Tuesday, 04 August 2020
Englishman in Dubrovnik Englishman in Dubrovnik

Can Croatia afford to reject the Euro?

By  Mark Thomas Oct 14, 2017

I remember once interviewing Nigel Farage. For those of you who have been locked in a dark room for the past few years he is largely responsible for Britain of the verge of leaving the European Union. He was the driving force behind the Brexit campaign.

I actually met his deputy in a hotel in Babin Kuk. Croatia was on the verge of becoming a full member of the EU and Farage and his political party were lobbying for the people of Croatia to vote “no” in the referendum. He might have lost that vote but a few years later he won much bigger in the Brexit vote. To say the least Farage is a “colourful” character who appeals to a certain voter due to his outspoken views, yes Farage is a mini Trump, just a lot poorer. In fact the two are great friends.
He has this way of producing descriptive sound bites at the drop of a hat, again appealing to voters. When I asked him what he thought of Croatia entering the EU he said “It is like boarding the Titanic after it had hit the iceberg.” Yes, in one line he had made his point.

And now I wonder how he would comment, what the one liner would be, when he reads the news that Croatia is planning to take the Euro as its official currency by 2022.

I am still a little on the fence when it comes to the Euro being introduced.
It is absolutely different from the UK rejecting the Euro, this was done because if the importance of the stock trading, business and most importantly for the British government to keep control over its own finances. Having your own currency of course means ruling your financial situation, from inflation rates, interest rates, values of pensions…I could go on and on. But again this only works if the government are a) capable and b) responsible. If you don’t meet either of these two criteria it might be a good idea to think again.

The Kuna is basically tied to the value of the Euro anyway. We have a currency that is linked and therefore have lost a certain amount of financial independence anyway.

This is a big decision and I would predict that it will go to a referendum. Mainly because I am doubtful that any government would be willing to take that amount of responsibility. So do we hand over the reins of our financial future to the Bundesbank (whoops I mean the EU) or do we go it alone? Who would you trust to control the purse strings, Zagreb or Berlin (whoops I mean Brussels). And that is exactly the dilemma I am in.

There are so many outside factors (and inside ones) that a black and white decision is hard to make. And then there is the Italy and Spain example to take into account. When the death bells of the Lira and the Peso was sounded the citizens were rightly frustrated when prices of products were flipped overnight but of course salaries were kept the same. Yes, overnight prices doubled and salaries kept the same. There is an argument that this was the beginning of the current crisis that Spain is currently suffering from, massive youth unemployment and a crash of Spanish products and real estate. Would that happen in Croatia? The last thing we need is more young, talented people leaving the country! But with the Kuna being tied to the Euro already presumably it wouldn’t. Who knows?

And then on the plus side it would probably mean much larger spends by tourists to the country, especially those cruise ship passengers. Many of them are getting information (as I did on a cruise) that Euros are accepted in Croatia already. And then when they find out that they can’t they simply don’t spend. Unofficially most tourist businesses in Dubrovnik take Euros anyway (although illegal) and then give change in Kuna.

As I said I am still undecided. However, when I asked for comments it would seem that I am in the minority. 90 percent answered that the Euro was a bad move. “Why would Croatia want the Euro, look at Greece” – “Bad news. Prices will increase” and “Bad mistake!! All countries were Euro were introduced, simply destroyers the life of people and caused terrible consequences for the local economy.”

If the Euro is rejected at a referendum would that mean a Crexit vote would be the next step? Or would the Bundestag (whoops sorry I mean the EU commission) even give the Croatian government the opportunity of taking a referendum? Some clever person once said that “the worst battle you will ever have to fight is between what you feel and what you know.”

The Voice of Dubrovnik


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