ZAGREB, July 1 — Croatia became the 28^th member of the European Union, capping a decade of judicial and economic reforms to sever ties from its communist and wartime past.

Tens of thousands of Croatians celebrated the entry of the second former Yugoslav republic into the EU with five-story projections of its history and technology, as well as concerts, dance performances and street parties across Zagreb. European Commission President Jose Barroso and other EU officials gathered at the central square as Croatian and blue-and-yellow EU flags fluttered in the evening breeze above revelers’ heads.

The Adriatic country, which emerged as an independent state in 1991 during the bloody breakup of Yugoslavia, is looking to EU membership to help solidify a lasting peace throughout the Balkan region as tensions still smolder in Bosnia-Herzegovina and Kosovo to the south. Leaders are also counting on EU ties to lure foreign investors to the US$63 billion (RM199 billion) economy and end four years of recession and stagnation.

“It is up to us to reach out to the countries in the region and assist them in the fast adoption of the European criteria,” said Prime Minister Zoran Milanovic told citizens in the capital before the stroke of midnight. “There are unbreakable bonds between us and these countries and nations. We are also tied together by upholding together the values of solidarity and love of freedom, which we want to imprint strongly on the fundamental concept of the European Union.”

The country of 4.2 million, best known for its 3,600 miles of beaches, islands and harbors, is joining the EU just as Europe suffers from its longest economic contraction. As much as €10 billion (RM41.1 billion) in EU funds may flow in through 2020 to modernize communist-era railways, sewers and bridges, diversify domestic industry and bring living standards up to those of eastern EU members such as the Czech Republic, Slovakia and Poland.

Borders Down

At midnight, EU flags were hoisted and customs posts were removed from Croatia’s borders with EU neighbors Hungary and Slovenia, as joint border controls were put into force.

Croatia still has to fulfill more criteria to be allowed into the bloc’s passport-free Schengen Zone. Deputy Premier Vesna Pusic said yesterday that Croatia has met “a lot” of conditions to take part in the Schengen system and expects to be a member in about two years.

While Croatia’s membership will not solve all of its problems, the country can look forward to benefits from EU structural funds, Barroso told the Croatian public broadcaster on July 29.

German Taxpayers

“German taxpayers, or any other taxpayers, do not need to fear that they will have to spend money on Croatia,” Pusic said at a press conference in Zagreb yesterday. “The only thing we need to worry about is that we don’t absorb EU funds fully, but that depends on us alone. Croatia is a great place for investment.”

Croatia over the past century has belonged to the Austro- Hungarian empire, the Serb-dominated Kingdom of Yugoslavia and a communist federation ruled by Josip Broz Tito after World War II before it was engulfed in ethnic civil war in the 1990s with other former Yugoslav states.

On its road to the EU, Croatia had to surrender war-crime suspects to the war crime tribunal in the Hague, reform the justice system and eradicate political corruption that sent a former prime minister to jail.

It now belongs to a union of sovereign states that stretches from the Atlantic Ocean in the west to the Black Sea bordering Turkey, Ukraine and Russia.

After completing its membership, Croatia is turning to help sponsor EU aspirations by other former Yugoslav partners, including Serbia, its chief foe during the civil wars, as well as Montenegro, the Republic of Macedonia and the former province of Kosovo.

Serbia, Kosovo

The presidents of Serbia and Kosovo will meet with their Croatian counterpart later today in Zagreb, while EU President Herman Van Rompuy meets the Serbian premier in Belgrade to keep up EU mediation over a lasting political agreement between the two sides. Serbia will begin membership talks by January, EU leaders decided last week, after it showed “progress” in making a settlement with Kosovo.

“Croatia has changed enormously over the last decades,” EU’s Barroso said to screams and applause from the crowd. “Croatia is also an example to others in the region. As a European Union member state, you have made clear that you will help others follow your path. I welcome to this commitment as our union is open to those who share our European values.”

Hours before the celebration began, civil engineer Darko Petrak and his two young sons checked out the main square as workers put finishing touches to blue-bunted stages and risers.

‘Can’t Wait’

“We can’t wait to be part of the European Union,” said Petrak, squeezing the shoulders of his 10-year-old son, Karlo. “The times are hard, but there is hope we will do better in the EU.”

The night’s festivities were marked by concerts of Croatian artists, including the 2CELLOS and folk dancers, and a show that touted the country’s history with images including giant hands knitting traditional lace patterns and aerial views of historic towns along the seacoast. Black-and-white clad folk dancers, wearing paper-mache animal heads, were delivered away from the square in a street car.

Pictures were projected onto Neoclassical and Art Deco buildings in the central square, which is dominated by the horse-mounted statue of 19^th-century statesman Josip Jelacic.

Some locals expressed skepticism. Law student Diana Milosevic, 27, sat outside of a local espresso shop outlining the pros and cons of EU membership. She said she is concerned that negative perceptions of Croats abroad may not easily be overcome.

Lingering Doubts

“I’m afraid we are not prepared enough, and that competition will destroy us,” said Milosevic. “But I hope that I will get the possibility to work abroad, that I as a Croatian will be accepted.”

EU membership is meant to give citizens the right to work in other countries, though that right is being phased in by some older members, similar to what happened to former East Bloc countries that joined in 2004.

The unemployment rate for Croatia stood at 19.6 per cent in May. The economy has failed to grow since 2008 and rising labor costs make it harder to attract investment into export industries. Foreign direct investment plummeted to almost one- fifth of the US$4.2 billion invested in 2008.

Since then, the economy has shrunk by a combined 10.9 per cent, according to Eurostat data compiled by Bloomberg. Gross domestic product contracted by 1.5 per cent from a year earlier between January and March, government data show.

Tourism Boost

The country counts on its seashores and vineyards to boost tourism, which makes up about a fifth of the economy. The tourism board markets the medieval towns and emerald bays of the former Roman province as “the Mediterranean as it once was.”

Croatia also promotes itself as the home of the Dalmatian dog, Zinfandel wine and the tie, first worn by Croatian mercenaries in the Middle Ages. It’s the home country of Wimbledon winner Goran Ivanisevic and Alpine skiing champions Janica and Ivica Kostelic.

Mattie Cobb, a tourist from Kentucky, chanced into the EU’s newest member during a trip across the former Yugoslavia and to Venice, Italy. She first visited Zagreb in 1968 with a US musical group during Tito’s reign.

“We arrived last night and had then we found out that this is the day they are joining the European Union, and I said, wow,” Cobb said as her tour group gathered at the central square.

“It’s so exciting.” – Bloomberg