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Montenegro (08/07)


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.


Republic of Montenegro

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.

Nationality: Noun--Montenegrin(s); adjective--Montenegrin.
Population: 630,548 (2004 Republic census).
Population growth rate (2004): 3.5%.
Ethnic groups (2004 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.

Type: Republic.
Constitution: Adopted October 12, 1992.
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: Democratic Party of Socialists (DPS), Democratic Union of Albanians (DUA), Democratic League in Montenegro (DSCG), Democratic Serbian Party (DSS), Liberal Party (LP), People's Party of Montenegro (NS), Serbian People's Party (SNS), Social Democratic Party (SDP), Socialist People's Party (SNP), Movement for Change (PZP), Albanian Alternataive (AA), Croatian Civic Initiative (HGI), Bosniak Party (BS), Party of Serbian Unity (SSJ), People's Socialist Party (NSS), and Party of Serbian Radicals (SSR).
Suffrage: Universal at 18.

GDP (2006): $2.230 billion (�1,778).
Real GDP growth rate (2006/2005): 6.5%.
Per capita income (2006): $3,500 (�2,790).
Inflation rate (2006): 2.5%.
Natural resources: Bauxite.
Agriculture: 15% of GDP.
Industry: 28% of GDP.
Services: 56% of GDP.
Trade (2006): Exports--$619.3 million (�493.6 million). Major markets--Serbia ($211.1 million; �168.2 million), Italy ($178.4 million; �142.2 million), Hungary ($55 million; �43.9 million) Greece ($52.3 million; �41.7 million), Bosnia and Herzegovina ($34.9 million; �27.8 million). Imports--$1.763 billion (�1.405 billion). Major suppliers--Serbia ($502.4 million; �400.4 million), Germany ($194.8 million; �155.3 million), Italy ($174.1 million; �138.7 million), Greece ($75.1 million; �59.9 million), Croatia ($72.6 million; �57.9 million).

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.

Serbia, the European Union (EU), and all permanent members of the United Nations Security Council have recognized the Republic of Montenegro's independence. Montenegro joined the Organization for Security and Cooperation in Europe (OSCE) on June 22, 2006, the United Nations (UN) on June 28, 2006, and the Council of Europe on May 11, 2007.

In January 1998, Milo Djukanovic became Montenegro's President, following bitterly contested elections in November 1997, which were declared free and fair by international monitors. His coalition followed up with parliamentary elections in May 1998. Having weathered Milosevic's campaign to undermine his government, Djukanovic struggled to balance the pro-independence stance of his coalition with the changed domestic and international environment following the North Atlantic Treaty Organization (NATO) bombing campaign in Kosovo. In December 2002, Djukanovic resigned as President and was appointed Prime Minister. The President of Montenegro is Filip Vujanovic, elected in May 2003 after two previous elections were declared void after failing to meet voter turnout requirements. 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 became Prime Minister.

The Montenegrin Parliament is the lawmaking body of the Government of Montenegro.

Principal Government Officials
President--Filip Vujanovic
Prime Minister--Zeljko Sturanovic
Foreign Minister--Milan Rocen

The Montenegrin Government has established a military and a Ministry of Defense. Further reform and transformation of both institutions is underway.

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 2006 inflation was 2.5%, and, according to the cost of the living index, the inflation rate in the first half of 2007 was only 1.1%. Around 85% of capital value in Montenegrin companies had been privatized by December 2006. The banking sector, telecommunications, and oil import and distribution in Montenegro are 100% privately owned. Capital structure analyses show 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, as of January 2006, introduced the tax rates of 17% and 7% (for tourism). 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 has been implemented since January 2007.

Net foreign direct investment (FDI) in 2006 reached $680 million, which was six times higher than in 2004, and investments per capita are $1,100--one of the highest in Europe. In the first half of 2007 there was a 78% increase in direct foreign investments in Montenegro. According to preliminary data from the Montenegrin central bank, the amount of foreign investments from January to July 2007 was $650 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.

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, and Montenegro has indicated its desire to join the EU and NATO. Montenegro is applying for membership in various international organizations, since the union's seats in such bodies were retained by Serbia. Serbia and Montenegro dissolved their union peacefully, and both countries have stated intentions to maintain close political, economic, and cultural ties.

The United States recognized Montenegro on June 12, 2006 and formally established diplomatic relations on August 15. 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 prepare the country for World Trade Organization (WTO) accession and to promote local economic growth and business development.

Principal U.S. Embassy Officials
Deputy Chief of Mission--Arlene Ferrill
Political-Economic Counselor--Marcus Micheli
USAID Officer-in-Charge--Joseph Taggart
Public Affairs Officer--Judith Jones
Vice Consul--Miriam Lacho

The Embassy is located at Ljubljanska bb, 81000 Podgorica. Telephone: +381 81 225 417; Fax: +381 81 241 358.

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