Croatia takes final steps into EU with open border and euro switch

Croatia has switched to the euro and entered Europe’s borderless zone – two steps its prime minister called a “historic moment” for his country, which joined the European Union nearly a decade ago.

On Sunday the Balkan country bid farewell to its kuna currency and became the 20th member of the eurozone.

It is also now the 27th country in the passport-free Schengen zone, the world’s largest, which enables more than 400 million people to move freely around its members.

“It is the season of new beginnings. And there is no place in Europe where this is more true than here in Croatia,” tweeted EU chief Ursula von der Leyen, as she arrived in Croatia to mark the occasion.

She first met Andrej Plenkovic, the prime minister, and the Slovenian president, Natasa Pirc Musar, at a border crossing with EU member Slovenia.

During a joint press conference at the Bregana crossing, Von der Leyen praised “two immense achievements” for the EU’s newest member reached on the same day.

“So indeed this is a day for the history books.”

Plenkovic echoed the point, stressing it was a “historic moment” as the former Yugoslav republic, which fought a war of independence in the 1990s, had achieved what he called its “strategic goals”.

Von der Leyen then headed to Zagreb where she was treated to a coffee at the main square by Plenkovic, who in a symbolic gesture paid in the new currency.

Experts say the adoption of the euro will help shield Croatia’s economy at a time when inflation is soaring worldwide after Russia’s invasion of Ukraine sent food and fuel prices through the roof.

While Croatians welcome the end of border controls, some fear the euro switch will lead to an increase in the cost of living as businesses round up prices when they convert them.

“It will be difficult. Prices that are already high will become even higher,” said Ivana Toncic, a teacher from Zagreb.

But tourist agency employee Marko Pavic said Croatia was joining “an elite club”.

“The euro was already a value measure – psychologically it’s nothing new – while entry into Schengen is fantastic news for tourism.”

Use of the euro is already widespread in Croatia. About 80% of bank deposits are denominated in euros and Zagreb’s main trading partners are in the eurozone.

Officials have defended the decision to join the eurozone and Schengen, saying that in doing so Croatia completes its full EU integration. The country of 3.9 million people joined the EU in 2013.

Experts say the adoption of the euro will lower borrowing conditions amid economic hardship. Croatia’s inflation rate reached 13.5% in November compared to 10% in the eurozone.

Analysts stress that eastern EU members with currencies outside the eurozone, such as Poland or Hungary, have been even more vulnerable to surging inflation.

The French president, Emmanuel Macron, hailed Croatia’s switch to the euro, describing it as a “stable and solid” currency that had contributed to Europe’s resilience in facing the consequences of the war in Ukraine.

Croatia’s entry into the Schengen area is expected to provide a boost to the Adriatic country’s key tourism industry, which accounts for 20% of its GDP. Previously long queues at the 73 land border crossings with Slovenia and Hungary will become a thing of the past.

But border checks will only end on 26 March at airports due to technical issues. Croatia will still apply strict border checks on its eastern frontier with non-EU neighbours Bosnia, Montenegro and Serbia.