Economists Divided Over Effects of OECD Membership Failure

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Slovenia and Hungary have blocked Croatia’s bid to become a member of the OECD.

Just when the doors of the Organization for Economic Cooperation and Development (OECD), which gathers 35 of the most developed countries in the world, seemed to be opening for Croatia, after many years of trying, last week everything fell apart. Governments of Slovenia and Hungary announced they would block the bid due to bilateral issues with Croatia, reports Jutarnji List on September 10, 2017.

As things stand now, Croatia will not enter the elite club for quite some time, to which most EU member states already belong. It remains to be seen what will be the consequences, and analysts themselves are divided. Some of them warn there will be consequences, perhaps more substantial than it might seem now.

“Things are very serious. Apart from the fact that the Slovenian politicians have again shown that it is complicated to negotiate with them, Croatia itself will feel the consequences of remaining outside the OECD,” warns economist analyst Damir Novotny.

First of all, he adds, it is about status and reputational issues. The OECD gathers the most developed countries in the world, and Croatia remains out of the elite club. Novotny points out that this could also be reflected in the business and investment environment in Croatia, which could result in smaller investments in the economy. Ultimately, according to Novotny, it could slow Croatia down in its efforts to upgrade its credit rating.

On the other hand, Željko Lovrinčević from the Zagreb Institute of Economics does not expect significant consequences of the OECD membership failure. It should not reflect on international trade and integration processes, which Croatia is part of with or without the OECD. Yet, the inability to achieve membership in the OECD carries at least one significant disadvantage. Croatia will not sit at the table where decisions are made.

Lovrinčević stresses that the Slovenian blockade of the OECD bid due to bilateral issues is very unusual. “The OECD is an organisation which focused on achieving higher economic, political and social standards, and on enhancing excellence. This kind of behaviour from Slovenia is very rare and is not in the spirit of the OECD itself,” says Lovrinčević.

An experienced Croatian diplomat agrees. “This is a serious matter. In this way, Slovenia is trying to force us to accept the arbitration decision. Someone has apparently suggested them they should not create practical problems, such as intentionally causing long lines on the borders crossings or trying to send police in the Bay of Piran, so now they have opted for moves such as this in order to internationalise the problem. They did something similar when we were entering NATO and the EU,” says the diplomat.

He adds that Croatia should respond with a much stronger diplomatic offensive that would explain to the international community what the problem is with the arbitration process.

Translated from Jutarnji List.


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