Montenegro's tourism hopes

Tough reforms are needed to improve the economy

By Paul Anderson In Podgorica

Montenegro's election campaign has been dominated by the question of the country's separation from the Yugoslav federation.

But most people here are equally concerned with the dismal condition of the economy and the prospects for improvement.

People hope tourism is the key to success

Many Montenegrins see their country as the future Switzerland of the Balkans - a small but manageable land, with the strategic location on trade routes, and with a great potential for economic prosperity.

Montenegro's biggest resort is its scenic beauty - stunning inland lakes and mountains which sweep down to an un-spoilt coastline on the Adriatic Sea.

No wonder then that the country's leaders are resting their plans for economic revival on tourism and on maritime industry, which they argue they will not be able to exploit shackled to Serbia and its multi-billion dollar foreign debt.

Long road ahead

But reform will be painful. Montenegro's tourism and transport infrastructure is underdeveloped and, more than a decade after the collapse of Communism, economic restructuring has yet to get off the ground.

Many people see full independence as the way forward

Economists say Montenegro remains a country of unreformed state monopolies, controlled by a clique of the friends and associates of political leaders, from President Milo Djukanovic down.

Imports far outstrip exports, and in the word of one economist, the country is bankrupt, dependent entirely on foreign aid. Roots-up reform is needed, liberal economists say, to build new institutions and clear out the Communist old guard.

Some progress has been made though, which has yielded stability. Last year Montenegro pulled out of the Dinar zone and now uses only the Deutschmark as its official currency. In effect it handed currency control to stronger outside forces. Next year it will switch to the Euro.