Montenegro hopes EU talks will help tackle crisis

(PODGORICA) - Montenegro is set to open EU accession talks that the tiny Balkan country hopes will help it overcome a serious economic crisis and stamp out corruption and organised crime.

European Union ministers agreed earlier this week to open membership negotiations with the former Yugoslav republic, but warned that it will have to step up its fight against corruption and ensure judicial independence.

The decision must be endorsed by leaders of the 27-nation bloc at the summit in Brussels on Thursday and Friday.

"The main problem Montenegro faces today is an alarming social and economic situation," political analyst Daliborka Uljarevic told AFP.

"The number of those fighting for survival is growing, the budget is shrinking ... while healthy investments are rare," she added.

The country has a population of just 650,000, but the unemployment rate is at 13 percent, while public debt reached 50 percent of its gross domestic product (GDP) in 2011.

Montenegro has a relatively undiversified economy relying heavily on foreign investment which drove an economic boom between 2006 and 2008.

The biggest problem for the tiny country now is the KAP aluminium plant which the state nationalised in February.

In the takeover, the state guaranteed 131 million euros ($147 million) in debt owed by the plant -- a significant sum given that the gross domestic product of the country reached just about $4 billion in 2010, according to World Bank data.

"The KAP debt could freeze the country's financial system and the guarantees the government gave to foreign creditors represent an imminent danger to the country's public finances," economic analyst Mila Kasalica said.

Montenegro's economy grew by 2.7 percent last year but for 2012 the government forecasts an expansion of just 0.5 percent.

"Montenegro not only needs the 'soft' strength of the European Commission that imposes priority for reforms but also European investors," said Podgorica university professor and former European integration minister Gordana Djurovic.

Between 2010 and 2011 foreign investment dropped by a third and the trend continued this year with a plunge of 46 percent in the first four months compared with the same period in 2011.

EU ministers noted that Montenegro must put special emphasis on the rule of law and fundamental rights while resolving the problems identified by the European Commission's last report. It named in particular "the independence of the judiciary, the fight against corruption and organised crime".

Brussels is also pushing Podgorica to ensure a better protection for the media after several recent high profile attacks on journalists.

In March, Olivera Lakic, a journalist for the Vijesti newspaper, was attacked after publishing an article on counterfeit cigarettes produced in Montenegro.

The international community has insisted that the circumstances of the attack on Lakic and others like it, as well as the murder of the editor-in-chief of Dan magazine, Dusko Jovanovic, in 2004, must be properly investigated.

Meanwhile, Montenegrin corruption watchdog MANS said that getting a date for the start of accession talks "is a boost for all who oppose organised crime" and a "first step to free Montenegro" from the scourge.

Despite the debt problems that the EU is facing itself, Montenegrin support of membership stands at some 62 percent.

Accession "negotiations will bring order to Montenegro. We need changes because we have difficulty changing by ourselves," Rade, an engineer from Podgorica, who did not want to give his last name, told AFP.

Of the six former Yugoslav republics -- Bosnia, Croatia, Macedonia, Montenegro, Serbia and Slovenia -- only the latter is an EU member. Croatia is set to become the bloc's newest member next year.

Montenegro will join Turkey and Iceland, which are also in current negotiations toward ultimate accession of the bloc, a process that generally takes years.