EUROPEAN COMMISSION Strasbourg, 19.10.2021 SWD(2021) 293 final COMMISSION STAFF WORKING DOCUMENT Montenegro 2021 Report Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions 2021 Communication on EU Enlargement Policy {COM(2021) 644 final} - {SWD(2021) 288 final} - {SWD(2021) 289 final} - {SWD(2021) 290 final} - {SWD(2021) 291 final} - {SWD(2021) 292 final} - {SWD(2021) 294 final}



Table of Contents 1. Introduction 1.1. Context 1.2. Summary of the Report 1.3 State of play of the accession negotiations 2. Cluster 1: The Fundamentals of the Accession Process 2.1. Functioning of democratic institutions and Public Administration Reform 2.1.1 Democracy 2.1.2. Public Administration Reform 2.2. Rule of law and fundamental rights 2.2.1 Chapter 23: Judiciary and fundamental rights 2.2.2 Chapter 24: Justice, freedom and security 2.3. Economic criteria 2.3.1. The existence of a functioning market economy 2.3.2. The capacity to cope with competitive pressure and market forces within the Union 2.4. Public Procurement, Statistics; Financial control Chapter 5: Public procurement Chapter 18: Statistics Chapter 32: Financial control

3. Good neighbourly relations and regional cooperation 4. Ability to assume obligations of membership Cluster 2: Internal Market Chapter 1: Free movement of goods Chapter 2: Freedom of movement for workers Chapter 3: Right of establishment and freedom to provide services Chapter 4 - Free movement of capital Chapter 6: Company law Chapter 7: Intellectual property law Chapter 8: Competition policy Chapter 9: Financial services Chapter 28: Consumer and health protection Cluster 3: Competitiveness and inclusive growth Chapter 10: Information society and media Chapter 16: Taxation Chapter 17: Economic and monetary policy Chapter 19: Social Policy and employment Chapter 20: Enterprise and industrial policy Chapter 25: Science and Research Chapter 26: Education and culture

Chapter 29: Customs union Cluster 4: The Green agenda and sustainable connectivity Chapter 14: Transport policy Chapter 15: Energy Chapter 21: Trans-European networks Chapter 27: Environment and climate change Cluster 5: Resources, agriculture and cohesion Chapter 11: Agriculture and rural development Chapter 12: Food safety, veterinary and phytosanitary policy Chapter 13: Fisheries Chapter 22: Regional policy and coordination of structural instruments Chapter 33: Financial and budgetary provisions Cluster 6: External relations Chapter 30: External relations Chapter 31: Foreign, security and defence policy Annex I – Relations between the EU and Montenegro 1. Introduction 1.1. Context

Accession negotiations with Montenegro were opened in June 2012. To date 33, negotiating chapters have been opened, of which three have been provisionally closed. Montenegro accepted the revised enlargement methodology focusing on: fundamental reforms, stronger political steer, increased dynamism and predictability of the process. Montenegro continued to broadly implement the Stabilisation and Association Agreement (SAA) and meetings of the joint bodies under the agreement took place at regular intervals. Overall progress in the accession negotiations depends on progress in the area of rule of law, as per the requirements set out in the Negotiating Framework as well as the revised methodology formally accepted by Montenegro in the Intergovernmental Conference held on 22 June 2021. Progress towards meeting the interim benchmarks set in the rule of law Chapters 23 and 24 will be key to achieve further progress in the negotiations overall, no further chapters will be provisionally closed before this milestone is reached. The political commitment of the Montenegrin authorities to the strategic goal of European integration has been consistently stated as the key priority for the country during a rather challenging reporting period as the COVID-19 pandemic continued throughout the period. By September 2021, Montenegro had recorded around 131,500 cases and about 1940 deaths related to the pandemic, around 33% of the population had been fully vaccinated. Though the final extent of impact in terms of loss of human lives and damage to the economies is still difficult to assess, it is clear that the necessary restrictions imposed in the context of the pandemic took a heavy toll, notably on tourism-dependent economy of Montenegro, which is the worst affected country in the region. The EU continued to provide essential and unparalleled support. This includes financial support: a substantial package of EUR 53 Million of non-repayable financial aid and EUR 60 Million of favourable loans as macro-financial assistance to address the immediate health crisis, in addition to delivering vast quantities of health supplies and equipment, as well as EUR 200,000 allocation under the EU Solidarity Fund. The EU and its Member States have also supported the country’s vaccination campaign by providing over 262,000 doses by early September, which is a sign of concrete EU solidarity. 1.2. Summary of the Report Concerning the political criteria, the reporting period was marked by tensions and mistrust between political actors. The deep polarisation between the new ruling majority and the opposition persisted throughout 2020 and intensified in the post-election period. Heated relations and mistrust fed frequent escalations and further exacerbated political divisions, including within the ruling majority. The Parliamentary elections resulted in a change of the ruling coalition and transformed the dynamics between organs of the state and demonstrated a need to find a balance in the new political landscape, including on questions concerning religious communities and ethnicity, which dominated the political agenda during the reporting period. Friction between the executive and legislative powers has slowed down reform work. In December 2020, Parliament elected the 42nd government of Montenegro, the number of ministries was substantially reduced. It is the first government in Montenegro composed mostly of non-politically affiliated experts. In its final report on the 2020 Parliamentary elections, the OSCE Office for Democratic Institutions and Human Rights (ODIHR) limited election observation mission recommended a comprehensive reform to harmonise the electoral legal framework and regulate all key aspects of elections, through an inclusive process, well in advance of the next elections. In December 2020, the Parliament established the committee on comprehensive electoral reform, tasked to deliver legislative reforms by the end of 2021. Progress has been slow due to initial delays and periodic boycotts. Parliament dismissed the President of the State Electoral Commission (SEC) in June 2021, appointment of a new President is still pending in the Parliament. Continued efforts are needed to enhance professionalism, transparency and accountability of the SEC. In 2021, local elections took place in two municipalities. 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, leading to nearly constant pre-electoral campaigning at national and local level. A credible, independent and effective institutional response to the so-called ‘envelope affair’ remains to be ensured. The lack of constructive engagement of all parliamentary actors prevented a meaningful political dialogue, further polarising the political landscape. The boycott of plenary sessions by majority of MPs, from the opposition and the ruling majority caused a suspension of decision-making in Parliament in 2021. Parliament improved the transparency of its work, communicating with the public and stepped up its legislative and oversight role overall. The ruling majority frequently initiated or passed legislation through the fast-track procedure, without necessary public consultations and without duly taking into account EU accession requirements. Parliament is yet to demonstrate in practice its commitment to Montenegro's EU reform agenda and improve coordination with the government on legislative initiatives. Parliament should strengthen the professional and expert capacity of its administrative staff and improve women's political representation. The composition of the current Parliament is unprecedented in Montenegro’s history. It should endeavour to find a broad cross-party and societal consensus on EU-related reforms, which is vital for the country to make progress on its EU path. It is clear that active and constructive participation by all parties is required to enhance parliamentary accountability, oversight of the executive, democratic scrutiny, to improve the quality of legislation and for key appointments. So far, the Parliament was not able to secure the required 2/3 majority for important judicial appointments and therefore key functions of the judicial system are still filled on acting bases. As regards governance, there is a need to strengthen stakeholders' participation, and the government's capacity to implement reforms. In December 2020, Parliament elected the 42nd government of Montenegro. The number of ministries was reduced to 12; women head four of them. The new government composition is the first expert government in Montenegro, only the position of Deputy Prime Minister is held by a political party leader. The government also adopted a new national programme for EU accession for the period 2021-2023. The negotiation structure was substantially weakened by the resignation or dismissal of 110 of its members, including 16 chapter negotiators and 24 heads of working groups. Most of these key positions remain vacant. Some key ministries failed to show sufficient commitment and constructive engagement in the EU accession process under their new leadership. The role of civil society is recognised and promoted, however the current legal and institutional framework needs to be further improved to strengthen the consultation and cooperation mechanisms between state institutions and the civil society in the context of the EU accession process. Montenegro is moderately prepared on the reform of its public administration. Overall, limited progress was made in the reporting period. The change of government and of the parliamentary majority severely affected the civil service: amendments to the Law on Civil Servants and State Employees lowered the requirements for competence, independence and merit-based recruitment of civil servants. Moreover, the recent reorganisations of public administration led to substantial staff changes, including at senior levels, jeopardising Montenegro’s capacity to retain experienced staff in EU-accession process related matters in many sectors. Strong political will is needed to effectively depoliticise the public service, optimise the state administration and implement managerial accountability. Montenegro remains moderately prepared to apply the EU acquis and European standards in the area of judiciary and fundamental rights and has made limited progress overall, with limited track record on accountability. No progress has been made in the area of the judiciary and the implementation of key judicial reforms is stagnating. The decisive political commitment needed to unblock important segments of those reforms is still outstanding, with a number of appointments to the judiciary remaining pending in Parliament due to the inability to secure a qualified majority. Despite a more proactive approach of the Anti-Corruption Agency, corruption remains prevalent in many areas and an issue of concern. On fundamental rights, Montenegro continued meeting obligations from international human rights instruments and legislation However challenges remain in ensuring that national legislation on human rights is implemented effectively. There was limited progress in the area of freedom of expression. Montenegro has achieved some level of preparation in the fight against corruption. It made limited progress, with last year’s recommendations partially met with regard to further results on track records on repression and prevention of corruption and the efforts of the Anti-Corruption Agency to address its challenges. Track record on seizure and confiscation of assets needs to be further improved. The Anti-Corruption Agency (ACA) under new management demonstrated a more proactive approach, especially in stepping up its communication and outreach activities towards the general public, media and civil society and in addressing the caseload pending from previous years. Despite this positive trend, challenges related to Agency’s independence, priority-setting, selective approach and the quality of its decisions remain and require sustained efforts in this respect. Corruption remains prevalent in many areas. There is a need for strong political will to effectively address this issue, as well as a robust criminal justice response to high-level corruption. Montenegro has some level of preparation/is moderately prepared in the fight against organised crime. It made some progress in addressing last year’s recommendations, in particular in improving access for law-enforcement agencies to key databases and increasing the number of investigators and experts in key areas. The number of organised crime cases investigated and prosecuted continued to grow, and the number of cases adjudicated at courts nearly tripled. International police cooperation is well established and continued to yield results, with unprecedented drug seizures abroad. However, the capacity to address tobacco smuggling and money laundering is not yet at the expected level. Montenegro still needs to address some systemic deficiencies in its criminal justice system, including the way organised crime cases are handled in the courts. On fundamental rights, Montenegro largely has the legislative and institutional framework in place and made some progress in meeting the obligations laid down in international human rights instruments and legislation. However, challenges remain in effective implementation. The efficiency of investigations into the excessive use of force by law-enforcement and hate crimes needs to improve further. Vulnerable groups, including Roma and Egyptians, and persons with disabilities continue to experience multiple forms of discrimination and difficulties in enforcing their rights in administrative and judicial proceedings. Women continue to experience inequality in participating in political and public life and accessing employment and economic opportunities. Gender-based violence and violence against children remain issues of serious concern. Incidents of ethnically and religiously motivated attacks, hate crimes and hate speech continued to rise. Montenegro has only partially addressed last year’s recommendations. Access to justice, in particular for vulnerable groups remains to be improved. The amendments to the Law on Freedom of Religion of Belief were adopted after limited, and not fully inclusive, consultations with religious communities. Montenegro has achieved some level of preparation in the area of freedom of expression. Overall, it made limited progress during the reporting period and only partially addressed last year’s recommendations. There were some new developments on investigation into the 2018 shooting of an investigative journalist, but full and effective judicial follow-up both to this case and to other important old cases, remains to be ensured. In April 2021, the government established a new ad hoc commission for monitoring violence against the media, but it has not yet fully or effectively addressed the significant recommendations made by the previous commission. A revision of the legal framework is ongoing, to address the additional issues identified in the 2020 law on media and the law on public broadcaster RTCG, to complete it with a new law on audio-visual media, and ensure their full alignment with the EU acquis and European standards. More efforts are required to limit the effects of disinformation and on-line harassment and hate speech, while ensuring that such measures do not limit disproportionately freedom of expression. Parliament appointed the new RTCG Council in June 2021 without broad cross-party support. Following this change and the subsequent changes of RTCG management, the public broadcaster started to feature politically more diverse content. The media scene remains overall highly polarised, often marked by politically biased and unbalanced reporting, including extensive involvement of foreign media from the region, which was particularly notable during election periods. Self-regulatory mechanisms remain weak. On the economic criteria Montenegro has made some progress and is moderately prepared in developing a functioning market economy. The country experienced a sharp recession in 2020 as the COVID-19 pandemic took a heavy toll on its tourism-dependent economy. This created large negative spill over effects on private consumption, investment, employment, trade and public finances. To support citizens and the economy, authorities implemented several economic support packages. These measures were, to a large extent, well targeted, transparent and of a temporary character. In spite of some delays due to the pandemic, the government continued implementing some of the envisaged reforms to improve the business environment. An orderly government transition in the middle of the crisis preserved the effectiveness of the COVID-19 policy response. The new government managed to mitigate fiscal risks by accumulating sizeable fiscal buffers to cover the 2021 financing needs, including for additional COVID-19 support programmes. The financial sector remained stable during the crisis, as a result of its strong pre-crisis position and the support measures implemented by the authorities, but the delayed impact of the crisis on bank balance sheets calls for close monitoring of the financial institutions. Montenegro has made some progress and is moderately prepared to cope with competitive pressure and market forces within the EU. The COVID-19 pandemic demonstrated that lack of diversification makes Montenegro’s tourism-dependent economy highly vulnerable to shocks. Some efforts have been made to improve innovation capacities and to introduce EU standards at local companies thanks to public grants, but these remain modest given the scale of the challenge. The quality of the educational system and curricula preferences appear inadequate to raise human capital and address skill mismatches. Modern telecommunication and energy infrastructure is being deployed rapidly, but there is a substantial deficit in transport infrastructure, hindering integration with regional and EU markets. In addition, the low level of sophistication of domestic products, the small size of local companies and low level of participation in external markets represent major obstacles for increasing competitiveness and diversifying the economy.

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 marred by tensions, as nationalistic rhetoric increased. 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 many areas, albeit at a slower pace than previously. The internal market cluster is key for Montenegro’s preparations to meet the requirements of the EU’s internal market and is of high relevance for possible early integration measures and the development of the Common Regional Market. Progress was achieved on market surveillance, accreditation and standardisation; electronic company registration legislative prerequisites; prevention of money laundering and terrorist financing; company law; state aid and aid transparency; banking; consumer and health protection. Montenegro should now focus on: alignment with the EU acquis governing metrology and standardisation, develop the operational capacity of the Employment Agency; regulated professions, capital movements and payments, including on the acquisition of property rights, phasing out its investor citizenship scheme; company law and corporate accounting; intellectual property; competition and State aid; consumer protection and health protection and on implementing the laws aligning with the capital requirements EU acquis in the banking sector. The competitiveness and inclusive growth cluster has significant links to Montenegro’s Economic Reform Programme. Progress was made on tobacco control; pensions; industrial policy, smart specialisation, vocational education and training, and trade facilitation. On economic and monetary policy, work to implement the action plan for alignment with the EU acquis is ongoing. Montenegro should now focus on: independence of the media sector; VAT, excise duties and direct taxation coordination of economic and monetary issues; labour law and the anti-discrimination law, safety at work; industrial policy, research and innovation, education and training and EU-compatible computerised transit system. The green agenda and sustainable connectivity cluster has significant links to Montenegro’s Economic Reform Programme, the Commission’s Economic and Investment Plan and the Green Agenda for the Western Balkans. Progress was made in creating a day-ahead energy market; Transport Development Strategy, nature protection and the National Energy and Climate Plan. Montenegro should now focus on: the energy sector; trans-European networks, telecommunications, TEN-T and TEN-E Regulations; green transition, waste management, water quality, nature protection and climate change. Resources, agriculture and cohesion cluster comprises policies linked to EU Structural funds and Investment funds and developing the capacities to assume responsibilities of a future EU Member State. Progress was made in agriculture, food and fisheries, regional policy and structural instruments, financial and budgetary provisions and management of own resources. Montenegro should now focus on: implementation of the IPARD programme, agriculture and rural development as well as fisheries, upgrading food establishments and food safety controls, EU cohesion policy requirements, capacity for the handling of indirect management programmes in IPA and rules of administration for the own resources system. On the external relations cluster, Montenegro continued to fully align with all EU CFSP positions, declarations and EU common positions. It also continued to implement actions under the common regional market based on EU rules, including through cooperation within CEFTA and the Regional Cooperation Council. Alignment to the integrity of the Rome Statute would allow the provisional closure of the remaining open chapter 31 under this cluster. Strengthening the administrative capacity to apply the EU acquis remains an important challenge for Montenegro, including the urgent need to re-construct a functional negotiating structure. On migration, both legal and irregular migration fell sharply in 2020 against the backdrop of the COVID-19 pandemic. The arrival of irregular migrants fell by 60% compared with 2019, with 3149 migrants apprehended in 2020. The Special Prosecutor’s Office conducted two investigations into migrant smuggling in 2020. In one case, final convictions were issued against eight individuals. Although Montenegro’s capacity to manage mixed migration flows and the integration of refugees is improving, sustained efforts are required in order for the country to cope with migratory pressure, by further increasing its reception capacity and raising standards in the reception centres. This will also include developing further its international cooperation on readmission, supporting the successful reintegration of returnees, increasing its capacity to prosecute migrant smuggling networks, and setting up a modern migrants’ data collection system. 1.3 State of play of the accession negotiations CLUSTERS Chapters / areas Date chapter opened / closed with interim or closing benchmarks Fundamentals All chapters open 23-Judiciary and fundamental rights 24-Justice, freedom, security 5-Public Procurement 18-Statistics 32-Financial control …Economic Criteria …Functioning of democratic Institutions …PAR December 2013 December 2013 December 2013 December 2014 June 2014 - - Internal Market All chapters open 1-Free movement of goods 2-Freedom of movement for workers 3-Right of establishment and freedom to

establish services 4-Free movement of capital 6-Company Law 7-Intellectual property rights 8-Competition 9-Financial services 28-Consumer and health protection June 2017 December 2017 December 2017 … June 2014 December 2013 March 2014 June 2020 June 2015 December 2014 Competitiveness and inclusive growth All chapters open ch.25 and 26 provisionally closed 10-Information society and media 16-Taxation 17-Economic and monetary policy 19-Social policy and employment 20-Enterprise and industrial policy 25-Science and research 26-Education and culture 29-Customs union March 2014 March 2015 June 2018 December 2016 December 2013 December 2012 (opened and closed - no closing benchmarks); April 2013 (opened and closed – no closing benchmarks) December 2014 Green Agenda and Sustainable connectivity All chapters open 14- Transport policy 15- Energy 21-Trans-European Networks 27-Environment and climate change December 2015 December 2015 June 2015 December 2018 Resources, Agriculture and cohesion All chapters open 11-Agriculture and rural development 12-Food safety, veterinary, phytosanitary services 13-Fisheries 22-Regional policy and coordination of

structural instruments 33-Financial and budgetary provisions December 2016 June 2016 June 2016 June 2017 December 2014 External Relations Both chapters open ch.30 provisionally closed 30-External relations 31- Foreign, security & defence policy March 2015 – June 2017 provisionally closed June 2014 2. Cluster 1: The Fundamentals of the Accession Process 2.1. Functioning of democratic institutions and Public Administration Reform 2.1.1 Democracy The August 2020 Parliamentary elections resulted in a change of the ruling coalition and transformed the dynamics between the executive and legislative powers, and demonstrated a need to find a balance in the new political landscape, including on questions concerning religious communities and ethnicity, which dominated the political agenda during the reporting period. The international election observers recommend a comprehensive reform to harmonise the electoral legal framework and regulate all key aspects of the elections, through an inclusive process, well in advance of the next elections. In December 2020, the Parliament elected the 42nd government of Montenegro, the number of ministries was substantially reduced and it is the first government in Montenegro composed mostly of non-politically affiliated experts. Elections In its final report on the 2020 parliamentary elections, OSCE Office for Democratic Institutions and Human Rights (ODIHR) limited election observation mission recommended a comprehensive reform to harmonise the electoral legal framework and regulate all key aspects of the elections, through an inclusive process, well in advance of the next elections. In December 2020, the Parliament established the committee on comprehensive electoral reform, tasked to deliver legislative reforms by the end of 2021. Progress has been slow due to initial delays and periodic boycotts. In 2021, local elections took place in two municipalities. 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, leading to nearly constant pre-electoral campaigning at national and local level. A credible, independent and effective institutional response to the so-called ‘envelope affair’ remains to be ensured. In December 2020, OSCE/ODIHR limited election observation mission (LEOM) published its final report on the 30 August 2020 parliamentary elections, identifying 23 recommendations to bring the electoral framework closer in line with OSCE commitments and other international obligations and standards for democratic elections. The mission concluded that the electoral legal framework provides sufficient regulations for democratic conduct of elections, but gaps, ambiguities and inconsistencies undermine legal certainty and allow for selective implementation. A number of previous OSCE/ODIHR recommendations remain unaddressed, including those related to an audit of the voter register, measures against the misuse of state resources, as well as certain limitations of suffrage rights.

In December 2020, the Parliament established a new Committee for a comprehensive electoral reform, with a mandate to propose legislative reforms first by end of June 2021, subsequently extended to end of 2021. In April 2021, following the nomination of all 14 ruling majority and opposition members, the committee initiated its work. In May 2021, three DPS MPs suspended their participation in the work of the Committee, remaining four opposition MPs left the Committee in June 2021. Three civil society organisations (CSOs) were invited to participate. Genuine inclusiveness, strong political commitment and willingness to find cross-party consensus would be needed for the Committee to deliver on its ambitious agenda. In addition to addressing outstanding OSCE/ODIHR recommendations, the committee has a mandate to propose new laws on election of MPs and councillors, voter’s registry, financing of political entities and electoral campaigns, and registers of residence, a decision on holding local elections in all municipalities in a single day as well as a code of ethics for election campaigns. Furthermore, the committee has been tasked with analysing the implementation of and proposing possible amendments to the Law on identity cards and the Law on Montenegrin citizenship as well as proposing measures to strengthen the professionalism and transparency of the work of the State Election Commission (SEC) and the Anti-Corruption Agency (ACA). According to OSCE/ODIHR LEOM final report, the 2020 elections were run overall transparently and efficiently, but the SEC did not properly fulfil its regulatory role. Important aspects, such as verification of supporting signatures for candidate registration, criteria for registration of the lists with national minority status and the tabulation of results remain to be addressed. New SEC members representing parliamentary political parties were appointed in January 2021. Following the 2020 parliamentary and local elections in five municipalities (Andrijevica, Budva, Gusinje, Kotor and Tivat), 13 complaints were submitted, of which four were accepted and one partially accepted by the SEC. Completed complaint procedures did not reveal violations that would call into question the regularity of the election process. The OSCE/ODIHR final report notes that the right to file complaints limited to violations of voter’s own voting rights does not fully ensure right to an effective remedy and recommends extending the right of voters to file complaints on all aspects of the electoral process, including the possibility to challenge election results. In 2021, local elections in the municipalities of Niksic and Herceg Novi took place on 14 March and 9 May, respectively. The electoral campaign for Niksic local elections was marked by reports of foreign interference. No comprehensive audit to enhance public trust in the voter’s registry, for example through conducting field tests, has been conducted. Allegations of double-registered voters in one or more countries of the region need to be thoroughly investigated by the competent authorities. In November 2020, the Constitutional Court ruled that the prescribed residential condition for exercising the right to vote in local elections of ‘at least six months before the day of the elections’ was unconstitutional and annulled the respective provision of the Law on elections of MPs and councillors. There are no new developments in the political and judicial follow-up of the alleged misuse of public funds for party political purposes in 2012 on the “audio recordings affair”. Political and judicial follow-up to the ‘envelope affair’ is still ongoing. In April and in June 2021, the Appellate court accepted the appeals of the Special State Prosecutor's Office, and revoked the decisions of the High Court in Podgorica to terminate criminal proceedings against an official from the previous ruling majority for money laundering. Parliament The lack of constructive engagement of all parliamentary actors prevented a meaningful political dialogue, further polarising the political landscape. The boycott of plenary sessions by majority of MPs, from opposition and ruling majority caused a suspension of decision-making in the Parliament in 2021. The change of the ruling coalition transformed the dynamics between the executive and legislative powers. The Parliament enhanced transparency of its work, communicating with the public and stepped up its legislative and oversight role overall. However, the ruling parliamentary majority frequently initiated or passed legislation through fast-track procedure, without public consultations and without duly taking into account EU accession requirements, which hindered EU-related reform progress, risking reversing earlier achievements. The parliament is yet to demonstrate in practice its commitment to Montenegro's EU reform agenda and engage in constructive coordination with the government on related legislative initiatives. The parliament should engage in a transparent, decisive and inclusive dialogue on the implementation of OSCE/ODIHR outstanding recommendations and pending judicial appointments. It should also strengthen the professional and expert capacity of its administrative staff and improve women's political representation. The 27th convocation of the Parliament was constituted on 23 September 2020. Parliament Speaker and two Vice-Speakers from the ruling majority were elected, along with the chairs and members of the 13 permanent working bodies and the Committee on monitoring and control of the privatisation process. The opposition is yet to nominate its candidate for a Deputy Speaker. Five coalitions and four political parties are represented in the new Parliament's composition where the ruling coalition holds a thin majority of 41/40. Out of 81 Members of Parliament (MPs), two operate as independent MPs, while five represent ethnic minority parties. The polarisation between the new ruling majority and the opposition persisted throughout 2020 and intensified in the post-election period. Heated relations and mistrust fed frequent escalations and further exacerbation of political divisions, including within the ruling majority. Cross-party negotiations to reach the necessary qualified majority for the overdue appointment of the new Supreme State Prosecutor, four Judicial Council lay members and two judges of the Constitutional Court are yet to start. The State Election Council’s decision not to submit a report on filling a vacant MP mandate resulted in the Parliament's unilateral decision to validate an MP mandate. This decision led to eight Constitutional Court initiatives in January 2021 – three by the ruling majority and five by the opposition as well as to the opposition boycotting the work of parliamentary bodies. As regards Parliament’s legislative role, the opposition resumed its participation in the Parliament’s work in March, however the biggest parliamentary opposition group announced a boycott again in May. Furthermore, a part of the biggest ruling majority parliamentary group announced a boycott of the plenary work of the Parliament in June 2021. This led to suspension of the decision-making process of the Parliament. The periods of participation of all MPs in the plenary sessions and working bodies temporarily improved the quality of parliamentary debate. In 2020, the Parliament held 13 sittings and enacted 46 laws, while in the first half of 2021, Parliament held 12 sittings and enacted 22 laws. A number of important legislative initiatives, such as the amendments to the Law on civil servants and state employees, were proposed and passed by the ruling majority without adequate consultations with the government or ensuring alignment with the EU acquis, risking reversing earlier achievements, including on key rule of law reforms. Institutional coordination between the Parliament and the government on prioritising legislative initiatives pertaining to the EU reform agenda needs to be substantially improved, and agreed consultations need to be adhered to, regardless of the origin of initiatives. The Parliament's capacity to scrutinise proposed legislation for compliance with EU acquis is still limited. Efforts were undertaken to improve parliamentary oversight of all governance branches, but effective control remains at early stage. In 2020, four special sessions of the Parliament were dedicated to MP questions to the Prime Minister's and his Cabinet. In the first six months of 2021, four question time sessions were organised. In 2020, 159 sessions of parliaments working bodies were organised, one control hearing and 22 consultative hearings were held. Since the beginning of 2021, nine control hearings and eight consultative hearing were organised by the competent parliamentary committees. In 2021, the Parliament Speaker enacted an action plan containing 69 measures for strengthening the legislative and oversight function of the Parliament. A uniform and effective system is yet to be developed for monitoring the implementation of conclusions and recommendations adopted at oversight hearings. The findings of the State Audit Institution (SAI) continue to be addressed in a limited manner, and there is still no discussion or reporting on the implementation of major policies and legislation. The Parliament improved the level of transparency and communication with the public. For the first time all sessions of the parliamentary working bodies are broadcasted live on the YouTube channel of the Parliament and the national public broadcaster RTCG launched a parliamentary channel dedicated to regular parliamentary work. The Parliament has re-designed its website, adapting it for blind and partially sighted people and now provides more user-friendly information to citizens. Persons with disabilities can now access the plenary hall. By the end of December 2020, the new convocation of the Parliament received 156 citizens’ petitions, with 11 referring to legislative initiatives. Since November 2020, citizens can also submit petitions online through the Parliament’s website. 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. In January 2021, the parliamentary administrative committee revoked the decision determining the criteria for MPs’ justified absence from parliament's plenary and committee sittings, adopted in 2020. Provisions prescribing fines for MPs were deleted by introducing amendments to the rules of procedure in 2021. In July 2020, the amendments to the rulebook on organisation and systematisation of the Parliament’s service were adopted, by the end of 2020 out of total 269 posts in the Parliament’s service 198 were filled. Professional and expert capacity of the Parliament administrative staff should continue to be strengthened. The lack of available space in the Parliament for both service staff and MPs remains an issue. In March 2021, the Parliament elected its new Secretary General and two deputies. In the reporting period, the Parliament did not agree to lift any MP's immunity, although, in February 2021, the Special State Prosecution Office requested waiving the immunity of two MPs (one from the ruling majority and one from the opposition). In February 2021, the Appellate Court annulled the first-instance verdict and ordered re-trial in the ‘Coup d’état’ case involving two ruling coalition leaders, including the chair of the parliamentary committee on security and defence. A criminal case involving one ruling coalition MP is currently ongoing in court. The number of women MPs increased slightly from 18 to 22, now accounting for 27%. Women’s involvement in political life remains limited: there are no women among the political party leaders and very few in the parties' leadership. Electoral lists satisfy only minimum requirements in terms of gender equality. The amendments to the rules of procedure of the Parliament introduced the obligation to have at least one Deputy Speaker elected among MPs of the less represented gender. Female MPs across the political spectrum formed the first Women’s Club in the Parliament in 2020 and in December the first female Deputy Parliament Speaker was elected. Shortcomings in the legal framework regulating political parties and their funding persist and the level of budgetary political party financing is still considerably above the European average (EUR 7.3 million in 2020). The Anti-Corruption Agency and the State Audit Institution monitor political party financing with limited results. Governance

In December 2020, the Parliament elected the 42nd government of Montenegro. The number of ministries was substantially reduced to 12; women head four of them. The new government composition is the first expert government in Montenegro, only the position of the Deputy Prime Minister is held by a political party leader. The government adopted the proposal of the Law on budget for 2021 and its annual work plan at the end of March 2021, and it was adopted by the Parliament on 17 June, when the parliament also dismissed the Minister of Justice and Minority Rights. In December 2020, the government appointed a new Chief Negotiator for EU accession who also acts as a National IPA Coordinator. The report on the implementation of the national programme for EU accession for 2020, adopted in February 2021, outlines that out of 281 commitments in the EU accession process, 121 or 43% were fulfilled. Out of 142 laws and by-laws, 98 (69%) have been prepared and adopted, while out of 56 strategic documents, only 23 (41%) were completed. The government also adopted a new National Programme for EU accession for the period 2021-2023. The negotiation structure was substantially weakened by the resignation or dismissal of 110 of its members, including 16 chapter negotiators and 24 heads of working groups. Most of these key positions remain vacant. Some key ministries failed to show sufficient commitment and constructive engagement in the EU accession process under their new leadership. The government has continued to share information on the EU accession process in line with its public information strategy 2019-2022. In 2020, the government adopted 40 draft laws. In the first six months of 2021, the government adopted 33 draft laws. Parliament’s legislative initiatives gradually became the rule, weakening the government’s role as a policy-maker. Public consultations organised by the executive continue to lack genuine and systematic inclusion of all relevant stakeholders. All 12 ministries adopted rulebooks on internal organisation and systematisation. The government has established several ad-hoc advisory bodies, including the National Council for the fight against high-level corruption, the Council for control of the voter registry and the Council for privatisation and capital projects. The government also adopted decisions on establishing Councils for public administration reform, for competitiveness and for cyber security. These newly established bodies are yet to demonstrate concrete results. By the end of June, the government held 29 sessions and frequently resorted to the procedural option of adopting decisions without holding a session, including a decision to issue government bonds worth EUR 750 million, to appoint acting Police Director, and to establish a new airline company. Some steps were taken to improve cooperation with the President, but functional cohabitation and coordination between the two branches of executive power remains to be improved. In April 2020, the Parliament enacted the amendments to the Law on local self-government aligning it with the provisions of the Law on protection of the population from infectious diseases. New local governments were established in Budva, Kotor, Tivat, Andrijevica, Gusinje municipalities following the 30 August local elections, and in Niksic and Herceg Novi municipalities following the local elections held in the first half of 2021. New mayors were elected in the municipalities of Berane and Ulcinj. Women’s political participation remains low at the local level, with only two out of 24 municipalities headed by a woman mayor. Civil society The role of the civil society is recognised and promoted, however the current legal and institutional framework needs to be further improved to strengthen the consultation and cooperation mechanisms between state institutions and the civil society in the context of the EU accession process. Amendments to the Law on free access to information and a Law on volunteering have yet to be adopted. The Council for Cooperation of State Administration Bodies and Non-Governmental Organisations has yet to resume its work, suspended in October 2020. Although State funding rules to civil society organisations are in place, not all ministries have launched calls to award grants to CSOs. A stronger capacity of ministries in strategic planning, monitoring and evaluation of the support they provide to CSOs would enhance the quality of the cooperation between State bodies and the civil society. 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. Draft amendments to the Law on Access to Information, went through a public consultation process, but remain to be adopted. However, information classified by public institutions and withheld from the public remains an issue, in practice restricting the access of civil society organisations (CSOs) and the public to key policy decisions. This concern needs to be addressed as a matter of priority. Montenegro has not adopted a law on volunteering, which would be needed to promote and regulate volunteer work in CSOs and hence increase their human resources. The 2018-2020 strategy for improving the environment for NGOs has expired and needs to be replaced by a new one. The role of civil society in the accession process is recognised and promoted at political level. In 2020, most of the ministries appointed CSOs members to the working groups in charge of drafting laws and State strategies in their respective areas, an obligation under the Law on public administration. However, not all ministries conduct public consultations when draft laws and strategies are prepared. When they do so, the consultations remain sometimes a formality, without real openness towards the views of civil society representatives. The public administration needs to improve the consultation mechanism with civil society. As regards the 2018 controversial dismissals of prominent NGO representatives from key state institutions and regulatory bodies, their membership in the concerned bodies could not be legally restored, despite further courts decisions issued during the reporting period, establishing that they were unlawfully dismissed. The Council for Cooperation of State Administration Bodies and Non-Governmental Organisations, a body consisting of an equal number of state officials and CSO representatives, held three meetings in 2020 but stopped its activities in October 2020, further to the change of government. New government members of the Council have yet to be appointed. Insufficient visibility and outreach to local CSOs in more remote areas have yet to be addressed. The rules for public funding of CSOs provide for a minimum of 0.5 % of the state budget to be allocated to civil society. In 2020, this budget amounted to EUR 4.3 million, while the allocation for 2021 is EUR 4.6 million. Montenegro’s legislation requires all ministries to conduct consultations with CSOs on their annual funding priorities, to publish open calls and to award grants through a selection process involving external evaluators. However, in 2020 not all ministries have launched calls to award grants to CSOs, despite their legal obligation to do so. A new call for the selection of external evaluators was held to address concerns on the impartiality of the previous evaluators. The capacity of ministries to monitor and evaluate the projects implemented by CSOs remains to be strengthened. CSOs can also access funds at local level, according to the law on local self-governments. However, the transparency of procedures still needs to be improved. 2.1.2. Public Administration Reform Montenegro is moderately prepared on the reform of its public administration. Overall, limited progress was made in the reporting period. Some progress was made in areas such as medium-term policy planning, electronic government and public finance management as well as budget transparency. Public consultations were held on draft amendments to the Law on Access to Information, which, together with the new Public Administration Reform and Public Financial Management strategies, remain to be adopted. Amendments to the Law on Civil Servants and State Employees, adopted in January 2021 at the initiative of the Parliament, lowered the requirements for merit-based recruitment, competence and independence of civil servants. The impact of their practical implementation remains to be seen. Reorganisation of public administration led to substantial staff changes, losing experienced staff in EU accession process related matters. Strong political will is needed to effectively address depoliticisation of the public service, optimisation of the state administration and effective implementation of managerial accountability. Most of the recommendations from 2020 remain valid. The future approach to optimisation of the public administration remains to be defined by the government. In the coming year, Montenegro should in particular: ®finalise, adopt and start implementing the new Public Administration Reform and Public Financial Management strategies in line with the national guidance for strategic planning and its linkage with the mid-term budgetary framework; ®improve citizens’ access to public information by finalising, adopting and start implementing amendments to the Law on access to information in line with the SIGMA principles of public administration; ®ensure effective lines of accountability between and within the institutions; ensure recruitments to all positions in the public administration according to the principles of merit, competence and transparency. Strategic framework for public administration reform A new Public Administration Reform (PAR) Strategy 2022-2026 has yet to be finalised, pending consultations of all relevant stakeholders, and adopted. The new strategy is expected to improve the quality and efficiency of service delivery as well as optimisation of the public sector. In April 2021, the composition of the PAR Council was modified aiming to strengthen political support to PAR. Representatives of civil society and academia became members of the Council, and the Prime Minister took over the presiding role. With regard to financial sustainability, the reforms currently remain dependent on external donor funding. Legislative amendments in the PAR area were initiated and adopted by the Parliament without prior involvement of the competent ministry.

The organisational set-up of the state administration has not been fully aligned with the Law on State Administration. The reorganisation of the state administration conducted after the 2020 elections was made without sufficient ex-ante analysis or strategic approach. The overall quality of strategic documents produced over the reporting period has improved, and the documents are largely aligned with the standards set down in the decree and methodology on strategic planning. Public financial management Despite initial delays, the pace of implementation of the Public Financial Management (PFM) reform programme (2016-2020) has gradually increased. Good progress was made on the adoption of programme-based and gender sensitive budgeting, including the first elements of performance budgeting, as well as the gradual introduction of a mid-term budgetary framework. The adoption of several decrees in the last quarter of 2020 and the adoption of amendments to the Law on budget and fiscal responsibility in June 2021 supported these reforms. Additional legislative changes are needed to complete the ongoing reforms, including the establishment of a fiscal council and the adoption of accrual accounting. The establishment of a new budget planner and a centralised system for the calculation of earnings substantially improved the state budget electronic system. New systems for e-procurement, excise and e-fiscalisation are operational since January 2021. Challenges remain with regard to capital budgeting, debt management, commitment and assets management, as well as with regard to interoperability of the different IT systems in place. Furthermore, the alignment between strategic plans and mid-term budgetary framework is still to be substantially improved. The implementation of the public sector accounting law in 2022 remains uncertain due to delays in the adoption of the necessary secondary legislation and upgrading of the accounting IT system. A Public Investment Management Assessment (PIMA) was carried out in June 2021. The implementation of the action plan of the PFM reform programme 2016-2020 has been extended to 2021. Based on the results of the evaluation of the current programme, as well as the recommendations of the Public Expenditure and Financial Accountability (PEFA) and PIMA, a new PFM strategy 2022-2026 has yet to be finalised, pending consultations of all relevant stakeholders, and adopted. On budget transparency, some progress was achieved through the adoption of a new programme budget classification, with programme goals and performance indicators for the 2021 state budget. However, the execution, monitoring and reporting framework is still lacking, due to technical incompatibility between the budget planner, the treasury and accounting IT systems. The civil society is not systematically involved in monitoring the implementation of the PFM reform programme. New templates for in-year and annual budget execution reports remain to be adopted and implemented. Public service and human resources management In January 2021, the Law on Civil Servants and State Employees was amended at the initiative of the Parliament. The key amendments relate to lower qualification requirements for recruitment of senior management staff, possibility to dismiss the heads of the authority for any irregularity in their annual reports and appointment of acting heads in public administration. As a result of the reorganisations of the state administration referred to above, 65% of senior management staff at central level were dismissed (91 employees) or resigned (42 employees). Among them, 110 employees were members of the key EU-accession negotiation structure. In addition, major changes in management staff in schools and hospitals took place. Implementation of the 2018-2020 Public Administration Optimisation Plan ended in December 2020. In 2020, there was a significant increase in number of employees at central and local level. Accountability of administration Following various public consultations, conducted in inclusive and transparent manner, amendments to the Law on Access to Information have yet to be finalised and adopted. The number of appeals against decisions of public sector institutions on requests for information remains excessively high for a country with the size of Montenegro (4,328 in 2020). 76% of appeals were successful. Approximately one third of the successful appeals (1,002 in 2020) are because of silence of administration in the first instance bodies. The basic accountability mechanisms between the ministries and the subordinate authorities are not functioning consistently. Only selected authorities submit their annual plans and reports for formal approval to the relevant ministry. The plans and reports of subordinate authorities do not stipulate objectives and measurable outcome-level targets nor performance information. Service delivery to citizens and businesses The Ministry of Public Administration, Digitalisation and Media established the register of state bodies and institutions and made it publicly available to the citizens. The register was also adapted for the use of persons with disabilities. In line with the Law on electronic government, sub-legislative acts were adopted and the Council for electronic government was established. In accordance with amendments to the law on electronic identification and electronic signature, a number of rulebooks were adopted. A register of providers of electronic services was established, and it is possible to use electronic signatures in transactions, free of charge for citizens and at lower price for businesses. The progress in public service delivery has been slow. Service, including digital service, provision is largely ineffective, and not user-friendly. Meanwhile, the process of establishing a company was re-designed, rendering it smoother and less costly. The administrative procedures supporting the delivery of public services remain below expectations. Data interoperability and sharing data across public and private institutions, as well as the use of the established interconnection platform (Government Service Bus) is still limited. The implementation of the Law on identity card started in June 2020. The new electronic identity cards issued to Montenegrin citizens allow for electronic identification and signature.

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 effective fight against corruption are of paramount importance, as is respect for 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. Limited progress was made in the area of the judiciary, with stagnating implementation of key judicial reforms and a limited track record on accountability. Despite a more proactive approach of the Anti-Corruption Agency, corruption remains prevalent in many areas and still an issue of concern. On fundamental rights, Montenegro continued meeting obligations from international human rights instruments and legislation; however, challenges remain in ensuring the effective implementation of national legislation on human rights. There was limited progress in the area of freedom of expression. Nevertheless, the technical and administrative work visibly intensified after the long over due appointments of new negotiating structures had been finalised in June 2021. Functioning of the judiciary Montenegro’s judicial system is moderately prepared, with no progress overall. The implementation of key judicial reforms is stagnating. The decisive political commitment needed to unblock important segments of those reforms is still outstanding, with a number of appointments to the judiciary remaining pending in Parliament due to inability to secure qualified majority. Concerns remain over the institutional performance of the Judicial and Prosecutorial Councils. Reform results, in particular the track record on judicial accountability remain limited. Independence and professionalism of the judiciary need to be further strengthened. Montenegro continues to make efforts on efficiency of judiciary, in particular towards the development and promotion of alternative dispute settlement. However, human, financial and infrastructure management has still not improved. The timely implementation of the new ICT justice development programme has become uncertain due to organisational changes in the Ministry of Justice, Human and Minority Rights. Last year’s recommendations have not been met and remain largely valid. Therefore, in the coming year, Montenegro should in particular: ®ensure the effective independence and professionalism of the judiciary by addressing all the remaining recommendations of the Venice Commission on the Law on State Prosecution Service, and fully and unambiguously implementing the relevant constitutional and legal framework, in line with the Venice Commission and Council of Europe Group of States against Corruption (GRECO) recommendations; ®review the disciplinary and ethical framework for judges and prosecutors to strengthen its objectivity, proportionality and effectiveness, and ensure its effective implementation; ®adopt a new strategy for rationalisation of the judicial network laying down the next concrete steps leading to closure of unviable small courts. Strategic documents No tangible results can be reported so far on the implementation of the 2019-2022 judicial reform strategy. The efforts to monitor the implementation of the Strategy need to intensify. The adoption of a new action plan for the period 2021-2022 is pending. 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, as identified by the GRECO, outstanding issues remain with regard to strengthening the Judicial Council’s independence against undue political influence, for instance due to the ex-officio participation of the Minister of Justice. Moreover, the May 2021 amendments to the Law on the State Prosecution Service, which entered into force in June 2021, failed to fully address the Venice Commission’s recommendations concerning risks of politicisation of the Prosecutorial Council. In the process of preparation of the amendments, the Government twice requested the Venice Commission’s opinion. Initially, the initiative was presented by the ruling coalition MPs, together with an initiative to dismantle the current Special Prosecutor’s Office (SPO) and replace it with a new State Prosecutor’s Office for Organised Crime and Corruption. In its March 2021 opinion, the Venice Commission acknowledged the public demand for reform but critically assessed the proposals. The plans concerning the SPO were subsequently abandoned. Revised amendments to the Law on State Prosecutor’s Service were prepared following limited informal consultations including two round tables with active involvement of political parties, academia and NGOs. In its May 2021 urgent follow-up opinion, the Venice Commission welcomed the proposals aiming to mitigate the risk of politicisation and of conflict of interest within the Prosecutorial Council through new ineligibility criteria for its members and by stipulating that the one additional lay member would be nominated by NGOs and endorsed by the Parliament. These positive elements, however, did not justify the early termination of mandate of all members of the Council with the entry into force of the May 2021 amendments (their mandate would regularly terminate in January 2022), which is not in line with the Venice Commission recommendations and raises concerns as regards judicial independence. This is even more problematic since the new lay members continue to be voted in by a simple majority in Parliament – an issue on which the Venice Commission had already provided recommendations in 2014 and 2015 respectively and which remains to be addressed. It is essential for Montenegro to address these issues in order to avoid reversing the earlier achievements in the area of justice reform. Additional guarantees need to be put in place to mitigate the risks undue political influence over Prosecutorial Council that results from the election by simple Parliamentary majority of its five lay members. One specific solution proposed by the Venice Commission was for one of the five lay members to be appointed by the academic and by the legal community (the Bar), in addition to the member nominated by NGOs. A request for review of constitutionality of the May 2021 amendments, lodged by the Prosecutorial Council in June 2021, is pending before the Constitutional Court. After entry into force of the May 2021 amendments to the Law on State Prosecution Service, the procedure for appointment of a new Prosecutorial Council was launched in June 2021. In August 2021, the Speaker of Parliament proclaimed a new Prosecutorial Council that functions in incomplete composition until the appointment of the five lays members that is pending in Parliament. Broad political consensus on these pending appointments will be key to prevent politicisation of the Council and undue political influence over it. After the expiry of the mandate of the previous composition of the Judicial Council in 2018, the temporary anti-deadlock mechanism, introduced in 2018 continues to apply for a third year already due to inability to secure qualified majority in Parliament for election of the 4 non-judicial members. Following earlier resignations of two judicial members of the Council, two new members were elected in February 2021. After the resignation of the President of the Judicial Council in 2019, the President of the Supreme Court in December 2020 and the dismissal of the Minister of Justice, Human and Minority Rights in June 2021, the Council continues operating in incomplete composition. This undermines its capacity to exercise certain of its important competencies and all possible steps need to be taken for the Council to fully resume its functions. The operational capacity of both Councils secretariats continues to improve, but needs to be further strengthened. The 2021 budget of the Judicial Council was reduced by 16% compared to the previous year to EUR 1.38 million and the budget of the Prosecutorial Council by 30% to EUR 469,000. Both Councils still need to assume budgetary and financial management functions. The process of gradually transferring budgetary planning and execution to courts and prosecution offices is still at an early stage. The Ministry of Finance is yet to recognise courts and prosecution offices as budgetary units. In September 2020, the State Audit Institution (SAI) issued a negative opinion on the regularity of operations of the Judicial Council for 2019 and a conditioned opinion on the financial audit with regard to the judiciary’s annual report. The two Councils still need to step up efforts to improve the transparency of their work, including by publishing fully reasoned decisions on promotions, appointment and disciplinary cases. Transparency improved slightly in the case of the Judicial Council, while it has decreased in the case of the Prosecutorial Council. The Prosecutorial Council needs to demonstrate a more proactive approach in addressing issues within the prosecutors' organisation, including with respect to professional performance of the heads of state prosecutor's offices and state prosecutors, their accountability, and to protect the reputation of the prosecutorial profession. The allegations of politically motivated actions by the SPO require credible, independent, transparent and effective institutional response. 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 on state-sponsored apartments or loans under favourable conditions granted by the previous governments to members of the judiciary and prosecution, including senior ones and those dealing with politically sensitive cases, continue to raise concerns. Out of the seven court presidents re-appointed for at least a third term between 2019 and 2020, the President of the Supreme Court and three basic court presidents resigned in December 2020 and January 2021. Four more basic court presidents serving at least a third term remain in office. Three public calls for the election of a new President of the Supreme Court were unsuccessful. One basic court president was elected in early 2021; the procedure for election of further two basic court presidents is pending. In June 2021, following the entry into force of the amendments to the law on State Prosecution Service, the Parliament suspended the ongoing procedure for selection of the Supreme State Prosecutor and the Prosecutorial Council published a new public call for candidates. In the same month, the Prosecutorial Council appointed a new acting Supreme State Prosecutor after the previous one retired. After cancelling the vacancy announcements for 11 heads of prosecution offices, initiated in 2019, the Prosecutorial Council published a new call in January 2021. The selection procedure was completed for 10 heads of prosecution offices, while the appointment of the head of basic prosecution office in Podgorica was suspended after the amendments to the Law on State Prosecution Service entered into force. In December 2020, the Constitutional Court elected its new President for a three-year mandate. Following the retirement of two judges in January 2021, the Court operates in incomplete composition with 5 out of 7 judges. The procedure for the election of the two Constitutional Court judges is pending before the Parliament where qualified majority is required. The random allocation of cases is foreseen by the Law on courts, and implemented automatically through the judicial information system PRIS. However, limitations in very small courts remain, while PRIS has not been introduced in the misdemeanour courts. In 2020, 1 274 cases were delegated among the courts, including 746 cases delegated at the level of basis courts and 528 cases delegated between the two high courts. In the absence of clear criteria, the practice of reallocating large numbers of cases between courts to reduce backlogs undermines the right to a lawful judge.

In July 2020, the Parliament enacted amendments to the Law on courts and to the Law on State Prosecution Service, harmonising both laws with the 2018 Law on judicial cooperation in criminal matters. No presidential pardons were granted in 2020 (compared to one in 2019). Accountability The promotion and enforcement of ethics and standards of professional behaviour of judges and prosecutors is hampered by limited track records and lack of proactivity by both Councils. In 2020, disciplinary proceedings were launched in four cases. In one case, the disciplinary liability of a judge was established and a fine of 20% salary reduction for three months was imposed. One initiative was dismissed, and one rejected. In the first half of 2021, two further proceedings were opened. In one case, disciplinary liability of a judge was established resulting in a sanction of 4-monthly 40% salary reduction. In April 2021, the Judicial Council temporarily suspended a basic court judge due to pending criminal proceedings on suspicion of issuing illegal court decisions. In 2020, one disciplinary proceedings was initiated against a public prosecutor and one further proceedings in early 2021. In one of these cases disciplinary liability was established and sanctioned by a fine. In 2020, there were 13 reports of alleged violations of the code of ethics for judges and further 15 by June 2021. Of the eight cases completed in 2020, in one case, a violation was established by the ethical commission, while no such violation was found in the four cases completed by mid-2021. Two cases were referred to disciplinary prosecutor. During 2020, five initiatives of alleged violations of the code of ethics of public prosecutors were examined and further three in 2021. Violations were found in two cases. The system for detecting breaches of integrity rules needs to be made more effective, objective, consistent and proportionate and ensure due follow-up of all cases that give grounds for disciplinary or ethical responsibility. A legal remedy against decisions of the ethical commissions of both Councils has yet to be introduced by the law. The decisions of the Prosecutorial and Judicial Councils remain insufficiently motivated and case-law is yet to be developed. In 2020 and early 2021, judicial inspections were conducted in accordance with the annual plans and irregularities were found in one misdemeanour court, three public bailiffs’ offices and two notaries’ offices. No irregularities were found in prosecution offices. The Ministry’s capacity in this area needs to be enhanced. While two new inspectors were hired in 2020, due to retirements, only one judicial inspector out of four foreseen, and the chief judicial inspector, were employed in June 2021 in the respective department of the Ministry of Justice and Human and Minority Rights. New code of ethics for notaries and the code of ethics of court interpreters and translators were developed and adopted. The self-regulatory roles of the chambers and professional associations of legal professions must be further enhanced. Professionalism and competence Montenegro organises single nationwide competitions for judges and prosecutors. In December 2020, the Administrative Court annulled the 2019 decision on selection of candidates for basic court judges due to procedural irregularities. The repeated selection procedure was finalised in March 2021. Further efforts are required to address in a credible manner these types of challenges. In 2020, two judges were promoted to higher-level judicial positions, while four judges were voluntarily reassigned. As example of good practice, the Judicial Council has started publishing the names of candidates who apply for the judicial positions. In January 2021, four state prosecutors were promoted to a higher state prosecutor's office, while one state prosecutor was permanently voluntarily reassigned to another basic state prosecutor's office. In 2020, 23 judges were evaluated, 15 under the regular evaluation procedure (compared to 55 in 2019). Following the resignation of the Supreme Court President, the Judicial Council has not yet started with the process of evaluation of judges for 2021. According to its interpretation of the law, the assessment cannot be performed until a new President of the Supreme Court is elected who should chair the respective commission. This narrow interpretation prevents adequate and timely promotion of judges and the election of courts’ presidents. In 2020, no public prosecutors were evaluated under the regular evaluation procedure, while two prosecutors were evaluated for the purpose of promotion and seven at the end of their four-year mandates. Until June 2021, one special prosecutor was evaluated under the regular procedure and three state prosecutors after two years in office. Professional evaluation of prosecutors needs to be more thorough, objective, and in line with the assessment criteria revised in 2017. Any revision of the existing rules and criteria for evaluation of judges and prosecutors should not depart from the established principles. The interpretation of legal conditions for old-age retirement of judges and prosecutors is disputed after the 2020 Law on pensions insurance lowered the general age requirement for acquiring the right to pension, deviating from provisions in the general labour law. Both the Judicial and the Prosecutorial Councils consider that the new Law on pensions does not apply to them and the Judicial Council’s request for review of constitutionality of the Law on pensions is pending before the Constitutional Court. In May 2021, the Bar Association of Montenegro declared a complete general strike of lawyers, due to their objection to the implementation of the Law on fiscalisation. The strike lasted until end of July, and led to postponement of hearings in all courts and seriously affected a number of proceedings, including urgent ones. The disciplinary panel of the Bar Association initiated proceedings against one lawyer who broke the strike to represent a person deprived of liberty. Quality of justice In 2021, the Judicial Training Centre (JTC) was allocated a budget of EUR 419,999, 30% less than in 2020 and below the statutory minimum. While the centre continued to be financially supported by the EU and other international donors, its autonomous and self-sustainable functioning will need to be ensured. The functioning and staffing levels continued to improve. The centre has gradually adapted to the epidemiological situation and moved its training activities online. Its administrative, managerial, strategic planning, communication and financial management capacities need to improve further. Its regular cooperation and communication with the Judicial and Prosecutorial Councils is yet to be established. The role of the Centre’s Programming Council has improved, but its current approach to annual training programming needs to be replaced by a comprehensive training needs assessment, which should adequately cover also the judicial values and skills. The Centre participates in the activities offered by the European Judicial Training Network (EJTN) as an observer. In 2020 and by mid-2021, 37 members of the judiciary and the Centre’s secretariat participated in EJTN activities. Full implementation of instructions for collecting statistical data in compliance with the guidelines of the European Commission for the Efficiency of Justice (CEPEJ) remains a challenge. 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 October 2020, the ICT justice development programme for the period 2021-2023 was adopted. Although the Ministry of Justice and Human and Minority Rights is a key institutional actor for the implementation, the Ministry’s reorganisation in early 2021, downgrading the organisational status of the Directorate for ICT Justice and Data Security to a service for judicial ICT raised concerns with respect to allocation of sufficient capacities for the implementation. A new act on reorganisation is under preparation that should restore the status of the ICT directorate. In 2020, the Ministry of Justice developed a centralized judicial web-portal integrating portals of judicial and prosecutorial institutions to a single unit. The ICT sub-system for courts is expected to be fully operational by the end of 2022. Until the new system is 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 has security loopholes and does not operate consistently. Software module for electronic archiving in judicial institutions has been developed and tested. In October 2020, the Judicial Training Centre started developing its integral information system as online portal for registered users, which should include a platform for e-learning. The budget for judiciary for 2021 is EUR 36.5 million (2020: EUR 39.1 million) and remains above the regional per capita average. Montenegro has 50 judges (60% of whom are women) and 19 prosecutors (over 62% of whom are women) per 100,000 inhabitants, far above the European average of 21 judges and 12 prosecutors, as well as 2.6 times as many judicial staff per inhabitants as the European average. Collection of court fees remains much lower compared to the region. The positive trend in alternative dispute resolution continued. The implementation of the new law, which provides inter alia for compulsory recourse to alternative dispute resolution for certain types of cases, started in August 2020. All relevant bylaws were adopted and the Centre for Mediation was transformed into a Centre for Alternative Dispute Resolution (ADR). The number of cases referred to the Centre for ADR has significantly increased, both by courts and by citizens. In 2020, 3 567 cases were referred to the Centre for Mediation (2019:917 cases), and 1 269 cases were settled through mediation (2019:403 cases). By mid-2021, the number of cases referred to the Centre for ADR (3,744), both by courts and parties already exceed the total number for 2020 During the same period, 618 cases were solved. Further 2,819 cases (2019: 2,743) were submitted to the Agency for Peaceful Settlement of Labour Disputes in 2020, 1,663 of which were resolved (2019: 1,258. Efficiency In 2020, 118 913 cases were pending before Montenegrin courts, including 80 723 new cases; 83 206 cases were resolved. Montenegro continued to take concrete measures to reduce the backlog of old cases, which were given priority status. In 2020, 5 896 cases older than three years have been resolved, while at the end of the year there were still 3 036 cases older than three years pending before Montenegrin courts. The disposition time, i.e. the average time from filing to decision, was 150 days in basis court cases (2019: 143 days) and 147 for commercial cases (2019:116 days). The disposition time before the Administrative Court (438 days) remains the cause for concern. As regards the enforcement, 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 1 600 by the end of 2020. In 2020, 66 402 cases were filed to bailiffs' offices (2019: 61 127) with 42,283 cases pending at the end the year (2019:40 019). The centralised case management system for bailiffs continues to be used consistently, guaranteeing data reliability. The enforcement of court decisions remains a challenge.

In October 2020, the Ministry of Justice published an analysis on the needs of the rationalization of the judicial network, which recommended the merge of the smallest courts to larger courts close to their current territorial jurisdiction. The analysis should serve as a basis for preparation of a new strategy for rationalisation of the judicial network. However, no concrete steps have been taken in this respect during the reporting period. 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 Montenegro continued to implement the war crime prosecution strategy, but with limited results. The 2019 conviction of one defendant for crimes against civilian population in Kosovo * became final in 2020. There are currently five cases in the preliminary phase of investigation concerning war crimes committed on the territories of Bosnia and Herzegovina, and of Croatia. One new investigation was opened in 2021, while one was closed for lack of grounds for prosecution. In November 2020, the co-operation with the International Residual Mechanism for Criminal Tribunals (IRMCT) resulted in the handover of a file concerning individuals believed to be Montenegrin nationals who are suspected of serious war crimes. On the basis of this file, the Special Prosecutor’s Office opened a preliminary investigation in one case, formed a special investigative team and undertook activities to identify the potential suspects and to request mutual legal assistance from the prosecution service of Bosnia and Herzegovina. SPO revised one of the finally adjudicated war crimes cases and contacted IRMCT and the family of the victims with the aim to obtain new information or evidence. Montenegro ensures good cooperation with the neighbouring countries and the IRMCT. In 2020, the SPO acted upon 11 letters rogatory from Bosnia and Herzegovina, Serbia, Croatia and the Kosovo Specialist Chambers and upon further nine in the first half of 2021. Investigation and adjudication of war crimes cases faces legal and practical obstacles, including with respect to specific evidentiary requirements of war crimes trials, witness protection and insufficient capacities within the prosecution and the judiciary. Montenegro needs to further steps up its efforts as a matter of priority to fight impunity for war crimes, to address the legal and practical obstacles and to demonstrate a more proactive approach 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 not been brought so far. During 2020 and first half of 2021, 52 claims for compensation were pending before the courts, all concerning the "Morinj" case. Of those, 41 were fully or partially upheld, awarding the total non-pecuniary damage of EUR 230 700. In 16 out of 41 cases, the judgments became final. Proceeding are ongoing in remaining 13 cases. All these claims are treated as priority by the courts. Compensation can only be awarded in cases where a criminal conviction for war crimes has become final. In February 2021, Berane Municipal Council rejected an initiative to name a street after the former commander of the Army of Republika Srpska, convicted for war crimes. In June 2021, Parliament supported the motion of the Prime Minister to dismiss the Minister of Justice, Human and Minority Rights after he failed to agree to established facts about the crime of genocide being committed in Srebrenica. On the same day, Parliament adopted a resolution on genocide in Srebrenica. Fight against corruption Montenegro has achieved some level of preparation. Limited progress was achieved, with last year’s recommendations partially met through further results on track records on repression and prevention of corruption and the Anti-Corruption Agency’s efforts to address its challenges. The track record on seizure and confiscation of assets and final court decisions in corruption cases needs to be further improved. The Anti-Corruption Agency (ACA) under the new management demonstrated a more proactive approach, especially with regard to stepping up its communication and outreach activities towards the general public, media and civil society and addressing the remaining caseload from previous years. Despite this positive trend, challenges related to the Agency’s independence, priority-setting, selective approach and quality of its decisions remain and require sustained efforts in this respect. In the coming year Montenegro should in particular: ®review the legal framework in the area of prevention of corruption to address the issues identified through its application, in order to strengthen the track record on prevention of corruption and the Agency’s performance in this respect; ®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 The track record of investigations, prosecutions and final convictions in cases of high-level corruption increased but remains to be further consolidated. In 2020, Special Public Prosecutor's Office (SPO) opened investigations into criminal offences of high-level corruption in eight cases against 35 persons and 8 legal entities (2019: six cases against 15 individuals and one legal entity). In the first half of 2021, eight investigations against 28 individuals and seven legal entities were opened. Further high-level corruption cases are in the phase of preliminary investigation. The investigated cases concern inter alia privatisation, fraud in relation to investment and development loans, tax fraud and misappropriation of coastal land. Suspected individuals include former ministers (one currently serving as MP and another one as ambassador), high-level public officials, majority owner of a commercial bank and the bank’s CEO, a judge and director of a public company. Three indictments (2019: 5) were lodged for the criminal offence of high-level corruption against 18 persons and three legal entities in 2020, and further two indictments against eight individuals and one legal entity in the first half of 2021. The financial investigations have been launched in four cases against nine persons in 2020 and in four cases by mid-2021 against 30 individuals and two legal entities (2019: 4 cases against 29 persons). In the ‘envelope affair’, the High Court initially accepted the part of the indictment against the businessman involved in the case and five other persons for creating a criminal organisation engaged in money laundering. The indictment against the former Mayor of Podgorica and the adviser to the President of Montenegro in the same case was subsequently confirmed upon appeal by the prosecution. Three final and enforceable judgements (2019: 4) were issued for high-level corruption in 2020, resulting in two convictions of three persons. In 2021, one conviction based on a plea bargain agreement became final and one further convicting judgment was issued in another case but is not yet final. In December 2020, Montenegro sent a new request to Serbia for the extradition of the former President of the State Union of Serbia and Montenegro, after the reply to its request from April 2019 had not been answered. The track record on the confiscation of assets for criminal offences in the field of high-level corruption remains moderate. In 2020, one residential unit of 193 m2 was confiscated. In the first half of 2021, assets were temporary frozen in two cases. The track record on prevention of corruption is slowly improving, but sanctions imposed in general still remain below the statutory minimum and do not have a preventive or deterrent effect. In 2020, the ACA instituted 510 proceedings (469 proceedings for violating the provisions of the Law on prevention of Corruption, and 41 for violating the provisions of the Law on financing of political entities and election campaigns) before misdemeanour courts. A total of 394 proceedings were completed in 2020 (including those from previous years), in 81% of them fines were imposed. These amounted to EUR 58 370 for violation of the Law on prevention of corruption, and EUR 23 192 for violation of the Law on financing of political entities and election campaigns. Further 652 proceedings were instituted by mid 2021, and in the proceedings terminated during the same period fines in the total amount of EUR 62,475 were imposed. In 2020, the ACA further issued 42 direct misdemeanour orders (2019:40) and 131 in the first six months of 2021 alone. In four cases, ACA requested seizure of material gain before the competent courts, resulting in one confiscation valued EUR 2,892 in 2020 and in two confiscations in the amount of EUR 8,654 in the first half of 2021. Based on 135 opinions (2019:158) and 63 decisions (2019:72) issued by the Agency in 2020 on incompatibility of functions and conflict of interests, 41 public officials resigned (2019:57), whilst one (2019: four) was dismissed. In 2020, the ACA has received 8,108 (2019:8149) income and asset declarations and verified 966 reports (2019:911), exceeding its annual plan by around 10%. The optional consent for accessing bank accounts for the purpose of verifying the data submitted in the declarations was provided by 53,5% of public officials. In 2020, the Agency initiated 138 (2019:119) administrative proceedings and violations were established in 60 (2019:54) cases. Sanctions were imposed in 10 cases (2019:17), seven in the form of a warning, two in the form of salary deduction and one in the form of initiation of the disciplinary procedure. In December 2020, the Agency started to monitor the lifestyle of public officials, using publicly available data and media reports. The ACA carried out planned control and verification of 872 (2019:839) public officials, 20 of them high-ranking officials, including two ministers. The Agency issued 21 misdemeanour orders (2019:7) totalling EUR 3,832. Concerning funding of political parties and electoral campaigns, in 2020, 46 political parties (out of 59) submitted annual financial reports, while 51 submitted decisions regarding amounts of membership fees for 2020. All reports submitted were published on the Agency’s website. In November 2020, the Agency published the report on its oversight of the election campaign for the 30 August elections. The Agency carried out control of 43 political entities/electoral lists as well as 36 opened election accounts. In total, 144 complaints were submitted and processed. In 11 cases, the ACA found violation of the Law on financing of political entities and electoral campaigns, initiated proceedings in 12 cases and forwarded seven complaints to other competent authorities for further examination. In the course of the election campaign, the ACA submitted 74 warnings to political parties and initiated 44 misdemeanour proceedings, 89% less in comparison with campaign for 2016 parliamentary elections. The Agency developed a specific PR plan for the campaign and organised three roundtables with the civil society, media and political parties as well as regular ‘open-door’ days with interested NGO representatives. In the first quarter of 2021, the Agency oversaw the local elections in Niksic on 14 March in line with its competences. According to the final report issued in June, the Agency verified 54 reports of political parties and issued 33 warnings. In total, 105 proceedings were conducted related to irregularities and suspicions of violations of the Law. The Agency performed 10 on spot inspections and was part of the working group established by the Ministry of Interior during election day in Niksic. It organised four meetings with NGO representatives. Five complaints were submitted for Agency’s further investigation, four of them were forwarded to other competent bodies. One misdemeanour procedure was initiated and 30 misdemeanour orders were issued. The Agency oversaw the local elections in Herceg Novi on 9 May in accordance with its work plan which included eight on spot inspections, as well as co-operation with civil society and media. In 2020, the State Audit Institution published positive audit reports on annual financial statements from 2019 for eight political entities, whilst regularity audits resulted in one positive, one negative and six conditional reports. The SAI further forwarded three cases to the prosecution following completed audits of public bodies and public companies. While the quality of its reports is improving, the fact that it only forwards its suspicions of fraud and corruption related offences to the prosecution once it completes its audit, negatively affects the efficiency of the criminal response to these cases. In 2020, the Agency received three requests for whistle-blower protection, including one requesting physical protection, which was subsequently referred to and denied by law enforcement services. The Agency finalised the work on the three request from 2019, establishing the damage caused on whistle-blower in two cases. In 2020, the Agency received 75 reports on threats to public interest (2019:110), 31 reports were processed and threats on public interest were established in three cases. Twelve reports were forwarded to the prosecution, whereby four reports were rejected and investigation on the other reports is underway. The prosecution established irregularities in one case from 2016 concerning the private sector. On integrity plans, in 2020, 679 reports on the implementation of the integrity plans for 2019 were submitted, and currently 98% of public authorities have integrity plans in place. The Agency prepared the report on the implementation of the integrity plans, which also includes assessment of the efficiency and effectiveness of all integrity plans and recommendations for their further improvement.

The lobbying register still contains only six persons. In 2020, the Government approved a draft rulebook on the organisation of the lobbying exams. The new commission on lobbying is yet to be appointed, after the mandate of the former one expired. The draft code of ethics for top executive officials and the guidelines on how to implement the anti-corruption rules prepared already in 2020 is still not adopted. The results in this area remain very limited. In 2020, the Agency submitted two non-binding legal opinions, on the draft Law on amendments to the Law on civil servants and state employees, and on the Law on sports. In the first quarter of 2021, it submitted its opinion on the proposal of the Law on Public Prosecutor's Office and on the proposal of the Law on Prosecutor's Office for organized crime and corruption as well as its opinion on the existence of threats to public interest by the Minister of Justice at that time. In April 2021, the Agency initiated proceedings to determine potential conflict of interest with regard to Minister of Justice and his role in drafting the Law on freedom of religion, following a NGO complaint. Institutional framework Prevention of corruption Currently, the Agency employs 55 people. In March 2021, the rulebook on the systematisation of the Agency, was adopted and foresees a total of 75 posts in the ACA organisational structure. In 2020, the Agency enhanced its communication activities, including strengthening its presence on social networks and media as well organising joint meetings with CSOs. The work has also started on addressing the remaining caseload from previous years. In November 2020, the basic court of Podgorica annulled the Parliament’s decision to dismiss one member of the Council of the ACA in 2019 due to incomplete establishment of facts, application of the law and legal reasoning. With another ruling in November 2020, the basic court of Podgorica found