You're reading: Update: ‘Slovenia vote clears obstacle to Croatia European Union bid

LJUBLJANA, June 6 (Reuters) - The 'yes' vote was leading in a Slovenian referendum on a border arbitration deal with Croatia that is vital for Zagreb's EU membership bid, a count of 60 percent of the vote showed.

With 98 percent of votes counted, 51.6 percent of Slovenes approved the deal, the state electoral commission said.

The vote should boost Croatia’s chances to join the European Union in 2012.

Under the border arbitration deal, an international team will settle a dispute over the land and sea border that dates from the 1991 break-up of Yugoslavia. The ruling would be binding for both countries.

"This is a historic decision," Prime Minister Borut Pahor told national TV Slovenia after partial results were out.

Slovenia joined the European Union in 2004, the only former Yugoslav state so far to have done so. Like any other EU member, it can veto Croatia’s progress towards membership.

Pahor’s centre-left government has made ending the dispute with Croatia its main foreign policy goal. Slovenia blocked Croatia’s EU application process for most of 2009 until the two governments reached a deal last September.

Janez Jansa, opposition leader and former prime minister who had denounced deal as bad for Slovenia, said approval of the deal would result in Slovenia losing access to international sea waters.

"This result shows that Slovenia is divided over a question where we should not be divided at all," Jansa said.

The dispute involves a sliver of land on the Istrian peninsula in the northern Adriatic. Slovenia — squeezed between Italy and Croatia — has demanded to have direct access to international waters, which could force Croatia to cede some of the sea it sees as its own.

Analysts say the approval will end the 19-year old border dispute and ease relations between the two countries.