EUROPEAN COMMISSION Brussels, 6.10.2020 SWD(2020) 353 final COMMISSION STAFF WORKING DOCUMENT Montenegro 2020 Report







Accompanying the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions



2020 Communication on EU Enlargement Policy {COM(2020) 660 final} - {SWD(2020) 350 final} - {SWD(2020) 351 final} - {SWD(2020) 352 final} - {SWD(2020) 354 final} - {SWD(2020) 355 final} - {SWD(2020) 356 final}



Table of Contents 1.Introduction 1.1. Context 1.2. Summary of the Report 1.3State of play of the accession negotiations 2.Fundamentals first: political criteria and rule of law chapters 2.1Functioning of democratic institutions and public administration reform 2.1.1Democracy 2.1.2.Public administration reform 2.2Rule of law and fundamental rights 2.2.1.Chapter 23: Judiciary and fundamental rights 2.2.2Chapter 24: Justice, freedom and security 3.Fundamentals first: economic development and competitiveness 3.1.The existence of a functioning market economy 3.2.The capacity to cope with competitive pressure and market forces within the Union 4.Good neighbourly relations and regional cooperation 5. Ability to assume the obligations of membership 5.1Chapter 1: Free movement of goods

5.2Chapter 2: Freedom of movement for workers 5.3Chapter 3: Right of establishment and freedom to provide services 5.4Chapter 4: Free movement of capital 5.5Chapter 5: Public procurement 5.6Chapter 6: Company law 5.7Chapter 7: Intellectual property law 5.8Chapter 8: Competition policy 5.9Chapter 9: Financial services 5.10Chapter 10: Information society and media 5.11Chapter 11: Agriculture and rural development 5.12Chapter 12: Food safety, veterinary and phytosanitary policy 5.13Chapter 13: Fisheries 5.14Chapter 14: Transport policy 5.15Chapter 15: Energy 5.16Chapter 16: Taxation 5.17Chapter 17: Economic and monetary policy 5.18Chapter 18: Statistics 5.19Chapter 19: Social Policy and employment 5.20Chapter 20: Enterprise and industrial policy 5.21Chapter 21: Trans-European networks

5.22Chapter 22: Regional policy and coordination of structural instruments 5.25Chapter 25: Science and Research 5.26Chapter 26: Education and culture 5.27Chapter 27: Environment and climate change 5.28Chapter 28: Consumer and health protection 5.29Chapter 29: Customs union 5.30Chapter 30: External relations 5.31Chapter 31: Foreign, security and defence policy 5.32Chapter 32: Financial control 5.33Chapter 33: Financial and budgetary provisions Annex I – Relations between the EU and Montenegro



1. Introduction 1.1. Context Accession negotiations with Montenegro were opened in June 2012. To date all 33 screened negotiating chapters have been opened, of which three have been provisionally closed. Montenegro continued to broadly implement the Stabilisation and Association Agreement (SAA) and the meetings of the joint bodies under the agreement took place at regular intervals. Chapter 8 (Competition), the final negotiating chapter for Montenegro, was opened in June 2020. Overall progress in the accession negotiations will depend on progress in the area of rule of law, as per the requirements in the Negotiating Framework. Progress towards meeting the interim benchmarks set in the rule of law chapters 23 and 24 will be key for further progress in the negotiations overall. The public political commitment of the Montenegrin authorities to the strategic goal of European integration is regularly and consistently stated as the key priority for the country and mostly also translates to policy decisions. The COVID-19 pandemic is a global shock that has not spared the Western Balkans. The final extent of its footprint in terms of loss of human lives and damage to the economies is still difficult to assess, but early estimates foresee a drop of between 4 and 6% of Gross Domestic Product in the region. Thousands of citizens are at risk of losing their jobs, and temporary government support measures (unemployment benefits, deferrals/waivers to tax and social security contributions, etc.) have an important fiscal impact. While the EU is itself heavily affected by the pandemic, it has spared no time and effort to provide essential and unparalleled support to the Western Balkans. This includes financial support of more than EUR 3.3 billion for countries in the region to address the immediate health crisis and resulting humanitarian needs, as well as longer term and structural impact on their societies and economies. Given the European perspective of the Western Balkans, the EU is also treating the region as privileged partners by associating them with the Union’s mechanisms and instruments. These include the Health Security Committee, Joint Procurement Agreements, Union Civil Protection Mechanism, Solidarity Fund, consular assistance in repatriation or exemption from temporary EU export restrictions of medical equipment. These and other measures have provided immediate relief and are a clear message of the EU’s political commitment towards the region. The European Commission recommended that emergency measures taken in the context of the COVID-19 pandemic are proportionate, restricted to what is necessary and limited in time so that rule of law and democratic and human rights standards are respected.

1.2. Summary of the Report Concerning the political criteria the reporting period was marked by tensions and mistrust between political actors and low level of trust in the electoral framework. Due to the COVID-19 pandemic parliament was inactive in the early months of 2020 and was subsequently dissolved, due to the August 30 parliamentary elections. No political party boycotted the elections, which were contested by 11 candidate lists. According to the preliminary findings from the Office for Democratic Institutions and Human Rights of the Organisation for Security and Cooperation in Europe (OSCE/ODIHR) the elections were competitive and were managed transparently and efficiently, but took place in an environment highly polarized over issues of church, and national identity. The campaign was peaceful despite the frequent confrontational tone. Contestants were able to convey their messages, but OSCE/ODIHR expressed a number of concerns in relation to an undue advantage for the ruling party and unbalanced media coverage. The elections resulted in an unprecedented change of the ruling majority composition. The new parliament should endeavour to find a broad cross-party and societal consensus and demonstrate in practice its commitment to Montenegro's EU reform agenda, which is vital for the country’s progress on its EU path; as well as engage in a transparent, decisive and inclusive dialogue on the implementation of OSCE/ODIHR outstanding recommendations. In December 2019, due to lack of quorum, the parliament enacted solely with the votes of the hitherto ruling majority some legal solutions aimed at partially addressing the recommendations of OSCE/ODIHR. The adopted changes did not significantly affect the existing electoral framework, with the exception of campaign finance. Outstanding priority OSCE/ODIHR recommendations, such as professionalism, impartiality and transparency of the election administration; candidate registration and mechanisms for authentication of credibility of voter signatures; media supervision during electoral campaign, an audit of the voter register; measures against the misuse of state resources and gender balanced political representation in the elections, remain unaddressed. Thus, review of the electoral framework in a comprehensive and inclusive manner remains pending. The new chair of the State Electoral Commission (SEC) was appointed in March 2020. Efforts to enhance the transparency and accountability of the SEC's work need to continue. Despite cross-party agreement to hold local elections on the same day, the legal framework still provides for their conduct on a rolling basis. It remains to be decided when a new system will be implemented. The political scene prior to the August 2020 elections was fragmented, polarised and marked by lack of genuine political dialogue. Some initial steps were taken in the course of 2019 towards re-establishing the political dialogue in Parliament with the partial participation of the opposition parties in work in the temporary parliamentary committee. However opposition members suspended their participation after the government tabled the draft Law on religious freedoms or belief for plenary adoption. The latter resulted in large-scale religious protests as of December 2019, which were temporarily put on hold in spring 2020, due to COVID-19 crisis. The outcome of the Parliamentary elections paves the way for returning the political debate to the Parliament. Active and constructive participation by all parties is required to enhance parliamentary accountability, oversight of the executive, democratic scrutiny, better quality of legislation and to enable key appointments. In 2019 and the first half of 2020 the parliament could not secure the required 2/3 majority for important judicial appointments and therefore key functions of the judical system are filled on an acting basis. The mandate of the Supreme State Prosecutor expired in October 2019 and his successor remains to be appointed. There were no new developments in the political and judicial follow-up of the alleged misuse of public funds for party political purposes that took place in 2012 (the ‘audio recordings affair’). With regard to the January 2019 ‘envelope affair’, indictments were lodged for money laundering against two defendants. These cases require a credible, independent and effective institutional response. As regards governance, there is a need to strengthen transparency, stakeholders' participation, and the government's capacity to implement reforms. Monitoring of the quality of strategic policy documents by the Government's General Secretariat has become structured and systemic. The government's policy on state-sponsored apartments or loans under favourable conditions raised concerns about the effectiveness of the national checks and balances system. Stakeholders’ participation in both the accession and legislative processes remains to be improved. Montenegro is moderately prepared on the reform of its public administration. Overall, some progress was made during the reporting period. Montenegro started the implementation of the law on civil servants. The medium-term policy-planning framework, merit-based recruitment, human resource management and rationalising of the organisation of the state administration continued to advance well. Strong political will is still needed to effectively ensure the de-politicisation of the public service, the optimisation of the state administration, and the implementation of managerial accountability. Montenegro remains moderately prepared to apply the EU acquis and the European standards in the area of the judiciary and has made limited progress overall, namely through the continuous implementation of the ICT strategy for the judiciary. Last year’s recommendations regarding the judiciary were only partially addressed. Challenges remain, in particular with regard to the independence, professionalism, efficiency and accountability of the judiciary. The decision of the Judicial Council to re-appoint seven court presidents, including the President of the Supreme Court, for at least a third term raises serious concerns over the Judicial Council’s interpretation of the letter and the spirit of the Constitutional and legal framework, which limits those appointments to maximum two terms in order to prevent over‑concentration of power within the judiciary. It is not in line with GRECO recommendations on the independence of the judiciary, which Montenegro is expected to comply with, in order not to reverse earlier achievements in the judicial reform. Montenegro has achieved some level of preparation in the fight against corruption. It made limited progress on last year’s recommendations which were only partially addressed regarding the track record on repression and prevention of corruption and a new institutional framework for the Asset Recovery Office. The Anti-Corruption Agency, operating under newly appointmed leadership, continued to be strengthened through capacity building activities and technical assistance. However, challenges related to its independence, priority-setting, selective approach and quality of its decisions remained. The Agency is yet to demonstrate a proactive approach in all areas falling under its mandate, including on the protection of whistle blowers, the control of financing of political parties and electoral campaign, and oversight of lobbying. The track record on seizure and confiscation of criminal assets needs to be further improved. Corruption remains prevalent in many areas and a serious concern. There is a need for strong political will to effectively address this issue of concern, as well as a robust criminal justice response to high-level corruption. Montenegro has some level of preparedness/is moderately prepared in the fight against organised crime. Some progress was made, including in addressing last year’s recommendations, in particular as regards the creation of a centralised bank account register, a stronger capacity and professionalism of the police and an increased number of on-going proceedings on asset confiscation. An initial track record of investigations into trafficking in human beings and money laundering was established. Internal organisation and coordination of law-enforcement agencies was further improved, as reflected in the increasing number of investigations, arrests and seizures. However, Montenegro still needs to address some fundamental and systemic deficiencies in its criminal justice system, including the way organised crime cases are handled in the courts. Some progress was made in the fight against terrorism and preventing/countering violent extremism in line with the objectives set out in the Joint Action Plan on counter-terrorism for the Western Balkans and the bilateral implementing arrangement. On fundamental rights, Montenegro made some progress. The legislative and institutional framework in the area of fundamental rights is now largely in place. In July 2020, the law on life partnership of same-sex couples was enacted by Parliament, making Montenegro the first country in the region to regulate the status of same-sex couples. The capacity of human rights institutions and of the Ministry of Human and Minority Rights has been reinforced, and trust in the Ombudsperson’s office is increasing. However, important challenges remain in ensuring that national legislation on human rights is effectively implemented. The reports of excessive use of force by the police and allegations of torture call for swift and effective investigations. Ethnically and religiously motivated attacks in the context of the August 2020 elections are a matter of serious concern. Further efforts are necessary to mainstream human rights across all areas of work, public policies and sectors. Disadvantaged groups, including Roma and Egyptians, and persons with disabilities continue to experience multiple types of discrimination and difficulty in enforcing their rights in administrative and judicial proceedings. Gender-based violence and violence against children remain issues of serious concern. During the reporting period Montenegro made no progress on freedom of expression. Although there has been progress on the media legislation, this has been overshadowed by arrests and proceedings against editors of on-line portals and citizens for content they posted or shared on-line in the course of 2020. Important old cases of attacks remain unresolved, including the 2004 murder of the editor-in-chief of daily newspaper, Dan, and the 2018 shooting of an investigative journalist. Concerns also remain about national public broadcaster RTCG’s editorial independence and professional standards. The media scene continues to be highly polarised and self‑regulatory mechanisms remain weak. The growing volume of region-wide disinformation further polarised the society in the aftermath of the adoption of the Law on freedom of religion and during the electoral campaign. In the area of migration the 2018 upward trend in the number of incoming irregular migrants was confirmed in 2019. 7,978 irregular migrants were apprehended in 2019, a 60% increase from 2018. All of the apprehended migrants expressed their intention to request asylum, which continued to put the country’s reception facilities under pressure. Montenegrin authorities prevented 516 illegal entries to the country and 1514 illegal exits from the country. The Special Prosecutors Office (SPO) conducted three investigations into migrant smuggling, involving more than 40 people. The European Border and Coast Guard Status Agreement with the EU, signed in October 2019, entered into force on 1 July 2020. The implementation of the first Joint Operation under the Agreement was launched on 15 July. Montenegro must continue its efforts to cope with the migratory pressure, by further developing its international cooperation on readmission, raising its capacity to prosecute migrant smuggling networks, increasing its reception capacity and enhancing its migrants’ data collection system. As regards the economic criteria, Montenegro has made some progress and is moderately prepared in developing a functioning market economy. Due to lower investment growth, the economy slowed down to a more sustainable pace in 2019. Exports, in particular of services, were growing but not enough to curb the large current account deficit. Financial sector stability has been reinforced following the bankruptcy and resolution of two local banks and the strengthening of the banking supervision framework. Labour market conditions improved, but the unemployment rate remains high, particularly among women, youth, Roma and low-skilled people. Labour activation measures and coordination between employment and social services recorded limited progress. Montenegro’s economic outlook deteriorated substantially since the second quarter of 2020, as the COVID-19 quarantine measures introduced in April brought large pans of the economy to a halt. Public finances, which improved in 2019, are under significant pressure in 2020 due to fast growing costs to finance the authorities’ policy response to the pandemic combined with a sharp decline in budget revenue due to lower economic activity. Meanwhile, in spite of some signs of improvement of the business environment, measures to fight against informality were delayed and there is a persistent and very large number of companies with frozen bank accounts. State-owned transport companies are not competitive and their losses are being transferred to the state. The institutional capacities of the competition and anticorruption agencies remain weak. Montenegro has made some progress and remains moderately prepared in terms of its capacity to cope with competitive pressure and market forces within the EU. Investment in knowledge and human capital is very modest, resulting in low innovation and productivity levels of local companies. Educational outcomes need to improve across the board, as well as the provision of upskilling and reskilling measures. Several important infrastructure projects are being implemented, gradually transforming Montenegro into a net exporter of electricity and developing transport networks. Physical broadband networks are being developed by the private sector while the authorities strengthened the legislative framework. However, the economy presents a weak industrial base characterised by low value-added activities, constrained by the small size of the market and the low technological know-how of most local companies.

With regard to good neighbourly relations and regional cooperation, Montenegro remained constructively committed to bilateral relations with other enlargement countries and neighbouring EU Member States, albeit bilateral relations with Serbia were marked by tensions. Montenegro is generally an active participant in regional cooperation. Concerning Montenegro's ability to assume the obligations of membership, important work on alignment and preparation for the implementation of the EU acquis has taken place in most areas. The country has reached a good level of preparation in areas such as company law, intellectual property law, energy, and foreign, security and defence policy. It is moderately prepared in many chapters, such as free movement of goods, agriculture and rural development as well as food safety, veterinary and phytosanitary policy. Montenegro is at some level of preparation in the areas such as environment and climate change, and social policy and employment. Good progress has been made in the areas of Social policy and employment, Financial services, Agriculture and rural development, and food safety, veterinary and phytosanitary policy and Science and research. Looking ahead, Montenegro should focus in particular on competition policy, economic and monetary policy, statistics and financial control, and specifically on the functioning of the judiciary and freedom of expression. Strengthening the administrative capacity for ensuring the application of the EU acquis remains an important challenge for Montenegro. Montenegro has continued to fully align with all EU common foreign and security policy positions and declarations. 1.3 State of play of the accession negotiations 30 Chapters opened (with interim or closing benchmarks; date) Montenegro working on fulfilment of interim or closing benchmarks 1 – Free movement of goods - 20/06/17 2 – Freedom of movement for workers - 11/12/17 3 – Right of establishment and freedom to provide services - 11/12/17 4 – Free movement of capital - 24/06/14 5 – Public procurement - 18/12/13 6 – Company law - 18/12/13 7 – Intellectual property rights - 31/03/14 8 – Competition policy – 30/06/20 9 – Financial services - 22/06/15 10 – Information society and media - 31/03/14 11 – Agriculture and rural development - 13/12/16 12 – Food safety, veterinary, phytosanitary services - 30/06/16 13 – Fisheries - 30/06/16 14 – Transport policy - 21/12/15 15 – Energy - 21/12/15 16 – Taxation - 30/03/15 17 – Economic and monetary policy - 25/06/18 18 – Statistics - 16/12/14 19 – Social policy and employment - 13/12/16 20 – Enterprise and industrial policy - 18/12/13 21 – Trans European Networks - 22/06/15 22 – Regional policy, coordination of structural instruments - 20/06/17 23 – Judiciary and fundamental rights - 18/12/13 24 – Justice, freedom, security - 18/12/13 27 – Environment - 10/12/18 28 – Consumer and health protection - 16/12/14 29 – Customs Union - 16/12/14 31 – Foreign, Security & Defence policy - 24/06/14 32 – Financial Control - 24/06/14 33 – Financial and budgetary provisions - 16/12/14 3 Chapters provisionally closed 25 – Science and research (opened and closed 18/12/12) 26 – Education and culture (opened and closed 15/04/13) 30 – External relations: (opened 30/03/15; provisionally closed 20/06/17) 2 Chapters currently not applicable for Montenegro 34 – Institutions 35 – Other issues 2.Fundamentals first: political criteria and rule of law chapters 2.1 Functioning of democratic institutions and public administration reform 2.1.1 Democracy Elections Montenegro held Parliamentary and local elections in five municipalities on 30 August 2020, under an electoral legal framework assessed to be largely unchanged since the last elections, in the challenging context of the COVID-19 pandemic. According to international observers from the OSCE Office for Democratic Institutions and Human Rights (ODIHR) and OSCE Parliamentary Assembly, the elections were peaceful and competitive; they were mostly run transparently and efficiently. The campaign environment was highly polarized over issues of church and national identity as well as marked by undue advantage for the ruling party and unbalanced media coverage. Numerous recommendations previously made by OSCE/ODIHR remain unaddressed, therefore political actors and relevant institutions now need to engage in a transparent, decisive and inclusive dialogue on the implementation of these recommendations to address long-standing electoral shortcomings well ahead of the next elections. Upon the invitation of the Montenegrin authorities, ODIHR and OSCE Parliamentary Assembly deployed a limited election observation mission, due the COVID-19 pandemic context. According to their preliminary conclusions, the elections were competitive and took place in an environment highly polarized over issues of national identity and church, with the Serbian Orthodox Church (SOC) taking an active stance during the campaign period. The campaign was peaceful despite the frequent confrontational tone. OSCE/ODIHR and OSCE Parliamentary Assembly further noted that contestants were able to convey their messages, during the election campaign but that the ruling party gained an undue advantage through misuse of office and state resources and dominant media coverage, which further undermined the quality of information available to voters. The elections were run overall transparently and efficiently, and although COVID-19 related restrictions limited physical campaign opportunities and increased online outreach, they did not prevent voters from turning out in high numbers. The voter turnout was at record high level of 76, 6% of the electorate, only surpassed by the 2006 independence referendum. The Election Day was orderly and the process was generally transparent and well administered, while health protocols were not implemented consistently. The election administration met legal deadlines and generally worked transparently and managed the technical aspects of the electoral preparations efficiently. The SEC held regular sessions open for observers but not to the media. Based on the State Election Commission’s (SEC) final results the three opposition-led coalitions won together 41 mandates, which, in a parliament of 81 members, constitutes the basis to form a new majority. Hitherto ruling party Democratic Party of Socialists and its junior coalition partners from the previous legislature (SD, Bosniak party and Albanian lists) got 38 seats together, except for the Croatian minority party, which for the first time will not be represented in the parliament. SDP passed the threshold, winning two mandates. In line with the legal framework, voters and contestants can file complaints to election commissions and the courts, including appeals of SEC decisions to the Constitutional Court. According to OSCE/ODIHR the election dispute resolution system does not ensure effective remedy, due to the lack of transparency and short deadlines. Prior to the election day, six appeals were filed to the SEC and five to the Constitutional Court which discussed four of them in closed sessions and did not publish its decisions, thus undermining transparency of the election dispute resolution process. The State Prosecutor initiated ex officio two cases related to pressure on voters in the run-up to the August 2020 parliamentary elections. Following Election Day, prosecution offices initiated investigations in nine alleged Election Day violations, including buying of voters IDs, vote buying, pressure on voters and breach of the secrecy of vote. Following the Election Day, the Basic Prosecution Office in Podgorica has indicted two persons upon suspicion of having violated free voter's will at voting and destroying voting documentation. Parliamentary elections were repeated at one polling station The legal framework remained largely unchanged since the last parliamentary elections, with the exception of campaign finance. While it provides basic regulations for the conduct of democratic elections, gaps and ambiguities allow for circumvention, particularly in campaign finance. A number of ODIHR recommendations remain unaddressed. These include professionalism, impartiality and transparency of the election administration; an audit of the voter register and measures against the misuse of state resources; certain limitations of suffrage rights; candidate registration and mechanisms for authenticating the credibility of voter signatures; media compliance during electoral campaigns; and gender-balanced political representation in elections. A temporary parliamentary committee for comprehensive reform of electoral and other legislation was set up in autumn 2018 as a special purpose vehicle to enable cross-party political dialogue. The committee resumed its work after a 10-month stalemate and in October 2019. In December 2019, opposition members suspended their participation in the committee after the government tabled the draft law on religious freedoms or belief for plenary adoption. This resulted in a lack of quorum and the committee's inability to complete its work. In December 2019, the Parliament enacted, solely with the votes of the ruling majority, changes to election-related provisions of four pieces of legislation. The adopted changes do not significantly affect the existing electoral framework. In May 2020, the ruling majority submitted the draft Law on Election of MPs and Councillors for the adoption and simultaneously to the Venice Commission and OSCE/ODIHR for their opinion. The draft Law was submitted without prior cross-party agreement and a few weeks before calling the parliamentary elections. In their joint opinion, OSCE/ODIHR and the Venice Commission assessed the draft as an overall improvement in the legal framework, underlining however the need for an open and transparent process of legislative making and a number of key recommendations.

Elections in five municipalities (Andrijevica, Budva, Gusinje, Kotor, and Tivat) took place on 30 August, along with the parliamentary elections. Despite cross-party agreement to hold all local elections on the same day, the legal framework still provides for their conduct on a rolling basis. It is yet to be decided when a new system will be implemented. The local elections in Tivat, initially scheduled for April 2020, were postponed due to the COVID-19 outbreak. This decision was possible as April 2020 amendments to the Law on local self-government introduced the possibility to prolong the mandate of local assemblies for up to 90 days in cases of 'emergency situation', in addition to a 'state of emergency'. Following a public call, the new chair of the SEC was appointed in March 2020, solely with the votes of the hitherto ruling majority. Capacity building of the SEC is ongoing, but efforts to enhance the transparency and accountability of SEC's work need to continue. In their preliminary findings, OSCE/ODIHR and OSCE Parliamentary Assembly concluded that SEC did not entirely fulfill its regulatory role during the parliamentary elections, leaving several important aspects, such as the verification of supporting signatures for candidate registration, the criteria for registration of the lists with national minority status, and the tabulation of results, unaddressed. It was also assessed that in some of its decisions the SEC used wide discretionary powers to interpret and implement the law. The recommendations on the epidemiological protection of voters were unclear and difficult to implement. The public prosecution service compiled 1,142 cases following the April 2018 presidential elections, mostly related to alleged falsification of identification documents and/or of signatures. Of these, 1,134 are still in the phase of preliminary investigation. In spring 2019, the Constitutional Court ruled that the blocking of freeware and cross-platform instant messaging services on the October 2016 Election Day was unconstitutional and annulled the respective provision of the law on electronic communication. There were no new developments in the political and judicial follow-up of the alleged misuse of public funds for party political purposes that took place in 2012 (the ‘audio recordings affair’). In December 2019, the Special State Prosecution indicted a high DPS official for money laundering in the 'envelope affair'. The indictment includes six more individuals, suspected of creating a criminal organisation and money laundering. Political and judicial follow-up is still ongoing. Parliament In spite of some positive steps towards re-establishing political dialogue in the Parliament, some opposition parties boycotted most of parliamentary work during 2019. Limited progress was made in improving parliamentary accountability, the oversight of the executive and democratic scrutiny, and the legislative-making process.The parliament's role in overseeing the government response to the coronavirus pandemic was marginal. The 30 August elections resulted in an unprecedented change of the ruling majority composition. The new parliament should demonstrate in practice its commitment to Montenegro's EU reform agenda, step up its legislative role and oversight role, and engage in a transparent, decisive and inclusive dialogue on the implementation of OSCE/ODIHR outstanding recommendations. Following the August 2020 parliamentary elections, the new Parliament was constituted on 23 September. The number of women Members of Parliament (MPs) decreased to 18, now accounting for 22%. The deep political polarisation between the opposition and the ruling parties, as well as among opposition parties themselves, continued in 2019. Before the 2020 elections, there were 16 political parties represented in Parliament. Out of 81 MPs, four represented ethnic minorities, while three operated as independent MPs. Five coalitions and four political parties are represented in the new parliament's composition. Out of 81 MPs, five represent ethnic minorities The partial return of the majority of opposition MPs did not yield the necessary qualified majority during the previous legislative term for the overdue appointment of Judicial Council lay members and the new Supreme State Prosecutor. In June 2019, the Supreme Court adopted a non-binding legal opinion stating that Parliament's decisions on the election, appointment or dismissal of public officials cannot be challenged through administrative or civil procedures. On the basis of this opinion and contrary to its first judgment recognising the regular court's jurisdiction, a basic court in a civil procedure decided in the retrial that it has no jurisdiction to examine the legality of Parliament’s decision in the case of a former Radio and Television of Montenegro (RTCG) Council member. This raises concerns about the lack of legal safeguards against Parliament's decisions, jeopardising the right to effective legal remedy. As regards Parliament’s legislative role, participation of opposition MPs in the plenary sessions contributed to improving the quality of debate overall. However, a number of laws were adopted without proper discussion and in the absence of the opposition. Parliament's capacity to scrutinise proposed legislation for compliance with EU acquis is still limited. A parliamentary budget office was established in 2019 to provide general expertise to MPs on budgetary issues. There was a reduction in 2019 of the number of acts adopted via extraordinary measures, 3 legislative acts out of 97 (3% of the total), compared to 13.6 % in 2018, this reduction being largely the result of the opposition parliamentary boycott. Further efforts are needed to ensure effective control and parliamentary oversight of all governance branches, also at the level of the parliamentary committees. In particular, the parliament's role in overseeing the government response to the coronavirus pandemic was limited. In 2019, 7 control hearings and 37 consultative hearings were held (compared to 30 in 2018 and 43 in 2017). A uniform and effective system for monitoring the implementation of conclusions and recommendations adopted at oversight hearings is yet to be developed. The SAI’s findings continue to be addressed in a limited manner, and there is still no discussion or reporting on the implementation of major policies and legislation. Parliament maintained a high level of transparency at administrative level. However, significant efforts are required to improve its communication and cooperation with the public, and in particular to establish a procedure for addressing citizen’s complaints and petitions. The practice of MPs submitting amendments to the laws circumventing public consultations continued with, among other, changes introduced to laws on local self-government, civil servants and state employees, and tax administration. No citizen’s petition was submitted to Parliament during the reporting period. A new code of ethics for MPs was adopted by Parliament in July 2019 with the votes of hitherto ruling majority MPs. No complaints from members of the public, media or interested parties alleging breaches of the code of ethics have been submitted to the human rights committee. Also in July 2019, Parliament amended its rules of procedure, introducing fines for MPs failing to participate and for longer than 30 days in parliamentary activities. The provisions have not been implemented yet. In January 2020, the parliamentary administrative committee adopted a decision determining the criteria for MPs’ justified absence from parliament's plenary and committee sittings. The lack of available space in Parliament for both service staff and MPs remains an issue. In the reporting period, Parliament did not agree to lift any MPs' immunity; a request to waive the immunity of an MP from the largest opposition alliance was rejected by Parliament in December 2019. In the same month, MPs of the same alliance were temporarily detained and suspended from parliamentary work for 15 days, after causing an incident in Parliament. Preliminary prosecutorial investigation in this case is ongoing. In September 2019, the Constitutional Court annulled the Criminal Procedure Code provision, which was applied in 2018 to issue detention orders against two MPs without their immunity being previously lifted. In the first instance proceeding, in May 2019, two of the leaders of the largest opposition alliance were sentenced to five years in prison each in the ‘coup d’état’ case following the lifting of their immunity. In October 2019, one of the opposition leaders was sentenced to four months of house arrest for violent behaviour in Parliament. A criminal case involving an opposition MP from the same alliance is currently ongoing in court. The number of women MPs increased to 24 (29.63%) from 19 (23.5%) in 2018, but after the 2020 election declined to 18 MPs. Women continue to be underrepresented in high-ranking positions in Parliament as well as in party leadership positions. The Women’s Political Network, composed of women MPs from 16 political parties, presented amendments aimed at strengthening women’s political participation and economic empowerment and now in line with their proposal, the new law on financing of political entities and electoral campaigns stipulates that 20% of the budgetary funds for the regular operation of parliamentary parties should be disbursed proportionately to the elected representatives of the underrepresented gender. Shortcomings in the legal framework regulating political parties and their funding, including those identified by OSCE/ODIHR, persist even after the adoption of the law on financing of political entities and election campaigns in December 2019, and its subsequent amendments in April 2020. The latter allow for the allocation of social benefits during an election year in cases of war, state of emergency, epidemic or pandemic of communicable diseases. The level of budgetary political party financing is still considerably above the European average. The increase of the limit for private donations of up to EUR 5,000 for individuals and EUR 20,000 for legal entities requires a more effective control of political party financing from private sources. The Anti-Corruption Agency and the SAI monitor political party financing with limited results. Parliamentary oversight in the area was hindered by the prosecution’s refusal to report to the parliamentary anti-corruption committee and attend its special session on the 'envelope affair'. Governance Montenegro continued to implement its national programme for EU accession. The number of ministers was reduced by two to seventeen (including only four women) in November 2019 when the Prime Minister took over the coordination of the Ministry for Sustainable Development and Tourism. This followed the minister’s resignation following the dissemination of a video of construction inspectors taking bribes from an investor. In June 2019, the government adopted a decision on the Rule of Law Council, a temporary government body chaired by the Prime Minister and tasked with monitoring the implementation of commitments under chapters 23 and 24. The decision refines the Council’s composition and rules of procedure. The Council held a session dedicated to the European Commission's rule of law non-paper in December 2019 and in June 2020. In October 2019, the government established the commission for preparing the Montenegrin version of the EU acquis. The government's decision to establish a National Coordination Body for Communicable Diseases to coordinate the national response to the coronavirus pandemic was met with criticism by civil society organisations, which disputed the constitutionality and legality of its decisions, notably the one on publicly disclosing the identity and addresses of persons in self-isolation.

As regards central government bodies, the government's Secretariat General stepped up its efforts to monitor the quality of strategic documents and implementation reports. It provided opinions for their improvement in line with the 2018 regulation on the manner and procedure for drafting, harmonising and monitoring the implementation of strategy documents and accompanying methodology for policy-making and implementation. Coordination with policy development stakeholders remains to be strengthened further. In August 2019, the government published a list of 96 officials, including heads of judiciary and independent institutions, who were granted state-sponsored housing or loans on favourable conditions by the current government, in the absence of clear, transparent and objective criteria for their allocation. It also published its justification for such decisions. A second such list was published by a NGO containing information on state-sponsored housing and loans granted during the previous mandate of the government. Following the publication of the information and the recommendation of the Anti-Corruption Agency Council, the government formed a working group to reconsider its housing policy. The government has continued to share information on the EU accession process in line with its public information strategy, carrying out a range of activities in several Montenegrin towns. In July, the government established a temporary body for the implementation of the public information strategy. Implementation of the 2018-2020 Open Government Partnership Initiative action plan is under way. In December 2019, Parliament enacted the law on electronic governance as well as amendments to the law on electronic identification and signatures. The government regularly produces analysis of the state of electronic services in Montenegro, proposing concrete measures for their improvement. Through an online e-petition platform established in April 2018, five public petitions were submitted, none of which was accepted. Following a series of grassroots protests in October against the construction of hydropower plants, the government initiated negotiations on the amicable termination of contracts for constructing seven small hydropower plants in four northern municipalities. Contrary to the law on state administration, the government continues to adopt a number of laws affecting citizens’ rights without ensuring proper public inclusiveness and participation. Public consultations in the legislative and policymaking process still lack the genuine and systematic inclusion of relevant stakeholders. On local self-government, in May 2019, Parliament enacted amendments to the laws on local self-government and on municipal police as well as accompanying secondary legislation. These provide that recruitment to local self-governments should be conducted in line with the national system of merit-based recruitment and use the system for electronic testing for the professional exam to work in the public administration. Implementation of the law on local self-government delivered initial positive effects in the field of local government's financing. This increased municipalities' revenues from both personal income tax and from the equalisation fund transfers. The law was challenged by a parliamentary opposition party before the Constitutional Court. The Constitutional Court rejected the request. The transparency of municipal finances and spending needs to be considerably improved. The mayor of Kotor, a member of the opposition, was replaced by a ruling party representative in July, following a rift in the local opposition coalition. In June 2019, the Pljevlja local assembly elected a new mayor following the resignation of the previous one. Women’s political participation remains low also at local level, with only 1 out of 24 municipalities headed by a woman mayor. Civil society The legal, institutional and financial environment under which civil society organisations operate was further improved, in particular the rules on State funding of non-governmental organisations (NGOs). The role of civil society in the design, implementation and monitoring of public policies is recognised and promoted. However, the genuine inclusion of civil society organisations (CSOs) in the policy-making process is not sufficiently ensured in practice. An increasingly restrictive approach to public access to information remains a matter of concern. An empowered civil society is a crucial component of any democratic system and should be recognised and treated as such by state institutions. The overall legal and institutional framework on freedom of expression, of association and assembly is in place. The law on Non-Governmental Organisations, amended in 2017, and its secondary legislation, which defined standardised and more transparent state funding mechanisms, have started to be implemented. However, the capacity to launch and handle grant schemes still needs to be improved and capacity varies amongst ministries. In April 2020, the Ministry of Public Administration launched public consultations to assess the implementation of the law, and set up a working group where one third of the members are NGO representatives. A law on volunteering has yet to be adopted. Further steps were taken to improve dialogue on cooperation between public institutions and civil society. The Council for the Development of NGOs, a body consisting of an equal number of state officials and CSO representatives, intensified its work in 2019. However, it still lacks visibility and outreach to local CSOs in more remote areas. The NGO strategy continued to be implemented. A final evaluation of the strategy 2018-2020 is under preparation. The process of drafting a new NGO Strategy for 2021-2023 was launched, with the participation of representatives of the civil society in the relevant working group. Civil society continues to be actively involved in the accession process, including in the different working groups on the negotiation chapters. Its role in the accession process is recognised and promoted at political level. However, in many cases, NGOs’ participation in working groups remains a formality; the lack of timely information, inclusion and openness to their recommendations prevents them from influencing the decision-making process. In February 2020, the Prime Minister launched a series of consultations with civil society, media and political stakeholders on issues of key importance for Montenegro's accession process. The initiative resumed in May 2020 after being temporarily put on hold in March 2020 due to the coronavirus outbreak. The amount of information classified by public institutions and withheld from the public is growing, in practice restricting the access of CSOs and the public to key policy decisions. This concern needs to be addressed as a matter of priority, including in reviewing the legal framework, to ensure civil society has genuine oversight in key policy areas. Consultations on the draft law on free access to information were temporarily suspended at the request of civil society during the coronavirus pandemic. The 2018 controversial dismissals of prominent NGO representatives from key state institutions and regulatory bodies were deemed unlawful by court decisions issued in the course of 2019. Notwithstanding these court decisions, some of which are final, the NGO representatives’ membership of the concerned bodies has not been restored. The rules for public funding of CSOs secure a minimum of 0.5 % of the state budget to be allocated to civil society. In 2019, this budget amounted to EUR 3.7 million (compared with EUR 4 million in 2020). While the overall process has become more transparent in recent years with the recruitment of external assessors, concerns over the evaluation process persist. The transparency of state funding has improved with the establishment of an online database of CSO projects that have received state funds since 2009. CSOs can also access funds at local level under the law on local self-governments, but the majority of municipalities lack transparent procedures. 2.1.2. Public administration reform Montenegro is moderately prepared on the reform of its public administration. Overall, some progress was made as one of last year’s recommendations was addressed (the start of implementation of the law on civil servants. In addition, the medium-term policy planning framework, merit-based recruitment, human resource management and rationalising the organisation of the state administration continued to advance well. While strong political will is still needed to effectively address de-politicisation of the public service, ensure the optimisation of the state administration, and effective implementation of managerial accountability, including the delegation of decision-making. Two of the Commission’s recommendations from 2019 remain valid. In the coming year, Montenegro should in particular:

®draft and adopt new Public Administrative Reform (PAR) and Public Financial Management (PFM) strategies with realistic objectives, based on the results of the evaluation of the previous strategy, and assessment and the 2019 PEFA, respectively; ®continue with optimisation of the public administration through effective implementation of the plan; ®improve citizens’ access to public information by finalising the Law on access to information in line with the SIGMA principles of public administration. Public administration reform The 2018 annual report of the 2016-2020 public administration reform (PAR) strategy was adopted in May 2019 in line with the standards set down in the decree and methodology on strategic planning. Civil society continues to actively participate in monitoring government reforms, and they and other stakeholders have been invited to submit initial proposals towards the drafting of the planned 2021-2025 Strategy for Public Administration Reform by 1 May. Political support for the reforms is ensured by the work of the PAR Council, which held two sessions during the reporting period. As regards their financial sustainability, the reforms remain dependent on donor funding. Medium-term policy planning and reporting system Montenegro’s medium-term policy planning and reporting system was further strengthened through the implementation of the decree on the method and procedure for drafting, harmonising and monitoring the implementation of strategic documents. In particular, the network for strategic planning and training for relevant staff in ministries was expanded. The General Secretariat of the government has an active role in monitoring implementation of the decree and ensuring quality control by issuing opinions on draft strategic documents, which accompany the texts when they are presented to the government for adoption. The methodology also aims to rationalise such documents and has led to a reduction in their number. The medium-term fiscal plan is yet to be linked to policy planning. However, the General Secretariat of the government initiated the introduction of mid-term planning system at the level of ministries in line with the new methodology. As a pilot project, the Ministries of Economy, Sustainable Development and Tourism, and Agriculture and Rural Development also adopted mid-term work programmes, covering 2019-2021 for the first time. In April 2020, the government adopted the first reports on implementation of mid-term work programme of ministries for 2019. Public financial management The ongoing implementation of the 2016-2020 Public Financial Management (PFM) reform programme addresses some key weaknesses of the PFM system. The programme includes bringing the legal and regulatory framework into line with the EU acquis and updating the existing IT system for the management of the whole budget cycle. However, several key reforms are not included or were removed from the programme since adoption. They include alignment with the ESA 2010, accrual accounting, improvement of reporting on budget execution, commitment management, cash flow planning and arrears management. Specific action plans on these are pending. The pace of PFM reform implementation increased in 2019 with the implementation of several important activities, including the preparation of a mid-term budgetary framework, programme budgeting and capital budgeting. The Public Expenditure and Financial Accountability (PEFA) assessment was implemented in 2019. It was quite positive but also identified several areas that will need to be addressed in the next PFM strategy. The public sector accounting law was adopted in November 2019; implementation of which is planned to start in 2022, after the adoption of the necessary secondary legislation. On budget transparency, the government continues to systematically publish the budget proposal and the adopted budget, as well as budget execution reports. However, there is no mechanism to ensure the quality, comprehensiveness and readability of published data. Civil society should be more systematically involved in monitoring the implementation of the PFM reform programme. Public service and human resources management Women are well represented at the higher levels of the Montenegrin civil service, in the areas of PAR and to some extent PFM. The Minister of Public Administration is a woman. Many of the directors-general and directors in the ministry, the head of the Human Resource Management Authority (HRMA), the General Secretary and both deputies, and the head of the CFCU are women. The adoption of several implementing legislative acts over the reporting period enabled the full implementation of the law on civil servants and state employees. The 2020 human resource plan for the national public administration bodies and the Prime Minister’s office was adopted in February 2020. A competency framework was established to ensure adequate recruitment procedures for senior civil service positions. An electronic testing system was introduced for the professional entry exam for working in the public administration, including at local level. Regarding implementation of the 2018-2020 Public Administration Optimisation Plan, the national authorities reported that the number of employees in public administration declined by 105 at local level and increased by 49 at central level during the reporting period. In May 2019, the law on salaries of public sector employees was amended, giving a legal basis for consensual termination of employment in the public administration. In October, the government modified the decision on severance pay in the event of consensual termination of employment of public sector employees, offering attractive terms for those that sought it, as a means to encourage people to leave the administration. So far, 1,579 public employees have applied for severance payment at central level and 322 at local level. To date 282 severance payments have been approved at central level and 128 at local level. Salary scales are publicly available, while public sector salaries remain modest. Montenegro still needs to introduce an adequate and attractive remuneration system for civil servants and state employees, based on clear, fair and transparent criteria. The HRMA continues to have responsibility for the professional development of civil servants and state employees by providing necessary training. It is also responsible for nationally accredited training in human resources, strategic planning, ethics and integrity. Accountability of the administration The report on administrative proceedings for July 2017-December 2018 was drafted using the new national methodology. It covers administrative proceedings at local level for the first time. It shows that 98% of disputes at central level and 91% at local level were settled within the deadline. The implementing legislation necessary to implement of the law on general administrative procedure was adopted. Following an analysis of the legislative framework on free access to information, work on a new law was started, for which the public consultation was put on hold during the COVID-19 pandemic period. Service delivery to citizens and businesses

Montenegro adopted a national interoperability framework in line with the European interoperability framework. Eleven institutions have already been connected to the single information system for electronic data interchange. A law on electronic government and amendments to the law on electronic identification and electronic signature were also adopted during the reporting period. 2.2 Rule of law and fundamental rights 2.2.1. Chapter 23: Judiciary and fundamental rights The EU's founding values include the rule of law and respect for human rights. An effective (independent, quality and efficient) judicial system and an effective fight against corruption are of paramount importance, as is respect of fundamental rights in law and in practice. Montenegro remains moderately prepared to apply the EU acquis and the European standards in this area and has made limited progress overall. Last year’s recommendations regarding the judiciary have only been partially met. Challenges remain, in particular with regard to the independence, professionalism, efficiency and accountability of the judiciary. It is essential that Montenegro does not reverse earlier achievements in the judicial reform. Corruption remains an issue of concern and Montenegro needs to take more proactive steps to ensure maximum integrity, impartiality and accountability of the Anti-Corruption Agency. On fundamental rights, Montenegro has achieved some progress. While most legislative and institutional frameworks are now in place, further efforts are still needed to ensure the effective application and protection of human rights and alignment with EU acquis. Freedom of expression remains a matter of serious concern. No progress was made in implementing last year's recommendations. Montenegro continues to implement a detailed action plan, which was adopted in 2013 prior to the opening of the accession negotiations on the chapter and subsequently updated in February 2015. Functioning of the judiciary Montenegro’s judicial system is moderately prepared, with limited progress overall in this area. Last year’s recommendations have been met only partially through the continuous implementation of the ICT strategy for the judiciary. In addition, Montenegro continues to make efforts towards the development and promotion of alternative dispute settlement. However, the results of the reforms, in particular the track record on judicial accountability remain limited. The results achieved regarding the independence and professionalism of the judiciary need to be further consolidated. Human, financial and infrastructure management has not improved. In the coming year, Montenegro should in particular: →ensure the effective independence and professionalism of judiciary by full and unambiguous implementation of relevant constitutional and legal provisions, in line with GRECO recommendations, in particular to effectively limit the appointment of courts’ presidents to maximum two terms and take measures to strengthen the independence of the judiciary, including by abolishing the ex officio participation of the Minister of Justice; in the Judicial Council; →review the disciplinary and ethical framework for judges and prosecutors to strengthen its objectivity, proportionality and effectiveness, and ensure it effective implementation; →prepare and adopt a new strategy for rationalisation of the judicial network, which would lay down the next concrete steps leading to closure of unviable small courts. Strategic documents In September 2019, the government adopted the 2019-2022 judicial reform strategy and the accompanying 2019-2020 action plan, including an analysis of the effects of the preceding strategy, which however remained a factual analysis of activities without any impact assessment. In October 2019, a Council for monitoring the strategy implementation was established, composed of the main judicial institutions and of the professional associations of judges and prosecutors. CSOs have not been invited to participate in the Council’s work. There are no notable delays in the implementation. Management bodies The Judicial and Prosecutorial Councils remain the principal bodies managing the judicial system and the careers of judges and prosecutors. Their composition and appointment procedures are broadly in line with European standards. However, according to the Council of Europe Group of States against Corruption (GRECO), outstanding issues remain with regard to strengthening the Judicial Council’s independence against undue political influence, for instance the ex-officio participation of minister of justice. The anti-deadlock mechanism introduced by the 2018 amendments to the law on the Judicial Council continues to apply, allowing for extension of the non-judicial members’ mandate until new ones are elected. Following the resignation of the President of the Judicial Council in December 2019, the Council continued to operate in incomplete composition. In July 2020, after publication of a new call for candidates in January 2020, Parliament again failed to secure sufficient majority for any of the candidates for the four non-judicial members of the Judicial Council. The mandate of the Supreme State Prosecutor expired in October 2019 and his successor has yet to be appointed. After the first unsuccessful call for candidates, the Prosecutorial Council appointed the outgoing Supreme State Prosecutor in an acting capacity. In the second call proceedings, Parliament did not secure the qualified majority to elect the candidate proposed by the Prosecutorial Council. The Prosecutorial Council has not yet completed the appointment procedure for 11 heads of state prosecution offices, initiated in 2019. In June 2020, the Prosecutorial Council confirmed the Chief Special Prosecutor unanimously for a second mandate. The 2020 budget of the Judicial Council increased by 20% to EUR 1.65 million from the EUR 1.37 million allocated in 2019. The 2020 budget of the Prosecutorial Council rose by 16% to EUR 670,000 (2019: EUR 561,000). The operational capacity of both Councils secretariats continues to improve, but need further strengthening. Also, both Councils still need to assume budgetary and financial management functions at central level as well as at court and prosecution office level. Technical preparations are to be finalised to gradually transfer budgetary planning and execution to courts and prosecution offices in the course of 2020, while the Ministry of Finance is yet to recognise them as budgetary units. The two Councils need to step up efforts to improve the transparency of their work, particularly by publishing fully reasoned decisions on promotions, appointments, and disciplinary cases. Concerns also remain over the professional capacity of members of both Councils, in particular those of the Judicial Council, as well as their commitment and the time devoted to the performance of their functions. Independence and impartiality The legal framework guaranteeing judicial independence is in place but the judiciary and the prosecution continue to be perceived as vulnerable to political interference. Reports that the government granted some members of the judiciary and prosecution, including senior members, state‑sponsored apartments or loans on favourable conditions raises additional questions in this respect. The decision of the Judicial Council to re-appoint seven court presidents, including the President of the Supreme Court, for at least a third term raises serious concerns over the Judicial Council’s interpretation of the letter and the spirit of the Constitutional and legal framework, which limits those appointments to maximum two terms in order to prevent an over‑concentration of powers within the judiciary. It is also not in line with the recommendations of the GRECO on the independence of the judiciary, which Montenegro is expected to comply with. In June 2020, Deputy Prime Minister and Minister of Justice, following a meeting of the Rule of Law Council, issued a public statement suggesting to courts’ presidents appointed beyond a second term to resign. Allegations of corruption in the Supreme State Prosecutor’s office and reported unauthorised interference in the work of the Special State Prosecution require an independent and effective institutional response. In April 2020, as part of the saving measures introduced due to COVID-19 pandemic, the Government decided to reduce for the months of May and June by 50% the salaries of functionaries and civil servants in the highest remuneration groups, among which are over 200 judges and prosecutors. Decisive political commitment is needed to guarantee the full independence of the judiciary. In January 2020, the Constitutional Court, after unsuccessful election of a new president, elected its former President as a ‘presiding judge’ in the interim, even though such a category is not provided for by the legal framework. The procedure for appointing the new Constitutional Court president needs to be conducted without further delay. The random allocation of cases is ensured by the law on courts, and implemented automatically through the judicial information system PRIS. There are certain limitations on the random allocation of cases in very small courts, while PRIS has not been introduced in misdemeanour courts. In the absence of clear criteria, the practice of reallocating large numbers of cases between courts to reduce backlogs is continued (1451 cases in 2019), putting at risk the right to a lawful judge. In December 2019, the government adopted amendments to the law on courts and the law on the State Prosecutor’s Office in order to harmonise both laws with the 2018 law on judicial cooperation in criminal matters; both are pending enactment in Parliament. One presidential pardon was granted in 2019 (there was one in 2018 and one in 2017). In June 2020, the Parliament passed a Law on Amnesty to reduce the prison sentences of some inmates by 5-15%, in order to reduce the prison overcrowding in the context of COVID-19 outbreak. While those serving sentences for some of the most serious crimes, including war crimes, aggravated murder, terrorism and trafficking in human beings, corruption and offences against sexual freedom, will not be entitled to amnesty, the latter can apply to organised crime - related offences .

Accountability Track records on the enforcement of the codes of ethics and disciplinary accountability for judges and prosecutors remain poor. In 2019, one disciplinary proceeding was launched and completed before the Judicial Council disciplinary commission (2018: one proceeding initiated). This established a violation, which resulted in a 20% salary for 3 months. There were no new disciplinary proceedings against prosecutors (2018: four cases in total). During the same period, there were 14 reports of alleged violation of the code of ethics for judges; 12 were completed and in two cases, violations were established by the ethical commission (2018: 15 cases in total, violation established in one case). In one of these two cases the Judicial Council overturned the decision on violation upon a complaint submitted by the judge. Of 12 cases of alleged violation of code of ethics for prosecutors violation was established in 3 cases (2018: 4 cases in total, no violation established). In the first half of 2020, there were two reports of alleged violation of the code of ethics for judges and two reports of alleged violation of the code of ethics for prosecutors. Disciplinary proceedings were instituted against one judge. The system for detecting breaches of integrity rules needs to be made more effective by ensuring due follow-up of all cases that give grounds for disciplinary responsibility. The objectivity, proportionality and effectiveness of the disciplinary framework for judges have yet to be strengthened. The approach to handling cases in both Commissions overseeing the enforcement of the codes of ethics is still inconsistent. A legal remedy against decisions of the ethical Commissions of both Councils has yet to be introduced by the law. The relevant decisions of the Prosecutorial and Judicial Councils are insufficiently motivated and case-law has yet to be developed. Although the counselling function of the ethical commissions has been strengthened within the judiciary and prosecution service, ethics and professional conduct in the judiciary and information on existing complaints mechanisms need to be promoted further. In 2019, the Ministry of Justice's regular judicial inspection found irregularities in a misdemeanour court’s register-keeping and archiving system, while no irregularities were established in the prosecutors’ offices. The ministry’s capacity to conduct judicial inspections remains limited, with only two judicial inspectors working on supervision of courts, prosecution offices, notaries and public bailiffs. The judicial inspection system needs to be enforced effectively, including through more thorough and unannounced inspections. In March 2019 amendments to the law on public bailiffs were adopted which introduced an obligation for bailiffs to submit asset declarations to the Anti-Corruption Agency. In December 2019, the revised code of ethics for public bailiffs was adopted and the new commission for ethical conduct of public bailiffs formed. The Ministry of Justice and the Public Bailiffs' Chamber started joint inspections of 18 bailiffs' offices. In total, six irregularities were found in three offices. In 2019, four disciplinary proceedings were initiated against public bailiffs, and one further so far in 2020 In two cases, disciplinary liability was established and fines imposed accordingly. In another case, a public bailiff was temporarily suspended until the end of criminal proceedings against him. Additional steps are needed to promote professional and ethical standards among bailiffs, including appropriate training. Professionalism and competence Montenegro has continued organising single nationwide competitions for judges and prosecutors. In 2019, 9 judges were promoted to higher-level judicial positions and 2 prosecutors were elected to higher-instance prosecution offices. Allegations of conflict of interest against some members of the Judicial Council regarding certain candidates in the 2019 competition, the manner in which the interviews with candidates were conducted; and integrity violations by candidates during the 2020 competition, point to outstanding challenges in transparent and merit-based recruitment of judges, professionalism of the Judicial Council’s commission for testing; and technical preconditions for organisation of testing. Both Councils now conduct regular assessment of judges and prosecutors under the new system of regular professional assessment. In 2019, 55 judges and 53 prosecutors were evaluated under the regular assessment procedure. The fact that all evaluated prosecutors received excellent grade raises questions over the objectivity and the overall purpose of the evaluation process. Assessment needs to be more thorough, in line with the assessment criteria revised in 2017. Quality of justice The 2019-2020 action plan accompanying the judicial reform strategy encompasses measures for implementing the Judicial Training Centre strategy. In 2020, the Judicial Training Centre was allocated a budget of EUR 615,593 (2019: EUR 619,000) which remains below the statutory minimum. The autonomous and self-sustainable functioning of the Centre is therefore yet to be guaranteed. However, the Centre’s state budget funding is currently sufficient since a large part of its activities continue to be financially supported by the EU and other international donors. Its secretariat still employs 14 of the 19 planned posts, while the number of its implemented activities is steadily increasing. The training activities of the Centre were interrupted during the period of COVID-19 restrictions. The Centre's managerial, strategic planning and administrative capacity needs to further improve, especially following the changes in its management in December 2019. Its regular cooperation and communication with the Judicial and Prosecutorial Councils is yet to be established, especially over the organisation of initial training cycles. The role of the Centre’s Programming Council has to be substantially improved as regards training needs assessment and evaluation. The Centre participates as an observer in the activities offered by the European Judicial Training Network (EJTN) but is not proactively benefiting from the expertise within the network. Activities in the judiciary continued to harmonise jurisprudence, including with the case-law of the European Court of Human Rights. However, concerns remain over institutional disputes and divergent understanding and interpretation of human rights standards between the Supreme Court and Constitutional Court, putting at risk legal certainty and the right to a final judgement and effective legal remedy. No progress was made in the full implementation of instructions for collecting statistical data in compliance with the guidelines of the European Commission for the Efficiency of Justice (CEPEJ). Issues also remained regarding the reliability and availability of statistical data for the judiciary in the absence of an advanced case management system. Data on the total length of proceedings is still not available. Statistical information on the performance of the judicial system is not systematically analysed, nor used for management and policy-making purposes. In September 2019, the government adopted an updated 2016-2020 action plan for implementation of the ICT strategy for the judiciary, with some adjustments of the target dates due to certain delays in the implementation and a detailed budget breakdown. The new ICT sub-system for courts was procured in June 2019. Until the new system is put in place, the current judicial information system, PRIS, is used by all courts for case monitoring, certain aspects of case management and interaction with parties. The system still has security loopholes and does not operate consistently outside Podgorica, while the prosecution's information system is not yet sufficiently advanced. The 2020 budget for the judiciary is EUR 39.1 million, similar to 2019. Montenegro has 51 judges (58% of whom are women) and 17 prosecutors (over 65% of whom are women) per 100,000 inhabitants, far above the European average of 21 judges and 11 prosecutors (source: CEPEJ), as well as three times as many judicial staff per inhabitants as the European average. Montenegro stands out in comparison to the region with regard to much lower collection of court fees. A positive trend continued in alternative dispute resolution, with Montenegro undertaking a number of measures to strengthen and promote its use. The law on alternative dispute resolution was adopted by the government in November 2019; it provides, among other things, for compulsory recourse to alternative dispute resolution for certain types of cases. The law is yet to be enacted by Parliament. In 2019, 917 cases were referred to the Centre for Mediation (2018: 629 in total), and 403 cases were settled through mediation (2018: 107). During the same period, 2,743 cases (2018: 3,450) were submitted to the Agency for Peaceful Settlement of Labour Disputes, of which 1,258 were resolved (2018: 3,041). However, this method has yet to be used systematically in order to maximise its overall impact. Efficiency In 2019, 131,956 cases were pending before Montenegrin courts, 92 of which were new cases (6.9 % less than in 2018). Some 92,305 cases were resolved (5.5 % less than in 2018), while the overall case backlog fell by 2 % to 38,190. Montenegro continued to take concrete measures to reduce the backlog of old cases, which were given priority status. The number of cases older than 3 years fell by 5.5 % to 2,912. The disposition time, i.e. the average time from filing to decision, was 143 days in basis court cases (2018: 142 days) and 116 for commercial cases (2018: 107 days). Disposition time before the Administrative Court (534 days) is a cause for concern. In April 2019, amendments to the Law on enforcement and securing of claims were adopted, aiming to align with the EU acquis and address some challenges in the practice of enforcement proceedings. As regards enforcement, the clearance and recovery rates are increasing, and the backlog of enforcement cases before the courts has been reduced from 150,000 in 2016 to just around 2,500 at the end of 2019. In 2019, 61,127 cases were filed to bailiffs' offices, with 40,019 cases pending at the end the year. The centralised case management system for bailiffs continues to be used consistently, guaranteeing data reliability. The enforcement of court decisions remains a challenge. In 2019, the Constitutional Court of Montenegro received 2,320 cases (2018: 2,291), while it resolved 1,436 cases (2018: 1,203). The trend of backlog increase continues in 2020.

The 2017-2019 mid-term strategy for the rationalisation of the courts network does not envisage any tangible and concrete rationalisation measures. With the 2019-2020 action plan accompanying the judicial reform strategy, the government committed itself to prepare an underlying analysis for rationalisation of the judicial network which is underway and should be finalised in autumn. Reform in this area should draw on the available data, conclusions from undertaken studies and cost-benefit analyses, while ensuring better overall management of human resources and judicial infrastructure, and should ultimately lead to optimisation of the judicial network and closing down of small unviable courts. Domestic handling of war crimes cases Implementation of the war crimes prosecution strategy is ongoing. In June 2019, a first‑instance court reached a decision sentencing a defendant to 14 years of imprisonment for crimes against the civilian population in Kosovo. The sentence was upheld by a second-instance court decision in November 2019. While the decision is final, proceedings on the defendant’s motion for protection of legality are currently ongoing. Within the jurisdiction of the Special Prosecutor's Office (SPO), four cases remain in the preliminary phase of investigation concerning war crimes committed on the territories of Bosnia and Herzegovina, and Croatia. Following the signature of a memorandum of understanding with the International Residual Mechanism for Criminal Tribunals (IRMCT) in early 2019, guidelines for cooperation have been prepared on the exchange of information and evidence with IRMCT. The Montenegrin Supreme State Prosecution has signed regional cooperation agreements on war crimes cases with Croatia (2006), Serbia (2007) and Bosnia and Herzegovina (2014). In 2019 and first half of 2020, Montenegro acted upon seven letters rogatory from Bosnia and Herzegovina, three letters rogatory from Croatia and one from the Kosovo Specialist’s Prosecutor’s Office. Activities are also ongoing on re-examination of old cases with a view to securing revision of the final judgements. The prosecution regularly participates in regional operational meetings. It is important to ensure that victims of war crimes have equal access to justice, in line with European and international standards, and that compensation is in line with the country's commitments. In 2019, there were 19 claims for compensation pending before the basic court of Podgorica: 17 for damages incurred due to the reduction of general life activity, fear and mental suffering, and 2 for damages incurred due to unlawful deprivation of liberty. All these claims are given priority by the court. By June 2020, four claims for compensation were partially upheld, awarding non-pecuniary damages in the amounts between EUR 4,500 and EUR 6,000. A proactive approach needs to be applied, in order to effectively investigate, prosecute, try and punish war crimes in line with international standards. The judicial decisions reached in the past contained legal mistakes and shortcomings in the application of international humanitarian law. Charges of command responsibility, co-perpetration and aiding and abetting have so far not been brought. Fight against corruption Montenegro has achieved some level of preparation. It made limited progress in the fight against corruption, with last year’s recommendations partially met with regard to track record on repression and prevention of corruption and a new institutional framework for Asset Recovery Office (ARO). The Anti-Corruption Agency (ACA) continued to be strengthened through capacity building activities and technical assistance. However, challenges related to its independence, priority-setting, selective approach and quality of its decisions remained. The Agency is yet to demonstrate a proactive approach in all areas falling under its mandate, including on the protection of whistle‑blowers, the control of financing of political parties and electoral campaign, and oversight of lobbying. Track record on seizure and confiscation of criminal assets needs to be further improved. Corruption remains prevalent in many areas. There is a need for strong political will to effectively address this issue of concern, as well as a robust criminal justice response to high-level corruption. In the coming year Montenegro should in particular: ®ensure the maximum integrity, impartiality and accountability of the ACA and remedy the shortcomings in its decision making, which were established by domestic courts; ®improve track records on repression and prevention of corruption, including by imposing effective sanctions and take concrete measures to limit the use of plea bargains to exceptional cases, in order to improve the transparency and the credibility of the judicial response to corruption through a more deterrent and consistent sanctioning policy; ®review the legal approach towards financial investigations, and asset recovery, to align it with international standards and with modern EU practices; establish an integrated approach between all the bodies involved and provide them with the necessary legal and operational tools to create the conditions for establishing a sustainable track record in this area. Track record A track record of investigations, prosecutions and final convictions in cases of high-level corruption has been established but remains to be further consolidated. In 2019 the Special Public Prosecutor's Office opened investigations into high-level corruption related criminal offences in 6 cases against 15 individuals, including majority owner of a commercial bank and the bank’s CEO (the ‘Atlas bank affair’), director of a public company and municipality functionaries; and 1 legal entity. Further 4 investigations were opened in the first half of 2020. In 2019, 5 indictments (2018: 12 cases) were lodged for the criminal offence of high-level corruption against 38 individuals and 3 legal entities and the financial investigations have been launched in 4 cases against 29 individuals in high-level corruption cases. In the ‘envelope affair’ case the prosecution indicted the former mayor of Podgorica and current adviser of the President of Montenegro for money laundering. No further indictments were lodged in the first half of 2020. In July 2020, Interpol cancelled the red notice warrant for the fugitive businessperson under investigation in the ‘Atlas bank’ and ‘envelope’ cases. Four final and enforceable judgements (2018: 4) were issued for high-level corruption in 2019 and one further against 3 individuals by mid-June 2020. No final judgements were issued against public officials. Montenegro sent an official request to Serbia in April 2019 for the extradition of the former President of the State Union of Serbia and Montenegro, who was convicted of high-level corruption. The request is still pending with the Serbian authorities. The track record on the confiscation of assets still needs to be improved. In 2019 the High Court in Podgorica ordered the temporary confiscation of assets with a total value of EUR 3,477,880 in three cases. One residential unit of 193m2 was permanently confiscated in February 2020. Montenegro has made some progress in establishing a track record on the prevention of corruption. In 2019, the Anti-Corruption Agency (ACA) instituted 387 proceedings before the misdemeanour courts (380 for alleged violation of the law on prevention of corruption and 7 for alleged violation of the law on financing of political entities and electoral campaigns). A total of 371 proceedings were completed, including those from previous years, in 90 % of them fines were imposed. These amounted to EUR 75,380 for violation of the law on prevention of corruption, and EUR 19,900 for violating provisions of the law on financing of political entities and electoral campaigns. The ACA further issued 40 direct misdemeanour orders, 35 for violation of the law on prevention of corruption and 5 for violation of the law on financing of political entities and electoral campaigns (2019: 19) imposing fines in the amount of EUR 21,997. In 13 cases the ACA requested seizure of material gain before the competent courts, resulting in seizures in 7 cases with a total amount of EUR 22,966. Based on the 158 opinions (2018: 185) and 72 decisions (2018: 60) issued by the Agency in 2019 on incompatibility of functions and conflict of interests, 57 public officials (2019: 77) resigned from their office and from 59 functions and 4 were dismissed. In August 2020, the Administrative Court annulled the decision of the Agency that found no conflict of interest in the former Prime Minister, now President, signing in October 2016 a decision on awarding concession for construction of a small hydropower plant to the company owned by his son. In 2019, 8,149 income and asset declarations were submitted to the Agency (2018: 8,004). The optional consent for accessing banks accounts for the purpose of verifying the data submitted in the declarations decreased in 2019 from 60% to 57% of public officials and from 69% to 65% of civil servants. The ACA verified 911 such reports, slightly exceeding its annual plan. It initiated 119 administrative proceedings, and established violations and irregularities in 54 decisions. Sanctions were imposed in 17 cases, 15 in the form of a warning, 1 as dismissal, and 1 in the form of a salary deduction. The Agency investigated 31 cases of inexplicable wealth in 2019 but found no irregularities. The ACA carried out planned control and verification of 839 public officials, 20 of them high-ranking officials. In this regard, 7 misdemeanour orders were issued totalling EUR 2,252. The ACA continued to monitor the overall compliance of relevant entities in meeting the legal obligations on the funding of political parties and electoral campaigns. In May 2019 the Agency published its report on the March 2019 local elections in Tuzi municipality. While it initiated one misdemeanour proceeding against one political party for overspending, it found no major irregularities and no abuse of public resources for electoral campaign purposes. Forty-eight political parties (out of 59) submitted annual financial reports, while 44 submitted decisions regarding amounts of membership fees for 2019. All reports submitted were published on the Agency’s website. The ACA instituted 5 misdemeanour proceedings for failure to submit the annual financial reports. In 2019, the Agency verified 6 reports from the biggest political parties and performed further 41 verifications of compliance with the law. In early 2020 the ACA started with preparations of its activities related to the August 2020 Parliamentary and local elections. In the run-up to the elections, ACA performed its monitoring activities. It initiated i.a. verifications of some 700 donors to political campaigns. It further initiated over 400 proceedings concerning abuse of public resources for electoral campaigns purposes and instituted 25 misdemeanour proceedings. The ACA did not impose any direct sanctions with respect to expenditures reports submitted by the contestants or published any conclusions, despite the fact that these did not correspond to ACA findings. The State Audit Institution published positive audit reports on annual financial statements from 2018 for 18 political entities, 6 conditional reports and one negative report, whilst regularity audits resulted in 3 positive, 10 negative and 12 conditional reports. In the context of the 'envelope affair', the ACA published the decision on the misdemeanour order of EUR20,000 against the ruling party and a request for payment of EUR47,000 to the state budget in December 2019, 10 months after it was issued. In 2019, 3 requests for whistle-blower protection were submitted to the ACA (2018: 1). So far, ACA issued a negative decision in one of these cases, the other two are still under examination. The Agency further received 110 reports on threats to public interest (same number as in 2018). In 49 completed examinations of these reports, it identified a threat to public interest in 9 with respect to 9 of them. The Agency further initiated 3 ex officio proceedings (still ongoing) for determining the existence of a threat to the public interest and continued working on the 4 it initiated in 2018.

The ACA continued to provide support to public bodies concerning integrity plans. In 2019, 671 reports on implementation of the integrity plans were submitted to the Agency. The practical impact of integrity plans has yet to be assessed. No new lobbying certificates were issued in 2019 (since 2014: 14). Six lobbyists and one legal entity remain registered with the Agency. Following-up and sanctioning breaches of the law remain a challenge. Low numbers continue to suggest that lobbying activities are being carried out outside the legal framework. In 2019, the ACA prepared an analysis of the legal framework in this area. Apart from Police and Customs, there were no cases demonstrating the implementation of codes of ethics for members of the legislative and executive authorities. In July 2019, Parliament adopted a revised code of ethics for its members, introducing a requirement of ad-hoc disclosure when a conflict emerges between the private interest of an MP and a matter under consideration in the parliamentary procedure. Since its establishment, the ACA submitted to the line ministers 17 non-binding legal opinions on draft legislative acts in the area of its competence. Its opinions were taken into account for 4 legislative acts, 4 legislative processes are currently ongoing, and in in eight cases, the ACA recommendations were not reflected in the final version of a legislative act. In 2019, the ACA provided its opinion on the law on financing of political entities and electoral campaigns and the law on prevention of corruption. Institutional framework Prevention of corruption In July 2019, Parliament appointed the new Council of the ACA. The Council has five members, of which two are from civil society. A number of opposition and NGO representatives contested the legal interpretation of the law on prevention of corruption applied for the call, notably the requirement to pass the state exam for employment in the national administration, as specified by the law on state employees and civil servants. Currently, 54 people are employed out of the 60 planned posts. The capacity of the ACA continued to be strengthened through capacity-building activities and technical assistance. There were further improvements to the IT system. The ACA now has real-time access to relevant databases. All data since the Agency began operating (1 January 2016) have been incorporated into its information system. The ACA continued measures on communication and awareness-raising. Despite the measures taken and the more proactive work of the new ACA Council, challenges remain: the Agency and its staff must ensure maximum transparency, integrity, impartiality, independence, an unselective approach, and uniform and full application of relevant laws. In December 2019, Parliament appointed the ACA’s director as chair of the Council of the Agency for personal data protection and free access to information. After three unsuccessful calls, the new ACA director was selected in July 2020 by the ACA Council. The overall impact of anti-corruption measures in particularly vulnerable areas (local self-government, spatial planning, public procurement, privatisation, healthcare and education) still has yet to be demonstrated by tangible results. Regarding public procurement, the amendments to the law on public procurement enacted in December 2019 provide a legal basis for full implementation of an electronic public procurement system. This should improve the transparency of public procurement procedures and help to reduce corruption risks. Law enforcement The institutional and operational capacity of prosecutors, judges and police to fight corruption should be further improved, particularly through specialised and long-term training. Financial investigations still need to be launched systematically in parallel with criminal investigations to discover the financial structures behind criminal offences. The initial track record of cases reaching prosecution from the police and other state institutions needs to be improved and consolidated. Political influence should not be exerted on law enforcement and judicial officials by members of the executive and the legislative branch. The Special Prosecutor’s Office (SPO) has now 50 employees, including 13 Special Prosecutors and 34 civil servants. The poor office conditions of the SPO remain a matter of concern. Legal framework Montenegro is party to all international anti-corruption conventions, including the UN Convention against Corruption. The legal framework and secondary legislation on anti‑corruption are in place. Passive and active corruption are both punishable under the Criminal Code. Montenegro is encouraged to make illicit enrichment a criminal offence. The Council of Europe Group of States against Corruption (GRECO) concluded that out of 11 recommendations on the ethics and integrity of MPs, judges and prosecutors, 8 are considered to be satisfactorily implemented and 1 partially implemented. Two recommendations (both concerning the judiciary) have not been implemented. The new law on financing of political entities and election campaigns, enacted by Parliament in December 2019 only partially addressed the OSCE/ODIHR recommendations. In April 2020, the Parliament enacted an amendment to this law, providing for allocation of social benefits from the budgetary reserve in an election year, in case of a war, state of emergency, epidemic of pandemic of communicable diseases. Despite some improvements, the current legal framework still has legal gaps and conflicting provisions and does not provide for effective safeguards and sanctions against circumvention, which limits the effectiveness of oversight. All shortcomings in the existing legal framework on political parties' financing, including those identified by ODIHR, need to be addressed. The implementation of the current law on free access to information has not helped to increase the accountability and transparency of the public service. In 2019 the total number of requests for free access to information was 5,409 (2018: 6,080) and 3,531 complaints were filed (2018: 3,248). The process of revising the law started in spring 2019, but has been put on hold due to the COVID-19 outbreak. Montenegro needs to ensure the compliance of both the legal framework and its practice with international and European standards in this area. Fundamental rights The legislative and institutional framework in the area of fundamental rights is now largely in place. In July 2020, the law on life partnership of same-sex couples was enacted by Parliament, making Montenegro the first country in the region to regulate the status of same-sex couples. The capacity of human rights institutions and of the Ministry of Human and Minority Rights has been reinforced, and trust in the Ombudsperson’s office and the quality of its work is increasing. Decisions of the Constitutional Court further align with European and international standards. However, important challenges remain in ensuring that national legislation on human rights is effectively implemented. The reports of excessive use of force by the police and allegations of torture call for swift and effective investigations. Ethnically and religiously motivated attacks in the context of the August 2020 elections are a matter of serious concern. Further efforts are necessary to mainstream human rights across all areas of work, public policies and sectors. Vulnerable groups, including Roma and Egyptians, and persons with disabilities continue to experience multiple types of discrimination and difficulty in enforcing their rights in administrative and judicial proceedings. Women in Montenegro continue to experience inequality in accessing employment, economic opportunities, and a clear wage gap remains in the country. Gender-based violence and violence against children remain issues of serious concern. While there has been progress with regard to the rights of lesbian, gay, bisexual, transgender and intersex (LGBTI), there continue to be incidents, hate speech and homophobic expressions against this community. In the coming year, Montenegro should in particular: ®ensure a better and more systematic access to justice, complaint systems and free legal aid for victims of human righ