Bloomberg News

Croatia to Use EU Cash to Upgrade Its Infrastructure, Pusic Says

July 02, 2013

Croatia, which yesterday became the 28th European Union member, will use funds from the trading bloc to upgrade its communist-era infrastructure, Deputy Prime Minister Vesna Pusic said.

The nation wants to improve irrigation, upgrade rail lines, build bridges and expand its sewage system, Pusic, who also serves as foreign minister, said in an interview yesterday in her office in the capital, Zagreb.

Croatia, struggling to kickstart an economy that hasn’t grown since 2008, is looking to the fiscal boost to create jobs, diversify industry and bring living standards up to those of other eastern EU members such as the Czech Republic, Slovakia and Poland. The Balkan country stands to receive as much as 10 billion euros ($13 billion) in EU funds through 2020 after joining the Brussels-based trade bloc.

“This is huge for us,” Pusic said. “The plan is to use about half of the funds for five or six big infrastructure projects, while the rest would go into agricultural projects, such as improved irrigation.”

Croatia’s leaders are also counting on EU entry to attract investors to the $63 billion economy that is dominated by tourism and services. Foreign direct investment in 2012 fell to about one-fifth of the $4.2 billion in 2008. Since then, economy shrank by a combined 10.9 percent, according to Eurostat data compiled by Bloomberg.

Government plans include bypassing a slice of Bosnian territory that separates Dubrovnik, Croatia’s most-popular southern tourist region, from the rest of the country. A European Commission study on whether to build a bridge, a tunnel or a road corridor is scheduled to be completed in August.

Passport-Free Travel

The solution will have to meet conditions for eventual membership in the passport-free Schengen Zone, which Croatia may join by 2015, according to Pusic. A bridge may cost about 250 million euros and would have the advantage of being “an uninterrupted passage across the European Union territory” and onward into Montenegro, she said.

The government is also considering a plan to build a rail link from Slovenia in the north to the Serbian border in the south to help expand cargo transport, she said.

Joining the Schengen agreement, an EU system that allows travel across member states without border controls, is Croatia’s “big goal” Pusic said.

“This is our target and it’s doable, considering what we have done already,” she said. “Croatia was made to meet very many Schengen criteria until today and the remainder is to see that all these things are put in practice, to show this is actually working, that there are no counterfeit products or illegal crossings.”

Border Agreements

That includes signing agreements with neighbors Serbia and Montenegro on border controls to complement accords already concluded with Bosnia-Herzegovina, which shares a 1,000-kilometer-long border with Croatia. Part of the costs of implementing new practices are covered by EU funds, Pusic said.

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 peace throughout the Balkan region and support neighbors such as Serbia and Montenegro on their EU path.

As Balkan leaders met yesterday in Zagreb to discuss regional cooperation, Croatian President Ivo Josipovic said EU-supported meetings will continue, with plans to invite French President Francois Hollande to the next gathering.

“Our plan is to have a good influence in the region, because this is absolutely in our immediate interest,” Pusic said. “Any instability in the region would affect us directly.”

To contact the reporters on this story: James M. Gomez in Zagreb at jagomez@bloomberg.net; Jasmina Kuzmanovic in Zagreb at jkuzmanovic@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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