When the Montenegrin parliament declared independence on 3 June 2006, there was considerable scepticism about the country's sustainability, particularly amongst those who, two weeks earlier, had voted in a referendum on its future to remain in a joint state with Serbia. "Montenegro is too small to survive alone," was a typical view, in this case expressed by an economics graduate interviewed then by the BBC. Read more …
Others were more optimistic. Few, however, would have predicted that in the same year Montenegro would head up the list of Central and South East European countries ranked in terms of FDI per capita, ahead of Estonia and Croatia. This boom was fuelled by investment in real estate along the coast. Two years later, in December 2008, the state, which had only just regained the independence it had lost in 1918, when it became a part of Yugoslavia, formally applied for EU membership. It received official candidate status in November 2010 and hopes to start accession negotiations in 2012. Hit by the global economic crisis, the Montenegrin economy contracted by nearly 6 percent in 2009. Also the real estate market plummeted. However, with unemployment at a relatively low 12.1 percent, the budget deficit at 3.0 percent of GDP, government debt at 42 percent of GDP, and a return to growth (1.1 percent in 2010), Montenegro seems to be convalescing.
While today few doubt that Montenegro has the potential to succeed on its own, the small Adriatic country faces a number of major challenges on its way to EU membership. One issue is dealing with the legacy of its socialist-era, industrial infrastructure. Key parts of it, such as the Podgorica's aluminium plant and the steel works in Niksic, are highly polluting, public health hazards and loss-making. These heavy industrial leftovers are hard to reconcile with Montenegro's self-proclaimed constitutional status as the world's first ecological state and its drive to market itself as a chic and upmarket tourist destination. Another issue is that of stark regional economic imbalances, with living standards on the coast and in the capital Podgorica, far outstripping those of the mountainous north. The issues of organised crime and corruption, or rather the widespread perception of a failure by the authorities to deal with them root and branch, are also ones which have evoked much international concern, in particular from the EU. Many of today's illicit networks grew out of those established during the years of war and sanctions during the 1990s when Montenegro, then part of Slobodan Milosevic's rump Yugoslavia, was a major hub for large-scale cigarette smuggling to Italy and sanctions busting. The alleged extent of the operation is troubling. Prosecutors in Italy have even implicated Milo Djukanovic, Montenegro's president of prime minister for most of the past 20 years, in the affair. (Djukanovic has never had to stand trial, however.)
6 May 2011
ESI essay: Montenegro: Germany's Balkan stipends – Asylum and the Rozaje exodus (January 2016)