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The Financial Times: Survey - Montenegro

Serbia deal fails to stir enthusiasm 
By Eric Jansson and Anthony Robinson 
Published: July 11 2002 5:00 | Last Updated: July 11 2002 5:00 

Shotgun weddings seldom give much cause for celebration. So when the outline agreement to replace what remained of Yugoslavia with a looser federal arrangement under the new name of Serbia and Montenegro was signed in Belgrade three months ago, the smiles were a trifle forced, at least from the Montenegrins.

To the European Union and US, the March 14 agreement, brokered by Javier Solana, the EU foreign policy supremo, was a small diplomatic triumph. By cajoling a reluctant Milo Djukanovic, the Montenegrin president, to sign the agreement with Vojislav Kostunica, Serbia's federal president, they hoped that Yugoslavia, with all its sad and bloody connotations, had been consigned peacefully to the history books. At the same time, a halt had been called to further "Balkanisation" of the former Yugoslav space.

By putting their signatures to the document, the two presidents were praised for sending a clear message to the Kosovar and Macedonian Albanians that they, too, should end their separatist dreams.

Unspoken, but implicit, lingered the possibility that at some in time in the future, the new federation of Serbia and Montenegro could be expanded to include Kosovo, a United Nations protectorate with a 90 per cent ethnic Albanian population, but still, technically, part of Serbia.

Seen from Podgorica, the Montenegrin capital, the agreement looks loosely worded and ambiguous.

The most that government ministers, speaking off the record, are prepared to say is "where there is a will, there is a way". They suggest that if the pragmatic, economic reform-minded technocrats in the Serbian government of Zoran Djinjic want to have a constructive relationship with Montenegro, and vice versa, the new loose federation will not cause any trouble.

In practice, however, the new constitution, whose details have still to be worked out, seems most likely to become a football in the internal Serbian power struggle between Mr Djinjic, the prime minister, and President Kostunica - and the main issue in the run-up to this year's presidential and possibly early parliamentary elections in Montenegro. At a time when both states urgently need to concentrate on pushing through economic and other structural reforms, the constitutional issue threatens to divert attention from the main goal.

Montenegrins remain divided on the federal issue, geographically and emotionally. Support for the federal link with Serbia comes mainly from the small villages and hill farms of the north and from older, less educated, citizens.

Support for independence is strongest among the young and in the capital and the coastal areas, with exceptional pockets of support for the continuation of the greater Serbia dream in places such as Herceg Novi, whose population has been swelled by Serb refugees from Bosnia, Croatia and Kosovo.

But Mr Djukanovic and his "Victory for Montenegro coalition" won 36 seats in the parliamentary elections last year, with the promise of a national referendum on the independence issue. Instead, the deal was done without consultation in a smoke-filled room in Belgrade, leaving Mr Djukanovic open to criticism for not keeping to his word and acting in an autocratic way.

Opposition comes from the pro-federation "together for Yugoslavia" coalition which holds 33 seats in the 77-seat parliament.

The balance is held by the small Liberal party, whose six MPs usually vote with the government. The Liberals are not part of the government, mainly because of fierce personal antagonism between the president and Slavko Perovic, leader of the Liberals. The pro-independence side is also supported by the two votes of the ethnic Albanians.

President Djukanovic, is a former communist who was prime minister until 1997 when he split away from Slobodan Milosevic, the then Serbian leader. He has since led the drive for independence from Serbia, which has a population 18 times greater than the 660,000 Montenegrins and a chauvinist tradition in regard to its neighbouring southern Slavs and ethnic minorities.

In an interview, Mr Djukanovic confirmed that he had signed the March agreement reluctantly in the face of pressure from the EU and the US and a divided electorate at home. Montenegro is highly dependent on EU and US aid to fill its budget and foreign trade deficits and the president was also made to understand that the eventual goal of EU entry would be more likely if he signed up to continue the constitutional link with Serbia.

But he made clear that he still believes it would be better to allow Montenegro and Serbia to go towards a common European future as separate states in the way that Slovenia, Croatia and Macedonia have done. He also warns that Montenegro could still walk away from the Belgrade agreement if, as he suspects, the Montegrin side comes under pressure to "harmonise" its economic and other policies with Belgrade rather than Brussels.

The March agreement is vague in many key respects. Nowhere, for example, is it specified clearly which currency the "harmonised" new federal state should use. Since January 1, Montenegro has been the de facto 13th member of the euro zone while Belgrade retains the dinar. This is a currency which is tightly managed by the Serbian central bank but which has been associated with manipulation, state sponsored theft of hard currency deposits and hyper-inflation over the last 10 years.

The problem is that the March agreement is not really focused on the economic matters of most concern to the average Serb or Montenegrin. It is essentially a document that reflects wider political and strategic imperatives.

While Washington, Brussels and other European capitals were focused on removing Mr Milosevic from power, Mr Djukanovic received strong personal support and the equivalent of €300m a year in project finance and technical assistance. This has financed new roads, new laws, banking sector and other reforms and helped bankroll a bloated bureaucracy and well-staffed police force. This aid helped to finance stabilisation and underpin an economic recovery based on construction and increased tourism receipts.

Once Mr Milosevic was safely in the Hague facing an international war crimes court, however, the EU and US switched track.

Instead of supporting Montenegrin independence, the international community is now focused on preventing further "Balkanisation". The new federation is supposed to dissuade the Kosovar and Macedonian Albanians from demanding their own state. Mr Djukanovic is sceptical. "I know all the leaders around here," he says. "Anybody who thinks that the Kosovar Albanians or anybody else are going to change their minds about independence from Serbia because of what the Montenegrins do or don't do doesn't know what he is talking about."

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 Copyright: The Financial Times Ltd 2002

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