Why is Montenegro eyeing EU?
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Why is Montenegro eyeing EU?

Why would a country join a group of loose political affiliations when the whole world is creaking under its possible implosion? As a political-economy entity, the European Union (EU) is under threat and its currency, the Euro, wondering what next. Gautam Chikermane writes.

columns Updated: Dec 20, 2011 00:22 IST
Gautam Chikermane
Gautam Chikermane
Hindustan Times
Gautam Chikermane,EU,Montenegro

Why would a country join a group of loose political affiliations when the whole world is creaking under its possible implosion? As a political-economy entity, the European Union (EU) is under threat and its currency, the Euro, wondering what next. Greece, a statistically-insignificant constituent, may walk out; Spain and Portugal could be next; but most important, Italy, a G20 nation, is standing on the edge of a financial precipice. So, why is Montenegro - a small, young and beautiful nation - wanting to join the EU?

"We still believe in EU," Montenegro deputy prime minister for economic policy and financial systems Vujica Lazovic told me as we sat in hotel Maestral overlooking the Adriatic sea. "It is very, very important for Montenegro." A nation in the making, this breakaway country of former Yugoslavia that got independence from Serbia five years ago and joined the World Trade Organisation last week on December 17, is possibly the most optimistic about the future of EU.

An economist, who has moved his favour from John Maynard Keynes to Paul Krugman following the economic crisis, Lazovic listed three reasons for integrating Montenegro into EU. "First, Montenegro has shown economic growth in the crisis time. The second point is that we have political stability. The third point is that Montenegro has very good relationships with the entire neighbourhood and we are seen to be providing stability to the whole region."

As I drove around this country that's as large as Nagaland, I began to see the connections between politics, wealth and development come to life. This 13,812 sq km country has a scenic geography with Dinaric mountains overlooking a 300 km coastline of the Adriatic Sea. As a result, the wealthy of the world are converging here, buying properties and yachts. But in order to be a high-end tourist destination, the underlying political infrastructure like planned development, property titles, law and order is missing.

"European integration is a question of adopting standards," Lazovic said. "It is important to us to use European funds to develop our infrastructure. We can't build high quality tourism if we don't have high quality infrastructure." So, the country is reorganising its judiciary, education, administration and so on, keeping this need in mind.

One of the problems in Budva, a coastal municipality about a two-hour drive over black mountains from the capital Podgorica, is the unplanned proliferation of houses. "The biggest danger here is that if you buy a villa overlooking the sea," a property investor told me on condition of anonymity, "without warning, the view you bought will get covered by an illegal building, turning your investment into dust." Sure enough, the villas overlooking the sea hide many behind them. Corruption by serving officials is rampant.

"This is a transition time," Lazovic said. "At one point we had very active investors from Europe - Eastern, Middle and Western. They wanted to buy land and develop building projects - hotels and homes. But our administrative capacity was not adequate to regulate them. Now…if you try to raise a building without local community or state permission, you will be arrested and jailed." It was only three months ago, in September, that the country established the office of a Notary. Prior to this, properties had to be registered by the court.

But if you want to see a country being built - physically and strategically - drive an hour North to Tivat and hit the beautiful Porto Montenegro, a waterfront development positioned to attract the wealthy. Run by Canadian businessman Peter Munk, this is a marina for 650 luxury yachts - 150 of them being superyachts that go as long as 150 metres - with houses and shops thrown in. Unashamedly upmarket, undoubtedly a vacation haven for the rich, Porto Montenegro goes a step beyond that Lazovic hoped will "transform the economy of Montenegro". To me this looked like fantasyland but Lazovic had a different take.

"They (the rich) will use helicopters, eat organic food," he said. "They will transform our tourism. There will be employment avenues for repair, maintenance and so on. This project is the best promotion of our country. If the rich come to Montenegro once, they will come again and again. It is very important to be on the map of the yachting tours."

Apart from high-end tourism, Montenegro aims to work its agriculture, energy, health and education to drive its economy. This includes exploitation of undersea reserves of oil and gas, an international tender for which will be opened this month. The risk: the beautiful beaches will turn black, and is perhaps something that is incompatible with high-end tourism. I told him that.

"Yes, absolutely," Lazovic agreed. "But we will see how to prevent that." Meanwhile, joining the EU has become a public priority for this nation of 650,000 people. Over the next few months, the Montenegrin government will begin accession negotiations that will begin in June 2012. A property manager told me she was unsure about the country joining the EU but would be happy with the pension she gets once the country is in tune with EU labour norms.

But while Montenegro's hurry to join the EU reminds us of the way Greece did in 1981, its real goal - to help the accession help strengthen its infrastructure and systems to attract the global wealthy - will probably see it through. Of course, the fact that it will be among the few European economies that will grow by almost 3% this year will ease the negotiations. "We have prepared a strategy and action plans," Lazovic said. "This is our chance."

For full interview log on to hindustantimes.com/lazovic

First Published: Dec 19, 2011 21:56 IST