Wednesday, 3 August 2022

Eurozone Accession: Are Croatian Exchange Offices Doomed to Failure?

August the 3rd, 2022 - Are Croatian exchange offices doomed to failure as Croatian Eurozone accession rapidly approaches, and with the sending of the kuna to the history books set to take place on the 1st of January, 2023?

As Poslovni Dnevnik writes, six hundred kuna for one hundred euros has become a common amount that is obtained when exchanging these currencies during the height of the summer tourist season when you have to convert money at local Croatian exchange offices. That is all due to alter with the arrival of the euro as the country's official currency, and the need for Croatian exchange offices to exist at all will be greatly reduced. Many will close their doors and never open them again, reports HRT.

If you ask the tourists spending time (and money) here in Croatia themselves, everything is very clear and simple, adopting the bloc's single currency is a good move for Croatia. But when it comes to Croatian exchange offices, most of them anyway, they'll have to think about another business model entirely if they want to survive the introduction of the euro from the first of January next year.

"It will be difficult for Croatian exchange offices who will continue to try to work only in the foreign currency exchange business to survive because 80, 90 percent of the turnover takes place around the purchase and sale of euros, and without this turnover it will be difficult for them to survive," warned Sergi Gabor, president of the Association of Croatian Exchangers.

Financial experts have hope and believe that most Croatian exchange offices can be transformed and remain in business when the changeover happens, and that not all of them will be closed due to the demand for digital money, as well as savings and exchanges being done in other currencies.

"Perhaps there will be a continuation of turbulent economic trends at the level of Europe or the world, and in that case it will be possible that in Croatian exchange offices, there will be a tendency for people to be dealing with other currencies such as the Swiss franc or the US dollar,'' believes Hrvoje Japuncic, a financial expert.

For more on Croatian Eurozone accession, make sure to check out our dedicated politics section.

Tuesday, 19 July 2022

The Countdown is On! Croatian Euro Coin Production Officially Begins

July the 19th, 2022 - Croatian euro coin production has officially kicked off as the country's accession to the Eurozone rapidly approaches, marked out on the calendar to take place on the 1st of January, 2023.

As Poslovni Dnevnik writes, on Monday the 18th of July, 2022, Croatian euro coin production finally began at the Croatian Mint in Sveta Nedelja near the City of Zagreb, and Prime Minister Andrej Plenkovic (HDZ) and Governor of the Croatian National Bank (CNB) Boris Vujcic both attended the ceremony marking the start of production as Croatia's entry into the Eurozone draws ever closer and the final loose ends are tied up.

The whole Croatian euro coin production process looks really impressive, six presses are currently working in the Croatian Mint in Sveta Nedelja, where they can produce between five and eight hundred coins per minute. The daily capacity of the factory itself is a massive four million coins, and about seventy employees are working on the rollout of these brand new coins in time for the official change over the the bloc's single currency next year in three shifts, as reported by HRT.

It is interesting to note that the plates for the coins themselves are procured in other European countries, through various tenders, and the tool intended for the Croatian euro coin production was produced right here in the Republic of Croatia.

As we approach the beginning of Croatia's membership of the Eurozone and the Croatian national currency (kuna) spends its final few months in circulation as legal tender, people will be able to purchase the new Croatian euro coins themselves as of December the 1st, 2022, while the Croatian National Bank (CNB) will be supplying the country's banks beginning in October.

For more on the countdown to Croatian Eurozone membership and other politics stories, make sure to check out our dedicated politics section.

Sunday, 17 July 2022

All Hands on Deck for Creation of Croatian Euro Coins by End of 2022

July the 17th, 2022 - All hands are firmly on deck with employees having to work hard in three shifts to make sure the new Croatian euro coins are going to be ready by the end of this year for the official introduction on the first day of 2023.

As Poslovni Dnevnik writes, the governor of the Croatian National Bank (CNB), Boris Vujcic, recently said that the current crisis we're in due to rising inflation and the ongoing war in Ukraine best illustrates the advantage of the Republic of Croatia finally joining the Eurozone.

"The markets already know this, they know exactly what the exchange rate will be here in Croatia, and because of that, we didn't even see any pressure on the weakening of the kuna, nor did we have to intervene or raise our interest rates. Other European Union (EU) member states that are not part of the Eurozone, such as Hungary, Poland, the Czech Republic and others, have already experienced pressure on their own respective currencies and interest rates, which are rising very strongly, which spills over into the home loan and business loan market, while in Croatia, they're thankfully still at a historic low,'' explained Vujcic

''If we weren't set to officially join the Eurozone, the situation would be different in this country,'' he noted.

The governor also announced that the minting of Croatian euro coins will start on Monday. The process, as he said, is logistically demanding, because Croatian euro coins all need to be minted by the end of this year, and it will have to be done in three shifts.

"We're on the verge of minting all of the Croatian euro coins," he said, adding that the second major demand will be the withdrawal of the current kuna banknotes from use.

''As for the conversion from the Croatian national currency to euros, it will be automatic from January the 1st, 2023, and all loans that aren't in euros will remain at the exchange rate that had already been established. Those who have loans with a fixed interest rate will see everything remain the same as it was when the kuna was being used, and those who have a variable rate will see it adjusted in such a way that the consumer doesn't end up in a worse position after the conversion than they were before it,'' he explained.

''Consumers are going to remain in the same situations as they were before,'' assured Boris Vujcic.

For more, make sure to check out our dedicated politics section.

Saturday, 25 June 2022

For Many Croatian Exchange Offices, This Summer Will be the Last

June the 25th, 2022 - For many Croatian exchange offices, this summer season will be their last. Croatia's Eurozone entry is set to take place at the very beginning of next year, and for a number of offices, the doors are being well and truly locked.

As Jadranka Dozan/Poslovni Dnevnik writes, the beginning of summer and the height of the tourist season is also the usual time of the "main harvest" for Croatian exchange offices, with the biggest turnovers in that niche market occuring during the months of July and August.

Last year, almost a third of the total annual turnover of authorised Croatian exchange offices was realised solely during those two summer months, and from the beginning of June to the end of September, 50 percent of the year-round turnover took place.

For many Croatian exchange offices, especially those for which these jobs aren't just a "side" activity, this summer, given the introduction of the euro at the beginning of next year, could be the last in which they remain in business.

According to the annual report of the Croatian National Bank (CNB) published this week, about 850 authorised Croatian exchange offices were active across the country at the end of last year, with a slightly higher number of them holding CNB licenses, a total of 1,146 of them.

Those who provided foreign currency trade services throughout the year or seasonally did so through approximately 3,500 Croatian exchange offices, where they traded a total of 31 currencies. However, out of 25.1 billion kuna in annual turnover (of which 18 billion kuna refers to purchases), more than 87 percent or 21.7 billion kuna was realised in euros (15 billion kuna through purchases, and the rest through the sale of euros). The majority of the remaining turnover refers to the US dollar (5.6%) and the Swiss franc (4.7% of the turnover).

Compared to pandemic-dominated 2020, last year's turnover within Croatian exchange offices increased primarily due to the recovery of the travel and tourism industry, by about 30 percent or almost six billion kuna. The first four months of this year also brought year-round traffic growth to offices.

According to the CNB, by the end of April, exchange offices across the country had generated a massive 6.73 billion kuna, compared to less than 5 billion kuna in the same period last year.

Authorised Croatian exchange offices achieved a record turnover back in 2017 (30.2 billion kuna), although in the meantime the inflows of tourist foreign currency grew. For example, in the record year of 2019, exchange offices made less than 30 billion kuna worth of foreign cash exchanges.

To a large extent, the explanation lies in the growing trend of non-cash payment transactions. By accepting foreign payment cards (cards issued outside of the borders of this country), transactions worth 20.8 billion kuna were realised last year.

Compared to the first year of the pandemic, 2020, it's equal to twice as much, compared to pre-pandemic 2019, not even four percent less, and compared to the exchange record in 2017, the value of transactions with foreign payment cards performed in Croatia last year was about 4.5 billion kuna higher.

There is no doubt that with the introduction of the euro in 2023, the number of CNB licenses for these jobs will fall even further. Most of the approximately (seasonally or year-round) 850 active Croatian exchange offices also perform other activities and currency exchange operations aren't their main activity.

The CNB estimates that they are the core business for approximately 200 legal entities, which in turn provide these services at approximately 400 exchange offices. It is also estimated that they employ between 600 and 800 employees.

For more, make sure to check out our dedicated business section.

Saturday, 18 June 2022

Croatian MP Miro Bulj: There Could be No Worse Time for Eurozone Entry

June the 18th, 2022 - Croatian MP Miro Bulj has boldly claimed that there could be no worse time possible for Croatian Eurozone accession, for which it has had the green light and into which it will enter on the 1st of January 2023, replacing the kuna with the euro.

As Poslovni Dnevnik writes, Croatian MP Miro Bulj (MOST) spoke recently with N1 television about possible changes to the Law on Referendums. He says that MOST is against the way of defining which topics could be decided in a referendum. Bulj also believes that the imminent introduction of the euro couldn't be possibly coming at a worse time.

"In the sense of defining the topics [which could be decided in a referendum[, what they did with the constitutional referendum for which we collected 400 thousand signatures, is more than sad. We'll oppose it. We can change it to make it easier to collect signatures, not to limit them in advance and define the appropriate topics. We know that the Constitutional Court is under the control of HDZ, that these are the Godfathers and that it's a purely political body. That body is meaningless. We strongly oppose this and we will monitor how other political options will behave,'' warned Bulj, talking about the amendments to the Law on Referendums.

Croatian MP Miro Bulj also said that the HDZ had enjoyed great levels of support from other political parties when it came to the epidemiological measures introduced in the fight against the spread of the novel coronavirus, which had a hugely negative impact on the economy.

"It doesn't mean anything to them that we have more voters than we have residents, it's a disastrous proposal. This is a blow to the foundation of and the Constitution of the Republic of Croatia,'' believes Bulj.

"Where does one get the right to say that the constitutional changes for which MOST collected signatures aren't constitutional? They can't say what the people think about the Constitution. It was the same with the definition of marriage. This is a direct interference of HDZ and the Constitutional Court in the interest of Andrej Plenkovic, who has also taken over the judicial system. This isn't something new, it's a blow to democracy, it's shameful act and an anti-national blow to the Constitution,'' said Croatian MP Miro Bulj.

Bulj's beliefs on Croatian Eurozone accession

"It couldn't possibly be coming at a worse moment," Bulj said when asked if it was the right time to send the kuna to the history books and introduce the new currency, adding that we need to be taking care of our natural resources and as such, our farmers.

"We must help our farmers during these difficult times, not be spending our time on preparing to introduce the euro. It's clear to Finance Minister Zdravko Maric how much inflation will rise to and what will happen, but it's more important to listen to Brussels than the interest of the Croatian people. They've played games and it's obviously more important to Plenkovic to be the one to introduce the euro than listen to the interest of the people. Nobody knows what will happen when the euro is introduced,'' concluded Croatian MP Miro Bulj.

For more, check out our dedicated politics section.

Wednesday, 25 May 2022

Former CNB Governor Damir Odak Talks Eurozone Entry

May the 25th, 2022 - Former CNB governor Damir Odak has discussed Croatia's current final preparations for entrance into the Eurozone, scheduled for the very beginning of next year.

As Poslovni Dnevnik writes, the Croatian kuna that has been deposited into banks by the last day of this year, will ''wake up'' on January the 1st, 2023, as euros, said former CNB governor Damir Odak.

Odak was a recent moderator of the round table ''The expected impact of the euro on banks'' which was held as part of a larger conference called ''The Financial Market'' in Opatija. Former governor Damir Odak said that then, at the time of conversion, the amounts will be ''divided by 7.5 and something'', kuna and euro bank accounts will be merged into one single account, and of course, all Croatian bank accounts will have new balances shown in the new currency - the euro. Whoever comes to an ATM or branch to withdraw cash will receive euros instead of kuna, he explained, as Novi list reports.

The round table was attended by the presidents of the leading domestic banks, all of whom are preparing for the huge project of introducing the euro as Croatia's currency in 2023. In some banks, as it was said, there is a ''general mobilisation'', to make sure that everything is in order so that all processes run smoothly and the transition to the new currency is as painless as possible.

Mario Zizek, President of the Management Board of Addiko, says that the project of introducing the euro is priority number one in that bank. "It often happens to all of us that projects slip out of people's full attention within a few days, but with the introduction of the euro, this is far from the case," said Zizek. Balazs Bekeffy, President of the Management Board of OTP banka, says that, based on the experience of others, some services and products may become more expensive, but this will not be anything drastic.

Liana Keseric, President of the Management Board of Raiffeisen Bank, said that they have five key focuses at this moment in time: their clients, leadership, risk management, technology and processes. Marko Badurina, President of the Management Board of Hrvatska postanska banka, says that despite the short-term costs, the long-term net effects are positive. Christoph Schoefboeck said additional cost optimisation will be needed.

By joining the Eurozone, the day before, CNB Governor Boris Vujcic reminded the banks that they would have the full help of the European Central Bank/EC) at their disposal, which is something the CNB had issues with due to its limited maneuver due and the already very high ''euroization'' of the banking system. Therefore, many restrictions will be lifted, the required reserve will be significantly reduced, and the obligation to cover foreign currency liabilities with foreign currency claims will be abolished. Therefore, a new wave of liquidity awaits them. However, it has also been said that banks are also facing negligible costs due to the adjustment of all of their internal processes, IT systems, applications, information campaigns, and also the loss of some jobs, such as those held by people working in exchange offices.

The most interesting presentation was given by the President of the Management Board of Privredna banka Zagreb, Dinko Lucic. He said that banks are big advocates of the introduction of the euro in Croatia precisely because they aren't looking at the short term, because if they did only take that into consideration, he said, then they'd really have high costs. Lucic recalled the experience of Slovakia's accession to the Eurozone:

"According to the experience there, and knowing the opportunities here, for larger banks on the Croatian market, the costs related to the introduction of the euro could range between 10 and 17 million euros, which is a serious cost in the short term. In the long run, however, we expect an increase in economic activity, greater attractiveness of the state for foreign investment, greater need for financial instruments and we see this as an opportunity to partially compensate for the costs incurred,'' said Lucic.

"It will be smoother in Croatia than it was in some other countries where the euro was introduced. However, when I compare Croatia and Slovakia, there was a much bigger national consensus in Slovakia on the introduction of the euro, while some recent research shows that there are still many Eurosceptics and those who argue that this is something very negative. That said, the euro brings long-term benefits to society as a whole, that’s for sure. Its importance for crisis stability is particularly evident. The sooner we adopt the euro, the better,'' concluded Lucic.

For more, make sure to check out our dedicated politics section.

Friday, 6 May 2022

Croatian Euro Printing to Begin on Large Scale in July 2022

May the 6th, 2022 - Croatian euro printing is set to begin on an enormous scale come this July, as Croatia makes the very last preparations to send the kuna to the history books and finally join the Eurozone next year.

As Poslovni Dnevnik/Jadranka Dozan writes, the National Council for the Introduction of the Euro has once again confirmed that all of the current preparatory steps are in line with the plan to switch to the bloc's single currency on the first day of 2023. Recently, the Croatian National Bank (CNB) finally presented the design of the national side of the one euro coin, which was selected in a repeated tender.

The CNB has already begun preparations for large-scale Croatian euro printing, and according to Governor Boris Vujcic, mass production should start during the month of July. Before that, one million kuna's worth of test coins will be made by the middle of next month, the central bank says.

By this summer, the ongoing tender for the services of creating and implementing an informative national campaign to replace the kuna with the euro will be concluded. The estimated value of this public procurement stands at a massive 27 million kuna, and half of the campaign costs are being borne by the European Commission (EC).

Currently, no obstacles are being noticed

All in all, in recapitulating the course of preparatory activities from the 15th session of the Council, it was said that everything is going according to the planned deadlines. The Prime Minister recalled that the Croatian Government adopted a report on the action plan back in late March, which confirmed that all reform commitments made upon entering the European Exchange Rate Mechanism ERM II (in July 2020) had now been met by Croatia.

Croatian euro printing aside, the competent ministers responsible for individual areas of measures from the action plan briefly reported on the activities carried out in the area of ​​improving the business environment, managing state-owned enterprises, strengthening the bankruptcy framework and the framework for preventing money laundering.

The new Minister of Economy Davor Filipovic emphasised the administrative relief that will be felt by the domestic economy with an estimated effect of 686 million kuna, as well as 531 million kuna of reduced non-tax and parafiscal benefits. From the judicial department, they primarily emphasised the changes in the bankruptcy law and the improved framework for the work of bankruptcy trustees.

Increased inflation rates, which according to recently updated government projections rose to a concerning 7.8 percent of the annual average this year, do not pose a problem or obstacle in the context of the convergence criteria for the euro, both the government and the CNB are strongly convinced.

Regarding the inflation criterion (up to 1.5 percentage points above the average of the three best performing countries), Governor Boris Vujcic explained that, for a start, this criterion doesn't refer explicitly to the (three) lowest inflation rates but instead to the best performance.

Imported price pressures

The governor reiterated that the greatest advantage of the euro is shown during financial and other such crises, such as the recent global coronavirus pandemic or the current crisis being caused by the economic consequences of the war in Europe, more precisely in Ukraine.

This, he said, is especially true for small and open economies such as that of Croatia, and the country's lag over the past decade is the result of a stronger decline in the crisis and a longer recovery period, partly due to Croatia's then inability to rely on the ECB's monetary policy. Although inflationary pressures will obviously last longer than expected before the escalation of the war in Ukraine, and imported inflationary pressures may spill over into Croatian prices, the governor underlined that this should not be linked to the introduction of the euro.

People are often afraid of prices being rounded up upon a country's entry to the Eurozone, but now these effects don't really seem crucial. In the seven countries that last entered the Eurozone, prices which were a mere 0.2 to 0.4 percentage points higher were recorded.

For more, check out our politics section.

Thursday, 16 December 2021

Boris Vujcic Reveals When Shops May Start Displaying Prices in Euros

December the 16th, 2021 - Croatian National Bank Governor Boris Vujcic has revealed more about when Croatia will begin displaying prices in shops and other sales outlets in both kuna and euros.

As Poslovni Dnevnik/Ana Blaskovic writes, the latest forecast regarding the domestic economy has been revised once again with Boris Vujcic pointing out that the CNB is "cumulatively quite optimistic". The basic contribution to domestic GDP remains the same as before - foreign demand is primarily made up of the exports of services due to the surprisingly good tourist season this past summer, as well as the growth of the exports of goods and personal consumption.

The burning issue for people, however is the inflation rate, which will accelerate to 2.4 percent this year, and should remain at that level throughout 2022. Boris Vujcic pointed out that Croatia could meet the criteria for joining the Eurozone on time, too.

“The main logistical activity is cash withdrawals and coin minting. We'll have to borrow banknotes and ensure that from the 1st of January 2023 they end up in peoples' hands,'' said Boris Vujcic.

"Everyone is already working on it because we can't wait for next summer to start with that. IT adjustments in companies are already underway, and if we enter from January the 1st, 2023, then we will have to show prices in both kuna and euros as early as the summer months,'' explained Vujcic.

The CNB Council: Croatian GDP growth of 4.1 percent is expected in 2022

At a recent session, the Council of the Croatian National Bank discussed current economic and financial developments and adopted the Monetary Policy Projection and Macroeconomic Developments and Forecasts, as well as several other decisions within its competence. Taking into account the achievements in the first nine months of 2021 and the movement of indicators of monthly economic activity available for the fourth quarter, real GDP could grow by 10.8 percent on the level of the the whole of 2021, and thus already exceed the pre-crisis level this year.

In 2022, growth of 4.1 percent is expected, predominantly supported by foreign demand, with a positive contribution from various other components. The expected slowdown in growth is mostly the result of the base effect, ie the cessation of the effect of the low level of GDP in 2020 on the annual growth rate. The projection of Croatian GDP in 2022 is still exposed to numerous risks, with the negative ones predominating, and they're mainly related to the potential unfavourable development of the ongoing epidemiological situation and the increase in uncertainty that continues to bring with it.

The growth of Croatian tourism revenue during the main part of the summer season this year almost completely brought the current and capital account surplus closer to the record realisation from the third quarter of pre-pandemic 2019, so its level this year could exceed 4 percent of GDP, and additionally increase to 5 percent GDP in 2022. The growth of the current and capital account surplus, along with tourism, is strongly supported by net inflows of EU funds.

Consumer price inflation accelerated, which was influenced by rising food prices, and based on the achievements so far this year, it can be estimated that consumer price inflation at the level of the whole of 2021 could amount to 2.4 percent, with the growth of energy prices accounting for half of this growth. In 2022, the average rate of consumer price inflation is expected to remain at the same level, with inflationary pressures potentially becoming more pronounced in the first half and more subdued in the second half of the year.

For more, check out our dedicated politics section.

Saturday, 11 December 2021

EU Announces That Croatia Meets Requirements for Schengen Entry, Finally

December the 11th, 2021 - The Republic of Croatia finally meets all of the many requirements for Schengen entry, and European Union member states agreed this on Thursday, paving the way for a final decision on the matter.

As Poslovni Dnevnik writes, the 27 EU member states agreed that Croatia meets all the conditions for implementing the Schengen acquis, paving the way for a final decision on Schengen entry which is without any control when crossing the European Union's internal borders.

The agreed text of the conclusions was formally adopted by EU member states' interior ministers on Thursday without further discussion.

Two other member states, the Netherlands and Sweden, had procedural reservations at a meeting of the Permanent Representatives Committee (Coreper) on Wednesday as their representatives awaited consultation(s) with the relevant committees in their respective parliaments, and conclusions couldn't be reached without the consent of all member states. The green light finally arrived for Croatian Schengen entry on Thursday, in time for the interior ministers who gathered in Brussels to officially confirm it.

Representatives of both of the aforementioned countries said that in principle they had no substantive objections to the text of the conclusions, but that these are common procedures in their countries when a position to be represented by their representatives in Brussels has sought consultations with the relevant parliamentary committees.

"Croatia has met all of the necessary conditions for the implementation of all parts of the Schengen acquis," the text of the agreed conclusions reads. This created the preconditions for the Council to take a decision in accordance with Article 4 (2) of the Agreement on the Accession of Croatia, which allows for the abolition of internal border controls. "With a view to Croatia's accession to Schengen, Croatia is called upon to continue to consistently implement the Schengen acquis and the obligations related to the Schengen acquis," the conclusions said.

These conclusions are a procedurally necessary condition for making a decision on Croatian Schengen entry and removing border controls at the Croatian land border with Slovenia and Hungary, as well as at airports and seaports.

The final decision on Schengen entry could be made in about six months during the French EU presidency, and it requires the explicit consent of all Schengen member states. The Council should also seek the opinion of the European Parliament, which it may or may not follow.

The adopted conclusions don't mean that the decision for Croatia to join Schengen is guaranteed as it cannot be ruled out that some of member states might block the decision. Conclusions on Schengen readiness for Bulgaria and Romania were adopted way back in 2011, and the two countries are still outside Schengen.

The text itself states that the adopted conclusions meet the preconditions for the Council to be able to subsequently decide that all parts of the Schengen acquis apply in Croatia.

"The Council can begin work on the draft decision with a view to forwarding it to the European Parliament for consultation as soon as possible," the conclusions said.

Schengen entry requires thorough evaluations to assess whether the country can take responsibility for external border control on behalf of other Schengen countries, to cooperate effectively with the police authorities of other Schengen member states in order to maintain a high level of security after the abolition of border controls, to apply Schengen rules, such as the control of land, sea and air borders (airports), the issuance of Schengen visas, police cooperation and protection of personal data, and the connection with and use of the Schengen Information System.

Onthr 6th of March 2015, Croatia sent a letter stating that it was ready to start evaluations in all relevant areas of the Schengen acquis as of the 1st of July of the same year. The evaluation process began in June 2016 and was completed in May 2019, and the European Commission confirmed on the 22nd of October 2019 that Croatia meets all the technical requirements for Schengen entry.

The procedure was carried out by teams of experts from the European Commission and EU member states, who, after carrying out all of the inspections, wrote a series of reports and recommendations to correct all of Croatia's identified shortcomings. Following these recommendations, Croatia has developed action plans to address these shortcomings. The last action plan for the area of ​​external border management was concluded back in February this year.

Croatia has gone through the most comprehensive and detailed process of assessing its readiness for Schengen membership, which no EU member state has encountered so far. It fulfilled 281 recommendations in eight areas of the Schengen acquis, of which 145 recommendations related solely to the area of ​​external border control.

With the help of the EU, Croatia has invested significant funds in its border protection, which is guarded by six and a half thousand police officers. It has been under a lot of pressure from migrants trying to enter EU territory for a long time and border police have been accused by the media and NGOs of forcibly returning and inhumanely treating illegal migrants trying to cross.

For more, check out our dedicated politics section.

Wednesday, 1 December 2021

Following Macron's Visit, French-Croatian Economic Partnership Stoked

December the 1st, 2021 - The French-Croatian economic partnership is set to be ramped up even further and cover a variety of different fields following the French President's recent visit to Zagreb in which he stated Croatia's Schengen readiness.

As Poslovni Dnevnik/Marija Brnic writes, last week, French President Emmanuel Macron and Croatian Prime Minister Andrej Plenkovic signed the Strategic Partnership Agreement between the two countries, which is a political declaration with a broader scope in which the two countries will engage in deeper French-Croatian cooperation.

The focus of the public, due to the simultaneous signing of the contract on the purchase of twelve Rafale fighter jets, was the military aspect of future cooperation with the country that is now the largest European Union military power, as well as to open French support for Croatia's entry into the Eurozone and the Schengen area.

This French-Croatian strategic document also brings preferences in bilateral relations between the two economies, part of which refers to the engagement of Croatian companies in the implementation of contracts for the procurement of combat squadrons.

The details haven't been specified, but it is stated that "France is ready to increase the development of further high-value aeronautical support activities at the industrial level in Croatia in connection with the Rafale aircraft."

From this it can be concluded that the doors are well and truly open to industrial cooperation in the aviation industry between the two nations. Cooperation between small and medium-sized and large companies and universities, as well as the participation in industrial consortia financed from the EU budget is also envisaged.

French-Croatian foreign trade relations have only been growing from year to year and the Agreement states that greater importance is needed in increasing the recognition of each country's economies and their investments. In the long run, mutual cooperation in education and scholarships will contribute to this, and in the short term, the foundations for stronger networking will be the two countries' plans which are primarily based on going green and the digital transition, as well as the EU's multiannual financial framework.

In addition to connecting to specific projects, France is also offering its support for the development of technology parks and the ecosystem of start-ups in Croatia, and will share its best experiences in supporting startups and growing companies. With experience in infrastructure projects and the automotive industry, a special space is being opened up in waste management, water management, green energy and digitalisation.

The two countries intend to improve their cooperation in the field of tourism, primarily in the search for models on how to escape from the bings of problematic mass tourism. France is the world's number one tourist destination at the moment, it is visited by the most tourists annually, while Croatia is the European country that receives the most tourists per capita. Therefore, the issue of sustainable tourism is becoming more and more significant, and judging by the Partnership Agreement, the way out will be cultural tourism and joint archaeological research programmes..

There is also talk of cooperation through ITER (International Experimental Thermonuclear Reactor), the construction of an experimental nuclear reactor, the largest investment in science in which all countries of the world participate, and its "host" is France. Getting electricity from fusion energy in France is seen as a priority goal to ensure non-carbon energy sources and sustainable development. This agreement does not, therefore, bring individual projects with specific participants into the ''game'', but instead proposes a proper framework for future French-Croatian partnerships, from which three-year action plans will be adopted at a later stage.

This isn't the first strategic partnership between Croatia and France, as they signed a similar agreement back in 2010, but with the acquisition of the Rafale planes, and also with its 2013 status of an EU member state, Croatia is now receiving more attention.

For more, check out our dedicated politics section.

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