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Love At Arm’s Length

Those shaping economic policy in Montenegro face the challenge of balancing foreign trade policies, promoting market openness with neighbouring countries, and safeguarding economic interests, particularly in vulnerable sectors

Despite the praise heaped on Montenegro, when the time comes to “add and subtract” the real balance of progress towards the European Union, it is debatable, and regional economic cooperation, which is declaratively espoused by the choir, often stumbles on political squabbles in the region.

In response to the simple question of what regional cooperation means from the Montenegrin point of view, the official position that’s been advocated actively by all recent governments is that “Montenegro shows commitment in continuity to good regional relations, in which we are a good neighbour to everyone”… The consolidating of regional economic cooperation has always been among Montenegro’s priorities, which in terms of quantity participates actively in the work of more than 30 regional initiatives and cooperation platforms, ranging from the expert level to the highest political level. However, whether relations with the region are qualitatively ahead of, at the same level, or below relations with the EU and NATO is a question that remains and persists.

The impression is that the region is loved almost “chorally”, but at the time when the Open Balkan initiative was launched, it caused tension and continuous conflict between Montenegro’s political actors. Opponents constantly highlighted possible rivalries and tension between different countries, as well as a distinct separation from the EU accession process, because that process must not “eclipse” Montenegro’s efforts to satisfy the conditions for EU accession, the country’s top foreign policy goal.

Corporate players from the region have already entered the Montenegrin market, making substantial ownership progress, especially in telecommunications, banking services, and retail chains

Furthermore, the country’s foreign trade balance doesn’t provide a strong argument to advocates of a more open region, given that Montenegro’s foreign trade deficit increased by a full 700 million euros in 2022, reaching 2.8 billion euros, which was equivalent to the state budget. Modest exports worth 700 million euros, in contrast to imports with a total value of 3.5 billion euros, demonstrate the economy’s clear dependence on imports, with all the populist discussion that draws out.

Foreign direct investments in Montenegro last year “surpassed” the one-billion-euro mark for the first time, but most investment is still linked to real estate.

And yet, the Montenegrin market is already open to the region’s corporate players, and in the lucrative fields of telecommunications, banking services and retail chains (trade) – the “region” has long since made significant (ownership) strides on the Montenegrin market. And there are no significant obstacles, at least on the most financially attractive territory, to the free movement of people, goods and capital – and capital somehow always seems to find its way to profitable sectors.

Looking to the future, Montenegro is clearly betting on the trump card of offering its tourist products to the region, and tourism is the country’s chief resource, so in this domain the openness of the region really suits Montenegro. In this sector, every Open Balkan, open Europe, open world initiative is more than desirable, and upscale tourists from the region are very welcome guests… Just as the international and regional hotel chains that have arrived in Montenegro and significantly elevated the level of service of the outdated hotel industry along the entire Montenegrin coast were extremely desirable.

However, one gets the impression that the country’s flimsy agriculture is already faltering, due to both its inefficiency and great openness, while it is clear that everyone tasked with shaping economic policy in this small country is confronted by the problem of striking the right balance, or of finding ways to carefully balance the country’s foreign trade policies and promote market openness and cooperation with neighbouring countries while simultaneously protecting its economic interests, including certain fragile sectors of the economy.

Montenegro pins its tourism future on regional openness, welcoming upscale tourists and international hotel chains for elevated coastal experiences

Decisions regarding customs systems and foreign trade policies have sometimes been made spontaneously and sometimes with great consideration, while they’ve sometimes simply been copied… Liberal economics was the mantra of the so-called Montenegrin school of economics, and over the past few decades the laissez-faire approach has been promoted as the only desirable approach.

The 30th August 2020 change of government in Montenegro seemed, at first glance, to spell the abandoning of that liberal economy forever, with specific social mediation, socially-oriented policies and state interventionism “raising their heads” and appeared to bring an end to any elements of the liberal economy. Some kind of Novo- Montenegrin “New Deal” seemed to have appeared on the scene, but things usually aren’t what they initially seem to be and Montenegro is a long way from being a utopia of social justice and it is unclear how much the new interventionism has helped the country’s most fragile industrial sectors, and particularly whether it’s helped at all when it comes to agriculture.

That’s why, in this simultaneously “liberated” and “illiberal” Montenegro, a local producer of yoghurt and cheese will view the open regional market that threatens their position with suspicion. The products of the ‘Kravica’ brand, which are a few cents cheaper than domestic alternatives on the Montenegrin retail market, will once again lead to a rise in old tensions – social, political and national – and any based economic analysis and honest evaluation of the inefficiency of domestic production won’t be very useful and won’t defend an unrestrained regional presence. And that’s because populism doesn’t disappear overnight and, as has been the case to date, the greater opening up of the market will be loved the most “at a distance”, with the old maxim “love in exchange for love, and cheese in exchange for money”.

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