Montenegro Counts Its Friends, Then Its Dinars

As Montenegro edges towards fiscal independence from Serbia, Milo Djukanovic's latest tour of European capitals looks like an attempt to secure international support for Montenegro before the final break-up of the federation.

Montenegro Counts Its Friends, Then Its Dinars

As Montenegro edges towards fiscal independence from Serbia, Milo Djukanovic's latest tour of European capitals looks like an attempt to secure international support for Montenegro before the final break-up of the federation.

Thursday, 10 November, 2005

Talks with Serbia on the future of Montenegro's role in the federation have just begun after a long silence. After the first of two days of talks this week at the seaside resort of St. Stefan, Montenegro's ruling Democratic Party of Socialists and Serbia's ultra-nationalist Radical Party admitted that they took opposing positions on the question.


Talks between Montenegro and Serbia's Socialist Party and JUL were scheduled to form the second round of negotiations on October 26.


But the two republics are scarcely closer today than they were a week ago, when Montenegrin President Milo Djukanovic told Czech President Vaclav Havel that unless Serbia moves towards democratisation, Montenegro will vote for independence in a referendum,


Havel gave his approval at the two presidents meeting in Prague, promising: "the Czech Republic will not oppose if Montenegro goes its own way." This is something that many Montenegrins have been waiting a long time for. Havel is the first European leader who has publicly supported Montenegrin independence.


Unlike Havel, however, the majority of European leaders insist on the preservation of the territorial integrity of the Federal Republic of Yugoslavia (FRY). Europe is tying Montenegro's destiny to that of Serbia, in spite of the fact that the international community has not recognised FRY and it is not a full member of the UN.


Before his meeting with Havel, President Djukanovic met with the newly appointed Secretary General of NATO, George Robinson. Only a brief statement was published after this meeting, but well-informed sources suggest that Robertson vehemently opposed Montenegrin independence.


Montenegro's departure from the federation would immediately raise the issue of the status of Kosovo. The borders in the Balkans would have to be formally redrawn. New conflict with Milosevic would almost be certain. Hence, Robertson's request for Montenegrin patience - and negotiations with Belgrade.


Montenegro, often impatient and bellicose in the past, has demonstrated incredible patience since it fell out with Belgrade and Djukanovic is doing everything he can to avoid conflict with the FRY president.


However, judging by Djukanovic's latest statements, it will not be possible to postpone the issue of independence indefinitely. Djukanovic used his visit to Prague to send a message to other international leaders: "Even though I am aware of the opposition of America and EU to further disintegration of the Balkans, I believe that it cannot be in anybody's interest to keep Montenegro by force in a union characterised by the dictatorship of Yugoslav President Slobodan Milosevic."


The Montenegrin president has asked the US and the EU to help Montenegro politically and financially. Fearing that Milosevic might start a war with Montenegro, Djukanovic has appealed to Western leaders to "act now to prevent conflict and not post festum, after the conflict."


This is not the first appeal he has made. He has asked for concrete financial aid from the West and accession to international financial institutions several times in the past.


As part of the FRY, Montenegro was excluded from the International Monetary Fund and the World Bank, after the founding of the federation in 1992. Montenegrin Prime Minister Filip Vujanovic has officially demanded that Montenegro receive the same treatment as Kosovo.


After the NATO intervention, Kosovo was granted special status by the World Bank, allowing the republic significant financial support and loans for reconstruction. Even though the US administration has requested the same agreement for Montenegro, European countries have opposed any such arrangement.


Western help has thus been reduced to humanitarian aid for refugees. After KFOR troops entered Kosovo, 45,000 people sought refuge in Montenegro. There are about 70,000 refugees in all in Montenegro at the moment (over 10 per cent of the total population). The majority of them are Serbs and Montenegrins from Kosovo.


It is clear that what humanitarian aid Montenegro does receive from the West cannot kick-start the devastated economy: in addition to its own projects, the small republic is also paying for the reconstruction of Serbia and the Dinar has been devalued by one third over the last month.


Inflation has caused genuine panic in Podgorica. Salaries and pensions have lost value. The Montenegrin Union has threatened the government that it will start organising protests unless the population is protected from monetary shocks from Belgrade.


The devaluation of the Dinar has caused impatience among the Montenegrin ruling coalition. The Social-Democratic Party (SDP), one of the partners in the government, has requested that the economy be protected from Milosevic's financial schemes in Serbia.


The main board of the SDP has criticised the government's inaction over the influx of excess dinars from Serbia. "We do not accept that the reconstruction of Serbia should go over Montenegro's back and that we pay the price of Milosevic's wars," the leader of the SDP, Zarko Rakcevic, has said.


Vujanovic's government seems to have taken these warnings seriously. The Montenegrin press reported that Vujanovic's cabinet is considering introducing the German mark as a parallel currency in Montenegro. According to their plans, all prices in Montenegro will be expressed in dinars and marks, and salaries and pensions will be paid in the German currency. This is obviously only a temporary solution. The introduction of a parallel currency is expected on October 28.


The procrastination over the introduction of a separate currency stems from Podgorica's fear of Milosevic's possible reaction since the Dinar is all that still links Belgrade and Podgorica economically. But temporary solutions fail to satisfy many in Podgorica.


"Instead of the temporary solutions and the special status that Vujanovic's cabinet is demanding from the international community, we ought to be thinking about a permanent solution. If we want to have our one, solid currency and status in international organisations, we have to declare state independence," economist Branimir Pajkovic says.


Branko Perovic, the Montenegrin Minister of Foreign Affairs, said in an interview that a referendum for independence would be held in February next year.


Milka Tadic is editor of the weekly magazine Monitor in Podgorica.


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