What will change for Croatia now that it’s part of the Schengen Area?

On January 1, 2023, Croatia officially became the 27th country to join the Schengen Area, the world’s largest visa-free region. The country’s new status effectively removes any existing border controls between Croatia – which already held the world’s eighth-strongest passport in 2022 – and much of Europe. It’s a boon for the Balkan nation that is expected to boost its economic and passport power, not to mention the standard of living for millions of Croatians.

Why does Schengen membership matter so much? Though a member of the European Union since 2013, Croatia had been excluded from the EU’s visa-free area until it was able to meet a lengthy list of necessary criteria – what’s known as the Schengen legal acquis.

After fulfilling the requirements, Croatia garnered unanimous support from the other 26 member states in the Schengen zone, and now, its citizens can enjoy unhindered access to the visa-free area. Home to 420 million residents, the 4,000-square-kilometer Schengen zone routinely sees its residents cross borders to study, work, travel, and visit family and friends without any border controls. Around 3.5 million people move across the area’s internal borders daily, accounting for a whopping 1.25 billion trips annually.

“It is an incredible historic milestone that will have a positive impact for centuries to come. The Croatian people and and their future generations can look forward to a better quality of life  – this is the power of a world without divisions,” says Armand Arton, president and founder at Arton Capital.

Immediate economic benefits

Croatia’s new status as a Schengen member is excellent for travelers, too. Previously, foreigners visiting Croatia had to show their passports at border control points and suffer through congested land crossings when passing through Slovenia and Hungary (both of which are Schengen members).

But now, Croatia can issue Schengen visas, enabling visitors to travel easily around the zone. This convenient, checkpoint-free travel experience will likely attract more travelers – and economic opportunities – in the process.

For example, the country’s tourism industry is expected to receive a significant boost this year as more travelers find it easier to visit the southeastern European country, famous for its Black Sea beaches, medieval castles, and Game of Thrones shooting locations.

Tourism already accounts for 20% of the national GDP, and a surge in visitors will likely attract more investments, create jobs, and generate revenues and taxes – underpinning a robust and competitive economy for the country’s 4 million citizens.

A stronger currency

Removing pesky border controls also further integrates Croatia into Europe’s powerhouse economic bloc. The free movement of people, goods, services, and money across much of the continent through a single market has fueled the success of the EU, the world’s third-largest economy, representing 16% of the global GDP.

Moreover, the European Council voted to include Croatia in the eurozone, making it the 20th country to adopt the euro as its currency. Using the euro carries myriad benefits for Croatia, including more efficient cross-border trade, price stability, better integrated financial markets, and closer ties with the European Central Bank.

By phasing out its former currency – the kuna – in favor of the euro, experts predict it will also help protect Croatia’s economy during soaring global inflation. Croatia’s inflation rate reached 13.5% last year, compared to 10% in the rest of the eurozone.

Enhanced security and collaboration

In addition to the many economic benefits, Schengen membership also confers improved domestic security through functions like cross-border police collaboration, stronger judicial cooperation, and quick extradition processes.

Backed by the resources of other Schengen members, Croatia can better tackle security or terrorism threats and manage immigration challenges. When paired with strong economic prospects and a stable currency, Croatia’s future looks very bright.

“I wouldn’t be surprised to see Croatia emerge as a rising star on the European continent,” says Arton. “It is a compelling example of how a world with fewer borders, more trust and collaboration, and a shared sense of purpose can create a life-changing impact.”

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