On 1 January, Croatia, the last State to join the European Union (in July 2013), pulled off the double whammy of joining the Eurozone and the Schengen zone: incredible progress (see EUROPE 12991/1, 13080/1). This makes it the second country of the Western Balkans after Slovenia to enjoy this dual membership. This is the perfect opportunity to take stock of how both zones are looking.
The Eurozone is now made up of 20 member states of the European Union. Since the Treaty of Maastricht, adopting the single currency has been an obligation, as long as the preconditions were met. The United Kingdom, however, always rejected this option and its departure from the EU has therefore changed nothing.
Denmark, for its part, was given an exemption clause, but held a referendum in September 2000 resulting in a no vote (see EUROPE 7810/2), yet it belongs to the European Exchange Rate Mechanism (ECM II). Sweden’s situation was different, as the adoption of the euro was set out in its accession treaty, but in a referendum held in September 2003, 56% of its population voted against adopting it (see EUROPE 8542/7). Opinion polls in both countries suggest that their citizens have yet to change their minds.
Significantly, the country which took over the Presidency of the Council of the EU at the beginning of this year is a member of neither the Eurozone nor even of the ECM II. The example does not always come from above…
At the time of the major wave of EU enlargement in 2004, the Eurozone was made up of 12 candidates (11 since 1999 and Greece since 2001). Obviously, its future members were bound by a commitment to adopt the single currency. Eight countries met the criteria and joined the zone: in chronological order, Slovenia (2007), Cyprus and Malta (2008), Slovakia (2009), Estonia (2011), Latvia (2014), Lithuania (2015) and, now, Croatia. This demonstrates the attractiveness of the euro, which has been reinforced over time with the zone now representing some 345 million EU citizens.
When it comes to the stragglers, the picture is very mixed. Bulgaria hopes to adopt the euro by 2024 (it joined the ECM II in July 2020) and Romania has set itself a deadline of 2027 at the latest. No such timescales have been notified by Poland, Hungary and the Czech Republic, on the other hand, even though they have all been members of the EU since 2004: there may be a political significance to read into this. It is particularly paradoxical and shocking when you consider that Croatia did not join the EU until nine years after them and that there are six other entities that are not even members of the EU that have already adopted the euro: Montenegro, Kosovo, Andorra, Monaco, San Marino and the Vatican. In other words, the currency is now used in 26 countries, but not in six EU member states, and not the least significant at that.
The Schengen zone of free movement of people now has 27 members (not including the micro-entities) but, make no mistake about it, this does not correspond precisely to the 27 member countries of the European Union: 4 of these are not members of the club (Bulgaria, Romania, Ireland and Cyprus), whilst those that are include Switzerland, Iceland, Norway and Liechtenstein (EFTA countries).
A dramatic end to the year was secured when Austria and the Netherlands played their vetoes at the Council of the EU against Bulgaria and Romania (the EUROPE 13080/1), even though these have the net support of the European Parliament (see EUROPE 13084/11) and the Commission, which confirmed that the conditions were met to join Schengen (see EUROPE 13064/8). These two member states moreover resolutely play the European card, as we have seen in their determination to adopt the euro in the near future.
Croatia was therefore alone in joining the Schengen zone as the New Year was rung in. Previously, the last EU member states to join it, in December 2007, were Hungary, Poland, the Czech Republic, Slovakia, Slovenia, Malta and the three Baltic republics.
Although the conditions to join are very different, there is a practical link between the Eurozone and the Schengen zone. The single currency makes life easier for people who wish to, or must, travel within Europe. At least originally, Schengen was based on the same spirit, something that deserves to be revived (see EUROPE 13001/1). There is therefore an inequality for EU citizens between the two zones: some have both advantages, others have just one of them, while others have neither. This runs counter to the provisions of articles 2 and 3 of the Treaty on European Union.
During this time of wishes and resolutions, it would make sense to aspire to work to reduce these inequalities. Will the impetus for this come from Sweden?
Renaud Denuit