Croatia set to enter euro, borderless Europe club

Croatia was counting the last hours Saturday before switching to the euro and entering Europe's passport-free zone -- two milestone steps for the country since joining the EU nearly a decade ago.

At midnight (2300 GMT Saturday) the Balkan nation will bid farewell to its kuna currency and become the 20th member of the eurozone.

It will also be 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 group 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.

His wife, Sandra, disagreed, saying the "euro is more valuable".

"Nothing changes on 1 January, all is calculated in euros for two decades anyway," said clerk Neven Banic.

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

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.

The euro is already largely present in Croatia.

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

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

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

Experts say adoption of the euro will lower borrowing conditions amid economic hardship.

Croatia's inflation rate reached 13.5 percent in November compared to 10 percent in the eurozone.

Analysts say eastern EU members with currencies outside of the eurozone, such as Poland or Hungary, have been even more vulnerable to surging inflation.

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.

The long queues at the 73 land border crossings with fellow EU members 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 (840 miles)