|
|
|
|
|
|
|
|
|
|
  |
 |
  |
MONTENEGRO
>> Regional Overview >> Federal Republic of Yugoslavia Overview
Development Challenge FY2001 Program /
Activity & Budget InformationSummary Tables
Program Summary
Previous Years' Activities
2000, 1999,44
Introduction
Regional stability and the possibility for exerting a strong positive influence in the region constitute the rationale for U.S. support of Montenegro's efforts. Montenegro occupies a unique position in efforts to foster peace and stability in Southeast Europe, serving as a platform for positive change in the Former Republic of Yugoslavia (FRY). Since coming to power through free and fair elections, the government of President Milo Djukanovic has actively criticized the government of Slobodan Milosevic, including Serbia’s military action in Kosovo, identifying with U.S. goals for peace, democracy and economic prosperity in the region. President Djukanovic has moved rapidly to adopt critical economic reforms, and introduce democratic institutions in Montenegro even though reform policies and an independent stance on Kosovo have resulted in rising tension with Serbia.
The direction and speed with which Montenegro pursues reform objectives will influence political and economic development in Southeast Europe. However, Montenegro’s capacity to implement reform is extremely limited, and it will depend on the international community for support. USAID – through the provision of urgently needed technical assistance, budget support, PL 480 Title II and Economic Support Funds – is helping to bolster President Djukanovic’s efforts to align Montenegro with western nations and institutions by implementing reforms in the face of Serbia’s actions to subvert them.
The Development Challenge
Montenegro, under the leadership of President Djukanovic, appears to be committed to reform. However, the continued presence of 10,000 FRY military personnel, 5,000 to 10,000 former military personnel, and thousands of Serbian sympathizers in Montenegro allows the FRY to flex its muscles whenever the Montenegrin government pushes the reform agenda too hard. Serbia is actively taking steps to isolate Montenegro and disrupt its economy: closing its borders with Croatia and Bosnia, flooding the province with FRY dinars to spark inflation, charging excessive customs duties on food and other commodity shipments, and finally, severing all payments transactions with Montenegro. Milosevic's economic assault on Montenegro has driven up unemployment, created hyperinflation and contributed to other economic hardships that are sure to raise social tensions if not addressed immediately.
Montenegro escaped wide-scale, North Atlantic Treaty Organizations (NATO), air strikes during the Kosovo campaign. Nevertheless, it is suffering consequences of that engagement. Montenegro’s neutrality, and its willingness to host refugees during the bombing campaign is the crux of Montenegro's troubles with the Milosevic government. The conflict caused a tremendous influx of refugees from Kosovo, causing the total population, at one point, to swell by some 20%. More significantly, the arrival of Serb refugees from Kosovo, who have remained in Montenegro, in addition to the 20,000 Bosnian and Croatian refugees already there, has altered the ethnic balance in the province, (population: 650,000) and weakened President Djukanovic’s ability to advance his reform agenda.
Montenegro ‘s ability to advance a reform agenda is hampered also by the lack of experienced and trained personnel to develop and carry out democratic and economic reforms. As a dependent republic of the FRY, most of Montenegro’s economic and government institutions have been subject to control by Belgrade. Many skilled and capable Montenegrin technocrats resided in Belgrade. Montenegro’s leadership is committed to continuing reform efforts; but, will require significant support from the international community to overcome challenges to its successful transition to a democratic, market economy.
The impact of FRY tactics on Montenegro’s transition progress has prompted reflection on the parameters of a USAID strategy for Montenegro: one that can help Montenegro achieve economic self-sufficiency with the level of resources and influence that donors can bring to bear on the challenges facing Montenegro. In this context, USAID’s activities in Montenegro have been flexible and responsive to windows of opportunity.
Although halted briefly in FY 1999 during the Kosovo conflict. USAID assistance to Montenegro has resumed. While, USAID does not currently have a permanent presence in Montenegro due to continued security concerns, USAID is implementing activities largely through the aegis of implementing partners, including grantees and contractors. Seven grantee organizations were quickly in place to implement judicial reform, political party strengthening, micro enterprise lending, business and dairy development, industrial restructuring, and local government strengthening activities. Privatization and macro economic reform programs are underway as well.
USAID management and oversight responsibilities are being carried out by U.S., direct-hire staff and foreign service nationals from a primary, field office located in Pristina, Kosovo. USAID hopes to strengthen its management capacity by establishing an office closer to Montenegro under the direction of the USAID field office in Kosoovo. The office would be located in Dubrovnik, Croatia, with full time staff to manage activities and coordinate with implementing partners on the ground in Montenegro.
USAID plans to gradually adjust the strategic plan for Montenegro from one that provides immediate, urgent technical assistance to address the continuously evolving threats posed by Serbian policies. Security and political conditions permitting, USAID plans to implement a traditional program of transition assistance –- supporting inter alia macro-economic stabilization, economic restructuring, creation and strengthening of democratic institutions, and improved public administration. A new strategy would focus on systematic overhaul of Montenegro’s fiscal and commerce regimes, addressing taxing and public expenditures; reform of banking and financial systems; privatization of large, state-owned holdings such infrastructure and other "strategic" assets; and creation of a market-friendly climate for local and foreign investors. In the area of democracy and in light of the shifting of authority to municipal governments, USAID intends to place greater emphasis on strengthening the capacity of local governments to provide services and respond to their constituencies.
FY 1999 Supplemental
FY 1999 Support for East European Democracy (SEED) funds were budgeted to Montenegro to alleviate the immediate repercussions of the conflict in Kosovo. Economic Support Funds provided $15 million in FY 1999, including $12 million for emergency balance-of-payments support and $3 million for technical assistance to help the Government of Montenegro to manage its economy in the face of Serbian policies and tactics intended to cripple it. Another $5 million in SEED resources provided funding for micro lending and dairy development, and the initiation of business development and local government strengthening in crisis-impacted communities.
External Debt
The Government of Montenegro debt is treated as part of the debt of the Federal Republic of Yugoslavia.
Humanitarian Assistance
The refugee population is now estimated to be about 10% of Montenegro’s population, or 65,000 people. The international communityis providing for shelter, food, clothing medical and related services. USAID through its Office of Food For Peace (FFP) responded quickly obligating a total of $7.2 million in FY 1998 and 1999 resources, $4.2 million of which has been provided since the cessation of hostilities in Kosovo. The U.S. Department of Agriculture has provided another $10 million in food support. The USAID Office of Transition Initiatives (OTI) implemented a $1.2 million local government support program which provided resources to refurbish buses, dump trucks, ambulances and other vehicles to local governments impacted by the crisis.
Other Donors
Other bilateral donors in the region have very limited assistance programs in Montenegro. The multilateral, humanitarian aid organizations -- United Nations High Commissioner for Refugees, World Food Program, World Health Organization, and UNICEF – continue their commitments. The European Union (EU) has a modest program supporting humanitarian assistance, non-governmental organization strengthening, media development, small and micro enterprise development, and technical assistance for tax administration. The Organization for Security and Cooperation in Europe also has a small program that supports rule of law. The multilateral development banks are not operating in Montenegro.Hard data on assistance levels provided by the EU and other major donors, to Montenegro and the democratic opposition of Serbia, are not available at this time. The situations in these two sub-national units are still evolving and donor commitments constrained to windows of opportunity.
FY 2000 Supplemental Request
The Administration has a supplemental appropriation request of $34 million for Montenegro pending before Congress. Yugoslav troops in Montenegro – and continuous political and economic efforts, and threatened military action, by the Milosevic regime to undermine the democratic Djukanovic regime -- make Montenegro the hottest flash point in the Balkans. Montenegro has stood as a bulwark against the repressive Serbian government and serves as a model to Serbians that they can stand up to these forces. Additional funds are vital to maintain the economic viability of the fragile Montenegrin economy, which suffers trade blockades, inadequate revenue to maintain basic services, and struggles against political pressure to implement basic democratic and market reforms.
Supplemental funds will principally provide needed budget support so that governmental responsibilities for public services, payment of pensions and support to other vulnerable groups may be met. This will strengthen, economically and politically, the ability of Montenegro to continue on its democratic path.
Montenegro has also initiated an effective economic reform program, and additional funds would permit greater support to fiscal management and financial sector strengthening, legal reform and local governance development.
Country Background Information Resources CIA Factbook
Library of CongressNational Geographic Country Maps
State Dept. Country Information
 |
|||
Last Updated on: December 12, 2000 |
