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Make that 28: Croatia becomes newest EU member

From Oliver Joy and Deanna Hackney, CNN
updated 1:19 PM EDT, Mon July 1, 2013
STORY HIGHLIGHTS
  • "Welcome to our union," EU president says
  • Croatia is facing several challenges
  • "The EU will not be a panacea for Croatia's economy," an analyst says

(CNN) -- Croatia formally became the newest member of the European Union on Monday, marking an end to a 10-year campaign for a Balkan state that emerged from the ruins of a bloody civil war.

The celebrations began as the clock struck midnight Sunday. Fireworks lit the sky in the capital Zagreb, a choir sang "Ode to Joy" and thousands clinked champagne glasses and erupted in cheers.

"Welcome to your union, welcome to our union," EU President Herman Van Rompuy told the crowd.

The nation of 4.4 million people is the 28th member of the EU, and the second Balkan country that rose out of the ashes of Yugoslavia to join the union. Slovenia became a member in 2004.

Croatia set to join European Union
Croatia welcomes EU membership
Croatia's road to EU membership

"Whatever anyone is saying about us, you should know we are a country of rational people who are realistic about themselves and their country, and the role of their country in Europe and the world," Prime Minister Zoran Milanovic told the crowd.

Croatia looks to oil and gas fields in Adriatic Sea

Many challenges

With a low credit rating of junk and a political class stained by accusations of endemic corruption, Croatia's challenges are unlikely to disappear overnight.

It is three years into a debt crisis that is plaguing countries across southern Europe.

One of the challenges facing Croatia is its growth prospects. The financial crash of 2008 brought about a harsh double-dip recession that left the country's economy lingering in the doldrums.

Last year, unemployment peaked at 17.3% which is behind only Greece and Spain, according to Eurostat - the European Commission's data archive.

"The EU will not be a panacea for Croatia's economy," Will Bartlett, a senior research fellow at the London School of Economics, told CNN in January.

Fighting corruption

Croatia is also in the midst of cleaning up a political class that is rife with corruption. Since the country's inception in the early 1990s, it has struggled to choke off profiteering from those in positions of power.

Transparency International - an organization tackling corruption -- ranked Croatia below Rwanda, Jordan and Cuba in its Corruption Perceptions Index for 2012. But the country still came in above Italy - Europe's third largest economy.

"The country's evolution has been very slow since 1990," said Zorislav Petrovic, head of Transparency Internernational in Croatia.

But the current government - led by Milanovic - is taking steps to clean up the country's act under close supervision from the European Union.

In November, the country's former Prime Minister, Ivo Sanader, was jailed for 10 years after being found guilty of taking pay-offs from foreign companies.

Sanader - who was premier from 2004 to 2009 - had fled the country but was arrested in Austria.

Kristof Bender, deputy chairman of the policy institute, European Stability Initiative, says Croatia's progress to the "doorstep of the European Union" is quite remarkable.

"We mustn't forget how bad it was in the 1990s," Bender said. "The darkest moments of war, occupation, mass killings, ethnic cleansing, and autocratic leadership and crony capitalism were all there."

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