Croatia votes to enter the EU
Croatia voted by referendum yesterday to join the European Union. In the lowest turnout in any referendum deciding EU membership, Croats voted by a 2-to-1 margin to accede to the European Union. According to different reports, between 43 and 47 percent of eligible voters turned out to the polls on Sunday. Hungary’s accession vote was approved by referendum in 2003 with around 46% of voters casting ballots. According to the Associated Press, the low turnout is “a sign of how much the debt-stricken 27-nation bloc has lost its appeal within countries aspiring to join.” The New York Times writes that the large margin, “signal[s] that the bloc retains its allure despite the debt crisis engulfing the euro currency that many of its members use.”
Whichever line of argument is taken, it is clear that Croatia has plenty of its own economic worries to address. Its debt is rated just above “junk” level. Fitch has rated Croatian debt at BBB-, while S&P and Moody’s are due to examine Croatian debt in the second half of February. This leaves Prime Minister Zoran Milanovic with an imperative to push through a feasible budget in the near future. With the referendum behind them, Milanovic’s administration may have better luck with the budget, according to Timothy Ash of the Royal Bank of Scotland.
Croatia is scheduled to join the EU on July 1, 2013. It would be obliged to adopt the euro at a later date – possibly 2015 or 2016. This, of course, would be allowed only after Croatia meets the much-discussed Maastricht economic criteria. According to the CIA World Factbook of 2010, Croatia has a 58.2% Debt-to-GDP ratio, just below the 60% benchmark. Other data points give Croatia an even better outlook in debt while Deficit-to-GDP ratios vary below and above the desired 3%. While Croatia’s GDP was only 61% of the EU average in 2010, it is considered a “High-income economy” by the World Bank. EU members Romania and Bulgaria are in a lower classification than Croatia. Much of the rationale for a “yes” vote could be attributed to economics, as “yes” campaigners estimated $2.3 billion in aid from the EU would arrive in the next three years. “No” campaigns centered around the loss of sovereignty to the EU and the current malaise that is the Euro Crisis.
Of equal importance is this vote’s symbolic turn away from the repressive regime of Yugoslavia. Of the former members of Yugoslavia, only Slovenia has joined the EU. EU members voted in December against starting accession talks with Serbia and other ex-Yugoslavian states are even further behind in the accession process. For the time being, the soon-to-be EU of 28 must celebrate its newest member while facing the Eurozone of 17’s economic woes with renewed vigor.