Dobrodošli Hrvatska! Croatia in the EU and its impact on the functioning of the European Union.

by Aleksander Thomas. Originally published on 2013/07/09

Before going into detail, I would like to share my past experience of living in Croatia. I have been able to experience first-hand the political and social complexities of the countries that are part of the ex-Yugoslavia. I have spent much of my free time travelling around the region, witnessing the different reactions of the people to the economic and political change as Croatia moves toward the EU membership. Croatians seem to be blindly enthusiastic about their impending membership of the EU and do not realize the impacts of changes that they will have to embrace, especially in the functioning of the government and the implementation of social policies They are totally focused on their elevated status in the region as an EU member. Slovenians (already members of the EU) are fearful that the accession of Croatia, a larger country and economy, will divert investments from their country and thus damage its already fragile economy. Serbians have retrenched still further into their mental bunkers, convinced that everyone is against them, despite having the largest economy and a significant potential to profit from sharing their borders with the EU. Bosnians hope that with Croatia entering the EU the risk of their country being split into two between Croatia and Serbia would be reduced. Meanwhile Montenegrins are looking to exploit the ever-closer border with the EU for economic benefit.

Scheduled for July 1^st, 2013, the entry of Croatia to the EU will not significantly affect the functioning of the EU, mainly due to the low socio-economic potential of the country. However, the membership may have some relevance to EU policies, especially in terms of enlargement and energy.

Croatia’s accession to the EU will probably be the only one in the Western Balkans for the decade to come, considering the early stage of integration of the other states of the region. Therefore, it is only in the case of Croatia that you can analyse the effects of enlargement in the Balkans for the functioning of the EU.

Enlargement and the EU budget.

The planned enlargement of the EU to include Croatia did not affect the negotiations on the multiannual financial framework for 2014-2020. Croatia as a member country will benefit in 2014 from the commitment appropriations which amounts to around € 11.7 billion (approximately EUR 10 billion in payments with premiums of about 3 billion euros). It is a marginal part of the EU budget (approximately 1.2% of the 960 billion euros) and was not a contentious issue during its development.

The new EU budget is more modest, and Croatia will no longer use the Instrument for Pre-Accession Assistance (IPA). However, some works on the new multiannual financial framework have shown that the amount of funding to support the countries covered by the enlargement policy will be similar to that of the current financial perspective.

Croatian Institutional capacity.

The effect of Croatia on the EU decision-making process will be small. The country has received 7 352 weighted votes in the Council of the EU and its position will not change the simplified voting procedures in the Council from 2014 substantially. However, due to the requirement of unanimity in some areas, such as EU enlargement policy, the country will help to shape some policy on an equal footing with other Member States.

As expected, the number of Croatian MEPs could be reduced from 12 as planned to 11 due to the need to adapt institutions to the Lisbon Treaty. The area is likely to be entrusted to the Croatian Commissioner.

EU enlargement policy.

Croatia will be part of the credited groups of countries supporting the further enlargement of the EU and will be active in the policy, especially in the Western Balkans. This is not only the foreign policy priority of the country whose interest is the rapid integration of the poorly developed countries in the region. Further enlargement enjoys popular support in Croatia. Croatia’s membership has changed the vision of the region, as the country will become the link between the EU and the Balkans and will be able to pass on experience of the accession negotiations to other countries in the region. However, unresolved bilateral disputes (including border disputes with Serbia) carry a risk of exploitation by Croatia of its position of a Member State in resolving disputes with its neighbours. Slovenia did just that and it slowed down the process of EU enlargement in the region.

Croatia will also incite the Member States to create a more open EU, extending to countries not covered by the enlargement policy. This is due to the benefits of the accession for Croatia, its connection with less developed countries and the importance of tourism in its economy. However, the position of Croatia between Central Europe and the Adriatic means that it will support not only the Member States wishing to strengthen cooperation with the Eastern Partnership countries, but also those interested in strengthening the Southern dimension of the European Neighbourhood Policy (ENP).

Cohesion policy and the Common Agricultural Policy (CAP).

As a beneficiary of the EU cohesion policy, Croatia will be likely to maintain a large budget for its implementation. This means that the country will strengthen the Group of Friends of the cohesion policy. Croatia will also benefit from EU subsidies under the CAP. However, it may not be one of the proponents of an outright distribution due to its 5 per cent share of employment in the agricultural sector.

Croatia and the European gas market.

The Government of Croatia has taken steps to increase the importance of the country’s energy security, especially in the integrated gas market. This is reflected, among other things, in the launch of the two-way gas interconnector with Hungary (capacity 6.5 billion m3 per year). Its importance will increase if the planned but then delayed construction of the LNG terminal on the island of Krk (planned capacity of 10 billion m3) would be completed. This would allow Croatia to be a full partner in the Central European Gas Corridor. However, in January 2013, the country has signed agreements with Gazprom on the construction of the gas pipeline South (South Stream), which will allow Croatia to fully satisfy its internal demand for gas. This treatment may indicate that the construction of the LNG terminal Adria Croatia will not be a priority for the coming years.

Conclusions and recommendations.

Just like other Europeans, the Croats firmly believe that the EU will come out of the crisis stronger and better integrated. How Croatia will use this opportunity depends largely on its citizens. At the same time, they have a big responsibility: Europe’s green light for further expansion in the Balkans depends on the country’s performance in the Union.