Mixed feelings as Croatia switches to euro, joins borderless Europe club

Croatia has switched to the euro and entered Europe's passport-free zone — two major milestones for the country after joining the EU nearly a decade ago.

The Balkan nation bid farewell on Sunday to its kuna currency and became the 20th member of the eurozone.

It is the 27th nation in the passport-free Schengen zone, the world's largest, which enables more than 400 million people to move freely around its members.

Experts say the adoption of the euro will help shield Croatia's economy at a time when inflation is soaring worldwide after Russia's invasion of Ukraine sent food and fuel prices through the roof.

But feelings among Croatians are mixed.

While they welcome the end of border controls, some worry about the euro switch, with right-wing opposition groups saying it only benefits large countries such as Germany and France.

"We will cry for our kuna, prices will soar," said Drazen Golemac, a 63-year-old pensioner from Zagreb.

Many Croatians fear that the introduction of the euro will lead to a hike in prices — in particular that businesses will round up price points when they convert.

Croatia, a former Yugoslav republic of 3.9 million people that fought a war of independence in the 1990s, joined the European Union in 2013.

READ MORE: Croatia joins Eurozone and Schengen area by 2023

'Elite club'

For tourist agency employee Marko Pavic, "Croatia joins an elite club".

"The euro was already a value measure — psychologically it's nothing new — while entry into Schengen is fantastic news for tourism," he told the AFP news agency.

Use of the euro is already widespread in Croatia.

Croatians have long valued their most precious assets such as cars and apartments in euros, displaying a lack of confidence in the local currency.

About 80 percent of bank deposits are denominated in euros and Zagreb's main trading partners are in the eurozone.

Officials have defended the decision to join the eurozone and Schengen, with Prime Minister Andrej Plenkovic saying on Wednesday that they were "two strategic goals of a deeper EU integration".

"The euro certainly brings (economic) stability and safety," Ana Sabic of the Croatian National Bank (HNB) told AFP.

READ MORE: Croatia to join EU's open travel zone but Romania, Bulgaria kept out

Borderless area

Croatia's entry into the Schengen borderless area will also provide a boost to the Adriatic nation's key tourism industry, which accounts for 20 percent of its GDP.

Previously long queues at the 73 land border crossings with Slovenia and Hungary will become history.

Border checks will only end on March 26 at airports due to technical issues.

Croatia will still apply strict border checks on its eastern border with non-EU neighbours Bosnia, Montenegro and Serbia.

The fight against illegal migration remains the key challenge in guarding the EU's longest external land border at 1,350 kilometres.