Wed, May 24, 2006 - Page 6 News List

Tourism the key to success for the world's newest state

AP , PODGORICA, SERBIA-MONTENEGRO

With a spectacular coastline, Montenegro could profit from a tourism -- and real estate -- boom. It may also soon thrive from closer ties with the EU.

But first, the tiny Adriatic country must confront a number of problems it has never fully addressed: chronically bad infrastructure and endemic corruption.

Free from the embrace of big-brother Serbia following Sunday's referendum on independence -- including the pressure of Serbia's failure to capture top UN war crimes suspects -- Montenegro may get a clearer path toward its proclaimed goal of joining the EU.

But its rediscovered statehood will also test its ability to form a viable economy and push through the strict reforms set by the EU as a condition for eventual membership in the body.

"Montenegro will no longer be able to blame Serbia for all its troubles," said Balkan analyst Braca Grubacic. "Now, Montenegro is on its own."

Pro-independence Prime Minister Milo Djukanovic has for years accused Serbia of stifling its junior partner in their joint state, and blocking its economic progress and integration into the international mainstream.

While advocating independence, Djukanovic promised his people that Montenegro's economy will flourish by restoring the statehood it lost 88 years ago. The pro-Serbian camp had argued that Montenegro, with a population of 620,000, is too small to be viable on its own.

"I expect fast economic development and an increase in living standards," said Montenegrin President Filip Vujanovic. "Montenegro was handicapped in its union with Serbia."

But Montenegro is deeply divided between its pro and anti-independence factions, and its economy has been almost fully dependent on the black market since the troubled 1990s, when both Serbia and Montenegro faced international sanctions over their role in the Balkan wars.

That economy, including cigarette smuggling, helped Montenegro survive the heavy-handed rule of former Serbian leader Slobodan Milosevic. But it also destroyed most of its industry, which is at a virtual standstill and being sold off cheaply to foreign investors.

Per capita income is the equivalent of around US$1,000, the average monthly salary US$250 and unemployment about 30 percent.

Montenegro's tourism, based on soaring mountains and stunning Adriatic Sea coastline, is the tiny state's main economic trump card.

New hotels have been built and old communist-era buildings have been renovated. Real estate dotting the 290km-long coast has been sold, mostly to wealthy Russians.

With independence, Montenegro expects to double the visits by Western tourists to some 600,000 this year. They have stayed away from the republic because of its unstable political situation. Now, many may be wooed back by its cactus-studded cliffs and breathtaking vistas.

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