Few travellers bound for Montenegro stop in Podgorica. No wonder, Montenegro’s capital is a lacklustre town with barely a cluster of lively restaurants and bars in its centre. All the action is along the coast, where the towns of Budva and Sveti Stefan, as well as Tivat and Kotor further inland, attract hordes of tourists with their beautiful beaches and quaint, medieval architecture.
The hoteliers are expecting a good season, banking that holidaymakers put off by pricey French and Italian resorts will flock to the country. Many tourist spots are already fully booked, heralding a bustling summer.
Tourism has long been a pillar of Montenegro’s economy. In their heyday in the 1960s, Budva and Sveti Stefan were the summer destinations for statesmen and celebrities from across Europe and beyond. But the coastal resorts fell into decline in the following decades, and the Balkan wars of the 1990s all but destroyed Montenegro’s tourism industry. Following the breakup of its union with Serbia in 2006, Montenegro gained new impetus to become the next luxury holiday hotspot. So much so that in 2008 the Parliament declared five-star hotels to be in the nation’s interest and introduced a raft of tax incentives for developers interested in the market.
And invest they did. Canadian, British and Russian investors partnered up to turn Tivat, hitherto a drab naval base in the Bay of Kotor, into a modern marina for superyachts and sailing boats. Others built hotels and villas along stunning stretches of the country’s 294km coast, many of them UNESCO heritage sites. At the opening ceremony for Tivat’s Porto Montenegro in 2010, Prime Minister Milo Đukanović put the government’s investment philosophy this way: "This is not a place for mediocre investment projects. Montenegro will become one of the most elite tourist destinations in the world.”
The government’s message to investors has been clear: Montenegro is open for business and the government is ready to negotiate. Those with sufficient capital to invest have had little trouble gaining access to the Prime Minister. In recent years the government has drawn and redrawn laws and regulations to accommodate investors, and as long as developers gained Đukanović’s approval for their projects, few obstacles remained. Investors could also enjoy other perks, like Montenegrin citizenship, provided they invested €500,000 in the local economy.
Not all foreign investments have been in the country’s best interest. Oleg Deripaska’s takeover of Montenegro’s largest aluminium enterprise in 2005 turned sour by 2011 and resulted in several years of arbitration. The sale of a major coal mine to controversial Greek investor Victor Restis in 2008 ended in a stalemate, with both sides debating the terms of the agreement while the plant stood idle. Opaque real estate deals do not even make headlines because questionable amendments to state contracts are hidden underneath layers of mundane bureaucracy. It is standard procedure for the parliament to vote on long-term contracts between state companies and private investors. If the majority of parliamentarians vote in favour of a contract that turns out to be unfavourable for the state, who should be held to account, all 81 MPs? In its quest to attract wealthy investors, Montenegro’s politicians, it seems, have undermined the country’s institutions.
The country’s democracy is young, but it is already stale. Đukanović has been either the President or Prime Minister for nearly three decades. Most Montenegrins are genuinely better off than they were a decade ago and Đukanović deserves credit for putting the country on track towards membership in the European Union and NATO. But civil society groups allege that with few checks on his power, Đukanović has enriched himself and his family while turning Montenegro into a kleptocratic state that shelters criminals and oppresses dissidents.
Parliamentary elections are scheduled for October and few expect any significant changes on the country’s political scene. But there are some who perceive the government to be increasingly fragile. Gang violence has been on the rise and Đukanović’s efforts to balance relations with Montenegro’s traditional ally Russia while making new friends in the West are becoming more precarious. While Montenegro is likely to enjoy a sunny summer season, there might be some storms on the horizon come autumn.