ZAGREB (Reuters) - Croatia becomes the 28th member of the European Union at midnight on Sunday, passing a milestone in its recovery from war but anxious over the troubled state of its economy and the bloc it is joining.
Croatia joins the bloc just over two decades after declaring independence from federal Yugoslavia, a step that triggered four years of war in which some 20,000 people died.
Facing a fifth year of recession and record unemployment of 21 percent, few Croatians are in the mood to party.
The EU is mired in its own economic woes, which have created internal divisions and undermined popular support for the union.
EU flags fluttered from a stage in Zagreb's central square ahead of the evening festivities, but there was little mood of celebration on the streets.
"Just look what's happening in Greece and Spain! Is this where we're headed?" said pensioner Pavao Brkanovic in a marketplace. "You need illusions to be joyful, but the illusions have long gone."
Some 170 foreign officials, including 15 heads of state and 13 prime ministers, are expected to attend the main ceremony, which starts at 2300 local time (2100 GMT).
Among the speakers at the gathering will be the European Commission President Jose Manuel Barroso and European Council President Herman Van Rompuy.
President Ivo Josipovic told Croatia's Nova TV on Saturday journalists from EU countries had repeatedly asked him why Zagreb wanted to join the bloc.
"My counter question was: 'You come from the EU. Is your country preparing to leave the bloc?' They would invariably reply: 'Of course not.' Well, there you go, that's why we are joining, because we also believe the EU has a future," he said.
The country of 4.4 million people, with a coastline that attracts 10 million tourists each year, is one of seven that emerged from the ashes of Yugoslavia during a decade of war in the 1990s.
Slovenia was first to join the EU, in 2004. Serbia, Bosnia, Macedonia, Montenegro and Kosovo are still years away.
Croatia has gone through seven years of tortuous and often unpopular EU-guided reform.
It has handed over more than a dozen Croatian and Bosnian Croat military and political leaders charged with war crimes to the United Nations tribunal for the former Yugoslavia in The Hague.
It has sold shipyards, steeped in history and tradition but deep in debt, and launched a fight against corruption that saw former prime minister Ivo Sanader jailed.
Some EU capitals remain concerned at the level of graft and organised crime.
The occasion took a knock when German Chancellor Angela Merkel, the bloc's most powerful leader, pulled out of the accession ceremony, saying she was too busy.
Croatian media linked the move to a row over a former Croatian secret service operative wanted in Germany, though a spokesman for Merkel denied this.
Instead, Merkel urged Croatia to press on with reforms.
"There are many more steps to take, especially in the area of legal security and fighting corruption," she said in a weekly podcast.
For some Croatians the merits of accession were undeniable, despite the lukewarm mood.
"I know many people in Croatia are very sceptical but I think EU entry is the best thing that could have happened and it's an injustice we should have waited since 1990," said Zeljko Kastelan, a businessman whose hotels employ 70 people.
"What we need to do now is work hard to make up for the lost time." (Additional reporting by Annika Breidthardt in Berlin and Igor Ilic in Zagreb; Editing by Andrew Roche)
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