Croatia’s Uncertain Economic Future In EU

By Drazen Remikovic

Although the economic engine that comes with EU membership has been greatly diminished by the global credit crunch and the struggling euro, Croatia can expect to see some benefits when it becomes the EU’s 28th member next year.

Once a member, Croatia will gain access to the EU funding programmes — including being a partner in the Union budget. The budget, which was 864 billion euros from 2007-2013, covers expenditures in member states for sectors including agriculture, internal policies, administration and compensation.

“Croatia will benefit from almost 700m euros in commitments in the second half of 2013, but will have to set up an appropriate management and control systems to access these funds,” Anca Panduraru, press officer at the EC Enlargement and European Neighbourhood Policy, told SETimes.

She added there are no fees to enter the EU.

“Croatia will have to pay no more than 267m euros to the EU budget in 2013, the so-called ‘own resources’. In reality, the figure is likely to be lower,” she said.

The Croatian market will fully integrate with the EU market after accession, allowing Croatia’s major exports — transport equipment, machinery, textiles, chemicals and fuel – greater access to EU customers.

Membership in the EU may also help Croatia improve its negative BBB- credit rating from Fitch, experts said.

“The new budget, to be adopted by mid-February, will be the crucial moment in credit rating,” Sanja Bach, a Ministry of Finance spokesperson, told SETimes.

It’s unknown how much money the country must pay to the EU budget from 2015 to 2018, because the payments are individually determined by each country’s GDP.

“The idea that there is big cash from which a [newly joined EU] country can draw money is overblown. European cash was available 20 years ago, but then there was a small member number, and much could be drawn from that cash. Today, that cashbox is more empty than full. The conditions for getting money from EU funds are drastically tighter in recent years, precisely because the cashbox is more empty than full,” Zeljko Lovrincevic, professor at the Zagreb Economy Faculty and a member of the Institute for Economy of Zagreb, told SETimes.

The Ministry of Rural Development intends to apply for EU project financing in development of rail infrastructure, waste management and employment.

“Numerous projects are in preparation to apply for EU funding. In addition to infrastructure ones, there are projects in agriculture, environmental protection and others,” Ivanka Drmic, a ministry spokeperson, told SETimes.

Some industries may suffer, however. Croatia intends to privatise a total of six shipyards by the end of 2013, and it is estimated that some 1,500 shipyard workers will lose their jobs.

“The farmers will certainly lose in the transition, and shipyard workers; in these two sectors there will be a many layoffs. However, a positive impact will be in the industry producing electric components, automobile parts and materials, and others,” Lovrincevic told SETimes.

Vedran Dragicevic, the president of the Croatian Union of Metalworkers told SETimes there will be layoffs after Croatia’s EU accession, and in other sectors too — construction, textile industry, but said the union will fight for worker’s rights.

“We will not allow the EU entry process to break our backs. We will fight to ensure the workers are cared for,” Dragicevic said.