Update No: 118 - (29/03/07)
The world has a new country
Montenegro declared its independence on June 3 after its electorate voted to
dissolve the union with Serbia in a referendum on May 21. Serbia and Montenegro
both gave up their sovereignty to join the Kingdom of Serbs, Croats and
Slovenians in 1918, which eventually became the federal Yugoslavia. Yugoslavia
fell apart in violence in the early 1990's, but Serbia and Montenegro remained
in a federation until 2003, when it was transformed into the now defunct union
Montenegro has become the 192nd member of the United Nations, one of its
smallest members. 'Montenegro' means 'black mountain' in English. Montenegro is,
indeed, a very rugged and mountainous country. But it is green, indeed verdant
in its numerous valleys, while it has a resplendent coastline on the magnificent
blue of the Adriatic Sea.
The whole country is green in another sense. It has just acquired independence
and is not quite sure what to do with it, although the main drift is clear
enough, join the West beyond that magnificent sea, leaving the murkily black
history of its annexation to the now defunct Yugoslavia behind.
The Montenegrins voted on September 10th in the first parliamentary elections
since their tiny Balkan state split from Serbia on May 21. It was predictably
won by the pro-independence, pro-presidential bloc. Although the vote in May was
on a knife edge, popular opinion has swung strongly in favour of independence
now that it is an established reality. There is something exhilarating about
being master of one's own fate, as they now are.
The vote for the 81-seat assembly was key to Montenegro's hopes for joining the
European Union and NATO, as the new parliament will be charged with drafting and
passing a new national constitution for the world's newest country.
All of Montenegro's main political parties are united in their support for EU
membership. Analysts said that Djukanovic, the longest-serving prime minister in
the Balkans until replaced by Zeljko Sturanovic, owed his victory to the failure
of the pro-Serbian opposition to recover from defeat in the referendum in May.
The new government is expected to push for a new constitution. The new prime
minister also promised speedy entry into the Partnership for Peace, a first step
toward NATO membership, and a deal on closer political and economic ties with
the European Union.
The new government also has to eradicate a reputation for corruption and weak
institutions. The margin of its victory would help the pace of reforms, but some
questioned whether the government would have the resolve to implement them.
Stabilisation and Association pact signed with EU
The tiny Balkan republic of Montenegro has made a significant step towards
joining the European Union, after signing a Stabilization and Association
agreement (SSA) with the bloc, surging ahead of Serbia from which it seceded in
May last year following a referendum. The first step on the long road to
possible EU membership, the accord makes Montenegro an official EU candidate,
along with the other two republics of the former Yugoslavia - Macedonia and
Montenegrin Prime Minister Sturanovic and EU enlargement commissioner Ollie Rehn
inked the accord in Montenegro's capital, Podgorica on March 16th.
Rehn said the agreement would facilitate trade between Montenegro and EU and
promised European help in Montenegro's struggle against organised crime and
corruption. "Further progress on Montenegro's road to EU will depend on the
implementation of the agreement and the struggle against corruption and
organised crime and based on the reforms of judiciary and administrative
capacities," said Rehn.
Sturanovic said the agreement represented the first phase of substantial
integration of Montenegro into the EU," and "the best verification of
everything Montenegro has done so far on its road towards the EU."
Montenegro president Filip Vujanovic hailed the agreement as a "great step
forward for Montenegro," and pledged his country would continue to fulfil
all its obligations in the process of European integration.
The new tiger economy
"Mediterranean tiger" is a match to original "Asian
tigers": Singapore, Hong Kong, Taiwan, and South Korea. In 1960's and in
1990's they had a great growth of the economy, which several years in a row was
up by 15%.
Montenegro in transition could use the experiences of other countries such as
Estonia, and become the first "Mediterranean tiger" - it is a hallmark
of the case by Frederic Sautet and Kyle McKenzie, researchers of Mercatus centre
alongside the American University George Mason.
The future of Montenegro without any doubt is optimistic still. The country is
at a crossroads and it has many decisions to make, which will be keys for its
long-term success. It no longer has Serbia to retain her or to throw its blame
The possibility of Montenegro to become a "Mediterranean tiger" was
for the first time mentioned by the ex Prime Minister Milo Djukanovic, who four
years ago said that Government and the Parliament have to strive to create a
secure and attractive surrounding for the investors in order to have a speedy
economic growth and opening of new employment opportunities. He added that, if
they fulfil the goal, "the commentators in the next few years will maybe
speak about Montenegro as the Mediterranean tiger."
Their success in great part was based on direct investments from USA and Japan.
"Asian tigers: have focused themselves on a stimulation of production for
export to developed countries, they have discouraged domestic expenditure with
high custom rates, and they invested in the growth of productivity and
improvement of the educational system, from primary schools to universities.
Even though it is compared with "Asian tigers" the authors praise the
fact that Montenegro has reduced the custom rates and refused their increase
during the time when it was in Union with Serbia. They also commended the acts
about privatisation and the success of the market of capital funds. As
challenges, they cited the relatively high level of public expenditure of 44, 6%
of GDI (Gross Domestic Income) at the end of 2006, the labour market which needs
to be liberalized, and the high participation of the grey economy.
They call Montenegro "an extremely small country with just a little bit
more than 620.000 citizens" and they quote the professor of the economic
faculty Veselin Vukotic who suggests a concept of micro state and says that the
"key idea is to build a minimal but efficient state, in stead of a
paternalistic, all present, but weak one which we now have".
Sautet and McKenzie as a positive example state the growth of tourism
"thanks to the newest James Bond movie and glamorously presented vacant
hotel places in the country". Still, they forget that the vacant hotel
places, in the movie displayed as Montenegrin, are in fact located in Czech
A cloud on the horizon- dark and menacing
What will the new fate of Montenegro be? Ironically, it will probably be
decided from outside.
Ex-Prime Minister Milo Djukanovic long advocated integration with the West as
the goal. But there is a problem. Montenegro still has a black aspect - it is
rife with corruption, smuggling and crime.
It is most unlikely that the EU will want to permit its worst elements to enter
unopposed. There is a need for clarification all around.
The bandits that afflict the country have existed for centuries. They were
basically people with entrepreneurial talent, excoriated and banned by communism
and all other forms of outside authority. Are they prepared with self-rule,
apart from the out and out criminal element, to settle down to legitimate
outlets for their enterprise. Why not now tourism and hotels, and all that is
entailed in rejoining the comity of nations again?
The new country is attracting a great deal of interest from abroad. It is a
fabulously beautiful place right on the Adriatic. In a sense it is the most
originally 'Balkan' state in the region never having been fully occupied by the
Jat Airways and Montenegro Airlines merger talk rebuffed
The Belgrade daily, Politika, recently published an article which mentioned that
the national airline of Serbia, Jat Airways, and Montenegro Airlines plans to
merge for their future co-operation. Montenegro Airlines, Ministry of Transport
and Jat Airways Managing Board Director jointly rebuffed allegations that the
two companies plan to merge, Mnnews reported.
Company officials stated that Jat Airways has no plans to merge with Montenegro
Airlines. Montenegro Airlines officials recently stated that their company might
only co-operate with Jat Airways, while the Serbian Ministry for Capital
investments mentioned the possibility of a merger. Rados Sucur, Montenegrin
Associate Minister of Transport, denied that his ministry allowed the merging of
the two companies.
LUKoil to participate in privatisations
LUKoil Montenegro will participate in all privatisations of energy-related
companies in Montenegro, and also plans to open more than 20 petrol stations
throughout the country in 2007, Serbia & Montenegro Today reported.
Opening of the first petrol station is planned for June this year, LUKoil
Montenegro Executive Director, Robert Ferluga, was cited as saying. Russian oil
company LUKoil opened its representative office in Montenegro last year.
Hungarian firm will invest 3bn Euro
The Hungarian corporation Trigranit said in Budapest that it will invest three
billion Euro in Montenegro. This was announced by the general director of the
company, Loran Varga, and the chief of the sector for investment, Zolt Cabo,
Both officials of the company said that Trigranit is interested in investing in
Podgorica, Ulcinj, Skadar Lake, and Budva. Varga said that if the project were
approved then the income in tourism would double. He added that the company is
interested in construction of business centres, as the company has already built
such centres in Ljubljana, Zagreb, Bratislava and Budapest. He recalled that per
year their shopping malls are visited by about 60 million people. As Varga
pointed out, they would work in Montenegro based on the cooperation of the state
and the private sector. Trigranit is interested in the construction of roads and
investment in energy. It is expected that the capital city could soon announce
an open competition for the construction of a Millennium centre at the location
of the former military caserne "Moraca."
Croatia-Montenegro relations improving
Montenegro's President Filip Vujanovic went on an official visit to Croatia at
the invitation of his Croatian counterpart, Stepan Mesic, the Montenegrin agency
MINA told Mnnews.
Vujanovic was welcomed by Croatia's President, Stjepan Mesic, and Parliament
Speaker, Vladimir Seks.
On March 10th, the two heads of state said in Zagreb that Croatia-Montenegro
relations are developing well and the two countries should turn to the future,
while simultaneously drawing lessons from the past and closing all outstanding
issues through talks.
"Let's turn to the future, let's draw lessons from the past. Montenegro
sees in Croatia its friend and wants to close all outstanding issues by
agreement," said Vujanovic, on his first official visit to Croatia since
Montenegro declared independence last spring.
Mesic stated that the unsolved issues would not hinder the further development
of the relations between the two states. He said bilateral relations were
developing well but "can and must be better." "We are not running
away from problems or... pushing them under the carpet. We are talking about
everything and believe that talks, negotiations and agreements are the only way
to resolve existing problems," said Mesic.
He underlined that Croatia did not have unsolvable problems with any of its
neighbours and that those problems which seemed such were due to lack of
political will or courage or vision. Speaking of the border with Montenegro near
the southern Adriatic tip of Prevlaka, Mesic said it was regulated by a
temporary solution. "Of course, it is not final and prejudges nothing. But
it works perfectly and at this moment there is absolutely no need to tighten it
in any way."
Speaking of Euro-Atlantic integration, Mesic said Montenegro knew that Croatia's
accession to the EU was in its interest as well. He added Croatia was ready to
share its experience in accession negotiations. Vujanovic said that he and his
host had recalled two of their initiatives that were accepted by state
In 2005 an initiative was launched that Montenegro pay for property seized by
the former Yugoslav People's Army (JNA) in the southern Croatian sea resort of
Dubrovnik and, according to Vujanovic, "show that it is ready to
rehabilitate in this way... that part of the past and thus overcome the problem
that existed on that ugly page of Montenegro's history... a history in which,
guided and misled by the JNA, it took part on the Dubrovnik battlefield."
Vujanovic said the initiative had not been welcomed and four days was spent in
parliament to establish if the initiative clashed with the constitution. He
reiterated that Montenegro had publicly apologised and expressed genuine regret
for the Dubrovnik battlefield as well as saying that war crimes had been
committed there and that those responsible must end up before the Hague war
In July 2006 an agreement was signed by the two countries' state prosecutor's
offices on cooperation and the prosecution of perpetrators of war crimes, crimes
against humanity and genocide. "Croatia and Montenegro essentially want the
same, a peaceful and stable region and a European future. I am sure that by
building our relations we are contributing to the stabilisation of the region. I
am pleased with the talks we had and believe that Croatian-Montenegrin relations
have a good prospect, in the interest of the two countries and all their
citizens as well as in the interest of the region and Europe," said Mesic.
War-ravaged Croatia will take a softer approach towards newly independent
Montenegro by accepting shares in state companies instead of monetary
compensation from Montenegro, Mnnews reported.
In lieu of full war reparations to Croatia, Montenegro could offer shares in
state companies. Military attacks that were launched from Montenegrin territory
in 1991 wreaked havoc and destruction in the Croatian city of Dubrovnik. While
expressing regret for the destruction caused, the Montenegrin authorities said
that the republic was not the decision-maker in the former Yugoslavia and cannot
be considered the aggressor.
On February 27, Montenegrin Parliament Speaker Ranko Krivokapic, speaking after
a meeting with Croatian counterpart Vladimir Seks, said the two states would
agree on Montenegro's "political and moral responsibility" for the
However, the apologetic tone of Montenegro's pro-independence parties, which
have run the republic for the last decade, has been criticised by pro-Serbian
parties in Montenegro.
The Democratic Serbian Party accused Krivokapic of defending Croatian interests,
and the Serbian People's Party said they would seek the speaker's resignation.
"Krivokapic obviously wants to raise new tensions and disputes between the
Montenegrin citizens," the Socialist People's Party said.
Telekom Srbija bids for mobile operator
Telekom Srbija and Amsterdam-based Ogalar Company (owned by powerful Serbian
businessman Miroslav Miskovic) were the only bidders for a third mobile
telephony operator in Montenegro, Italian News Agency ANSA reported on February
They are offering US$16 million for the licence, although the reserve price was
set at US$ six million, it was reported. Telekom officials have confirmed that
Ogalar is part of Miskovic's Delta Holding and that the company has been working
on promoting Telekom. The consortium plans to invest about US$90 million, and is
ready to become operational in the summer, it was reported.
Donald Trump to invest in coastal hotel market
American billionaire, Donald Trump, has announced plans to invest in the hotel
business in the coastal area of Montenegro. Trump is interested in the
acquisition of hotel company HTP Ulcinjska Rivijera in Ulcinj, close to the
Albanian-Montenegrin border. This investment is one of the largest in Montenegro
since the republic became independent in 2006, according to media reports. Local
authorities have already received a letter of intent from Trump, Mnnews
Trump also announced plans to construct hotels and other facilities linked to
tourism. The local media have reported such an investment would be the largest
in Montenegro since the republic became independent last year.