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Factba.se: Australia DFAT Country Briefs - Montenegro
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COUNTRY BRIEFS


GENERAL

Montenegro is a country of 620,029 people (2011 census) in the western Balkans occupying 13,812 km2 - approximately six times the area of the Australian Capital Territory. It has a coast on the Adriatic Sea and shares borders with Croatia, Bosnia and Herzegovina, Serbia, Kosovo and Albania. Montenegro's capital is Podgorica.

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BILATERAL RELATIONS

Australia recognised the Republic of Montenegro as an independent state on 27 June 2006 (http://www.foreignminister.gov.au/releases/2006/fa069_06.html). Diplomatic relations between Australia and Montenegro were established on 1 September 2006. Non-resident accreditation to Montenegro is held by the Australian Ambassador in Belgrade, Serbia. Australia’s 2006 Census recorded 1,168 people of Montenegrin ancestry living in Australia.

In 2010 the value of Australia’s exports to Montenegro was A$ 3.2 million. These comprised primarily ores and concentrates, and Australian beef. In the same period, the value of imports from Montenegro was about A$ 155,000, consisting mainly of cement and construction materials, measuring and analysing instruments, and vehicle parts and accessories.

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POLITICAL OVERVIEW

The Montenegrin parliament is an 81-seat unicameral body. Deputies serve a four-year term. The parliament passes all laws in Montenegro, appoints the prime minister (on nomination by the president), appoints ministers (on nomination by the prime minister), appoints justices of the courts and ratifies international treaties.

Montenegro held its first parliamentary elections as an independent country in September 2006, when the ruling Democratic Party of Socialists (DPS) and the Social Democratic Party (SDP) retained the slim overall majority. Montenegro went to the polls again on 29 March 2009, when Prime Minister Milo Djukanović's coalition government was returned to office with a clear majority. According to the report of the Organization for Security and Cooperation in Europe (OSCE) Office for Democratic Institutions and Human Rights (ODIHR), the 2009 parliamentary elections met 'almost all' OSCE and Council of Europe commitments. Following Prime Minister Djukanović's resignation, Igor Luksić was installed as Prime Minister on 29 December 2010.

The president of Montenegro is directly elected for a five-year term. No person may serve more than two terms as president. The president is responsible for promulgating laws enacted by parliament, nominating the prime minister and justices of the Constitutional Court for approval by parliament, representing Montenegro internationally and calling parliamentary elections. The day-to-day conduct of government is led by the prime minister and portfolio ministers.

Montenegro's presidential elections in December 2002 and February 2003 were declared invalid because voter turnout fell short of the required 50 per cent. Former Prime Minister and parliamentary Speaker Filip Vujanović (DPS) was elected President in May 2003 after the minimum voter turnout requirement was abolished. He was re-elected in the presidential elections held in April 2008.

The former state union of Serbia and Montenegro

The origins of the former state union of Serbia and Montenegro lie in the formal dissolution of the Federal Republic of Yugoslavia (FRY) on 4 February 2003. At this time, the Federal Parliament adopted a new Constitutional Charter and proclaimed the establishment of the state of 'Serbia and Montenegro'. Under the terms of the 2003 Belgrade Agreement, both Serbia and Montenegro had the right to hold a referendum regarding their membership of the state union. Montenegro held such a referendum on 21 May 2006.

Prior to the May 2006 referendum, the Montenegrin Parliament adopted the European Union recommendation that at least 50 per cent of registered voters must take part and that 55 per cent of the turnout must vote for independence for it to be deemed successful. Official results released on 23 May 2006 showed that 86.49 per cent of voters participated - the highest since the country's first democratic elections in 1990. Of those, 55.5 per cent voted for independence, just above the 55 per cent mandate required. The conduct of the referendum was deemed free and fair by international observers.

The Montenegrin Parliament adopted a declaration of independence on 3 June 2006, commencing the process for official dissolution of the state union of Serbia and Montenegro. On 5 June 2006 the Serbian Parliament voted to declare the Serbian Republic's independence, and assumed the powers and obligations as successor of the former state union of Serbia and Montenegro. Australia officially recognised the independent state of the Republic of Montenegro on 27 June 2006.

Foreign policy

Montenegro has eagerly pursued recognition and involvement within the international community. In the period since independence, Montenegro has joined the OSCE (June 2006), the United Nations (June 2006), NATO’s Partnership for Peace program (December 2006), the International Monetary Fund and the World Bank (January 2007).

Accession to the European Union is the country’s primary foreign policy objective. Montenegro’s formal application to the EU was lodged on 15 December 2008. EU candidate country status was granted on 9 November 2010. The EU’s progress report indicated that accession talks will begin after Montenegro has met the necessary political conditions relating to the rule of law and institutional stability. Then-Prime Minister Djukanović committed to meeting the criteria to allow Montenegro to open accession talks with the EU by November 2011.

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ECONOMIC OVERVIEW

Montenegro has been making a gradual transformation into a market economy since 1990. However, it is recovering from a low base following significant mismanagement of the Yugoslav economy by the Milosević regime. International sanctions introduced in May 1992 against the regime also exacerbated economic problems. A portion of the country's industrial and economic infrastructure was also damaged or destroyed during NATO military action in 1999.

In recent years, the pace of economic reform has been slow and the rate of economic development has been gradual. The effects of the global crisis caused a sharp contraction of 5.7 per cent in 2009, with main industries aluminium and banking significantly affected. After an estimated rebound of 1.1 percent in 2010, real GDP growth is forecast to increase to 2.0 per cent in 2011 and further to 3.5 per cent in 2012. Economic performance in 2010 was boosted by higher than expected output in energy, and mining and quarrying, as well as a strong rebound in exports. Tourism continues to be a significant part of the Montenegrin economy and has enjoyed a considerable amount of foreign direct investment (FDI). Inflation is predicted to increase to more normal levels of 3.4 per cent for 2011, up from 0.5 per cent for 2010.

Montenegro’s unemployment rate remains problematic, forecast at 19.4 per cent for 2011. Montenegro also suffers from a large shadow economy and significant hidden unemployment.

Montenegro’s principal export destinations in 2010 were Serbia, Greece, Italy and Hungary. The majority of Montenegro’s exports consisted of raw materials and semi-finished products, including base metals, aluminium, foodstuffs and beverages, and machinery and equipment, while the most important imports were machinery and equipment, mineral products, chemicals and vehicles. Principal import source countries were Serbia, Bosnia and Herzegovina, Germany and Greece.

Montenegro’s foreign trade deficit continues to be a problem. In 2010 the volume of imports was more than five times the volume of exports. Foreign debt is forecast to continue to rise through 2012, reaching $US 1.7 billion in 2010 or more than 25 per cent of the GDP. The IMF has argued that narrowing the external imbalances need not sacrifice Montenegro’s economic growth, given the country's sizable potential, especially in the energy and tourism sectors.

Although not part of the Eurozone, Montenegro uses the euro as legal tender.

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Last Updated: August 2011

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