(ANSA) - ZAGREB, 01 GEN - Croatia on Sunday switched to the
euro and entered Europe's passport-free zone -- two major
milestones for the country after joining the European Union
nearly a decade ago. At midnight, the Balkan nation bid farewell
to its kuna currency and became the 20th member of the eurozone.
It is now the 27th nation in the passport-free Schengen zone,
the world's largest, which enables more than 400 million people
to move freely around its members. "It is the season of new
beginnings. And there is no place in Europe where this is more
true than here in Croatia," tweeted EU chief Ursula von der
Leyen, as she arrived in Croatia to mark the occasion. She met
Croatian Prime Minister Andrej Plenkovic and Slovenian President
Natasa Pirc Musar at a border crossing with EU member Slovenia,
and was then to head on to Zagreb. Experts say the adoption of
the euro will help shield Croatia's economy at a time when
inflation is soaring worldwide after Russia's invasion of
Ukraine sent food and fuel prices through the roof. But feelings
among Croatians are mixed. While they welcome the end of border
controls, some fear the euro switch will lead to an increase in
the cost of living as businesses round up prices when they
convert them. "It will be difficult. Prices that are already
high will become even higher," said Ivana Toncic, a teacher from
Zagreb. - 'Elite club' - But tourist agency employee Marko
Pavic said Croatia was joining "an elite club". "The euro was
already a value measure -- psychologically it's nothing new --
while entry into Schengen is fantastic news for tourism," he
told AFP. Use of the euro is already widespread in Croatia.
Croatians have long valued their most precious assets such as
cars and apartments in euros, displaying a lack of confidence in
the local currency. About 80 percent of bank deposits are
denominated in euros and Zagreb's main trading partners are in
the eurozone. Officials have defended the decision to join the
eurozone and Schengen, saying that the country thus completes
its full EU integration. Croatia, a former Yugoslav republic of
3.9 million people that fought a war of independence in the
1990s, joined the European Union in 2013. Experts say the
adoption of the euro will lower borrowing conditions amid
economic hardship. Croatia's inflation rate reached 13.5 percent
in November compared to 10 percent in the eurozone. Analysts
stress that eastern EU members with currencies outside of the
eurozone, such as Poland or Hungary, have been even more
vulnerable to surging inflation. French President Emmanuel
Macron on Sunday hailed Croatia's switch to the euro, describing
it as a "stable and solid" currency that had contributed to
Europe's resilience in facing the consequences of the war in
Ukraine. - Boost for tourism - Earlier on Sunday, Croatian
National Bank governor Boris Vujcic symbolically withdrew euros
from a cash machine in downtown Zagreb. In recent days,
customers have queued at banks and ATMs to withdraw cash,
fearing payment problems during the immediate aftermath of the
transition period. As the clock struck midnight, a series of
events were held along Croatia's borders with its EU neighbours
to symbolise barrier-free travel. Foreign Minister Gordan
Grlic-Radman took part in a ceremony at a crossing point with EU
member Hungary, where the New Year countdown ended with a
traffic barrier being raised. A similar ceremony was held at the
Slovenia border, with Interior Minister Davor Bozinovic and
Slovenian Public Administration Minister Sanja Ajanovic Hovnik.
"Tonight we are celebrating New Year, new Europe with Croatia in
Schengen," Bozinovic told reporters. Croatia's entry into the
Schengen borderless area is expected to provide a boost to the
Adriatic nation's key tourism industry, which accounts for 20
percent of its GDP. Previously long queues at the 73 land border
crossings with Slovenia and Hungary will become history. But
border checks will only end on March 26 at airports due to
technical issues. And Croatia will still apply strict border
checks on its eastern frontier with non-EU neighbours Bosnia,
Montenegro and Serbia. The fight against illegal migration
remains the key challenge in guarding the European Union's
longest external land border at 1,350 kilometres (840 miles).
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Croatia adopts euro, enters borderless Europe club
"It is the season of new beginnings", von der Leyen