Croatia wakes up as EU member under economic cloud

(ZAGREB) - Croatia woke up on Monday as the newest EU state after a night of celebrations dampened by fears that membership to the bloc could add to the recession-hit country's economic burden.

"Good morning, citizens of the European Union," popular daily Jutarnji List wrote on its front page.

Becoming the 28th member of the EU club was "the most important (event) in the history of the country," the newspaper said, but warned it was "absurd to expect that the better life will come immediately with joining the EU."

Croatia is only the second former Yugoslav republic to join the bloc, after Slovenia in 2004, following the bloody breakup of the ex-communist federation in the 1990s.

Yet membership joy was tempered by worries that Croatia, with its 4.2 million population, would feel the pressure of the debt-wracked eurozone on its already weakened economy.

"Nothing has changed today, this (EU) project will cost us dearly," said 60-year old taxi driver Sreten Ilicic.

"The first baby born in EU Croatia overnight is already in debt because of the membership."

In his celebratory speech in Zagreb overnight, Croatian President Ivo Josipovic vowed not to "let the cloud of the economic crisis overshadow our vision and optimism."

"The crisis is a challenge, an invitation to make tomorrow better than today," he told the crowd.

But German daily Die Welt downplayed Croatia's hopes, marking its entry with the words: "The next problem child arrives in the EU."

Croatia's centre-left government hopes that EU entry will attract badly needed foreign investment and boost the economy with 11.7 billion euros ($15 billion) of potential financial aid.

The country's tourism-oriented economy has been either in recession or stagnant for the past four years, while unemployment stands at around 20 percent.

Its per capita gross domestic product is 39 percent below the EU average, with only Romania and Bulgaria lagging behind, the bloc's figures show.

The deficit is expected to reach 4.7 percent of GDP this year and could hit 5.6 percent in 2014 -- well above the EU's three-percent limit.

Brussels has already warned Croatia that it could face a sanctions procedure if it breaches the EU's already widely flouted public debt threshold of 60 percent of gross domestic product next year, as forecast.

Influential Croatian daily Novi List warned that the "future depends on us."

"No matter how many mistakes it has made, as much as we think the EU is falling apart as we put on a jersey with number 28, it is still the most secure place to live in and it offers us a helping hand."

Austria's daily Kurier also stroke an upbeat tone on the newest bloc member.

"A new country joins the club during its gravest identity and economic crisis... European enthusiasm among many Croatians is a psychological fact that should not be neglected," it said.

In its first diplomatic efforts as a fully-fledged EU member, Croatia on Monday held talks with the presidents of six Western Balkan nations as well as the breakaway territory of Kosovo, to discuss their paths towards the bloc.

The goal of the talks "is to send a message to both EU and the region that Croatia... continues to give strong support to all neighbours and their EU ambitions," the presidency said.

In Belgrade, where he arrived after attending Croatia's celebration, EU president Herman Van Rompuy praised Belgrade and Pristina efforts to normalise ties in an EU-brokered process that has brought them Brussels approval.

"I trust that all Balkan countries... (will) leave aside divisions and concentrate on common interest, common values and common goals," he said.

Kosovo, although still not recognised by all EU members, is set to start preliminary discussions in the first step on the path to Brussels.

Montenegro began negotiations in 2012 while Macedonia obtained the status of candidate in 2005 but due to name dispute with Greece, it has yet to begin talks with Brussels.

Albania applied in 2009 and was twice rejected and Bosnia-Herzegovina has yet to apply for membership status.

Factfile on Croatia