The Euro Zone Finance Ministers backed Croatia’s bid to join the eurozone. The new member will be the 20th in the eurozone. But is Croatia ready? It may not be ready to lower its debt to GDP ratio below 60% before five years. But once it joins the ERM II, rating upgrades will be back on the agenda. And there is a chance Croatia will join as early as 2018.
The ECB closed its assessment of both countries’ banking sectors in early June. As a result, these two new EU members are taking a stand against the current European politics to slow down EU expansion. They are demonstrating that more integration is possible inside the EU. Meanwhile, other European politicians are still debating Brexit and fragmented responses to the Covid-19 crisis.
China has played a crucial role in this project. The bridge’s construction was initially dubbed the “bridge that would never be built.” It was launched twice in the 2000s, but the first time was canceled due to insufficient funding. But the second time around, the Chinese government funded the project and the costs doubled. In addition, the project now involves a bridge that spans the former Yugoslavia and Serbia.
A number of countries have joined the eurozone in the past. The first countries to join were Greece, Italy, Bulgaria, and Slovenia. All three countries spent two years in ERM II. But the Danish central bank has an exception in the Maastricht Treaty. This means that Denmark is legally exempt from joining the eurozone. Similarly, the United Kingdom had an opt-out prior to its Brexit in 2020.
The process of EU enlargement is not credible, and the core EU countries are highly sceptical about the political wisdom of enlargement. In addition, Croatia’s intervention in Bosnia only reinforces the centrifugal tendencies. The European Union should not lose hope of its membership, but instead work to maintain its existing stability. In addition, it must be more committed to its values.
While the welcome for Croatia was tepid, enlargement fatigue and migrant workers fears were evident in the surveys. There were 33 negotiation areas to be considered, with judicial reform and a raft of reforms. One of the high-profile targets was the former Croatian prime minister Ivo Sanader, who was recently convicted of taking millions of euros in bribes.
However, the lack of positive impact was short-lived. The EU had to wait until the European Council decided on an arrangement with the “Wider Europe.” The process is unlikely to be complete before the end of the year. But if the EU does decide to grant Croatia candidate status, it should create a new dialogue mechanism to support its bid. Whatever happens, the EU should ensure the new dialogue process does not compromise its democratic principles. After all, it is the ultimate test of its credibility.
The fifth criteria to join the eurozone is legislative compatibility. All national legislation must be in line with the statute of the European central bank. The ERM requires candidate countries to keep their currency in the range of +-15 percent of the central parity rate for at least two years. The aim is to give the candidate country control over its economy. This is not easy to achieve, but it is essential for a successful bid.