Montenegro's euro challenge

Locals hope the new currency will boost reform

By Paul Anderson in Podgorica

It is not just the 12 nations of Euroland who are getting used to their new currency.

The euro - our money

Montenegro poster

The parts of the Balkans where the deutschmark has been used as the official currency, Kosovo and Montenegro, have also entered a new era.

In Montenegro, plans have been advanced for some time for a transfer to the euro, which many see as a ticket to integration in Europe, even membership of the European Union.

The euro switchover operation in Montenegro is - like the country itself - tiny, but it has still demanded meticulous planning.

Determined to succeed

In the central bank, cashiers totted up the deutschmarks Montenegrins have been using for the past two years to send back to Germany.

First though, they had to weed out counterfeits and, in a place well-versed in the arts of the black market, there were plenty of those.

Central bank President Ljubisa Krgovic wants his country's membership of the elite club to be a success from the start.

"Euro is the future of the region," he said.

"I think it is better at the beginning just now to adopt, not to think about (one's) own currency," he said, adding that a national currency would be too costly for Montenegro.

When the first consignment of 30m euros - most of it in coins - arrived by heavy transport, hopes of a new era of stability and prosperity came with it.

Montenegro asked for as many coins as possible.

Without enough small coins, its economists calculated shopkeepers would be tempted to round up prices, which in turn would fuel inflation.

Speeding reform

Across Europe, countries have been taking in large consignments of the bright new symbol of economic prosperity.

It's economically and psychologically very, very important when we say the euro is my currency

Economist Veselin Vukotic

In the Balkans, however, the euro serves a more concrete function.

"This is a cornerstone for our reform, especially reform of the banking sector," Mr Krgovic said.

He described the last decade of banking in dinars as a "disaster".

The euro, he said, "will help is to speed up reform and with new savings, we will have new sound investments".

For weeks shoppers have been acclimatising themselves to the relatively simple two-to-one exchange rate and many, for the first time in years, have been opening bank accounts.

Many are still wary of banks after the swindles and pyramid saving-scheme rip-offs of the early 1990s, but many are also excited by the new currency's arrival.

"We can hardly wait," said one shopkeeper. "The euro will speed up our integration into Europe."

Distant prosperity

For many families, however, the dream of prosperity is too distant.

Rada and Sinica Popovic have about DM400 ($200) a month to support their family amid continually rising prices for everything from bread and milk to electricity and fuel.

Power blackouts are a daily occurrence in their city.

Kosovo has also joined Euroland

"People don't have money for basic things. I get my salary, but some people in my factory haven't been paid for two or three years," Mrs Popovic said.

"It's difficult. People have to work in the grey market to earn money."

Her factory has gone the way of many others like it, Communist era dinosaurs with few prospects.

But according to Professor Veselin Vukotic, one of Montenegro's leading economists, the euro should help reverse that decline by reassuring investors.

"If you have stable money, and if you have hard currency, it's one of the main pre-conditions for reform, for new investment, for the restructuring of the economy," he said.

"The deutschmark was very, very positive for our economy. It's economically and psychologically very, very important when we say the euro is my currency."

All over Montenegro, posters announce the coming of the new currency with Messianic zeal.

"The euro - our money", they announce.

In reality, however, little will change immediately.

Real change is up to Montenegrins themselves, and the first tasks will be to root out corruption and pursue economic reform with more vigour.

The people say they know that, but they hope the new currency will at least nudge their country in the right direction.