report
Status: 12/31/2022 4:59 p.m
Croatia introduces the euro on January 1st and joins the Schengen area. The tourism trade and industry welcome this. At least the population of the Balkan state treats the euro with cautious hope for better times.
Traveling by train from Munich to Zagreb, the journey through rural Upper Bavaria, snowy mountain valleys in Austria and through forest-rich Slovenia. Then: longer stop in Dobova, doors open, some travelers stretch their legs at this train station on the Slovenian-Croatian border. You know what’s coming.
Not only the locomotive is changed in Dobova. The police check ID cards. And that can take time, as Zjelko and Ante know from experience. One to two hours sometimes in summer. They even waited four or five hours once.
control and waiting
The brothers drive the route often. Just like Igor, a friendly Swabian with family and business contacts in Croatia. He remembers the time before EU accession in 2013. Back then, when customs were still checking, the controls were much stricter.
Now everything is “relaxed”. But it’s still intense and time-consuming: This time it’s four police officers in bulletproof vests who ask for passports, examine visas, request information by radio, and stamp papers.
2023 – a special year for Croatia
Arrival Zagreb. People and music everywhere, fans and flags in red, white and blue. Tens of thousands celebrate the return of the national soccer team after their strong performance and third place at the World Cup in Qatar. On the central Ban Jelačić Square, the cheers and crowds are the greatest.
On the facade of a house: four meter-high luminous digits form the year “2023”. Not only is it a special moment for the country, it will also be a special year for Croatia. The Euro-Schengen year, so to speak.
Prices in two currencies
The goods in the shop windows are now advertised twice, in the national currency Kuna – and exactly in euros. This should make the transition easier and protect against rip-offs. Sellers who round up too much should be blacklisted – consumer protection.
But what do consumers actually say about the euro replacing the kuna? A market customer says it’s a bit of a shame, but the euro brings many advantages. In addition, someone decided this and “we can only hope that it will be good”.
Salaries and pensions are very low in EU comparison
It was decided by the EU institutions and before that by the Croatian government, led by the pro-European Andrej Plenković from the national-conservative HDZ party. And the market customer’s hope that the euro “will be good” is shared by the other 3.9 million people in the country. The average net salary is less than 1000 euros, pensions are just 200 or 300 euros and thus far below those in Germany. Food, clothing and travel are sometimes hardly cheaper.
Never before has the introduction of the euro been accompanied by such global economic upheavals. Ukraine war, inflation, supply chain shortages. In November, the inflation rate in Croatia was over 13 percent. Aid and relief packages were either small or complete compared to those in Germany.
Not far from elegant boutiques, fruit sellers and florists brave the cold. One says the euro is “definitely bad,” it makes everything more expensive, and that’s how it was in Germany and Austria. Another seller says: He has relatives in Germany and Austria, everything will be easier for them.
Turquoise sea, secluded beaches: Germans in particular like to travel to Croatia – and will soon be able to pay in euros there.
Image: REUTERS
The tourism industry hopes for new markets
Visit to Kristjan Staničić, the head of the Croatian Tourist Board. Staničić welcomes you in a room with pictures on the walls showing Croatia from its most beautiful side: turquoise blue sea, secluded beaches. And all that so close, as Staničić emphasizes. Croatia can be reached by car and is worthwhile even for short vacations. You want to open up new markets. Eco- and cultural tourism, more short vacationers, better gastronomy, fuller accommodations even outside of the summer season.
The Germans in particular like to come. There were a good 24.5 million overnight stays in the first eleven months of 2022 – strong growth compared to the last year before Corona, 2019. Other Mediterranean countries were not back on track so quickly, says Staničić.
Almost everyone is familiar with the euro
The government and the National Bank are promoting the new currency in information brochures and radio spots. Still, it doesn’t seem like anyone needs visuals. Everyone is familiar with the euro, it has been an important foreign exchange reserve and unofficial second currency for years. However, the country is actually not really ready for the euro, says economist Maruška Vizek.
It has to do with structural problems. Croatia is safe, clean and has a few competitive companies, for example in the logistics sector. But wages are too low and tourism alone is a weak mainstay.
In addition, the Balkan region is suffering from emigration, is politically unstable, and debt risks are real. Nevertheless, the country will benefit from the euro in the short term – also from the Schengen area. Thanks to the Schengen visa, it could become more attractive for students and employees.
Almost all Croatians are familiar with the euro, for years it has been an important foreign exchange reserve and unofficial second currency.
Image: picture alliance/dpa/AP
Industry hopes for more skilled workers and lower costs
More professionals – the Končar Group from Zagreb would be happy. The traditional group with 3700 employees builds, among other things, trains, generators, but also wind turbines, solar systems and power plants. Board member Božidar Poldrugač explains that you need very good people.
International know-how, cooperation across national borders, lower costs: A large company like Končar welcomes the Euro-Schengen double whammy, even if EU accession in 2013 was even more important. However, when asked about higher wages, Poldrugač is reluctant. You are already paying well by Croatian standards – a lot depends on the geopolitical situation.