Study finds EU benefits outweigh cost for Croatia

11/09/2007

EU membership won't come cheaply for Croatia. However, the public can expect better wages and more jobs, a report predicts.

By Natasa Radic for Southeast European Times in Zagreb –11/09/07

Croatia hopes to receive an invitation for EU entry in 2009. [AFP]

According to a report from the Economy Institute in Zagreb, EU membership will cost Croatia 1.6 billion euros annually. At the same time, the public will immediately feel the benefits of European integration, in the form of higher salaries and reduced unemployment.

The 1,500 page analysis, released over the summer, details the likely economic impact of joining the bloc. It predicts higher standards of living and a boost to major industries -- especially trade and tourism -- as early as 2009, when Croatia hopes to receive an invitation.

According to the study, the unemployment rate will drop to 10% after accession, from the current 16%. The country's GDP will rise, as will overall economic growth. The national currency will remain stable, the influx of foreign direct investment will rise and prices will remain stable, with a maximum increase of 1.4%.

Croatians will earn more and spend more, but food, clothing, groceries and housing will not become more expensive, the study finds. However, summer homes on the coast are an exception. Their prices are expected to increase as the real estate market is liberalised.

Studies like this were conducted by other EU members just before their final negotiation round with Brussels, says Institute head Sandra Svaljek. In particular, a study conducted in Poland served as a model for the Croatian report.

Some of the benefits of joining the EU can be seen even now, during the accession process, Croatia's chief EU negotiator Vladimir Drobnjak said. Membership will not only bring a better standard of living and higher salaries, but will give additional value to Croatia's political and social structure. "That value is beyond measure," Drobnjak said.

Although the overall picture is rosy, the report acknowledges that some sectors will face challenges. Among them are the agriculture and fishery industries. State subsidies will be eliminated after accession, and EU funds will have to suffice in order for Croatian agriculture to be competitive on the EU market.

Reforms will be necessary. The state has already prepared an agriculture strategy aimed at facilitating the transition to an EU integrated market, with national quotas for every product.