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Officially and unofficially, the euro reigns in the Balkans

27 December 2011, 13:40 CET
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(BELGRADE) - The eurozone crisis has not prompted panic in the Balkans even though the euro is the currency of reference here and Montenegro and Kosovo use it despite being a long way from membership.

Throughout the region, loans are taken out and savings made in euros while salaries are determined based on the European single currency.

"In the past, all of us in the Balkans were in love with the German mark. Since it disappeared, the euro rules," explained Zoran Jovanovic while sipping coffee at the popular Belgrade Biblioteka cafe.

"It is the case in Belgrade, Zagreb, Podgorica, Skopje, Tirana, Sarajevo or even Pristina, everyone thinks in euros," said the 40-year old architect.

While some European Union states struggle for years to fulfill the strict economic and monetary criteria to enter the single-currency zone, Kosovo and Montenegro have already made the euro their national currency.

Podgorica unilaterally adopted the euro after it proclaimed independence from Serbia in 2006. Pristina started using the euro as soon as the currency went into circulation in 2002.

Before the euro was introduced, the two capitals which were at odds with Belgrade and had abandoned the dinar and used the German mark.

"The euro was adopted in 2002 at the same time as in Europe," Agron Dida of Kosovo's Central bank told AFP.

"The EU did not decide officially to grant Kosovo the right to use the euro but there was a gentlemen's agreement between the UN and EU to allow Kosovo to use it," he said, explaining how the first batch of 150 million euros sent from the German central bank to Pristina was transferred in a plane under NATO military protection.

The adoption of the euro in this region has a negligible impact on the eurozone. Kosovo's 2012 budget is only 1.5 billion euros ($1.96 billion), slightly higher than in Montenegro, while just the Greek debt is over 350 billion euros.

Throughout the region, any big purchases are done in euros -- buying or renting property, paying private school fees and even gym memberships.

"The prices are in euros and the rent is settled in euros," explains Milica Peric of a Belgrade real estate agency specialising in renting to expatriates.

Even Belgraders who renting from private owners must pay in euros, although it is officially illegal.

"I have been renting apartments for more than ten years and there was not a single landlord who wanted (Serbian) dinars for rent. It's always euros," Ivan Rokvic, a 37-year old engineer, told AFP.

In shops and restaurants throughout the region, euros are generally accepted without any hassle.

"In many stores where the prices are displayed in euros, a customer has to pay in euros," said Lorena Dedja as she admired a 350-euro dress in a Tirana shop.

Foreign drivers can pay highway tolls in euros in Croatia, Serbia and Macedonia. Travel agents offer packages with euro prices.

Those who keep savings prefer to bank euros. In Serbia, euro savings make up 92 percent of the total private savings in foreign currencies. In Croatia the figure is 81 percent, in Bosnia 60 percent and in Albania 48 percent.

The same goes for loans -- 81 percent in Serbia are denominated in euros and 60 percent in Croatia.

But only a small percentage of people are actually paid in euros, mostly those working for foreign businesses.

Most people continue to have faith in the euro despite the crisis.

"The euro is a solid currency and I am convinced that the European leaders will save it," said Jasmin Delic, a Sarajevo computer banking expert who holds his savings in euros.

If the euro does not survive, many in the region are ready to return to their first love -- the German mark.

"If the euro is abandoned, the best decision will be to return to the German mark," Montenegrin economic expert Milenko Popovic told AFP.

Pristina salesman Mentor Latifi, 40, also believes Kosovo would return to its previous default currency in such a scenario.

"Kosovo is a small country and its hopes lie in its link with Germany. We will adopt the German mark. And we will not be the only ones to do so," Latifi predicted.

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