EU ushers in Croatia as 28th state, but holds back Serbia

(BRUSSELS) - Europe's leaders embraced Croatia as the EU's 28th member Friday but dashed the hopes of its former Yugoslav neighbour Serbia to clear a new hurdle in its longstanding bid to join the club.

As Zagreb signed an European Union accession treaty, Belgrade was prodded to make further progress in defusing tension on the north Kosovo border and normalising relations with Pristina, after its 2008 breakaway.

Croatia's signature follows almost a decade of long and often fraught negotiations.

"You are warmly welcomed in the European family," said EU president Herman Van Rompuy.

"We are finally crossing the threshold of our European home," said Croatian President Ivo Josipovic, who along with Prime Minister Jadranka Kosor signed the legal paperwork at a ceremony attended by the EU's 27 heads of state and government.

The signing ceremony was the culmination of a long-held ambition, but comes at a tough moment as Europe's debt crisis undermines the unity of the bloc and saps the enthusiasm of ordinary Croatians.

Croatia's moment of triumph took place just hours after a bruising night of talks for EU leaders, who failed to agree a change to their treaty to tackle the crisis, winding up negotiations just after 5:00 am (0400 GMT) with a new and separate pact for the eurozone that threatens dire divisions.

Hinting the crisis could douse the attraction of EU membership for the Balkan states, European Commission chief Jose Manuel Barroso said: "We should not let the economic crisis overshadow this very important policy" of enlargement.

Before Zagreb can formally join the bloc on July 1, 2013, citizens will get to vote on the question in a referendum early next year.

The latest survey suggested that around 60 percent of Croatians would back EU membership.

Croatia on Friday took up observer status at the EU talks, which shattered the hopes of Serbia to be granted candidate status at the summit, a key step in its road to membership.

The postponement to February on a decision for candidate status caused sharp disappointment as Serbian President Boris Tadic gears up for elections next spring.

"Serbia cannot and will not give up on its European future," Tadic said in Belgrade. "Any other decision would have long-term consequences for the citizens of Serbia. We belong to Europe."

Croatia's accession "shows the positive pull of the EU, the transformational power also of the European Union and our continued and reinforced commitment to the enlargement process."

Croatia is the second of the six Balkan republics that formed the old socialist Yugoslavia, which collapsed in a series of 1990s bloody wars, to join the bloc.

Of the six -- Bosnia, Croatia, Macedonia, Montenegro, Serbia and Slovenia -- only the latter is an EU member, since 2004.

The signing of the treaty marks a historic chapter for Croatia 20 years after it proclaimed independence, sparking a four-year war with Belgrade-backed rebel Serbs.

With a population of 4.2 million, its economy is based mostly on Adriatic coast tourism. It has been largely in recession since early 2009 and the official growth forecast for this year is a modest 0.5 percent.

Unemployment is running at above 17 percent.

Factfile on Croatia

EUROPEAN COUNCIL 9 DECEMBER 2011 - CONCLUSIONS

Accession Treaty of the European Union 
with Croatia - guide