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Croatia's debt woes mar EU entry

Friday, June 28, 2013 - 02:02

June 28 - Croatia will become the European Union's 28th member on Monday. But with an economy resembling a struggling euro zone state it's likely to face tough reforms the moment it signs up. Hayley Platt reports.

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Its Adriatic coast is a holiday hot spot. But Croatia's economic outlook is far from sunny. It's seen four years of contraction and job losses and its debt and budget deficit breach EU limits. When it joins the EU on Monday the European Commission is likely to impose harsh reforms. (SOUNDBITE) (Croatian) UNEMPLOYED WOMAN FROM ZAGREB, AMELA, SAYING: "When we enter the European Union, there will be more poverty." (SOUNDBITE) (Croatian) PAINTER FROM ZAGREB, VLATKA GRBOVIC, SAYING: "I am all in favour of cooperation with the European Union, but I think we've struggled to get our own Croatian state, only to enter into some kind of union." It's 10 years since the former Yugoslav republic first applied to be the 28th EU member and much has changed since then. Since 2008 output has fallen 11% - it's now only 60% of the EU average. One in five people are out of work and Croatia's businesses are stunted by lack of competition. It may not be joining the euro but it will still face some tough challenges. Nadan Vidosevic is President of Croatia's Chamber of Economy. (SOUNDBITE) (English) PRESIDENT OF CROATIAN CHAMBER OF ECONOMY, NADAN VIDOSEVIC, SAYING: "We will jump in the cold water and start swimming, you know. But, we decide to jump in the water, because we believe it will be at the end something that makes pleasure to us." Croatia's wine producers don't agree - under EU protection rules they'll be banned from selling their traditional red wine. They're trying to negotiate a get-out clause. Brussels policy analyst Corina Stratulat says both Croatia and the EU are aware there will be difficulties. (SOUNDBITE) (English) CORINA STRATULAT, POLICY ANALYST SPECIALISED IN THE BALKANS AND EU INTEGRATION AND ENLARGEMENT AT THE EUROPEAN POLICY CENTRE (EPC), SAYING: "We have worked very hard during the ten year long engagement and now both parts I think are entering this marriage very much aware of the fact that hard work lies ahead." But there's no turning back now - numerous celebrations are planned to mark accession. And a scale model of Croatia has been added to Belgium's mini-Europe park.