia’s total bank deposits and 60 percent of loans.
Owing to low confidence in the kuna, the euro was already in widespread use even before, accounting for almost 80 percent of Croatia’s total bank deposits and 60 percent of loans.
For Croatia where tourism accounts for 20 percent of GDP, the boost to tourism will be amongst the greatest benefits of joining both the Schengen and Eurozone. The removal of border controls will eliminate the long lines at the 73 land border crossings with Slovenia and Hungary where most visitors come by car. And with 70 percent of its 20 million yearly tourists also arriving from eurozone countries, the common currency will eliminate the need to exchange money. Although whole-heartedly favouring their country’s entry into the Schengen Zone, Croatians have exhibited mixed sentiments towards adopting the euro, with only 55 percent in favour, while others fear a potentially increased cost of living. Interestingly, even in 2013, when Croatia was due to join the EU, only 45 percent of Croatians approved the move, citing similar fears of increased costs of living and competition from other EU countries. While the adoption of the euro will undoubtedly bring substantial economic benefits, the World Bank states that Croatia will still need to adopt suitable national policies to raise its average income levels, exacerbated by a declining population coupled with many young Croatians preferring opportunities in wealthier neighbouring countries, at par with the rest of the EU.
For Croatia where tourism accounts for 20 percent of GDP, the boost to tourism will be amongst the greatest benefits of joining both the Schengen and Eurozone.
In December 2021, the Council confirmed that Croatia had fulfilled all the technical requirements, including managing external borders, data protection ,and police cooperation, of its Schengen evaluation process that began in July 2015, to join the Schengen area. In November 2022, the European Parliament voted in favour of Croatia joining the Schengen area, with 543 MEPs in favour, 53 against, and 25 abstaining, urging the Council to adopt a final decision. In December 2022, the final decision affirmed Croatia’s inclusion in the Schengen and eurozone through the unanimous vote by EU interior ministers in the Council. With Croatia’s accession to the Schengen zone, the EU’s external border shifts from Slovenia to Croatia. Thus, Croatia will have to fulfil the added responsibilities of securing the EU’s eastern external frontiers from non-EU neighbours Serbia, Montenegro, and Bosnia and Herzegovina through strict border controls.
In November 2022, the European Parliament voted in favour of Croatia joining the Schengen area, with 543 MEPs in favour, 53 against, and 25 abstaining, urging the Council to adopt a final decision.
Ever since the 2015 migration crisis, immigration is amongst the most electric issues on the continent, being further complicated by the large influx Ukrainian refugees. According to the EU’s border police Frontex, the first 10 months of 2022 recorded 77 percent higher irregular entries from 2021 making this the highest figure since 2016. In 2022, Austria recorded 100,000 illegal border crossings, with most migrants arriving through the Western Balkans route through an EU external border, thereby, complicating Romania and Bulgaria’s chances of joining the Schengen area. The Austrian position drew criticism from the Romanian government with Prime Minister Nicolae Ciucă referring to this as “inflexible” and Romania’s Ministry of Foreign Affairs lamenting its “regrettable impact on European unity in the current complicated geostrategic context”. Indeed, Croatia’s accession does give a symbolic boot to European unity in the face of the ongoing Russian aggression and Russia’s hopes of fracturing EU unity, and the inclusion of Romania and Bulgaria into the Schengen and Eurozone may have further boosted this morale. As Croatian Prime Minister Andrej Plenkociv reiterated, these are “two strategic goals of a deeper EU integration”. Besides the benefits to the acceding member state, the EU as a whole also gains though the strengthening of its common currency, especially in the face of current challenges like soaring inflation pressuring the eurozone. As ECB president Christine Lagarde highlighted, Croatia’s addition is “a vote of confidence for the euro area”. With celebrations organised at the border, there is no doubt that for the Croatians, the new year has brought much reason to rejoice. Unfortunately, Romania and Bulgaria will have to wait longer to celebrate.
In 2022, Austria recorded 100,000 illegal border crossings, with most migrants arriving through the Western Balkans route through an EU external border, thereby, complicating Romania and Bulgaria’s chances of joining the Schengen area.
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Shairee Malhotra is Associate Fellow, Europe with ORF’s Strategic Studies Programme. Her areas of work include Indian foreign policy with a focus on EU-India relations, ...Read More +