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World
Print Edition> World
UPDATED: July 22, 2013 NO. 30 JULY 25, 2013
The EU Newcomer
Croatia's accession to the EU is both an opportunity and a challenge for the western Balkan state
By Liu Zuokui
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EU EXCITEMENT: Croatians celebrate the accession of Croatia to the EU in Zagreb, the country's capital, on June 30 (XINHUA)

Croatia officially became the 28th member of the EU on July 1, and the first country from the western Balkan region in the bloc. The move carries positive significance not only for Croatia but also for other western Balkan states and even the EU.

After 10 years of unremitting efforts since its first formal application to join the EU, Croatia's achievements in reform finally earned recognition by the international community and the EU through its inclusion in the bloc. Croatia's accession to the EU can help the country upgrade its international standing and expand its international influence. In addition, becoming a member of the EU market presents the country a good opportunity for development because it can draw more support from EU funding as well as external strategic investment—a major boost to its economic recovery. With its EU membership, Croatia has become a link between the EU and other western Balkan states. It can provide technical support for other states that want to join the group, thereby improving its leverage and increasing its voice in the region.

Croatia has set an example for other western Balkan countries, encouraging them to participate in European integration. Montenegro has been carrying out an orderly reform process since the country began negotiations to join the EU in 2012. Macedonia has also entered into negotiations. On June 28, Serbia got the green light to start EU accession negotiations on January 1, 2014, which could be seen as a reward for Serbia's efforts to normalize relations with Kosovo. The progress made by the three countries has brought a greater sense of urgency to Albania and Bosnia and Herzegovina in their EU accession processes. The two countries worry that they might be further marginalized if they fail to make progress. Joining the EU would help rid these western Balkan states of the memories of war, turmoil and conflicts, allowing them to reemerge on the world stage with a new look.

For the EU, giving Croatia EU membership is an expression of the bloc's confidence. Although the euro zone is still mired in a crisis, the EU has shown that it is resolved to address the crisis and will stick to its expansion policy. The EU has the capacity to exert influence in the greater region, changing the political and economic systems as well as the development paths of struggling neighboring countries in order to promote peace and social transition.

Challenges ahead

The coalition government led by the Social Democratic Party of Croatia will remain stable. The successful accession to the EU will help the ruling coalition rally support. The corruption case of the opposition Croatian Democratic Community in 2011 made it unable to challenge the coalition. Barring unforeseen complications, the coalition could rule until the next parliamentary election in 2016. A stable government will be an important guarantee for the future reform and economic development of Croatia.

However, Croatia's continued economic recession, high unemployment and fiscal deficit have caused public resentment. Its economy has been declining since 2009, and the economic growth this year is estimated to remain negative by 0.3 percent. The unemployment rate is projected to reach 20.4 percent in 2013, as opposed to 19.1 percent in 2012.

Croatia has sustained high levels of fiscal deficit and debt compared with emerging markets. Its fiscal deficit is expected to reach 4.2 percent of GDP this year, and could remain above 3 percent by 2017. Its public debt has been soaring since the beginning of the financial crisis in 2008, with its proportion to the country's GDP rising from 29.3 percent in 2008 to 53.7 percent in 2013. The ratio is expected to exceed 60 percent in 2015. Deteriorating economic conditions could lead to strikes at any time. Austerity packages advocated by the government may also arouse objections from trade unions. Therefore, the biggest challenge facing the Croatian Government is how to promote economic growth and steer itself out of high unemployment and the financial crisis.

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