ZAGREB, November 20, 2019 - Croatian Prime Minister Andrej Plenković on Tuesday held talks with the EU's chief Brexit negotiator, Michel Barnier, on Great Britain's exit from the EU and future relations between Brussels and London, the government said in a statement.

Barnier informed Plenković of the latest developments regarding Brexit, and the two officials also discussed Croatia's role during its EU presidency regarding Brexit and future relations between the EU and the UK.

Plenković presented the priorities of Croatia's EU presidency, stressing that with regard to Brexit, maintaining legal security for citizens and companies in the EU and the UK was important to Croatia.

The two officials also discussed preparations for a summit of EU and Southeast European countries to be held in May 2020 in Zagreb. On the agenda of the summit will be the pace of development of future relations between the EU and Southeast European countries and their EU membership prospects.

Barnier is visiting Zagreb on the occasion of a congress of the European People's Party (EPP), which will be held on Wednesday and Thursday and at which Donald Tusk will be elected the new president of the biggest European political group.

More news about Croatia and the Brexit can be found in the Politics section.

ZAGREB, November 19, 2019 - The European Union needs to once again restore unity regarding the topic of enlargement after the disappointing decision not to okay the start of accession negotiations for North Macedonia and Albania, the President of the EU Council, Donald Tusk and Croatia's Prime Minister Andrej Plenković said in Zagreb on Tuesday.

Failing to decide about North Macedonia and Albania is a great disappointment, however, I remain an optimist, Tusk told reporters.

It is necessary to restore EU unity on enlargement, he added.

Plenković underscored that Croatia wanted the situation regarding North Macedonia and Albania to be unblocked.

"Those countries have Croatia's support and we will seek a solution over the next few months," said Plenković, the premier of Croatia that will preside over the EU in the first half of 2020.

Six European Union countries have addressed a letter to European Commission President Jean-Claude Juncker saying they are ready to work on improving the enlargement process on the understanding that it will lead to consensus on opening accession talks with Albania and North Macedonia in March next year.

"We are therefore ready to engage constructively in an effort to improve this process. We will do so on the understanding that such an exercise be conducted in an effective and result-oriented fashion and that it enables the EU to reach consensus on opening accession negotiations with Albania and North Macedonia in March 2020," says the letter, seen by Hina on Tuesday.

The letter was signed by the foreign ministers of Austria, the Czech Republic, Italy, Poland, Slovakia and Slovenia. Croatia, although not a signatory, shares these views, according to diplomatic sources.

The signatories called on the European Commission "to elaborate by January 2020 concrete proposals for ways to enhance the effectiveness of the accession process as an instrument to support reform and integration efforts in the region."

The letter also said that "there is no viable alternative to full-fledged membership of the Western Balkan countries in the EU if we want to safeguard our interests in the region effectively" and that the process "must continue without unnecessary delay."

The letter was made public ahead of Tuesday's meeting of the General Affairs Council which is due to discuss enlargement. It followed a document that France had addressed to the member states proposing reform of the present EU accession process. According to the French proposal, the process would be carried out gradually, in seven steps.

Speaking to a small group of correspondents from Brussels, Finnish Foreign Minister Pekka Haavisto said that the EU should not leave the entire Western Balkans region in the lurch and leave it to "other actors."

The Finnish presidency is of the view that if we lose the Western Balkans and do not take the integration of this region seriously, we may end up in new trouble, even in a new conflict, Haavisto said.

More news about Croatia and the EU can be found in the Politics section.

ZAGREB, November 16, 2019) - The Minister of Foreign and European Affairs, Gordan Grlić Radman, addressed a meeting of the European Academies' Science Advisory Council (EASAC) in Zagreb on Friday, presenting the priorities of the Croatian presidency of the Council of the European Union in the first half of 2020.

Croatia is making thorough preparations for the presidency, Radman said, adding that the presidency implies a mediating role and the art of compromising among the member states. He noted that Croatia was taking over the EU presidency after only six years of membership.

"The unity of the European Union members in understanding that we need one another to face the challenges of today is one of the distinctive strengths of the European Union," Radman said, according to a press release by the Ministry of Foreign and European Affairs.

The meeting, hosted by the Croatian Academy of Sciences and Arts, focused on support for research projects in the EU, especially financial support, harmonising the member states' policies on migration, and the brain drain within the EU, from eastern to western member states.

The EASAC brings together members of the science academies of the EU member states, Switzerland and Norway to discuss current and future EU policies, notably those concerning sciences and arts.

The Council is currently chaired by Thierry Courvoisier of Switzerland. The issue it is now primarily preoccupied with is sustainable development and the future of the planet, with the focus on preserving healthy soil and food, reducing exhaust emissions and alleviating the consequences of climate imbalance.

More news about Croatia and the EU can be found in the Politics section.

ZAGREB, November 15, 2019 - Entering the euro area will mean "the end of the agony" for Croatian exporters as the threat of the kuna gaining will be eliminated and the same rules will apply as in other EU member states, a panel in Šibenik heard on Friday.

The panel on the impact of the introduction of the euro on exports was held as part of the 18th Croatian Bank for Reconstruction and Development conference on export stimulation.

Finance Minister Zdravko Marić said Croatia could introduce the euro in 2023 but that this was not only up to it.

Croatia has to meet 19 benchmarks to which it committed in the letter of intent to join the Exchange Rate Mechanism (ERM II) and the letter on close cooperation with the European Central Bank (ECB), which envisages stress tests for Croatia's largest banks, he said.

Everything will be finalised by the end of Croatia's presidency of the Council of the EU next June, he added.

Croatian National Bank deputy governor Sandra Švaljek said the conversion exchange rate would be known six months before Croatia joined the euro area. It will be agreed with the ECB and the area's member states, but it is much more important to define the central parity, which will happen before joining ERM II, she added.

Švaljek said it was necessary to work on as optimal an exchange rate as possible when Croatia joined the euro area, adding that a depreciation of the kuna would suit exporters but not those who owed money in euros.

Marko Jurčić of the Croatian Chamber of Commerce said joining the euro area would mean "the end of the agony" for exporters, given their constant appeals for the weakening of the kuna, as the exchange rate would no longer impact their competitiveness and they would play by the rules in force in other EU member states.

The introduction of the euro does not mean the economy will grow or fall as some countries that do not have the euro, such as Czechia and Poland, are recording strong growths, Jurčić said.

Introducing the euro is a political decision that will eliminate many risks but exporters need help in many other ways, he added.

The president of the board of Slovenia's Export and Development Bank, Sibil Svilan, said the euro and Europe were no longer sacred and that when it was introducing the euro, Slovenia, as an export-oriented country, knew it was the right decision.

He said it was important that Slovenia's decision to introduce the euro was made at a referendum, which gave legitimacy to everything that happened later on, such as higher prices. He also recalled that upon introducing the euro, Germany was hit by a recession.

Dagmara Zawadzka of Poland's development bank said exports and the internationalisation of doing business were very important for an economy's development, noting that Poland was recording strong export growth.

She said Poland would not join the euro area in the near future and that the exchange rate risk was not a big problem for large companies. Introducing the euro would significantly help most SMEs in Poland, for which said risk poses a significant barrier, and they would profit from joining the euro area, she added.

More news about the introduction of euro can be found in the Business section.

ZAGREB, November 12, 2019 - Croatia's presidency over the European Union in the first half of 2020 can facilitate efforts to upgrade relations and dialogue between the EU and Russia, Russian Ambassador to Zagreb Anvar Azimov said on Tuesday.

Addressing a conference on gas as the future of energy, the ambassador said that both Europe and Russia suffered losses due to sanctions imposed on Moscow over the issue of Crimea.

Therefore, Azimov proposed that during its EU chairmanship Croatia should organise an energy conference bringing together European and Russian experts, and described such an event as the start of dialogue between the two sides.

Croatia can thus be a bond reconnecting the two sides, said Azimov at the conference, organised by the Zagreb-based Večernji List daily newspaper.

He said that losses suffered by EU member-states due to sanctions against Russia totalled 200 billion euros annually.

For more than 60 years, Russia has been a guarantor of provision of energy supplies to Europe, he said.

Azimov underlined that Russia annually delivers two billion cubic metres of gas to Croatia at a favourable price and that supplies to European buyers exceeded 210 million cubic metres annually.

The Russian ambassador claimed that the United States strongly lobbied for as little Russian gas as possible in Europe.

He added that although it was a disciplined member of the European Union, Croatia should also take care of its own interests.

Azimov also said that Russia had never used gas provision as a political instrument to exert pressure against any country.

More news about relations between Croatia and Russia can be found in the Politics section.

ZAGREB, November 12, 2019 - In the EU accession treaty Croatia undertook the obligation to adopt the euro as its official currency and the strategic goal is to meet the criteria by the end of the next government's term, Prime Minister Andrej Plenković said on Tuesday.

The economic benefits of the euro are many, the currency risk in the economy will be eliminated, the cost of borrowing will drop for all domestic sectors, and citizens and businesses will have lower financing costs than they would if Croatia stayed outside the euro area, he said at the Croatian Financial Institutions Day conference, organised by the Chamber of Commerce (HGK).

Conversion costs will be eliminated and the joint currency will contribute to international trade and competitiveness, Plenković added.

The euro is the second largest and strongest global currency used by more than 340 million people in the euro area, he said, adding that of all the EU member states outside the area, Croatia had the smallest population yet was the most euroised.

Croatia has the highest deposit euroisation of all EU member states outside the eurozone, Croats express value, calculate and save in euros, as a result of which household savings in euros have never been below 66% of all savings, revolving around 76% over the past nine and a half years, Plenković said.

Forty-six percent of household loans are in the domestic currency with a currency clause and businesses are also significantly tied to the euro, 58% of commodity exports are exports to the euro area and 56% of all nights are generated by tourists from the euro area, and 50% of bank loans are in a foreign currency or in the domestic currency with a currency clause, he added.

The plan is for Croatia to enter the European Exchange Rate Mechanism II upon confirmation of compliance with all conditions in the second half of 2020, Plenković said. Croatia will spend between two and a half and three years in ERM II and entry into the euro area is expected in January 2023 at the earliest or in January 2024.

HGK president Luka Burilović said the positive effects of the european currency include a lower price of capital, easier awarding of a better credit rating, the elimination of the currency clause risk, and higher competitiveness of exporters.

"We can hope that Croatia will have a stronger position in attracting foreign direct investment," he said. The euro is not a magic wand or a universal cure for economic problems but should be utilised as a generator for the realisation of strategic goals, he added.

More news about the introduction of euro can be found in the Business section.

ZAGREB, November 8, 2019 - Western Balkan countries, aspiring for European Union membership, are putting their hopes in Croatia's presidency of the Council of the EU in the first half of 2020, and are hoping that North Macedonia and Albania will be given a greenlight for opening accession talks before the Zagreb summit in May.

These hopes were expressed at a meeting on the European prospects of southeastern European countries in Geneva on Friday. The meeting, organised by the World Economic Forum (WEF), brought together heads of state or government and ministers from Albania, Austria, Bosnia and Herzegovina, Bulgaria, Croatia France, Greece, Hungary, Italy, Kosovo, Montenegro, North Macedonia, Slovakia, Slovenia, Serbia and Turkey.

During the event, Prime Minister Andrej Plenković said that "Croatia intends to help its neighbours" and that it would be ideal to reach a consensus on opening accession negotiations with North Macedonia and Albania by May.

"We are neither excessively optimistic nor enthusiastic. Nevertheless, this process needs to move forward. Without membership prospects we cannot count on accelerated economic development, true democratic values, cooperation, and accordingly, further strengthening of stability and security of our immediate neighbourhood," said Plenković.

Last month, the European Council failed to agree on opening accession negotiations with Tirana and Skopje, despite the fact that the European Commission gave its greenlight and the fact that a majority of EU member states were in favour of starting the talks. A unanimous decision is required in such cases.

France, as the most vocal opponent to further EU enlargement in the near future, as well as the Netherlands and Denmark withheld their support for the two Balkan aspirants.

North Macedonian Prime Minister Zoran Zaev said in Geneva that a lot of changes had been made in a bid to make progress on the journey towards the European Union.

Zaev put his hopes in Croatia's EU presidency because it would enable "more focus to be placed on the whole region," adding that North Macedonia would continue implementing reforms.

Albanian Prime Minister Edi Rama said that they felt as if "they are left without a compass", underscoring that Albania and its citizens nevertheless wanted EU membership.

Serbian President Aleksandar Vučić said his country was not so optimistic as North Macedonia and Albania, but it would like to be given a clear answer.

Since early 2014, when Belgrade opened accession negotiations, 17 policy chapters have been opened in that process.

One of the conditions for Serbia's admission to the EU is the normalisation of its relations with Kosovo.

Montenegro's Vice Premier Zoran Pazin said that his country did not expect the EU to make concessions.

Bosnia and Herzegovina's Prime Minister Denis Zvizdić said that the EU membership had no alternative.

Zvizdić also commented on French President Emmanuel Macron's description of Bosnia as a "ticking time-bomb" and the greatest concern for Europe in the Balkans due to the country's "problem of returning jihadists".

Zvizdić responded that his country had made great progress in the fight against terrorism and added that in the last three years no Bosnian citizens had gone to wars in foreign countries or participated in terrorist actions.

More news about Croatia and the Western Balkan countries can be found in the Politics section.

ZAGREB, November 7, 2019 - The European Commission on Thursday mildly revised down Croatia's growth outlook from the initial 3.1% to 2.9% in 2019, due to a slower growth rate in the country's main trading partners, and in the next two years, the EC expects investments to robustly rise in Croatia, alongside a record low employment rate and a declining public debt.

"As growth in Croatia’s main trading partners moderates, domestic demand will remain the main driver of economic activity," the EC says in its latest document called "European Economic Forecast for 2019, 2020 and 2021".

"Household consumption remains strong, driven by growing employment and wages as well as low inflation. Investment is set to continue growing strongly, backed by EU funds, and government consumption is also expected to support growth. The economy should continue adding jobs, but at a slower pace as labour shortages appear in some sectors," reads the document's section on Croatia.

The Commission also expects Croatia's the debt ratio "to continue declining steadily as the general government balance turns from mildly positive to neutral."

In 2020, Croatia's growth is set to rise at a rate of 2.6% and in 2021 by 2.4%.

In the previous document, the growth was projected at 2.7% both in 2020 and 2021.

The investment growth is projected at robust 8.8%, whereas in 2018, it was 4.1%. In 2020 the investment growth rate is projected at 7.5% and in 2021 at the rate of 7.2%.

"Driven by the rising uptake of EU funds by both the public and private sectors, investment growth is expected to record growth rates above those observed since 2015 throughout the forecast period. Furthermore, favourable financing conditions should remain supportive of private investment."

The Commission notes that economic activity in Croatia regained momentum in the first half of 2019, after a weaker-than-expected performance towards the end of 2018.

"Real GDP rose sharply in the first quarter, by 1.5% quarter-on-quarter, followed by more moderate growth in the second quarter, at 0.2%. Based on high frequency indicators, growth is expected to remain moderate in the second half of the year, bringing the forecast for 2019 to 2.9%.

Domestic demand is driven by strong household consumption and is supported by public consumption and investment, which benefits from increasing use of EU funding. Despite a recovery in exports, net exports are set to negatively contribute to growth due to the strong performance of imports.

"Throughout the 2019-2021 period, domestic demand is forecast to remain the main driver of GDP growth. Ongoing improvements in the labour market, rising wages and low inflation will continue to drive household consumption. A stronger contribution from public consumption is expected, driven by rising intermediate consumption and increasing public sector wages."

The Commission also projects that overall, Croatia's trade balance is expected to deteriorate throughout the forecast period and the current account balance is expected to gradually decrease to 0.3% of GDP by 2021.

"In 2019, the general government balance is expected to remain in surplus for the third year in a row," says the Commission.

"Revenues are performing strongly in spite of tax cuts, which particularly affected revenue from VAT and social contributions. Expenditure grows primarily due to wage hikes in the public sector, investment and intermediate consumption.

"In 2020-2021, tax revenue is expected to grow at a slower pace than nominal GDP, due to further tax cuts. EU funds are projected to continue supporting revenues as the programming period enters its most mature stage."

"Expenditure growth should continue in 2020 and moderate somewhat in 2021, largely due to the strong base effect of the rising wage bill, investment and capital transfers in 2018-2019. Additional savings are expected in interest payments, most notably in 2020, as a sizable portion of maturing debt is refinanced at lower rates."

The Commission expects Croatia's budget to remain balanced. "In structural terms, the general government deficit is expected to increase from 0.3% of GDP in 2018 to 1% of GDP in 2020 and decrease slightly in 2021. The debt ratio is set to continue declining strongly on the back of surpluses and nominal GDP growth, dipping below 65% of GDP in 2021."

More economic news can be found in the Business section.

ZAGREB, November 7, 2019 - Croatia's presidency of the EU Strategy for the Danube Region (EUSDR) will focus on stronger regional development, synergy between macro-regional strategies and the Cohesion Policy, as well as promotion of cooperation with countries of the Western Balkans and the Eastern Partnership, Regional Development and EU Funds Minister Marko Pavić said on Wednesday in Vukovar, where he presented the programme of Croatia's presidency of the Danube Strategy.

The Danube Strategy encompasses 14 countries of the Danube River basin and the programme of Croatia's presidency of the strategy provides a strategic framework for the EU's approach to the Danube region whose policies and investments have a direct impact on the lives of more than 20 million people.

The main theme of Croatia's presidency will be "The Danube Strategy - 10 Years Later" and the presidency will focus on identifying macro-regional cooperation, evaluating the results achieved thus far and determining the future direction of its development.

The Danube Strategy is one of the EU's four macro-regional strategies, adopted in 2011, and Croatia took over its presidency from Romania on 1 November, Minister Pavić underlined presenting the strategy, stressing that the strategy was connected with funds.

"So far Croatia has absorbed more than 1.2 billion kuna from the INTERREG programme for cross-border cooperation and of that amount, 83 million kuna comes from the Danube programme which follows the Danube Strategy," Pavić said, underlining the importance of planning future funding.

Croatia's chairmanship has three political objectives - strengthening regional development, creating a synergy between macro-regional strategies and the Cohesion Policy, as well as encouraging cooperation with the countries of the Western Balkans and Eastern Partnership, Pavić said.

He in particular made reference to the Slavonia-Baranja-Srijem regional development programme for which contracts worth almost 11 billion kuna have been signed and 4 billion kuna has been paid out.

"That project is the Croatian government's pride and based on signals from the European Commission, it is one of the few programmes that is chaired by the prime minister, which is believed to be one of the reasons of its success," Pavić underscored, adding that that programme would be especially presented through the Danube Strategy as a model for regions, notably less developed ones.

Croatia's chairmanship consists of five thematic priorities - cooperation between research institutions and economic stakeholders, environmental protection and sustainable economic development, inland waterways, tourism and smart villages, civil protection and regional and local government capacity building.

In a statement to the media after the presentation, Pavić underscored that chairing the Danube Strategy was an opportunity for Croatia's priorities to be reflected in future cohesion policies and the EU budget and that significant funds that can be secured for the Danube region be directed towards developing the five Slavonian counties.

Foreign and European Affairs Minister Goran Grlić Radman addressed the conference, stressing that Croatia joined the European family to protect stability and peace and prevent campaigns such as the Great Serbian aggression from ever happening again.

Radman said that aside from chairing the Danube Strategy Croatia was also chairing the Danube Commission, established in 1948, and that those presidencies would coincide with its presidency of the Council of the EU and that they would all end with the conclusion of the EU budget for the next seven years.

He added that as the national coordinator, his ministry would advocate the interests of all state institutions, civil society organisations, the academic community and other stakeholders and support a balanced and sustainable development and cross-border and macro-regional cooperation.

Vukovar Mayor Ivan Penava recalled that Vukovar has the largest river port in Croatia and that the importance of the Danube for the town's development can be seen in the fact that 231 cruise ships with 32,000 tourists berthed in Vukovar in 2018. By November 15 this year there will have been 356 ships with more than 48,000 tourists that will have visited Vukovar, he said.

The main events of Croatia's presidency of the Danube Strategy were presented in Vukovar today, including the 30th anniversary of INTERREG programmes in June 2020 and the central event - the annual forum of the Danube Strategy that will be held in Zagreb, with more than 700 participants.

The Ministry of Regional Development and EU Funds today presented 170 agreements valued at about 125 million kuna of national and EU funds to beneficiaries from the five counties in Slavonia, aimed at further stimulating balanced development.

More news about Croatia and the EU can be found in the Politics section.

ZAGREB, November 6, 2019 - Croatia will do its best during its presidency of the Council of the EU, together with the next European Council President Charles Michel, so that an agreement on the 2021-27 Multiannual Financial Framework (MFF) is reached as soon as possible, Prime Minister Andrej Plenković said in Prague on Tuesday.

The moment when the agreement is reached isn't unimportant. The last seven-year budget was adopted quite late, which affected the implementation of operational programmes and concrete payments to the member states, he said at the end of a summit of 17 EU member states which are part of the Friends of Cohesion informal group, which is against slashing cohesion funds in the 2021-27 EU budget.

Plenković said he would not speculate as to when an agreement could be reached.

He was speaking at a joint press conference with the summit host, Czech PM Andrej Babis, as the prime minister of the next country to chair the Council of the EU, which Croatia will do in the first half of 2020.

As the next Council of the EU president, Croatia has the good will and the ambition to try to find, together with the next European Council president, Charles Michel, the broadest consensus possible on the next seven-year budget, which is undoubtedly the most important political document for the whole Union, Plenković said.

We must make sure that citizens in the member states feel the added value of Union membership. Aside from the importance of the cohesion and the common agricultural policy, we realise that we should also take into account security, migration, border management etc, he added.

He said the draft MFF presented by the European Commission was a solid foundation for reaching a compromise.

Participants in the summit adopted a joint declaration which reads that "the EU co-financing rate under shared management should be kept at the current 2014-2020 level, with sufficiently flexible rules, as excessive rigidity in this area would have a significant impact on the beneficiaries and could endanger effective absorption capacity."

The current national co-financing rate 15%, while the Commission is proposing 30%.

"In this respect, it is also necessary to maintain sufficiently high the EU pre-financing and the current n+3 decommitment rule, taking into account the challenges posed especially at the beginning of the implementation."

The Friends of Cohesion also insist "that the system of own resources needs to be fair, rationalized, simplified and that the withdrawal of the United Kingdom offers a unique opportunity to remove all rebates and corrections as from 2021."

The declaration says "it is crucial to strike a balance between the common EU targets and the possibility for Member States to allocate resources in accordance with their national and regional priorities, needs or changing circumstances."

"More flexible thematic concentration rules at regional as well as Member State level for Cohesion Policy funds, mainly the ERDF (European Regional Development Fund), would enable such balance."

The first Friends of Cohesion summit was held in Bratislava in 2018, and since then Spain joined the group which comprises Croatia, Czechia, Estonia, Hungary, Malta, Poland, Slovenia, Slovakia, Spain, Bulgaria, Cyprus, Latvia, Lithuania, Romania, Italy, Portugal and Greece.

The Prague summit was attended by ten prime ministers, while the remaining seven states were represented by ministers or state secretaries.

More news about Croatia and the European Union can be found in the Politics section.