Croatia is set to become the European Union's 28th member in July 2013 after signing an accession treaty today but EU leaders delayed a decision on granting its fellow ex-Yugoslav neighbour Serbia the status of EU membership candidate.
EU politicians hope Croatia's membership, a reward for deep democratic and economic reforms, will persuade other countries in the Balkans that reforms pay off and accelerate democratic transition in a region torn by ethnic wars in the 1990s.
However, EU diplomats said European leaders meeting at a summit in Brussels delayed a decision on granting Serbia the status of an EU candidate until March at the latest due to concerns over Belgrade's failure to mend relations with its former province Kosovo.
"The achievement of Croatia proves to all in the region that through hard work, persistence, political courage and determination, EU membership is within reach," European Council president Herman Van Rompuy said at a signing ceremony on the sidelines of a summit of EU heads of state.
"Croatia is a pioneer, demonstrating in a tangible way that the future of the western Balkans as a whole lies in the European Union. The Union remains committed to this perspective."
At the same summit, EU governments were divided over how to build a fiscal union to preserve the euro currency, with a large majority of countries led by Germany and France agreeing to move ahead with a separate treaty, leaving Britain isolated.
Under the term of EU membership, Croatia is required to join the euro. Croatia's prime minister elect Zoran Milanovic told a news conference in Zagreb this was a requirement in the "medium term". "That is our aim," he said.
Analysts believe Croatia could aim to adopt the euro by the end of this decade.
The Adriatic state of 4.3 million people - less than one per cent of the EU's current population - began EU accession talks six years ago.
Its bid struggled due to concerns over corruption and Zagreb's slow progress in coming to terms with the legacy of Balkan wars. But a last-minute reform push by outgoing prime minister Jadranka Kosor persuaded the EU that Croatia was ready.
"This reform momentum now needs to be maintained," European Commission president Jose Manuel Barroso said.
Zagreb will face EU monitoring ahead of accession, with the EU executive expected to report on how well anti-corruption reforms are progressing.
Other hopefuls in the Balkans are struggling to convince EU countries that reforms and regional reconciliation following ethnic wars are moving fast enough.
Serbia made a last-minute push before today's summit to resolve border tensions with Kosovo, whose declaration of independence in 2008 Belgrade refuses to recognise.
Belgrade told ethnic Serbs last weekend to remove remaining road blocks in Kosovo's lawless north as it attempted to convince EU leaders of its goodwill toward Pristina and win membership candidate status.
Many of the barricades erected since July in a dispute over control of Kosovo's northern border with Serbia remain in place, however, and EU diplomats said Belgrade's actions may not be enough to win the support of all member governments.
In a draft statement prepared for the summit, EU leaders will praise Serbia for democratic reforms but call for more evidence of progress in relations with Kosovo before making a final decision in March, according to the text seen by Reuters.
They are also expected to signal accession talks could start with Montenegro in June 2012 while calling for more evidence that Podgorica is serious about fighting corruption and organised crime, draft conclusions showed.
Reuters