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Montenegro (06/08)


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For the most current version of this Note, see Background Notes A-Z.


  Montenegro flag is a red field bordered by a narrow golden-yellow stripe with the Montenegrin coat of arms centered.

PROFILE

OFFICIAL NAME:
Montenegro

Geography
Area: Montenegro (13,938 sq. km.) is slightly smaller than Connecticut.
Cities: Capital--Podgorica. Other cities--Bar, Berane, Bijelo Polje, Budva, Cetinje, Herceg Novi, Kotor, Niksic, Pljevlja, Tivat, Ulcinj.
Terrain: Varied; mountainous regions with thick forests; central plains; southwestern Adriatic coast with high shoreline with very few islands off the coast.
Climate: Generally continental; Mediterranean along the coast.

People
Nationality: Noun--Montenegrin(s); adjective--Montenegrin.
Population: 630,548 (2004 Republic census).
Population growth rate (2004): 3.5%.
Ethnic groups (2003 census): Montenegrin 43%, Serbian 31%, Bosniak 8%, Albanian 5%, Muslim 5%, Croatian 1%, Roma 0.5%.
Religions (2004 census): Orthodox 74%, Muslim 18%, Roman Catholic 4%.
Languages: Serbo-Croatian 95%, Albanian 5%.
Health: Infant mortality rate--14.2 deaths/1,000. Life expectancy--male 72.8 yrs., female 76.7 yrs.

Government
Type: Republic.
Constitution: Adopted October 19, 2007 and proclaimed October 22, 2007.
Independence: June 3, 2006 (declared by parliament after referendum in favor of independence from state union of Serbia and Montenegro).
Branches: Executive--president (chief of state); prime minister (head of government). Legislative--Montenegrin parliament. Judicial--Constitutional Court and Supreme Court.
Political parties (in alphabetical order): Albanian Alternative (AA), Bosniak Party (BS), Croatian Civic Initiative (HGI), Democratic League in Montenegro (DSCG), Democratic Party of Socialists (DPS), Democratic Serbian Party (DSS), Democratic Union of Albanians (DUA), Liberal Party (LP), Movement for Change (PZP), Party of Serbian Radicals (SSR), Party of Serbian Unity (SSJ), People's Party of Montenegro (NS), People's Socialist Party (NSS), Serbian People's Party (SNS), Social Democratic Party (SDP), and Socialist People's Party (SNP).
Suffrage: Universal at 18.

Economy
GDP (2007): $3.417 billion (€2.278 billion).
Real GDP growth rate (2007/2006): 7%.
Per capita GDP (2007): $5,511 (€3,674).
Inflation rate (2007): 6.5%.
Natural resources: Bauxite.
Tourism: 20% of GDP.
Industry: 13.8% of GDP.
Services: 58% of GDP.
Trade (2007): Exports--$820.5 million (€599 million). Major markets--Serbia ($232.2 million; €169.5 million), Italy ($224.9 million; €164.2 million), Greece ($100.8 million; €73.6 million) Hungary ($90.6 million; €66.2 million), Bosnia and Herzegovina ($41.3 million; €30.2 million). Imports--$2.923 billion (€2.134 billion). Major suppliers--Serbia ($874.1 million; €638.1 million), Germany ($292.1 million; €213.3 million), Italy ($285.2 million; €208.2 million), Croatia ($114.2 million, €83.4 million) Greece ($102.5 million; €74.8 million).

PEOPLE AND HISTORY
Montenegro resisted the rule of the Ottoman Turks, maintaining its independence and playing off its powerful neighbors against each other. Montenegro was recognized as an independent and sovereign principality by the Great Powers of Europe assembled at the Congress of Berlin on July 13, 1878.

During World War I, Montenegro fought on the side of the Allies but was defeated and occupied by Austria. Upon Austrian occupation, the Montenegrin king, King Nikola I, and his government went into exile. In late 1918, an Assembly met in Podgorica, and under the eyes of the Serbian army, deposed King Nikola and declared unification with Serbia. The government of Montenegro in exile denounced the Assembly's action, to no avail. From 1919 to 1941, Montenegro was part of what became known as the Kingdom of Yugoslavia, despite armed resistance in the early 1920s to rule from Belgrade.

When Yugoslavia was invaded and partitioned by the Axis powers in April 1941, Montenegro was appropriated by the Italians under a nominally autonomous administration. While some Montenegrins sided with Italy, motivated by antipathy against past rule from Belgrade, the Partisan Revolt in Montenegro began early, on July 13, 1941, and initially scored impressive successes against the Italian occupiers. Throughout World War II, Montenegro served as an effective base and refuge for Tito's Partisans. After the war, Montenegro was granted the status of a republic within Yugoslavia.

The breakup of the Yugoslav federation after 1989 left Montenegro in a precarious position. Between 1991 and 1992, Slovenia, Croatia, Bosnia and Herzegovina, and Macedonia all seceded from Yugoslavia. On April 27, 1992 in Belgrade, Serbia and Montenegro joined in passing the Constitution of the Federal Republic of Yugoslavia. Though Montenegro reaffirmed its political attachment to Serbia, a sense of a distinct Montenegrin identity continued to thrive. The government of Montenegro was critical of Yugoslav President Slobodan Milosevic's 1998-99 campaign in Kosovo, and the ruling coalition parties boycotted the September 2000 federal elections, which led to the eventual removal of Milosevic's regime.

In March 2002, the Belgrade Agreement was signed by the heads of the federal and republican governments, setting forth the parameters for a redefinition of Montenegro's relationship with Serbia within a joint state. On February 4, 2003, the F.R.Y. parliament ratified the Constitutional Charter, establishing a new state union and changing the name of the country from Yugoslavia to Serbia and Montenegro. On May 21, 2006, the Republic of Montenegro held a successful referendum on independence and declared independence on June 3.

GOVERNMENT AND POLITICAL CONDITIONS
Following Montenegro's declaration of independence, the first parliamentary elections were held on September 10, 2006. Both domestic and international observers assessed the elections as being generally in line with international standards. Zeljko Sturanovic of the leading Democratic Party of Socialists (DPS) was appointed as Prime Minister. The newly elected Montenegrin parliament began work on the country's first post-independence constitution, which was adopted on October 19, 2007. The constitution, among other things, changed the country's official name to "Montenegro." European and Euro-Atlantic integration has been one of the driving forces behind the reform process that led to the signing of a Stabilization and Association Agreement with the European Union (EU) on October 15, 2007. Following the resignation of Prime Minister Sturanovic due to health reasons in February 2008, President Vujanovic nominated (and parliament approved) the leader of the ruling DPS, former Montenegrin President and Prime Minister Milo Djukanovic, as head of the government. Presidential elections were held on April 6, 2008, and incumbent President Vujanovic was elected for a second five-year term with 52% of the vote. Domestic and international observers assessed this election as being generally in line with international standards. The Government of Montenegro is continuing to promote reforms that will bring the country closer to Euro-Atlantic institutions. Despite considerable progress since independence and success in maintaining inter-ethnic harmony, some ethnic tensions remain. The country must also cope with rule of law issues and uneven regional economic development.

Legislature
The parliament is Montenegro's lawmaking body. Parliament has 81 members elected in general elections. According to the results of the 2006 parliamentary elections, the governing DPS/SDP coalition has 41 members of parliament, followed by the Serbian List alliance (12 seats), the SNP-NS-DSS coalition (11), the Movement for Change (11), the coalition of the Liberal and Bosniak parties (three), the DUA (one), Albanian Alternative (one), and the coalition of the Democratic Union in Montenegro - Party of Democratic Prosperity (one).

Principal Government Officials
President--Filip Vujanovic (DPS)
Prime Minister--Milo Djukanovic (DPS)
Foreign Minister--Milan Rocen (DPS)
Defense Minister--Boro Vucinic (DPS)
Speaker of the Parliament--Ranko Krivokapic (SDP)

DEFENSE
The Montenegrin Government has established a military and a Ministry of Defense. Further reform and transformation of both institutions is underway. The Montenegrin military operates under the joint authority of the Security and Defense Council, which consists of the president, prime minister, and the speaker of parliament. Parliament also maintains oversight through its Security and Defense Committee. Montenegro officially entered NATO's Partnership for Peace in November 2006 and in April 2008 was invited to join an Intensified Political Dialogue with the Alliance.

ECONOMY
Montenegro has natural resources, primarily bauxite, adequate water supplies, and a climate conducive to agriculture and tourism. The establishment of the bauxite-alumina-aluminum industry after World War II provided Montenegro with a core strategic industry, which has suffered from high production costs since the first energy crisis in 1973. In the 1960s, tourism began its initial growth, largely attracting visitors from Eastern Europe. War and sanctions in the early 1990s hit Montenegro hard, and recovery only really began after the end of the Kosovo crisis in 1999 and the adoption of the deutschmark (DM) in November 1999, which largely disconnected Montenegro's economy from Serbia and the Serbian dinar.

During the last few years, Montenegro has created a business-friendly investment climate. The Euro replaced the DM on March 31, 2002. The country established the lowest corporate tax rate in the region (9%) and Standard & Poors has given Montenegro a credit rating of BB+. In 2007, the inflation rate was 6.5%. More than 85% of capital value in Montenegrin companies had been privatized by December 2007. The banking sector, telecommunications, and oil import and distribution in Montenegro are 100% privately owned. Capital structure analysis shows that the state still has shares in 65 companies, and in 53.8% of those the state has more than 50% ownership. The biggest improvement Montenegro has made has been in the area of tax policy. Montenegro introduced value added tax (VAT) in April 2003, and introduced tax rates of 17% and 7% (for tourism) as of January 2006. The lower VAT rate for tourism is to encourage growth in this strategic industry. Montenegro also decreased the personal income tax (PIT), and a 15% flat rate was implemented in January 2007; a 12% rate will be implemented in January 2009.

Net foreign direct investment (FDI) in 2007 reached $1.379 billion, which was ten times higher than in 2004, and investment per capita is $2,223--one of the highest in Europe. In the first quarter of 2008, there was a 6.8% increase in direct foreign investments in Montenegro compared with the same period in 2007. According to preliminary data from the Montenegrin central bank, the amount of foreign investment from January to March 2008 was $294.8 million.

Tourism and tourism investments, particularly along the Adriatic coast, are booming. The independent World Travel and Tourism Council repeatedly has ranked Montenegro as the top-growing tourism destination in the world, with growth estimated at 10% annually through 2016.

FOREIGN RELATIONS
Since the June 3, 2006 declaration of independence, the European Union, Serbia, and all permanent members of the UN Security Council have recognized Montenegro. The UN General Assembly voted on June 28, 2006 to admit Montenegro as a new member state. Montenegro joined the Organization for Security and Cooperation in Europe (OSCE) on June 22, 2006, and the Council of Europe on May 11, 2007.

Montenegro signed a Stabilization and Association Agreement with the EU in October 2007, concluded a World Trade Organization (WTO) agreement with the EU in April 2008, and was invited to join an Intensified Political Dialogue with NATO at the April 2008 Summit in Bucharest.

U.S.-MONTENEGRO RELATIONS
The United States recognized Montenegro on June 12, 2006 and formally established diplomatic relations on August 15 of that year. The U.S. maintains an Embassy in Podgorica. There are currently a variety of U.S. assistance programs in place in Montenegro to help improve the economic climate and strengthen democracy. These include initiatives to promote local economic growth and business development and strengthen rule of law and democratic institutions. President Vujanovic met U.S. Secretary of State Rice on May 1, 2007 during his visit to Washington, DC. Speaker of the Parliament Ranko Krivokapic visited Washington in November 2007 and met with Nancy Pelosi, Speaker of the U.S. House of Representatives. The Montenegrin military also established a partnership with the Maine Army National Guard, and efforts are underway to broaden this relationship to include cooperation in the civilian sector.

Principal U.S. Embassy Officials
Ambassador--Roderick W. Moore
Deputy Chief of Mission--Arlene Ferrill
Political-Economic Counselor--Marcus Micheli
USAID Officer-in-Charge--Joseph Taggart
Public Affairs Officer--Judith Jones
Consular Officer--Gina Werth

The Embassy is located at Ljubljanska bb, 81000 Podgorica. Telephone: +381 81 225 417; Fax: +381 81 241 358. The Embassy website is http://podgorica.usembassy.gov.



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