In the old Yugoslavia, Montenegro was one of the main tourist areas, the preferred holiday spot for some of the world's rich and famous.

But all that has collapsed. Now the government is appealing for international help, and is warning of an economic crisis which could destabilise the country.

For a generation of British and European tourists the port of Budva, on a beguiling stretch of the Adriatic, has been a favourite destination. But not today.

To the north and south coastal targets are pounded by Nato and one resident tells me: "When I hear sirens I feel panic - it just seems to be calm and peaceful."

Tourism hopes dashed

Watch Brian Barron's report

Now Budva is a holiday mecca isolated by sanctions and closed frontiers. Hopes were running high that tourism in Montenegro would be reborn this summers, but that prospect has been wrecked by conflict over Kosovo.

The economic situation is so grim that fishing has become the only way that Christo Niklanovic, Budva's top restaurant owner, can survive:

Budva used to buzz with tourist activity - now it is deserted

"You can see there is almost nobody on the streets. Everything is empty. Everybody is afraid - for their families and for their future. Because of the bombing we are close to the end."

Even the seaside funfair struggles to make a dinar as Montenegro pays for being a minor partner in Milosevic's Yugoslav federation.

Budva's mayor told me there hasn't been a collapse of tourism on this scale since World War II. The loss of revenue could even imperil Montenegro's stability.

The island of St Stephan was a favourite of Sylvester Stallone and Sophia Loren

At the other end of the bay, one of world's most exclusive resorts is closed. In past years stars such as Sylvester Stallone and Sophia Loren stayed on St Stephan's island - now only essential maintenance is under way, carried out by Montenegran draft dodgers.

These men have come to Budva to escape being called up by the Yugoslav army. One man told me "Milosevic has made too many mistakes - first Bosnia, now Kosovo - so why should Montenegro suffer?"