Commission staff working document - Montenegro 2009 progress report accompanying the Communication from the Commission to the European Parliament and the Council - Enlargement Strategy and Main Challenges 2009-2010 {COM(2009) 533 final}
Date: 2009-10-14
Institutions: European Commission
Subjects: Montenegro, accession to the European Union, enlargement of the Union, pre-accession strategy, report

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 14.10.2009 
SEC(2009) 1336 

COMMISSION STAFF WORKING DOCUMENT 

MONTENEGRO 2009 PROGRESS REPORT 

accompanying the 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Enlargement Strategy and Main Challenges 2009-2010 

{COM(2009) 533 final} 

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

Introduction .................................................................................................................. 4 

Preface.......................................................................................................................... 4 

Context ......................................................................................................................... 4 

Relations between the EU and Montenegro................................................................. 5 

Political criteria ............................................................................................................ 6 

Democracy and the rule of law .................................................................................... 6 

Human rights and the protection of minorities .......................................................... 13 

Regional issues and international obligations ............................................................ 18 

Economic criteria ....................................................................................................... 20 

The existence of a functioning market economy ....................................................... 20 

The capacity to cope with competitive pressure and market forces within the Union
.................................................................................................................................... 25 

4. 

European standards .................................................................................................... 27 

4.1. 

Internal market ........................................................................................................... 27 

4.1.1.  Free movement of goods............................................................................................ 27 

4.1.2.  Movement of persons, services and right of establishment ....................................... 29 

4.1.3.  Free movement of capital........................................................................................... 30 

4.1.4.  Customs and taxation ................................................................................................. 31 

4.1.5.  Competition................................................................................................................ 32 

4.1.6.  Public procurement .................................................................................................... 32 

4.1.7. 

Intellectual property law ............................................................................................ 33 

4.1.8.  Social policies, employment and public health policy............................................... 34 

4.1.9.  Education and research .............................................................................................. 35 

4.1.10.  WTO issues ................................................................................................................ 36 

4.2. 

Sectoral Policies ......................................................................................................... 36 

4.2.1. 

Industry and SMEs..................................................................................................... 36 

4.2.2.  Agriculture and fisheries ............................................................................................ 37 

4.2.3.  Environment............................................................................................................... 38 

4.2.4.  Transport policy ......................................................................................................... 40 

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4.2.5.  Energy ........................................................................................................................ 42 

4.2.6. 

Information society and media................................................................................... 43 

4.2.7.  Financial control......................................................................................................... 44 

4.2.8.  Statistics ..................................................................................................................... 44 

4.3. 

Justice, freedom and security ..................................................................................... 45 

4.3.1.  Visa, bordermanagement, asylum and migration....................................................... 45 

4.3.2.  Money laundering ...................................................................................................... 47 

4.3.3.  Drugs .......................................................................................................................... 49 

4.3.4.  Police.......................................................................................................................... 49 

4.3.5.  Fighting organised crime and terrorism ..................................................................... 50 

4.3.6.  Protection of personal data......................................................................................... 52 

STATISTICAL ANNEX.......................................................................................................... 53 

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COMMISSION STAFF WORKING DOCUMENT 

Montenegro 2009 Progress Report 

1. 

INTRODUCTION 

1.1. 

Preface 

Since March 2002 the Commission has reported regularly to the Council and the Parliament 
on progress made by the countries of the Western Balkans region. 

The  Commission  issued  progress  reports  focusing  exclusively  on  Montenegro  since  2006. 
This report: 

–  briefly describes relations between Montenegro and the Union; 

–  analyses  the  political  situation  in  Montenegro  in  terms  of  democracy,  the  rule  of  law, 

human rights, protection of minorities and regional issues; 

–  analyses the economic situation in Montenegro; 

–  reviews  Montenegro’s  capacity  to  implement  European  standards,  i.e.  to  gradually 
approximate  its  legislation  and  policies  to  the  acquis,  in  line  with  a  Stabilisation  and 
Association Agreement and the European Partnership priorities. 

This  report  covers  the  period  from  early  October  2008  to  mid-September  2009.  Progress  is 
measured on the basis of decisions taken, legislation adopted and measures implemented. As a 
rule,  legislation  or  measures  which  are  being  prepared  or  awaiting  parliamentary  approval 
have not been taken into account. This approach ensures equal treatment across all reports and 
permits an objective assessment. 

The  report  is  based  on  information  gathered  and  analysed  by  the  Commission.  Many 
additional  sources  have  been  used,  including  contributions  from  the  government  of 
Montenegro and from the EU Member States, European Parliament reports1
 and information 
from various international and non-governmental organisations.  

The  Commission  draws  detailed  conclusions  regarding  Montenegro  in  its  separate 
communication on enlargement2, based on the technical analysis contained in this report. 

1.2. 

Context 

Montenegro  is  a  potential  candidate  for  EU  membership.  The  Stabilisation  and  Association 
Agreement  between  Montenegro  and  the  EU  was  signed  in  October  2007.  An  Interim 
Agreement  was  signed  on  the  same  date  and  entered  into  force  in  January  2008.  The 

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The rapporteur for Montenegro until September was Mr. Marcello Vernola. Since September, the new 
rapporteur is Mr. Charles Tannock. 
Enlargement Strategy and Main Challenges 2009-2010 (COM(2009) 533 of 14.10.2009). 

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Commission  delegation  in  Montenegro  has  been  operational  since  November  2007.  In 
December  2008  Montenegro applied for membership of the European Union. In April 2009 
the  Council  decided  to  implement  the  procedure  laid  down  in  Article  49  of  the  Treaty  on 
European  Union.  Accordingly,  the  Commission  was  requested  to  submit  to  the  Council  its 
Opinion on the application by Montenegro. The Commission started work on its Opinion by 
sending Montenegro a comprehensive list of questions relating to the Copenhagen criteria and 
the  conditions  set  for  the  stabilisation  and  association  process.  This  report  in  no  way 
prejudges  the  analysis  to  be  made  by  the  Commission  in  its  Opinion  on  Montenegro’s 
application for EU membership. 

1.3. 

Relations between the EU and Montenegro 

Montenegro is participating in the Stabilisation and Association Process. Implementation of 
the  Interim  Agreement  (IA)  has  continued.  Ratification  of  the  Stabilisation  and 
Association Agreement (SAA) progressed. By 1 September 2009 22 EU Member States had 
confirmed ratification of the SAA. Montenegro is continuing to implement its commitments 
under the SAA and to prepare for full implementation of the SAA once it is ratified. This is a 
key priority of the European Partnership. The bodies provided for by the Interim Agreement 
operated smoothly.  

The EU is providing guidance to the Montenegrin authorities on reform priorities as part of 
the European Partnership.3 Implementation of the European Partnership by Montenegro is 
progressing.  Dialogue  on  European  integration  issues  continued  in  the  enhanced  permanent 
dialogue and in the bodies provided for by the Interim Agreement. In March 2009 a political 
dialogue was held between the EU (troika) and Montenegro. 

The  visa  facilitation  and  readmission  agreements  between  Montenegro  and  the  European 
Community  continued  to  be  implemented.  In  the  framework  of  the  visa  liberalisation 
dialogue,  Montenegro  has  made  important  progress  in  the  areas  of  justice,  freedom  and 
security  and  has  fulfilled  the  majority  of  the  roadmap  benchmarks.  Therefore,  the 
Commission proposed in July 2009 lifting the visa obligation for Montenegrin citizens. This 
proposal is subject to Montenegro meeting the outstanding criteria before the Council of the 
EU takes its decision, after consultation of the European Parliament. 

As  a  potential  candidate  for  EU  membership,  Montenegro  aligned  itself  with  121  CFSP 
declarations from a total of 128 relevant declarations adopted by the EU during the reporting 
period. 

Since  2007  Montenegro  has  been  receiving  pre-accession  financial  assistance  from  the 
Instrument for Pre-Accession Assistance (IPA), which is being implemented by the European 
Commission  delegation  in  Podgorica  since  September  2008.  Montenegro  has  continued  to 
prepare for decentralised management of EC aid. 

In 2009 a total of €33.3 million was allocated to Montenegro. The main focus areas are rule of 
law, including justice and police reform, labour and safety at work, environmental protection 
railways, State financial management and audit, and alignment to internal market legislation. 
EU financial support has been provided to civil society development under the Civil Society 
Facility. Under the national IPA programme for 2009, €2.2 million have been earmarked for 

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Council Decision 2007/49/EC. 

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projects aiming to enhance civil society organisations contribution to the social, economic and 
political  development  of  Montenegro,  in  areas  such  as  social  welfare,  special  education, 
preventive  health,  inter-cultural  dialogue,  transparency  and  accountability  of  the  public 
administration, judiciary and parliament.  

In response to the economic crisis, an IPA crisis package has been created, comprising €200 
million for the Western Balkan region which are expected to leverage investments of at least 
€1  billion,  co-financed  by  the  partner  financial  institutions.  The  country  will  benefit  from  a 
share  of  multi-beneficiary  funds  for  competitiveness,  SMEs,  energy  efficiency  and  banking 
sector  regulation.  In  addition,  the  country  benefits  from  Montenegro-earmarked  multi-
beneficiary funds to accelerate the infrastructure investments. €5 million were committed to 
the  Infrastructure  Project  Facility  for  a  project  on  water  infrastructure  in  mountain 
municipalities.  

Provisional  application  of  Protocol  8  of  the  SAA  started  in  November  2007.  As  a  result, 
Montenegro can join Community programmes which are open to Western Balkan countries. 
Montenegro  participates  in  the  7th  Framework  Programme  for  research  and  technological 
development and in the specific programme on entrepreneurship and innovation, which is part 
of the Competitiveness and Innovation Framework Programme (2007-2013). Montenegro is at 
the  final  stage  of  its  preparations  to  participate  in  the  European  Community’s  Culture 
Programme. 

2. 

POLITICAL CRITERIA 

This  section  examines  the  progress  made  by  Montenegro  towards  meeting  the  Copenhagen 
political  criteria,  which  require  stability  of  institutions  guaranteeing  democracy,  the  rule  of 
law,  human  rights  and  respect  for  and  protection  of  minorities.  It  also  monitors  regional 
cooperation,  good neighbourly  relations with enlargement countries and Member States and 
compliance with international obligations, such as cooperation with the International Criminal 
Tribunal for the former Yugoslavia (ICTY). 

2.1. 

Democracy and the rule of law 

Constitution 

Establishment of the legal and institutional set-up required for an independent country, which 
is a key European Partnership priority, is almost complete. One of the last pieces of legislation 
required,  the  Law  on  State  Property  which  regulates  ownership  and  transfer  of  State  and 
municipal property, was adopted. The deadline for adoption of legislation provided for by the 
Law on Implementation of the Constitution was further extended to April 2010.  

Parliament 

In  January  2009  parliament  adopted  a  decision  to  call  early  elections,  which  were  held  in 
March  2009.  According  to  the  international  election  observation  mission  led  by  the 
OSCE/ODIHR,  the  elections  met  almost  all  international  and  European  commitments. 
However,  remaining  shortcomings  and  challenges  still  need  to  be  addressed.  The  electoral 
framework has to be harmonised with the Constitution, including on minority representation. 
Further work is also needed on ensuring full separation between State and party structures in 
the  electoral  administration  and  ensuring  transparent  allocation  of  parliament  seats.  A  new 

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Law  on  State  Property  provides  a  framework  ensuring  clear  separation  of  State  and  party 
premises, including during elections, but has yet to be implemented.  

Voter  turn-out  in  the  parliamentary  elections  was  less  than  in  the  previous  elections  but 
remained  high  at  66%.  The  coalition  for  European  Montenegro  led  by  outgoing  Prime 
Minister Milo Djukanovic increased its majority and won 48 out of 81 seats.  

There  has  been  some  progress  in  the  work  and  functioning  of  parliament.  Work  on 
strengthening political consensus, particularly on European integration issues, has continued. 
The  National  Council  for  EU  Integration  continued  to  contribute  to  EU  integration.  The 
government reported on progress with EU integration at every session of the Committee for 
International Relations and European Integration. This further raised the level of involvement 
of this committee in the integration process. As regards control mechanisms, this committee 
called ministers to hearings on several occasions.  

Parliament  adopted  124  laws,  which  is  a  30%  increase  compared  to  2007.  This  intense 
activity  is  welcome  as  Montenegro  continues  to  complete  its  legal  framework  following 
independence  and  taking  into  account  alignment  with  the  acquis  communautaire.  However, 
parliament's  capacity  to  scrutinise  legislation  and  monitor  its  implementation  needs  to  be 
enhanced. 

In December 2008 a new set of rules on organisation of the parliamentary administration were 
adopted.  The  rulebook  provides  for  establishment  of  six  more  ‘bureaus’  within  the 
Parliament's Administration Service, including a Bureau for EU Integration. One of its tasks 
is  to  give  an  independent  assessment  of  alignment  of  draft  legislation  with  the  acquis.  The 
new rules provide for increasing the parliamentary administration’s human resources. A part 
of these resources has already been made available. Further efforts have been made to provide 
for staff training.  

Steps have been taken to improve use of the working bodies and observance of the rules of 
procedure.  Efforts  have  been  made  to  bring  parliament  closer  to  citizens,  for  example  by 
means  of  visits  and  brochures.  Parliament  continued  its  work  on  oversight  of  defence  and 
security bodies, inter alia by organising a hearing of the director of the police in December 
2008.  This  practice  needs  to  continue  and  expand.  Civilian  and  democratic  oversight  of 
defence and security bodies is a key priority of the European Partnership.  

The Committee for International Relations and EU Integration has upgraded its contacts with 
the  European  Parliament.  It  holds  the  chairmanship  of  the  conference  of  the  parliamentary 
committees  for  EU  integration  of  Western  Balkan  countries  for  2008-2009.  In  this  context, 
Montenegro successfully hosted a well-attended regional parliamentary conference in Cetinje 
in March 2009. 

Parliament’s work and operation still need to be consolidated in several areas. Planning needs 
to  be  improved.  Inspection  and  control  mechanisms  are  underused.  The  supervisory  role  of 
parliament generally remains weak.  

At present administrative and other resources required for parliament’s work, including expert 
support, remain insufficient. Staff and expert support for committees are rudimentary.  

The  temporary  solution  for  TV  coverage  of  parliamentary  debates,  following  the 
disagreement between the government and opposition on this topic, expired in March 2009. 

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No  solution  has  been  proposed  for  the  new  parliament’s  mandate.  Until  then  public  TV 
committed  to  cover  parliamentary  debates  in  line  with  an  earlier  arrangement  with  political 
parties.  

Neither the newly established Bureau for EU integration nor the Committee for International 
Relations  and  EU  Integration  yet  have  sufficient  capacity  to  scrutinise  independently 
alignment of draft legislation with the EU acquis.  

Further  progress  remains  necessary  on  mature  and  consensual  functioning  of  parliament. 
From October 2008 to March 2009 two opposition parties boycotted parliamentary work due 
to  the  government’s  recognition  of  the  independence  of  Kosovo4.  This  boycott  hindered 
contribution of a diversity of views for development of new legislation. 

Overall,  there  have  been  some  improvements  in  the  functioning  of  parliament.  The 
parliamentary parties’ overall commitment to working on the basis of consensus, in particular 
on  EU  integration,  remains  a  solid  basis  for  further  democratic  development.  The  National 
Council for EU Integration has yet to achieve its full potential Further efforts are needed to 
enhance  parliament’s  efficiency  as  a  legislative  and  oversight  body.  Aligning  electoral 
legislation with the Constitution remains a priority. 

Government 

Following the March 2009 parliamentary elections, a new government headed by the outgoing 
Prime Minister was elected by parliament in June 2009. It has three Deputy Prime Ministers 
(DPMs), amongst them a new DPM for the political system, four new ministries (Ministry for 
EU integration, Ministry for Environment and Urban Planning, Ministry of Labour and Social 
Welfare and Ministry of Health).  

Building  on  the  2009  work  programme  of  the  previous  government,  the  new  government 
programme  gives  priority  to  European  and  Euro-Atlantic  integration,  dealing  with  the 
consequences  of  the  economic  crisis  and  ensuring  sustainable  growth  in  Montenegro, 
including raising the standard of living, balanced regional development and key infrastructure 
projects. The fight against organised crime and corruption along with judicial reform continue 
to be government priorities.  

The  government  maintained  a  strong  pace  for  adoption  of  new  legislation.  Stakeholders, 
including  civil  society  and  international  organisations,  were  continuously  involved  in 
developing  new  legislation.  However,  new  legislation  has  not  always  been  based  on  a 
thorough  needs  assessment  and  on  identification  of  priorities  and  of  means  for  full 
implementation. 

The  management  structures  of  most  government  bodies,  including  ministries,  have  not 
substantially changed and in many cases remain over-centralised. Further strengthening of the 
middle-management level would make decision-making more effective. The human resources 
of  the  Secretariat  for  EU  Integration  (SEI)  and  line  ministries  have  not  been  substantially 
improved,  due  to  government  cost-cutting  measures  in  response  to  the  economic  crisis. 
Progress remains necessary on monitoring implementation of policies and laws and receiving 
feedback. 

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Under UNSCR 1244/1999. 

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The Deputy Prime Minister and the SEI consistently raised the profile of the EU integration 
process  and  related  requirements  as  Montenegro  moved  forward  with  its  EU  membership 
application.  The  SEI  made  some  progress  on  issues  related  to  translation  of  EU  texts  and 
efforts have been made to harmonise vocabulary used by State bodies on EU issues. A plan 
was adopted to improve government cross-checking of draft legislation with the EU acquis by 
means of an article-by-article  check  by the SEI. In  June 2009 the SEI was  converted into a 
fully  fledged  Ministry  for  European  Integration  and  the  post  of  the  Deputy  Prime  Minister 
was converted to Minister for European Integration to head the new ministry. The new set-up 
is expected to streamline coordination on European integration issues. 

Awareness  of  EU  integration  issues  within  line  ministries  was  further  raised  by  organising 
round tables on EU affairs for civil servants. The EU offices in line ministries have become 
more effective as they have grown more familiar with the demands of their role. In general, 
the  standard  of  contributions  by  the  Montenegrin  authorities  to  regular  meetings  with  the 
European Commission under the stabilisation and association process has been maintained. 

As regards local government, the 2009 action plan on local government reform was adopted 
in  March  2009.  A  joint  central/local  government  commission  reviewed  draft  legislation  on 
local  governance.  However,  implementation  of  reforms  remains  limited.  Implementation  of 
the  2008  local  government  action  plan,  under  the  supervision  of  a  joint  central/local 
government commission, has not advanced very far. No report on implementation of the 2008 
action plan has been adopted. 

Overall,  the  government  has  continued  to  put  together  the  structures  needed  as  a  result  of 
independence.  The  framework  for  coordination  of  European  integration  activities  has  been 
made  more  effective.  Human  resources  in  ministries  and  relevant  agencies  to  address 
European  integration  issues  need  to  be  further  strengthened.  Local  self-government  reform 
remains a key challenge. 

Public administration 

Some  progress  has  been  made  on  upgrading  the  country’s  administrative  capacity  and  on 
reforming the public administration, a key European Partnership priority.  

A Law on State Property adopted in January 2009 defined State and municipal property and 
clarified the ownership of premises used by State bodies. A Law on Conflicts of Interest of 
Public Servants adopted in December 2008, provided a detailed definition of public officials 
and  increased  transparency  requirements  in  the  public  administration.  A  commission  to 
oversee  compliance  with  the  new  Law  was  appointed  in  July  2009.  A  Law  providing  for 
internal audit units in government bodies was adopted in November 2008, but implementation 
has not yet started. These legal provisions strengthen the overall framework for transparency 
and  accountability.  Establishment  of  the  central  human  resources  register  by  the  human 
resources  management  authority  (HRMA)  is  almost  complete.  The  HRMA  continued  to 
conduct  training  programmes  for  civil  servants  Recruitment  procedures  to  the  public 
administration  are  generally  based  on  public  vacancy  announcements,  but  the  concept  of 
merit-based recruitment and promotion of civil servants is not provided for in the legislation 
and is not implemented in practice. Several activities have been organised to raise awareness 
of job opportunities in the public sector. Overall, the HRMA lacks the administrative capacity 
to promote and monitor implementation of the Civil Service Law.  

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The  Ombudsman’s  Office  dealt  with  541  complaints  in  2008,  around  80  %  of  which  were 
resolved.  As  in  previous  years,  the  majority  concerned  the  work  of  courts,  in  particular  the 
long  duration  of  court  proceedings,  followed  by  the  public  administration,  the  prosecution 
service  and  municipalities.  Most  recommendations  made  by  the  Ombudsman’s  Office  were 
followed  up.  A  Deputy  Ombudsman  for  children's  rights  has  been  appointed  in  July  2009. 
However,  the  Law  on  the  Ombudsman  has  still  to  be  fully  aligned  with  the  Constitution. 
Further  enhancement  of  the  office's  capacities  is  required,  as  well  as  an  improvement  to  its 
premises' accessibility.  

Implementation  of  the  national  training  strategy  for  municipalities  has  begun.  However, 
implementation of the 2008 local government action plan has been limited, while progress on 
building  up  local  authorities’  administrative  and  management  capacity  remains  slow.  No 
progress  has  been  made  on  municipalities’  capacity  for  financial  management,  including 
budgeting,  public  procurement  and  allocation  of  grants.  Lack  of  computerisation  in  many 
municipalities hinders efficiency and increases the risk of corruption.  

Overall,  some  progress  has  been  made  on  strengthening  the  legislative  framework  for  the 
public administration. There was some progress on human resources management but, due to 
the  government’s  cost-cutting  measures,  there  has  been  no  overall  strengthening  of  human 
resources. Significant efforts are required to establish a professional, accountable, transparent 
and merit-based civil service, free of political interference. Further reform is required in the 
fields  of  financial  control,  public  procurement  and  licensing  procedures.  To  this  effect, 
internal  control  mechanisms  need  to  be  established  throughout  the  public  administration. 
Efforts  need  to  continue  to  prepare  fully  for  implementation  of  the  SAA  by  upgrading 
administrative capacity in the areas covered by the agreement.  

Judicial system 

Montenegro  has  made  progress  in  the  area  of  judicial  reform,  a  key  European  Partnership 
priority.  The  action  plan  to  implement  the  2007–2012  judicial  reform  strategy  has  been 
further followed up. The second report on implementation of the action plan was adopted in 
March 2009. 

A  Law  on  the  Constitutional  Court  has  been  adopted  with  the  objective  of  clarifying  the 
precise  scope  of  the  court's  mandate.  The  new Criminal  Procedure  Code  (CPC)  intended  to 
increase  the  overall  efficiency  of  the  prosecution  has  been  adopted.  In  particular,  it  extends 
the powers of the public prosecution office, makes prosecution more efficient by placing the 
pre-trial  procedure  in  the  hands  of  the  public  prosecutor,  introduces  a  reversed  burden  of 
proof for confiscation of criminal assets and extends use of special investigative measures to 
corruption  crimes.  Preparatory  work  on  the  application  of  the  CPC  has  started,  including 
specialised training for prosecutors, judges and the police.  

Progress  has  been  made  on  implementation  of  key  legislation  intended  to  increase  the 
professionalism and independence of judges and prosecutors. The Prosecutorial Council was 
elected, adopted its rules of procedure and became operational. The remaining vacancy in the 
Judicial Council, nominated by the parliamentary opposition, has been filled. Both the Judicial 
and the Prosecutorial Councils have begun to establish a track record of decisions on selection 
of  judges,  deputy  prosecutors  and  prosecutors  and  on  disciplinary  proceedings.  During  the 
reporting period, nine judges have been suspended and one has been dismissed by the Judicial 
Council. Progress has also been made in reducing the backlog of cases. 

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The overall professional capacity of judges and prosecutors has been strengthened by training, 
including on anti-corruption. Some training on carrying out investigations has been provided 
to  prosecutors.  Special  departments  in  the  high  courts  for  combating  organised  crime, 
corruption,  war  crimes  and  terrorism  established  in  September  2008,  started  dealing  with 
cases.  The  capacity  of  the  special  prosecutor’s  office  for  fighting  organised  crime  has  been 
bolstered by additional deputy prosecutors, training and equipment. 

Investigation and court proceedings in Montenegro's limited number of domestic war crimes' 
cases have made headway. An out-of-court settlement has been made regarding the survivors 
and  families  of  the  victims  of  deportations  of  Bosnian  civilians  in  1992  and  compensations 
have been awarded.  

However,  there  have  been  no  further  developments  on  supplementing  the  Constitution  with 
implementing  provisions  in  line  with  European  standards  covering  the  judiciary  and  the 
prosecution service, where there still is political interference. Serious concerns regarding the 
independence of judges and prosecutors persist. Scope for political  influence exerted on the 
prosecution exists through the appointment of the Prosecutorial Council by parliament and the 
parliament’s  powers  to  appoint  and  dismiss  the  State  prosecutors.  The  unclear  division  of 
responsibility  for  supervision  of  the  courts  between  the  Ministry  of  Justice  and  the  Judicial 
Council, the participation of the Minister of Justice as a member of the Judicial Council and 
the  election  and  dismissal  of  the  president  of  the  Judicial  Council  by  parliament,  constitute 
further causes for concern regarding the independence of the judiciary.  

The  efficiency  of  the  judicial  system  needs  to  be  further  enhanced.  Judicial  enforcement 
procedures remain inefficient while lengthy court procedures remain a cause for concern. The 
misdemeanour reform strategy needs to be implemented in a way which will avoid creating 
further  backlogs.  The  new  Law  on  the  Right  to  Trial  within  Reasonable  Time,  granting 
compensation  to  citizens  whose  trial  exceeds  a  set  time-frame,  has  entered  into  force,  but  a 
track record has yet to be established. The reliability of court data needs to be improved. The 
computerised  case  management  system  has  yet  to  be  introduced  in  all  courts.  Random 
allocation of cases in courts has not yet been fully implemented and computerised.  

Training programmes to prepare the prosecution service for its role in the pre-trial procedure 
under  the  new  Criminal  Procedure  Code  must  be  further  pursued.  Modern  techniques  for 
financial  investigations  are  still  insufficiently  used.  The  special  prosecutor’s  office  needs 
further  strengthening  in  the  form  of  expertise,  qualified  support  staff  and  equipment.  The 
capacity of the Ministry of Justice for judicial cooperation has been somewhat strengthened. 
However,  its  internal  organisation  and  procedures,  skilled  human  resources  and  IT  systems 
need  to  be  further  improved.  The  ongoing  reform  of  the  juvenile  justice  system  has  yet  to 
yield results.  

Overall,  Montenegro  is  moderately  advanced  in  the  area  of  judicial  reform.  There  has  been 
some  progress  through  the  enhancement  of  the  legal  framework  and  the  implementation  of 
legislation.  Further  efforts  are  required  for  the  consolidation  of  the  independence, 
accountability, integrity and efficiency of the judicial system.  

Anti-corruption policy  

There has been progress in the fight against corruption, which is a key European Partnership 
priority.  

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The strategic framework for fighting corruption has been fine-tuned to place greater emphasis 
on  monitoring  implementation  of  anti-corruption  measures  from  the  action  plan  against 
organised crime and corruption. The national commission for monitoring implementation of 
the action plan produced its fourth and fifth report. 

The legal framework for the fight against corruption has been strengthened with the adoption 
of  the  new  Criminal  Procedure  Code  in  July  2009,  the  Law  on  Prevention  of  Conflicts  of 
Interest  in  Performing  Public  Functions  in  December  2008,  the  Law  on  Internal  Financial 
Control  in  November  2008  and  the  Law  on  Financing  the  Election  Campaigns  for  the 
President, Mayors and Presidents of Municipalities of Montenegro in January 2009.  

Progress  has  been  made  on  further  enhancing  preventive  and  investigative  anti-corruption 
bodies.  The  resources  of  the  Directorate  for  Anti-Corruption  Initiatives  (DACI)  have  been 
strengthened  and  its  co-operation  with  the  police  has  been  enhanced.  Furthermore,  it 
intensified  its  training  activities  for  administrative  bodies  and  the  public,  as  well  as  the 
realisation  of  reports  and  researches  related  to  corruption.  The  human  resources  and 
equipment  of  the  special  prosecutor’s  office  for  fighting  organised  crime,  corruption, 
terrorism and war crimes have been built up. The specialised high court units for organised 
crime  and  corruption  have  also  been  reinforced.  Anti-corruption  training  is  available  to  the 
police, border police, customs officers, prosecutors and judges.  

Internal  control  departments  within  the  Police  Directorate  are  starting  to  build  a  record  of 
action  against  corruption.  During  the  reporting  period,  twelve  corruption  charges  were 
brought against thirteen police officers as a result of internal investigations. In the judiciary, 
criminal charges for corruption and abuse of office were brought against three judges. 

DACI, NGOs and the media conducted activities to raise awareness of corruption. Two NGOs 
actively  participated  in  the  work  of  the  national  commission  for  fighting  corruption  and 
organised crime and in screening related draft legislation  

However, corruption continues to be a cause of concern in Montenegro. The national action 
plan  against  organised  crime  and  corruption  needs  to  be  compiled  on  the  basis  of  risk 
assessments and to include priorities for action. The country’s national legislation is not yet 
fully aligned with the international anti-corruption instruments ratified by Montenegro. Some 
Group  of  States  against  Corruption  (GRECO)  recommendations  have  yet  to  be  fully 
implemented.  Anti-corruption  action  plans  on  the  level  of  local  administration  have  been 
adopted by eleven out of t 21 municipalities but implementation has begun only in two. 

Montenegro  still  lacks  strong  and  independent  supervisory  authorities  to  evaluate  asset 
declarations  and  financing  of  political  parties  and  to  monitor  and  exercise  control  over 
expenditure  in  the  public  sector,  notably  on  public  procurement,  spatial  planning  and 
privatisation. A supervising authority to monitor and ensure compliance with the Law on the 
Financing  of  Political  Parties  and  the  Law  on  the  Financing  of  Election  Campaigns  for  the 
President, Mayors and Presidents of Municipalities of Montenegro is yet to be established. As 
a result, political parties' compliance with the law is only supervised in relation to allocations 
provided by the state budget. Private donations remain uncontrolled, due to the absence of a 
supervising authority. The new Law on the Prevention of Conflict of Interests in Performing 
Public Functions, adopted in December 2008 includes some improvements but also has some 
serious shortcomings and loopholes. Most importantly, it provides for a significant exemption 
for  parliamentarians,  who  are  allowed  to  hold  executive  powers  in  public  companies  or 
executive  agencies.  The  appointment  of  the  supervising  authority  by  the  parliament  raises  a 

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cause for concern. Further, the sanctioning powers of the Commission are limited in scope, as 
well  as  legally  problematic  especially  with  regard  to  politicians.  The  new  Commission  has 
been appointed in July 2009. Its Rules of Procedure are yet to be adopted. 

The administrative bodies for detecting and investigating corruption still lack sufficient staff 
with appropriate skills. This applies to the Police Directorate’s internal control unit and unit 
for  combating  organised  crime  and  corruption  and,  to  a  lesser  extent,  to  the  prosecution 
service. 

A track record of corruption cases in courts is being built but the number of final convictions 
remains  low.  The  investigative  capacity  of  law  enforcement  bodies  remains  weak  due  to 
shortfalls  in  expertise,  specialised  equipment  and  working  conditions.  There  is  still  a 
significant lack of expertise in modern financial investigation. In 2008 and the first quarter of 
2009,  the  Police  Directorate  for  organised  crime  and  corruption  carried  out  financial 
investigations in five cases which had elements of corruption. Inter-agency cooperation needs 
to  be  further  enhanced,  as  it  is  still  based  primarily  on  bilateral  agreements  and  informal 
arrangements.  A  national  coordination  unit,  intended  to  bring  together  the  expertise  and 
databases  of  the  police,  customs  authorities,  tax  authorities  and  the  administration  for 
prevention of money-laundering and financing of terrorism is yet to be created. 

Overall,  good  progress  has  been  made  on  strengthening  the  strategic,  legislative  and 
administrative  framework.  However,  corruption  remains  prevalent  in  many  areas  and 
continues to be a particularly serious problem. The commitment of the authorities has not yet 
been  backed  by  consistent  implementation  of  anti-corruption  legislation.  While  there  is  a 
positive trend, investigation capacities and co-ordination of law-enforcement agencies remain 
weak.  There  is  insufficient  supervision  in  the  areas  of  financing  of  political  parties  and 
conflict  of  interests.  A  solid  track  record  of  convictions  in  corruption  cases  remains  to  be 
established, particularly in cases of high-level corruption. 

2.2. 

Human rights and the protection of minorities 

Observance of international human rights law 

As  regards  ratification  of  human  rights  instruments,  some  progress  has  been  made.  In 
March 2009 Montenegro ratified the Optional Protocol to the UN Convention against Torture 
(OPCAT)  Montenegro  applied  to  join  the  UN  Human  Rights  Council  in  February  2009.  In 
June 2009, it signed the Council of Europe Conventions on Exercise of Children's rights, on 
Protection  of  children  against  sexual  exploitation  and  sexual  abuse  and  on  the  Adoption  of 
children.  It  has  not  yet  ratified  the  Council  of  Europe  Convention  on  the  avoidance  of 
statelessness in relation to State succession and the UN Convention on the rights of persons 
with disabilities and its optional protocol. 

In  January  2009  Montenegro  appointed  a  government  agent  before  the European  Court  of 
Human Rights.  

Regarding  promotion  and  enforcement  of  human  rights,  direct  implementation  of 
international  human  rights  standards  remains  restricted  to  cases  of  conflicts  with  domestic 
legislation.  The  Constitution  contains  no  explicit  provision  that  ratified  international  human 
rights  treaties  should  be  applied  in  compliance  with  the  practice  of  international  bodies  in 
charge  of  interpreting  them.  The  application  of  the  European  Convention  on  Human  Rights 
(ECHR) with regard to the period before independence has not yet been fully clarified. 

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The  right  to  appeal  on  the  basis  of  the  European  Convention  on  Human  Rights  against 
violations which occurred prior to Montenegro’s independence has not yet been clarified. 

During  the  reporting  period,  the  European  Court  of  Human  Rights  (ECtHR)  issued  one 
judgement finding that Montenegro had violated the ECHR. A total of 249 new applications 
were made to the ECtHR since October 2008. As of September 2009, there were 404 cases 
pending before the Court. 

Overall,  Montenegro  has  made  some  progress  on  improving  observance  of  international 
human rights law. Further efforts to align legislation with international human rights standards 
and to improve judicial enforcement are needed. 

Civil and political rights 

Some  progress  has  been  made  on  prevention  of  torture  and  ill-treatment  and  the  fight 
against  impunity.  The  government  adopted  an  action  plan  for  the  prevention  of  torture, 
which aims to improve the conditions of detainees, prisoners or patients in neuro-psychiatric 
institutions. 

Allegations of torture and ill-treatment during arrest and detention continue to be reported. In 
2008, the Ombudsman received a higher number of complaints about police ill-treatment than 
in the previous year. In six cases, the Ombudsman recommended disciplinary proceedings or 
criminal investigations against police officers. Civil society organisations reported an increase 
in alleged police assaults in 2008. Overall, torture and ill-treatment remain a sporadic problem 
in Montenegro. 

The  disciplinary  procedure  for  abuse  of  office  and  exceeding  official  powers  defined  in  the 
Law  on  Civil  Servants  and  Public  Employees  is  not  fully  observed.  A  need  remains  to 
strengthen  internal  control  mechanisms  and  take  steps  to  accelerate  judicial  intervention. 
International standards and judicial practice for combating torture need to be fully applied. 

As  regards  access  to  justice,  the  long  duration  of  court  procedures  remains  a  cause  for 
concern. The right of citizens to a trial within reasonable time is protected by law, yet due to 
deficiencies in the procedure, most claims have been rejected. Free legal aid remains limited. 
The Law on Free Legal Aid has not yet been adopted. The overall backlog of court cases has 
been reduced, but further efforts are necessary.  

Some  progress  has  been  made  regarding  the  prison  system.  New  facilities  for  specific 
categories  of  detainees  have  been  opened.  Video  monitoring  of  detention  areas  has  been 
introduced  in  some  police  units.  Some  progress  has  been  made  on  monitoring  of  detention 
facilities by external bodies. 

However, most detention facilities in Montenegro are not yet differentiated and specialised for 
specific categories of detainees. Detention facilities lack sufficient capacity for all detainees. 
Conditions  in  some  police  detention  facilities  are  unsatisfactory.  Staff  in  detention  facilities 
lacks training. Reform of the probation/parole system remains pending. Overall, conditions of 
detention facilities are not yet in line with international standards and as recommended by the 
Ombudsman.  

Some  progress  can  be  reported  on  freedom  of  expression.  A  lengthy  trial  of  a  high-profile 
murder case of a daily newspaper owner has been concluded and a conviction has been made. 
Some progress  was  also  achieved  on  investigation  of violence against journalists. However, 

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there  is  still  cause  for  concern.  New  incidents  of  mistreatment  have  been  reported. 
Defamation  cases  against  journalists  continue  to  be  used  as  a  means  of  exerting  pressure 
against  independent  journalism  and  courts  impose  disproportionate  fines  in  such  cases. 
Intimidating  statements  by  state  officials  on  the  role  of  media  and  NGOs  are  a  cause  of 
apprehension. The Law on Free Access to Public Information is still being implemented with 
uneven results. 

There were set-backs in the implementation of the Law on Electronic Communications due to 
the  delay  in  establishing  the  Agency  for  Electronic  Communications  and  to  a  disagreement 
between the Agency for Electronic Communications and the Broadcasting Agency on powers 
regarding  frequency  allocation.  Delays  in  frequency  allocation  procedures  raise  concerns 
about political interference. The independence of the members of the governing council of the 
Agency  for  Electronic  Communications  remains  questionable,  as  they  are  appointed  by  the 
government. 
remains 
unsatisfactory. Media transparency remains insufficient.  

the  Law  on  Electronic  Communications 

Implementation  of 

Regarding freedom of assembly and association, there are no restrictions to report.  

Some  progress  has  been  made  on  the  role  of  civil  society  organisations.  Several  NGOs 
continue  to  have  a  high  public  and  political  profile.  A  strategy  for  cooperation  between  the 
government and NGOs was adopted in January 2009. Civil society organisations continue to 
be  consulted  by  the  government  and  are  represented  in  the  National  Council  for  European 
Integration.  However,  the  mechanism  by  which  civil  society  members  are  elected  to  the 
National Council for European Integration has to be clarified. 

The number of registered NGOs has increased to 4,600, but only a small minority of them are 
active.  Civil  society  groups  do  not  yet  participate  in  the  Radio/Television  Council  of 
Montenegro. 

As  regards  freedom  of  religion,  relations  between  the  major  religious  groups  (Orthodox, 
Islamic and Roman Catholic) remain satisfactory. However, the conflict between the Serbian 
and  Montenegrin  Orthodox  churches  in  Montenegro  over  official  recognition  and  property 
ownership continues.  

Overall,  there  has  been  some  progress  in  the  area  of  civil  and  political  rights.  However, 
further efforts are necessary on prevention of ill-treatment, freedom of expression and access 
to justice. The capacity and differentiation of detention facilities need to be enhanced.  

Economic and social rights 

Limited  progress  has  been  made  on  protection  of  women’s  rights,  including  the  issue  of 
domestic  violence  and  protection  of  victims.  A  government  campaign  on  violence  against 
women was launched in 2008. The speed of processing cases in courts and the attitude within 
the police teams specialising in family violence have improved somewhat.  

The  number  of  cases  of  domestic  violence  reported  to  the  police  is  still  small.  However, 
domestic violence remains widespread. The Law on Protection from Violence in the Family 
has  still  not  been  adopted.  There  is  a  lack  of  financial  support  for  organisations  providing 
services to victims or for the victims themselves. The protection given to victims of violence 
remains  unsatisfactory  and  municipal  social  care  centres  still  need  to  be  improved.  Sexual 
harassment, as defined in the Labour Law, needs to be duly prosecuted. 

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In the field of gender equality, some progress has been achieved. Implementation of the action 
plan  for  gender  equality  (2008-2012)  has  started.  The  Office  for  Gender  Equality  has 
established  a  forum  for  dialogue  with  civil  society  and  a  university  pilot  project  on  gender 
studies. Government ministries and bodies have started reviewing documents from a gender 
equality angle. Women remain well represented at working and middle management levels in 
the  public  administration.  A  law  which  will  prohibit  discrimination  based  on  gender  is 
pending. 

Women remain underrepresented in decision-making processes and in leading positions both 
in the public administration and in the private sector. Only 6% of top positions in the 2006-
2009 government mandate were occupied by women. In the new government mandate there is 
one woman in a ministerial position. In parliamentary elections in March 2009 only 14% of 
candidates were women, while in the new parliament only 11% of members of parliament are 
women. More than 80% of the illiterate population are women. Overall, the Law on Gender 
Equality has not yet resulted in mainstreaming gender equality policy in parliament, ministries 
and across the public administration. Efforts in this field must be intensified.  

In  practice,  limited  progress  has  been  made  on  women’s  rights.  Women  remain 
underrepresented  in  top  public  and  private  sector  positions.  It  is  necessary  to  continue 
improving  protection  against  and  raising  awareness  of  gender-based  discrimination,  in 
particular on the labour market. 

Limited progress has been achieved concerning children’s rights. A Deputy Ombudsman for 
children’s  rights  has  been  appointed  in  July  2009.  The  council  on  child  rights  has  begun  to 
meet on an ad hoc basis. A local day-care centre for children with disabilities was opened and 
three local centres are being constructed. Efforts were made to improve school enrolment of 
Roma children and avoid their marginalisation.  

However,  further  reforms  remain  necessary.  There  is  still  a  gap  between  the  goals  of  the 
national  strategy  on  development  of  child  and  social  protection  and  implementation  in 
practice. The Law on Child and Social Protection has not yet been brought into line with the 
UN  Convention  on  the  Rights  of  the  Child  and  with  international  practice.  The  council  on 
child rights has no systematic work programme. Capacity to monitor children’s rights remains 
weak.  Child  protection  from  violence  is  inadequate,  as  most  cases  of  violence  against  and 
between  children  remain  unreported.  Capacity  for  data  collection  in  the  social  and  judicial 
sectors needs to be further strengthened. Development of alternative, community-based care 
services needs to be accelerated. 

Concerning  socially  vulnerable  persons  and/or  persons  with  disabilities,  some  progress 
has been achieved. Laws on travel concessions for people with disabilities and on movement 
of blind persons with the assistance of guide dogs were adopted. Construction of a centre for 
professional rehabilitation and integration of people with disabilities and of several centres for 
disabled  children  has  begun.  However,  the  Law  on  Professional  Rehabilitation  and 
Employment  of  Disabled  People,  which  places  an  obligation  on  employers  to  adapt  their 
premises to the needs of employees with disabilities, is not sufficiently enforced. 

Regarding labour rights and trade unions, the Law on Strikes was brought into line with the 
Constitution, expanding the right to strike to public administration employees.  

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In  the  area  of  anti-discrimination  policies,  adoption  of  the  Law  on  Prohibition  of 
Discrimination  is  still  pending.  Lesbian,  gay,  bisexual  and  transgender  (LGBT)  people  are 
marginalised and discriminated against in Montenegrin society.  

Regarding property rights, a Law on Private Property Relations was adopted in March 2009. 
It  provides  for  equal  treatment  of  foreign  citizens  with  Montenegrin  citizens  on  acquiring 
movable  and  immovable  property.  A  Law  on  State  Property,  which  clearly  defines  the 
property  belonging  to  the  State  and  municipalities,  was  adopted.  However,  property 
restitution  has  been  slow.  The  Ombudsman’s  Office  reported  fewer  complaints  regarding 
restitution of property in 2008, than in previous years. 

Overall,  there  has  been  limited  progress  in  the  area  of  economic  and  social  rights.  Major 
legislation such as the Law against Discrimination and the Law on Protection from violence 
in  the  Family  is  yet  to  be  adopted.  Domestic  violence  remains  a  cause  for  concern.  The 
protection  of  women  against  all  forms  of  violence  needs  to  be  considerably  strengthened. 
Implementation  of  strategies  and  legislation  addressing  vulnerable  groups  needs  to  be 
accelerated. 

Minority rights, cultural rights and protection of minorities 

Overall,  minority  rights  are  respected.  There  is  a  broad  and  adequate  legal  framework 
safeguarding them, including cultural rights, on the basis of the constitution. Yet, the Law on 
Minority Rights and Freedoms has not yet been harmonised with the Constitution regarding 
minority representation. While preserving the existing tolerance and mutual respect between 
Montenegro’s  varied  ethnic  groups,  there  is  a  need  to  adopt  legislation  in  order  to  address 
outstanding  issues  in  this  area.  Also  the  constitutional  provision  on  ‘proportionate 
representation’ of national minorities in public services needs to be clarified. 

Montenegro  needs  to  resolve  the  status  of  around  16,200  displaced  persons  from  Kosovo. 
Their re-registration has been announced by the authorities. Displaced persons from Kosovo 
face  great  difficulties  in  gaining  access  to  employment,  due  to  restrictions  imposed  by  the 
Law on Employment and Work of Foreigners. Construction of accommodation for displaced 
Roma from Kosovo was initiated in June 2008. Overall, displaced persons from Kosovo live 
in  very  difficult  economic  and  social  conditions  partly  due  to  their  unresolved  legal  status. 
Another  particular  cause  for  concern  is  the  situation  of  the  Konnik  refugee  camp  close  to 
Podgorica.  

A  re-registration  of  displaced  persons  from  Croatia  and  Bosnia  and  Herzegovina  which  has 
been recently completed, has found 5,648 of them residing in Montenegro. A legal framework 
to address their status has been put into place. Displaced persons can either be registered as 
refugees  if  they  fulfil  the  requirements  of  the  Law  on  Asylum,  and  subsequently  be  able  to 
apply for Montenegrin citizenship, or as foreigners with permanent residence under the Law 
on Foreigners. Montenegro must ensure the effective implementation of these laws. Between 
March  2008  and  September  2009,  a  total  of  270  displaced  persons  acquired  Montenegrin 
citizenship  by  naturalisation.  The  European  Partnership  priorities  regarding  abolition  of  all 
discriminatory provisions in key fields, affecting refugees and displaced persons and creating 
the  conditions  for  integration  of  those  who  choose  to  remain  in  Montenegro,  have  not  yet 
been fulfilled. 

The situation of the Roma, Ashkali and Egyptian (RAE) communities remains a cause for 
concern.  A  census  conducted  by  the  national  statistical  office  in  October  2008,  has  found  a 

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total  of  more  than  10,000  RAE  in  Montenegro.  However,  this  figure  is  disputed  by  Roma 
representatives.  The  government  is  cooperating  with  international  organisations  and  civil 
society  groups  on  projects  to  improve  the  situation  of  the  RAE  population  in  line  with  the 
strategy under the Decade of Roma inclusion initiative. Regarding access to education, there 
has been some progress on enrolment of RAE pupils in primary and secondary schools and on 
addressing marginalisation in schools. The Ministry of Education and Science has dispersed 
RAE pupils across schools to avoid segregation, introduced a policy of affirmative action to 
secure  acceptance  of  RAE  students  in  secondary  schools,  conducted  an  awareness-raising 
campaign  to  encourage  acceptance  of  RAE  pupils,  and  special  training  for  teaching  RAE 
pupils.  

However,  further  efforts  are  needed  to  improve  the  situation  of  the  RAE  population.  As 
regards education, scholarship funding for RAE students remains at a token level and almost 
fully  dependent  on  external  donors.  The  unemployment  rate  among  the  Roma  population 
remains around 80%, while the illiteracy rate is around 70% and even higher among women. 
There remains a lack of appropriate housing for the RAE community. Although the strategy 
recognises the lack of documentation and civil registration amongst the RAE population, only 
limited  efforts  have  been  made,  in  the  form  of  encouraging  local  authorities  to  register  the 
RAE  population.  It  is  estimated  that  a  big  percentage  of  the  RAE  population  currently  lack 
birth or citizenship certificates. The social and economic situation of the RAE population in 
Montenegro  remains  a  cause  for  serious  concern.  They  face  marginalisation  and  lack  of 
integration into society.  

Overall,  there  has  been  some  progress  on  strengthening  the  framework  for  minority 
protection.  However,  implementation  is  still  lagging  behind,  inter  alia,  due  to  the  lack  of 
reliable data and a relatively limited budget. Montenegro must effectively resolve the status of 
displaced persons and work on improving their access to economic and social rights, which 
remains  limited.  Roma  continue  to  face  very  difficult  living  conditions  and  discrimination, 
particularly  regarding  access  to  education,  social  protection,  health  care,  employment  and 
adequate housing. 

2.3. 

Regional issues and international obligations 

Satisfactory  cooperation  with  the  International  Criminal  Tribunal  for  the  former 
Yugoslavia (ICTY), a key European Partnership priority, is continuing.  

Investigation and court proceedings in Montenegro’s limited number of domestic war crimes 
cases made headway or were concluded in cooperation with other countries in the region. The 
"Kaluđerski  Laz"  and  "Morinj"5  trials  are  continuing.  In  April  2009  investigation  of  the 
"Bukovica"6  case  was  completed.  The  government  agreed 
to  pay  an  out-of-court 
compensation  settlement  to  the  survivors  and  families  of  the  victims  of  deportations  of 
Bosnian civilians in 1992. Several persons have been indicted for this crime. An investigation 
was  opened  by  the  Chief  Prosecutor  in  2009  concerning  possible  war  crimes  by  former 
Yugoslav army pilots in Dubrovnik in the 1990s. 

5 

6 

In  the  "Kaluđerski  Laz"  case,  charges  have  been  brought  against  eight  people.  The  victims  were 
civilians of Albanian origin. In the "Morinj" detention camp case, charges have been brought against six 
persons. 
In  the  Bukovica  case,  charges  have  been  brought  against  seven  persons.  The  victims  were  civilian 
muslims. 

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Montenegro maintains the 2007 bilateral immunity agreement with the United States granting 
exemptions from the jurisdiction of the International Criminal Court. This does not comply 
with the EU Common Positions on the integrity of the Rome Statute or the related EU guiding 
principles on bilateral immunity agreements. Montenegro needs to align with the EU position. 
Montenegro adopted a Law on Cooperation with the ICC in July 2009. 

There  has  been  little  progress  in  the  Sarajevo  Declaration  process  which  aimed  to  finalise 
the regional refugee return process by the end of 2006. While Montenegro continued to work 
to  a  greater  or  lesser  extent  on  its  roadmap,  there  has  been  limited  discussion  on 
implementation issues on either a bilateral or a regional basis. 

Regional cooperation and good neighbourly relations form an essential part of the process of 
moving  towards  the  European  Union.  Montenegro  is  actively  participating  in  regional 
initiatives,  including  the  South  East  European  Cooperation  Process  (SEECP)  and  will  take 
over  its  chairmanship  in  2010-2011.  Montenegro  is  also  actively  involved  in  the  Regional 
Cooperation  Council  (RCC).  In  2009  Montenegro  holds  the  chairmanship  of  the  Central 
European  Free  Trade  Agreement  (CEFTA)  and  also  participates  in  the  Energy  Community 
Treaty and the European Common Aviation Area Agreement (ECAAA).  

The Regional School for Public Administration (ReSPA) in Danilovgrad near Podgorica has 
become operational. 

Montenegro  has  continued  to  foster  good  bilateral  relations  with  other  enlargement 
countries  and  neighbouring  EU  Member  State  Italy.  Cooperation  with  neighbouring 
countries  intensified  particularly  in  the  areas  of  cross-border  cooperation  and  science  and 
technology.  

Relations  with  Albania  have  developed  further.  Agreements  on  cooperation  in  science  and 
technology and in culture were signed and concrete steps against organised crime taken. The 
construction of the joint border crossing point at Muriqan/Sokobine was completed.  

Relations  with  Bosnia  and  Herzegovina  have  further  intensified.  Following  the  signature  of 
the Agreement on cross-border cooperation, joint border patrols have been set up. Agreements 
on  cooperation  in  the  areas  of  culture,  education  and  science  as  well  as  a  readmission 
agreement have been signed.  

Cooperation  with  Croatia  has  been  further  strengthened.  An  agreement  on  protection  of 
minorities was signed. The joint working group on resolving property issues and the council 
on  economic  relations  both  held  meetings.  An  agreement  on  cooperation  in  science  and 
technology was signed. Progress has been achieved towards settling the bilateral border issue 
between  Croatia  and  Montenegro.  The  two  countries  have  been  co-operating  on  preparing 
their submission to the International Court of Justice on delimiting the border at Prevlaka. The 
temporary border agreement is functioning well. 

Cooperation  with  the  former  Yugoslav  Republic  of  Macedoniа  has  been  strengthened.  An 
agreement on dual citizenship was signed, as were agreements on cooperation on EU affairs, 
air  traffic,  tourism,  agriculture  and  protection  in  the  event  of  natural  disasters.  Defence 
cooperation  has  been  intensified.  Negotiations  on  an  agreement  on  social  security  are 
ongoing.  

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Relations  with  Serbia  continue  to  be  affected  by  the  Montenegrin  decision  to  recognise 
Kosovo’s  independence.  The  Montenegrin  Ambassador  was  declared  persona  non  grata  in 
October  2008.  A  new  Ambassador  was  accredited  to  Belgrade  in  September  2009. 
Cooperation  in  the  defence  sector  was  good  and  the  Serbian  Minister  for  Defence  visited 
Podgorica  in  February  2009.  The  Montenegrin  President  visited  Belgrade  in  May  2009. 
Economic  cooperation  remains  good.  On  the  basis  of  a  bilateral  agreement,  Serbian 
diplomatic  and  consular  missions  in  some  countries  continue  to  provide  services  to 
Montenegrin  citizens.  Negotiations  on  dual  citizenship  are  ongoing  but  progress  has  been 
limited.  Agreements  on  judicial  cooperation  and  joint  border  patrols  were  signed.  Police 
cooperation  in  the  fight  against  organised  cross-border  crime  was  strengthened.  Talks  on 
border demarcation are ongoing.  

Relations  with  Turkey  have  remained  good.  Agreements  were  signed  on  free  trade  and  on 
bilateral defence cooperation. 

Bilateral  relations  with  Italy,  Montenegro's  neighbouring  EU  Member  State,  have  further 
developed. The EU is Montenegro’s main trading partner. 

Overall, Montenegro has further improved its active cooperation in the region, by intensifying 
its participation in multilateral initiatives and organisations and by further fostering bilateral 
relations. 

3. 

ECONOMIC CRITERIA 

In  examining  the  economic  developments  in  Montenegro,  the  Commission’s  approach  was 
guided by the conclusions of the European Council in Copenhagen in June 1993, which stated 
that membership of the Union requires the existence of a functioning market economy and the 
capacity to cope with competitive pressure and market forces within the Union. 

3.1. 

The existence of a functioning market economy 

Economic policy essentials  

Montenegro submitted its third Economic and Fiscal Programme (EFP), covering the period 
2009-2011,  by  the  end  of  January  2009.  However,  its  assumptions  became  very  quickly 
outdated  due  to  the  crisis.  Yet,  the  fiscal  strategy  of  the  government  continued  to  focus  on 
keeping  the  budget  deficits  within  3%  of  GDP  in  both  2009  and  2010  despite  the  negative 
impact of the crisis and the cost of the measures adopted to mitigate its effects. Meanwhile, 
the government coalition partners overcame some of the previous discrepancies of views on 
economic  policy.  Overall,  the  domestic  consensus  on  economic  policy  essentials  has  been 
maintained. 

Macroeconomic stability  

The economy continued to grow strongly at around 8% in real terms in 2008 driven by strong 
demand and, on the supply side, by construction and services. However, at the end of 2008 
industrial  output  contracted  on  the  poor  results  of  manufacturing,  and  the  metal  industry  in 
particular.  This  sector  suffered  from  decline  in  external  demand  in  the  context  of  the 
international crisis and the subsequent collapse of commodity prices. In the first half of 2009 
the economy contracted by 3.5%, as the negative effects of the crisis extended to several key 
sectors  (i.e.  basic  metals,  financial  services,  and  construction).  Industrial  production 

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contracted on average by 20% year-on-year in the first six months of 2009, as manufacturing 
output  went  down  by  33%.  Only  three  manufacturing  industries  (chemicals,  foodstuffs  and 
printing)  and  the  utility  sector  expanded  in  the  first  half  of  the  year  compared  with  the 
previous one. On the other hand, after a bad spring the tourism industry recovered during the 
summer.  Yet,  as  a  consequence  of  the  robust  economic  growth  witnessed  during  most  of 
2008, Montenegro’s per capita income, measured in purchasing power standards (PPS), rose 
to  46%  of  the  EU27  average,  compared  with  41%  a  year  earlier.  Overall,  after  the  high 
growth in 2008, the economy contracted in 2009 mainly due to the impact of the global crisis 
on the real economy. 

In  2008,  the  current  account  deficit  remained  very  large  at  29%  of  GDP,  despite  the  strong 
cutback in merchandise imports (45% year-on-year) in the last quarter of the year due to the 
sharp deceleration of the banks’ lending activity. The surplus of the balance of services was 
on a declining trend. The factor income balance deteriorated in 2008, as compensation paid to 
the  increasing  number  of  foreign  workers  outpaced  incomes  from  Montenegrins  working 
abroad. The cool-down of the real estate market in 2008 resulted in a decline of FDI inflows 
by  17.4%  year-on-year.  Yet,  the  sizeable  outflows  associated  to  this  market  also  decreased, 
which  contributed  to  sustain  net  FDI  levels  at  17%  of  GDP.  Foreign  loans  increasingly 
covered  the  financing  gap  of  the  current  account  deficit.  The  moderation  of  both  domestic 
demand  and  imports  related  to  foreign  investments  continued  during  the  first  half  of  2009, 
resulting in a significant narrowing of the trade deficit by 36.6% year-on-year and a moderate 
contraction of the current account deficit to 22% of GDP (annualised). The faster decrease of 
FDI outflows by 53.2% over the year offset the decline in inflows (16.6%), so that on a net 
basis  FDI  still  expanded  to  16%  of  GDP,  covering  80%  of  the  current  account  deficit. 
Overall, as a consequence of the crisis, the large current account deficit  declined until June 
2009, while net FDI remained resilient. 

The  labour  force  survey  (LFS,  according  to  the  ILO  definition)  revealed  that  the 
unemployment rate declined by 3 percentage points to 16.8% during 2008. More recent data 
from  the  Employment  Agency  shows  that  the  official  unemployment  rates  for  2009  also 
continued  contracting  until  end-August.  Meanwhile  employment  continued  growing  during 
2009 by some 5% year-on-year. The unbalanced regional distribution of the workforce and its 
limited mobility remain a rigidity factor, favouring continued inflows of foreign workers. Yet, 
the government relies on the significant share of temporary non-resident workers to cushion 
imbalances  on  the  local  labour  market.  Overall,  labour  market  indicators  improved  on 
favourable seasonal effects, despite diminishing economic activity. 

In  2008  macroeconomic  stability  was  also  challenged  by  high  prices.  Yet,  after  peaking  in 
August  2008  close  to  10%,  the  average  annual  inflation  declined  to  7.4%  by  the  end  of  the 
year.  The  consumer  price  index  further  slowed  down  to  2.1%  year-on-year  in  July  2009  as 
housing and transport prices exerted a downward pressure. With the euro as sole legal tender7 
the room for autonomous monetary policy remained limited. The Central Bank of Montenegro 
(CBCG)  continued  to  use  prudential  requirements,  in  particular  reserve  requirements,  as 
intervention tools. The CBCG has been very active trying to preserve the stability of the local 

7 

Montenegro unilaterally uses the euro as legal tender, without participating in the euro area. In October 
2007 the Council adopted a declaration on the de facto use of the euro in Montenegro which is due to 
exceptional circumstances. 

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financial system. In autumn 2008 the growth of broad money supply8 turned negative due to 
serious  withdrawals  of  bank  deposits.  The  CBCG  intervened  by  urgently  adopting  a  set  of 
measures for protecting the banking system, consisting in a full guarantee for deposits and the 
possibility  of  government  credit  support  for  eventual  liquidity  shortfalls  of  banks.  Overall, 
inflation has been decelerating as the economy cooled down. 

The  lending  activity  of  commercial  banks  expanded  by  23%  year-on-year  in  2008,  as 
compared  with  165%  a  year  before.  The  moderation  was  initially  the  consequence  of  the 
Central  Bank  measures  to  bring  the  lending  boom  down  to  sustainable  levels.  The  credit 
portfolio  reached  83%  of  GDP  in  2008  up  from  80%  a  year  earlier,  while  bank  deposits 
declined by 6.7% year-on-year. During the first half of 2009 the liquidity shortage triggered 
by  the  withdrawal  of  deposits  constrained  the  lending  capacity  of  the  banking  sector.  The 
contraction of deposits reached 11.7%, while credit growth dropped by 5.9% since the start of 
the year. Overall, the liquidity of the banking system was challenged by the problems in the 
second largest lender and the effects of the global financial crisis. 

In  2008  the  budget  execution  yielded  a  surplus  of  0.5%  of  GDP.  Consolidated  public 
expenditures  increased  significantly,  reaching  44%  of  GDP  from  41%  of  GDP  in  2007, 
boosted by rising transfers to social security institutions and to households. This expansionary 
increase in spending commitments put additional pressure on fiscal policy as of early 2009, 
when  the  local  repercussions  of  the  crisis  resulted  in  lower  fiscal  revenues  than  planned. 
Nonetheless,  the  authorities  reacted  promptly  by  curtailing  spending  and  still  maintaining  a 
budget  surplus  of  0.4%  of  GDP  in  the  first  half  of  2009.  The  government  revised  the  2009 
budget  in  July,  notably  by  reducing  capital  investments,  expenditures  in  goods  and  services 
and planning wage cuts in  public  administration, in order to  maintain the deficit  at 2.6% of 
GDP.  Loans  from  foreign  private  banks  were  subscribed  and  a  minority  stake  in  the  power 
utility  (EPCG)  was  sold  to  a  foreign  partner.  However,  other  fiscal  risks,  in  particular  the 
contingent  liabilities  linked  to  the  restructuring  packages  for  the  metal  industries  and  the 
liquidity problems in the banking sector. Overall, public finances have come under increased 
pressure  in  2009,  but  the  authorities  managed  to  limit  the  deficit  by  curtailing  spending, 
borrowing and selling assets. 

In  2008  the  public  debt  remained  broadly  unchanged  in  GDP  terms  at  26.8%.  Public  debt 
further increased in the first half of 2009 to 28.4% of projected annual GDP. Public domestic 
debt  increased  by  9%  since  the  beginning  of  the  year,  while  the  public  external  debt  grew 
faster,  by  15%  since  end-2008,  mostly  due  to  investments  in  infrastructure  co-financed  by 
international  financial  institutions.  During  the  third  quarter  of  2009,  the  government 
subscribed two loans worth 3.4% of GDP from foreign private banks for financing the state 
budget,  bringing  public  debt  above  30%  of  GDP  at  the  end  of  the  year.  Overall,  debt 
obligations are rising due to infrastructure spending and loans to finance the emerging budget 
deficit. 

Macroeconomic policy has been driven to a large extent by the financial crisis. It focused on 
implementing  a  more  prudent  fiscal  policy  and  accelerating  structural  reforms  in  several 
sectors.  For  instance,  developing  a  more  market-oriented  approach  to  highway  construction 
by involving the private sector through Public-Private Partnerships (PPPs), reducing the fiscal 

8 

The broad measure of money (M21) aggregate consists of deposits of banks with the Central Bank and 
demand  and  term  deposits  with  banks  and  the  Central  Bank,  in  euros  and  other  currencies,  including 
deposits of the central government. 

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burden on labour to increase competitiveness, or developing the legislative framework for the 
financial system with the adoption of legislation based on EC Directives. The Central Bank 
has also contributed to macroeconomic stability by timely adapting monetary policy to fast-
evolving  circumstances.  In  2008  the  CBCG  introduced  a  restrictive  policy  to  reduce  the 
exposure of the economy to the surge of a credit bubble. In 2009 it reversed its path, easing 
reserve  requirements  to  release  more  liquidity  into  the  financial  system.  Overall,  structural 
reform  policies  combined  with  a  timely  adaptation  of  the  fiscal  and  monetary  policy  to  the 
international crisis impact, are contributing to recovery. 

Interplay of market forces  

The  share  of  the  private  sector  in  the  economy  is  very  large  as  the  public  sector  is  mostly 
reduced to network industries (utilities and transport). Moreover, the influence of the public 
sector  in  price  dynamics  is  practically  limited  to  the  energy  sector.  The  energy  regulator 
establishes  electricity  prices  in  relation  to  production  cost  thresholds.  In  June  2009,  the 
Administrative  Court  annulled  the  energy  regulator’s  decision  to  increase  electricity  prices. 
As  a  result,  some  €20  million  from  the  overhead  prices  are  being  returned  to  consumers 
gradually by decreasing prices for electricity until the debt is settled. The privatisation process 
also  suffered  from  the  global  crisis  as  some  successful  bidders  failed  to  conclude  a  sales 
agreement. This was notably the case with the auctions of the tobacco retailer Duvankomerc, 
and  the  publisher  Pobjeda.  A  few  publicly  owned  companies  failed  repeatedly  to  attract 
interest  from  investors,  such  as  the  appliances  factory  Obod  or  the  insurance  company 
Lovćen.  In  these  cases,  new  privatisation  methods  are  proposed  and  companies  are  being 
slated for sale again. Further progress has been recorded in the privatisation of key energy and 
transport  systems.  The  government  sold  a  minority  stake  in  the  power  utility  (EPCG), 
providing the possibility for the new partner to acquire majority control of the company after 
five years. The railway transportation company and the port of Bar have already established 
their freight units as completely independent companies, preparing their privatisation through 
concession  deals.  However,  restructuring  of  the  aluminium  and  steel  plants  remains  a 
considerable  challenge.  Overall,  the  privatisation  process  is  quite  advanced  and  state 
intervention in the economy has remained limited except for temporary rescue operations in 
strategic sectors such as basic metals and banks. 

Market entry and exit 

The  Council  for  the  elimination  of  business  barriers,  established  in  mid  2008,  continued  its 
activity  in  2009.  Achievements  in  the  relevant  period  included  the  simplification  of 
administrative  procedure  for  obtaining  construction  permits  and  reviewing  technical 
documentation  and  enhancement  of  transparency through  the  relevant  authorities'  obligation 
of publishing related documentation on their website. The operation of new trade outlets does 
not  require  any  longer  municipal  license  but  a  simple  announcement  of  intent  for  record 
purposes.  In  addition,  the  authorities  have  also  established  a  website  for  gathering  online 
requests  from  entrepreneurs  to  remove  further  barriers.  However,  electronic  signature 
legislation still needs to be implemented in order to benefit from the full potential of online 
business  and  administrative  transactions.  Market  exit  procedures  have  been  reduced  to  six 
months  on  average.  In  the  first  half  of  2009,  in  spite  of  the  crisis,  registration  of  new 
enterprises  continued  at  an  average  of  212  new  limited  liability  companies  per  month 
compared with 284 during 2008. During the first five months of 2009 the Commercial Court 
registered  134  bankruptcy  procedures,  a  similar  number  to  that  recorded  during  the  same 
period  a  year  before  (138).  The  backlog  of  ongoing  cases  decreased  to  139,  practically 
converging with the number of newly opened files. Additionally, 284 companies applied for 

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voluntary liquidation under the Law on Insolvency, and were subsequently removed from the 
registry  of  the  Commercial  Court.  Overall,  market  entry  has  improved  and  exit  procedures 
have been further streamlined. 

Legal system 

Three  key  pieces  of  legislation  regulating  property  rights  were  adopted  in  2009.  The 
Concession  and  the  State  Property  Laws  introduced  more  comprehensible  concession  rights 
on public properties and resources, with the possibility of extension of such contracts up to 90 
years.  The  Property  Relations  Law  provides  the  same  treatment  to  foreign  citizens  as  to 
nationals  for  acquiring  movable  and  immovable  property,  although  some  limitations  still 
remain for foreigners purchasing agricultural land, for which the new law provides long-term 
leasing as an alternative. Recourse to the judicial system increased as previous reluctance to 
resolve commercial disputes through official circuits is fading away, also due to the negative 
effects of the crisis. During the first half of 2009 the Commercial Court received 5,200 cases 
(compared  with  1,279  a  year  before).  However,  the  large  informal  sector  is  fuelled  by 
weaknesses in tax and expenditure policies, as well as in law enforcement, including the fight 
against corruption and organised crime. The informal sector remains an important challenge, 
as it reduces the tax base and the efficiency of economic policies. Overall, the new property 
laws  improved  legal  certainty  facilitating  foreign  investors’  engagement  in  large  projects. 
However, the fight against corruption and tackling the large informal economy remain major 
challenges. 

Financial sector development 

The size of the banking sector in terms of assets stabilised at 99% of GDP by the end of 2008, 
compared  with  106%  a  year  earlier.  However,  banks  assets  further  contracted  to  88.7%  of 
GDP  by  end-June  2009  as  deposit  withdrawals  and  negative  lending  growth  persisted.  The 
sector remained highly concentrated, with three banks holding 63.9% of the banking sector’s 
assets and 58.8%  of total deposits.  Excessive risk taking  by Prva Banka -the second largest 
bank-  without  due  concern  for  prudent  banking  practices,  resulted  in  stability  risks  for  the 
whole  sector.  Faced  also  with  the  effects  of  an  international  crisis  threatening  the  domestic 
market,  the  Central  Bank  together  with  the  government  adopted  several  measures  for  the 
protection  of  the  banking  system.  A  full  guarantee  for  all  deposits,  and  the  possibility  of 
government  credit  support  for  liquidity  shortfalls  or  for  recapitalisation  were  granted.  In  an 
attempt to improve positions of both lenders and debtors and to create more space for bank 
lending  activities,  the  CBCG  also  introduced  additional  measures  to  create  more  favourable 
conditions  for  loans  restructuring  and  further  reduced  the  rate  of  mandatory  reserves  on 
existing deposits to 10%, with no reserve requirements for new deposits. The government also 
intervened by providing a credit support of € 44 million (about 1.3% of 2008 GDP) to Prva 
Banka  in  exchange  for  this  bank's  shares  placed  as  collateral.  The  bank  has  meanwhile 
managed  to  repay  75%  of  the  loan.  The  withdrawal  of  deposits  set  off  in  October  2008, 
occurring at a rate of 18% until February 2009, moderated to an average monthly contraction 
of 0.2% in the second quarter of 2009. As a result, during the first half of 2009 the banking 
system lost deposits for some 5.7% of GDP, most of it from the two biggest banks. End-June 
2009,  the  average  capital  adequacy  ratio  came  down  to  11.9%,  close  to  the  stipulated  10% 
minimum  level,  while  the  ratio  of  non-performing  loans9  climbed  to  8.9%,  compared  with 

9 

Considering the Central Bank of Montenegro’s stricter classification of past-due loans as any loan that 
is past due for more than 61 days, compared with the Basel II classification of after 90 days. 

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3.9% a year before. In June 2009 the average weighted effective lending interest rate peaked 
at  9.38%,  while  the  weighted  average  deposit  effective  interest  rates  recorded  3.80%,  down 
from 9.40% and 4.10% respectively in December 2008. Overall, the stability of the financial 
system was maintained under very difficult circumstances. 

The  domestic  insurance  market  further  expanded  by  a  more  modest  18%  year-on-year  in 
2008, following a 28.7% expansion of billed premiums a year before. End 2008 there were 11 
companies active in the sector, after several new firms entered the market. The sector remains 
highly concentrated,  with  one  company holding a 61% market share. The industry accounts 
for  some  3%  of  GDP  and  is  primarily  made  up  of  compulsory  insurance.  Its  life  insurance 
segment is developing fast from a very low base and accounted in 2008 for some 12% of total 
premiums  (compared  with  4.5%  a  year  before).  The  leasing  market  continued  its  rapid 
expansion  in  2008,  increasing  contract  value  by  42.2%  year-on-year,  representing  4.9%  of 
GDP (compared to 4.1% a year before). The majority of leasing contracts relate to real estate 
and vehicle purchases. The two stock exchanges showed signs of recovery in May 2009 as the 
markets were positively influenced by the sale of a minority stake in the power utility EPCG. 
In May, after more than one year of continuous deterioration, the aggregate capitalisation rose 
to 147% of GDP, from 116% in the previous month. Overall, while the non-banking financial 
sector continued expanding, capital markets went through a severe correction. 

3.2. 

The  capacity  to  cope  with  competitive  pressure  and  market  forces  within  the 
Union 

Existence of a functioning market economy 

Quick  responses  to  a  fast-changing  and  difficult  global  economic  environment  prevented  a 
deep  deterioration  of  macroeconomic  stability,  as  employment  was  preserved,  prices 
moderated  and  the  public  deficit  was  contained.  Macroeconomic  stability  was  seriously 
challenged  by  an  expansionary  fiscal  stance  in  2008,  followed  by  liquidity  problems  in  the 
banking sector, and current contingent liabilities in the metal sector. Apart from direct support 
to  metal  smelters  and  one  bank,  the  authorities’  rescue  plans  focused  on  accelerating 
structural  reforms  and  preserving  the  stability  of  the  financial  system.  To  this  end,  the 
government provided credit guarantees to international banks for extending loans to domestic 
lenders  which  freely  decided  on  the  final  allocation  of  credit.  Overall,  the  functioning  of 
market  mechanisms  was  challenged  by  the  magnitude  of  adjustments  taking  place  in  the 
external accounts and the financial sector. 

Human and physical capital 

In  the  context  of  still  persistent  labour  demand,  several  educational  reforms  were 
implemented to align the supply side with market requirements, not least the Law on National 
Vocational  Qualifications,  and  the  strategies  for  introducing  didactic  software  in  education 
and  for  establishing  the  qualification  framework.  For  young  managers  having  already 
graduated,  the  Agency  for  Employment  (ZZZ)  together  with  the  Directorate  for  Small  and 
Medium-Sized  Enterprises  (SMEDA)  implemented  practical  training  programmes.  The 
Agency  continued  its  activities  with  academic  institutions,  providing  professional  guidance, 
but also adopting programmes for the integration of minorities into the workforce as well as to 
improve work participation rates, especially in the poorer northern region. Overall, the skills 
mismatch remains an important issue. In some labour intensive sectors the country needs to 
resort to foreign workers to sustain economic growth. 

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Gross fixed capital formation (GFCF) as a share of GDP reached 24% in 2007. Estimates for 
2008  suggest  a  ratio  of  30%  of  GDP.  Almost  40%  of  FDI  invested  in  2008  went  into  real 
estate,  30%  in  domestic  companies  and  banks  and  a  similar  amount  in  intercompany  debt 
(namely foreign banks towards local subsidiaries). Public capital spending increased in 2008, 
reaching 9.3% of GDP, compared with 6.7% a year earlier. However, during the first half of 
2009,  further  moderation  in  credit  expansion  and  budget  spending  cuts  reduced  capital 
formation. Overall, worsening economic conditions did not stop restructuring in energy and 
transport  as  well  as  the  launch  of  major  concessions  for  private  investments  in  tourism  and 
highways. 

Sectoral and enterprise structure 

The  crisis  exacerbated  the  weakness  of  the  main  industries  of  the  country  –basic  metals 
production–  already  hampered  by  excessively  high  production  costs.  To  restructure  and 
address the structural problems of the aluminium smelter, and the more cyclical ones of the 
steel  mill,  the  government  provided  credit  guarantees  and  a  redundancy  programme  to 
proceed with technological upgrades and labour cuts. In the energy sector, after the separation 
of the transmission unit from the power company (EPCG), establishing tariffs for the use of 
the  network  and  the  adoption  of  secondary  legislation,  all  necessary  preconditions  were 
formally met for the development of competition and establishment of the electricity market. 
Meanwhile, the government sold in July a minority stake in the utility, retaining a 55% share. 
The  new  partner  may  later  acquire  majority  control  in  EPCG  subject  to  successful 
implementation  of  the  investment  programme.  The  railway  transportation  company  and  the 
port of Bar separated their freight units, thus preparing the ground for their privatisation also 
with a view to securing the necessary capital for their modernisation. The national air carrier, 
Montenegro Airlines, implemented the first stage of its restructuring by transformation into a 
shareholder company. Overall, a significant restructuring of strategic enterprises and sectors 
is underway. 

The  structure  of  the  economy  continued  shifting  towards  services.  More  than  70%  of  total 
employment during 2008 was recorded in services. Public administration employees10 in total 
services decreased by 2%, while the private sector witnessed an increase of 4% year-on-year, 
driven by large increases in the number of hotel and restaurant workers, but also transport and 
financial activities. Yet the largest share of tertiary labour remains wholesale and retail trade 
(20% of total labour). The industrial sector represented 22% of the total workforce, but is on a 
declining trend. The participation of workers in agriculture, forestry and fishing represented 
some 8% of total employment. Overall, most of the advertised employment vacancies (63%) 
concerned jobs in tourism, construction and trade sectors, confirming that the economic shift 
to these activities continues. 

Small  and  medium-sized  enterprises  (SMEs)  are  proving  their  resilience  as  the  number  of 
bankruptcies  in  2009  remained  at  the  same  level  as  a  year  before  although  the  number  of 
unpaid  invoices  reported  by  the  Central  Bank  payment  system  has  been  rising.  The  SME 
sector  represents  some  60%  of  GDP  and  employs  67%  of  the  total  workforce.  Most 
companies (77%) have less than 10 employees and deal largely in retail and repair services. 
They still face a number of persistent difficulties, such as revolving existing loans, obtaining 
municipal permits or the absence of spatial planning documents. Overall, SMEs went through 

10 

Including: public administration, social insurance, education, health and social workers. 

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very  difficult  conditions,  confronting  increasing  payment  arrears,  diminishing  demand  and 
stricter conditions to obtain bank loans. 

State influence on competitiveness 

Government intervention in the economy expanded with the adoption of several initiatives in 
support of those sectors most affected by the crisis, namely banking and metallurgy. Since the 
start  of  the  crisis  until  mid-2009  state  guarantees  amounted  to  9%  of  GDP,  of  which  42% 
were  for  loans  to  the  aluminium  complex  KAP  and  the  bauxite  mine  RBN  (partially 
renationalised),  47%  to  banks  and  8%  to  the  steel  mill  Niksic.  The  measures  approved  to 
protect banks depositors benefited both local and foreign lenders operating in the country. The 
authorities  also  adopted  a  programme  reducing  electricity  prices  for  the  most  vulnerable 
categories of the population, as well as for SMEs. In addition, the major industrial companies 
(the steel mill and the aluminium factory) saw their temporary subsidies for the purchase of 
electricity  extended  on  condition  of  achieving  major  restructuring.  Overall,  increased  state 
intervention occurred as a reaction to the unfolding crisis. 

Economic integration with the EU  

As a consequence of the crisis the annualised level of openness of the economy decreased in 
the first half of 2009 to 50.6% of GDP, from 83% a year earlier. The main foreign destination 
for  domestic  products  remains  the  EU,  which  accounts  for  57.8%  of  the  total  (down  from 
64.6%  in  2008),  followed  by  CEFTA  countries  (40.2%,  up  from  33.4%  in  2008).  The 
reversed trend was confirmed for imports, which mostly originate from neighbouring CEFTA 
countries (53.3%, up from 50% a year before), followed by the EU (38.2%, down from 41.4% 
in 2008). Overall, trade openness remained high, although the severe contraction of the metal 
industry brought down the main export of the country, traditionally oriented to the EU market. 

4. 

EUROPEAN STANDARDS 

This  section  examines  Montenegro's  capacity  gradually  to  approximate  its  legislation  and 
policies to the acquis related to the internal market, sectoral policies and justice, freedom and 
security,  in  line  with  the  Stabilisation  and  Association  Agreement  and  the  European 
Partnership  priorities.  It  also  analyses  Montenegro's  administrative  capacity.  In  each  sector, 
the  Commission's  assessment  covers  progress  achieved  during  the  reporting  period  and 
summarises the country's overall level of preparations. 

4.1. 

Internal market 

4.1.1.  Free movement of goods 

Some  progress  can  be  reported  on  standardisation.  The  internal  rules  and  procedures  have 
been  drafted  for  the  Institute  for  Standardisation  (ISME)  which  is  responsible  for  planning, 
developing,  approving,  publishing  and  maintaining  Montenegrin  standards  and  related 
documents. ISME has increased its staff to 16 and moved to new premises which provide the 
necessary working conditions. Besides the database developed under the former State Union, 
Montenegro is currently developing its own database of national standards. ISME has so far 
adopted about 1,800 Montenegrin standards, of which 85% are European standards. ISME has 
begun  to  develop  a  network  of  technical  committees  involving  all  the  main  stakeholders 
(professional associations, scientists and government authorities) in the most relevant sectors. 

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In  July  2009  ISME  became  an  affiliate  member  of  the  European  Committee  for 
Electrotechnical Standardisation (CENELEC). 

Limited progress can be reported with conformity assessment. The government has adopted 
by-laws  implementing  the  Law  on  Technical  Requirements  and  Conformity  Assessment. 
These include decrees on methods and procedures for conformity assessment of products and 
procedure  of  notification  in  the  area  of  technical  regulations,  standards  and  conformity 
assessment procedures. Enquiry points for technical regulations and standards have yet to be 
established.  

Limited progress can be reported in the field of accreditation. The new Law on Accreditation 
was  adopted  in  July  2009.  The  Accreditation  Body  of  Montenegro  (ABM)  signed  a 
contractual  agreement  with  the  European  co-operation  for  Accreditation  (EA)  in  November 
2008  and  became  an  associate  member  of  the  International  Laboratory  Accreditation 
Cooperation (ILAC) in April 2009. It received a number of applications but accredited no new 
bodies.  Improving  coordination  with  other  parts  of  the  quality  infrastructure  and  enhancing 
the administrative capacity of the ABM itself are preconditions which must be met before the 
quality infrastructure can function properly.  

Some progress has been made as regards metrology. A new Law on Metrology was adopted 
in  December  2008.  A  by-law  on  legal  units  of  measurement  was  also  adopted  in  February 
2009. The Bureau of Metrology has a staff of 28 out of the 34 planned. The bureau became an 
associate  member  of  WELMEC  (European  Cooperation  in  Legal  Metrology)  in  April 
2009.Conditions  in  five  laboratories  (for  mass,  length,  electrical  quantities,  temperature  and 
pressure) are still not up to the required standard.  

There  has  been  limited  progress  in  the  area  of  market  surveillance.  The  administrative 
capacity  of  the  Market  Inspectorate  and  of  the  other  authorities  carrying  out  market 
surveillance  activities  has  been  strengthened.  However,  by-laws  necessary  to  implement  the 
Law  on  General  Product  Safety  have  not  been  adopted  yet.  Among  these  are  also  rules  on 
methods of exchange of information on dangerous products which would set the legal basis 
for the Market Inspectorate to become the future national contact point for the RAPEX system 
in  the  future.  Further  efforts  are  needed  to  raise  administrative  capacity  in  this  field,  to 
develop  and  implement  a  market  surveillance  strategy  with  adequate  coordination  and 
cooperation  between  relevant  authorities,  to  create  a  market  surveillance  information 
exchange system and to introduce modern risk assessment techniques for market control.  

Good  progress  was  made  in  the  area  of  consumer  protection.  The  focus  was  on 
implementing  the  national  consumer  protection  programme  (NCPP)  and  the  corresponding 
action plan. The government adopted a report on the first year of implementation of the NCPP 
(April  2008–March  2009).  Cooperation  with  NGOs  dealing  with  consumer  protection  was 
strengthened  as  a  result  of  implementation  of  the  NCPP  and  for  the  first  time  the  State 
provided  funds  to  NGOs  for  consumer  protection-related  activities.  Twenty  members  of  the 
arbitration  board  on  consumer  protection,  the  body  in  charge  of  out-of-court  settlement  of 
disputes,  were  appointed  in  December  2008  for  a  four-year  mandate.  The  first  case  was 
handled  and  other  cases  are  now  before  the  board  waiting  for  decision.  Awareness-raising 
activities on the existence and purpose of the arbitration board are needed, along with further 
development of the capacity of board members.  

Overall, preparations in the area of free movement of goods continued, even though they are 
not very advanced in the area of market surveillance. Montenegro still needs to strengthen its 

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institutional  and  administrative  capacity  further,  improve  cooperation  between  the  relevant 
State institutions and accelerate transposition of the  product-specific acquis into  its  national 
legislation. 

4.1.2.  Movement of persons, services and right of establishment 

Further  progress  has  been  made  on movement  of  persons  and  access  to  the  labour  market. 
The Law on Employment and Work of Foreigners, regulating the movement of labour force 
by introducing a work permit system with annual quotas entered into force in January 2009. 
By-laws  necessary  for  the  implementation  were  adopted,  including  one  to  fix  the  quota  of 
work permits for foreigners in 2009. The Law on Foreigners relating to terms and conditions 
of entering, movement and stay of foreigners was adopted in December 2008. 

As regards coordination of social  security, the social insurance agreements ratified between 
Montenegro  and  Luxembourg,  Hungary  and  Switzerland  brought  significant  improvements 
for Montenegrins working abroad. 

In  the  process  of  finalising  negotiations  for  accession  to  the  World  Trade  Organisation 
(WTO), Montenegro ensured extensive liberalisation as regards freedom to provide services. 
Work  permits  and  quotas  as  foreseen  by  the  mentioned  Law  on  Employment  and  Work  of 
Foreigners apply also as precondition for individual cross-border service-providers. No work 
has  been  done  on  the  distinction  between  the  arrangements  applicable  to  cross-border 
provision of services by EU operators in Montenegro and to service-providers established in 
Montenegro.  

There  has  been  some  progress  in  the  banking  sector.  Following  adoption  of  the  Law  on 
Banks,  the  Central  Bank  adopted  a  further  set  of  related  by-laws  to  be  implemented  by  all 
banks by March 2009. In particular, the minimum capital adequacy ratio was increased from 
8% to 10% and the system for reporting by banks was improved by direct connection with the 
Central  Bank.  The  Central  Bank  concluded  memoranda  of  understanding  with  a  number  of 
home supervisors of foreign banks, covering seven of the nine countries which operate bank 
subsidiaries  in  Montenegro.  In  response  to  the  global  economic  crisis,  in  October  2008  the 
government  adopted  a  Law  on  Measures  for  Protection  of  the  Banking  System  and  related 
implementing  legislation,  to  be  applied  until  the  end  of  2009.  The  law  provides  for  a  full 
government guarantee for the deposits of physical and legal persons. In addition it provides 
the  possibility  of  government  guarantee  for  inter-bank  loans  against  shares  as  collateral, 
government credit support, Central Bank short term loans and provision of additional capital 
or obligatory capital provision for individual banks. These last are also allowed to temporarily 
use of up to 50% of their mandatory reserves. 

Further  alignment  with  the  acquis  is  still  required,  in  particular  regarding  the  Capital 
Requirements  Directive.  Further  strengthening  of  administrative  capacity  is  still  needed, 
particularly  of  supervisory  capacity  with  an  increased  focus  on  risk-based  supervision, 
consolidated supervision and cross-sector and international cooperation, including with home 
supervisors. 

The institutional framework for supervision of the non-banking financial sector continued to 
improve.  Thirteen  by-laws  related  to  the  umbrella  laws  on  insurance  and  several  by-laws 
related to securities were adopted. The agency for insurance supervision recruited additional 
staff, bringing the total to 10 out of the 17 planned. Further recruitment of staff and upgrading 
of implementation capacity are needed. In February 2009 the Securities Commission signed 

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the  Multilateral  Memorandum  on  Cooperation  with  the  International  Organisation  of 
Securities Commissions (IOSCO). 

As  far  as  postal  services  are  concerned,  a  strategy  for  the  postal  sector  was  adopted  in 
December 2008. 

Limited progress can be reported on the right of establishment. The Property Relations Law 
introduced  the  same  treatment  to  foreign  citizens  as  to  nationals  for  acquiring  movable  and 
immovable property, however with some limitations for agricultural land, providing for long-
term leasing as an alternative (See points 3.1 The existence of a functioning market economy, 
and  4.1.3.  Free  movement  of  capital).  No  progress  can  be  reported  on  recognition  of 
professional  qualifications.  An  updated  operational  plan  for  elimination  of  business  barriers 
has not yet been developed. 

No  further  progress  can  be  reported  regarding  company  law.  A  Law  on  Insolvency 
Procedures is at the drafting stage and the draft Law on Takeovers of Joint Stock Companies 
is before the government.  

Some  progress  has  been  made  in  the  areas  of  accounting  and  auditing.  Amendments  to  the 
Law on Accounting and Auditing introduced, inter alia, requirements on the transparency of 
reporting,  quarterly  electronic  reporting  and  supervision.  The  new  law  provides  for 
establishment of an accounting and auditing council, an advisory body to promote accounting 
and  auditing  regulation  and  good  practices.  The  government  adopted  a  strategy  and  action 
plan to promote financial reporting. However, gaps remain in establishment of an independent 
public  oversight  system.  The  division  for  accounting  and  auditing  in  the  Finance  Ministry 
currently carries out inspections but is understaffed. The planned supervisory authority has yet 
to be established. 

Overall,  in  the  areas  of  free  movement  of  persons,  services  and  right  of  establishment, 
Montenegro partly meets the targets and priorities set. 

4.1.3.  Free movement of capital 

There  has  been  further  progress  in  the  field  of  free  movement  of  capital.  A  Law  on  State 
Property  and  a  Law  on  Property  Relations  were  adopted  in  February  2009.  Conditions  for 
acquisition  of  movable  and  immovable  property  have  been  clarified,  however  some 
restrictions remain on foreign natural and legal persons owning property in Montenegro and 
therefore the new legal framework does not yet allow treatment completely equivalent to that 
given to Montenegrin nationals. Limits are imposed on acquisition of ownership rights over 
inter alia forests and forest land, agricultural land, cultural monuments of special importance, 
real estate within one kilometre of the land border or islands.  

With  reference  to  payment  systems,  a  new  Law  on  National  Payment  Operations  was 
adopted  in  October  2008,  regulating  transfers  of  funds,  inter-bank  transfer  settlements, 
electronic  means  of  payment  and  establishment  and  control  of  payment  operations.  Twelve 
related by-laws were also adopted. 

Overall, Montenegro has met the priorities and objectives set in the area of free movement of 
capital.  

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4.1.4.  Customs and taxation 

Further progress was achieved in the area of customs. The customs tariff nomenclature was 
harmonised with the 2009 EU Combined Nomenclature and duties were reduced in line with 
the Interim Agreement. The Convention on Temporary Admission (Istanbul Convention) was 
ratified. Fees for customs services have been harmonised with Article VIII of GATT, but not 
yet with the SAA and the acquis.  

In relation to the previous year the total amount of duties and taxes collected by the customs 
administration increased by 6.5%. New division and database for dealing with infringements 
of  intellectual  property  rights  has  been  set  up  within  the  customs  administration  (See  point 
4.1.7  Intellectual  property  law).  A  joint  border  crossing  point  with  Albania  became 
operational in June 2009. Further training on rules of origin, valuation of imported goods and 
protection  of  intellectual  property  rights  was  organised  for  both  customs  officers  and 
economic operators. An agreement on integrated border management has been signed with the 
police  and  the  health  administration.  Montenegro  signed  with  Serbia  an  agreement  on 
facilitating border controls on goods transported by rail. An agreement on mutual assistance 
on  customs  matters  with  Moldova  was  signed  and  ratified  by  parliament.  Montenegro  also 
participates  in  a  regional  project  in  order  to  exchange  pre-arrival  customs  information  with 
neighbouring  countries,  in  order  to  facilitate  trade  and  enforce  customs  legislation.  To 
enhance  cooperation  with  EU  customs  administrations  and  the  Commission,  Montenegro 
asked  to  join  the  Community’s  Customs  2013  Programme.  The  customs  administration 
currently  employs  579  staff  out  of  the  669  planned.  Recruiting  and  retaining  staff  is  a 
recurring problem, which weakens the administrative capacity of the institution. No business 
or IT strategy has been adopted. 

Overall, legislative alignment with the acquis is well on track and the customs administration 
has  been  able  to  manage  implementation  of  the  SAA.  However,  further  alignment  is  still 
required  in  areas  such  as  origin,  transit  and  simplified  procedures,  customs  valuation  and 
customs fees. A business and IT strategy needs to be developed and attention needs to be paid 
to strengthening the administrative capacity in terms of project management skills and quality 
assurance. The fight against corruption remains a key priority. 

Further progress can also be reported on taxation. With reference to direct taxation, personal 
income  tax  was  reduced  from  15%  to  12%.  In  the  case  of  corporate  taxation,  legislative 
amendments cut the tax rates on dividends from 15% to 9% and eliminated double taxation of 
profits paid by subsidiaries to parent companies. As for indirect taxation, amendments to the 
Law  on  Excise  and  related  by-laws  improved  alignment  with  the  acquis,  in  particular  on 
increasing  excise  on  cigarettes,  other  tobacco  products  and  mineral  oils  with  effect  from 
October  2009.  The  legislation  is,  however,  not  yet  completely  aligned  with  the  European 
standards.  This  applies,  in  particular,  to  the  excise  arrangements  for  energy  products  and 
small  producers  of  alcoholic  beverages,  to  zero  or  reduced  VAT  rates  or  special  VAT 
schemes and to the principles of the code of conduct for business taxation which have not yet 
been  implemented.  Amendments  to  the  Law  on  Administrative  Taxes  improved  alignment 
with Article VIII of GATT. 

In  2008  the  gross  tax  and  contributions  collected  by  the  tax  administration  were  26.5% 
higher  than  in  2007.  In  the  first  quarter  of  2009  they  were  10.5%  higher  than  the  planned 
budget revenue. A project is under way to introduce both a single tax registration form and a 
single tax return form. To improve operation of its tax system, Montenegro asked to join the 
Community’s Fiscalis  2013 Programme. The tax  administration  currently  employs  613 staff 

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out  of  the  744  planned.  Its  main  needs  remain  additional  long-term  recruitment  and 
professional training. IT strategy is in place. Project management skills and quality assurance 
methods have not yet been introduced. 

Overall,  alignment  with  the  acquis  is  on  track,  although  further  alignment  is  still  required. 
Further  progress  towards  modernising  the  tax  administration  is  also  needed,  with  particular 
emphasis on tax collection and controls, including effective use of risk analysis. The effort to 
reduce informal economy needs to continue. A business and IT strategy needs to be developed 
and project management skills and quality assurance have to be introduced. 

4.1.5.  Competition 

Limited progress can be reported in the field of anti-trust. Efforts are still required to adopt 
the new Law on Competition Protection, to further improve the existing legislation, transform 
the  existing  Administration  for  Competition  protection  (ACP)  into  a  fully  independent 
Competition  Protection  Authority  (CPA)  and  establish  a  system  of  deterrent  fines. 
Implementing rules are also still to be adopted.  

Between October 2008 and August 2009 the ACP decided twelve merger cases and examined 
two case of abuse of a dominant position. The ACP is gradually improving its capacity with 
the aid of training courses. Out of a planned staff of thirteen, the ACP currently employs ten. 
Its  administrative  capacity  needs  to  be  further  enhanced  to  allow  it  to  exercise  its  future 
investigation,  decision-making  and  sanction  powers  and  eventually  secure  full  professional 
and financial independence. Additional efforts are also required to raise public awareness of 
competition policy.  

Further progress can be reported in the area of State aid. The government adopted a new draft 
Law  on  State  Aid  Control  in  April  2009  and  prepared  a  series  of  by-laws  with  the  aim  of 
further alignment with the acquis.  

The  State  Aid  Control  Commission  (SACC)  continued  strengthening  its  administrative 
capacity with the aid of training. From October 2008 to August 2009 the SACC took eleven 
decisions and three conclusions. A department for control of state aid was set up within the 
Finance  Ministry  in  November  2008.  It  currently  employs  three  persons.  However,  the 
capacity  of  both  the  SACC  and  the  state  aid  department  still  needs  to  be  strengthened  to 
enable them to assess complex state aid cases autonomously and to play an active and visible 
role  in  the  design  of  government  support  to  national  operators.  A  preliminary  inventory  of 
state aid schemes was compiled, but additional efforts are required in order to complete it. 

Overall,  Montenegro  partially  meets  its  targets  in  the  area  of  competition.  Further 
improvement  of  the  framework  for  protecting  competition  and  upgrading  of  the  relevant 
administrative  capacity  are  required.  In  particular,  the  State  aid  control  system  needs  to  be 
strengthened  and  the  capacity  of  the  SACC  and  the  State  aid  department  needs  to  be 
enhanced. 

4.1.6.  Public procurement 

Some  progress  has  been  made  in  the  public  procurement  system,  notably  in  the  form  of 
adoption of implementing legislation, training to support contracting entities and awareness-
raising in the private sector.  

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A  new  Law  on  Concessions  was  adopted  in  January  2009.  However,  it  falls  short  of  the 
requirements of the acquis.  

Improvements  have  been  made  with  regard  to  transparency.  The  State  Commission  for  the 
Control of Public Procurement Procedures (PPC) publishes its decisions and all complaints on 
its website. All tenders are currently published on the Public Procurement Directorate’s (PPD) 
website. There has been no progress towards introducing electronic procurement.  

The  2006  Public  Procurement  Law  established  a  complex  framework  for  qualification  of 
bidders and documentation requirements. The two key institutions – the PPD and the PPC – 
currently  employ  15  and  8  staff  respectively.  They  both  require  additional  staff. 
Administrative  capacity  in  general  needs  further  upgrading,  in  particular  as  regards  anti-
corruption activities and integrity. Procurement officers and procurement departments within 
the  contracting  entities  have  not  yet  been  sufficiently  developed.  The  new  Law  on 
Concessions does not distinguish clearly between concession contracts and public contracts. 
Further  work  is  needed  on  the  definitions  for  works  concessions  and  the  relevant 
implementing legislation has yet to be adopted. The Concession Committee should be set up 
to handle complaints about the award of concessions, keep a concession register and approve 
the  use  of  certain  procedures.  Additional  efforts  are  needed  to  introduce  a  separate 
procurement system for utilities and fully transpose the Utilities Directive. The introduction of 
e-procurement  needs  to  be  started  and  centralised  procurement  seriously  considered  by  the 
authorities. Overall, Montenegro partially meets its targets in the area of public procurement. 
Further efforts are needed to align the legislation with European standards and to build up the 
administrative capacity.  

4.1.7. 

Intellectual property law 

Some  progress  has  been  made  in  the  field  of  intellectual  property  rights  and  industrial 
property rights. The legislative framework has been improved with the adoption of a Law on 
Patents  which  is  generally  in  line  with  international  and  EU  standards.  Implementing 
legislation remains to be adopted. Amendments to the Regulation concerning the validity of 
existing intellectual property rights were made to eliminate legal gaps related to the validity of 
national  IP  rights  and  to  bring  the  procedures  into  line  with  international  agreements. 
Following the amendments to the Decree on the fees for customs services, since January 2009 
holders  of  IPR  are  not  required  to  pay  a  fee  for  processing  requests  for  IPR  protection.  A 
uniform request form is being introduced to ensure equal treatment by the customs authorities, 
in  compliance  with  the  model  laid  down  by  Commission  Regulation  1891/2004.  An 
agreement on the extension of European patents to Montenegro was signed with the European 
Patent  Office  (EPO)  in  February  2009  allowing  the  validity  of  European  patents  on  the 
territory of Montenegro but has not been ratified yet. 

The  Montenegrin  Intellectual  Property  Office  (MIPO)  is  gradually  improving  its  capacity. 
Also,  a  division  for  intellectual  property  was  established  in  the  customs  administration.  It 
prepared  an  information  brochure  for  the  public  on  customs  measures  to  protect  IPR  and 
combat counterfeiting and piracy. In September 2008 an intellectual property database, based 
on the UK model, was installed (See point 4.1.4 Customs and taxation). Customs staff dealing 
with IPR attended a number of training courses and international conferences. As for judicial 
protection,  the  Podgorica  commercial  court  established  a  specialised  intellectual  property 
division.  

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However,  an  IPR  strategy  is  not  yet  in  place  and  further  strengthening  of  the  legislative 
framework  remains  necessary.  The  administrative  capacity  of  the  MIPO  is  insufficient, 
especially in terms of human resources, as it currently employs 17 out of the 22 staff planned, 
premises  and  IT  capacity  (network,  databases  and  registers).  The  market  inspectorate  also 
needs  further  strengthening,  including  establishment  of  a  specialised  unit  to  deal  with  IPR 
infringements  and  the  hiring  of  specialised  market  inspectors.  Further  measures  are  also 
required  to  develop  an  information  system  connecting  the  various  bodies  involved  and 
supporting the data exchange and to introduce modern risk assessment for performing market 
control.  The  number  of  police  staff  dealing  with  IPR  infringements  is  still  insufficient. 
Specialised training needs to be provided for judges working in this sector. Further efforts are 
needed  to  improve  overall  cooperation  and  coordination  between  enforcement  bodies, 
including the Market Inspectorate, and also cooperation with rights-holders. 

Overall,  preparations  in  the  area  of  IPR  protection  are  at  an  early  stage,  in  particular  with 
regard to the institutional and enforcement capacity for dealing with complex IPR cases and 
public awareness of protection of intellectual property rights. 

4.1.8. 

Social policies, employment and public health policy 

In  the  area  of  social  policies,  as  regards  labour  law  the  legal  framework  remains  the  2008 
Labour Law. 

The  legislation  on  health  and  safety  at  work  has  yet  to  be  brought  in  line  with  European 
standards. A Law on Labour Inspection was adopted in December 2008, but the capacity of 
the  Ministry  of  Labour  and  Social  Welfare,  including  its  labour  inspection  department, 
remains weak. There are currently 11 safety at work inspectors in charge of labour inspection. 

With regard to  tripartite social  dialogue, the government decided to establish an agency for 
peaceful  settlement  of  labour  disputes,  as  required  by  the  Labour  Law,  but  it  is  not  yet 
operational. In April 2009, the Social Council signed a memorandum on social partnership in 
view of addressing the impact of the global economic crisis. A working group for monitoring 
the  economic  crisis  was  established  in  June  2009  that  can  propose  measures  to  the  Social 
Council in case of severe disturbances on the labour market. Nevertheless, the role of social 
partners in the decision making process remains limited. Amendments to the Law on Strikes 
gave public servants the right to strike. Collective labour disputes are generally not solved by 
mutual  agreement.  Bipartite  social  dialogue  needs  to  be  further  developed,  in  particular  at 
national and sectoral levels. 

As regards social inclusion and anti-discrimination, reliable data and comprehensive analyses 
are needed to provide a sound basis for social inclusion policies. Particular attention needs to 
be  paid  to  territorial  aspects  of  poverty.  Fighting  poverty  and  promoting  social  inclusion 
needs  to  be  further  prioritised.  Several  laws  governing  the  rights  and  status  of  disabled 
persons have been adopted, but have yet to be implemented. As regards anti-discrimination, 
little progress can be noted on the adoption of a comprehensive anti-discrimination law. (See 
also point 2.2 Human rights and the protection of minorities, section on social inclusion, anti-
discrimination and equal opportunities.) 

As regards social protection, the Law on Basic Social Benefits was amended and the Law on 
Pension  and  Invalid  Insurance  was  adopted.  Implementation  of  the  strategies  for  social  and 
child protection, for social protection for the elderly and for the inclusion of disabled persons 
in Montenegro together with the related action plan for 2008 and 2009 remains slow.  

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In  the  field  of  employment  policy,  a  small  decrease  in  unemployment  was  reported  by  the 
Employment Agency despite the contracting demand resulting from the crisis. The two large 
activation programmes implemented early 2009 have contributed to counteract the impact of 
the  crisis  on  unemployment.  Their  longer  term  impact  needs  to  be  carefully  monitored. 
Structural  unemployment,  uneven  regional  employment,  undeclared  work  and  skills 
mismatches  are  still  problems  that  are  insufficiently  addressed.  The  Employment  Agency 
produces unemployment statistics and the National Statistical Office (MONSTAT) conducts 
the labour force survey in line with the relevant legislation. The Ministry of Health, Labour 
and Social Welfare has been divided into the Ministry of Health and the Ministry of Labour 
and Social Welfare. 

In  the  area  of  public  health  policy,  laws  were  adopted  on  emergencies,  health  inspection, 
drug  abuse,  health-related  databases  and  health  inspections.  Strategies  on  fighting  chronic 
non-contagious diseases and managing medical waste were put in place. 

However, currently the healthcare system does not meet the needs of the population. Further 
efforts are needed to reform primary health centres, improve health service quality and patient 
safety and provide equal access to healthcare. Legislation concerning human blood and tissues 
and  cells  quality  and  safety,  tobacco  control  and  reporting  of  communicable  diseases  is  not 
yet fully aligned with European standards and has not yet been implemented. Guidelines for 
implementation  and  action  plans  still  need  to  be  developed.  There  are  still  significant  gaps 
with  regard  to  communicable  diseases  (an  early  warning  and  response  system  is  not  yet  in 
place).  Cancer  screening  is  currently  not  organised,  traceability  of  human  blood  and  tissues 
and cells quality and safety is lacking and the blood transfusion system needs to be reformed. 
The budget for health policy remains very limited.  

In the field of mental health, further efforts are needed to create community-based services as 
an alternative to institutionalised healthcare, together with specific healthcare for children and 
young  people  with  mental  health  problems.  Adequate  financial  resources  and  trained 
healthcare personnel are needed to improve the quality of health services in this area. 

Overall,  Montenegro  has  continued  to  address  its  priorities  in  the  area  of  employment  and 
social policies. However, compliance with European standards needs to be further improved 
and the country’s capacity to implement the new legislation effectively needs to be enhanced. 
With  the  exception  of  labour  market  analysis,  more  reliable  statistics  for  social  policies  are 
needed  as  a  basis  for  further  intervention.  Further  efforts  are  also  required  to  strengthen 
administrative and institutional capacity in the area of public health. 

4.1.9.  Education and research 

As regards access to education, primary and secondary school enrolment rates remain high. 
Four new private universities have been established specialising in management of traffic and 
communications,  humanities,  information  technology  and  international  tourism  and  hotel 
management. 

The Ministry for Education and Science has been reorganised and now employs 72 staff out 
of the 99 planned. The government adopted a strategy for the establishment of a Montenegrin 
qualification  framework  (MQN)  for  2008-2010  and  a  strategy  on  introducing  educational 
software  in  schools.  In  December  2008,  a  Law  on  National  Professional  Qualifications  was 
adopted.  

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Further steps were  taken to upgrade the quality assurance system for universities. A  quality 
assurance  system  is  now  in  operation  at  the  University  of  Montenegro.  The  faculties  of 
Business  Management,  of  State  and  European  Studies,  and  of  Foreign  Languages  at  the 
Mediterranean University have been re-accredited, while two other private universities are in 
the process of re-accreditation. 

Future challenges in the field of education include finalising the establishment of the National 
Qualifications  Framework,  improving  recognition  of  informal  learning,  strengthening  the 
links between higher education and vocational training and the labour market.  

In  the  field  of  culture,  Montenegro  has  finalised  talks  for  inclusion  in  the  Community’s 
Culture  Programme  as  of  2010  and  has  established  a  cultural  contact  point  to  promote  the 
programme and assist potential applicants. 

As  regards  research,  a  special  department  dealing  with  science,  research  and  technological 
development  was  established  within  the  Ministry  of  Education  and  Science.  Montenegro 
participated actively in the Seventh EC Framework Programme for research and technological 
development  (FP7).  It  nominated  observers  for  various  programme  committees  and  the 
European Strategy Forum on Research Infrastructure and managed its financial contribution. 
Information  days  on  FP7  were  organised  in  order  to  encourage  participation  and  several 
cooperation  projects  are  under  way.  Montenegro  has  also  been  very  active  in  international 
cooperation in the Steering Platform for the Western Balkan countries. However, more efforts 
could be made to involve small and medium-sized enterprises and on Marie Curie projects.  

Based on the strategy on scientific research activities for the period 2008-2016, Montenegro 
has  taken  a  number  of  steps  towards  integration  into  the  European  Research  Area,  such  as 
introduction of a young researcher programme. 

Overall, further progress has been made in the fields of education and culture. There has been 
good  progress  on  research,  particularly  on  strengthening  the  institutional  framework  and  on 
participation in FP7. 

4.1.10.  WTO issues 

Montenegro's  legislation  has  been  brought  in  line  with  WTO  requirements.  The  country 
concluded all its bilateral negotiations with working party members in 2008 and the country’s 
accession conditions were agreed. However, Montenegro’s accession to the WTO continues 
to  be  blocked  by  a  Ukraine  request  for  radical  tariff  reductions  and  wide-ranging 
commitments in access to services markets, including many sensitive sectors, which was only 
made in December 2008.  

Efforts are required to strengthen the management and administrative capacity necessary for 
proper implementation of the commitments made to WTO members. 

4.2. 

Sectoral Policies 

4.2.1. 

Industry and SMEs 

Some  slight  progress  can  be  reported  on  SME  policy.  Montenegro  remains  committed  to 
applying  the  European  Charter  for  Small  Enterprises.  It  is  also  a  full  member  of  the 
Entrepreneurship and Innovation Programme (EIP) under the Competitiveness and Innovation 
Framework  Programme  (CIP).  A  local  consortium  led  by  the  European  Information  and 

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Innovation  Centre  joined  the  Enterprise  Europe  Network  in November  2008.  An  interactive 
SME  website  came  into  operation  at  the  beginning  of  2009.  It  allows  the  introduction  of 
online requests for removal of barriers.  

Further  legislative  progress  was  made  towards  simplifying  administrative  procedures  and 
shortening  the  time  taken  for  reviewing  technical  documentation  and  issuing  construction 
permits and certificates of occupancy. The law on craftsmanship was adopted in July 2009.  

The network of nine business centres was expanded by adding two more, one in Plav the other 
in  Kolasin.  An  IT  business  incubator  has  come  into  operation  in  Podgorica,  with  four 
businesses  assisted  up  to  now.  A  business  start-up  centre  was  established  in  Bar  to  support 
newly established SMEs in cooperation with local business and educational establishments.  

However,  the  regulatory  impact  assessment  for  the  new  legislation  has  not  yet  been 
established.  No  progress  was  made  in  extending  the  silent-is-consent  principle  to  other 
spheres of public administration apart from business registration. 

The  process  of  developing  Montenegro's  industrial  strategy  has  not  advanced  and  the 
administrative capacity for industrial policy remains weak. An operational plan for removal of 
business barriers for 2009 has not been adopted. No progress can be reported on establishment 
of  a  credit  guarantee  fund  (CGF)  for  SMEs.  No  progress  has  been  made  on  cluster  policy. 
Implementation  of  the  strategy  for  lifelong  entrepreneurship  learning  for  2008-2013,  which 
envisages  introducing  entrepreneurial  learning  as  a  key  skill  in  primary  and  secondary 
schools, is at an early stage.  

Overall,  Montenegro  has  started  to  address  its  priorities  in  the  area  of  industrial  policy  and 
has partly met them as regards SME policy. However, further efforts are required to remove 
barriers to business, especially at local level, including speeding up licences and permits and 
fully implementing measures such as a CGF, incubators and clusters. 

4.2.2.  Agriculture and fisheries 

Some  progress  was  achieved  on  agriculture  and  rural  development  policy.  Laws  on 
agriculture  and  rural  development  and  on  an  agricultural  census  were  adopted  by  the 
parliament in July 2009. Amendments to the Tobacco Law and to the Law on Fertilisers were 
also adopted. Montenegro ratified the International Plant Protection Convention in December 
2008.  

The government adopted a national programme for food production and rural development for 
the period 2009-2013. This builds on the strategy for food production and rural development 
and  further  aligns  Montenegro’s  agricultural  policy  with  the  EU  agricultural  policy.  The 
budget for agriculture and rural development was increased by 20% compared with 2008. A 
pilot  census  conducted  in  October  2008  successfully  tested  the  instruments  for  the  main 
agricultural census which was postponed to April 2010. 

Direct  support  continued  to  be  provided  to  the  livestock  sector  in  the  form  of  headage 
payments.  Different  models  for  support  for  the  plant  production  sector  (modernisation  of 
production  of  vegetables  in  greenhouses,  direct  support  per  hectare  to  seed-potato  growers 
and  certain  cereal  growers  and  production  support  for  tobacco  growers)  also  remained  in 
place for several thousand beneficiaries, as did investment support for primary production. 

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A  phytosanitary  administration  was  established  in  the  Ministry  of  Agriculture,  Forestry  and 
Water  Management  and  experts  to  work  on  rural  development  issues  were  recruited. 
However,  administrative  capacity  as  regards  rural  development  within  the  Ministry  of 
Agriculture remains very limited and further upgrading is needed in order to start preparation 
for the IPARD framework. Staffing needs to be augmented.  

In the area of food safety, veterinary and phytosanitary policy, adoption of implementing 
regulations  improved  legislative  alignment  with  the  acquis  and  the  institutional  framework. 
The  phytosanitary  administration  came  into  operation  and  currently  employs  18  staff  out  of 
the  28  planned.  In  accordance  with  the  Law  on  Plant  Variety  Protection,  a  department  for 
plant variety protection was established within the phytosanitary administration. 

Regarding food safety, the government adopted implementing regulations on control of food 
of plant or animal origin and a residue monitoring programme. The Law on Ratification of the 
International  Plant  Protection  Convention  was  adopted.  The  phytosanitary  administration 
established a department for food safety.  

The veterinary administration was restructured in November 2008 and a department for public 
health  was  established.  In  accordance  with  the  Veterinary  Law,  the  2008  annual  health 
protection  programme  was  implemented  and  a  programme  for  2009  was  adopted.  The 
recently established veterinary administration continued to upgrade its administrative capacity 
and the veterinary diagnostic laboratory improved its equipment and staffing. Assessment of 
agri-food establishments for compliance with EU requirements has started. 

The government adopted a national strategic plan for the fisheries sector for 2009-2013 which 
sets  objectives  for  the  development  of  aquaculture  and  marine  fisheries,  including  scientific 
assessment  of  fish  stocks.  The  number  of  staff  responsible  for  fisheries  in  the  Ministry  of 
Agriculture has been increased. A draft Law on Marine Fisheries is before parliament. 

Overall, some progress can be reported on the strengthening of the legal framework, however, 
implementation  of  legislation  still  needs  to  be  enhanced.  Further  strengthening  of  the 
administrative  capacity  of  bodies  in  charge  of  phytosanitary  policy  and  food  safety  is 
required.  An  integrated  food  safety  system  still  needs  to  be  established.  The  administrative 
capacity  of  the  Ministry  of  Agriculture,  Forestry  and  Water  Management,  in  particular  as 
regards rural development, needs to be strengthened. 

4.2.3.  Environment 

Progress has been made as regards horizontal legislation. The government adopted a national 
environmental policy setting out national priorities and addressing cross-cutting issues, such 
as  the  need  to  bring  gradually  all  environmental  protection  issues  together  under  a  single 
ministry.  The  decree  on  the  amount  of  fees,  the  manner  of  calculation  and  payment  of  fees 
related to the pollution of the environment has been brought in line with the provisions of the 
Interim Agreement to the SAA (See point 4.2.4 Transport Policy). Alignment of the relevant 
environmental legislation with the acquis is moderately advanced. A national committee for 
approval  of  clean  development  mechanism  projects was  established. The Espoo Convention 
on  Environmental  Impact  Assessment  in  a  Transboundary  Context  and  the  Aarhus 
Convention on Access to Information, Public Participation in Decision-Making and Access to 
Justice in Environmental Matters were ratified. Further efforts are required on implementation 
and enforcement of legislation. 

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In  the  area  of  air  quality,  considerable  work  is  under  way,  but  little  tangible  progress  has 
been  achieved.  Amendments  to  the  Air  Quality  Law  aiming  to  improve  harmonisation  with 
EU  standards  and  a  rulebook  on  air  quality  assessment  are  being  developed,  but  alignment 
towards four directives on air quality, laying down the remaining definitions and air quality 
standards, needs to be finalised. Regarding air quality assessment, emission inventories need 
to be prepared.  The  national  and  local emission inventory for 2006 was updated in October 
2008.  Implementing  legislation  on  air  quality  is  also  required.  Gaps  to  be  filled  include 
identifying  conglomerations  and  zones,  establishing  a  monitoring  programme  and  database 
and making data available to the public. 

Limited  progress  has  been  made  in  the  field  of  waste  management.  Financial  and 
administrative  limitations  delayed  implementation  of  the  Waste  Management  Law  from 
1 November 2008 to 1 January 2010. Further work is required to develop the necessary by-
laws. Implementation of the strategic plan for waste management continued. A regulation was 
published  on  the  criteria,  amount  and  method  of  payment  of  fees  for  waste  management. 
Feasibility  studies  and  environmental  impact  assessments  on  six  regional  sanitary  landfill 
locations were finalised and projects are being designed. However, alignment with European 
standards  needs  considerable  strengthening  and  acceleration,  in  particular  concerning  the 
landfill Directive and the waste shipments regulation.  

Limited  progress  can  be  reported  on  water  quality.  A  Law  on  Water  Management  and 
Financing  was  adopted.  In  spite  of  some  progress,  the  degree  of  alignment  to  the  Drinking 
Water Directive remains very low. Alignment with European standards needs to be improved 
substantially. Further efforts are required to improve implementation and enforcement.  

Some  progress  can  be  reported  in  the  field  of  nature  protection.  A  Nature  Protection  Law 
established the legal framework for Natura 2000. Related by-laws have not yet been adopted. 
A number of international conventions and agreements were ratified, e.g. the Convention on 
the  Conservation  of  European  Wildlife  and  Natural  Habitats  (Bern  Convention),  the 
Convention on the Conservation of Migratory Species of Wild Animals (Bonn Convention), 
the  Agreement  on  the  Conservation  of  Cetaceans  of  the  Black  Sea,  Mediterranean  Sea  and 
Contiguous  Atlantic  Area  (ACCOBAMS),  the  European  Landscape  Convention  and  the 
Convention  on  the  Protection  of  Underwater  Cultural  Heritage.  A  Law  on  Mountain  Trails 
and amendments to the Law on National Parks were adopted. A decision on establishment of 
the  Nature  Protection  Institute  was  adopted.  Further  awareness-raising  efforts  are  needed  in 
this  field.  Inspection  measures  and  sanctions  have  not  yet  been  adopted.  The  level  of 
alignment  has 
implementation  and  enforcement  remain  challenges. 
Preparations in this area are at an early stage. 

improved,  but 

Some  progress  can  be  reported  on  industrial  pollution  control  and  risk  management, 
although there are no signs of transposition of the Mining Waste Directive. The Convention 
on Transboundary Effects of Industrial Accidents was ratified. Montenegro has aligned with 
almost all the relevant legislation, but implementation and enforcement remain challenges.  

There  was  no  progress  in  the  areas  of  chemicals  and  genetically  modified  organisms 
(GMOs). Implementation and enforcement in both fields remain weak. Preparations in these 
areas are at an early stage. 

There was no progress on noise abatement.  

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Further  efforts  are  needed  to  strengthen  the  administrative  capacity  of  all  institutions 
involved in environmental policy-making and enforcement. 

Following  establishment  of  the  new  government,  responsibility  for  the  environment  and 
spatial planning was assigned to the new Ministry of the Environment and Spatial Planning. 
Previously it had been divided between the Ministry of Tourism and the Environment and the 
Ministry of Economic Development (spatial planning). This redistribution of powers did not 
affect the administrative capacity in these areas, which remains limited.  

An  Environmental  Protection  Agency  (EPA),  with  a  wide  range  of  responsibilities  in 
implementing  and  enforcing  environmental  legislation,  was  formally  established  by 
government decree. A director was appointed and an operating budget allocated for 2009. So 
far  the  EPA  has  employed  14  permanent  staff  out  of  the  60  or  so  planned.  In  particular, 
environmental impact assessment (EIA) need to be properly carried out by the EPA whenever 
legally required and in proper coordination between all relevant authorities, including in cases 
(such as small-scale energy projects or in connection with the implementation of the spatial 
plan) where a local authority issues the permit and decides on the scope and final approval of 
EIA. Proper inspections need to be made possible at all levels, central and local. The limited 
resources of the EPA raise serious concerns about the ability of the new agency to perform its 
functions. 

The  sharing  of  responsibility  for  the  water  sector  between  the  Ministry  of  the  Environment 
and Spatial Planning and other ministries must be clarified. Coordination between the bodies 
involved in environmental protection issues, particularly in inspection activities, needs to be 
improved. There has been a considerable increase in the number of inspections conducted by 
the ecological inspectorate. However, the lack of implementation capacity at local level and 
poor coordination between central and local government are continuing to limit enforcement 
capacity.  Further  upgrading  of  the  administrative  capacity  of  the  ecological  inspectorate  is 
necessary.  

The  government  established  ‘Project  Consulting’  (PROCON),  a  company  in  charge  of 
managing projects in the field of communal services and environmental protection, primarily 
providing related logistical support to municipalities.  

Overall,  Montenegro  has  made  some  progress  on  legislative  alignment  with  European 
standards.  However,  implementation  and  enforcement  need  to  be  further  strengthened. 
Particular  attention  needs  to  be  paid  to  strengthen  administrative  capacity  and  to  establish 
effective inspection services. Work on awareness-raising on environmental protection issues 
needs  to  be  continued.  Environmental  protection,  in  particular  in  coastal  areas  and  national 
parks, remains a cause for concern. 

4.2.4.  Transport policy 

In  the  field  of  trans-European  transport  networks,  Montenegro  has  continued  to  actively 
participate  in  the  implementation  of  the  2004  Memorandum  of  Understanding  on  the 
development  of  the  South  East  Europe  Core  Regional  Transport  Network,  and  in  the  South 
East Europe Transport Observatory (SEETO) particularly by updating and implementing the 
Multi-annual Plan 2009-2013. Continued cooperation in the framework of SEETO and further 
improvement in the quality of the existing road and rail infrastructure are needed. 

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On  road  transport,  Montenegro  continued  to  allow  unrestricted  Community  transit  traffic 
through its territory. The decree amending the amount of fees, the manner of calculation and 
payment  of  fees  related  to  the  pollution  of  the  environment,  so  called  "Eco-tax",  has  been 
brought  in  line  with  the  Interim  Agreement  to  the  SAA.  The  amendment  ensures  eco-tax 
proportionality  for  foreign  heavy  goods  vehicles  entering  Montenegro  territory.  However, 
proportionality of the same tax applying to other EU vehicles coming to Montenegro and not 
covered  by  the  Interim  Agreement  remains  a  concern.  Amendments  to  the  Law  on  Road 
Traffic Safety were adopted. In January 2009 Montenegro became a member of INTERBUS. 
Progress  in  the  road  haulier  sector  was  limited  both  on  adoption  and  on  implementation  of 
harmonised  legislation.  The  Law  on  Contracts  for  Carriage  by  Road  was  adopted  by 
parliament.the  Law  on  Digital  Tachographs  remains  to  be  drafted.  The  draft  strategy  to 
improve  road  traffic  safety  has  yet  to  be  adopted.  The  traffic  safety  situation  remains 
unsatisfactory and additional prevention measures are necessary. 

In  the  field  of  rail  transport,  unbundling  of  the  railway  company  into  an  infrastructure 
company  (Montenegrin  Railway  Infrastructure)  and  an  operator  (Railway  Transport  of 
Montenegro) was followed by establishment of the commissions for privatisation of the newly 
established  companies.  A  border-crossing  agreement  was  concluded  with  Serbia  in  March 
2009, but it appears not to be in line with EU open access provisions (See point 4.1.4 Customs 
and taxation). However, no progress was reported on implementation of rail safety rules. The 
Railway  Directorate  which  under  the  new  government  regulations,  will  take  over 
responsibility for the rail transport department from the Transport Directorate has not yet been 
set up. 

In  the  field  of  maritime  transport,  there  is  limited  progress  to  report.  Restructuring  of  the 
national port at Bar through privatisation was launched. The port was divided into five limited 
liability companies. Privatisation will be implemented in two phases. The first phase, putting 
out  to  tender  the  Marina  Bar  port  authority,  started.  The  new  regulator,  the  Port 
Administration provided for by the Law on Ports, has not yet been set up. On safety issues, 
the rate of detention of Montenegrin vessels in the area covered by the Paris memorandum of 
understanding  reached  an  appalling  33%  in  2008,  indicating  clear  flag  State  insufficiencies 
that need to be addressed. Security issues also require particular attention. 

There  are  no  developments  to  report  in  the  fields  of  inland  waterways  and  combined 
transport. 

Concerning  air  transport,  alignment  of  national  legislation  on  aviation  with  the  acquis 
progressed. The 2008 Law on Civil Aviation came into force with effect from February 2009. 
Bilateral  air  services  agreements  have  been  signed  with  the  former  Yugoslav  Republic  of 
Macedonia and initialled with Croatia and Switzerland. However, the Law on Civil Aviation 
needs to be amended in line with the recommendations made in the 2008 ECAA assessment 
report to ensure compliance with the European Common Aviation Area (ECAA) Agreement. 
A  civil  aviation  safety  committee  has  still  not  been  established  and  this  is  preventing 
implementation of a civil aviation safety programme. The Montreal Convention has yet to be 
ratified  and  Montenegro  has  not  yet  become  a  full  member  of  the  European  Joint  Aviation 
Authorities (JAA). Relations with the European Aviation Safety Agency (EASA) have been 
put on a formal footing by a working arrangement signed on 7 July 2009. The administrative 
capacity of the relevant authorities is not yet up to the standards for proper enforcement of the 
aviation  acquis.  Despite  Montenegro  serious  engagement  in  the  recent  set  up  of  air  traffic 
national  bodies,  staff  available  is  limited.  Additional  efforts  are  necessary  to  ensure  the 
appropriate  level  of  alignment  with  European  standards.  Montenegro's  participation  in  the 

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Single  European  Sky  Committee  and  in  the  Implementation  of  the  Single  European  Sky  in 
South Eastern Europe (ISIS) Programme will be beneficial in this regard. 

Overall,  Montenegro’s  preparations  are  moderately  advanced  in  the  cases  of  road  and  rail 
transport, but still at an early stage for air and maritime transport. Progress on safety aspects 
and a systemic approach to development of transport is still limited. Considerable efforts are 
required to establish adequate administrative capacity and implement the acquis. 

4.2.5.  Energy 

Regarding security of supply, the new Energy Law remains to be adopted. It will address oil 
stocks, security of electricity and gas supply and cogeneration.  

Regarding  the  internal  energy  market,  in  line  with  the  national  energy  development 
strategy, an action plan for the period 2008-2012 was adopted in October 2008. It reflects the 
general objectives of the EU’s energy policy. The electricity market was opened for all non-
household  consumers  with  effect  from  1  January  2009.  The  regulator  has  adopted  rules  on 
qualified  buyers  of  electricity,  on  designation  of  the  public  electricity  supplier  and  on 
approval of market rules.  

Progress on restructuring the State electricity company (EPCG) has continued. Following the 
decision  to  unbundle  EPCG,  five  daughter  companies  were  established.  The  Company  Law 
was  amended  to  allow  unbundling  of  transmission  and  the  setting-up  of  a  transmission 
company and a holding company – EPCG AD. Four of the five daughter companies, dealing 
with  generation,  supply,  distribution  and  construction,  remain  part  of  the  holding  company. 
The transmission joint stock company was fully unbundled in April 2009. EPCG AD is being 
partly  privatised  by  means  of  a  capital  increase  and  sale  of  18.3%  of  its  shares  to  Italian 
power company A2A. In the next stage, the plan is to turn the four remaining companies into 
independent joint stock companies. Restructuring is due to be completed by the end of 2009. 

Decisions to award eight concessions to build and operate small hydroelectricity plants were 
adopted.  A  decision  determining  feed-in  tariffs  from  small  hydroelectricity  plants  was 
adopted. 

Preparation  are  being  made  for  putting  out  to  tender  construction  of  large  hydroelectricity 
plants, based on a concession.  

There has been little tangible progress in relation to renewable energy.  

Several  programmes  and  awareness-raising  campaigns  to  promote  energy  efficiency  were 
conducted as part of the Montenegrin Year of Energy Efficiency. The adoption of the Law on 
Energy Efficiency remains hereby of key importance.  

A  Law  on  Nuclear  Safety  and  Radiation  Protection  has  been  adopted  in  August  2009. 
Within  the  Environmental  Protection  Agency  a  regulatory  body  responsible  for  protection 
against ionising radiation was established. However, alignment with the acquis would require 
improvement of the regulatory infrastructure and enhancement of its technical capacity. The 
existence of hundreds of radioactive lightning rods spread all over the country still constitutes 
a radiological thread that needs to be addressed.  

Overall,  some  progress  can  be  reported  in  some  energy  sectors.  Steps  have  been  taken 
towards meeting the requirements of the Energy Community Treaty, such as the opening of 

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the  electricity  market  for  non-household  consumers,  but  further  efforts  are  required. 
Promoting energy efficiency and renewable energy sources is crucial. 

4.2.6. 

Information society and media 

Some  progress  has  been  made  on  electronic  communications  and 
information 
technologies. The liberalisation of the sector has continued. Even though narrowband is still 
predominant for connecting to the internet, as of January 2009 the broadband penetration rate 
was  5.5%  and  alternative  operators  held  around  20%  of  this  important  growth  market.  The 
mobile penetration rate was 184%.  

The  Agency  for  Electronic  Communications  and  Postal  Services  (EKIP),  established  by  the 
Law on Electronic  Communications, has come into operation. Its statutes, work programme 
and operational and financial plans were adopted. The agency increased its human resources. 
Rulebooks on the annual fees for numbers and addresses and on use of radio frequencies have 
been adopted. Rules on (higher) annual fees for numbers and addresses as well as for the use 
of frequencies were adopted. So far no comprehensive market analysis has been performed by 
EKIP.  However,  the  Law  on  Electronic  Communications  defines  significant  market  power 
(SMP)  operators  in  its  transition  articles  and  accordingly  new  licences  were  issued  to  these 
operators.  In  2009  EKIP  launched  the  market  analysis  and  designation  of  operators  holding 
SMP process. 

However, implementation of the Law on Electronic Communications was delayed by the late 
nomination  of  the  new  board  and  the  executive  director  of  the  Electronic  Communications 
Agency. The procedure for appointing the members of the board remains a cause for concern 
regarding  their  independence.  The  late  establishment  of  the  agency  delayed  adoption  of 
implementing  legislation,  including  rulebooks  on  number  portability  and  local  loop 
unbundling. The administrative capacity of the department for telecommunications policy in 
the Ministry of Transport, Maritime Affairs and Telecommunications remains weak. 

There has been no progress towards enhancing consumer protection. 

There  have  been  further  developments  regarding  information  society  services.  A  new 
Ministry  for  the  Information  Society  was  established  on  3  January  and  turned  into  the 
Ministry  for  Economic  Policy  and  the  Information  Society  with  the  formation  of  the  new 
government  in  June  2009.  It  is  responsible  for  information  and  communication  technology 
initiatives  in  all  government  bodies.  An  information  society  strategy  for  2009-2013  was 
adopted  in  February  2009.  Laws  on  personal  data  protection  and  on  personal  names  were 
adopted.  However,  the  Conditional  Access  Directive  has  not  yet  been  transposed.  Human 
resources  at  the  Ministry  for  Economic  Policy  and  the  Information  Society  are  still  weak. 
Electronic signature legislation is in the process of implementation.  

In the area of audiovisual policy and the media, a Law on Public Service Broadcasting was 
adopted  in  December  2008.  It  abolished  the  steering  committee  of  Radio  Television 
Montenegro  (RTCG)  and  transferred  its  powers  to  the  RTCG  Council,  which  has  nine 
members appointed by parliament. However, the political independence of the public service 
broadcaster has to be ensured. Licence fees for radio and television were abolished. RTCG is 
now financed from the State budget. It receives 1.2% of the annual budget. This provides the 
public broadcaster with stable financial resources.  

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The  responsibilities  of  the  Agency  for  Electronic  Communications  and  of  the  Broadcasting 
Agency under the Law on Electronic Communications regarding frequency licensing remain 
unclear. A disagreement between the two agencies regarding their competences contributed to 
delays in allocating a frequency to a private TV station.  

Overall,  some  progress  has  been  made  regarding  the  information  society  and  the  media. 
However, progress in this sector has been hindered by the late implementation of the Law on 
Electronic  Communications.  Concerns  remain  about  the  independence  of  the  Electronic 
Communications Agency. Disagreements on responsibility for frequency licensing are giving 
rise to concern and related competences and procedures require urgent clarification. Further 
strengthening of the legislation and related implementing regulations is needed. Greater focus 
needs to be put on implementing the national information society strategy. The effectiveness 
and independence of the public service broadcaster need to be ensured. 

4.2.7.  Financial control 

Some progress can be reported in the area of public internal financial control (PIFC), in line 
with  Montenegro’s  PIFC  policy  paper.  The  Law  on  PIFC  was  adopted  in  November  2008, 
followed by implementing legislation focusing on financial management and control (FMC) 
systems and internal audits (IA) in the public sector. A Central Harmonisation Unit for both 
FMC  and  IA  is  in  place  and  internal  audit  units  are  being  set  up  in  line  ministries.  Further 
efforts  are  required,  however,  to  draft  new  and  align  existing  implementing  legislation. 
Considerable  awareness-raising  at  all  levels  of  the  administration  and  training  remain 
necessary. 

In  the  area  of  external  audits,  progress  can  be  reported.  The  numbers  of  qualified  State 
auditors  and  of  audits  undertaken  are  increasing.  The  State  Audit  Institution  is  steadily 
developing  its  administrative  capacity  to  ensure  efficient  external  audit.  Parliament  adopted 
the institution’s annual report for the period from October 2007 to October 2008, accepting all 
the proposed conclusions.  

Overall,  Montenegro’s  preparations  in  the  fields  of  PIFC  and  external  audit  are  at  an  early 
stage.  

4.2.8. 

Statistics 

There  has  been  some  progress  on  statistical  infrastructure.  The  government  adopted  a 
development  strategy  for  statistics  for  2009-2012.  The  new  strategy  gives  the  Statistical 
Office of Montenegro (MONSTAT) the coordinating role for developing a statistical system 
in  compliance  with  the  European  Statistics  Code  of  Practice.  However,  an  action  plan  and 
financial  resources  for  implementing  the  strategy  are  still  not  available.  The  Statistical  Law 
needs to be revised to match the objectives of the strategy.  

Currently  MONSTAT  employs  135  people,  out  of  203  posts  allocated  by  the  organisation 
chart adopted in April 2008. The process of filling the new posts has been constrained by the 
lack of office space. Management capacity remains relatively weak, with three positions for 
assistant directors vacant for a whole year. Retaining skilled staff remains a problem. 

Some  progress  was  made  on  data  dissemination  policy.  A  release  calendar  for  2009  was 
published  on  MONSTAT’s  website  in  December  2008.  A  multiannual  statistical  work 
programme for 2009-2013 was adopted, providing the basis for the annual plans. Efforts are 

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required to implement the annual plans effectively. A memorandum of understanding remains 
to be signed with the Central Bank to ensure provision of timely and high-quality statistics, 
particularly in relation to GDP in accordance with ESA 95, the European System of Accounts.  

Progress in the field of classifications and registers has been limited.  

As  regards  sector  statistics,  progress  can  be  reported.  MONSTAT  conducted  the  pilot 
population and housing census in June 2009. The pilot agricultural census was conducted in 
2008  and  the  agricultural  census  law  was  adopted  in  July  2009.  The  preparations  for  the 
agricultural  census  in  April  2010  are  well  advanced.  Some  progress  has  been  made  on 
business  statistics,  but  generally  the  availability  of  business  statistics,  especially  short-term 
statistics, needs to be improved. Efforts are still needed to ensure that the 2011 population and 
housing  census  is  carried  out  in  a  timely  manner  in  line  with  EU  standards.  As  regards 
macroeconomic statistics, cooperation with the customs administration has improved, leading 
to  better  timeliness  and  quality  in  the  monthly  external  trade  statistics.  The  consumer  price 
index is now published monthly. Compliance with ESA 95 has progressed, but much remains 
to  be  done.  MONSTAT  still  does  not  produce  quarterly  national  accounts.  The  quality  and 
timeliness  of  data  need  to  be  improved;  annual  national  accounts  should  be  published  by 
September,  in  line  with  EU  standards.  Transmission  of  trade  data  to  Eurostat  needs  to  be 
improved. 

Overall, some progress can be reported in the area of statistics and Montenegro has started to 
address  its  targets.  However,  its  administrative  capacity  remains  weak  and  the  legislative 
framework needs to be further improved and completed. Substantial efforts remain necessary 
in all areas in order to improve compliance with EU standards. 

4.3. 

Justice, freedom and security 

4.3.1.  Visa, bordermanagement, asylum and migration 

Good progress has been made in the area  of visa policy  and in  the wider  framework of the 
visa liberalisation dialogue. In particular, Montenegro has taken important steps towards the 
benchmarks set in the road map for visa liberalisation and met the majority of them, allowing 
the  Commission  to  include  Montenegro  in  its  proposal  of  July  2009  for  visa  free  travel. 
Montenegro has established sound procedures for applying for and issuing travel documents, 
supported by suitable technology and equipment. By September 2009, it has issued 122,190 
new biometric passports in line with EU and international standards. Replacement of old-style 
travel documents by new biometric passports is expected to be completed by the end of 2009. 
The Law on Foreigners entered into force in January 2009. A new Visa Regulation, based on 
the Schengen rules, entered into force in March 2009. The visa policy is not yet fully in line 
with  European  standards.  Montenegro  still  has  limited  capacity  for  issuing  visas  in  the 
Ministry  of  Foreign  Affairs  and  at  its  few  diplomatic  and  consular  missions.  There  is  no 
electronic database or other IT system linking consular offices issuing visas with the Foreign 
Ministry.  Processing  applications  on  paper  hinders  effective  control  of  applicants,  in 
particular when visas are issued at border crossing points. The sector for migration, visas and 
readmission in the Ministry of the Interior and Public Administration needs to be reinforced in 
terms of both expertise and human resources. Montenegro has started to address its priorities 
in  the  area  of  visa  policy,  but  further  work  is  required.  As  regards  border  management, 
Montenegro made progress. It has continued to implement its integrated border management 
(IBM)  strategy  and  the  associated  action  plan.  Cross-border  cooperation  is  working  well 
under  both  formal  and  informal  arrangements.  The  border  police  carry  out  regular  joint 

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patrols with the Albanian border police and the Croatian police. Reconstruction of the Bozaj 
border  crossing  point  (BCP)  was  completed  and  work  has  started  on  reconstruction  of  the 
Dobrakovo  BCP.  The  Sukobin-Muriqan  joint  BCP  with  Albania  was  opened  in  June  2009. 
There  has  been  some  improvement  in  the  equipment  at  BCPs,  although  the  availability  of 
integrated passport readers remains limited and there are no devices for taking fingerprints.  

At  the  end  of  2008  a  memorandum  of  understanding  on  cooperation  on  IBM,  was  signed 
between  the  Ministry  of  the  Interior  and  Public  Administration,  the  Police  Directorate,  the 
Customs  Directorate,  the  Veterinary  Directorate  and  the  phytosanitary  administration.  A 
working  arrangement  with  FRONTEX  was  signed  in  June  2009.  Five  additional  border 
crossing points were connected to the Police Directorate’s central database and have access to 
the Interpol database. 

However, new legislation on State border control, including border surveillance, and related 
implementing legislation which will ensure further alignment with the Schengen acquis have 
yet  to  be  adopted.  The  border  demarcation  with  Serbia  and  Kosovo  is  still  pending. 
Surveillance systems are lacking at both the blue and green borders and the equipment used 
for border checks is not yet adequate. A basic training curriculum for border police needs to 
be  established.  Further  development  of  specialised  and  advanced  training  for  experienced 
border  police  staff  (with  special  reference  to  intelligence  personnel)  is  needed  in  order  to 
boost  the  capacity  to  prevent  and  detect  cross-border  crimes.  Inter-agency  cooperation  on 
border management requires further improvement by establishing a national coordination unit 
or  multi-agency  information  centre,  in  particular  to  allow  on-line  sharing  of  information 
between  institutions  for  their  day-to-day  work.  Progress  can  be  reported  in  relation  to 
establishment  of  a  risk  analysis  system.  However,  more  trained  intelligence  officers  are 
required at all levels. Linking all border crossing points into a network with online access to 
the national database and to the Interpol database must be addressed as a priority. 

Overall,  Montenegro  has  made  good  progress  on  addressing  priorities  in  the  area  of  border 
management but needs to maintain the pace of reforms. 

Limited  progress  has  been  made  in  the  area  of  asylum,  although  the  legislative  and 
institutional frameworks are almost complete. The Law on Asylum provides a broad spectrum 
of  rights.  There  are  very  limited  numbers  of  asylum-seekers  in  Montenegro:  in  2008  there 
were seven and to date in 2009 there have been 13.  

In practice, asylum-seekers and recognised refugees face certain obstacles, including difficult 
access  to  the  labour  market.  The  mixed  judicial/administrative  nature  of  the  State  Asylum 
Appeal Commission needs to be clarified. The law provides for no judicial recourse against its 
decisions. Its staff requires training on asylum issues. Construction of the planned reception 
centre for asylum-seekers has not yet begun. Currently accommodation for asylum-seekers is 
provided  by  the  bureau  for  the  care  of  refugees.  Proper  implementation  of  the  asylum 
legislation  needs  to  be  ensured,  including  due  examination  of  asylum  applications  and 
provision of judicial review in the event of refusal. 

Overall, Montenegro has started to address priorities in the area of asylum. However, further 
efforts are needed on implementation of legislation. 

Some  progress  has  been  made  on  migration.  The  Law  on  Foreigners  and  the  Law  on 
Employment  and  Work  of  Foreigners  have  been  in  force  since  January  2009.  The  Law  on 
Foreigners  broadly  reflects  the  principles  laid  down  in  the  Directive  on  common  standards 

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and  procedures  for  returning  illegally  staying  third-country  nationals.  A  number  of 
implementing  laws  related  to  the  Law  on  Foreigners  need  to  be  adopted.  The  border  police 
department  for  foreigners  and  fighting  illegal  migration  and  the  Ministry  of  the  Interior’s 
department for migration, visas and readmission deal with migration issues. The strategy for 
integrated  migration  management  for  2008-2013  and  the  action  plan  for  2008-2009  were 
adopted in November 2008. A council for monitoring implementation of the strategy has been 
established.  No  problems  have  been  observed  with  implementation  of  the  readmission 
agreement between Montenegro and the European Community. At the end of 2008 Albania, 
Bosnia and Herzegovina, Croatia, Montenegro, the former Yugoslav Republic of Macedonia 
and  Serbia  signed  a  memorandum  of  understanding  on  setting  up  a  system  for  sharing 
statistical  data  on  illegal  migration  and  participating  in  the  regional  system  of  advance 
notification. 

However,  the  human  resources  and  specialist  knowledge  on  migration  issues  within  the 
Ministry of the Interior need to be strengthened. Cooperation with other public institutions, in 
particular with the Employment Office, on unlawful employment of migrants remains weak. 
Integration  of  migrants  and  reintegration  of  Montenegrin  nationals  readmitted  under 
readmission agreements have not yet been sufficiently addressed. Further progress is needed 
on  collection  of  data  on  migration.  Detention  facilities  for  those  foreign  nationals  who 
illegally overstay are not yet adequate. 

Montenegro  needs  to  ensure  effective  implementation  of  the  legal  framework  aimed  at 
resolving  the  status  of  displaced  persons  from  Bosnia  Herzegovina  and  Croatia  and  resolve 
the status of displaced persons from Kosovo. 

Overall, there has been good progress in the area of migration. Further efforts are needed on 
implementation  of  legislation  and  enhancement  of  administrative  capacity  and  institutional 
cooperation. The issue of internally displaced persons needs to be resolved. 

4.3.2.  Money laundering 

Some  progress  has  been  achieved  in  the  fight  against  money-laundering.  Legislation 
implementing the Law on the Prevention of Money-Laundering and Terrorist Financing was 
adopted  in  December  2008.  These  two  regulations  put  in  place  rules  and  procedures  for 
reporting cash transactions over €15,000 and suspicious transactions and for organising data-
keeping, data protection, compliance officers’ professional training and internal control within 
the entities reporting to the anti-money-laundering administration. In March 2009, one further 
piece of implementing legislation was adopted on drafting guidelines for risk analysis for the 
purpose of preventing money laundering and terrorism financing. Police and prosecutors have 
received  training  on  identification  and  detection  of  money-laundering  and  confiscation  of 
criminal assets. 

The  directorate  for  prevention  of  money-laundering  and  terrorism  financing  is  maintaining 
databases  on  suspicious  transactions,  cash  transactions  over  a  given  threshold  and  court-
registered  real  estate  sales  contracts.  Analysts  from  the  directorate  also  have  access  to 
statistical reports on deposits and withdrawals and on investors in capital markets. However, 
the Directorate lacks an important software database (IBASE), which would facilitate national 
and  international  cooperation  and  exchange  of  data  with  law  enforcement  agencies.  It 
currently  employs  25  staff  of  the  foreseen  34  posts.  A  reporting  entities  register  makes  it 
possible to monitor reporting trends. The scope of reporting entities has been extended but the 
number of suspicious transactions reported decreased over 2008. 

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The requirements for identification of beneficial owners by the reporting entities, especially 
by  casinos  and  estate  agencies,  have  been  tightened  up  and  one  report  of  a  suspicious 
transaction has already been received from an estate agency. 

However, Montenegro’s effectiveness in fighting money-laundering needs to be enhanced. Its 
legislation  is  not  yet  fully  in  line  with  the  UN  Convention  against  Transnational  Organised 
Crime  and  the  UN  Convention  against  Illicit  Traffic  in  Narcotic  Drugs  and  Psychotropic 
Substances.  A  quarter  of  the  anti-money-laundering  administration’s  posts  have  not  been 
filled; staff turnover is high and remuneration low. The statistics produced are not yet reliable. 
A  clear  set  of  management  statistics  needs  to  be  agreed  so  that  the  appropriate  data  are 
collected on a routine basis. 

During 2008 only one report of a suspicious transaction was made by a money service bureau 
and none by lawyers or notaries. Tighter control needs to be exercised over funds invested in 
real  estate.  Only  five  of  the  eleven  commercial  banks  in  total  submitted  STRs  in  2008  and 
2009 and about half of all STRs originate from two banks. Reporting entities’ understanding 
of  their  obligations  to  report  to  the  anti-money-laundering  administration  needs  to  be 
improved,  as  does  supervision  of  compliance  by  reporting  entities.  This  calls  for  greater 
capacity in the anti-money-laundering administration. 

The March 2007 list of indicators for identifying suspicious customers and transactions needs 
to be updated. The capacity for a risk-based approach to dealing with suspicious transactions 
reported to the anti-money-laundering administration and the resulting implementation record 
remain  weak.  The  necessary  guidelines  are  not  yet  in  place.  Analysts  with  the  necessary 
training are needed for the directorate. 

The  capacity  of  the  police  and  the  prosecution  service  to  investigate  cases  of  money-
laundering remains insufficient. Only a small, though increasing number of money-laundering 
cases  were  forwarded  to  the  prosecution  service  by  the  police.  The  prosecution  service  still 
lacks  expertise  in  this  field.  In  2008  three  financial  investigations  were  conducted  by  the 
police in cooperation with the special prosecutor for fighting organised crime. There is a need 
to strengthen the human resources further, along with the expertise and technical capacity of 
the police and prosecutors, particularly for financial investigations. Between September 2008 
and August 2009 there was no conviction on money-laundering.  

The capacity for conducting financial investigations and awareness of their importance in the 
anti-money-laundering  administration,  the  police  and  the  prosecution  service  needs  to  be 
improved.  More  effective  inter-agency  cooperation  is  necessary  to  reduce  bureaucracy  and 
ensure regular feedback on investigations. This will require, amongst other things, revision of 
the current memoranda on cooperation between the anti-money-laundering administration, the 
police and the prosecutor’s office. 

Overall, Montenegro has continued to address its priorities, but money-laundering remains a 
serious problem linked to organised crime and corruption. Clear determination to prevent and 
combat money-laundering is needed. The fall in the number of investigations and of reports of 
suspicious transactions and the fact that there were no convictions for money-laundering are 
causes for concern.  

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4.3.3.  Drugs 

Montenegro  has  made  some  progress  in  the  fight  against  drugs.  The  national  strategic 
response  to  narcotics  and  the  associated  action  plan  are  being  implemented  under  the 
coordination of a new National Drugs Office. For the first time a survey on the use of alcohol, 
tobacco  and  drugs  was  conducted  in  line  with  the  EU  method.  Preventive  activities  have 
continued.  Police  and  customs  officers  have  received  training  on  control  of  precursors  and 
smuggling of drugs. A drug manual has been distributed to border police officers. There was 
an upward trend in seizures of most types of drugs during the reporting period. International 
cooperation on law enforcement in drug cases has improved. 

However, a Law on Precursors has not still been adopted. Montenegro remains a key link on 
the  transit  routes  for  drugs.  Domestic  drug  consumption  is  increasing.  The  capacity  of  the 
police  to  fight  drug-related  crime  continues  to  be  insufficient.  The  police  department 
responsible  for  combating  drug-related  crime  is  still  not  properly  staffed  and  equipped. 
Instruments  such  as  witness  protection  and  under-cover  agents  are  infrequently  used,  partly 
due to the inherent difficulty of using such tools in a very small, socially tightly-knit country. 
The National Drug Office has become operational but is understaffed. The planned national 
information  unit  on  drugs,  which  will  be  responsible  for  collecting  and  documenting 
information  on  drug  addicts,  has  yet  to  be  established.  Problems  persist  with  prevention  of 
drug addiction and with treatment and rehabilitation of addicts. Inter-agency and international 
cooperation on law enforcement needs to be strengthened. 

Overall,  Montenegro  has  started  to  address  its  main  priorities,  but  further  action  is  needed. 
The  institutional  framework  for  fighting  drug-related  crime  has  been  reinforced  and  seizure 
levels have increased. However, drug trafficking, in particular by groups engaged in organised 
crime, remains a serious cause for concern. Drug abuse is continuing to rise and there is still a 
lack of reliable statistics.  

4.3.4.  Police 

Some progress was made in the area of policing and police reform over the reporting period. 
The internal reorganisation continued. Staff has been receiving extensive training. The Police 
Academy continued to build its capacity for general and specialised training for various levels 
of staff, including specialised training for criminal and border police. A track record is being 
established in the area of internal control. Disciplinary measures have been imposed on 124 
police officers  while  from  February  to July 2009, criminal charges were brought against 27 
police  officers.  Pilot  implementation  of  intelligence-led  policing  has  started  in  two  regional 
police units – Bar and Budva, including the outpost of Ulcinj. A pilot project on community 
policing  has  also  been  successfully  implemented  in  all  regional  police  units.  A  modern 
forensic centre has started work. New equipment was provided to the police and new police 
uniforms were introduced. 

The police have been actively participating in international police cooperation and a number 
of  joint  operations  conducted.  Under  the  Convention  on  Police  Cooperation  for  South-East 
Europe  (Vienna  Convention),  the  Montenegrin  police  were  involved  in  cross-border 
cooperation and exchanged intelligence with the police services of neighbouring countries. 

However, the professional capacity of the police still needs to be improved,  in particular as 
regards  use  of  modern  investigation  and  analysis  techniques,  the  availability  of  basic 
infrastructure and equipment and a comprehensive IT network. Equipment and facilities need 

EN 

49 

   EN 

 
to be upgraded, in particular for the organised crime department. Police staff specialising in 
the fight against organised crime need to remain focused on this field rather than diverted to 
other  tasks.  Operational  effectiveness  and  security  require  that  dissemination  of  intelligence 
and  operational  data  need  to  be  based  on  the  ‘need  to  know’  principle  rather  than  on 
hierarchical channels of communication.  

Data  maintenance  rules  and  compilation  of  statistics  in  the  Police  Directorate  need  to  be 
improved.  The  overall  number  of  policemen  remains  high  compared  with  crime  rates.  The 
police internal control unit needs to be further strengthened. The overall reform of the police 
needs to continue with the adoption of a new Law on the Police, taking into account the new 
Criminal Procedure Code and strengthening police integrity and understanding of the role of 
the police as a provider of services to the public. Control of access to weapons and explosives 
needs to be tightened up. The strategic cooperation agreement with Europol has been ratified 
in August 2009.  

Overall, police reform in Montenegro is moderately advanced. 

4.3.5.  Fighting organised crime and terrorism 

Some  progress  can  be  reported  in  the  fight  against  organised  crime.  In  February  2009  the 
second  Additional  Protocol  to  the  European  Convention  on  Mutual  Legal  Assistance  in 
Criminal  Matters  entered  into  force.  The  government  adopted  the  fourth  and  fifth  report  on 
the  action  plan  for  implementation  of  the  programme  for  fighting  corruption  and  organised 
crime. Progress has been made on implementation across a large number of areas, although a 
considerable  number  of  measures  have  been  only  partially  implemented  or  not  yet  applied. 
The  national  commission  on  fighting  organised  crime  and  corruption  and  its  tri-partite 
commission  continued  their  activities  on  case  monitoring  and  on  harmonising  statistics  and 
methods of analysis. 

The  newly  adopted  Criminal  Procedure  Code  considerably  strengthens  the  legislative 
framework  for  fighting  organised  crime  and  corruption.  The  number  of  deputies  and 
administrative staff in the special prosecutor’s office for fighting organised crime, corruption, 
war crimes and terrorism was increased. The relevant departments in the two high courts have 
also been strengthened with the aid of specialised training. The number of investigations and 
indictments of organised crime cases increased and a higher number of final convictions were 
secured, including in a high-profile case concerning the murder of a journalist. The authorities 
have been actively participating in international judicial and police cooperation.  

The  Police  Directorate’s  unit  for  fighting  organised  crime  and  corruption  conducted  six 
financial  investigations  in  2008  and  brought  six  criminal  charges.  Three  financial 
investigations  were  initiated  between  January  and  April  2009,  of  which  one  concerned  an 
organised  crime  case.  The  investigative  and  operational  capacity  of  the  special  verification 
unit responsible for collecting and analysing intelligence was further developed and the unit 
was equipped with new computers. 

However,  efforts  are  still  needed  to  ensure  effective  implementation  of  delayed  measures 
under the action plan for fighting organised crime and corruption.  Future strategic priorities 
and activities need to be based on a thorough and comprehensive assessment of the real needs 
and  threats  related  to  organised  crime  and  corruption,  taking  into  account  the  resources 
available for  implementation.  The quality of statistics needs to be substantially  improved in 
order to be able to track trends in organised crime and corruption. Coordination, at national 

EN 

50 

   EN 

 
level, of international judicial cooperation needs to be formalised and improved. The working 
procedures, staff and technical equipment of the bodies in charge of international cooperation 
on law enforcement, in particular the international police cooperation unit, need to be further 
enhanced.  If  the  legislative  provisions  allowing  confiscation  of  criminal  assets  are  to  be 
effective, police and prosecutors need further training in financial investigations, so that they 
can  trace  criminal  assets  and  present  related  evidence  before  the  courts.  The  State  Agency, 
which will have the task of dealing with confiscated criminal assets, was established in July 
2009.  Enhanced  efforts  are  needed  to  ensure  the  necessary  institutional  and  administrative 
capacity to make it operational. 

The Police Directorate’s organised crime unit is understaffed and has no staff at local level. 
The  working  conditions  of  this  unit  are  inadequate  and  its  professional  skills  need  further 
upgrading,  especially  with  regard  to  modern  investigation  techniques,  including  financial 
investigation, which is not yet perceived as one of the main tools for tackling organised crime, 
corruption and money-laundering. 

The surveillance capability of the Police Directorate’s special verification unit is insufficient 
to conduct investigations effectively, because of the shortage of skilled staff and some special 
equipment.  Plans  to  develop  a  number of practical tools for  law enforcement practitioners -
such  as  a  manual  on  application  of  special  investigative  techniques  and  a  manual  on 
intelligence-led policing - have still to be implemented. Training and expertise, particularly on 
financial  investigative  methods,  need  to  be  improved  significantly,  as  do  equipment  and 
premises.  

A  cooperation  agreement  between  the  Police  Directorate  and  the  prosecutor’s  office  was 
signed  in  June  2009.  However,  implementation  of  other  planned  measures,  aimed  at 
formalising  the  existing  informal  inter-agency  cooperation  and  exchange  of  information, 
needs  to  continue.  Operational  cooperation  between  law  enforcement  agencies  could  be 
improved  by  the  establishment  of  a  national  coordination  unit  allowing  direct  exchanges  of 
information and intelligence between the police and the tax, customs and money-laundering 
administrations.  To  ensure  greater  efficiency,  gradual  development  of  the  necessary  expert 
skills  and  processing  procedures  is  needed,  together  with  production  and  systematic 
dissemination  of  intelligence  and  information  which  will  support  the  full-time  work  of  the 
unit. 

During the reporting period, convictions in organised crime have increased. In order to attain 
better  results,  consistent  use  will  have  to  be  made  of  new  legal  tools,  along  with  recruiting 
additional  specialised  police  and  prosecution  staff,  streamlining  procedures,  strengthening 
inter-agency cooperation and providing specialised training. 

Overall,  the  institutional,  legal  and  administrative  capacity  for  fighting  organised  crime  has 
been  strengthened.  The  improvements  to  the  legislation  on  criminal  procedure  are  a  major 
step in the right direction. However, the capacity of the police and judiciary to deal with such 
cases  remains  limited.  The  inefficiencies  in  prosecution,  trial  and  sentencing  of  organised 
crime in Montenegro remain a serious cause for concern. 

There  has  been  good  progress  in  the  fight  against  the  trafficking  of  human  beings. 
Montenegro is continuing to be used primarily as a transit country. The 2009 action plan to 
implement the strategy to fight trafficking in human beings was adopted in December 2008. It 
includes measures against the trafficking of children. The Council of Europe Convention on 
Trafficking of Human Beings entered into force in November 2008. Facilities are in place to 

EN 

51 

   EN 

 
support  and  protect  victims  of  trafficking.  Shelters  and  victim  assistance  schemes  are 
continuing  to  be  run  by  NGOs  and  financed  by  the  government.  Their  existing  capacity  is 
presently sufficient given the low number of victims of trafficking (four persons in 2007 and 
three  in  2008).  The  office  of  the  national  coordinator  on  trafficking  in  human  beings  has 
carried out extensive work on prevention and public awareness-raising to combat trafficking. 
Specialised  training  has  been  provided  to  relevant  institutions  at  national  and  local  levels. 
Cases  concerning  trafficking  in  human  beings  have  been  investigated  and  concluded  with 
convictions.  

Further measures are necessary to enhance the capacity of the authorities to identify potential 
victims. The need for changes to the existing legislation on illegal migration will have to be 
examined from this angle. 

Overall,  Montenegro  has  advanced  in  the  area  of  the  fight  against  trafficking  in  human 
beings, though efforts need to continue.  

Limited progress  has been  made  on  strengthening coordination  between and the capacity of 
the  law  enforcement  agencies  for  fighting  terrorism.  The  special  counter-terrorism  unit 
within the Police Directorate received further training and contributed to police operations, for 
example  by  protecting  persons  and  consignments  of  money.  A  national  strategy  against 
terrorism still needs to be adopted.  

Overall,  Montenegro's  framework  for  fight  against  terrorism  is  at  an  early  stage  of 
preparation. 

4.3.6.  Protection of personal data 

Some progress  was achieved,  in the form of adoption of the Law  on  Protection of Personal 
Data at the end of 2008. The Law entered into force but changes to the legislation as aiming at 
ensuring  the  independence  of  the  supervisory  authority  have  not  yet  been  adopted.  The 
President  and  members  of  the  Council  of  the  authority  were  not  appointed  within  the  time 
frame set out by the law.  

Personal  data  protection  has  not  yet  substantially  improved.  Montenegro  still  needs  to 
harmonise  its  data  protection  legislation  fully  with  the  EU  acquis.  The  newly  adopted  law 
does not give sufficient independence to the supervisory authority. The supervisory authority 
and the necessary information systems are not yet in place. Other legislation also needs to be 
aligned  with  the  Law  on  Personal  Data  Protection.  The  public  administration  needs  to  be 
trained on its new obligations regarding personal data protection. 

Overall,  Montenegro  has  started 

to  address  some  of 

its  priorities 

in 

this  area.

EN 

52 

   EN 

 
STATISTICAL ANNEX 

STATISTICAL DATA (as of 14 September 2009) 
Montenegro 

Basic data 
Population (thousand) 
Total area of the country (km²) 

National accounts 
Gross domestic product (GDP) (million national currency) 
GDP (million euro) 
GDP (euro per capita) 
GDP (in Purchasing Power Standards (PPS) per capita) 
SI: GDP (in PPS per capita, EU-27=100) 
SI: Growth rate of GDP (national currency, at constant prices, % change on previous year) 
SI: Employment growth (national accounts, % change on previous year) 
Labour productivity growth: GDP growth per person employed (% change on previous year) 
SI: Unit labour cost growth (national accounts, % change on previous year) 
SI: Labour productivity (GDP in PPS per person employed, EU-27=100) 
Gross value added by main sectors (%) 

Agriculture 
Industry 
Construction 
Services 

Final consumption expenditure, as a share of GDP (%) 
Gross fixed capital formation, as a share of GDP (%) 
Changes in inventories, as a share of GDP (%) 
Exports of goods and services, relative to GDP (%) 
Imports of goods and services, relative to GDP (%) 

Industry 
Industrial production volume index (2000=100) 

Note  1999 
610 

2000 
612 

2001 
615 

2002 
617 

2003 
619 

2004 
621 

2005 
623 

2006 
624 

2007 
625 

2008 
627 

13 812 13 812 13 812 13 812 13 812 13 812 13 812 13 812 13 812  13 812 

Note  1999 

1) 

: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 

2000 
: 
1 066 
1 750 
: 
: 
: 
: 
: 
: 
: 

12.4 
19.2 
4.3 
64.1 
91.9 
16.9 
5.5 
36.8 
51.1 

2001 
: 
1 295 
2 113 
: 
: 
1.1 
: 
: 
: 
: 

11.9 
20.7 
3.9 
63.4 
100.2 
17.5 
5.9 
38.4 
62.0 

2002 
: 
1 360 
2 208 
: 
: 
1.9 

2003 
: 
1 510 
2 435 
: 
: 
2.5 

 -19.9e  -8.9e 
11.4 
: 
: 

21.8 
: 
: 

12.2 
20.0 
4.0 
63.8 
105.8 
14.6 
4.1 
35.4 
59.9 

11.6 
19.2 
3.4 
65.8 
101.0 
13.3 
2.1 
30.6 
47.0 

2004 
: 
1 670 
2 684 
: 
: 
4.4 
2.7e 
1.7 
: 
: 

10.9 
18.7 
3.5 
66.9 
99.4 
17.0 
-0.4 
42.0 
58.1 

2007 
: 

2005 
: 

2006 
: 
1 815  2 149p 2 808p 
2 912  3 443p 4 484p 
: 
: 
41.0 
35.0 
8.6p 
10.7p 
 -5.0e  11.7e 
-1.0 
13.6 
: 
: 
: 
: 

: 
31.0 
4.2 
 -11.4e
15.6 
: 
: 

2008 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

10.4 
17.1 
3.6 
68.9 
99.8 
18.0 
-0.3 
43.6 
61.1 

8.5p 
10.1p 
13.6p 
16.0p 
4.2p 
4.3p 
73.7p 
69.5p 
104.2p 104.5p 
24.3p 
21.9p 
3.7p 
3.6p 
46.5p 
49.4p 
79.0p 
79.1p 

: 
: 
: 
: 
: 
: 
: 
: 
: 

Note  1999 
96.0 

2000 
100.0b

2001 
99.0 

2002 
100.0 

2003 
102.0 

2004 
116.0 

2005 
114.0 

2006 
115.0 

2007 
115.0 

2008 
113.0 

Inflation rate 
SI: Consumer price index (CPI), (total, % change on previous year) 

Note  1999 

: 

2000 
: 

2001 
: 

2002 
: 

2003 
: 

2004 
: 

2005 
: 

2006 
: 

2007 
: 

2008 
7.4 

Balance of payments 
Balance of payments: current account total (million euro) 
Balance of payments current account: trade balance (million euro) 

Note  1999 

: 
: 

2000 
: 
: 

2001 
: 
: 

2002 
-175 
-433 

2003 
-102 
-359 

2004 
-120 
-416 

2005 
-154 
-514 

2006 
-531 
-849 

2007 
-643 
-1 159 

2008 
-1 006 
-1 490 

EN 

53 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance of payments current account: net services (million euro) 
Balance of payments current account: net income (million euro) 
Balance of payments current account: net current transfers (million euro) 

of which government transfers (million euro) 
Net foreign direct investment (FDI) (million euro) 
Foreign direct investment (FDI) abroad (million euro) 

of which FDI of the reporting economy in EU-27 countries (million euro) 

Foreign direct investment (FDI) in the reporting economy (million euro) 

of which FDI of EU-27 countries in the reporting economy (million euro) 

Public finance 
General government deficit/surplus, relative to GDP (%) 
SI: General government debt, relative to GDP (%) 

Financial indicators 
Gross foreign debt of the whole economy, relative to GDP (%) 
Gross foreign debt of the whole economy, relative to total exports (%) 
Money supply: M1 (banknotes, coins, overnight deposits, million euro) 
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro) 
Money supply: M3 (M2 plus marketable instruments, million euro) 
Total credit by monetary financial institutions to residents (consolidated) (million euro) 
Interest rates: day-to-day money rate, per annum (%) 
Lending interest rate (one year), per annum (%) 
Deposit interest rate (one year), per annum (%) 
euro exchange rates: average of period - 1 euro = … national currency 
Effective exchange rate index (2000=100) 
Value of reserve assets (including gold) (million euro) 

External trade 
Value of imports: all goods, all partners (million euro) 
Value of exports: all goods, all partners (million euro) 
Trade balance: all goods, all partners (million euro) 
Terms of trade (export price index / import price index, 1998=100) 
Share of exports to EU-27 countries in value of total exports (%) 
Share of imports from EU-27 countries in value of total imports (%) 

Demography 
Natural growth rate: natural change (births minus deaths) (per 1000 inhabitants) 
Infant mortality rate: deaths of children under one year of age per 1000 live births 

: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 

Note  1999  2000  2001 

: 
: 

: 
: 

: 
: 

Note  1999  2000  2001 

2) 
3) 
4) 

5) 

: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

Note  1999  2000  2001 

: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 

Note  1999  2000  2001 
5.5 
14.6 

6.1 
11.1 

5.6 
13.4 

100 
76 
83 
: 
76 
0 
0 
76 
69 

2002 
: 
: 

2002 
: 
: 
: 
: 
: 
125 
: 
: 
: 
: 
: 
55 

2002 
: 
: 
: 
: 
: 
: 

2002 
4.8 
10.8 

112 
88 
58 
: 
39 
-5 
0 
44 
16 

2003 
: 
: 

2003 
: 
: 
285 
403 
494 
199 
: 
: 
: 

148 
86 
62 
: 
51 
-2 
-1 
53 
36 

2004 
: 
: 

2004 
: 
: 
291 
437 
547 
279 
: 
: 
: 

196 
18 
147 
6 
381 
-4 
-3 
384 
318 

2005 
: 
: 

2005 
: 
: 
351 
615 
867 
374 
: 
: 
: 

197 
31 
90 
7 
467 
-26 
-78 
493 
376 

2006 
: 
: 

2006 
: 
: 
484 
1 099 
1 587 
843 
: 
: 
: 

1.000  1.000  1.000  1.000 

: 
50 

: 
60 

: 
173 

: 
329 

440 
17 
59 
2 
525 
-115 
-71 
640 
515 

2007 
: 
: 

2007 
: 
: 
592 
1 557 
2 728 
2 213 
: 
: 
: 
1.000 
: 
512 

403 
8 
73 
9 
568 
-74 
-58 
641 
447 

2008 
: 
: 

2008 
: 
: 
512 
1 209 
2 339 
2 726 
: 
: 
: 
1.000 
: 
360 

2003 
: 
: 
: 
: 
: 
: 

2003 
4.3 
11.0 

2004 
: 
: 
: 
: 
: 
: 

2004 
3.4 
7.8 

2005 
974 
461 
-514 
: 
53.5 
45.3 

2005 
2.4 
9.5 

2006 
1 483 
627 
-855 
: 
62.2 
45.4 

2006 
2.5 
11.0 

2007 
2 073 
487 
-1 585 
: 
65.6 
41.3 

2008 
2 527 
433 
-2 094 
: 
61.3 
41.1 

2007 
3.0 
7.4 

2008 
: 
7.5 

EN 

54 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life expectancy at birth: male (years) 
Life expectancy at birth: female (years) 

Labour market 
Economic activity rate (15-64): share of population aged 15-64 that is economically active (%) 
SI: Employment rate (15-64): share of population aged 15-64 that is in employment (%) 

Share of male population aged 15-64 that is in employment (%) 
Share of female population aged 15-64 that is in employment (%) 

SI: Employment rate of older workers (55-64): share of population aged 55-64 that is in employment (%) 
Employment by main sectors (%) 

Agriculture 
Industry 
Construction 
Services 

SI: Unemployment rate: share of labour force that is unemployed (%) 

Share of male labour force that is unemployed (%) 
Share of female labour force that is unemployed (%) 

Unemployment rate of persons < 25 years: share of labour force aged <25 that is unemployed (%) 
SI: Long-term unemployment rate: share of labour force that is long-term unemployed (%) 

Social cohesion 
Average nominal monthly wages and salaries (national currency) 
Index of real wages and salaries (index of nominal wages and salaries divided by the CPI) (2000=100) 
SI: Early school-leavers: share of population aged 18-24 having not completed upper secondary education 
and not currently in education or training (%) 

Standard of living 
Number of passenger cars per 1000 population 
Number of subscriptions to cellular mobile telephone services per 1000 population 

Infrastructure 
Density of railway network (lines in operation, per 1000 km²) 
Length of motorways (thousand km) 

Innovation and research 
SI: Spending on human resources (public expenditure on education) relative to GDP (%) 
SI: Gross domestic expenditure on research & development, relative to GDP (%) 
SI: Percentage of households who have Internet access at home (%) 

Environment 
SI: Total greenhouse gases emissions, CO2 equivalent (tons, 1990=100) 
SI: Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP 2004) 

70.7 
76.1 

71.1 
76.3 

71.4 
76.5 

70.9 
75.7 

70.4 
74.9 

71.0 
75.3 

70.4 
74.9 

Note  1999 
58.5 
39.2 
47.3 
31.4 
: 

6) 
6) 
6) 
6) 

7) 
7) 
7) 
7) 

2.6 
22.5 
3.0 
71.8 
19.3 
: 
: 
: 
: 

2000 
60.4 
38.5 
46.2 
30.6 
: 

3.4 
22.4 
3.5 
70.8 
19.3 
: 
: 
: 
: 

2001 
57.1 
37.1 
45.6 
29.0 
: 

3.1 
25.8 
2.1 
69.1 
21.2 
: 
: 
: 
: 

2002 
59.1 
37.7 
46.6 
29.0 
: 

3.0 
26.0 
2.1 
68.8 
20.7 
: 
: 
: 
: 

2003 
58.9 
36.2 
44.5 
28.1 
: 

1.8 
25.7 
2.0 
70.6 
22.7 
: 
: 
: 
: 

2004 
51.7b 
37.4b 
46.5b 
28.8b 
: 

10.9b 
16.5b 
3.4b 
69.2b 
27.7b 
: 
: 
: 
: 

2005 
49.9 
41.0 
42.4 
27.6 
: 

8.6 
16.3 
2.9 
72.1 
30.3 
: 
: 
: 
: 

70.7 
74.8 

2006 
49.0 
41.0 
41.0 
29.0 
: 

6.8 
14.8 
4.7 
73.7 
29.6 
: 
: 
: 
: 

71.2 
76.1 

71.2 
76.1 

2007 
53.0 
43.0 
48.0 
37.0 
: 

8.1 
13.8 
3.8 
74.3 
19.3 
18.1 
20.9 
: 
: 

2008 
51.9 
43.2 
50.8 
36.1 
: 

7.6 
15.3 
6.1 
71.0 
16.8 
15.9 
17.9 
: 
: 

Note  1999 

2000 

2002 
164.4  181.0  211.0  149.1 
109.7 
99.9 

100.0 

2001 

91.6 

2003 
2005 
2004 
173.9  195.3  213.1 
119.3  130.9  139.7 

2006 
246.0 
156.4 

2007 
2008 
338.0  416.0 
179.9  195.2 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

Note  1999 

2000 

2002 
184.6  185.3  161.0  166.8 
639.6  775.5 

2001 

: 

: 

2003 
2005 
2004 
171.8  176.1  190.9 
674.4  778.7  872.0  1 127.5 

2006 
: 

Note  1999 
18.1 
: 

Note  1999 

: 
: 
: 

Note  1999 

: 
: 

2000 
18.1 
: 

2000 
: 
: 
: 

2000 
: 
: 

2001 
18.1 
: 

2001 
: 
: 
: 

2001 
: 
: 

2002 
18.1 
: 

2002 
: 
: 
: 

2002 
: 
: 

2003 
18.1 
: 

2003 
: 
: 
: 

2003 
: 
: 

2004 
18.1 
: 

2004 
: 
: 
: 

2004 
: 
: 

2005 
18.1 
: 

2005 
: 
: 
: 

2005 
: 
: 

2006 
18.1 
: 

2006 
: 
: 
: 

2006 
: 
493.8 

2007 
: 
384.4 

2007 
: 
: 

2007 
: 
: 

2007 
: 
: 
: 

2008 
: 
: 

2008 
: 
: 

2008 
: 
: 
: 

2008 
: 
: 

EN 

55 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SI: Share of renewable energy in electricity consumption (%) 
SI: Road freight transport as a share of total inland freight transport (modal split of freight transport) (%) 

: 
: 

: 
: 

: 
: 

: 
: 

: 
: 

: 
: 

: 
: 

: 
: 

: 
: 

: 
: 

Energy 
Primary production of all energy products (thousand TOE) 
Primary production of crude oil (thousand TOE) 
Primary production of hard coal and lignite (thousand TOE) 
Primary production of natural gas (thousand TOE) 

Net imports of all energy products (thousand TOE) 
Gross inland energy consumption (thousand TOE) 
Electricity generation (thousand GWh) 

Agriculture 
Agricultural production volume index of goods and services (producer prices, previous year=100) 
Total utilised agricultural area (thousand hectare) 
Livestock: cattle (thousand heads, end of period) 
Livestock: pigs (thousand heads, end of period) 
Livestock: sheep and goats (thousand heads, end of period) 
Production and utilisation of milk on the farm (total whole milk, thousand tonnes) 
Crop production: cereals (including rice) (thousand tonnes, harvested production) 
Crop production: sugar beet (thousand tonnes, harvested production) 
Crop production: vegetables (thousand tonnes, harvested production) 

Note 

Note 

8) 
9) 
9) 
9) 
10) 
11) 

1999 
: 
: 
: 
: 
: 
: 
2.7 

1999 
106.0 
518p 
180e 
22e 
306e 
195e 
4p 
: 
: 

2000 
: 
: 
: 
: 
: 
: 
2.7 

2000 
95.0 
518p 
179e 
19e 
293e 
197e 
3p 
: 
: 

2001 
: 
: 
: 
: 
: 
: 
2.5 

2001 
107.0 
518p 
178e 
21e 
244e 
194e 
4p 
: 
: 

2002 
: 
: 
: 
: 
: 
: 
2.3 

2002 
106.0 
518p 
183e 
22e 
241e 
198e 
5p 
: 
: 

2003 
: 
: 
: 
: 
: 
: 
2.7 

2003 
101.0 
518p 
175e 
24e 
252e 
203e 
4p 
: 
: 

2004 
: 
: 
: 
: 
: 
: 
3.3 

2004 
104.0 
518p 
169e 
27e 
254e 
209e 
3p 
: 
: 

2005 
: 
: 
: 
: 
: 
: 
2.9 

2005 
99.0 
517p 
118 
11 
255 
186 
3p 
: 
: 

2006 
982 
: 
982 
: 
-49 
933 
3.0 

2006 
102.0 
517 
115 
13 
249 
178 
3 
: 
: 

2007 
795 
: 
795 
: 
87 
804 
2.1 

2007 
89.0 
516 
109 
10 
222 
173 
2 
: 
: 

2008 
1 136 
: 
1 136 
: 
-25 
1 111 
2.8 

2008 
: 
516 
106 
10 
209 
160 
3 
: 
: 

SI = Structural indicators 
: = not available 
p = provisional value 
e = estimated value 
b = break in series 
1) The data are without Financial Intermediation Services Indirectly Measured (FISIM). 
2) As of 31 December. Instead of standard M1, data under national definition of M0 are provided. 
3) As of 31 December. Instead of standard M2, data under the national definition of M11 are provided. The monetary aggregate M11 comprises M1 increased by the Central Government’s demand deposits 
in euros and other currencies. The monetary aggregate M2 includes M1 and the non-banking sector’s time deposits with banks, in euros and other currencies, excluding deposits of the Central Government. 
4) As of 31 December. Instead of standard M3, data under the national definition of M21 are provided. Monetary aggregate M21 comprises M2 increased by the Central Government’s time deposits in euros 
and other currencies. 
5) No official national currency exists. Euro is the currency in use. 
6) Age group refers to persons aged 15 or more years. 
7) From 2004 onwards, a new methodology, harmonized with the EU requirements, is used.  
8) Agricultural area includes: arable land, area under pastries, fishponds and ponds. 
9) Number of livestock in 1 000 including enterprises and cooperatives and households. 
10) Calculated net quantity in 1 000 tonnes; includes enterprises and cooperatives, and households. 
11) Includes households, enterprises and cooperatives. 

EN 

56 

EN