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MOKRICE, Slovenia (AP) — Croatia agreed Monday to suspend legal action against Slovenia over a long-standing banking dispute stemming from the breakup of Yugoslavia. In return, its neighbor agreed not to block its entry into the European Union.

Croatia is slated to join the EU on July 1, and the agreement clears the way for Slovenia to ratify its accession treaty by that date. The two former Yugoslav republics have clashed for years over savings deposits at the former Slovenian LB bank following the breakup of the Yugoslav federation in 1991. Croatia wants EU-member Slovenia to pay back €270 million ($353 million) to Croatian depositors.

According to the deal signed by the two countries' prime ministers, Croatia will stop its legal action. Talks to finally resolve the issue will continue with the help of the Bank for International Settlements, which advises central banks.

Croatia's Prime Minister Zoran Milanovic expressed hope a resolution will come "in a reasonable time and to mutual benefit." Slovenia's outgoing Prime Minister Janez Jansa said his country can now move to launch the ratification procedure for Croatia's entry as early as this week.

Jansa dismissed fears that the process could be further stalled because of an ongoing political crisis in Slovenia, which led to a no-confidence vote against Jansa's government and an election of a prime minister designate.

"There exists high consensus among Slovenian politicians on this subject," Jansa said. If everything goes as planned, Slovenia's parliament will ratify Croatia's EU membership by the end of the month.

Croatia is the first former Yugoslav republic to join the bloc after Slovenia became an EU member in 2004. Other Balkan states have been lagging. Slovenia's official STA news agency reported that the European Council President Herman Van Rompuy called the agreement a "sign of maturity" and an "example for the whole region".

"By choosing the path of dialogue, tenacity and compromise, you have been able to turn the page as member states of our Union," Van Rompuy said in the congratulatory message.