9 May 2013 - EC press release (SPEECH/13/398

A) General

In less than two months, Croatia will become the newest EU Member State. This is the result of a long, and often painful, process, starting with the country's application to join the Union in 2003. But it is also the result of a successful enlargement policy – it is a success for Croatia, for the region of the Western Balkans as a whole, and for enlargement.

Before looking at what the EU brings to Croatia, and, vice versa, what Croatia brings to the EU, let me say a couple of words on the accession process Croatia went through, in order to reach this point: based on the "lessons learnt" from the previous enlargement round, the EU placed even greater emphasis on rule of law issues – a new negotiating chapter was created, on judiciary and fundamental rights, and strict conditionality was used.

Upon the conclusion of negotiations, and the signing of the accession treaty in December 2011, Croatia was placed under a strict pre-accession monitoring regime – another innovation used for the first time by the EU, in order to ensure that the acceding country will be ready to join. And the hard work paid off:

In the last Report on Croatia's accession preparations – so called Monitoring Report published on 26 March this year, the Commission has acknowledged that Croatia will be ready to join the EU on 1st July.

B) Enlargement benefits (economic)

In the current crisis we tend to forget the enlargement benefits as we observe our economies through the bleak indicators of the current crisis. But this crisis has nothing to do with EU enlargement. On the contrary, the economic reforms and benefits achieved thanks to the enlargement will help bring Europe back on track again.

So, the EU enlargement is not part of the problem. It is part of the solution because the enlargement extends the internal market. It opens trade, investment and financial flows, thus giving opportunities to firms in the EU and in the acceding countries.

Trade between the old and new Member States grew almost threefold in less than 10 years preceding the 2004 and 2007 enlargements. Even more illustrative is the fivefold increase in trade among the new Members themselves.

More trade translates into more growth and jobs. Central and Eastern Europe grew on average by 4% annually in the period 1994-2008. It is estimated that the accession process itself contributed almost half to this growth e.g. 1.75 percentage points per year over the period 2000-2008. The economic dynamism of these countries generated three million new jobs in just six years from 2002 to 2008.

Growth in the acceding countries contributed to growth in the old Member States through increased investment opportunities and demand for final products. It contributed 0.5 percentage point to the cumulative growth of EU-15 in the period 2000-2008.

As the internal market was expanding, the EU further advanced in becoming the most interesting place to invest in the world. EU-15 firms were investing towards Central and Eastern Europe, but they were receiving even more investment from other parts of the world.

Financial flows that accompanied the enlargement process showed textbook behaviour. They flew from richer to poorer countries and helped the firm restructuring and raised people's living standards. They did not contribute to excessive public and private debt.

Following the outbreak of the crisis in 2008, the foreign financial investors remained in the region. This would most probably not be the case if the countries had not been firmly integrated in the EU or had European perspective.

C) Remaining homework for Croatia

On the economic front, the situation is very challenging: Until 2009, the Croatian economy enjoyed a period of more than ten years of growth in foreign investment, accompanied by low inflation, a stable exchange rate and developed infrastructure. Since then, also due to the global financial crisis, investment activity has been decreasing. Structural problems remain. Complex bureaucracy and corruption have a negative effect on the economy as well.

The Commission forecast, in spring 2013, is that Croatia's GDP for 2013 will fall by 1%. This is a little better than the projected negative growth of 2.0% for 2012. Some important initial steps have been taken regarding the implementation of urgently needed structural reforms in the economy, to improve competitiveness and growth prospects. Croatia's informal participation in the 2013 European Semester provides a good opportunity to develop the structural reform agenda further and to pursue its vigorous implementation. Within this framework, the Commission will assess the Economic Programme, which was submitted by Croatia in April.

At the same time, the Commission puts great emphasis on Croatia's continuation of the fight against corruption: already in 2013, the Commission will publish its first anti-corruption report for the whole of the EU, including Croatia. The Commission consistently calls on Croatia to continue the fight against corruption on all levels, including at the highest ones, and to continue building a sustainable track record in this area.

Concerning the future financial aid, Croatia needs to ensure that adequate administrative capacity to manage the funds and a pipeline of high quality and mature projects is in place. This is absolutely necessary for the efficient and effective use of the structural and cohesion funds.

As Croatia's borders will become the EU's borders, special attention will be needed concerning the staffing and training of its border police, the facilities, and the technical equipment which is necessary. Progress has been made in this area, and it has been recognised by the experts in the peer review missions. The challenge now is to find the necessary funds in order to realise all outstanding commitments. Croatia has been planning to do this also through the Schengen Facility Fund.

D) What will the EU bring to Croatia.

So what will the EU bring to Croatia? Well, do not expect dramatic changes overnight! Croatia will not be a different country on 1 July than it was on 30 June. Croatia is already a different country, having been transformed through the enlargement process. Important and fundamental changes have already taken place, due to the reforms necessary for Croatia to make progress in the accession negotiations.

These changes may not be evident, as they happened slowly. But they are very much present: in the increased efficiency of the judiciary, in the fight against corruption and organised crime, in the changes made in industry, competition etc. But also in the application of EU standards, for example in the veterinary sector, thus improving food safety for Croatian citizens.

Where changes will be obvious after 1 July is, of course, in border management: Croatia's borders will become the EU's external borders. This will have an effect, for example, on Croatia's neighbours – let me recall that the Commission has been working for many months now, with Croatia and Bosnia and Herzegovina, to find solutions for the new situation that will emerge for Croatia's neighbours, as far as border management is concerned, after the country joins the EU.

Croatian citizens will also feel the very tangible changes brought about by the country's accession in what concerns their possibilities to study and work abroad: they will now share the same opportunities as the citizens of other Member States – subject, of course, to the possible transition periods for workers.

Croatian companies will participate fully in the internal market – and will have direct access to over 500 million consumers. This is not an opportunity to be taken lightly, as it can translate into more jobs and better living standards for the Croatian citizens.

Croatia will be eligible for structural and cohesion funds – just for the second half of 2013, the total EU funds approved for Croatia amount to EUR 687.5 million [but to be noted that Croatia's contribution to the EU budget amounts to EUR 374 million].

But let us leave aside the economics, for the time being, and look at the broader picture: by entering the EU, Croatia will shoulder part of the responsibility for the European project. Croatian citizens will be recruited and will work for the EU institutions [249 officials and temporary agents are in the process of being recruited]. Both through the work of its citizens, and by its active role in the EU deliberations, Croatia will help shape the future of the EU.

Let us also not forget that, after accession, Croatia will set two new strategic goals: joining Schengen and adopting the euro. Both developments will also have very real and tangible results for its citizens.

E) What will Croatia bring to the EU.

To answer this question, let us look first to the Western Balkans region. Croatia is the second country to emerge from the former Yugoslavia, to join the Union. In doing so, it shows two things: that the enlargement process is very much alive, and that the EU meets its commitments when the countries of the region make the necessary reforms.

For the EU, having Croatia as a member means, first of all, extending the area of political stability in a strategic European region that was torn by conflict not so long ago.

It also means expanding the EU's internal market, creating new opportunities for EU business and customers.

More to the point, it means applying EU standards in various, crucial areas that have a direct impact on Europe as a whole: energy security, for example, environmental protection, and phyto-sanitary standards.

Last but not least, it enhances the EU's cultural diversity and human potential. The EU is more than a sum of its parts, it is a vibrant and dynamic society that can only be enriched and strengthened by its newest addition. By making the most of the new tourist opportunities offered by Croatia as an EU Member States, the citizens of other Member States will have the opportunity to see for themselves the dynamism, vitality and rich culture and history of Croatia and its people.

F) The road ahead

We will continue to work with our Croatian colleagues so that any commitments still outstanding are met before accession. And after the accession, Croatia will be subject to the same monitoring mechanisms as the Member States and, if it does not comply with the acquis, will be faced with the same procedures, and possibly penalties, as any other Member State. And of course challenges remain, including on the economic front, or the fight against corruption, which requires continuation of efforts.

Let me conclude by saying that the Commission is confident that Croatia will be ready for membership on 1 July. Croatia's active observer status will come to an end. The work to turn membership into a success will start.