Balkanalysis.com

Montenegro

Capital Podgorica
Time Zone CET (GMT+1)
Country Code 382
Mobile Codes 67,68,69
ccTLD .me
Currency Euro
Land Area 13,812 sq km
Population 672,000
Language Montenegrin
Major Religions Orthodox Christianity, Islam

Chinese Investment Developments in the Balkans 2016: Focus on Montenegro

By Bilsana Bibic

On 7 July 2006, Montenegro (then a newly independent state) established diplomatic relations with the People’s Republic of China. China had recognized Montenegro’s sovereignty less than a month before. Since then, China’s relationship with Montenegro and other ex-Yugoslav countries has progressively evolved.

According to Loïc Poulain’s article China’s New Balkan Strategy (2011), China invests in Southeastern Europe in order to “circumvent the EU’s anti-dumping regulations and export products directly to a market of some 800 million people”. According to the same article, the Balkans, with their free-trade agreements and strategic positioning, are crucial for the resurrection and extension of the ancient Silk Road which would reduce the time needed for Chinese products to reach Europe.

Even though China’s grand Balkan scheme is somewhat doubtful, the intensification of Chinese investment in the region speaks to an increasingly growing interest. The best manifestation of this is the “16+1” initiative which started in 2012 and which seeks to improve economic relations between China and 16 European countries, including Albania, Bosnia, Croatia, Macedonia, Montenegro, Serbia, and Slovenia. At the last summit of the “16+1” platform in December 2014 in Belgrade, China promised a $3bn investment fund for Central and Eastern Europe.

Montenegro: Fleet Renewal and Highway Investments

Despite all of this, China is not a top investor in Montenegro at present. As a recent article concerning the Central Bank of Montenegro report on FDI notes, top investors are Norway, Italy, Hungary and Russia (in that exact, surprising order). However, the China Exim Bank loans for the construction of the Podgorica-Kolasin motorway section (total cost 809.6 million euros) and for the renewal of the Montenegrin ship fleet (total cost circa €100 million) are in no way negligible.

In fact, Prime Minister Djukanovic had already in 2013 deemed the motorway project “the most important infrastructure project for the future economic development of Montenegro”. The financing agreement for the motorway project entitling China Road and Bridge Corp (CRBC) to build 41 kilometers of the 169.2 kilometers Bar-Boljare motorway was signed on 30 October, 2014. The conditions are favorable. The €689 million loan is given for 20 years, with a 6-year grace period and a 2% fixed interest rate. The project is exempted from taxes and custom fees under the Law on Major Highway and requires that at least 30% of the work be assigned to local companies.

Controversies

However, the project has been a fairly controversial topic in Montenegro itself. In March 2014, the World Bank withdrew its budget support loan while the IMF warned of dangers to fiscal stability. The EBRD 2015-2016 Transition Report deemed economic growth of Montenegro in 2014 “disappointing”. Moreover, public debt has been gradually increasing (70.56% GDP in 2016 and growing) while the repayment of debt is requiring greater funds each year.

MP Mladen Bojanic spoke of the other risks involved in the motorway project in an interview in November 2014, noting the currency risk (the loan is denominated in US dollars), the risk of construction quality, the risk of failure to fulfill the deadline (set for 2019) and so on.

There is also a risk that most of the work will be done by Chinese personnel, at the expense of the local Montenegrin workforce, and the fact that many investors are government-owned companies which could “raise eyebrows… in Brussels”, according to a Forbes article from June 2016.

Budget and Exemption Issues

The controversy surrounding the construction of the motorway Bar-Boljare partially stems from the way in which the Parliament of Montenegro approved the project in the first place. Namely, a new law on fiscal responsibility was passed in 2014 as a way to improve public finance management. However, the motorway was termed a project of national interest which allowed for higher deficit and debt in its case, despite the newly adapted law. In order to accommodate obligations related to the motorway project, the Montenegrin government introduced measures of fiscal tightening – a 2% VAT increase, a 4% income tax for above-average earnings and more.

Debt and Developments

These measures, however, are not entirely negative. Their timing and extent, according to the EBRD 2015-2016 Transition Report indicate that they are a sign of “progress in consolidating public finances in Montenegro”. For example, the 7 cents tax on gasoline and taxes to be introduced on coffee, alcohol, carbonated drinks, tobacco etc. are very unpopular but are also a way to prepare for the repayment of the motorway project loan.

In the same vein, the steadily increasing public debt is concerning. However, the motorway project – the main reason for its increase – is “an investment which will positively affect Montenegrin economy”, according to the Central Bank of Montenegro governor Milojica Dakic. The first beneficiaries of the motorway project are the owners of domestic construction companies – the contract stipulates that these companies are supposed to do 30% of the work. According to Ivan Brajovic, the Minister of Transport and Maritime Affairs, 25.16% of the work has been subcontracted so far, while 684 workers have been engaged in the construction.

Some worries, however, remain. The official start of the motorway project was supposed to have been on May 11, 2015. However, the first leveling of the concrete for the Moracica bridge, marking the real beginning of the works took place very recently, on June 3, 2016. The delays bring into question the possibility of finishing the project within the agreed deadline and budget. However, as Brajovic noted, the state has protected itself from delays caused by the contractor. According to him, “the value of agreed penalties reaches 5% of the total project value.”

Other Chinese Projects in Montenegro

Aside from the motorway project, China has one more significant investment in Montenegro, and two more potential investments. They are summarized well in a recent article by Central European Initiative and consist of:

Renewal of the ship fleet

Energy projects (potential)

Blue Corridor Motorway project (potential)

The renewal of the ship fleet began with a loan from China’s Exim Bank worth €56 million. Montenegro used this money to buy two ships, made by Chinese Poly Group. The first two ships were delivered in 2012 for the Montenegrin maritime company, thanks to a 3% fixed interest loan with a 5-year grace period and 15-year maturity. The second two ships were ordered the same year but under slightly different arrangements – 20-year maturity and 2% interest rate for a loan worth around 41 million euros.

According to the above-mentioned article by Central European Initiative, the potential investments in the energy projects in Montenegro consist of the construction of hydropower plants on the Moraca and Komarnica (5 in total) with combined costs of €664 million, and a new unit of a thermal power plant in Pljevlja, worth €326 million. The Chinese Companies Consortium delivered an offer for the power plan unit in March 2013. However, the project was not followed through.

Finally, there is the possibility of Chinese investment in the Blue Corridor motorway project, stretching along the eastern shore of the Adriatic and Ionian seas. The Memorandum of Understanding between Montenegro, Albania and China’s Pacific Construction Group Corporation Limited was signed in November 2015. However, there have been no other concrete developments on this project so far.

Conclusions

As a strong economy with favorable loan conditions and an alternative to the European Union’s more rigid investment funds stipulations, China is an increasingly important partner for the Balkan countries. Its growing interest in the Balkans and Montenegro can be seen from the above examples. China’s interest in the Balkans might as well be, as Poulain’s China’s New Balkan Strategy suggested five years ago, primarily a way to expand the Chinese exports. However, its investments in Montenegro suggest that both sides benefit. The concerns surrounding the motorway project and other Chinese investments, however, should not be ignored. With the ongoing works and continued partnership, the extent of the benefits Montenegro will reap in the long run remains to be seen.

Brain Drain in Montenegro: from Data Assessment to Possible Solutions

By Bilsana Bibic

In the context of youth unemployment, Montenegro places better than other countries in the region. For example, ILO WESO Trends for 2015 predicts a 38.8% youth unemployment rate for Montenegro, in comparison to a 47.5% rate for Serbia and 57.7% rate for Bosnia.

This, however, does not mean that Montenegrin youth are better off on the labor market. According to Vijesti, there were around 30,000 unemployed individuals registered with the Bureau for Employment in March this year. 14,000 of them were young people. And, if we are to judge on the basis of the capital, Podgorica, the majority has a higher educatio degree.

Statistical Data on Brain Drain and the Labor Market

A new IMF special report underlines the incomplete reform process in the Western Balkans, and warns of the risks of a further unemployment increase. Montenegro, which compares favorably to new member states but lags behind EU average in almost all areas, is mentioned as being the country with the sharpest increase in poverty since 2008 (together with Albania).

A sure sign of the inefficiency of the labor market is the constant emigration of the most highly-skilled members of the population. While an exact number of highly-skilled Montenegrins abroad does not exist, the 2014 Study on Diaspora notes that 2,605 individuals living abroad (6.2%) have a university degree.

This data, however, is based on the 2003 census. Other newer data, based on the 2013 census, is still lacking. An important step in solving this issue in Montenegro is the Scientific Network Project which the Directorate for Diaspora conducts in cooperation with the Ministry of Science. However, though laudable, the project lacks a vision of interpretation of data in order for it to be useful to the various actors in the field, as Aleksandar Jacimovic, the acting president of OMSA noted in comments for Balkanalysis.com.

Action Plans, Education and Challenges

The Action Plan for Employment for 2015 gives further insight into the internal causes of brain drain and the situation on the labor market. A high level of unemployment paired with inactivity of the labor force, lack of entrepreneurship incentives and the active informal sector are the top challenges.

An issue specific to Montenegro is the regional difference in unemployment and development levels between the southern/central and the northern regions. As Al Jazeera Balkans notes, while the country’s unemployment rate in March 2014 was 15%, northern Montenegro’s rate was 25%.

Due to a lack of opportunities, youth increasingly migrate from the northern and into the central and southern parts of Montenegro. This leads to a twofold brain-drain phenomenon: one in relation to foreign countries, and the other, an imbalance within the country itself. Most jobs, however, especially in the southern region, are seasonal, short-term and only a few necessitate a higher education degree. Thus, for the majority of highly-educated unemployed youth, the situation is a stalemate.

Another big challenge for Montenegro is the quality of higher education. The labor market demands skills which education currently fails to provide. HEIs are inadequately funded, especially in relation to research activities, resources are scarce (human resources, accessibility of data and academic materials, etc.), while research capacities are underdeveloped (in relation to methodology and data processing). Moreover, issues surrounding plagiarism make students mistrust the ability of HEIs to provide them with adequate personal and academic development.

As a consequence, young people go abroad, seeking quality education and opportunities for professional advancement. Nevertheless, these factors are a matter of personal desire of a particular individual as much as a necessity. Sometimes, the main inspiration for departure is the curiosity and desire to study and work abroad.

At other times, reasons surrounding the economic and social situation prevail. Recently, a politization of youth and the resulting decline in their political engagement has become an acute problem in the region. The discourse on politization in Montenegro, though present, still awaits wider public debate and research. Participation in political parties as a way of securing a job, nepotism, and promotion on the basis of non-professional criteria are taken for granted. For those who wish to be employed on the basis of merit and treated professionally, the option of emigration is sometimes the most feasible.

Existing Institutional Mechanisms for Countering Brain Drain in Montenegro

Montenegro has various mechanisms in place that are supposed to deal with the question of brain drain. Legislation includes a (now-expired) National Youth Action Plan, Strategy of Cooperation with Diaspora 2011-2014, an Action Plan related to it and a Draft Law on the Cooperation of Montenegro with Diaspora.

Meanwhile, the country’s scientific system is regulated by the Law on Scientific and Research Activities from 2010, and also by the Amendments of the Strategy for 2012-2016. Montenegro also has a Directorate for Diaspora which has existed under its current structure since 2011.

The implementation mechanisms are numerous. The Ministry of Science publishes regular calls for national and bilateral projects in the field of scientific and research activities. The first Center of Efficacy was established and the financing of the first Scientific and Technological Park in Montenegro is underway.

Moreover, the Ministry of Science, in cooperation with the Ministry of Education, co-finances scientific and research activities. In this regard, the new National Program of Scholarships for Excellence is quite remarkable. Some 1.26 million euros will be invested in the financing of talented Montenegrins studying and researching at renowned HEIs abroad.

In relation to bridging the gap between the labor market and education, the Bureau for Employment’s Professional Training Program, now in its third year of implementation, is a theoretically sound mechanism. The new program – Youth are Our Potential – is also worth mentioning.

Practical Shortcomings and Private-Sector Tendencies

However, even though such official implementation mechanisms to increase youth employment and reduce brain drain do demonstrably exist, a discrepancy between theory and practice is still present, as the data on unemployment and brain drain clearly demonstrates.

Indeed, as Aleksandar Jacimovic pointed out, the new National Program of Scholarships for Excellence has a time limitation (it ends in 2017), offers only co-financing rather than full financing of studies and makes return to Montenegro a condition of funding. The Professional Training Program, on the other hand, has failed to produce significant results so far. Out of 7,500 individuals who have completed the program, 2,000 (26.6%) got a job offer.

For many employers, this program represents a way to acquire a free labor force. It is common for a company in need of two employees to ask for up to 12 trainees, while then failing to provide any of them with the necessary support. As these examples demonstrate, Montenegro needs quality, not quantity in terms of results from the government’s mechanisms.

NGO Activities and Preferences for a ‘Brain Circulation’ Model

An important NGO working with these issues is OMSA. The organization works with government bodies, lobbies for various interests of the community of Montenegrins who are studying abroad, and is an important interlocutor on new initiatives and projects.

In the past, they have worked on making all of the funding available to Montenegrin students studying in Montenegro also available to those studying abroad. They are engaged in the Montenegrin Empowerment tool project aiming to collect data on the Montenegrin population abroad born after 1980 in an interactive and accessible manner, which would consider career development. They are considered to be a strong advocate of transforming the idea of brain drain into brain network and understanding the decision to go abroad as an individual career decision of high risk.

In a country with a large discrepancy between the ways brain drain is understood among various national and international actors, such advocates are essential. The Montenegrin Directorate for Diaspora shows a positive shift in this regard. The Directorate acknowledges the need for the brain drain question to be considered in a new manner, and focuses its efforts on developing knowledge networks.

In this sense, it moves towards the brain circulation model, which is more flexible and better aligned with the complex migratory trends of highly skilled populations and away from the traditional brain drain/brain gain models. The brain circulation model, unlike the traditional models, acknowledges the positive impact of brain drain. It understands mobility as a personal choice, allowing for development of mechanisms which do not seek to permanently re-locate highly skilled professionals to their country of origin but to create knowledge networks.

Conclusions

Montenegro is still far from bridging the gap in attitudes and perceptions, and shifting the long-term brain drain policies towards a model of brain circulation that some advocates consider the ideal one. The regional differences within the country, based on unequal development and investment, will have to be addressed as well to remedy the basic brain drain problem.

In regards to making the domestic labor market more appealing to Montenegrin students currently studying abroad, a temporary positive discrimination in employment, tax and housing areas could possibly show results. A reassessment of the national approach to financing HEIs, study and research programs would also be constructive. HEIs need more funding to be directed towards research activities.

On the other hand, according to experts like Aleksandar Jacimovic, mechanisms of financing study programs with the aim of investing acquired knowledge into Montenegro need to be separated from those which aim to stimulate the global presence of Montenegrin citizens in various fields.

Finally, and most importantly, as Aleksandar Jacimovic succinctly puts it, “the administration needs to completely dedicate itself to the development of human capital, placing strengthening of youth and collaborative culture at the center of all actions and to constantly remove all limits and barriers for creative and proactive action imposed by the system.”

Italy’s New Government and the Western Balkans

By Matteo Albertini

At 9.00 pm on the 12th of November 2011, Silvio Berlusconi resigned from his position as Italy’s prime minister, due to a failure to preserve his majority in the Chamber of Deputies, the lower house of the Italian parliament. Primarily, of course, Berlusconi’s departure came after pressure from internal and foreign institutions, public opinion and political leaders, as a consequence of the country’s worsening economic crisis and fears that he was no longer capable of the necessary strong leadership at this time.

His meeting with President Napolitano at the Quirinale marked the end of one of the most controversial government in Italian history, and is seen by many commentators as the last chapter of Berlusconi’s life as a political leader.

Enter Monti

The day after, Napolitano appointed Professor Mario Monti as new prime minister, asking him to form a new government capable of solving Italy’s chronic debt crisis. Monti is a well known figure in Europe and abroad: a member of the Trilateral Commission (as is Lucas Papademos, the new Greek prime minister, whose own situation was assessed in this recent Balkanalysis.com article), international adviser to Goldman Sachs, a former European Commissioner for competition and former rector of the eminent Bocconi University of Milan.

No surprise, then, that this appointment by Napolitano was praised by European and international institution like the IMF and World Bank. Less predictable was the support Monti immediately gained from domestic political parties (including Berlusconi’s, which has still a relative majority), industrial representatives and trade unions’ officials- each of them, for different reasons, having identities light years away from that of an insider to international financial trusts.

In two days, Monti accepted his designation and defined his new so-called “technicians’ government,” which won a trust vote both from the lower and the upper chambers of the Italian Parliament. The principal members of the technical government are: Giulio Terzi di Sant’Agata (a former ambassador to the US) as Minister of Foreign Affairs; Anna Maria Cancellieri as Minister of Interior; Paola Severino as Minister of Justice; Francesco Profumo as Minister of Education; Corrado Passera as Minister of Development and Infrastructures, and Admiral Giampaolo di Paola as Minister of Defense.

Unprecedented Expertise

Each of these ministers is a recognized expert in the field in which he or she will operate as a public official- a fact which represents quite a rarity in Italian political tradition. This comes as a confirmation that the first hardship of Monti;s cabinet is to be recognized by international and Italian observers as a credible answer to the risk of collapse.

And indeed, the new government is now being called upon to make many crucial decisions, and not only restricted to the economic and financial sectors, which constitute its main area of expertise and will require its biggest efforts. In Italian newspapers today, the question most frequently being repeated is “what next?”, implying that a long-term solution to the crisis cannot be reached only on national terms, but must involve new policies in economic management at an EU level.

The sides are principally two (or three, maybe): those saying that the debt crisis may be solved only through a wider participation of European Central Bank in financing “shaky” countries, and those, with Germany ahead, which underline the “domino-risk” of using money from virtuous states to help squanderers (the third being the position of those pointing out, in different ways, that the problem is Europe itself).

Concerns for Economy, and a Medium-Term Presence

Needless to say, the decisions that will be taken in Brussels will affect the behavior of European countries towards the Western Balkans, and will have an impact on their economies; European countries such as Germany and Italy are the main commercial partner of the area. As was seen in a previous Balkanalysis.com article, investors are attracted by the dimension of new markets, the cheap labor costs, the profitable tax regime and so on. Sound political and diplomatic relations permitted also high-level alliances in energetic and financial sectors, whose effective outcome depends now widely on the success of the “economic rescue” of Italy and Euro-zone.

In the Western Balkans, economic integration in the European market precedes the admission in the European Union for the most populous countries of Croatia – the forthcoming 28th EU member – and Serbia, as well as for smaller countries “looking for approval” like Montenegro and Kosovo, that adopted the euro as everyday currency (for practical and business reasons, not by virtue of any qualifying procedure, however).

As was well reported in the broad research collected in no. 3 of PECOB’s paper series (Portal of Central Eastern and Balkan Europe), dated September 2010, the crisis affected Balkan states by slowing down still fragile economic systems, bound to political and infrastructural reconstruction; as a consequence, the dreaded reduction of foreign investments, the unemployment, the perceived corruption and the lack of solid welfare, could constitute a major factor of destabilization in the region, boosting inequality, poverty and differences between social classes. These were of course the same factors that led, 25 years ago, the Yugoslav Federation down the road to collapse.

Thus, many eyes are now looking at the new Italian government’s moves with growing concern, because they will have consequences outside Italy too. This is even more the case since it is now likely that the present government will remain in charge until the next elections (spring 2013), and will thus set medium-term policy for the entire country.

Balkan Banking Connections

At first sight, this government seems to have less interest in the Western Balkans than the previous one had, considering that Berlusconi was considered by many domestic observers as a close friend, or at least an ally, of the former Montenegrin President Milo Djukanovic.

Many business agreements have been signed under the aegis of this Adriatic friendship, such as the acquisition by Italian group A2a of almost half of the national Montenegrin electric company EPCG, or the building of new pipelines from Bar to Bari. Most of these agreement were financed by Italian banks and specifically by the two giants, Intesa-San Paolo Group and Unicredit Banca, which already hold a consistent part of the financial market in Yugoslav successor states.

A clue as to the new government’s Balkan orientation may be found in the presence in the Monti cabinet of Corrado Passera. Still last week CEO of Intesa-San Paolo, Passera has been deeply involved in the group’s investments in the Western Balkans during the past years. Even if he resigned from his bank as soon as he was appointed Minister of Development and Infrastructures (which also covers energetic supplies), it is reasonable to imagine that he will take advantage of his experience towards the area and support those project he financed as a bank manager.

However, the main characteristic of this technical government lies exactly in the personal biography of the ministers: at least five of them have had long careers in the financial and entrepreneurial area. The new Minister of Welfare, Elsa Fornero, was together with Passera a high-rank official of Intesa-San Paolo, vice-president of the Surveillance Council since 2010; we might also recall her role as consultant to the World Bank in 2003-2004, when she was appointed to evaluate the state of transition economies such as Russia, Lithuania and later, Albania and Macedonia.

Military and Diplomatic Appointments and the Balkans

The new government is then well aware of the possible consequence of an Italian “step back” from the region, at least for how it might affect the financial and credit markets. But the possible role of the new Italian cabinet as a stability factor in the Western Balkans stands out also in the military and diplomatic sectors: Admiral Giampaolo di Paola, appointed as Minister of Defense, is currently serving as Chairman of the NATO Military Committee but has long experience as Italian Chief of Staff, and has frequently visited Bosnia and Kosovo, where Italian soldiers are participating in EUFOR and KFOR peacekeeping missions, respectively.

The task of cutting through the diplomatic knots of the Western Balkans will fall on the new Minister of Foreign Affairs, Giulio Terzi di Sant’Agata, current Italian ambassador to the United States. A member of the Italian representation to the United Nations during the nineties, he served in New York as vice-president of the Italian delegation in the Security Council during the war in Bosnia. And he is considered one of the leading Italian experts on international security and human rights: during his career, he has been a close counselor of the Minister of Foreign Affairs, especially for issues related with the Balkans and Middle East.

Another more subtle aspect of possible diplomatic influence concerns Italy’s unique religious dynamic. The new Minister for International Cooperation and Integration, by necessity, is also the minister tasked with handling the Balkan countries. The nominee is Andrea Riccardi, a top official of the Catholic Comunità di Sant’ Egidio. This is the same organization whose member is Juliusz Janusz, appointed by the Holy See as apostolic delegate to Kosovo on 10th February 2011. The significance of the Vatican’s overtures in Muslim-majority Kosovo has been discussed by two Balkanalysis.com articles, the first in October 2008 and the second in April of this year.

This thus leads us to another important link between Italy’s new government and the Balkans: that between the Vatican and Catholic “headquarters” in Rome, which are well represented in this cabinet and may condition Italian foreign policies in the next months, even towards project and investments in the Balkans.

Other Concerns: North Africa and Above All, the Economy

Certainly the Western Balkans will not be the main concern of the new executive, if we consider the general situation on the Mediterranean chessboard: the turbulent events in North Africa and the consequences of the Arab Spring require careful attention from Italy, being a neighboring country. But Admiral di Paola, speaking as NATO commander, frequently underlined the importance of enlarging the Treaty to Balkan countries, as members or partners. This position has been depicted as clashing with Russian interest in the region and in Serbia in particular, as a consequence of the ineffectiveness of the NATO-Russian council (Russian envoy Dmitry Rogozin said in 2009 that it is a council where “scholastic discussions were held”).

The “technicians’ government” led by Mario Monti is going to face more than one trial in its effort to drag Italy out of the crisis. Many questions are still unanswered: will Monti’s cabinet just follow the ‘golden rules’ expounded by the IMF and international financial organization, since it is constituted by representatives of these groups? And what will guarantee, let alone the control of public debt, the redistribution of wealth and the economic growth necessary to avoid default and a tragic chain effect in the European Union and neighboring countries? Time is short, and everyone is expecting to receive an answer as soon as possible.

Given the unprecedented severity of the financial crisis and its possibly transformational effects on the entire EU, it is natural to assume that the Balkans will not loom large on the agenda of the Monti government. However, where and how it chooses to act will no doubt reflect the cumulative experience and interests of the cabinet members discussed above.

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Montenegro Pushes for Exclusivity in Tourism Brand

(Balkanalysis.com Research Service)- Despite the continuing effects of an uncertain economy on tourism globally and regionally, Montenegro remains determined to carve out an identity as a chic, sophisticated and exclusive destination, as ongoing development projects show.

Speaking for Britain’s Daily Mail, tourism ministry official Ferdinand Wieland attested that the government’s strategy “…is to not just renovate old hotels, but create state-of-the-art new projects and turn Montenegro into a higher-quality tourist destination.”

Documenting several high-profile developments currently opening or under construction, the newspaper noted that price adjustment for properties has settled since a peak in 2007, but that interest remains relatively higher than in other once-touted Balkan getaways such as Bulgaria. Further, the excitement surrounding exclusive hotels such as the newly-opened Aman Sveti Stefan – on the fabled isle near Budva – remains palpable.

Key to the government’s strategy is a new “super-marina”, known as Porto Montenegro, being built near Tivat. The 10-year project will include luxury amenities, apartments, a five-star restaurant, and leisure activities. It is being backed by Peter Munk, a Canadian mining executive with extensive business activities in Eastern Europe and Russia.

In October 2006, Munk concluded negotiations with the government, taking over a Yugoslav-era shipbuilding and naval yard. At the time, the pioneering investor enthused that with the acquisition, “…we are establishing a brand new industry which will enable Montenegro to be competitive with the most successful yacht harbors on the Mediterranean.” according to SETimes.com.

Now, completion of the first residential units and 85 of the planned 600 yacht berths well ahead of schedule is adding to industry confidence, reads the Daily Mail, especially at a time when other planned projects in the region have stagnated due to the state of the economy.

Proclaiming that their marina is being ‘created by yachtsmen, for yachtsmen,’ the Porto Montenegro management has assembled a notable team of international heavyweights to design, build and outfit the place. Among these include landscape designer Robin Lane Fox, vice-chairman of the British Horticultural Society who has done work for Queen Elizabeth II, and structural engineering company ARUP, whose past projects include the Sydney Opera House, Centre Pompidou in Paris, and several venues for the Beijing Olympic Games in 2008, according to the Porto Montenegro website.

Yachting is an important part of the draw in a small country often compared with Monaco and San Tropez. Numbers for the year so far are impressive. On July 28, Radio-Television Montenegro quoted Sanja Brankovic of the Tourism Organization of Kotor as saying that thus far in 2010, some 110 ships with 47,965 passengers and 248 yachts with 965 passengers have been moored in the harbor.

Industry and governmental leaders are keen to present tourism development as the prime focus for economic development in the tiny, rugged and often spectacularly beautiful Adriatic state. At least for three months of the year, there is promise for seaside tourism- while Montenegro would like to also develop its mountain-based offerings for summer and winter sports as well. Developing and lengthening the season by adding on things like spa and wellness centers is an area of new attention.

While the current economic crisis has seen decreases in tourism in traditionally-touristed countries such as Greece, June saw a 13 percent increase in passengers at Podgorica and Tivat airports over last year. On July 8, Turkish Airlines began running direct flights to the Montenegrin capital on a thrice-weekly basis, making Montenegro even more accessible to global travelers.

For the British media, Mr. Wieland also stated that he expects western visitor levels to increase by up to seven per cent this year, up from the around 1.2 million visitors who visited Montenegro in both 2008 and 2009.

Already, increased visitor numbers have been noted, according to the Radio-Television Montenegro report. For example, the public relations manager of the Budva Riviera Hotel Group, Tijana Kotarac, said that the company’s hotels in Budva and Petrovac have experienced a 13 percent rise in total stays over last year.

She added that the majority of guests from abroad or from Russia, Serbia, France, Germany, Bosnia and Herzegovina and the countries of Eastern Europe.