Why Croatia's President Is So Happy to Be Joining the EU Now

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For Croatia, it is all over bar the fireworks. The former Yugoslav republic will join the European Union on July 1, and without a second thought for the bloc's economic traumas.

I asked President Ivo Josipovic, while he was in London last week, why on earth his country would want to become the EU's 28th member now. Iceland's new government, after all, last week decided to freeze its EU membership talks and the U.K. is thinking seriously about leaving.

"I was asked this question hundreds of times," said Josipovic, in a verbal rolling of the eyes. The most important reason, he said, is that, unlike some others, Croats haven't forgotten that the EU was created as a peace project and they still need it. His country endured a brutal war in the 1990s and for him the EU means binding Croatia and its neighbors -- Serbia, Bosnia, Kosovo, Macedonia, Montenegro and Albania -- into that peace project. Slovenia, a fellow ex-Yugoslav republic, already joined the bloc in 2004.

"It is peace, stability, a big market and the European cultural space," said Josipovic, in an interview at the bar of London's Ritz hotel. Josipovic, apart from being a politician, is an academic, a lawyer and a composer of contemporary classical music.

He is also aware of just how tiny Croatia, population 4.3 million and falling, is. That makes it all the more important to be part of the political and trading bloc to which the country sends about 60 percent of its exports. "I understand the skeptics," he says, "but I am a Europhile and there are more reasons to stay together than split. Fragmented European economies can't compete."

At the moment, Croatia isn't competitive, its economy is in its fifth straight year of recession. Unemployment is 21 percent, up from almost 14 percent in 2008, and the population is aging. Foreign direct investment has been at subdued levels since 2008 and is concentrated in services such as banking and tourism, rather than in export-oriented industries as in other post-communist parts of Europe.

Still, Josipovic says he is confident that Croatia can break out of recession. The current government has embarked on a series of painful structural reforms, including cuts to the country's bloated public services -- a process that he said was helped along by EU membership requirements. At the same time, Croats are realistic about the EU and don't expect "more than is possible" from membership, he said.

Josipovic probably speaks for most of Croatia's elite. In the current climate, there will be no triumphalism of the kind seen when neighboring Slovenia joined the EU in the midst of an economic boom, says Emil Tedeschi, the head of Croatian snacks and beverage firm Atlantic Grupa. Yet those few who vocally oppose EU accession offer no alternative "except to stay isolated in the middle of the Balkans," he said.

Croats are divided about what they hope will happen after joining, according to Dejan Jovic, the chief analyst in Josipovic's office. Nationalists, he said, see EU membership as a way of locking in Croatia's sovereignty. At the same time, they want to close the EU's doors behind them, he said, separating permanently from Serbia, Bosnia and the other former Yugoslav states. Liberals, by contrast, see joining the EU as a step toward eliminating borders. They think carrying on the EU's enlargement to include the other Balkan countries is more in Croatia's national interest than separation.

At a reception in a splendid room in the U.K's Foreign Office on May 22, a pianist played some of Josipovic's compositions. The U.K. minister for Europe, David Lidington, said Croatia's accession was a moment "for all of us to celebrate."

In the Balkans, one joke doing the rounds is that the British are saying to Croatia: "Here, have our chair. We're just leaving." There was no hint of skepticism, though, in anything that Lidington, a politician from the euroskeptical Conservative Party, said in front of the Croatian television news cameras. He talked about unlocking the "benefits of EU membership." That's a very different message from the one many other Conservative MPs are delivering to their own people. Perhaps that is because, unlike for Croats, war isn't within the living memory of the vast majority of Britons.

(Tim Judah, the Europe correspondent for the World View blog, is a correspondent for the Economist and author of several books on the Balkans. Follow him on Twitter. The opinions expressed are his own.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Tim Judah at timjuday@gmail.com

To contact the editor on this story:
Marc Champion at mchampion7@bloomberg.net