COMMISSION STAFF WORKING DOCUMENT MONTENEGRO 2012 PROGRESS REPORT accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Enlargement Strategy and Main Challenges 2012-2013
Date: 2012-10-10
Institutions: European Commission
Subjects: Community acquis, Montenegro, accession criteria, economic reform, political reform

EUROPEAN 
COMMISSION 

Brussels, 10.10.2012  
SWD(2012) 331 final 

COMMISSION STAFF WORKING DOCUMENT 

MONTENEGRO 
2012 PROGRESS REPORT 

accompanying the document 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Enlargement Strategy and Main Challenges 2012-2013 

{COM(2012) 600 final}

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TABLE OF CONTENTS 

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

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

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

Relations between the EU and Montenegro................................................................. 4 

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

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

Human rights and protection of minorities ................................................................ 12 

Regional issues and international obligations ............................................................ 16 

Economic criteria ....................................................................................................... 17 

The existence of a functioning market economy ....................................................... 17 

The capacity to cope with competitive pressure and market forces within the Union
.................................................................................................................................... 21 

Ability to take on the obligations of membership...................................................... 23 

Chapter 1: Free movement of goods .......................................................................... 23 

Chapter 2: Freedom of movement for workers .......................................................... 25 

Chapter 3: Right of establishment and freedom to provide services ......................... 26 

Chapter 4: Free movement of capital ......................................................................... 27 

Chapter 5: Public procurement................................................................................... 28 

Chapter 6: Company law............................................................................................ 29 

Chapter 7: Intellectual property law........................................................................... 29 

Chapter 8: Competition policy ................................................................................... 30 

Chapter 9: Financial services ..................................................................................... 31 

1. 

1.1. 

1.2. 

1.3. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

4. 

4.1. 

4.2. 

4.3. 

4.4. 

4.5. 

4.6. 

4.7. 

4.8. 

4.9. 

4.10.  Chapter 10: Information society and media ............................................................... 32 

4.11.  Chapter 11: Agriculture and rural development......................................................... 33 

4.12.  Chapter 12: Food safety, veterinary and phytosanitary policy .................................. 34 

4.13.  Chapter 13: Fisheries.................................................................................................. 35 

4.14.  Chapter 14: Transport policy ..................................................................................... 35 

4.15.  Chapter 15: Energy .................................................................................................... 36 

4.16.  Chapter 16: Taxation.................................................................................................. 37 

4.17.  Chapter 17: Economic and monetary policy.............................................................. 38 

4.18.  Chapter 18: Statistics.................................................................................................. 39 

4.19.  Chapter 19: Social policy and employment ............................................................... 39 

4.20.  Chapter 20: Enterprise and industrial policy.............................................................. 42 

4.21.  Chapter 21: Trans European Networks ...................................................................... 42 

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4.22.  Chapter 22: Regional policy and coordination of structural instruments .................. 43 

4.23.  Chapter 23: Judiciary and fundamental rights ........................................................... 44 

4.24.  Chapter 24: Justice, freedom and security ................................................................. 50 

4.25.  Chapter 25: Science and research .............................................................................. 55 

4.26.  Chapter 26: Education and culture............................................................................. 55 

4.27.  Chapter 27: Environment and climate change ........................................................... 56 

4.28.  Chapter 28: Consumer and health protection............................................................. 58 

4.29.  Chapter 29: Customs union........................................................................................ 60 

4.30.  Chapter 30: External relations.................................................................................... 60 

4.31.  Chapter 31: Foreign, security and defence policy...................................................... 61 

4.32.  Chapter 32: Financial control..................................................................................... 62 

4.33.  Chapter 33: Financial and budgetary provisions........................................................ 63 

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1. 

INTRODUCTION 

1.1. 

Preface 

Since March 2002, the Commission has reported regularly to the Council and Parliament on 
progress made by the countries of the Western Balkans region. This is the second report on 
Montenegro’s  progress  since  the  Commission  published  its  Opinion  on  the  country’s 
application  for  membership  of  the  European  Union  in  November  2010  and  the  European 
Council granted Montenegro candidate status in December 2010.  

This report on progress made by Montenegro on preparing for EU membership: 

– 

– 

– 

– 

briefly describes relations between Montenegro and the Union; 

analyses the situation in Montenegro in terms of the political criteria for membership; 

analyses  the  situation  in  Montenegro  on  the  basis  of  the  economic  criteria  for 

membership; 

reviews developments as regards Montenegro’s capacity to take on the obligations of 
membership, that is the acquis expressed in the Treaties, the secondary legislation and the 
policies of the Union. 

This report covers the period from October 2011 to September 2012. 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 sources 
have been used, including contributions from the government of Montenegro, the EU Member 
States,  European  Parliament  reports1  and  information  from  various  international  and  non-
governmental organisations. 

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

1.2. 

Context 

The Stabilisation and Association Agreement between Montenegro and the EU was signed in 
October 2007 and entered into force in May 2010. 

Montenegro presented its application for membership of the European Union on 15 December 
2008.  Following  a  request  by  the  Council,  the  Commission  submitted  its  Opinion  on 
Montenegro’s  application  in  November  2010.  In  December  2010,  the  European  Council 
granted Montenegro candidate country status.  

1.3. 

Relations between the EU and Montenegro 

The Commission recommended opening accession negotiations with Montenegro in October 
2011. This recommendation was reiterated in May 2012. Following a positive decision by the 
Council,  endorsed  by  the  European  Council,  accession  negotiations  with  Montenegro  were 
opened in June 2012. The screening of the chapters on judiciary and fundamental rights, and 
justice,  freedom  and  security  took  place  in  spring,  in  line  with  the  new  approach  for  these 

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The rapporteur for Montenegro is Mr Charles Tannock. 
Enlargement Strategy and Main Challenges 2012-2013 - COM(2012) 600.  

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chapters. Screening reports to be prepared by the Commission for these chapters will provide 
substantial guidance, including on the tasks to be addressed in the action plans to be adopted 
by the Montenegrin authorities, which will constitute the opening benchmarks. The screening 
of  the  remaining  chapters  started  in  September,  with  the  chapters  on  science  and  research, 
education and culture, and public procurement. 

Montenegro is participating in the Stabilisation and Association Process. 

Overall,  Montenegro  continued  to  implement  its  obligations  under  the  Stabilisation  and 
Association Agreement (SAA) smoothly. The Stabilisation and Association Committee met 
in July and five sub-committee meetings have been held since October 2011. The stabilisation 
and  associations  meetings  between  representatives  of  the  European  Parliament  and  of  the 
Montenegrin parliament continued to be held bi-annually. Members of the Joint Consultative 
Committee  between  the  EU  Committee  of  the  Regions  and  Montenegro’s  local  authorities 
have  been  appointed  in  March.  A  Civil  Society  Joint  Consultative  Committee  between  the 
European  Economic  and  Social  Committee  and  civil  society  organisations  of  Montenegro 
held its inaugural meeting in October 2012.  

Montenegro participates in multilateral economic dialogue with the Commission and the EU 
Member  States.  The  aim  of  this  dialogue  is  to  prepare  Montenegro  for  participation  in 
multilateral  surveillance  and  economic  policy  coordination  under  the  EU’s  Economic  and 
Monetary Union. The dialogue included a ministerial meeting in Brussels in May 2012.  

Visa  liberalisation  for  citizens  of  Montenegro  travelling  to  the  Schengen  area  has  been  in 
force  since  December  2009.  The  Commission  set  up  a  post-visa-liberalisation  monitoring 
mechanism  to  assess  whether  the  implementation  of  reforms  introduced  by  the  country  was 
consistent  with  the  visa  roadmap  and  sustainable.  This  was  complemented  by  an  alert 
mechanism to prevent abuses. The Commission presented its second monitoring report to the 
European  Parliament  and  the  Council  in  December  2011  and  adopted  the  third  in  August 
2012. A readmission agreement between the European Union and Montenegro has been in 
force since January 2008. 

The EU provides financial assistance to Montenegro under the Instrument for Pre-accession 
Assistance  (IPA).  For  the  period  2007-2013,  IPA  allocations  to  Montenegro  total  € 235.2 
million.  Adopted  in  November  2011,  the  2011-2013  Multiannual  Indicative  Planning 
Document  (MIPD)  for  Montenegro  entered  into  force  on  1  March  2012.  The  revised  IPA 
Regulation  transferring  Montenegro  from  Annex  II  (potential  candidates)  to  Annex  I 
(candidates) entered into force on the same date. The IPA National Programme 2011 came to 
€ 26 million and was adopted by the Commission in November 2011. The total IPA allocation 
for  2012  is  € 35 million  and  € 34,6  million  for  2013.  Like  the  2011  programme,  the  2012-
2013 national programme for Montenegro is focused on the priority sectors identified in the 
MIPD,  in  particular  the  rule  of  law,  public  administration  reform,  the  environment  and 
climate change. Montenegro also benefits from regional and horizontal IPA programmes. It is 
participating in five cross-border cooperation programmes with neighbouring Western Balkan 
countries; including in the new 2011-2013 cross-border cooperation programme with Kosovo∗ 
adopted  in  December  2011.  Montenegro  is  also  participating  in  transnational  cooperation 
programmes under the European Regional Development Fund and in the IPA Adriatic cross-
border programme with Member States. The IPA programme is currently managed by the EU 
Delegation  in  Podgorica.  Montenegro’s  preparations  for  transferring  management  of 
components  I  and  II  of  the  IPA  programme  from  the  EU  to  the  national  authorities  have 
advanced further. 

∗  

This designation is without prejudice to positions on status, and is in line with UNSCR 1244 and the 
ICJ Opinion on the Kosovo declaration of independence. 

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EU financial support has been provided for the development of civil society under the Civil 
Society Facility.  

Montenegro  is  participating  in  the  following  EU  programmes:  the  Seventh  Research 
Framework Programme; the Entrepreneurship and Innovation Programme and the Information 
the 
Communication  Technologies  Policy  Support  Programme  2011,  both  under 
Competitiveness  and  Innovation  Framework  Programme;  Culture  2007-2013;  and  Customs 
2013. 

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. 

2.1. 

Democracy and the rule of law 

Parliament 

Following parliament’s decision in July 2012 to shorten its mandate, the President called for 
early parliamentary elections to be held on 14 October.  

As  regards  the  legislative  framework  for  elections,  the  law  on  the  election  of  municipal 
councillors  and  members  of  parliament,  adopted  in  September  2011,  has  started  to  be 
implemented. All parliament’s seats have been awarded on the basis of the candidates’ order 
on the electoral lists, unlike previously, when half of them were awarded at the discretion of 
the  candidate  list  submitter.  The  president  and  nine  members  of  the  State  Election 
Commission  were  appointed  by  the  parliament  in  December  2011.  The  new  provisions 
providing  for  30%  of  female  candidates  on  the  candidate  lists  were,  for  the  first  time, 
implemented  in  elections  held  in  two  municipalities  in  April.  Nevertheless,  women  remain 
underrepresented in the parliament. 

The  electoral  legislation  needs  to  be  amended  in  line  with  a  number  of  pending 
OSCE/ODHIR  and  Venice  Commission  recommendations,  in  particular  as  regards  the 
dissolution  of  coalitions  and  their  funding  obligations,  and  the  extension  of  the  Central 
Election Commission’s mandate to municipal elections. The issue of  the constitutional two-
year residency requirement before citizens can obtain the right to vote remains unaddressed 
for  national  elections.  No  sanctions  are  provided  for  certain  provisions  of  the  law,  in 
particular  with  regard  to  the  restriction  for  public  officials  to  participate  in  election 
campaigns. 

The parliament amended its rules of procedure in May, which entered into force in July. The 
new  rules  provide  for  more  regular  control  hearings  and  enhanced  guarantees  for  draft 
legislation  presented  by  the  opposition  parties  to  be  examined  by  the  parliament.  They  also 
provide  for  the  setting-up  of  stand-alone  parliamentary  committees  on  European  integration 
and anti-corruption matters, chaired by opposition MPs. As a result, the National Council for 
European  Integration  has  been  abolished.  European  integration  remains  a  key  priority  for 
parliamentary work.  

There has been further progress with regard to the transparency of the parliament’s work. At 
the request of civil society organisations, it started publishing the voting record of individual 
MPs on its website in December 2011. A new law adopted in November 2011 regulates the 
Parliament’s  relations  with  lobbyists.  Further  measures  have  been  taken  to  improve 

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interaction  with  civil  society  and  the  public.  The  human  rights  and  freedoms  parliamentary 
committee has been tasked to deliberate on petitions and complaints submitted by citizens and 
civil society. However, procedures for acting upon civil initiatives have not been adopted yet.  

The parliament has continued its intensive legislative activity, which has included a number 
of  areas  relating  to  European  integration,  such  as  preventing  money  laundering  and  the 
financing of terrorism, and auditing EU funds. The work of the research department has been 
strengthened.  The  role  and  the  capacity  of  the  parliament  in  monitoring  the  process  of 
bringing  Montenegro’s  laws  into  line  with  EU  law  have  been  enhanced.  The  new  rules  of 
procedure  tasked  the  parliamentary  committees  to  monitor  the  implementation  and  the 
compliance  of  new  legislation  with  the  EU  acquis  in  the  areas  of  their  competence.  Their 
capacity and expertise are to be further strengthened in this regard. 

Parliament’s  oversight  role  has  been  enhanced,  notably  through  the  adoption  of  a  law  on 
parliamentary inquiry, amendments to the parliament’s rules of procedure and to the law on 
data secrecy, as well as a steady increase in the number of parliamentary questions, scrutiny 
and consultative hearings with high-level state officials and discussions of reports submitted 
by  various  institutions.  The  defence  parliamentary  committee  has  been  tasked  by  the  new 
rules of procedure to monitor the work of all security bodies and for the first time, under the 
law  on  parliamentary  oversight  of  the  security  and  defence  sector,  it  examined  the  activity 
report  of  the  police  and  the  state  of  security.  As  regards  parliamentary  oversight  of  anti-
corruption  matters,  in  February  the  parliament  decided,  for  the  first  time,  to  open  a 
parliamentary  investigation  and  establish  a  committee  of  inquiry  in  charge  of  collecting 
information and preparing a report on alleged corruption in the privatisation of the company 
‘Telekom Crne Gore’. The law on parliamentary inquiry, enacted in July, defined the scope of 
work of the committee of inquiry and provided it with the possibility to request information 
from  all  state  and  local  bodies  and  legal  entities.  Follow-up  to  the  conclusions  adopted  by 
parliamentary committees in oversight hearings is limited and needs to be reinforced.  

The  Parliament’s  administrative  capacity  has  been  strengthened,  notably  through  increased 
staff  numbers,  from  100  in  October  2011  to  122  in  August  2012,  and  a  number  of  training 
courses. Continued efforts are needed to further enhance the parliament’s administrative and 
expert capacity, for all parliamentary committees too. Office space and technical equipment is 
lacking,  even  for  MPs.  Training  of  existing  staff  and  the  recruitment  of  qualified  new  staff 
need to be pursued. 

Overall,  progress  has  been  made  with  regard  to  Parliament’s  functioning  and  its  legislative 
and  oversight  role  in  matters  including  the  rule  of  law.  Implementation  of  recently  adopted 
legislation  on  elections  has  started,  and  the  administrative  and  expert  capacity  of  the 
parliament  has  been  reinforced.  Transparency  has  improved  and  stand-alone  committees  on 
European integration and on combating corruption have been provided for. Efforts undertaken 
to enhance the parliament’s legislative and oversight capacity need to be pursued.  

Government 

The composition of the government changed in March and July. The Parliament appointed a 
new Minister for Foreign Affairs and  European Integration, following the  resignation of his 
predecessor.  A  new  Minister  for  Minority  Rights  was  appointed,  while  the  Deputy  Prime 
Minister  and  Minister  of  Justice  took  over  the  human  rights  portfolio.  A  new  Minister  of 
Defence was also appointed.  

In  December,  the  government  appointed  the  Chief  Negotiator  for  Montenegro’s  accession 
negotiations,  who  also  became  State  Secretary  for  European  Integration  and  National 
Coordinator for the IPA. In February, the government adopted a decision on the structure of 

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accession negotiations with the EU. The working groups for negotiations on chapters 23 and 
24  were  set  up  in  March,  while  those  for  chapters  5,  25  and  26  in  July.  They  include 
representatives  of  civil  society.  The  working  groups  for  the  remaining  chapters  are  being 
gradually appointed.  

In December, the government adopted a rulebook for the internal organisation of the Ministry 
of Foreign Affairs and European Integration with the aim of strengthening its structures and 
human  resources.  The  administrative  capacity  for  the  coordination  of  European  integration 
and  the  accession  negotiations  of  most  of  the  acquis  chapters  needs  to  be  substantially 
strengthened.  

The  government’s  rules  of  procedure,  adopted  in  December  and  in  force  since  January, 
introduced mandatory impact assessments for draft legislation and required the government to 
submit  its  work  programme  to  the  parliament.  The  rules  also  provided  for  enhanced  public 
consultations  on  draft  legislation  and  strengthened  expert  support  for  the  government’s 
working  bodies.  Two  related  decrees  were  adopted,  setting  out  procedures  for  cooperating 
with  NGOs  and  for  conducting  public  debates. The government also  adopted  its 2012 work 
programme and an analysis of the implementation of laws and by-laws, concluding that law 
enforcement is deficient in certain areas and adopting a number of follow-up measures.  

With regard to local self-government, a law on the territorial organisation of Montenegro was 
enacted in November and the law on local self-government amended in July, with a view to 
enhancing the transparency, efficiency and accountability of the administration at local level. 
An  obligation  was  introduced  for  the  municipal  authorities  to  publish  all  contracts  with 
natural or legal persons on their official websites. In June, the government adopted an analysis 
of the functioning of the local self-government, which contains recommendations for further 
legislative  amendments.  Local  administration  needs  to  be  rationalised  and  its  efficiency 
strengthened. 

Overall,  government  policy-making  has  further  improved.  The  structures  for  the  accession 
negotiations  are  gradually  being  set  up  and  include  representatives  of  civil  society.  The 
administrative  capacity  for  the  coordination  of  European  integration,  including  financial 
assistance,  needs  to  be  further  strengthened  to  meet  the  requirements  of  the  accession 
negotiations. The overall capacity of ministries to produce high-quality legislation and impact 
assessments needs to be enhanced. As regards local government, further efforts are needed to 
implement  recent  legislation  and  to  establish  a  transparent,  efficient  and  accountable 
administration. 

Public administration 

During  the  reporting  period,  Montenegro  continued  to  work  on  modernising  its  public 
administration. Comprehensive reform of the public sector was launched, led by the Ministry 
of the Interior and the Ministry of Finance, aimed at rationalisation and modernisation. 

In April, the government endorsed a 2012-2016 plan for reorganising the public sector with a 
view to increasing its efficiency, as part of the broader reform in this field. The plan presents 
an  initial  analysis  of  the  state  institutions  affected  by  the  reform,  and  sets  out  an  initial 
timeline  and  actions.  It  aims  to  make  better  use  of  budget  resources  by  making  the  salary 
system  more  uniform  and  transparent  and  by  identifying overlaps. At  the  same  time, it lays 
the basis for the building capacity in areas relating to European integration. The plan covers 
the state administration, all public authorities and all institutions which have either been set up 
by the government or financed, even partly, by the state  budget. Follow-up to the measures 
included in the reorganisation plan need to be ensured to accomplish effective progress in the 
the  public 
public  administration’s 

rationalisation  process.  The 

implementation  of 

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administration  reform  strategy  (AURUM)  has  to  benefit  from  better  coordination  and 
monitoring mechanisms. 

With  a  view  to  streamlining  public  administration  and  increasing  its  efficiency,  the 
government  continued  to  adopt  relevant  implementing  legislation.  In  December  the 
government  adopted  a  decree  on  the  organisation  of  the  state  administration,  reducing  the 
number  of  public  procurement  entities  and  facilitating  internal  auditing.  The  decree  was 
amended in April to re-establish the financial autonomy of some independent bodies.  

For the purpose of rationalising the public administration, the parliament amended the Law on 
Inspection  Control  to  bring  inspections  within  a  single  authority  and  improve  the  business 
environment. Implementing regulations are still needed.  

The Law on Salaries of Civil Servants and State Employees was amended in November and 
February,  widening  its  scope  to  cover  employees  in  State  funds.  The  law  allows  the 
parliamentary services and administrative services of the judiciary to adjust the variable part 
of  their  employees’  salaries.  A  corresponding  action  plan  was  endorsed  by  the  government. 
The Law on General Administrative Procedures remains to be revised in line with European 
standards and best practice.  

Since  January  2012,  impact  assessments  have  been  carried  out  for  new  legislation  and 
submitted  to  the  government  together  with  the  opinion  of  the  Ministry  of  Finance  on  the 
impact  that  the  implementation  of  the  new  law  will  have  on  the  state  budget.  To  increase 
transparency,  the  government  adopted  additional  implementing  legislation  aimed  at 
strengthening  cooperation  between  state  administration  bodies  and  non-governmental 
organisations.  

The  Human  Resources  Management  Authority  (HRMA)  organised  a  number  of  training 
courses in fields relevant to the work of the public administration, together with international 
partners. The HRMA’s capacity to coordinate training activities throughout the administration 
and its remit need to be strengthened.  

With  regard  to  the  State  Audit  Institution  (SAI),  several  steps  have  been  taken  to  improve 
audit methodology. The SAI’s powers were extended to auditing of political party financing 
via amendments to the Law on Political Party Financing. A strategy for the development of 
this institution was endorsed by the government in April. Additional amendments to the law, 
aimed  at  strengthening  SAI’s  independence  with  regard  to  financial  management  and  staff 
recruitment, have not yet been adopted. The SAI’s capacity needs to be reinforced especially 
with regard to its new powers. (See also Chapter 32 – Financial control) 

As  regards  e-government,  a  decree  which  entered  into  force  in  November  allows  all  state 
institutions to use electronic management of documents in their work.  

The  Ombudsman’s  administrative  capacity  and  budget  have  been  strengthened.  The 
Ombudsman’s cooperation with civil society is continuously improving, and the influence of 
the office has generally increased. Yet, the law on the Ombudsman remains to be aligned with 
the  acquis,  for  what  concerns  its  independence.  The  financial  and  human  resources  of  the 
Ombudsman have been strengthened but need to increase. 

Overall, Montenegro has taken further steps to address the challenges of public administration 
reform. The legislative framework and the implementation of the recent legislation need to be 
improved,  in  a  financially  sustainable  manner  and  with  adequate  verification  mechanisms. 
The capacity of the Ombudsman has been reinforced but needs to be further enhanced.  

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Judicial system (See also Chapter 23 – Judiciary and fundamental rights) 

With  regard  to  the  independence  and  impartiality  of  the  judiciary,  implementation  of  the 
legislation on courts, the Judicial Council and the State prosecutor’s office, amended in July 
2011 to strengthen judicial accountability and independence, continued. The Judicial Council 
and  the  Prosecutorial  Council  adopted  rules  of  procedure  setting  out  their  organisational 
structure,  functioning  and  decision-making  procedures.  The  new  Judicial  Council  was 
constituted in June and the new Prosecutorial Council in July. The first written tests for judges 
were  held  in  February,  in  accordance  with  the  new  criteria.  Future  work  needs  to  focus  on 
setting  up  a  single,  country-wide  recruitment  system  for  judges  and  prosecutors,  based  on 
transparent  and  objective  criteria.  The  promotion  criteria  for  judges  and  prosecutors  lack 
clarity  and  objectivity  due  to  the  lack  of  periodical  professional  assessment  of  judges  and 
prosecutors’  performance.  The  work  of  the  Judicial  and  Prosecutorial  Councils  is  hampered 
by  insufficient  administrative  capacity  and  budget  allocations.  The  ongoing  constitutional 
revision, aimed at adressing undue political influence in the judiciary, needs to be completed 
in line with European standards. 

Random  allocation  of  cases  continues  to  be  ensured  in  courts  with  the  aid  of  an  IT  system, 
with the exception of smaller courts with limited staff. 

Concerning the accountability of the judiciary, all decisions of the Administrative Court and 
the  Appellate  Court  became  publicly  accessible.  Commissions  for  monitoring  compliance 
with  the  Codes  of  Ethics  of  judges  and  prosecutors  were  appointed.  Members  of  the 
Disciplinary Commissions were appointed, together with two staff to investigate complaints 
of  corruption  in  the  judiciary.  However,  corruption  and  conflict  of  interest  are  still 
insufficiently  monitored  in  the  judiciary.  The  disciplinary  system  needs  to  be  further 
strengthened  and  differentiated  in  line  with  the  principle  of  proportionality,  and  the 
Disciplinary  Commission’s  dual  role  in  investigating  and  deciding  on  disciplinary 
proceedings  reviewed.  Procedures  for  removing  professional  immunity  need  to  be 
strengthened to ensure that judges and prosecutors are fully accountable under criminal law. 
A  reliable  system  of  professional  evaluation  of  judges  and  prosecutors  still  needs  to  be 
established. Plans to publish all court rulings have been only partially implemented. 

Regarding  the  efficiency  of  the  judiciary,  the  backlog  of  cases  has  been  further  reduced  by 
approximately 4%. Seven further notaries were appointed, bringing their total number to 40 
out of the 65 foreseen notary posts. Following the entry into force of the Law on Enforcement 
and  Security  of  Claims,  transferring  powers  for  civil  enforcement  to  the  bailiffs,  the 
Parliament enacted the Law on Public Bailiffs in December. Initial steps have been taken to 
rationalise the court network, but Montenegro remains one of the countries with the highest 
number of basic courts, judges, prosecutors and administrative staff per capita in Europe. Due 
to this high administrative cost, there are not enough budget resources to implement the new 
Law  on  Free  Legal  Aid  or  to  remedy  shortfalls  in  infrastructure  and  equipment,  which 
continue to hinder judicial efficiency. The quality of judicial statistics needs to be improved 
and  a  system  to  monitor  the  length  of  trials  introduced.  Enforcement  of  civil  decisions 
remains weak, as bailiffs have yet to be recruited. The independence and the administrative 
and  financial  capacity  of  the  Judicial  Training  Centre  need  to  be  strengthened  and  initial 
training with set curricula for all members of the judiciary established.  

Overall,  Montenegro  has  made  some  progress  on  the  judiciary.  Implementation  of  recently 
adopted legislation has started. Progress has been made with regard to the publication of court 
rulings  and  the  case  backlog.  The  process  of  constitutional  reform  to  stengthen  the 
independence  of  the  judiciary  in  line  with  European  standards  remains  incomplete.  Further 

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efforts are needed to ensure merit based appointments and career development, as well as to 
strengthen accountability and integrity safeguards within the judiciary. 

Anti-corruption policy (See also Chapter 23 – Judiciary and fundamental rights) 

Some  progress  has  been  made  in  the  fight  against  corruption.  The  strategy  for  fighting 
corruption and organised crime and the revised 2011-2012 action plan are being implemented. 
The  overall  institutional  framework  for  monitoring  implementation  of  the  action  plan  is 
working well.  

Montenegro  has  further  strengthened  its  anti-corruption  legal  framework,  with  a  view  to 
ensuring  alignment  with  the  relevant  European  and  international  standards.  Amendments  to 
the  Labour  Law  enacted  by  the  parliament  in  November  extended  protection  for 
whistleblowers  to  cover  the  private  sector.  Amendments  to  the  Law  on  Free  Access  to 
Information  were  enacted  by  the  parliament  in  July.  Amendments  to  the  Law  on  Political 
Party  Financing  were  enacted  in  December,  covering  supervisory  institutions  and  in-kind 
contributions  and  fixing  the  ceiling  for  membership  fees  at  10 %  of  a  member’s  annual 
income. Recently adopted legislation on conflicts of interest and public procurement started to 
be  implemented.  The  mechanisms  for  checking  on  the  funding  of  political  parties  and 
electoral  campaigns  and  imposing  penalties  need  to  be  reinforced  and  set  out  in  legislation. 
Civil servants’ asset declarations are still not being checked on substance to establish cases of 
illicit enrichment. The professional capacity and independence of the supervisory institutions, 
in particular the State Election Commission, the State Audit Institution and the Commission 
for the Prevention of Conflicts of Interest, need to be enhanced. The control system for public 
procurement remains to be strengthened.  

Some progress was made on prevention of corruption. In December, the Directorate for Anti-
Corruption  Initiatives  (DACI)  was  transferred  to  the  Ministry  of  Justice  to  ensure  better 
coordination  of  anti-corruption  activities.  The  DACI  conducted  a  number  of  awareness-
raising  campaigns  on  reporting  corruption  and  on  the  protection  of  whistleblowers.  Civil 
society  organisations  have  continued  to  actively  contribute  to  enhancing  the  strategic 
framework and have provided evidence in corruption cases. The recommendations contained 
in the risk assessment of areas vulnerable to corruption started to be implemented. Judges and 
prosecutors  have  been  given  training  on  combating  corruption,  in  particular  to  help  them 
implement  the  new  Criminal  Procedure  Code.  Measures  have  been  taken  to  prevent 
corruption  in  the  judiciary.  A  special  allowance  has  been  given  to  judges  working  on 
organised crime and corruption cases, and two staff were appointed to assist the Disciplinary 
Commission  with  checking  on  complaints  of  corruption  in  the  judiciary.  Nonetheless,  asset 
declarations made by judges and prosecutors are not yet cross-checked against other data and 
mechanisms  to  prevent  corruption  in  the  judiciary  need  to  be  further  strengthened.  The 
DACI’s  capability  needs  to  be  upgraded  and  its  capacity  to  monitor  implementation  of  the 
government’s action plan for fighting corruption and organised crime reinforced. 

Some progress has been made on suppression of corruption. The full entry into force of the 
new  Criminal  Procedure  Code  in  September  2011  has  helped  to  speed  up  the  criminal 
investigation  procedure  and  has  reduced  the  risk  of  information  leakage.  In  June,  the 
parliament  amended  the  Law  on  Custody  of  Seized  and  Confiscated  Property  to  define  the 
methods  of  management  of  seized  or  confiscated  proceeds  of  crime.  The  institutional  and 
operational  capacity  of  prosecutors,  judges  and  police  to  fight  corruption  has  been 
strengthened  through  further  training  support  and  additional  equipment.  The  use  of  special 
investigative  measures  is  more  systematic  and  a  special  investigative  team  has  been 
operational  in  the  Special  Prosecution  Office  since  October  2011.  Its  capacity  needs  to  be 

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increased,  in  particular  by  acquiring  access  to  relevant  databases.  Inter-agency  cooperation 
has improved to a certain extent, but needs to be further developed. 

Montenegro’s track record in combating corruption has improved. Three second-instance and 
four  first-instance  verdicts  have  been  issued  against  29  individuals  for  abuse  of  office  and 
bribery. Among those convicted to imprisonment are the former Mayor of Budva, his deputy, 
a  member  of  the  parliament  and  a  number  of  municipal  officials.  Nevertheless,  corruption 
remains widespread and continues to be a serious cause for concern. It continues to represent 
an  important  vulnerability  in  law  enforcement  investigations  of  organised  crime.  A  track 
record  of  combating  corruption  needs  to  be  steadily  built  up,  particularly  in  terms  of 
investigations and convictions in high-level corruption cases. The capacity of prosecutors and 
police  to  conduct  financial  investigations,  trace  criminal  assets  and  present  related  evidence 
before the courts needs to be improved. Inter-agency cooperation and information exchange, 
in particular between police and prosecutors, needs to be further enhanced. There are still no 
corruption cases in which seizure or confiscation of assets was ordered. The independence of 
the  judiciary  remains  a  matter  of  concern  affecting  the  country’s  determination  to  combat 
corruption.  

Overall,  some  progress  has  been  made  on  fighting  corruption.  Implementation  of  recently-
adopted  legislation  in  the  key  areas  of  political  party  financing,  prevention  of  conflicts  of 
interest  and  public  procurement  has  started.  The  capacity  of  the  supervisory  institutions,  in 
particular the State Election Commission, the State Audit Institution and the Commission for 
the  Prevention  of  Conflict  of  Interest,  needs  to  be  enhanced.  Montenegro  has  further 
developed its track record of investigations, prosecutions and convictions in corruption cases, 
but their number remains low and there are still no seizure or confiscation of assets ordered 
for  corruption  offences.  Corruption  remains  widespread  and  continues  to  be  a  serious  cause 
for concern, hindering law enforcement investigations of organised crime. 

2.2. 

Human rights and protection of minorities (See also Chapter 23 – Judiciary and 
fundamental rights) 

Observance of international human rights law 

As regards international human rights instruments, Montenegro signed the third optional 
protocol  to  the  convention  on  the  rights  of  the  child  in  February  and  ratified  the  Hague 
Convention on protection of children and cooperation in respect of inter-country adoption in 
March, to prevent children being sold for adoption. Nevertheless, the Constitution (Article 20) 
is not yet in line with Article 13 of the European Convention on Human Rights (ECHR), in 
relation  to  safeguarding  the  right  of  an  effective  remedy  before  the  national  authorities  for 
violations  of  rights  under  the  convention.  Montenegro  has  not  yet  started  the  ratification 
process for the Convention on Reduction of Statelessness. Its implementation of international 
human rights standards needs to be stepped up and the national legislation brought into line. 

As  regards  the  European  Court  of  Human  Rights  (ECtHR),  efforts  have  been  made  to 
ensure national courts’ compliance with ECtHR case law, partly by holding training courses 
for judges and prosecutors. During the reporting period the ECtHR delivered judgments on 17 
applications  finding  that  Montenegro  had  violated  rights  guaranteed  by  the  ECHR,  most  of 
them relating to freedom of expression, protection of property and the right to a fair trial. A 
total  of  264  new  applications  have  been  submitted  to  the  ECtHR  since  September  2011, 
bringing the total of pending applications to 851. 

With regard to the promotion and enforcement of human rights, some progress has been 
made.  The  administrative  capacity  and  budget  of  the  Protector  of  Human  Rights  and 
Freedoms  (the  Ombudsman)  have  been  strengthened;  this  institution  produced  three  reports 

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analysing the state of police premises used for detainees, protection from discrimination, and 
the situation of child begging. The Parliamentary Committee for Human Rights and Freedoms 
endorsed these reports between October and November, demonstrating increased involvement 
in  the  promotion  of  human  rights.  The  Ombudsman’s  cooperation  with  civil  society  is 
continuously improving. 

The authorities, including those at the highest level, showed a more positive attitude towards 
human  rights  discourse.  In  March,  the  Justice  and  Human  Rights  portfolios  were  merged 
under  the  Deputy  Prime  Minister.  The  human  rights  role  of  the  state  prosecutor  remains 
limited.  The  capacity  of  the  Ombudsman  needs  to  be  further  strengthened.  Shortcomings 
persist in the protection of human rights by judicial and law enforcement authorities, some of 
them in relation to alignment with European standards and ECtHR case law. 

Civil and political rights 

Progress  was  made  in  the  prevention  of  torture  and  ill-treatment  and  the  fight  against 
impunity.  The  Ombudsman  started  to  implement  the  monitoring  mechanism;  a  deputy 
ombudsman  was  specifically  appointed  in  June  to  monitor  the  prevention  of  ill-treatment. 
Nevertheless,  competence  in  this  area  needs  to  be  further  developed  and  staff  need  further 
training.  The  number  of  reported  cases  of  ill-treatment  remains  low,  while  processing  of 
reported cases continues to be slow. The legal and institutional framework for prohibiting ill-
treatment  still  needs  to  be  brought  into  line  with  international  standards,  particularly  with 
regard to prison conditions and the treatment of convicted persons.  

Some progress has been made as regards the prison system; the legal and policy framework 
was  enhanced.  An  action  plan  for  improving  the  prison  system  was  adopted  and  it  is  being 
implemented.  The  prison  administration  was  transferred  in  December  under  the  Ministry  of 
Justice,  ensuring  better  coordination;  yet,  the  capacities  of  the  relevant  staff  have  to  be 
enhanced. The newly adopted law on alternative sanctions has started to be implemented but 
further  efforts  are  needed  to  reduce  the  prison  population,  especially  the  non-violent 
offenders,  since  prison  overcrowding  remains  a  concern.  Living  conditions  in  prisons  have 
improved,  but  are  still  not  fully  in  line  with  international  standards,  in  particular  as  regards 
education,  prison  regime,  healthcare  and  medical  treatment.  The  detention  conditions  in 
Bijelo Polje remain of particular concern.  

With regard to access to justice, some progress has been made. The Law on Free Legal Aid 
came into effect in January and relevant services are now available in all the basic courts in 
Montenegro.  Nevertheless,  certain  categories  of  people  are  not  covered.  Administrative 
capacity  needs  further  development.  The  length  of  court  proceedings  remains  an  issue  of 
concern. 

Progress  has  been  made  in  promoting  freedom  of  expression.  The  decriminalisation  of 
defamation helped to improve the media environment. The authorities continued to promote a 
more favourable environment for journalists. In June 2012 the parliament adopted the Law on 
Amnesty, which, inter alia, enables the President to grant a pardon for individuals convicted 
of  defamation  and  insult,  even  in  the  absence  of  a  request.  There  have  been  first  instance 
convictions in some recent cases of violence against journalists; yet, efforts to investigate and 
prosecute cases of violence against journalists need to be stepped up. The media environment 
remains highly politicised and divided.  

Additional  staff  were  hired  to  increase  the  monitoring  capacity  of  the  Electronic  Media 
Agency, but the self-sustainability and monitoring capacity of the audiovisual regulator are a 
concern. Recent amendments to the law on electronic media put the regulator’s independence 

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at risk. Reform of the public broadcaster, aimed at making it more modern and self-financing, 
has to continue.  

Progress has been made with regard to freedom of assembly and association. Cooperation 
between state institutions and civil society organisations is improving. Dialogue with NGOs 
dealing with social reform and gender equality needs to be further strengthened.  

Freedom of thought, conscience and religion is generally ensured; tensions persist between 
the Serbian and Montenegrin Orthodox Churches, notably with regard to property issues. 

Overall,  good  progress  was  made  in  improving  the  legal  and  administrative  framework  for 
civil and political rights in Montenegro, and enforcing them. The Ombudsman’s power to act 
against  ill-treatment  needs  to  be  enhanced,  and  living  conditions  in  prisons  require 
improvement.  Efforts  to  investigate  and  prosecute  old  cases  of  violence  against  journalists 
need to be stepped up.  

Economic and social rights (See also Chapter 19 – Social policy and employment) 

Little  progress  has  been  made  with  regard  to  women’s  rights  and  gender  equality.  The 
strategy for implementing the law on protection from family violence was adopted. However, 
domestic  violence  is  still  an  issue  of  concern.  Implementation  of  the  legal  and  institutional 
framework for promoting and enforcing gender equality is hindered by the scarcity of human 
and financial resources. Women remain under-represented on the labour market. 

Some  progress  has  been  made  with  regard  to  children’s  rights.  The  Ombudsman  is  more 
involved in their protection. Awareness-raising campaigns have been launched. The Law on 
Juvenile  Justice  was  adopted  in  December  2011.  The  Ombudsman’s  capacity  in  relation  to 
children’s  rights  and  those  of  the  Council  on  the  Rights  of  the  Child  need  to  be  further 
enhanced.  

Some  progress  has  been  made  with  regard  to  the  rights  of  the  socially  vulnerable  and/or 
persons  with  disabilities.  In  March,  the  government  adopted  the  Action  Plan  for  the 
integration of persons with disabilities 2012-2013. The law on disabled persons still presents 
shortcomings as regards conformity with the EU acquis. The Council for the care of disabled 
persons  was  established  in  May.  The  monitoring  and  sanction  mechanisms  of  institutions 
dealing with persons with disabilities need to be further strengthened.  

Some progress has been made in the area of anti-discrimination policies. The Ombudsman 
produced various reports on human rights issues, which were discussed by the parliamentary 
committee  on  human  rights.  The  Ombudsman’s  capacity  remains  limited  despite  the 
appointment  of  new  staff;  the  relevant  legislation  still  presents  several  shortcomings,  e.g. 
concerning  the  Ombudsman’s  independence.  The  anti-discrimination  law  also  needs  to  be 
amended,  to  bring  it  in  line  with  the  acquis.  The  implementation  of  anti-discrimination 
policies and the monitoring and enforcement of human rights need to continue. As regards the 
rights  of  lesbian,  gay,  bisexual  and  transgender  (LGBT)  persons,  some  progress  has  been 
made.  The  government  showed  greater  openness  to  promoting  and  defending  LGBT  rights 
and has taken concrete steps to this end. The Prime Minister’s adviser on human rights and 
protection against discrimination has continued to be active on LGBT rights. A shelter and a 
counselling line for LGBT persons are active. The authorities ensured the rapid identification 
and arrest of the alleged perpetrators who attacked in September an actor and the director of a 
video  against  homophobia;  yet,  more  generally,  the  authorities’  handling  of  LGBT  rights 
cases  remains  slow.  LGBT  persons,  as  well  as  civil  society  activists  engaged  in  promoting 
and protecting LGBT rights, are still subject to discrimination. 

Labour  and  trade  unions  rights  are  generally  respected;  yet,  more  attention  is  needed  to 
ensure  full  transparency  of  representativeness  and  the  right  to  establish  new  unions,  in  line 

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with  the  relevant  national  regulations.  Negotiations  on  a  new  collective  agreement  have  not 
yet finished and social dialogue needs to improve. The capacity of the Social Council remains 
limited.  Amendments  to  the  Labour  Law  are  still  required  to  bring  it  into  line  with  the  EU 
acquis and implementation remains a challenge.  

Little progress has been made in the area of property rights. The process of restitution is not 
yet fully ensured and the work of the relevant commissions is proceeding slowly. Displaced 
persons with permanent residence in the country still face discrimination in relation to access 
to land. 

Overall, Montenegro has made progress on social and economic rights, by consolidating the 
relevant  legal  and  institutional  framework.  The  more  positive  attitude  of  the  authorities  has 
contributed to the promotion of these rights, but additional financial allocations, and  skilled 
human resources, need to be deployed to enforce them. The handling of violations of social 
and economic rights needs to improve. 

Respect for and protection of minorities, cultural rights 

As regards the promotion and protection of minorities and cultural rights, progress has been 
made. The implementation of the Law on Minority Rights has continued. The Minority Fund 
has  some  shortcomings  regarding  the  implementation  of  the  projects  it  finances.  Interethnic 
relations in the country are generally good, but Roma are still underrepresented in the public 
institutions.  

Progress has been made on the inclusion of Roma, Ashkali and Egyptians. The strategy for 
improving the status of Roma and Egyptians in Montenegro 2012-2016 and the Action Plan 
for 2012 were adopted by the government in April, in line with the operational conclusions of 
the social inclusion seminar on Roma issues; their implementation is slow. Some progress has 
been made to facilitate civil registration, in particular of displaced persons among the Roma, 
Ashkali  and  Egyptian  population.  Nevertheless,  discrimination  is  prevalent  in  access  to 
employment  and  to  social  and  health  care,  although  a  limited  number  of  measures  were 
undertaken to facilitate employment and education. 

Progress has been made on resolving the issues of displaced persons. In September 2011, the 
government  set  up  a  Coordination  Board  to  oversee  implementation  of  the  Strategy  for 
finding  durable  solutions  to  the  status  of  displaced  and  internally  displaced  persons  in 
Montenegro, with particular focus on the Konik area. The government provided a quick and 
efficient  emergency  response  to  the  fire  in  Konik  camp  in  July,  which  left  800  Roma  IDPs 
homeless.  In  November,  the  parliament  adopted  the  amendment  to  the  Law  on  Foreigners 
which  extended  the  deadline  for  applications  for  the  status  of  foreigner  with  permanent 
residence to 31 December 2012. The number of applications has increased. An office of the 
Ministry of the Interior opened in Konik camp for some months, to facilitate the registration 
of displaced persons. The temporary decree enabling access to social and economic rights for 
displaced persons was also extended, to June 2013. Additional measures and amendments are 
needed to ensure full access to economic and social rights for both foreigners with permanent 
residence and displaced persons.  

The detailed urban plan proposing changes to the Konik area was adopted in February, setting 
the  framework  for  the  construction  of  housing  for  the  existing  population;  yet,  the  capacity 
within the government to effectively implement projects on this scale needs to be improved. 
The Law on Social Housing has not yet been adopted. 

Overall,  Montenegro  made  progress  in  the  protection  of  minorities  and  cultural  rights.  The 
adoption  of  the  Strategy  to  improve  the  situation  of  the  Roma,  Ashkali  and  Egyptian 
population  and  the  relevant  Action  Plan  are  positive  developments  to  this  end,  but  the 

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inclusion of the Roma, Ashkali and Egyptians needs to be improved, in particular through the 
implementation of the relevant policy documents, as they still face discrimination. Progress in 
granting legal status to displaced persons has continued, but there are still gaps in access to 
economic and social rights for these people.  

2.3. 

Regional issues and international obligations 

With  regard  to  cooperation  with  the  International  Criminal  Tribunal  for  the  former 
Yugoslavia  (ICTY),  Montenegro  neither  received  requests  for  assistance  nor  had  cases 
referred back to its national authorities from the ICTY for possible further investigation.  

Three out of four local war crimes cases in Montenegro are still open. Four members of the 
former Yugoslav People’s Army were convicted in January for war crimes committed in the 
Morinj camp in 1991-92. A new trial has started in the case of the deportation of Bosniaks in 
1992.  The  processing  of  war  crime  cases  needs  to  be  stepped  up  and  fully  aligned  with 
international human rights and humanitarian case law. 

As  regards  the  International  Criminal  Court,  Montenegro  still  maintains  a  2007  bilateral 
immunity agreement with the United States, granting exemptions from the jurisdiction of the 
Court.  This  does  not  comply  with  the  EU  Common  Position  on  the  integrity  of  the  Rome 
Statute  or  with  the  related  EU  guiding  principles  on  bilateral  immunity  agreements. 
Montenegro needs to align with the EU position. 

Significant  progress  has  been  made  as  regards  the  Sarajevo  Declaration  Process,  which 
brings together Bosnia and Herzegovina, Croatia, Montenegro and Serbia and aims at finding 
sustainable solutions for the refugees who were displaced as a result of the armed conflicts in 
ex-Yugoslavia  during  the  1990s.  The  four  countries  signed  a  ministerial  declaration  in 
November 2011 in Belgrade, renewing their political commitment to bringing this chapter to a 
close. They agreed on a Regional Housing Programme assisting some 27,000 households or 
74,000  individuals.  The  programme  was  presented  for  international  donor  support  at  the 
Sarajevo April 2012 donors’ conference, which resulted in some € 265 million being pledged. 
Programme implementation is at an early stage. Good cooperation needs to continue between 
the  four  countries  on  all  outstanding  issues  in  the  process,  including  data  exchange  and 
statistics, civil documentation and pension rights. 

Regional  cooperation  and  good  neighbourly  relations  form  an  essential  part  of 
Montenegro’s  process  of  moving  towards  the  European  Union.  Montenegro  continues  to  be 
strongly  involved  in  developing  regional  cooperation.  It  is  also  continuing  to  actively 
participate  in  regional  initiatives,  including  the  South  East  European  Cooperation  Process 
(SEECP),  the  Regional  Cooperation  Council  (RCC),  the  Central  European  Free  Trade 
Agreement  (CEFTA),  the  Energy  Community  Treaty  and  the  European  Common  Aviation 
Area Agreement. Montenegro has continued to support the Igman Initiative on reconciliation, 
which brings together NGOs from Bosnia and Herzegovina, Croatia, Serbia and Montenegro. 
Montenegro also supports the RECOM initiative. 

As  regards  regional  judicial  and  police  cooperation,  an  agreement  on  extradition  between 
Montenegro and the former Yugoslav Republic of Macedonia entered into force in 2012. A 
memorandum  of  cooperation  was  signed  with  the  police  authorities  of  Bosnia  and 
Herzegovina, aimed at improving the joint fight against organised crime, corruption, terrorism 
and drug trafficking. A similar agreement was signed with the former Yugoslav Republic of 
Macedonia in March. 

Montenegro  continues  to  maintain  good  bilateral  relations  with  other  enlargement 
countries  and  with  neighbouring  EU  member  state  Italy.  However,  the  delimitation  of 
borders with Croatia, Serbia, Bosnia and Herzegovina and Kosovo remains pending.  

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Cooperation  intensified  with  Albania  in  economic  and  trade  relations.  The  two  countries 
initialled an agreement on cooperation in education and signed an agreement on recovery of 
Albania’s debt to Montenegro, an agreement on opening a joint border crossing point, and a 
cooperation plan on defence.  

Relations  with  Bosnia  and  Herzegovina  remained  good.  Agreements  were  signed  and/or 
ratified in various fields of cooperation, including international transport, mutual protection of 
classified  information,  legal  aid  and  enforcement  of  court  decisions.  A  dual  citizenship 
agreement was concluded in June. 

Montenegro  continued  to  have  good  relations  with  Croatia.  The  two  countries  signed  an 
agreement on mutual enforcement of court decisions in criminal matters and a memorandum 
on  cooperation  in  the  area  of  health.  The  temporary  agreement  on  Prevlaka  continues  to 
function  smoothly.  There  has  been  no  further  progress  in  the  procedure  for  submitting  the 
border demarcation to the International Court of Justice. 

Cooperation with the former Yugoslav Republic of Macedonia was further strengthened. The 
extradition agreement entered into force, as did agreements on economic cooperation and on 
the  EU  accession  process.  Agreements  on  the  readmission  of  persons  residing  without 
authorisation and on police cooperation were signed. 

Relations  with  Serbia  remained  good,  overall.  The  Serbian  Prime  Minister  led  a  senior 
delegation  in  a  visit  to  Podgorica  in  December.  The  two  governments  signed  a  number  of 
agreements  on  sectoral  policies,  an  agreement  on  cooperation  on  air  traffic  control  and  a 
protocol on cooperation in resolving the fate of missing persons. There were no developments 
regarding the dispute between the Orthodox churches in the two countries. 

Montenegro  continued  to  maintain  good  relations  with  Kosovo,  even  though  border 
demarcation has not progressed. The return of those displaced persons willing to come back to 
Kosovo is proceeding slowly. 

Relations  with  Turkey  are  good.  The  two  countries  signed  a  number  of  agreements  on 
protection and promotion of investments, air transport and social security, and a memorandum 
of understanding on education. Montenegro and Turkey worked more closely together in the 
field of economic cooperation. 

Overall,  Montenegro  continues  to  satisfy  the  Stabilisation  and  Association  Process 
conditionality on cooperation with the ICTY and regional cooperation. Certain bilateral issues 
with neighbouring countries are still unsolved, especially in the area of border demarcation. 

3. 

ECONOMIC CRITERIA 

In  examining  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 

In  January  2012  the  country  presented  its  first  Pre-accession  Economic  Programme  (PEP), 
covering the period 2012-2014. The priority of the programme is to reinforce economic and 
financial stability by continuing with fiscal consolidation and structural reforms. Overall, the 
political consensus on market economy fundamentals and economic policy remained strong. 

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Macroeconomic stability 

The  economy  continued  to  recover  in  2011  for  a  second  consecutive  year,  with  real  GDP 
growing  at  a  similar  growth  rate  as  in  2010  (at  around  2.5%).  In  2011  the  recovery  was 
primarily driven by private consumption fed by continued increases in tourism, whereas the 
contribution  of  net  exports  to  growth  dropped  significantly,  reflecting  import  developments 
and  the  recovery  of  commodities  exports.  Retail  sales  increased  by  15%  at  constant  prices, 
reflecting demand from tourism. Nonetheless, domestic demand still remained constrained as 
bank  lending  further  contracted,  investments  slowed  down,  employment  growth  remained 
limited,  and  net  wages  rose  only  marginally.  In  the  first  half  of  2012,  economic  activity 
slowed down. The value of construction works contracted in real terms by 16% year-on-year 
in the first half of 2012, after recording an average expansion of 7% in 2011. Industrial output 
declined by 7.5% year-on-year in the first six months of 2012, due to a decrease in electricity 
production  and  mining  ,  while  manufacturing  recorded  4%  expansion.  Still,  domestic 
consumption continues to be resilient, as reflected by the increase in retail sales by 9% in real 
terms in the first half of 2012, once more supported by tourism. Average per-capita income in 
purchasing power standards rose to 43% of the EU average in 2011, up from 41% in 2010. 
Overall, although the economy is still in the process of recovering, the performance of several 
sectors remains weak. 

The  current  account  deficit  contracted  to  19%  of  GDP  in  2011,  compared  to  25%  a  year 
earlier. The improvement was driven by an increase in the surplus of the balance of services 
from 13% of GDP in 2010 to 16% in 2011. However, the trade deficit still accounts for 40% 
of  GDP.  The  income  balance  shifted  from  a  deficit  to  a  surplus,  while  current  transfers 
improved  marginally.  On  the  financial  account,  net  FDI  inflows  contracted  markedly, 
totalling  12%  of  GDP,  compared  to  18%  a  year  before.  As  a  result  of  lower  net  capital 
inflows,  the  central  bank  had  to use foreign  exchange  reserves equivalent to  3% of GDP to 
finance the high current account deficit, underlining vulnerabilities related to the high reliance 
on external financing. In the first half of 2012 the trade deficit deteriorated following a sharp 
decline  in  exports  as  a  result  of  the  contraction  of  industrial  production  as  well  as  terms  of 
trade  losses  in  aluminium,  causing  an  8.7%  year-on-year  expansion  of  the  current  account 
deficit to 14.5% of annual GDP. The surpluses in the services and current transfers’ balances 
improved  significantly  compared  to  the  previous  year,  but  were  partially  offset  by  the 
negative results in the income balance. The financial account surplus contracted by 9% year-
on-year while the capital account deficit came close to balance. Net FDI inflows contracted to 
4.3% of annual GDP from 5.6% a year earlier while net loans inflows (i.e. other investments) 
reached  3%  of  GDP,  largely  reflecting  government  financing  operations.  Net  errors  and 
omissions  accounted  for  additional  6%  of  GDP.  Overall,  the  large  external  imbalances 
deteriorated, reflecting weak export capacity. 

Unemployment was very high at 20% on average in 2011 and in first half of 2012, according 
to the Labour Force Survey (LFS) Although employment declined markedly by -6.4% in 2011 
compared  to  the  previous  year,  the  rate  of  contraction  decelerated  in  the  first  half  of  2012 
(-0.9%).  The  activity  and  employment  rates  remained  low  at  around  57%  and  46% 
respectively during 2011 and the first half of 2012. There remain significant discrepancies in 
labour  statistics  between  Labour  Force  Surveys  (LFS)  and  the  Agency  for  Employment 
(AEM)  administrative  records.  Slow  labour  market  dynamics  have  been  reflected  in  the 
moderation of wages. In the first half of 2012 the average gross wage grew by nominal 0.7% 
year-on-year. In  December 2011,  amendments to the labour law introduced several  changes 
with  the  aim  of  encouraging  job  creation.  These  amendments  limit  the  length  of  fixed-term 
contracts to 24 months, and put an end to the possibility of an unlimited number of renewals. 
They  regulate  temporary  employment  agencies.  They  also  reduce  collective  dismissal  costs 

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and limits the room for discretionary labour dispute resolution. Additional amendments were 
introduced  in  the  law  on  employment  of  foreigners  and  disabled  persons  to  facilitate  their 
hiring.  Also  in  December,  the  parliament  adopted  the  laws  on  recognition  of  foreign 
professional  diplomas  and  qualifications.  Overall,  the  performance  of  the  labour  market 
remained weak.  

Unilateral  euroisation  implies  that  there  is  limited  scope  for  monetary  policy  discretion. 
Changes in reserve requirements remained the key tool for steering liquidity in the system. In 
November 2011, the central bank further lowered the reserve requirement ratios to 9.5% for 
deposits  with  maturity  of  up  to  one  year,  and  to  8.5%  for  deposits  with  maturity  over  one 
year. 

Inflation  reached  3%  in  2011,  a  significant  increase  after  a  deflationary  episode  in  2010. 
However, core inflation remained low, at around 1%. Consumer price inflation accelerated to 
3.9% in June 2012. The main contributors were alcohol and tobacco reflecting a pronounced 
base effect from the increase in excises duties at the beginning of the year. Increases were also 
recorded  in  accommodation  services  (i.e.  restaurants  and  hotels),  food,  as  well  as  fuels  and 
housing,  the  latter  as  a  consequence  of  the  increase  in  water  supply  prices  and  electricity 
tariffs. Overall, inflationary pressures have been increasing. 

In  2011,  the  consolidated  budget  deficit  reached  5.4%  of  GDP,  up  from  the  5%  deficit 
recorded  the  previous  year.  Total  revenues  fell  to  39%  of  GDP  in  2011,  down  from  42%  a 
year earlier. Tax income remained broadly stable in 2011, with the corporate income tax and 
value  added  tax  revenues  recording  some  moderate  growth  over  the  year.  However,  social 
security  contributions  declined  and  the  accumulation  of  tax  arrears  reached  almost  1%  of 
GDP  during  2011,  weakening  revenue  performance.  Consolidation  efforts  translated  into  a 
reduction of general government expenditures to 44.6% of GDP, compared to 47.2% the year 
before. Spending  was reduced on several items such as supplies and services, as well as on 
regular  maintenance  and  capital  expenditure.  However,  the  impact  of  early  retirements 
granted  to  workers  from  restructured  companies  offset  efforts  to  cut  expenditure.  Further 
revenue shortfalls in the first quarter of 2012 (around 12% lower than to the same period last 
year),  followed  by  the  call  of  a  state  guaranteed  loan  to  the  aluminium  plant  worth  1%  of 
GDP,  resulted  in  a  budget  deficit  of  3.2%  of  GDP  in  April,  compelling  the  government  to 
adopt a budget rebalance in May. The revised 2012 budget comprises additional expenditure 
cuts  of  0.3%  of  GDP  and  tax  increases  for  additional  0.7%  of  GDP.  The  budget  deficit 
broadened further to 3.5% of GDP in May, to stabilise at 3.7% in both June and July. Overall, 
the  stability  of  public  finances  is  challenged  by  a  receding  economy  and  substantial 
contingent liabilities. 

Contracting  external  demand,  falling  aluminium  prices  as  well  as  production,  and  lower 
capital  inflows  have  exposed  the  country  to  stronger  external  financing  and  liquidity 
constraints.  The  fact  that  Montenegro  is  using  the  euro  as  its  sole  legal  tender,  and  has 
therefore abandoned standard monetary policy tools, leaves fiscal policy as the main effective 
policy  instrument.  As  a  response,  the  authorities  have  continued  to  aim  at  tightening  fiscal 
policy,  notably  through  public  spending  adjustments.  Overall,  macroeconomic  stability  has 
been  broadly  maintained,  but  risks  and  uncertainties  persist  due  to  the  high  reliance  on 
external financing. 

Interplay of market forces 

The share of administered  prices in the  harmonised  index  of  consumer  prices  (HICP)  basket 
remained unchanged in 2011, at 10.7%. Administered prices concern: bread, electricity, water 
institutions, 
supply,  sewerage  collection,  refuse  collection,  fuels,  public  pre-primary 
compulsory  vehicle  insurance  and  administrative  fees.  The  telecommunications  and  energy 

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markets were further  liberalised. At present,  the  Agency  for  Electronic  Communications  and 
Postal Services (EKIP) can regulate prices only if a company has a dominant market position. 
The  energy  regulator  no  longer  sets  the  price  of  coal  for  electricity  generation.  Overall,  the 
influence  of  the  state  in  price  dynamics  is  being  limited  by  the  independence  of  market 
regulators. 

In April 2012 the Parliament requested the government to renationalise the ailing aluminium 
company and to execute the collateral of a state guaranteed loan after the majority owner of the 
company failed to honour it. However, at the time being the execution is being delayed. At the 
same  time,  the  bankruptcy  of  the  Niksić  steel  plant  ended  with  the  successful  sale  of  all  the 
factory  assets  (including  21.9%  of  state-owned  shares)  to  a  Turkish  steel  maker.  Several 
transport companies, including railways, port and the national airlines have been listed in the 
privatisation  plan  for  2012.  In  the  first  half  of  2012  calls  for  tenders  were  launched  for  the 
tobacco factory (NDKP), the Institute for Physical Therapy, as well as the container and bulk 
cargo terminal of the port of Bar. In July 2012, the privatisation council concluded a 90-year 
lease contract to develop a tourism resort on the former barracks site of Kumbor (Kotor Bay). 
However, negotiations on the sales agreement for newspaper Pobjeda and for dairy Zora are 
not yet concluded. Overall, the privatisation process resumed after two years of stagnation. 

Market entry and exit 

In 2011 there were 3,072 new enterprises registered in Montenegro, or 17% less compared to 
2010.  The  pace  of  registration  recovered  during  the  first  half  of  2012,  totalling  1,948  new 
businesses.  The  procedure  for  electronic  registration  of  companies  through  the  eGovernment 
portal became operational in May 2012 and the application of the regulatory guillotine further 
pursued. Line ministries started in mid-2012 monitoring the implementation of amendments to 
or  revocation  of  parts  of  the  legislation  identified  in  the  regulatory  impact  assessments  as 
creating barriers to businesses. Credit constraints and the slow and lengthy process of granting 
municipal  licences  still  hamper  investment  prospects  and  delay  the  establishment  of  new 
businesses. The number of bankruptcy cases has fallen significantly to 565 in 2011, compared 
to 2,196 a year before, although reaccelerated to 824 in the first half of 2012. Overall, while 
some  improvement  has  been  recorded  in  market  entry  procedures  and  bankruptcy  recovery, 
further efforts are still required to facilitate municipal licences.  

Legal system 

In December 2011, the parliament enacted the Law on Public Bailiffs, transferring powers for 
the  civil  enforcement  of  commercial  contracts  to  these  new  legal  officers.  However, 
enforcement  of  civil  decisions  remains  weak  and  bailiffs  are  yet  to  be  recruited.  There  have 
been  no  further  legislative  developments  in  the  field  of  property  rights  after  the  adoption  in 
June 2011 of the Law on State Surveying and the Land Registry. The modernisation of the land 
registry’s  current  electronic  system  continues.  Although  the  strategic  and  legislative 
framework to combat corruption has been strengthened, its implementation remains uneven. In 
order to address weaknesses in tax as well as in law enforcement, the government adopted in 
May  2012  a  series  of  measures  to  combat  the  grey  economy,  increasing  the  number  of 
inspection  controls,  notably  on  excise  products,  retail  turnover  accounts,  and  labour  market 
registration. As a result, in May and June 2012 there were 5,700 inspections resulting in 1,400 
infringement reports and two criminal charges. Overall, a new system has been introduced to 
improve the efficiency of civil enforcement of claims. However, weaknesses in the rule of law 
and corruption continue to have an adverse effect on the business environment and remain a 
major challenge. 

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Financial sector development 

The repair of the balance sheets of banks continued during 2011 and 2012. Banks (of which 
83%  of  capital  is  foreign-owned  while  2.7%  remains  in  state  ownership)  have  sold  part  of 
their  non-performing  assets  to  their  international  parent  banks  or  to  factoring  companies. 
Consequently, total bank assets contracted by the end of 2011 by 4.5% year-on-year, to some 
86% of GDP, and further declined to 83% of GDP at the end of July 2012. The share of total 
gross  loans  has  stabilised  since  October  2011  until  July  2012  at  around  57%  of  GDP,  and 
most of this credit (94%) has been extended to the private sector. However, total bank lending 
still  contracted  by  11%  year-on-year  in  2011  and  by  4%  in  the  first  seven  months  of  2012. 
Yet, a return of confidence is being recorded in the recovery of banks’ deposits, growing by 
1.5% year-on-year in 2011 and accelerating to 4% in July 2012. Moreover, foreign companies 
increased  their  saving  in  local  banks  (by  11%  year-on-year  in  July  2012)  for  the  first  time 
since August 2009. 

The interest rate spread of more than 6 percentage points (average lending interest rates were 
9.73%  in  December  2011  compared  to  deposit  rates  of  3.08%)  suggests  there  is  room  for 
increased efficiency in financial intermediation and the high risk aversion related to the still 
elevated ratio of non-performing loans (NPL). The NPL ratio fell to 15.5% of total loans at 
the end of 2011 compared to 21.5% a year before. In 2011, the liquidity of the banking sector 
remained  above  the  minimum  legal  requirement  of  10%.  The  capital  adequacy  ratio  (CAR) 
further  improved  to  16.5%  in  2011,  up  from  15.9%  a  year  earlier.  The  profitability  of  the 
financial  sector  also  improved  compared  to  the  previous  year,  although  it  still  remained 
negative at the end of 2011. The sector recorded  an aggregated loss  of € 3  million in 2011, 
compared to € 82 million a year before. However, in the first half of 2012 credit activity still 
remained  negative  while  NPLs  were  on  the  rise  again,  reaching  17%  in  June,  and  the  CAR 
ratio declined to 14.5% due to negative financial results of some banks. Overall, weaknesses 
remain in the financial sector. Although deposits are gradually flowing back into the system, 
banks’ capital and lending are declining. 

In 2011, there were five leasing companies, the same as a year before, and they recorded an 
annual increase in the value of contracts of 11% in real terms, totalling 1% of GDP, a modest 
figure compared to the volume of bank loans. Most contracts related to passenger cars (86%) 
followed at distance by commercial vehicles (8%). In 2011, the Montenegro stock exchange 
index  plunged  by  35%  and  continued  contracting  during  the  first  eight  months  of  2012  by 
21%  compared  to  the  same  period  a  year  before.  Furthermore,  market  capitalisation  fell  in 
August  2012  by  6.6%,  although  the  total  turnover  surged  by  122%  year-on-year  to 
€ 5 million. Overall, the share of non-bank financial intermediaries remains low. 

3.2. 

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

Existence of a functioning market economy 

The financial sector has gained in stability, but is still unable and too risk averse to provide 
much  needed  credit  to  the  economy.  Unemployment  remained  high.  Although  market 
mechanisms  are  becoming  more  efficient,  the  aluminium  plant  indebtedness  presents  a 
potential risk for public finances.  

Human and physical capital endowment 

The recent educational reform focuses on the qualification system, which consists of several 
types  of  external  examinations  –on  grounds  of  recommendations  from  industry  and 
businesses–  and  aims  to  improve  the  quality  of  education  and  to  align  curricula  with 
professional needs (see Chapter 26). The first Matura and vocational exams were organised 

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for  the  2011/2012  school  year.  Its  results  are  now  replacing  entrance  examinations  to 
universities and other institutions of higher education at the end of high school. However, a 
high  share  of  students  from  vocational  and  technical  (VET)  schools  enrols  in  the  university 
instead of entering the labour market, while employers report shortages for graduates with the 
right set of skills. Some 20% of persons with vocational education after primary school and 
16%  of  persons  with  tertiary  education  remained  unemployed  in  2011.  Overall,  labour  law 
reforms and measures to improve the quality of the education system have been initiated, but 
further efforts are required to re-align skills mismatches.  

Investments in Montenegro rely heavily on foreign savings, with FDI inflows playing a key 
role in improving economic competitiveness, diversifying the industrial base and raising the 
productive capacity of the economy. Despite a sharp slowdown, annual net FDI inflows have 
remained  above  10%  of  GDP,  indicating  sustained  investor  interest.  However,  investments 
have  been  largely  focused  on  real  estate,  totalling  39%  of  total  equity  investments  in 
Montenegro  in  2011,  while  companies  and  banks  received  33%,  and  a  still  significant  28% 
share  concerned 
liberalisation  of 
telecommunications  and  energy  has  facilitated  the  opening  of  their  respective  markets  (see 
Chapters 10, 14 and 15). However, important constraints are still present in energy, transport 
and environmental infrastructures. Overall, the country needs to attract further investments to 
develop its infrastructures. 

inter-company  debt.  The 

settlement  of 

the 

In 2011 some 0.4% of GDP was invested in research and development, compared to 0.1% a 
year  before.  The  Ministry  of  Science,  with  the  support  of  the  World  Bank,  commenced  the 
project  on  higher  education  research  for  innovation  and  competitiveness.  The  Ministry  also 
supported  five  initiatives  by  Montenegrin  teams  to  participate  in  EU  research  projects.  The 
ministry also co-financed scientific professional training abroad, doctoral and master studies 
and the publishing of scientific papers in reference scientific journals. Overall, Montenegrin 
institutions  have  started  to  participate  more  actively  in  European  research  programmes 
although private sector participation still remains insufficient. 

Sector and enterprise structure 

The  steel  company,  one  of  the  country’s  two  large  metal  producers,  was  eventually  sold  in 
June 2012 after several unsuccessful tenders. However, the situation of the aluminium plant 
(KAP)  remains  uncertain  as  the  company  still  needs  to  go  through  major  restructuring. 
Meanwhile,  further  progress  was  recorded  in  network  industries.  The  liberalisation  of  the 
electronic communications market has been completed. In November 2011 the Law on Postal 
Services  was  adopted  and  the  national  postal  service  was  converted  into  a  joint  stock 
company,  laying  the  basis  for  the  complete  opening  of  this  market.  The  energy  market  was 
further  liberalised.  In  March  2012  the  government  adopted  the  restructuring  plan  for 
Montenegro  Airlines.  The  opening  of  the  air  transport  market  has  been  formally  achieved. 
However,  although  the  legislative  work  for  the  opening  of  the  railways  and  the  maritime 
transport  markets  was  initiated,  it  has  not  yet  been  concluded  (see  Chapter  14-  Transport 
policy).  Overall,  the  restructuring  of  network  industries  is  facilitating  the  opening  of  their 
respective markets. 

There  has  been  little  change  in  the  sectoral  structure  of  the  economy.  The  services  sector 
remains  the  largest,  accounting  for  some  70%  of  GDP.  Agriculture  represents  about  9%  of 
GDP, industry 14% and construction 7%. The informal sector remains large and is fuelled by 
weaknesses in tax and expenditure policies, as well as in law enforcement. SMEs account for 
some  66%  of  total  employment.  SMEs  are  still  confronted  with  difficult  access  to  credit. 
Some financial relief continued to be provided through the Investment and Development Fund 
(IDF) which increased the number of loans and established a factoring facility. However, the 

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total amount of this support represented only 1.4% of total banks loans to private companies 
in 2011. The IDF project for development of business zones continues with the development 
phase  in  Podgorica  and  the  selection  of  two  new  zones:  in  Berane  and  Kolasin.  However, 
public sector financial cutbacks and organisational difficulties have led to a decline of support 
available to SMEs. The IDF established a credit guarantee scheme in April 2011, although no 
guarantees have been issued so far. Overall, the large informal sector and difficulties to obtain 
credit represent two major challenges for enterprise development. 

State influence on competitiveness 

Some progress has been recorded in the functioning and independence of regulators. In May 
2012  the  Agency  for  Electronic  Communications  and  Postal  Services  instructed  the 
incumbent operator to enable other companies to use the capacities of the cable infrastructure. 
Also in May, the Commission for the Control of Public Procurement annulled two important 
public tenders  due to procedural irregularities, revealing  increased  independence despite the 
risk  of  interruption  of  the  provision  of  medicines  or  internet  services  to  the  public 
administration. State aid was marginally reduced, from 2.3% of GDP in 2010 down to 2% in 
2011.  In  May  2012  the  Montenegrin  Commission  for  State  Aid  Control  ruled  for  the 
government to recover from the aluminium company € 30 million of state guarantees paid to a 
bank after the firm failed to service a loan. Overall, direct public support remains limited, but 
state guarantees are high and represent a risk for public finances.  

Economic integration and convergence with the EU 

Montenegro became a full member of the World Trade Organisation in April 2012. The total 
value  of  exports  and  imports  of  goods  and  services  increased  to  101%  of  GDP  in  2011, 
compared  to  94%  a  year  before.  However,  the  importance  of  the  EU  as  the  main  trading 
partner  has  decreased  somewhat,  as  the  EU  received  50%  of  total  merchandise  exports, 
compared to 56% a year earlier. The share of imports of goods from the EU fell moderately to 
36%, from 38% a year before. The CEFTA market remains the second largest for Montenegro 
exports,  receiving  some  40%  of  its  outbound  trade  in  2010  and  2011.  The  share  of  imports 
from  CEFTA  countries  continued  increasing,  from  40%  to  43%.  Foreign  direct  investments 
decreased  substantially  in  2011.  However,  the  share  of  EU  investments  expanded  further, 
totalling  53%  of  total  inflows  into  the  country  compared  to  50%  a  year  before.  The  Real 
Effective  Exchange  Rate  (CPI-based)  began  to  depreciate  in  2011  (by  3.2%)  after  having 
stabilised the year before, thus marginally contributing to improved external competitiveness. 
Overall, while trade integration with the EU has somewhat slowed, the EU remains the main 
destination for Montenegro’s exports and the main source for FDI. 

4. 

ABILITY TO TAKE ON THE OBLIGATIONS OF MEMBERSHIP 

This section examines Montenegro’s ability to take on the obligations of membership — that 
is,  the  acquis  as  expressed  in  the  Treaties,  the  secondary  legislation  and  the  policies  of  the 
Union.  It  also  analyses  Montenegro’s  administrative  capacity  to  implement  the  acquis.  The 
analysis  is  structured  in  accordance  with  the  list  of  33  acquis  chapters.  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. 

Chapter 1: Free movement of goods 

There  has  been  no  progress  in  the  area  of  general  principles.  Some  progress  has  been 
achieved in the case of horizontal measures. The new Law on Technical Requirements for 
Products  and  Conformity  Assessment,  the  Law  on  Market  Inspection  and  the  Law  on 
Inspection Surveillance were adopted in November 2011. Further alignment with the acquis 
remains to be achieved in both areas. The Law on Technical Requirements for Products and 

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Conformity  Assessment  is  still  non-compliant  with  the  acquis  in  several  aspects,  e.g.  in  the 
meaning and terms of use of the CE marking. 

In the area of standardisation good progress can be reported. The capacity of the Institute for 
Standardisation  of  Montenegro  (ISME)  is  gradually  improving,  despite  its  limited  financial 
and  human  resources.  By  the  end  of  August  2012,  ISME  adopted  8409  European  and 
international standards, and completed the public inquiry on 400 standards. 34% of adopted 
standards are harmonised standards in the meaning of the ‘New Approach’. The compliance 
with the membership criteria of the European Committee for Standardisation (CEN) remains 
to be fulfilled. ISME still has to adopt most of its rules of procedure. The majority of internal 
rules remain to be adopted. ISME has established six new Technical Committees, bringing the 
total  number  to  eight.  An  information  service  on  standards  was  established  in  compliance 
with  the  acquis.  Further  investment  will  be  required  to  develop  a  complete  ICT  system 
enabling  real-time  synchronisation  on  developing  standards  with  CEN,  the  European 
Committee 
the  European 
Telecommunications  Standards  Institute  (ETSI).  The  National  Strategy  for  Standardisation 
has not yet been approved by the government.  

for  Electrotechnical  Standardisation 

(CENELEC)  and 

Some  progress  can  be  reported  in  the  area  of  conformity  assessment.  The  new  Law  on 
Technical Requirements for Products and Conformity Assessment created a legal framework 
for conformity assessment for certain products even though the law still needs to be amended 
to  be  in  line  with  the  acquis.  The  requirements  for  the  designation  for  the  conformity 
assessment bodies have been decided, although they need to be further clarified and specified. 
Conformity  assessment  bodies  (CABs)  are  still  showing  limited  interest  in  becoming 
designated bodies despite the fact that two bodies were prepared to implement the functions 
of notified bodies. The new strategy on conformity assessment needs yet to be adopted. 

Good progress can be reported in the field of accreditation. In November, the Accreditation 
Body  of  Montenegro  (ATCG)  became  a  full  member  of  the  European  cooperation  for 
Accreditation  (EA).  This  was  preceded  by  the  adoption  of  new  rules  for  cross-border 
accreditation,  witnessing  and  information  security.  Three  technical  committees  were 
established.  The  ATCG  strengthened  all  its  bodies,  including  the  Accreditation  Committee 
and  the  Complaints  Committee,  and  accredited  two  more  CABs,  while  revoking  the 
accreditation  of  one  CAB  bringing  the  total  number  of  accredited  CABs  to  19.  The 
established Register of accredited CABs in Montenegro is well maintained and available on 
the  internet.  The  ATCG  has  developed  and  implements  a  surveillance  plan,  including 
monitoring  visits  and  re-assessment  of  accredited  organisations.  The  application  for  the  EA 
MLA  (Multilateral  Agreement)  signatory  status  in  the  areas  of  testing  laboratories  and 
inspection bodies needs still to be prepared.  

There  has  been  progress  in  the  area  of  metrology.  After  becoming  a  CGPM  (General 
Conference  on  Weights  and  Measures)  associate,  Montenegro  signed  in  October  2011  the 
CIPM  MRA  (Mutual  Recognition  Arrangement  of  the  ‘Comité  International  des  Poids  et 
Mesures’).  Limited  resources  remain  of  concern,  particularly  with  a  view  to  the  necessary 
calibration activities. A metrological traceability chain was established also in the remaining 
areas.  The  Bureau  of  Metrology  set  up  a  quality  management  system  in  line  with  the 
requirements of standard ISO/IEC 17025 for the laboratories of mass, length and temperature. 
These and the remaining metrology laboratories have yet to be accredited, and the strategy for 
metrology development adopted. 

There  has  been  good  progress  as  regards  market  surveillance.  In  November,  Montenegro 
adopted  a  Law  on  Market  Inspection  and  the  Law  on  Inspection  Surveillance.  The  new 
Regulation, adopted in December 2011 and amended in 2012, on the organisation and method 

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of  operation  of  the  state  administration  established  a  single  inspection  authority  called  the 
Market  Inspection  (uniting  34  inspection  services  in  charge  of  market  surveillance  of  non 
food products) as an independent body. The head of the authority was selected in May, but 
not  all  old  inspections  have  been  integrated  so  far.  The  reform  in  the  inspection  service 
remains to be completed with the adoption of the necessary implementing legislation and the 
finalisation  of  the  operational  and  procedural  set-up  of  the  authority.  The  revision  of  the 
General Product Safety Law and the planned new market surveillance law need to be pursued. 

Coordination  in  the  market  surveillance  area  was  strengthened.  A  Memorandum  on 
Cooperation  between  the  Market  Inspectorate  and  the  Customs  Authority  was  signed  in 
February 2012. The Coordination Body for Market Surveillance (CBMS) is taking the lead in 
ensuring  smooth  coordination.  In  March  2012,  the  CBMS  adopted  the  2012  National 
Programme  for  Market  Surveillance,  based  on  the  individual  annual  market  surveillance 
programmes  of  each  inspection  service.  In  April  the  government  adopted  the  report  of  the 
Coordination Body for 2011 with a list of competences of different inspections by groups of 
products. 

The  Market  Inspectorate  improved  the  market  surveillance  methodology  and  internal 
operational  rules,  and  substantially  trained  its  staff.  The  newly  introduced  IT  system  allows 
the  planning,  recording  and  tracking  of  market  surveillance  operations  to  be  improved  and 
establishes a good basis for introducing a proper risk management system. A new web-page 
of the Market Inspectorate was launched at the end of 2011. 

As  regards  the  ‘Old  Approach’  product  legislation,  some  progress  was  made  with  the 
adoption  in  November  of  the  new  Law  on  Pharmaceuticals  and  rulebooks  on  pre-packaged 
products and on bottles as measuring containers. The Agency for Drugs and Medical Devices 
established  a  reference  laboratory  for  identification  of  forgeries  and  created  a  database 
providing  information  on  relevant  stakeholders.  The  Ministry  of  Transport  and  Maritime 
Affairs  established  a  Department  for  Motor  Vehicles  to  develop  and  ensure  the  adoption  of 
technical  regulations  for  the  type  approval  of  motor  vehicles.  The  Law  on  Traffic  Safety, 
regulating motor vehicles in use, has yet to be adopted, as does the new Law on Chemicals. 

Little  progress  was  registered  in  the  area  of  ‘New  and  Global  Approach’  product 
legislation.  Rulebooks  on  electromagnetic  compatibility  as  well  as  radio  equipment  and 
telecommunications terminal equipment were adopted and entered into force in July. 

In the area of procedural measures, no progress was made. 

Conclusion 

Overall,  Montenegro  has  made  some  progress  in  the  area  of  free  movement  of  goods. 
Additional efforts, better coordination and stronger ownership are needed to further align with 
the  acquis.  Overall,  preparations  in  the  area  of  free  movement  of  goods  are  relatively 
advanced. 

4.2. 

Chapter 2: Freedom of movement for workers 

There  has  been  no  further  progress  in  the  area  of  access  to  the  labour  market.  Existing 
legislation still requires work permits for EU nationals. To comply with EU law on the free 
movement of workers, EU nationals must not be subject to any work permit requirement as 
from accession. Preparations in this area are at an early stage.  

There has been some progress regarding preparations for future participation in the European 
Employment Services (EURES) network, with the initial establishment of new administrative 
structures  within  the  employment  services,  and  training  of  potential  EURES  advisers. 
Preparations in this area have been launched. 

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There  has  been  little  progress  in  the  field  of  coordination  of  social  security  systems. 
Montenegro has ratified a cooperation agreement with Slovenia and signed an agreement with 
Turkey.  Negotiations  are  currently  under  way  with  the  Slovak  Republic,  Bosnia  and 
Herzegovina  and  Croatia.  There  was  no  progress  towards  strengthening  administrative 
capacity. Preparations in this area are at an early stage. 

There were no developments as regards the European Health Insurance Card. Preparations 
in this area still need to be launched. 

Conclusion 

Little  progress  has  been  made  in  the  field  of  freedom  of  movement  for  workers.  Overall, 
alignment with the acquis is still at an early stage. 

4.3. 

Chapter 3: Right of establishment and freedom to provide services 

There has been little progress in the field of the right of establishment. The implementation 
of recently amended legislation (on water, agricultural land, protection and rescue, geological 
research,  electronic  communication  and  spatial  planning)  faced  some  hurdles  at  local  level. 
Following its establishment within the central registry of the Commercial court, the one-stop 
shop  for  business  registration  became  an  integral  part  of  the  tax  administration  in  March. 
However,  registration  is  not  yet  possible  at  the  regional  units  of  the  tax  administration. 
Electronic  company  registration  became  operational  in  May  through  e-government  portal. 
Some progress has been achieved at central government level. However, additional efforts in 
implementing the reforms are still needed at local level. 

As  regards  freedom  to  provide  cross-border  services,  no  progress  can  be  reported  on 
transposition  of  the  Services  Directive.  Designation  of  a  central  body  to  coordinate  its 
implementation and other related activities are at the planning stage. 

Good progress can be reported in the area of postal services. A new Law on Postal Services 
was  adopted  in  November  with  a  view  to  further  aligning  the  national  legislation  with  the 
acquis.  This  law  sets  a  new  regulatory  framework  for  postal  services,  providing  for  further 
liberalisation of the postal market and its full opening as of the beginning of 2013, which is in 
line with the timeframe of the ‘second group’ of countries under Directive 2008/6/EC (‘Third 
Postal  Directive’).  The  law  also  provides  for  the  independence  of  the  national  regulatory 
authority,  sets  up  instruments  for  ensuring  the  sustainability  of  the  universal  postal  service, 
and  simplifies  the  procedure  for  issuing  an  authorisation.  Legislative  alignment  is  very 
advanced  (with  Directive  2002/39/EC,  the  ‘Second  Postal  Directive’)  and  only  some  minor 
issues  are  pending,  which  could  be  introduced  in  the  envisaged  implementing  legislation. 
Montenegro’s postal service changed its legal status into a joint stock company in January and 
preparations are ongoing for a public-private partnership tender. The administrative capacity 
of the national regulatory authority remains limited. 

There  has  been  some  progress  in  the  field  of  mutual  recognition  of  professional 
qualifications.  The  Law  on  Recognition  of  Foreign  Qualifications  for  Access  to  Regulated 
Professions  entered  into  force  in  April.  The  law  partly  transposes  Directive  2005/36/EC  on 
the  recognition  of  professional  qualifications  by  setting  out  the  general  framework  for  the 
recognition of foreign diplomas. There is still a need to strengthen administrative capacity. 

Conclusion 

Some progress can be reported on the right of establishment and freedom to provide services. 
Montenegro  made  good  progress  towards  aligning  the  new  law  on  postal  services  with  the 
acquis.  On  the  right  of  establishment,  legislative  reforms  need  to  be  implemented. 
Considerable efforts are still needed regarding the alignment of legislation with the Services 

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Directive, on mutual recognition of professional qualifications and as regards interinstitutional 
cooperation. Overall, preparations in this area are moderately advanced. 

4.4. 

Chapter 4: Free movement of capital 

As regards capital movements and payments, Montenegro has essentially liberalised them, but 
further efforts are needed to fully align legislation with the acquis.  

No  legislative  developments  can  be  reported  on  free  movement  of  capital  or  on  payment 
systems.  

With  regard  to  the  fight  against  money  laundering,  some  progress  can  be  reported. 
Amendments  to  the  law  on  prevention  of  money  laundering  and  terrorism  financing  were 
adopted in February. Further to the recently issued Financial Action Task Force (FATF) 2012 
report,  a  new  series  of  anti-money  laundering  initiatives  will  require  further  amendments  to 
the existing legislation and strengthening of the administrative capacity. 

Cooperation  between  the  Ministry  of  Finance,  the  Administration  for  the  Prevention  of 
Money Laundering and Terrorist Financing (APMLTF), the Central Bank of Montenegro, the 
Securities  and  Exchange  Commission  and  the  Insurance  Supervision  Agency  was  improved 
by means of a Memorandum on cooperation and data exchange in the area of prevention of 
money laundering and terrorist financing, signed in December. The police are not a party to 
the  Memorandum  and  the  current  arrangements  for  receiving  information  on  suspicious 
transactions from the APMLTF are time-consuming and delay financial investigations. 

Montenegro  produces  a  low  level  of  suspicious  transaction  reports  and  accounts  for  a  large 
document  flow  (estimated  at  about  300,000  documents  per  year).  Of  the  34  reports  of 
suspicious  transactions  (in  the  period  September  2011–March  2012),  24  came  from  the 
banking sector. There have been very few convictions for money laundering.  

The  IT  system  of  the  APMLTF  needs  to  be  updated  so  that  it  can  support  the  workflow 
effectively.  There  is  a  need  to  establish  a  clear  IT  policy,  including  plans  to  update  and 
maintain  the  current  hardware  and  obtain  software  allowing  data  analysis,  and  to  allocate 
funds under the national budget. 

Following the adoption of the rulebook on the internal organisation of the APMLTF in 2011, 
there was no further increase in the number of staff. One staff vacancy in this administration, 
which serves as the national Financial Intelligence Unit (FIU), was filled, bringing the total to 
29 staff out of 38 posts assigned.  

The administrative capacity of the supervisory authorities  to conduct anti-money  laundering 
inspections in the supervised institutions needs to be enhanced. Similarly, further efforts are 
needed to improve the awareness of the obligated sector to ensure adequate implementation of 
the  anti-money  laundering  rules,  and  to  enhance  cooperation  between  the  APMLTF,  the 
regulators/supervisory  bodies  and  the  obligated  sector  in  enforcing  anti-money  laundering 
legislation.  

In January, the administration signed agreements on exchanges of financial intelligence data 
with Japan and Canada.  

Conclusion 

Little  progress  can  be  reported  on  free  movement  of  capital  although  preparations  are  on 
track.  Full  alignment  with  the  acquis,  as  regards  payment  systems  and  strengthening 
administrative capacity, mainly in the area of the fight against money laundering, will need to 
be  further  pursued.  As  regards  combating  money  laundering  and  financing  of  terrorism, 
preparations  are  still  at  a  relatively  early  stage.  Major  efforts  are  required  to  enforce 

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legislation,  enhance  inter-agency  coordination  and  establish  a  track  record  on  fight  against 
money laundering and financial crime. Overall, preparations are on track. 

4.5. 

Chapter 5: Public procurement  

There  has  been  good  progress  as  regards  the  general  principles  applying  to  public 
procurement  in  Montenegro.  The  new  law  on  public  procurement  and  the  related  bylaws, 
which entered into force in January, aligned to a large extent the general principles with those 
of the EU acquis. The new law covers the remedies system, taking the alignment forward in 
this area. Further work is required to bring the legislation on concessions, utilities and defence 
procurement into line with the acquis.  

In the second half of 2011, a number of implementing provisions were adopted. In order to 
strengthen procurement capacity and reduce the risk of conflicts of interest, the government 
adopted in December 2011 the Decree on the functioning of the state administration, which 
aims to transfer the management of the public procurement procedures of 34 independent and 
semi-independent bodies to the competent line ministry. The impact of the decree will be to 
reduce  the  number  of  contracting  authorities  and  procurement  procedures.  Montenegro 
adopted a new strategy for public procurement for the period 2011-2015 in December 2011 
and  established  a  coordinating  body  to  monitor  its  implementation.  Resources  for 
implementing the strategy still need to be ensured. 

As regards the award of public contracts, some progress has been achieved with the entry 
into force of the new public procurement (PP) law. The helpdesk at the Public Procurement 
Directorate  is  operational.  The  Public  Procurement  Directorate  launched  a  new  portal  on 
public  procurement  in  January  2012,  which  publishes  the  procurement  notices,  award 
decisions and procurement plans of the contracting authorities. The system is only available in 
the  Montenegrin  language.  It  provides  for  more  transparency  but  needs  to  be  further 
developed. 

The administrative capacity for public procurement continues to improve. The new rulebook 
on internal organisation and job descriptions of the Public Procurement Administration (PPA) 
was adopted by the government in November 2011. The staffing of the PPA is 14. The new 
organisation of the PPA envisages the establishment of the new inspection service, which is 
expected to monitor the regularity and timeliness of procedures for contracts below € 500,000. 
This  complements  a  similar  function  of  the  State  Commission  for  contracts  with  a  value 
above € 500,000, and is independent of the general complaints review mechanism, which is 
also  operated  by  the  State  Commission.  The  competences  of  the  inspection  service  and  its 
powers need to be clarified by precise implementing provisions, and sufficient staff needs to 
be allocated. Furthermore, clearer separation of the functions of the different units needs to be 
ensured to avoid any possible overlaps with the PPA’s advisory and approval function. The 
PPA organised training activities to familiarise contracting authorities with the new PP law. 
Guidelines on the implementation of the new PP law were prepared and seminars were held 
on  anti-corruption  policy  and  the  prevention  of  conflicts  of  interest.  Yet  further  efforts  in 
terms of training and additional staffing are needed to increase the enforcement capacity. 

As  regards  the  remedies  system,  good  progress  has  been  achieved  with  the  system  being 
covered by the new PP law. A new State Commission for the Control of Public Procurement 
Procedures (SCPP) was established on 23 February 2012. The new Commission has a staff of 
6 and has obtained stronger powers and competences. A complaint fee of 1% of the contract 
value,  with  a  maximum  of  € 8,000,  has  been  introduced.  Since  its  establishment  until  14 
September 2012, SCPP has performed 26 controls of public procurement procedures and the 
average time for completing a case was 10 days.  

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Conclusion 

Overall, good progress has been achieved in the area of public procurement. Implementation 
of the new legislation remains a concern. The legislative framework for concessions remains 
to  be  aligned  with  the  acquis.  The  role,  powers  and  competences  of  the  future  inspection 
services need to be clarified and sufficient staff provided. Preparations in the area of public 
procurement are moderately advanced. 

4.6. 

Chapter 6: Company law 

As  regards  company  law,  there  were  no  further  developments.  The  national  legislation  is 
largely aligned with the acquis.  

As regards electronic signatures, the Root Certificate Authority at national level (Montenegro 
Post) issued more than 2,500 digital certificates, mostly to legal entities. Following the first 
wave of digital certificate issuance, the certificate authority receives 4-5 requests per day. 

With regard to corporate accounting and auditing, there are no further developments. Work 
on the amendments to the Law on Accounting and Auditing is ongoing. The amendments are 
to establish an independent public oversight body for auditors and a quality control system.  

Conclusion 

Little progress can be reported in the field of company law. New amendments to the Law on 
Accounting and Auditing, establishing an independent public oversight body for auditors and 
a related quality control system, are yet to be adopted. Overall, preparations are moderately 
advanced.  

4.7. 

Chapter 7: Intellectual property law  

In  the  area  of  copyright  and  neighbouring  rights,  the  Regulation  implementing  the 
Copyright Law was adopted. 

In  the  area  of  industrial  property  rights the  Implementing  Regulation  on  Trademarks  was 
adopted  in  October  2011.  The  amended  Trademark  Law  was  adopted  by  the  parliament  in 
July. The Regulation implementing the Patent Law remains to be adopted.  

The Regulation implementing the Law on Legal Protection of Industrial Design entered into 
force  in  March.  Amendments  to  the  Law  on  Legal  Protection  of  Industrial  Design  have  not 
yet been adopted.  

In  March,  the  Patent  Law  Treaty  and  the  Vienna  Agreement  establishing  the  International 
Classification of the Figurative Elements of Marks entered into force in Montenegro.  

Montenegro  adopted  the  Law  on  Confirmation  of  the  Nice  Agreement  Concerning  the 
International  Classification  of  Goods  and  Services  for  the  Purposes  of  the  Registration  of 
Marks. 

Installation  of  the  Industrial  Property  Automation  System  (IPAS)  by  the  World  Intellectual 
Property  Office  (WIPO)  has  started  and  will  take  one  year  to  complete.  This  will  delay 
improvements  in  workflow  management  and  working  procedures.  The  European  Patent 
Office  (EPO)  has  started  installation  of  a  database  of  patents  which  will  replace  the  IPAS 
module  originally  planned.  Both  systems  will  improve  workflow  management  and  working 
procedures. Improvements have been made to the system of electronic archiving. 

Investment in information technology (IT) equipment has been improved. However, the lack 
of IT competence and of sufficient financial resources impedes further progress, although the 
IPR capacity of existing staff is very good.  

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The  decree  on  the  organisation  of  public  administration,  adopted  by  the  government  in 
December 2011, recognises MIPO as an independent body. However, it limits significantly its 
independence as it concentrates the financial, procurement and other management functions in 
the  Ministry  of  Economic  Affairs.  The  decree  also  provides  the  framework  for  the 
establishment  of the Inspection Directorate, which  will  include industrial property  (IP). The 
decree entered into force in April 2012, but implementation remains to be achieved.  

Regarding  enforcement,  the  government  adopted  the  national  intellectual  property  strategy 
2012-2015 in December 2011, with the aim of improving the enforcement of IP and achieving 
faster  economic  growth  through  its  effective  use.  Sufficient  resources  and  close  monitoring 
will be crucial for the implementation of this strategy. The legal framework on enforcement 
needs to be streamlined and further aligned with the acquis. 

The Commercial Court received 22 cases in the area of protection of property law. All cases 
have  been  processed.  In  two  cases,  the  procedure  was  final  and  legally  binding.  In  two 
procedures it was decided to continue the procedure.  

The  IPR  enforcement  capacity  within  the  administrative  and  judicial  system  remains  weak. 
There  are  no  specialised  IP  courts  in  Montenegro,  and  the  competent  authority  to  appeal 
against  a  decision  made  by  the  IP  Office  is  the  Ministry  of  Economic  Affairs.  Another 
challenge is the lack of registered IP professionals able to represent legal or natural persons in 
proceedings  before  the  competent  authority.  The  IP  Office  does  not  currently  maintain  a 
register of selected representatives, and lawyers only need to be registered at the Montenegrin 
Bar Association.  

Conclusion 

Some progress can be reported in the area of intellectual property. Further efforts are needed 
to  align  with  the  acquis  in  this  area  and  to  implement  it  effectively  in  the  medium  term. 
Overall, preparations are moderately advanced. 

4.8. 

Chapter 8: Competition policy 

Regarding anti-trust and mergers, some progress has been made.  

The Parliament adopted a new Law on Competition in July, with a view to further aligning the 
national  legislation  with  the  competition  acquis.  The  new  Law  shall  enter  into  force  in 
October 2012. The new Law provides for the establishment of an operationally independent 
agency within 90 days from the entry into force of the law. The adoption of the implementing 
provisions remains to be finalised.  

The enforcement record in this area is slightly improving.  

The Authority for Competition Protection (ACP) adopted 13 decisions authorising proposed 
mergers in 2011 and five for the first months of 2012. One notification was revoked due to 
withdrawal  and  two  cases  are  under  investigation.  All  mergers  were  authorised  without 
remedies. As regards abuse of a dominant position, the ACP dealt with seven cases in 2011 
and six cases in the first seven months of 2012. Two cases for the whole period started ex-
officio  and  six  cases  were  suspended.  Two  cases  are  still  under  investigation.  In  five  cases, 
the  ACP  adopted  decisions  finding  that  firms  had  abused  their  dominant  market  positions. 
One  decision  of  2011  was  annulled  by  the  administrative  court  on  procedural  ground.  The 
ACP also carried out a number of surveys. The administrative capacity of the ACP needs to 
be enhanced and the enforcement record improved. 

In the area of State aid, progress was made. Amendments to the Law on State Aid Control 
were  adopted  in  November  to  better  align  the  national  legislation  with  the  acquis  and  to 
strengthen  the  operations  of  the  State  Aid  Control  Commission  (SACC).  In  December,  the 

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government  took  a  decision  requiring  all  legal  acts  on  the  basis  of  which  State  aid  may  be 
granted to be submitted to the SACC for evaluation of their compliance with the Law on State 
Aid Control, prior to their submission to the government. The rulebook on the contents of the 
annual  report  on  State  aid  granted  was  revised  to  include  more  precise  instructions  on  the 
method for analysing the effectiveness of State aid granted. In July the Parliament adopted the 
2011 Report. 

Seven  sectoral  laws  were  amended  and  aligned  with  the  State  aid  acquis  by  the  end  of 
December  2011.  However,  the  Law  on  Ports  still  needs  to  be  adopted.  The  government 
adopted  its  Decision  on  the  Regional  Aid  Map  in  March  2013.  The  State  aid  inventory, 
available on the newly established SACC website, is regularly updated with its decisions. 

The SACC took 14 decisions in 2011 and 10 in the first half of 2012. Out of the 24 cases, 18 
resulted in decisions finding the measures compliant, one resulted in a decision finding that 
the measure was non-compliant and in four cases it was concluded that the notified aid did not 
constitute State aid as per the provisions of Article 2 of the Law on State Aid Control. The 
SACC  has  started  three  ‘ex  officio’  investigations,  two  of  which  have  been  concluded  (one 
with a Decision on compliance and one with a Decision on recovery of State aid) and one is 
still pending. In June, the SACC is expected to deliver the 2011 Annual report on State aid 
control. 

Aid  measures  to  the  sensitive  sectors  need  to  be  brought  in  line  with  Montenegro’s 
obligations  under  the  Stabilization  and  Association  Agreement,  particularly  as  regards  the 
aluminium plant KAP and sensitive sectors.  

Conclusion 

Some progress has been made in the area of competition. Further efforts are needed to align 
Montenegro’s  legislation  with  the  acquis  and  to  ensure  the  operational  independence  of  the 
competition  authority.  Special  attention  needs  to  be  given  to  the  enforcement  of  State  aid 
rules, particularly in the areas of State aid to the sensitive sectors. Overall, preparations in the 
field of competition policy are moderately advanced. 

4.9. 

Chapter 9: Financial services 

There has been some progress in the area of banks and financial conglomerates. A Decision 
on  Public  Disclosure  of  Information  and  Data  by  Banks  was  adopted.  It  brings  the  Central 
Bank Regulation in line with Directive 2006/48/EC, thus implementing Pillar III of the Basel 
requirements. The Decision on Bank Reporting to the Central Bank pursuant to the Banking 
Law was amended to harmonise reporting forms for own funds and capital requirements for 
risks with the new Capital Adequacy Decision.  

The Decision on Large Exposures of Banks, adopted by the Central Bank in March, further 
aligns the national legislation with the acquis on calculation and treatment of large exposures. 
The  Decision  on  Minimum  Standards  for  Credit  Risk  Management  in  Banks,  together  with 
the guidelines for identifying connected parties, was adopted by the Central Bank in April and 
will come into force as of the beginning of 2013.  

A Decision on the Establishment of the Advisory Committee, as the standing advisory body 
of  the  Central  Bank  Council,  was  adopted  in  October  2011.  Members  of  the  Advisory 
Committee  have  to  be  Montenegrin  or  foreign  citizens  with  recognised  professional 
experience.  Alignment  with  the  new  acquis  on  deposit  guarantee  schemes  remains  to  be 
achieved.  

There  has  been  little  progress  in  the  area  of  insurance  and  occupational  pensions.  On  the 
basis of the law on compulsory vehicle insurance, the Insurance Supervision Agency adopted 

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the rulebook on the content of the form of the insurance policy for motor vehicle liability. The 
Decision  on  Determining  Level  of  Border  Insurance  was  adopted.  A  new  insurance  law 
transposing the relevant EU directives remains to be adopted. The insufficient administrative 
capacity of the Insurance Supervision Agency remains an issue of concern. 

There  has  been  little  progress  as  regards  financial  market  infrastructure.  The  Law  on 
Financial Collateral was adopted by the government in March.  

Some  progress  can  be  reported  in  the  area  of  securities  markets  and  investment  services. 
The  Law  on  Investment  Funds  was  adopted  in  November,  regulating  the  conditions  for  the 
establishment  and  operation  of  investment  funds  and  managing  companies  of  investment 
funds and other issues relevant for the functioning of investment funds. It is partially aligned 
with the 2009 Directive on the coordination of laws, regulations and administrative provisions 
relating  to  undertakings  for  collective  investment  in  transferable  securities  (UCITS).  The 
Securities  Commission,  the  trade  regulatory  and  supervisory  body  in  Montenegro,  also 
adopted 12 regulations for the implementation of the funds.  

The  Securities  Commission  adopted  Rules  on  Business  Secrets,  aiming  at  harmonising  the 
legislation  with  the  acquis  on  Markets  in  Financial  Instruments  Directive,  and  Rules  on  the 
content,  deadlines  and  the  method  of  publishing  of  financial  reports  by  the  issuers  of 
securities.  

Conclusion 

There  has  been  some  progress  in  the  field  of  financial  services.  Progress  has  been  made  in 
adopting legislation on public disclosure of information and data by banks, on calculation of 
large exposures and on UCITS. Substantial efforts are required to align with and implement 
the  existing  acquis  in  the  areas  covered  by  this  chapter.  Overall,  the  level  of  alignment 
remains moderately advanced.  

4.10.  Chapter 10: Information society and media 

Progress  can  be  reported  in  the  field  of  electronic  communications  and  information  and 
communications  technologies  (ICT).  The  administrative  capacity  of  the  Agency  for 
Electronic Communications and Postal Services (EKIP) has improved. After completing the 
first round of market analyses and further analysing five additional markets in 2011, EKIP has 
made  progress  in  implementing  competitive  safeguards,  including  reference  offers  for 
interconnection  and  wholesale  broadband  access  published  by  the  incumbent,  number 
portability in fixed and mobile markets and regulatory obligations enabling national roaming 
and access to mobile virtual network operators. There are three competing mobile operators in 
the country, while the incumbent dominates both the fixed telephony and broadband markets 
(having 81% of broadband connections). At the end of 2011, the fixed broadband penetration 
rate per population was moderate at 13.6%. As for rights of way, the market players continue 
to face administrative difficulties in deploying fixed and mobile networks. The appellate and 
supervisory powers of the Ministry of the Information Society and Telecommunications over 
EKIP  still  endanger  the  regulator’s  independence.  EKIP  has  also  launched  an  appeal  before 
the  Constitutional  Court  against  recent  legislative  amendments  whereby  the  power  of 
appointing the board of EKIP was transferred from the government to the parliament, as the 
new rules provide for the automatic dismissal of the board and EKIP’s executive director if its 
financial report is not approved by the parliament.  

Montenegro has started to address its priorities in this area. 

As  regards  information  society  services,  good  progress  can  be  reported.  Legislation 
implementing  the  Law  on  Electronic  Signature  has  been  adopted,  as  well  as  a  new  national 
strategy  for  information  society  development 2012–2016  containing  specific  strategies  on 

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electronic  communications  and  broadband  development.  The  information  society  strategy 
identifies the growth of broadband as a key national priority, projecting to achieve the Digital 
Agenda  for  Europe  objectives  by  2016.  A  Computer  Emergency  Team  (CERT)  has  been 
established.  A  law  on  e-governance  is  under  preparation.  There  has  been  no  progress  in 
further  aligning  the  Law  on  e-Commerce  with  the  acquis.  Preparations  in  this  area  are  on 
track. 

Little  progress  has  been  made  in  the  area  of  audiovisual  policy.  The  public  broadcaster  is 
undergoing  a  structural  reform,  aimed  at  ensuring  its  financial  independence  and 
sustainability  and  reaching  the  European  standards  for  public  service  broadcasting. 
Amendments  to  the  Law  on  Electronic  Media  have  been  adopted,  requiring  the  Agency  for 
Electronic  Media  to  submit  operational  and  financial  plans  and  reports  to  parliament  for 
approval. This clearly undermines the independence of the Agency. Although the Agency for 
Electronic Media has slightly increased its capacities with respect to monitoring of media, it 
still fails to monitor it outside the capital. Amendments to the Law on Digital Broadcasting 
were adopted by the Parliament in June 2012 whereby the digital switchover process has been 
postponed  with  a  new  deadline  of  17 June  2015.  This  raises  potential  concerns  about  the 
timely implementation of the digitalisation process. Despite the fact that the new management 
of  the  state  broadcaster  RTCG  has  made  significant  efforts  to  improve  the  quality  of 
programmes and has boosted ratings, the key challenges remain restructuring and digitisation 
of the radio and television stations. Preparations in this area have started. 

Conclusion 

There  has  been  some  progress  in  the  field  of  information  society  and  media.  However, 
independence of the regulatory bodies has been undermined by amendments to the legislation. 
Overall, preparations are moderately advanced. 

4.11.  Chapter 11: Agriculture and rural development 

In the area of horizontal issues there has been little progress. During the reference period, the 
national  statistics  body  Monstat  published  further  booklets  on  agricultural  data,  concluding 
the  findings  from  the  2010  agriculture  census.  The  bulk  of  the  agricultural  budget  for  2012 
remains  targeted  at  direct  support  measures  linked  to  production.  While  some  efforts  are 
being made to de-link from production, support measures will gradually need to be brought 
more  into  line  with  EU  rules,  decoupling  them  from  production.  Support  for  rural 
development measures is increasing due mainly to grant support under a World Bank project.  

In the area of common market organisation preparations still need to be launched. 

Some  progress  has  been  made  in  the  field  of  rural  development.  The  rural  development 
programme under the Instrument for pre-accession (IPARD) was submitted; however it still 
needs  to  be  further  amended  before  adoption.  Within  the  Ministry  of  Agriculture  and  Rural 
Development, the sector for rural development was appointed as the Managing Authority and 
the sector for payment as the IPARD agency. Establishment of the management and control 
system under IPARD is slow. Resources are very limited and the appointment of staff to the 
IPARD operating structures is  not very advanced. The administrative capacity and the legal 
framework are not yet sufficiently prepared to meet the objectives of the national action plan 
towards IPARD accreditation. Preparations are at an early stage in this area. 

There has been progress in the field of quality policy. Following the adoption of the Law on 
Geographical  Indications  in  2011,  a  guide  to  registration  procedures  has  been  prepared  for 
advisors and producers. Further implementing legislation is in the pipeline and efforts need to 
continue  to  provide  information  about  and  encourage  active  participation  in  the  schemes. 
Preparations in the area of quality policy are moderately advanced. 

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Progress  is  being  made  in  the  area  of  organic  farming.  A  national  action  plan  for  organic 
production  in  the  period  2012–2017  was  adopted  to  support  the  development  of  organic 
farming and the processing and consumption of organic products in the domestic market. A 
Law on Organic Production has been adopted. Preparations in the area of organic farming are 
moderately advanced. 

Conclusion 

Progress has been made in the area of agriculture and rural development. Efforts are needed to 
develop  an  appropriate  legal  framework  to  meet  the  objectives  of  the  national  action  plan 
towards  accreditation  for  the  management  of  rural  development  funds.  Overall,  alignment 
with the acquis is at a very early stage in this area. 

4.12.  Chapter 12: Food safety, veterinary and phytosanitary policy 

Little  progress  can  be  noted  as  regards  general  food  safety.  Training  of  staff  covering 
numerous  thematic  areas  in  the  food  safety  field  has  been  provided.  Still,  the  Law  on  Food 
Safety  remains  to  be  adopted.  Amendments  to  the  Law  on  Inspection  Surveillance  were 
adopted, establishing a unified body responsible for veterinary and phytosanitary inspections, 
though concerns on efficiency remain. Preparations in this area of the acquis are at an early 
stage. 

Progress has been made in the area of veterinary policy. The programme on the eradication 
of  rabies  has  started.  Training  of  veterinary  staff  continued.  Montenegro  adopted  a  new 
Veterinary Law. Increased effort is needed to adopt animal disease contingency plans and the 
comprehensive  programme  for  controlling  and  monitoring 
transmissible  spongiform 
encephalopathy. Preparations in the field of veterinary policy are at an early stage. 

With  regard  to  the  placing  on  the  market  of  food,  feed  and  animal  by-products,  no 
progress can be reported. Preparations in this field are at an early stage. 

There  was  limited  progress  in  the  implementation  of  food  safety  rules.  Montenegro  has 
adopted a monitoring programme for pesticide residues in food of animal and plant origin and 
a  programme  for  monitoring  residues  of  veterinary  medicinal  products.  Preparations  in  the 
area of food safety rules are not very advanced. 

No progress can be reported as regards specific rules for feed. Legislation on feedingstuffs 
intended  for  particular  nutritional  purposes  and  on  certain  products  used  in  animal  nutrition 
still  needs  to  be  adopted.  Preparations  in  the  area  of  specific  rules  for  feed  are  at  an  early 
stage.  

There has been some progress with regard to phytosanitary policy. Amendments to the law 
on  seed  materials  of  agricultural  plants  were  adopted  with  a  view  to  aligning  it  with  the 
acquis.  Rulebooks  on  phytosanitary  measures  to  prevent  the  introduction  and  spread  of 
several  harmful  organisms  have  been  adopted.  The  Plant  Pathology  Laboratory  started 
applying  the  compatibility  methods  for  the  identification  of  certain  harmful  organisms.  The 
administrative  capacity  of  the  phytosanitary  inspectorate  has  been  strengthened  through  the 
recruitment  of  one  additional  phytosanitary 
inspector.  Training  of  staff  continued. 
Preparations in the area of the phytosanitary sector are moderately advanced. 

No progress has been made with regard to alignment and implementation of the acquis in the 
area  of  genetically  modified  organisms  (GMOs).  Preparations  in  this  area  still  need  to  be 
launched. 

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Conclusion 

There  has  been  limited  progress  in  the  field  of  food  safety,  veterinary  and  phytosanitary 
policy. Efforts are needed in all aspects of this policy area, in particular with regard to further 
alignment with the acquis, the reinforcement of control capacity in the veterinary field, and 
the assessment of hygiene standards in food and feed establishments. Overall, alignment with 
the acquis in this area remains at an early stage. 

4.13.  Chapter 13: Fisheries 

No progress can be reported as regards further alignment of the relevant legislation with the 
fisheries  acquis.  The  administrative  capacity  of  the  fisheries  unit  in  the  Ministry  of 
Agriculture  and  Rural  Development  has  been  strengthened  by  taking  on  two  additional 
advisors.  

As  regards  resource  and  fleet  management,  limited  progress  can  be  reported.  The  fishery 
information system has been further developed. Staff of the Institute of Marine Biology were 
trained in assessing the biological state of the fish stocks. Efforts continued towards setting up 
a vessel monitoring centre. Preparations in this area of the acquis are at an early stage. 

There has been limited progress in the area of inspection and control. The fishery inspectors 
received  training  to  improve  their  abilities  to  inspect  and  monitor  fishing  activities  in 
accordance  with  the  relevant  EU  Regulations  and  practices.  However,  the  capacities  of  the 
fishery  inspectorate  remain  limited.  Increased  efforts  are  needed  to  ensure  the  systematic 
processing  of  data  from  logbooks,  adequate  registration  of  catches  and  landings,  the  use  of 
sales  notes  and  systematic  cross-checking  between  catch  composition  and  logbook  records. 
Preparations in the area of inspection and control are not very advanced.  

In the areas of structural actions, market policy and State aid, no progress has been made. 
Preparations in these areas are still to be launched. 

Montenegro has concluded no new international agreements on fisheries. There have been 
no  developments  regarding  Montenegro’s  application  to  join  the  International  Commission 
for  the  Conservation  of  Atlantic  Tunas  (ICCAT).  Montenegro  has  started  to  address  its 
objectives. 

Conclusion 

Some progress was made in the field of fisheries. Efforts are needed with regard to alignment 
of legislation with the fisheries acquis, and implementation of EU standards, in particular in 
the areas of resource management, inspection and control, market policy, structural policy and 
State aid policy. Overall, preparations in this area are at an early stage. 

4.14.  Chapter 14: Transport policy 

Good progress can be reported on road transport. The road fees for foreign-registered cars 
and  the  eco-tax  for  heavy  vehicles  were  repealed.  Montenegro  adopted  in  December  the 
action plan for implementing the road safety strategy for 2012, but the new law on road safety 
has yet to be adopted. Further alignment with recent road safety and dangerous goods acquis 
is  still  necessary.  Implementing  legislation  on  driving  time,  rest  periods  of  drivers  and 
recording  equipment  for  road  transport  was  adopted,  as  well  as  on  road  marking,  driving 
licences and fees for oversized and overweight vehicles. In March, Montenegro began issuing 
memory cards for digital tachographs in line with the obligation arising from the Agreement 
on the work of crew vehicles engaged in international transport and the acquis.  

There  has  been  some  progress  in  the  area  of  rail  transport.  With  regard  to  the  strategy  of 
restructuring of  the railway  of Montenegro, two phases have been completed. Infrastructure 

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charges for passenger trains were published in the network statement for year 2012. However, 
Montenegro still needs to transpose the interoperability directive. The administrative capacity 
of the newly established Railway Directorate was strengthened, but the independence of the 
rail  regulatory  body  from  the  line  ministry  needs  to  be  secured.  As  regards  to  the  border 
crossing  agreements,  further  alignment  with  EU  legislation  needs  to  be  made  for  the 
agreement with Serbia, while an agreement with Albania still needs to be signed.  

There is no inland waterway transport in Montenegro. 

No progress can be reported on combined transport. 

In  the  area  of  air  transport,  good  progress  took  place  with  regard  to  implementing  the 
European  Common  Aviation  Area  (ECAA)  Agreement,  with  the  adoption  of  the  new  Civil 
Aviation  Law,  covering  crucial  issues  such  as  safety,  security  and  air  traffic  management. 
Furthermore, two conventions of the International Civil Aviation Organisation (ICAO) were 
ratified.  

In  the  area  of  maritime  transport  good  progress  has  been  made.  The  transfer  of 
competencies  for  providing  ship  inspection  services  and  issuing  relevant  certificates  for 
vessels  registered  under  the  flag  of  Montenegro  to  the  International  Association  of 
Classification  Societies  continued.  As  regards  the  Paris  Memorandum  of  Understanding  on 
Port  State  Control  (PMoU),  Montenegro  achieved  a  0%  detention  rate  in  2011,  but  it  still 
needs to make progress in order to become a full member of the PMoU. 

An  accident  investigation  body  for  rail,  air  and  maritime  transport  still  remains  to  be 
established. 

No progress can be reported on satellite navigation. 

Conclusion 

There has been good progress in the area of transport, in particular as regards road, rail and 
maritime  transport,  but  there  is  a  need  to  ensure  effective  implementation  of  the  acquis. 
Further progress remains to be made in the rail transport sector concerning inter-operability, 
setting  up  an  accident  investigation  body,  as  well  as  the  independence  of  the  rail  regulator. 
Overall, preparations in this area are advanced. 

4.15.  Chapter 15: Energy 

Montenegro  still  needs  to  finalise  an  update  of  the  energy  development  strategy  and  of  the 
action plan for the period until 2030.  

No  progress  can  be  reported  in  the  area  of  security  of  supply.  A  decree  on  mandatory 
strategic stocks of oil and petroleum products has been developed, but adoption is yet to be 
finalised.  

There  has  been  some  progress  in  the  area  of  the  internal  energy  market.  The  Energy 
Regulatory Agency adopted implementing legislation which fulfils some of the preconditions 
the  energy  sector’s 
for  establishing  a  functioning  energy  market  and 
competitiveness.  Permanent  tariff  methodologies  for  transmission,  distribution  and  final 
consumers, applying incentive-based regulation for the first time in Montenegro, set the basis 
for  efficient  price  regulation.  However,  the  tariffs  are  not  fully  cost-reflective.  All  eligible 
customers  connected  to  the  distribution  system  remain  entitled  to  be  supplied  at  regulated 
tariffs.  The  distribution  company  remains  integrated  in  the  Montenegrin  Electric  Power 
Company  (EPCG),  and  the  deadline  for  its  legal  unbundling  is  the  end  of  2012.  In  January 
2012  the  Market  Operator  (COTEE  Ltd.)  was  established  as  a  separate  legal  entity.  Market 
rules  were  approved  by  the  regulator  in  July  2012.  New  and  non-discriminatory  rules  for 

increasing 

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allocation  of  cross  border  capacity  have  been  introduced.  There  has  been  no  progress  with 
regard  to  the  development  of  a  gas  market  in  Montenegro.  Montenegro  needs  to  start 
preparing for alignment with the EU’s ‘third internal energy market package’. 

Some  progress  can  be  reported  as  regards  renewable  energy  sources  (RES).  Montenegro 
adopted  implementing  legislation  based  on  the  Energy  Law  for  the  promotion  of  electricity 
produced  from  renewable  energy  sources  in  the  internal  electricity  market,  including  the 
establishment of differentiated feed-in tariffs. The work programme for the use of renewable 
energy  sources  (RES)  over  a  ten-year  period  has  yet  to  be  adopted.  The  implementation  of 
projects for small hydro power plants is progressing as planned. As regards the hydro power 
plant on the Morača River, the tender for the construction work failed, as no bid was received 
by the extended deadline of 30 September 2011. The existing Memorandum of Understanding 
between the Montenegrin government and the Italian company A2A allows for the possibility 
for  EPCG  to  build  the  plants,  and  EPCG  presented  a  technical  solution  for  this  project  in 
January.  There  is  a  successful  ongoing  project  providing  0%  interest  bank  loans  for  solar 
water heating to households.  

There was little progress in the field of energy efficiency; a revision of the energy efficiency 
legislation is under preparation, in order to ensure alignment with the acquis. The government 
adopted  an  operational  plan  for  improving  the  energy  efficiency  of  the  state  administration 
bodies for 2012.  

Good  progress  has  been  made  regarding  nuclear  energy,  nuclear  safety  and  radiation 
protection.  The  strategy  for  protection  against  ionising  radiation,  radiation  safety  and 
radioactive waste management with an accompanying action plan was adopted in September 
2011. In November and December 2011, rulebooks were issued on conditions for obtaining a 
permit  for  the  management  radioactive  waste  storage  and  methods  of  collecting,  processing 
and  storing  radioactive  waste,  respectively.  In  addition,  a  programme  on  systematic 
examination of radioactivity in the environment for the year 2012 was adopted. 

The  country  submitted  to  the  International  Atomic  Energy  Agency  its  first  National  Report 
under  the  Joint  Convention  on  the  Safety  of  Spent  Fuel  Management  and  on  the  Safety  of 
Radioactive  Waste  Management.  Also,  this  document  is  one  of  the  commitments  stemming 
from  the  Joint  Convention  on  the  safety  of  spent  fuel  management  and  the  safety  of 
radioactive  waste  management.  The  first  National  Report  and  Declaration  on  Nuclear 
Materials, stemming from the agreement with the International Atomic Energy Agency, was 
adopted  in  December  2011.  Following  public  debates,  Montenegro  issued  in  June  2012  its 
first  license  for  a  radioactive  waste  storage  facility.  As  regards  administrative  capacity,  the 
Environmental  Protection  Agency  established  a  new  department  responsible  for  radiation 
safety and protection against ionising radiation. This department currently employs 10 people.  

Conclusion 

Some progress can be reported in the area of energy. Additional implementing legislation for 
the  internal  energy  market  remains  to  be  adopted.  Montenegro  still  needs  to  adopt  the 
necessary acts concerning oil stocks reserves, as well as the ten-year work programmes on the 
development of RES. Overall, alignment with the acquis is at an early stage in this area.  

4.16.  Chapter 16: Taxation 

Little progress can be reported as regards legislative alignment with the acquis in the area of 
indirect  taxation,  especially  as  regards  VAT.  Legislation  on  deferred  payment  of  customs 
debt (duties and VAT) entered into force in January 2012. Amendments to the law on excise 
duties  entered  into  force  in  January  and  April  2012,  reducing  excise  duties  on  diesel  fuel, 
increasing the rates on cigarettes and alcoholic drinks, and introducing this tax for coffee and 

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carbonated  soft  drinks.  Further  improvements  remain  to  be  made  in  order  fully  to  align  the 
structure, scope and level of excise duties with the acquis. Preparations in the area of indirect 
taxation are at an early stage.  

Little progress was made in the area of direct taxation. Amendments to the personal income 
tax  law,  the  corporate  profit  tax  law,  and  the  law  on  mandatory  social  contributions  were 
adopted in February 2012 with the aim of aligning tax relief provisions with State aid rules 
and introducing a more detailed procedure for the taxation of capital gains. Preparations in the 
area of direct taxation are at an early stage. 

Little  progress  can  be  reported  as  regards  administrative  cooperation  and  mutual 
assistance. An agreement with Serbia on avoiding double taxation has been ratified. In due 
time,  Montenegro  will  have  to  align  with  the  EU  legal  framework  for  administrative 
cooperation with EU Member States and prepare for putting into operation the Central Liaison 
Office  (in  the  Tax  Administration)  and  the  Excise  Liaison  Office  (in  the  Customs 
Administration). Preparations in this area still need to be launched. 

There  has  been  some  progress  in  operational  capacity  and  computerisation  of  the  tax 
administration,  which  underwent  major  organisational  and  structural  changes  through 
reinforcement of the IT department and the creation of a large taxpayers unit. There has been 
progress in developing the internal control system by establishing a separate department for 
internal  control,  with  clearly  defined  procedures  for  internal  control  and  the  fight  against 
corruption.  The  IT  sector  remains  understaffed  and  lacks  training  with  a  view  to  the 
preparations  needed  for  interconnectivity  and  interoperability  with  the  EU  systems.  Further 
efforts  are  needed  to  upgrade  the  administration’s  management  capacity,  especially  on  the 
strategic level. To develop the mandatory VAT Information Exchange System and the Excise 
Movement  Control  System,  an  overall  functional  business  and  IT  strategy  needs  to  be 
established, endowed with sufficient budget and accompanied by action plans. Preparations in 
this area are not very advanced. 

Conclusion 

Little  progress  was  made  in  the  area  of  taxation,  with  developments  consisting  primarily  in 
the establishment of new departments within the tax administration. Further efforts are needed 
to develop an overall business and IT strategy. Overall, in the area of taxation, Montenegro’s 
alignment with the acquis is at an early stage. 

4.17.  Chapter 17: Economic and monetary policy 

As regards monetary policy, there was no progress in further alignment of the Central Bank 
law  with  the  relevant  EU  legislation.  The  Central  Bank  legislation  still  needs  to  be  aligned 
with the acquis on withdrawal, replacement and destruction of worn-out banknotes and coins. 
Institutional  and  personal  independence,  especially  of  the  Governor  of  the  Central  Bank, 
needs  to  be  safeguarded.  The  Insurance  Act  provides  privileged  access  for  the  state  to 
financial institutions. The fact that Montenegro is using the euro as its sole legal tender, and 
has  therefore  abandoned  standard  monetary  policy  tools,  leaves  fiscal  policy  as  the  main 
effective policy instrument. 

In  the  area  of  economic  policy,  Montenegro  submitted  its  first  pre-accession  economic 
programme  (PEP)  to  the  European  Commission  in  January,  covering  the  period  2012-2014. 
The PEP has taken over the role of the former EFP as a policy coordination instrument and 
has  contributed  to  the  preparation  of  the  main  national  fiscal  documents.  It  presents  recent 
macroeconomic developments and a comprehensive medium-term macroeconomic and fiscal 
framework, with a broad range of structural reform areas. The PEP meets EU requirements on 
format  and  content.  However,  it  fails  to  provide  in-depth  analysis  of  external  sustainability 

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and  competitiveness  issues.  The  capacity  for  economic  policy  formulation  and  coordination 
needs to be further strengthened.  

Further work is needed to improve fiscal reporting and to align with ESA95 standards. 

Conclusion 

There was some progress in the area of economic and monetary policy. Substantial efforts still 
have  to  be  made  to  complete  alignment  with  the  acquis,  in  particular  regarding  the  Central 
Bank’s  independence,  monetary  financing  and  privileged  access  of  the  public  sector  to 
financial institutions. The capacity for economic policy formulation and coordination needs to 
be  further  strengthened.  Montenegro’s  present  use  of  the  euro,  decided  by  the  Montenegrin 
authorities in exceptional circumstances, is fully distinct from euro-area membership. Overall, 
the level of alignment in the area of economic and monetary policy is moderately advanced at 
this stage.  

4.18.  Chapter 18: Statistics 

There has been good progress on statistical infrastructure. The new law on official statistics 
and  the  official  statistical  system  of  Montenegro  was  adopted  in  March,  with  a  view  to 
ensuring compliance with the European Statistics Code of Practice. 

The lack of sufficient human resources and office space remains an issue of concern. Monstat 
currently  employs  98  people  and  a  recruitment  procedure  for  11  new  employees  was 
launched.  

As regards classifications  and registers, some progress  has been made. The NACE Rev. 2 
classification  has  been  implemented  in  several domains,  including  for  agricultural,  financial 
and short-term statistics.  

There  has  been  good  progress  in  sectoral  statistics.  Progress  has  been  made  on  national 
accounts. The compilation of sectoral accounts for 2009 and 2010 is under preparation. The 
experimental calculation of quarterly GDP in constant and current prices was completed. 

As  regards  short-term  statistics  and  the  Harmonised  Index  of  Consumer  Prices,  further 
improvements  were  made.  Monstat  published  the  first  results  of  the  new  survey  on  use  of 
information and communication technologies in Montenegro as well as the results of the new 
survey on industrial waste. Monstat has carried out the pilot survey for Statistics on Income 
and  Living  Conditions  (EU-SILC).  The  regular  SILC  survey  will  start  in  2013  and  will 
provide  data  for  the  structural  indicators  of  social  cohesion.  Monstat  widely  published  data 
from  the  Population  and  Housing  Census  and  the  final  results  of  the  Agricultural  census. 
Further efforts are needed as regards the transmission of data to Eurostat. In general, Monstat 
needs to improve sectoral statistics. 

Conclusion 

Good  progress  can  be  reported  in  this  area.  Montenegro  still  has  to  make  serious  and 
sustained efforts to align with the acquis as regards agricultural, business and macroeconomic 
statistics. Overall, preparations in the area of statistics are moderately advanced. 

4.19.  Chapter 19: Social policy and employment  

There  has  been  good  progress  in  the  area  of  labour  law.  Amendments  to  the  Labour  Law 
were  adopted  in  November 2011  with  the  aim  of  aligning  it  with  the  acquis.  The  law  on 
peaceful  settlement  of  labour  disputes  was  also  amended  in  November 2011  with  a  view  to 
making the settlement of labour disputes more efficient and safer. The selection and training 
of  staff  for  the  Agency  for  peaceful  resolution  of  labour  disputes  has  been  finalised  and 

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capacity  building  improved.  However,  implementation  and  enforcement  of  the  legislation 
remains a serious challenge. Preparations in this area are on track. 

There  has  been  little  progress  in  the  area  of  health  and  safety  at  work.  A  Directorate  for 
Inspection Affairs was established in July including the Inspection of Labour. The training of 
labour  inspectors  and  social  partners  engaged  in  occupational  safety  and  awareness-raising 
activities have continued. Inspection capacity has somewhat improved, and the total number 
of fatal, serious and collective injuries at work went down in 2011 compared to 2010. There 
has however been no progress as regards legal alignment and the number of labour inspectors 
remains  insufficient.  Only  nine  out  of  the  12 positions  for  labour  inspectors  dealing  with 
occupational health and safety are filled. This represents an approximate ratio of one inspector 
per 23,555 workers (while the ILO recommendation is for one inspector per 10,000 workers). 
The Agency for Health and Occupational Safety has not been established yet. Preparations in 
this area are at an early stage. 

There  has  been  little  progress  as  regards  social  dialogue.  Trade  unions’  membership  of  the 
Social  Council  has  been  aligned  on  their  representativeness.  This  should  improve  the 
consistency of the procedure to determine representativeness at different levels (national and 
branch  level),  remove  employers’  insight  into  trade  union  membership  and  address  the 
previous data protection problems. Negotiations on a new General Collective Agreement have 
not  been  concluded.  The  capacities  of  the  Social  Council  have  not  been  strengthened.  The 
Social Council secretariat provided by the law has not been set up yet due to lack of funding. 
Only three social councils at municipal level are functioning properly. Concerns remain as to 
the  effective  recognition  of  all  trade  unions.  Bipartite  social  dialogue  still  remains 
underdeveloped. Preparations in this area have started. 

Little  progress  has  been  made  in  the  area  of  employment  policy.  A  national  strategy  for 
employment and human resource development for the period 2012–2015 and a national action 
plan for employment for 2012 were adopted in December 2011. Changes to the provisions on 
fixed-term contracts should contribute to reducing labour market duality. The labour market 
situation  deteriorated  in 2011  and  there  has  been  no  tangible  improvement  in 2012. 
Unemployment continued to increase and is at 20 %, and the labour market participation and 
employment  rates  remained  at  their  low  levels  (at  around  57%  and  46%  respectively). 
Registered unemployment significantly underestimates the number of actual jobseekers. High 
gender and regional gaps in activity, employment and unemployment persist. Only a third of 
the  unemployed  receive  unemployment  benefits.  As  a  consequence  of  the  crisis  and  rising 
unemployment,  more  resources  had  to  be  allocated  to  cash  benefits  and  the  financial 
allocations  to  active  labour  market  measures  were  reduced.  Nonetheless,  some  41%  of  the 
registered  unemployed  benefited  from  active  support  and  Montenegro  maintained  its  broad 
range of active labour market programmes. Their impact needs to be better monitored. A Law 
on Vocational Training of University Graduates was adopted by the Parliament in July 2012 
providing  traineeships  for  young  unemployed  professionals  without  working  experience. 
However, in general, skills mismatches remain a serious issue. As regards undeclared work, 
an  operational  Plan  for  combating  the  grey  economy  was  adopted  by  the  Government  in 
May 2012. Preparations in this area are at an early stage. 

There  has  been  limited  progress  in  preparations  for  the  European  Social  Fund.  An 
Operational Programme has been prepared. However, administrative capacity within the line 
ministries  involved  is  still  insufficient,  in  terms  of  both  numbers  of  staff  and  expertise. 
Preparations  in  this  area  have  started.  (See  also  Chapter  22  —  Regional  policy  and 
coordination of structural instruments) 

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Little  progress  has  been  made  on  social  inclusion.  The  transition  from  institutional  to 
community-based  care  is  at  an  embryonic  stage.  Progress  in  implementing  the  measures  set 
out  in  the  strategic  plans  adopted  for  poverty  reduction,  Roma,  people  with  disabilities  and 
other socially excluded people is being hindered by the lack of adequate human and financial 
resources. Preparations in this area are at an early stage.  

As  regards  people  with  disabilities,  an  action  plan  for  implementing  the  strategy  for 
integration  of  people  with  disabilities  2012–2013  was  adopted  in  March.  The  Council  for 
protection  of  people  with  disabilities  is  functional  and  currently  recruiting  new  staff. 
However, the Law on Prohibition of Discrimination of People with Disabilities still presents 
shortcomings.  There  has  been  little  progress  as  regards  employment  of  people  with 
disabilities. Access to buildings remains a concern. (See also Political criteria — Economic 
and social rights) 

No  progress  can  be  reported  in  the  field  of  social  protection.  Progress  in  the  field  of 
administrative and fiscal decentralisation of social services remains limited. Funded pension 
schemes based on mandatory savings have not yet been introduced. Funding for the current 
pension system is not sustained. Preparations in this area are at an early stage. 

There has been some progress in the area of anti-discrimination. The Council for protection 
against discrimination is now operational, and its financial and administrative capacities have 
been  strengthened.  Fifteen  members  of  the  Council  were  appointed  in  February ,  including 
representatives  from  the  Roma  community  and  one  member  representing  civil  society 
organisations  dealing  with  lesbian,  gay,  bisexual  and  transgender  (LGBT)  rights.  Anti-
discrimination  campaigns  and  training  for  civil  servants  have  continued.  Authorities  have 
continued  to  actively  promote  a  positive  environment  for  LGBT  rights,  but  cases  of 
discrimination against the LGBT community still occur. The national legislation still presents 
several  shortcomings,  e.g.  concerning  the  Ombudsman’s  independence.  Neither  is  the  anti-
discrimination  legislation  in  line  with  the  acquis  as  regards  definitions.  Involvement  of  the 
Ombudsman’s Office in this area still remains limited despite the appointment of new staff. 
Preparations  in  this  area  are  on  track.  (See  also  Political  criteria  —  Economic  and  social 
rights) 

Some  progress  can  be  reported  on  equal  opportunities.  Amendments  to  the  Labour  Law 
adopted  in  November introduce  parental  leave  for  the  first  time  as  a  concept  distinct  from 
maternity  leave.  Several  activities  on  gender  equality  have  been  carried  out  at  local  level, 
mainly by civil society organisations. Financial and human resources for efficient functioning 
of  gender  equality  mechanisms  and  for  implementation  of  the  activities  foreseen  by  the 
Gender  Equality  Action  Plan  remain  too  limited.  Roma  women  experience  double 
discrimination — as members of a minority group and as women. Montenegro has started to 
address its priorities in this area. (See also Political criteria — Economic and social rights) 

Conclusion 

Some progress has been made in the area of social policy and employment. Further efforts are 
needed  in  the  area  of  health  and  safety  at  work.  The  capacity  of  the  Public  Employment 
Service  also  needs  to  be  strengthened,  along  with  activation  approaches  in  order  to  address 
low activity and employment rates and the mismatch between the skills available and needs. 
Measures and policies for poverty reduction and for Roma inclusion need to be strengthened. 
The  situation  of  public  finance  continues  to  adversely  affect  reforms  in  the  social  area. 
Increased  efforts  are  needed  to  implement  the  planned  reforms  in  the  area  of  pensions. 
Overall, Montenegro has started to address its priorities in this area. 

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4.20.  Chapter 20: Enterprise and industrial policy 

There has been little progress in the area of enterprise and industrial policy principles. The 
action  plan  for  implementing  the  strategy  for  the  development  of  small  and  medium-sized 
enterprises  2011-2015  has  not  yet  been  adopted.  The  coordination,  monitoring  and 
implementation  capacities  in  this  area  are  not  yet  fully  established.  Following  the  National 
Partnership  for  Entrepreneurial  Learning  Council  meeting  in  December,  no  further 
development  can  be  reported  as  regards  the  drafting  of  an  action  plan  2012-13  for 
implementing the strategy for lifelong entrepreneurial learning 2008-2013. There has been no 
further progress as regards the coordination of various institutions to secure the effectiveness 
of the strategies in force.  

The  company  registration  process  has  been  unified,  eliminating  the  need  for  municipal 
registration, and a single identification number — the Tax Identification Number — has been 
introduced. Company and tax registration are conducted simultaneously. Online registration is 
under preparation. Montenegro still lacks a centralised online portal for SMEs.  

The government decided to introduce Regulatory Impact Assessment for sub-legal acts from 
January. Training has been provided in this respect. The issue of how the Regulatory Impact 
Assessment will be systematically and effectively implemented remains to be determined. 

Business  services  need  to  be  further  improved  and  diversified.  The  current  SME  voucher 
scheme is a positive step in this direction.  

There  has  been  no  progress  in  the  area  of  enterprise  and  industrial  instruments. 
Montenegro  continues  to  participate  in  the  Entrepreneurship  and  Innovation  Programme,  in 
particular in the Entrepreneurship and Innovation specific Programme (EIP). The Investment 
and  Development  Fund  (IDF)  continued  its  funding  operations,  mainly  via  loans.  Its  credit 
guarantee scheme has not yet issued any guarantees. There is not yet any assessment of the 
effectiveness of IDF instruments. 

The  Decree  on  the  organisation  of  the  public  administration  was  adopted  in  December, 
stipulating  that  the  SME  Development  Directorate  (SMEDD)  falls  under  the  supervision  of 
the  Ministry  of  Economic  Affairs.  No  further  progress  can  be  noted  in  the  coordination  of 
institutional support to SMEs between the Ministry of Economic Affairs, the Directorate for 
Development  of  SMEs  (SMEDD),  the  Chamber  of  Commerce  and  the  relevant  financial 
institutions  (IDF,  micro-credit  providers  and  commercial  banks).  The  lack  of  capacity,  the 
involvement  of  stakeholders  at  central  and  local  level  in  SME  development,  and  access  to 
finance are some of the areas of concern to be tackled in developing the private sector.  

Assessment  of  the  existing  sectoral  policies,  necessary  for  formulating  future  industrial 
policy, is still lacking.  

Conclusion 

There has been little progress in the area of enterprise and industrial policy. Various strategies 
and institutions exist, however, further efforts are needed to ensure the development and the 
implementation of this policy.  

4.21.  Chapter 21: Trans European Networks 

Some progress can be reported in the area of transport networks. Montenegro has continued 
to  participate  in  the  Memorandum  of  Understanding  on  the  development  of  the  South  East 
Europe  Regional  Transport  Network,  which  has  now  been  included  (as  indicative)  in  the 
European Commission’s proposal for the revision of TEN-T guidelines. Upgrading road and 
rail links included in the SEETO comprehensive network remains a priority.  

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As regards the preparations for developing the Bar-Boljare motorway project (SEETO route 
IV),  a  study  reassessing  a  number  of  technical  options  for  project  implementation  from  the 
point of view of the economic viability of the project has been developed with support from 
the  European  Investment  Bank.  As  regards  the  port  of  Bar,  the  cargo  terminal  and  general 
freight  was  included  in  the  2012  privatisation  plan.  Before  relaunching  the  procedure,  the 
government  has  taken  a  loan  from  the  EBRD  to  purchase  equipment  necessary  for  terminal 
operations  and  to  finalise  the  social  redundancy  programme  for  voluntary  staff  departures. 
These are seen as crucial preconditions in attracting interest in this privatisation. 

There  has  been  some  progress  in  the  area  of  energy  networks.  As  regards  the  underwater 
interconnection cable with Italy, project implementation continues. The implementation of a 
project  for  a  400  kV  overhead  line  linking  the  coast  (Lastva)  with  the  north  of  the  country 
(Pljevlja)  is  ongoing.  There  were  no  developments  with  regards  to  the  development  of  a 
natural  gas  strategy.  Montenegro  participates  in  the  Interstate  Committee  established  by  the 
members  of  the  Energy  Community  who  signed  a  Memorandum  of  Understanding  and 
Cooperation  with  Trans-Adriatic  Pipeline  AG.  A  comprehensive  feasibility  study  on  the 
Trans-Adriatic Pipeline project was launched in February.  

Conclusion 

Some  progress  has  been  achieved  in  the  area  of  Trans-European  Networks.  As  regards  the 
transport networks infrastructure, significant work remains to be done on improving road and 
rail  links.  Gas  interconnections  with  neighbouring  countries  need  to  be  developed  and  the 
national transmission system upgraded. Overall, preparations in this area are still at an early 
stage. 

4.22.  Chapter 22: Regional policy and coordination of structural instruments 

Little progress can be reported as regards the legislative framework. Legislation was adopted 
defining  the  organisation  and  responsibilities  for  decentralised  management  under  IPA 
components  preparing  for  the  Structural  Funds  and  the  Cohesion  Fund.  Compliance  with 
related EU policies, in particular on competition, State aid, public procurement, environment 
and  equal  opportunities,  has  not  yet  been  fully  achieved.  Preparations  in  this  area  are  at  an 
early stage.  

Good  progress  was  made  as  regards  the  establishment  of  an  institutional  framework. 
Appointments  were  completed  in  2011  but  corresponding  implementing  and  operational 
agreements  remain  to  be  signed.  A  high-level  working  group  on  the  preparation  for 
decentralised  management  was  established  in  the  last  quarter  of  2011,  headed  by  the 
competent  accrediting  officer  (CAO).  The  group  met  on  a  regular  basis  with  a  view  to 
speeding  up  the  preparations  for  decentralisation  of  IPA.  Preparations  in  this  area  are 
advancing. 

Some progress can be reported as regards administrative capacity. A gap assessment of IPA 
components preparing for the Structural Funds and the Cohesion Fund was completed and an 
action plan to address identified gaps was drawn up. This plan contains the list of identified 
gaps,  as  well  as  recommendations  for  addressing  them  in  the  course  of  the  ongoing  gap 
plugging  phase.  In  line  with  the  workload  analysis  of  relevant  authorities  undertaken  by 
Montenegro, increased efforts are required to recruit and properly train staff for the defined 
operating  structures.  The  development  of  internal  procedural  manuals  has  to  be  finalised 
without delay. Preparations in this area are at an early stage. 

Good  progress  has  been  made  in  the  area  of  programming.  In  March,  the  government 
adopted  the  Strategic  Coherence  Framework  and  the  two  operational  programmes,  namely 
one  for  regional  development  and  one  for  human  resources  development.  The  quality  and 

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maturity of projects need to be further improved in order to comply with the requirements of 
IPA components  preparing  for the Structural Funds and the Cohesion  Fund.  Preparations in 
this area are moderately advanced. 

Limited progress can be reported in the field of monitoring and evaluation. Discussions on a 
concept for a management information system have started. Training of staff of the operating 
structures continued in matters including monitoring indicators. Preparations in this area are at 
an early stage.  

Progress can be reported as regards financial management, control and audit. Pilot internal 
audits, covering the ministries involved in the management of IPA components preparing for 
the  Structural  Funds  and  the  Cohesion  Fund,  were  completed  in  the  period  from  November 
2011  to  March  2012.  The  purpose  of  the  pilot  audits  was  to  strengthen  the  financial 
management and control systems in line with the requirements for decentralised management 
of  these  IPA  components.  In  February,  legislation  providing  for  an  independent  audit 
authority for EU funds was adopted. The actual establishment of this body, the recruitment of 
the auditors and the definition of the internal organisation and working procedures remain to 
be  completed.  Preparations  to  establish  financial  management  and  control  systems  for  the 
future Structural Funds and the Cohesion Fund are at an early stage.  

Conclusion 

Some  progress  has  been  made  in  this  area,  in  particular  with  regard  to  the  institutional 
framework and programming. Montenegro needs to strengthen administrative capacity in the 
established IPA structures and adequately prepare them for the future. Overall, preparations in 
the area of regional policy and coordination of structural instruments have started. 

4.23.  Chapter 23: Judiciary and fundamental rights (See also Political criteria) 

Progress has been made in the area of the judiciary. Judicial reform has continued. The action 
plan  to  implement  the  judicial  reform  strategy  for  the  period  2007-2012  was  revised  in 
December,  amending  a  number  of  measures  on  the  independence  and  efficiency  of  the 
judiciary  and  the  relevant  deadlines.  Implementation  of  the  strategy  and  the  action  plan  has 
advanced.  

With regard to the independence  and impartiality of the judiciary, procedures for amending 
the Constitution are still ongoing with a view to further enhancing judicial independence, in 
particular through a de-politicised and merit-based system of appointments of members of the 
Judicial and Prosecutorial Councils and of state prosecutors. Draft constitutional amendments 
were  enacted  by  the  Parliament  with  the  required  2/3  majority  in  September  2011.  The 
Parliamentary Committee for Legal and Constitutional Affairs adopted a set of constitutional 
amendments in May, which have yet to be submitted to a plenary vote.  

Implementation  of  the  legislation  on  courts,  the  Judicial  Council  and  the  State  prosecutor’s 
office  continued.  In  June,  the  new  Judicial  Council  was  constituted  and  the  presidents  and 
members of the Disciplinary Commission and of the Commission for conducting the written 
tests for first-time appointment of judges were appointed from among its new members. The 
new Prosecutorial Council was constituted in July. In September, its president was elected and 
the  Disciplinary  Commission  and  the  Commission  for  conducting  the  written  tests  for  first-
time  appointment  of  prosecutors  established.  The  Judicial  Council  and  the  Prosecutorial 
Council  adopted  their  rules  of  procedure,  setting  out  their  organisational  structure  and  their 
operational  and  decision-making  procedures.  The  first  written  tests  for  judges  were  held  in 
February  and  13  judges  have  been  appointed  so  far,  in  accordance  with  the  new  criteria. 
Nevertheless,  vacancies  continue  to  be  published  for  specific  courts  and  a  single,  country-
wide  recruitment  system  on  the  basis  of  transparent  and  objective  criteria  remains  to  be 

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established for judges and prosecutors. The amended legislation on the Judicial Council and 
the State prosecutor’s office established a set of promotion criteria for judges and prosecutors. 
The criteria lack clarity and objectivity due to the lack of regular professional assessment of 
judges’  and  prosecutors’  performance.  Objective  criteria  and  clear  procedures  for  the 
permanent transfer of judges and prosecutors have not been introduced yet. The functioning 
of  the  Judicial  and  Prosecutorial  Councils  is  hampered  by  their  insufficient  administrative 
capacity and budget.  

Random, automated allocation of court cases continues to be ensured in courts with the aid of 
an IT system, except for smaller courts with few staff.  

Some progress was made in the field of accountability of the judiciary. All decisions of the 
Administrative Court and the Appellate Court became publicly accessible. Commissions for 
monitoring compliance with the Codes of Ethics of judges and prosecutors were appointed in 
October 2011. The Commission for monitoring compliance with the judges’ Code of Ethics 
acted  on  two  complaints,  both  of  which  were  rejected  as  unfounded.  The  judges’  Code  of 
Ethics was amended in March. Further efforts have been made to establish a track record of 
fighting  corruption  in  the  judiciary.  A  special  allowance  has  been  given  to  those  judges 
working  on  organised  crime  and  corruption,  and  two  staff  were  appointed  to  help  the 
Disciplinary  Commission investigate complaints of corruption in the judiciary. Nonetheless, 
corruption  and  conflicts  of  interest  are  still  insufficiently  monitored  in  the  judiciary  and  a 
reliable  system  of  checking  the  asset  declarations  of  judges  and  prosecutors  needs  to  be 
established. A disciplinary procedure against one judge was launched in January, resulting in 
a  warning.  No  disciplinary  proceedings  have  been  brought  against  prosecutors  so  far.  The 
disciplinary  system  needs  to  be  further  strengthened  and  differentiated  in  line  with  the 
principle  of  proportionality.  The  Disciplinary  Commission’s  dual  role  in  investigating  and 
deciding on disciplinary proceedings needs to be reviewed, and information on the outcome 
of  disciplinary  proceedings  published  in  an  appropriate  form.  Procedures  for  removing 
professional immunity need to be strengthened to ensure that judges and prosecutors are fully 
accountable  under  criminal  law.  A  reliable  system  of  professional  evaluation  of  judges  and 
prosecutors  still  needs  to  be  established.  Plans  to  publish  all  court  rulings  have  been  only 
partially implemented. 

Regarding  the  efficiency  of  the  judiciary,  Montenegro  has  taken  further  measures  to  reduce 
the backlog of cases. With around 11,500 unresolved cases from previous years in all courts at 
the  end  of  2011,  the  backlog  was  approximately  4%  lower  in  2011  than  in  2010.  Only  the 
Basic Court in Podgorica has an increased backlog due to the high number of civil cases. Four 
further notaries were appointed in January and three in May, bringing their total number to 40 
out of the 65 foreseen notary posts. Following the entry into force of the Law on Enforcement 
and  Security  of  Claims,  transferring  powers  for  civil  enforcement  to  the  bailiffs,  the 
Parliament  enacted  the  Law  on  Public  Bailiffs  in  December.  Nonetheless,  enforcement  of 
civil  decisions  remains  weak,  bailiffs  still  need  to  be  recruited  and  the  functioning  of  the 
bailiff system needs to be assessed.  

With  a  view  to  increasing  the  efficiency  of the  overall  judicial  system,  the  Judicial  Council 
began  setting  up  special  units  of  judges  dealing  with  juvenile  justice  at  the  High  Courts  of 
Podgorica and Bijelo Polje. The parliament enacted a Juvenile Justice Code in December and 
the  Judicial  Training  Center  adopted  a  dedicated  programme  for  training  of  judges  and 
prosecutors. Ammendments to the law on Mediation, enacted in May, regulated the status of 
the Mediation center. As regards access to justice, following the entry into force of the Law 
on Free Legal Aid in January 2012, three implementing acts were adopted and free legal aid 
offices  were  opened  in  all  basic  courts.  The  implementation  of  the  law  is  hampered  by  the 
offices’ insufficient budget. The 2012 budget for the judiciary and the prosecution is € 24.9 

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million,  which  represents  approximately  0.75  %  of  the  GDP.  As  the  salaries  of  magistrates 
and  administrative  staff  continue  to  account  for  most  of  this  total,  there  are  not  enough 
resources  to  remedy  deficiencies  in  infrastructure  and  equipment,  which  continue  to  hinder 
efficiency.  Initial  steps  have  been  taken  to  rationalise  the  court  network,  but  Montenegro 
continues  to  be  one  of  the  countries  with  the  highest  number  of  basic  courts,  judges, 
prosecutors and administrative staff per capita in Europe.  

The current IT system allows case-tracking, automatic allocation of cases and electronic filing 
of judicial acts but is not yet used for statistical reporting or for assessing the performance of 
courts.  The  statistical  indicators  used  do  not  provide  full  information  about  courts’ 
performance, the duration of trials or the human and financial resources allocated. This lack 
of  information  creates  problems  with  the  consistency  of  data  and  effective  follow-up.  The 
quality of judicial statistics needs to be improved and a system to monitor the length of trials 
introduced.  The  independence  and  the  administrative  and  financial  capacity  of  the  Judicial 
Training  Centre  needs  to  be  strengthened  and  initial  training  with  set  curricula  for  all 
members of the judiciary introduced.  

Some progress has been made on anti-corruption policy. The strategy for fighting corruption 
and  organised  crime  and  the  revised  2011-2012  action  plan  are  being  implemented. 
Preparations  are  ongoing  for  the  adoption  of  the  action  plan  for  the  period  2013-2014.  The 
overall institutional framework for monitoring implementation of the action plan is working 
well.  In  June,  the  Government  adopted  an  analysis  of  the  anti-corruption  institutional 
framework and a study on the effects of setting up an anti-corruption authority. 

Montenegro  has  made  additional  efforts  to  further  strengthen  its  anti-corruption  legal 
framework,  with  a  view  to  ensuring  alignment  with  the  relevant  European  and  international 
standards.  Amendments  to  the  Labour  Law  enacted  by  the  parliament  in  November  2011 
extended protection for whistleblowers to cover the private sector. Amendments to the Law 
on Free Access to Information were enacted by the parliament in July 2012, with a view to 
expanding  the  range  of  publicly  available  information  and  ensuring  compliance  with  the 
Council of Europe Convention on Access to Official Documents and international standards 
in this field. Amendments to the Law on Political Party Financing were enacted in December 
2011,  covering  supervisory  institutions  and  in-kind  contributions  and  fixing  the  ceiling  for 
membership fees at 10 % of a member’s annual income. The State Audit Institution (SAI) is 
now  responsible  for  auditing  political  parties’ annual  balance  sheets  and  reports  on  election 
campaign  costs,  while  the  State  Election  Commission  is  in  charge  of  monitoring  the 
implementation  of  other  aspects  of  the  law.  The  professional  capacity  and  independence  of 
the  State  Election  Commission  and  the  State  Audit  Institution  need  to  be  strengthened  to 
ensure fully effective independent oversight. The mechanisms for checking on the funding of 
political parties and electoral campaigns and imposing penalties need to be reinforced and set 
out 
insufficiently  dissuasive  and 
undifferentiated,  while  reporting  and  accounting  obligations  for  political  parties  need  to  be 
further  strengthened.  Very  few  sanctions  have  been  applied  so  far  to  political  parties  for 
breachng  the  rules  on  financing.  The  implementation  of  the  political  party  financing  rules 
needs to be improved and the pro-active approach of the supervisory bodies ensured. 

legislation.  The  sanctioning  system 

remains 

in 

Following  the  full  entry  into  force  of  the  amended  law  on  conflict  of  interest  prevention  in 
March, all 36 MPs who were also members of management boards of state-owned companies 
resigned  from  these  positions  and  all  16  MPs  who  also  held  executive  positions  (including 
two mayors) resigned from one of their posts. 97% of State officials and 93% of local officials 
submitted  asset  declarations  for  2011/2012  within  the  deadline  set  by  the  law.  The 
Commission  for  the  Prevention  of  Conflicts  of  Interest  made  321  requests  to  initiate 
misdemeanour  procedures  for  non-compliance  with  the  law,  which  resulted  in  176 

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judgements.  Asset  declarations  by  civil  servants  are  still  not  being  checked  on  substance  to 
establish  cases  of  illicit  enrichment.  The  Commission  for  the  Prevention  of  Conflicts  of 
Interest  continues  to  lack  the  legal  mandate  for  control  of  unjustified  enrichment,  access  to 
banking  information  and  databases  held  by  other  state  entities,  and  the  administrative  and 
professional capacity needed to perform its supervisory role adequately. 

Recently amended legislation on public procurement started to be implemented. However, no 
notifications  have  been  sent  so  far  from  the  Public  Procurement  Commission  to  the 
prosecution  and  the  control  system  needs  to  be  strengthened.  There  is  only  one  ongoing 
criminal procedure related to corruption in public procurement; no training has been provided 
to law enforcement officers and judges on such cases. 

Some  progress  was  made  on  prevention  of  corruption.  In  December,  the  DACI  was 
transferred to the Ministry of Justice to ensure better coordination of anti-corruption activities. 
The DACI conducted a number of awareness-raising campaigns on reporting corruption and 
on  the  protection  of  whistleblowers.  Civil  society  organisations  have  continued  to  actively 
contribute  to  enhancing  the  strategic  framework  and  have  provided  evidence  in  corruption 
cases.  The  recommendations  contained  in  the  risk  assessment  of  areas  vulnerable  to 
corruption started to be implemented, in particular in the areas of education, spatial planning 
and public procurement. Since September 2011, 178 complaints of corruption were received 
by the relevant institutions, out of which 140 were submitted to the prosecution and the police 
for  further  processing.  Judges  and  prosecutors  have  been  given  training  on  combating 
corruption,  in  particular  to  help  them  implement  the  new  Criminal  Procedure  Code.  Asset 
declarations submitted by judges and prosecutors are not yet cross-checked against other data 
and  measures  to  prevent  corruption  in  the  judiciary  need  to  be  further  strengthened.  No 
disciplinary  proceedings  have  been  launched  against  judges  for  corrupt  behaviour.  The 
DACI’s  capability  needs  to  be  upgraded  and  its  capacity  to  monitor  implementation  of  the 
government’s action plan for fighting corruption and organised crime reinforced. 

Some progress has been made on suppression of corruption. The full entry into force of the 
new  Criminal  Procedure  Code  in  September  2011  has  helped  to  speed  up  the  criminal 
investigation  procedure  and  has  reduced  the  risk  of  information  leakage.  In  June,  the 
parliament  amended  the  Law  on  Custody  of  Seized  and  Confiscated  Property  to  define  the 
methods  of  management  of  seized  or  confiscated  proceeds  of  crime.  The  institutional  and 
operational  capacity  of  prosecutors,  judges  and  police  to  fight  corruption  has  been 
strengthened  through  further  training  support  and  additional  equipment.  The  use  of  special 
investigative  measures  is  more  systematic  as  a  result  of  the  enhanced  administrative  and 
technical capacity of the Special Checks Unit. 9 representatives of the police force, the office 
for  prevention  of  money  laundering  and  terrorism  financing,  and  the  tax  and  customs 
administrations were appointed to the special investigation team, which became operational in 
October 2011. The team has been given additional financial resources; however, its capacity 
needs  to  be  increased,  in  particular  by  acquiring  access  to  relevant  databases.  Inter-agency 
cooperation has improved to a certain extent, but needs to be further developed.  

Montenegro  has  further  developed  its  track  record  of  investigation,  prosecution  and 
conviction  in  corruption  cases.  Second  instance  verdicts  have  been  issued  against  seven 
officials  of  a  public  company  in  Budva  and  four  employees  of  the  public  property 
administration of Ulcinj sentenced to imprisonment for abuse of their official positions, and 
one customs officer convicted of bribery. 17 persons have been convicted to imprisonment in 
first  instance  for  abuse  of  office  and  bribery,  including  the  former  Mayor  of  Budva,  his 
deputy,  a  member  of  the  parliament  and  four  municipal  officials.  Agreement  on  settlement 
was reached with five persons, among whom the former Mayor of Ulcinj. Court hearings are 
ongoing in two cases against 24 police, border police and customs officers accused of abuse 

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of official position and bribery. During the reporting period, 23 persons have been indicted for 
abuse  of  office  or  bribery,  including  the  President  and  a  judge  of  a  Basic  Court  and  three 
employees  of  the  Ministry  of  Interior.  An  investigation  is  ongoing  against  the  former  and 
current  directors  of  a  public  company  in  Budva  for  alleged  abuse  of  office.  Internal  checks 
performed by the customs administration, the tax administration and the police resulted in 119 
cases being investigated and appropriate measures taken in 35 cases. 

Nonetheless, corruption remains widespread and continues to give serious cause for concern, 
allowing also for the infiltration of organized crime groups into the public and private sectors. 
A track record of combating corruption needs to be steadily built up, in particular in terms of 
investigations, prosecutions and convictions in high-level corruption cases. The fact that all of 
the high-level corruption cases have been brought on the basis of evidence provided by a third 
party  remains  a  matter  of  concern.  There  are  still  no  corruption  cases  in  which  seizure  of 
assets  was  ordered.  CPC  and  Criminal  Code  provisions  on  confiscation  and  extended 
confiscation  of  criminal  assets  have  not  been  used  so  far.  The  professional  capacity  of  the 
Public Property Administration, responsible for the management of proceeds of crime needs 
to be strengthened. The capacity of prosecutors and police to conduct financial investigations, 
trace  criminal  assets  and  present  related  evidence  before  the  courts  needs  to  be  improved. 
Inter-agency  cooperation  and  information  exchange,  in  particular  between  police  and 
prosecutors,  needs  to  be  further  enhanced.  Prosecutors’  lack  of  access  to  relevant  databases 
and  insufficient  capacity  hamper  effective  implementation  of  the  CPC.  The  administrative 
capacity  of  the  Special  Prosecution  Office  for  fighting  organised  crime,  corruption,  the 
financing  of  terrorism  and  war  crimes  needs  to  be  strengthened.  The  independence  of  the 
judiciary  remains  a  matter  of  concern,  which  affects  the  country’s  determination  to  combat 
corruption.  

Montenegro has continued to improve the legal and institutional framework on the protection 
of fundamental rights. Nevertheless, shortcomings persist, especially in the enforcement of 
these  rights.  Administrative  capacity  and  financial  means  to  implement  the  laws  remain 
limited. 

Progress  has  been  made  in  the  prevention  of  torture  and  ill-treatment  and  the  fight  against 
impunity.  The  Ombudsman  started  to  implement  the  monitoring  mechanism.  Processing  of 
reported  cases  of  ill-treatment  continues  to  be  slow  and  the  relevant  legal  and  institutional 
framework  still  needs  to  be  brought  into  line  with  international  standards,  particularly  with 
regard to prison conditions and the treatment of convicted persons.  

Some progress has been made as regards the prison system; the legal and policy framework 
was enhanced but the administrative capacity remains to be reinforced. The use of alternative 
sanctions has helped to reduce the prison population but should be further pursued, as prison 
overcrowding  remains  a  concern.  As  a  consequence,  living  conditions  in  prisons  have 
improved but are still not fully in line with international standards as regards education, prison 
regime, healthcare and medical treatment.  

Some progress has been made with regard to access to justice. The Law on Free Legal Aid 
came into effect in January 2012 and relevant services are now available in all basic courts. 
The length of court proceedings remains an issue of concern. 

Progress  has  been  made  in  promoting  freedom  of  expression.  The  decriminalisation  of 
defamation and the alignment of the national system with the case law of the European Court 
of Human Rights have helped to improve the media environment. The new law on amnesty 
allows the President to pardon individuals convicted of defamation. Efforts to investigate and 
prosecute old cases of violence against journalists need to be stepped up.  

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48 

   EN 

Progress  has  been  made  with  regard  to  freedom  of  assembly  and  association.  The  legal 
framework has improved. Representatives of civil society organisations are regularly involved 
in  the  activities  of  the  state  administration,  including  working  groups  on  the  EU  accession 
negotiation chapters.  

Freedom  of  thought,  conscience  and  religion  is  generally  ensured,  but  tensions  persist 
between  the  Serbian  and  Montenegrin  Orthodox  Churches,  notably  with  regard  to  property 
issues.  

Little  progress  has  been  made  with  regard  to  women’s  rights  and  gender  equality.  The 
strategy  for  implementing  the  law  on  protection  from  family  violence  was  adopted. 
Nonetheless,  domestic  violence  is  still  an  issue  of  concern.  Women  are  largely  under-
represented in the top political and managerial positions in the country. 

Some progress has been made with regard to children’s rights. The Law on Juvenile Justice 
was  adopted  in  December  2011.  The  introduction  of  victim-offender  mediation  as  an 
alternative measure for children in conflict with the law continued to yield good results. A law 
on social and child welfare has yet to be adopted. Further efforts are needed to ensure better 
inclusion and access to mainstream education for children with disabilities.  

Some  progress  has  been  made  with  regard  to  the  socially  vulnerable  and/or  persons  with 
disabilities.  An  action  plan  for  the  integration  of  persons  with  disabilities  2012-2013  was 
adopted in March. Yet, there are no sanctions for breaking the law on disabled persons. Steps 
were taken towards deinstitutionalisation, and relevant training given to social workers.  

Some  progress  has  been  made  in  the  area  of  anti-discrimination  policies.  The  Ombudsman 
produced  three  reports  on  human  rights  issues,  which  were  discussed  by  the  parliamentary 
committee  on  human  rights.  The  Council  for  the  protection  against  discrimination  is  now 
operational. A number of awareness-raising and training activities for civil servants have been 
held to build capacity in this field. Yet, the law on the Ombudsman, as well as that on anti-
discrimination,  remain  to  be  aligned  with  the  acquis.  Some  progress  has  been  made  with 
regard  to  the  rights  of  lesbian,  gay,  bisexual  and  transgender  (LGBT)  persons.  The 
government  showed  greater  openness  to  promoting  and  defending  LGBT  rights.  The  first 
conviction  for  an  attack  against  a  representative  of  the  LGBT  community  was  issued;  the 
authorities ensured the rapid identification and arrest of the alleged perpetrators who attacked 
in late September an author and director of a video against homophobia. However, processing 
of  cases  related  to  LGBT  rights  remains  slow  and  LGBT  persons,  as  well  as  civil  society 
activists  engaged  in  promoting  and  protecting  LGBT  rights,  continue  to  be  subject  to 
discrimination. 

Labour  and  trade  unions  rights  are  generally  respected.  Yet,  more  attention  is  needed  to 
ensure full transparency of representativeness and the right of constitution of new unions, in 
line with the relevant national regulations. Negotiations on a new collective agreement have 
not yet finished. Social dialogue needs to improve.  

Little  progress  has  been  made  in  the  area  of  property  rights.  The  commissions  for 
denationalisation  have  continued  their  work.  Restitution  of  property  is  still  slow  and 
procedures are cumbersome.  

Progress  was  made  with  regard  to  the  respect  for  and  protection  of  minorities  and  cultural 
rights. Interethnic relations in the country are generally good.  

Progress was made on the inclusion of Roma, Ashkali and Egyptians, especially in ensuring 
civil  registration  of  displaced  persons  among  them.  A  strategy  for  2012-2016  and  an  action 
plan  were  adopted  by  the  government  in  April  2012;  their  implementation  is  slow.  Limited 
measures  were  taken  to  facilitate  education  and  employment.  Drop-out  and  unemployment 

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49 

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rates  remain  high,  especially  for  women.  Roma,  Ashkali  and  Egyptians  still  have  problems 
with  access  to  satisfactory  living  conditions  and  to  social  and  health  care.  Roma  are  still 
underrepresented  in  public  institutions.  Progress  in  resolving  the  issues  of  displaced  and 
internally displaced persons has been significant. The deadline for applications for the status 
of  foreigner  with  permanent  residence  has  been  extended  to  31  December  2012  and  the 
number  of  applications  has  increased.  An  office  of  the  Ministry  of  the  Interior  opened 
temporarily in Konik camp to facilitate the registration of displaced persons living there. The 
government provided a quick and efficient emergency response to the fire in Konik camp in 
July, which left 800 Roma IDPs homeless. 

The temporary decree on access to social and economic rights for displaced persons was also 
extended,  to  June  2013.  Its  implementation  needs  to  continue.  The  urban  plan  proposing 
changes  to  the  Konik  area  was  adopted  in  February  2012,  but  the  government’s  capacity  to 
implement  projects  on  such  a  scale  is  poor.  The  Law  on  Social  Housing  has  not  yet  been 
adopted. 

Good  progress  has  been  made  as  regards  strengthening  the  right  of  individuals  to  personal 
data protection. The Law on Personal Data, the Information Secrecy Act and the Law on Free 
Access  to  Information  were  adopted.  Further  efforts  are  needed  to  implement  the  national 
legislation in line with the EU acquis in this area. 

There were no developments regarding EU citizens’ rights. 

Conclusion 

Montenegro  has  made  some  progress  in  the  area  of  the  judiciary  and  fundamental  rights. 
Implementation  of  recently  adopted  legislation  has  started.  Progress  has  been  made  with 
regard  to  the  publication  of  court  rulings  and  the  backlog  of  court  cases.  The  constitutional 
reform  aimed  at  strengthening  judicial  independence  has  not  been  completed  yet.  A  single, 
country-wide recruitment system and a system to monitor the length of trials need to be set 
up,  the  court  network  rationalised  and  the  reliability  of  judicial  statistics  improved.  Further 
efforts are needed to ensure merit based appointments and career development, as well as to 
strengthen  accountability  and  integrity  safeguards  within  the  judiciary.  Montenegro  has 
strengthened  its  anti-corruption  legal  framework  and  further  developed  its  track  record  of 
investigation, prosecution and conviction in corruption cases, but greater efforts are needed in 
this respect. Corruption remains widespread and continues to be a serious cause for concern, 
allowing also for the infiltration of organized crime groups into the public and private sectors. 
The number of final convictions remains low and there are still no corruption cases in which 
seizure or confiscation of assets were ordered. The existing legal and institutional framework 
for the protection of fundamental rights has been further strengthened. The decriminalisation 
of defamation contributed to improving the media environment. The process of granting legal 
status  to  displaced  persons  has  further  advanced.  Social  inclusion  of  Roma,  Askhali  and 
Egyptians  has  to  continue,  in  particular  through  the  implementation  of  the  relevant  policy 
documents.  Shortcomings  persist  in  the  protection  of  human  rights  by  judicial  and  law 
enforcement  authorities.  Efforts  to  investigate  and  prosecute  old  cases  of  violence  against 
journalists need to be stepped up. Further sustained efforts will be needed to align with the EU 
acquis  and  international  standards  in  this  field.  Overall,  preparations  in  this  area  are 
moderately advanced. 

4.24.  Chapter 24: Justice, freedom and security 

Some progress can be noted in the area of migration. The second phase of construction of the 
centre for foreigners, related to equipment and premises, is being completed. Amendments to 
the law on foreigners were passed in November 2011, postponing the deadline for submitting 

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requests for foreigner status for displaced persons to the end of 2012. A number of relevant 
by-laws  better  regulated  foreigners’  conditions.  The  number  of  irregular  migrants  in  2011 
increased  to  1,504  (1,160  in  2010).  Montenegro  signed  a  readmission  agreement  with  the 
former  Yugoslav  Republic  of  Macedonia  in  March  and  ratified  the  existing  readmission 
agreements  with  Kosovo  and  Switzerland.  Further  efforts  are  still  needed  to  ensure  full 
alignment  with  the  acquis  on  legal  migration,  not  least  on  the  right  to  family  reunification, 
long-term residence and conditions of admission of third-country nationals for the purposes of 
studies, research and highly qualified employment. The readmission agreement with Serbia is 
still pending.  

Developments in this area are well on track. 

Some  progress  has  been  made  with  regard  to  asylum.  The  implementation  of  the  Law  on 
Foreigners  has  continued,  with  the  adoption  of  a  number  of  by-laws  on  record  keeping  in 
asylum,  and  on  concrete  assistance  to  asylum  seekers.  The  establishment  of  the  centre  for 
asylum seekers has been completed and will be ready to begin operations once the permits are 
issued. Montenegro received 239 applications for asylum, out of which only one resulted in 
subsidiary  protection.  Further  efforts  are  required  to  align  the  national  legislation  with  the 
acquis  and  the  international  standards  in  this  area,  including  the  need  to  make  the  national 
database  for  checking  asylum  seekers’  personal  data  fully  functional.  Second  instance 
decision-making on asylum cases needs further improvement.  

The country is moderately advanced in this area. 

Some progress has been made on visa policy. In 2011, a total of 996 visas were issued in third 
countries for entry to Montenegro. The number of visas issued at the border decreased to 120 
in  2011  (280  in  2010)  and  continued  to  decrease  during  2012.  The  country  has  partially 
aligned  its  legislation  with  the  EU  positive  and  negative  lists  contained  in  Regulation 
539/2001. Decisions on the temporary suspension of the visa requirements for the nationals of 
Armenia, Azerbaijan and Kazakhstan have been adopted for the summer season. There is still 
no electronic link between the diplomatic and consular missions and the national visa system 
of the Ministry of Foreign Affairs and European Integration (MFAEI), nor is there a visa with 
security features. The country is moderately advanced in this area. 

Progress  can  be  reported  in  the  field  of  external  borders  and  Schengen.  The  integrated 
border management strategy and action plan have continued to be implemented, including by 
rehabilitating  certain  border  facilities  and  opening  a  new  one  at  the  border  with  Serbia. 
Additional  technical  equipment  has  been  provided;  capacity  building  and  training  were 
delivered. Cooperation with Frontex has continued to be good; Montenegro has continued to 
implement its Common Core Curricula and was involved as an observer in a joint operation. 
Regular  coordination  meetings  on  border  issues  and  joint  patrolling  took  place  with  the 
authorities  of  the  neighbouring  countries.  Preparations  are  ongoing  to  establish  common 
contact points with Bosnia and Herzegovina and with Kosovo. Further efforts are needed to 
ensure that IT equipment is in place at the BCPs, regularly train the border police and avoid 
frequent rotation of trained staff. The security of the blue border and the border with Kosovo 
remains to be substantially strengthened, including the controls at the main ports. These latter 
would increase the security of the entire maritime sector. A risk assessment still needs to be 
carried out.  

Preparations in the area of external borders and Schengen are advanced. 

Progress can be reported in the area of judicial cooperation in civil and criminal matters. 
As  regards  civil  matters,  in  February  Montenegro  ratified  the  Convention  on  jurisdiction, 
applicable law, recognition, enforcement and cooperation in respect of parental responsibility 

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and  measures  for  the  protection  of  children.  Bilateral  relations  in  the  field  of  civil  matters 
have continued with the neighbouring countries and with certain Member States. A proposal 
for the Act on Private International Law was adopted by the government in June. As regards 
judicial  cooperation  in  criminal  matters,  the  legal  framework  for  fighting  serious  and 
organised  crime  at  regional  and  international  levels  has  been  further  strengthened.  In 
September  2011,  Montenegro  ratified  an  agreement  with  Croatia  on  mutual  enforcement  of 
judgments in criminal matters. Further efforts are needed to fully align the legal framework 
with  the  acquis,  in  particular  by  applying  the  legislation  on  the  European  evidence  warrant 
and  the  principle  of  mutual  recognition  of  judgments  and  probation  decisions.  Montenegro 
needs  to  meet  all  the  criteria,  including  on  personal  data  protection,  to  conclude  the 
cooperation agreement with Eurojust.  

Preparations in this area are on track. 

Progress has been made in the area of police cooperation and the fight against organised 
crime.  The  country  has  continued  to  extend  international  and  regional  cooperation  in  these 
fields,  as  well  as  to  reinforce  its  legal  framework  and  administrative  capacities.  Joint 
investigative  operations  with  other  countries  of  the  region,  and  with  EU  Member  States, 
Interpol  and  Europol,  resulted  in  an  increase  in  the  number  of  indictments,  arrests  and 
convictions in the field of organised crime. An agreement on extradition and an agreement on 
police cooperation were respectively ratified and signed with the former Yugoslav Republic 
of Macedonia. A police cooperation agreement with Croatia, to strengthen public security and 
prevent  criminal  activities  during  the  tourist  season  was  signed  in  May  2012.  The  police 
authorities  from  Montenegro  and  Bosnia  and  Herzegovina  signed  a  memorandum  of 
cooperation on jointly fighting corruption, organised crime, drug trafficking and terrorism. A 
secure connection between Europol and Montenegro was put in place in April; an operational 
agreement remains to be signed and the liaison officer remains to be appointed.  

The  policy  and  legal  frameworks  in  this  area  have  been  improved.  The  Law  on  Internal 
Affairs was enacted by the Parliament in July. It foresees the transfer of the Police Directorate 
under the authority of the Ministry of Interior and Public Administration, to ensure political 
accountability and better coordination on law enforcement matters. Attention needs to be put 
to  ensure  independent  and  transparent  oversight  on  the  police,  detailed  rules  to  deal  with 
complaints  against  the  police,  and  fair  recruitment  process.  Since  September  2011,  the  new 
Criminal Procedure Code is being implemented by all relevant state bodies. More specialised 
organisational  units  within  the  police  have  been  introduced.  An  action  plan  for  combating 
organised crime was adopted in January, introducing operational measures and indicators in 
line  with  the  priorities  identified  in  the  2011  organised  crime  threat  assessment  (OCTA). 
OCTA’s classified version needs to be made available to the Office of the Special Prosecutor, 
given its leading role in the investigations against organised groups’ affiliates. The capacities 
of  the  witness  protection  unit  in  the  police  have  been  reinforced,  through  the  provision  of 
adequate  training  and  relevant  IT  equipment,  including  for  secure  communication. 
Montenegro  has  ratified  the  Council  of  Europe’s  Convention  on  Cybercrime  and  the 
additional protocol, and incorporated their provisions in the Criminal Code. A contact point 
for cybercrime is active within the police. 

The  intelligence-led  policing  (ILP)  model  is  being  implemented  and  the  capacities  of  the 
relevant  department  reinforced,  including  for  the  activities  of  the  special  investigative  team 
(SIT). The track record of cases on organised crime has continued to develop3, but needs to 
advance further. In May, the High Court in Bijelo Polje sentenced two members of a criminal 

3 

For additional details on the track record of cases of organised crime over the reporting period, see also 
the report on Montenegro’s progress in the implementation of reforms of May 2012. 

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organisation  involved  in  money  laundering, drug  trafficking and  smuggling to  six and eight 
years’ imprisonment, fines of more than € 12 million and financial compensation to the state 
of € 21.4 million. A new investigation was opened in June for a case of cybercrime, against 
10 individuals accused of computer fraud. Three new indictments have been raised, for a case 
of document forgery (June) and two  of drugs trafficking (in June and July, respectively). A 
number of trials are ongoing. 

Financial  investigations  have  led  to  the  temporary  seizure  of  assets  amounting  to  over  € 40 
million.  Amendments  to  the  Law  on  Management  of  Seized  and  Confiscated  Property  were 
enacted  in  June,  extending  the  definition  of  property  and  improving  its  management.  Still, 
relations  between  the  prosecution  service  and  the  police  within  the  framework  of  the  new 
CPC  need  to  be  clarified  and  improved,  including  in  conducting  financial  investigations. 
Additional  equipment  and  specialised  staff  are  needed  to  increase  the  capacities  of  the  law 
enforcement  authorities  to  investigate  and  manage  complex  cases;  their  access  to  relevant 
databases  and  criminal  intelligence  information  has  to  be  ensured.  Trainings  need  to  be 
delivered  to  the  judicial  authorities,  to  increase  their  specialisation  in  the  field  of  organised 
crime.  Efforts  are  still  required  to  align  the  legal  framework  on  witness  protection  and  the 
extradition procedures with the acquis. To ensure the full implementation of the ILP system 
throughout the country, further training and capacity building for the police is needed, both at 
local and central level. The Public Property Administration needs to be further strengthened, 
particularly by upgrading the skills of the staff in charge of valuing and managing temporarily 
seized and confiscated assets. The preparation of implementing legislation in this area has to 
be finalised, as well as inter-institutional cooperation needs to be improved, in order to ensure 
smooth  and  timely  enforcement  of  court  decisions  on  seizure  or  confiscation  of  criminal 
assets. The overall number of financial investigations and seized assets remains low, due to 
the very weak administrative capacity in this field.  

Some progress can be reported in the fight against money laundering. The Law on Prevention 
of Money Laundering and Terrorist Financing was amended in February 2012 with the aim of 
aligning it with the acquis. The relevant body opened 107 new cases and has taken an active 
part in a financial investigation led by the Special Prosecutor, resulting in two indictments for 
money laundering against six individuals. A  memorandum  on  inter-institutional  cooperation 
and data exchange in the prevention of money laundering and terrorist financing was signed 
in December; nevertheless, the police are still not part of it. The current procedures whereby 
the police receive information on suspicious transactions from the APMLTF delay financial 
investigations and need to be revised. The IT system of the APMLTF needs to be reviewed 
and updated to support the workflow effectively. The track record of financial investigations 
needs  to  be  further  developed.  Montenegro  produces  a  low  level  of  suspicious  transaction 
reports, mainly from the banking sector; the capacities of the relevant institution need to be 
reinforced  to  check  all  obligors.  The  number  of  convictions  for  money  laundering  remains 
very low.  

Some progress has been made with regard to trafficking in human beings. The preparation of 
a new national strategy for combating trafficking in human beings for the period 2012–2018 
is in its final phase, following a public debate organised in July. During the reporting period 
four  people  were  identified  as  victims  and  hosted  in  the  shelter  for  human  trafficking,  for 
which more adequate premises have been found. Still, the capacities of the law enforcement 
and  judicial  authorities  in  dealing  with  cases  of  trafficking  in  human  beings  need  to  be 
reinforced. Identification and protection of victims, especially children and women, need to be 
further strengthened. The country is moderately advanced in this area. 

Montenegro  has  made  progress  in  the  field  of  police  cooperation  and  in  the  fight  against 
organised  crime.  The  track  record  has  continued  to  develop,  but  needs  to  advance  further. 

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Tackling organised crime through all means of the legal system presents particular challenges 
for the country. Regional and international cooperation was reinforced through the signature 
of  agreements  and  joint  operations.  Still,  the  results  achieved,  including  the  administrative 
capacities and interagency cooperation in the field of organised crime have to be pro-actively 
consolidated,  particularly  in  the  field  of  financial  investigations,  while  the  legal  framework 
needs to be completed. A national criminal intelligence system still remains to be established. 
Its lack hampers the effectiveness of the law enforcement bodies, which has to be enhanced. 
Prosecutor’s leading role in investigations still needs to be strengthened. Increased efforts are 
required in the fight against money laundering and trafficking in human beings, including to 
identify and reintegrate victims.  

Preparations in this area are moderately advanced. 

Limited progress can be reported in the fight against terrorism. Execution of the action plan 
for  implementing  the  relevant  strategy  has  continued,  including  through specialised  training 
for  the  judicial  and  law  enforcement  authorities.  The  relevant  report  was  adopted  in  July. 
However, the capacity to detect and address in a coordinated way activities possibly linked to 
terrorism  remains  limited.  Efforts  remain  to  be  made  to  fully  align  the  national  legislation 
with the acquis. Preparations in this area are moderately advanced. 

Progress  can  be  reported  on  cooperation  in  the  field  of  drugs.  The  division  for  the  fight 
against  drugs  within  the  police  directorate  was  reorganised,  and  the  responsibilities  for 
prosecuting  smuggling  and  trafficking  have  been  centralised  at  the  criminal  police 
department;  its  capacities  have  been  strengthened  through  specialised  training  and  the 
purchase of equipment to be used in anti-drug operations. Montenegro successfully conducted 
a  number  of  police  operations  in  this  area,  in  close  cooperation  with  Interpol,  Europol,  EU 
Member  States’  police  forces,  the  US  Drug  Enforcement  Agency  and  the  neighbouring 
countries,  which  resulted  in  the  arrest  and  prosecution  of  a  number  of  members  of  criminal 
organisations.  Awareness-raising  activities  on  drugs  were  conducted  in  schools  and  at  local 
level.  

However, drug trafficking is still a major concern, since Montenegro is in the transit area on 
the smuggling route to and from the EU. The amount of seizures remains very low. The legal 
framework and administrative capacities have to be strengthened, and are still to be aligned 
with the acquis. A focal point for cooperation with the European Monitoring Centre for Drugs 
and  Drug  Addiction  (EMCDDA)  has  been  appointed  but  is  not  yet  operational,  due  to  the 
limited financial and human resources. Further efforts are needed on drug prevention and on 
the treatment and rehabilitation of drug users. Preparations in this area are progressing. 

Some progress can be reported on customs cooperation. A division responsible for capacity 
building was established within the customs administration. 

Further efforts are needed to align the legislative framework with the acquis in this field: no 
progress  can  be  reported  in  relation  to  accession  to  the  Common  Transit  Convention.  The 
procedure for accession to the Convention on mutual assistance and cooperation between the 
Member  States  (Naples  II)  has  not  yet  been  initiated,  and  the  Convention  on  the  use  of 
information technology for customs purposes has not yet been ratified. 

For the fight against counterfeiting of the euro, see Chapter 32 — Financial control.  

Conclusion 

Overall,  Montenegro  has  made  some  progress  in  the  area  of  justice,  freedom  and  security. 
Alignment  with  the  acquis  in  the  field  of  migration,  asylum  and  visa  has  started.  The 
construction  of  the  centre  for  foreigners  and  the  one  for  asylum  seekers  is  being  finalised. 
Implementation of the integrated border management strategy and action plan is on track. In 

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the area of police cooperation and the fight against organised crime, the country has continued 
to  extend  its  international  and  regional  network  and  to  reinforce  its  legal  framework  and 
administrative capacities. Joint investigative operations with other countries of the region, as 
well as with EU Member States, Interpol and Europol, resulted in an increase in the number 
of indictments, arrests and convictions in the field of organised crime. The policy and legal 
frameworks in this area have improved. Further sustained efforts will be needed to align with 
the  acquis  in  this  chapter,  especially  in  the  fields  of  asylum,  visa,  external  borders  and 
Schengen,  the  fight  against  organised  crime,  and  to  develop  a  solid  track  record  of 
investigations, convictions and drugs seizures. The capacity to implement the legal framework 
in judicial cooperation in civil and criminal matters has to be reinforced. Increased efforts are 
required in the fight against money laundering and in addressing trafficking in human beings. 
The country is moderately advanced in this area. 

4.25.  Chapter 25: Science and research 

Good progress has been made in the area of research and innovation policy. The budget for 
funding research projects at national level has been increased and several measures have been 
taken to strengthen research and innovation capacity. Preparations in this area are on track. 

Some  progress  has  been  made  with  regard  to  research  cooperation  under  the  Seventh  EU 
Research  Framework  Programme  (FP7).  Montenegro  has  strengthened  its  administrative 
capacity by expanding the network of national contact points and has organised Information 
Days  and  training  sessions  on  research  cooperation  with  European  and  other  international 
partners (e.g. China). Successful participation has slightly increased, but remains particularly 
weak in terms of participation of SMEs and Marie Curie grants under the Specific Programme 
‘People’. Further efforts are necessary with a view to participating in the next EU Research 
and Innovation Programme ‘Horizon 2020’. Preparations in this area are on track. 

Some  progress  can  be  noted  with  regard  to  Montenegro’s  integration  into  the  European 
Research Area (ERA). The budget for the national funding programme has increased and has 
been allocated in a transparent and competitive manner and in line with EU priorities in terms 
of  thematic  areas.  Funding  has  also  been  used  to  stimulate  mobility  of  researchers. 
Montenegro has become a full member of EUREKA and applied for membership in COST. 
Collection  of  statistics  on  investment  in  research  has  improved.  The  level  of  investment  in 
research has increased from 0.13% to 0.45% of GDP. However, the level of investment by the 
private sector remains very low. Further steps have been taken to establish the first centre of 
excellence.  A  business  plan  to  establish  a  Science  and  Technology  Park  has  also  been 
prepared  aiming  at  improving  the transfer  of knowledge  and cooperation between academia 
and  industry.  Several  measures  have  been  taken  to  encourage  SMEs  to  innovate.  Further 
efforts  based  on  the  Innovation  Union  flagship  are,  however,  necessary,  in  particular 
preparation for the self-assessment tool. Preparations in this area are on track. 

Conclusion 

Good  progress  has  been  made  in  the  area  of  science  and  research.  Further  efforts  are 
necessary  to  strengthen  research  and  innovation  capacity  at  national  level  and  facilitate 
integration into the European Research Area. The level of investment in research needs to be 
further  increased  in  particular  from  the  private  sector  and  by  stimulating  public  and  private 
investment in scientific research activities. Overall, preparations are on track. 

4.26.  Chapter 26: Education and culture 

There has been some progress in the fields of education, training and youth. Strategies and 
action  plans  have  been  adopted  in  the  areas  of  elementary  education,  lifelong  learning  and 
vocational education. The number of children included in pre-school education has continued 

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to  increase.  More  Roma,  Ashkali  and  Egyptian  (RAE)  children  are  attending  school  (1,582 
children  enrolled  in  2012)  due  to  the  inclusive  education  programme  implemented  by  the 
Ministry  of  Education  and  Sports.  They  are  also  provided  with  free  textbooks  and  school 
supplies.  

Montenegro  has  established  the  legal  framework  for  Bologna  reforms  and  the  process  of 
implementation  is  underway.  The  third  cycle  of  studies  requires  attention  and  support  in 
reinforcing  the  research  component  and  following  international  standards.  The  number  of 
students at the public University of Montenegro has increased from 2,931  in 2003 (the  year 
when  Montenegro  adopted  the  Bologna  process)  to  18,464  (2011),  putting  a  strain  on  the 
university’s  limited  resources  and  challenging  its  capacity.  Almost  75%  of  pupils  from 
technical  schools  in  secondary  education  enrol  in  university  courses  instead  of  entering  the 
labour  market,  and  employers  report  shortages  of  finding  graduates  with  the  right  skills  in 
sectors such as tourism. A review of the enrolment policy for universities and the objectives 
of  the  VET  schools  is  therefore  necessary  to  match  skills  to  the  labour  market  needs.  More 
emphasis  should  also  be  put  on  implementation  of  the  Law  on  National  Qualifications 
Framework.  The  National  Qualifications  Council  has  set  up  ten  sectoral  commissions  made 
up  of  members  of  the  private  sector  and  government  officials  to  help  establish  a  better 
connection between education providers and employers, i.e. the labour market. Montenegro’s 
results  in  PISA  scores  and  the  participation  of  Montenegrin  students  in  competitive  EU 
scholarship programmes remain low. Preparations in this area are starting.  

Some  developments  can  be  reported  in  the  area  of  culture.  Montenegro  was  one  of  the 
countries selected for the European Union Prize for Literature in 2011 as part of the activities 
financed  through  the  Programme.  Information  Days  have  been  organised  to  promote  the 
Programme.  An  MoU  has  been  prepared  for  participation  in  the  Europe  for  Citizens 
programme. Preparations in this area are on track. 

Conclusion 

Some progress has been made in the area of education and culture. Higher education reform 
and  modernisation  of  the  vocational  education  and  training  system  need  to  be  further 
addressed. Implementation of educational reforms remains a challenge. Overall, preparations 
are moderately advanced. 

4.27.  Chapter 27: Environment and climate change 

Little  progress  has  been  made  in  the  area  of  the  environment.  With  regard  to  horizontal 
legislation, the parliament amended the Law on Strategic Environmental Assessment (SEA) 
to ensure full transposition of the SEA Directive. Further efforts are needed to implement the 
Environment  Impact  Assessments  (EIA)  and  SEA.  No  progress  was  made  with  regard  to 
access  to  environmental  information,  access  to  justice  and  environmental  liability.  Public 
consultations  with  civil  society  and  other  stakeholders  need  to  improve.  A  second  ‘Aarhus 
Centre’ was opened, covering the northern part of the country. 

Some progress was made in the area of air quality. Part of the NEC Directive was transposed 
by  the  Decree  on  maximum  national  emissions  of  certain  pollutants.  The  rulebook  on  air 
quality  monitoring  was  adopted  pursuant  to  the  Law  on  Air  Protection.  The  government 
adopted  a  decree  determining  types  of  pollutants,  threshold  values  and  other  air  quality 
standards.  Air  quality  standards  have  been  further  harmonised,  in  particular  those  related  to 
suspended  particulates.  Two  new  automatic  stations  for  air  quality  monitoring  have  been 
placed  in  the  municipalities  of  Pljevlja  and  Podgorica.  A  regulation  has  been  adopted 
transferring  part  of  the  competences  of  the  Environmental  Protection  Agency  to  the  public 
institution ‘Centre for eco-toxicological testing of Montenegro’. Pursuant to the Law on Air 

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Protection,  the  Ministry  of  Sustainable  Development  and  Tourism  adopted  the  new 
Monitoring Programme of Fuel Quality of Petroleum Origin. 

Some progress is noted in the area of waste management with the adoption of the new Law on 
Waste  Management.  Preparation  and  implementation  of  municipal  waste  management  plans 
are  at  an  early  stage.  The  development  of  an  integrated  waste  management  system  is  at  an 
early stage, with waste continuing to be disposed of in open sites or in multiple unauthorised 
dumps.  Limited  progress  has  been  made  in  relation  to  waste  infrastructure,  in  particular  the 
construction of regional landfills. 

With regard to water quality, no progress can be reported. Efforts to develop and adopt water 
quality legislation  should be  stepped up.  Monitoring  networks and water management plans 
are at an early stage of development, as is the infrastructure for waste water treatment. 

In the field of nature protection, little progress can be reported. A decree on the organisation 
and  functioning  of  the  public  administration  was  adopted  by  the  government,  providing  for 
the  Nature  Protection  Institute  to  be  placed  under  the  authority  of  the  Agency  for 
Environmental  Protection.  Implementation  of  the  Habitats  and  Birds  Directives  and  the 
development of scientific data for the designation of protected areas and future Natura 2000 
sites remain at an early stage. 

As regards industrial pollution control and risk management, some progress was made with 
the  adoption  of  the  programme  for  bringing  certain  industries  in  line  with  the  Law  on 
Integrated Environmental Pollution Prevention and Control.  

Some progress can be reported in the field of chemicals, mainly due to the adoption of a new 
Law  on  Chemicals.  The  new  law  designates  the  Ministry  of  Sustainable  Development  and 
Tourism  and  the  Environmental  Protection  Agency  (EPA)  as  the  competent  authorities  for 
chemicals, and lays down rules on the classification, packaging and labelling of chemicals and 
the transport, import and export of hazardous chemicals.  

Some  progress  was  made  in  the  area  of  noise  through  the  adoption  of  a  rulebook  on  limit 
values for noise in the environment.  

As  regards  civil  protection,  little  progress  can  be  reported  with  regard  to  the  preparation  of 
strategies  for  protection  from  and  prevention  of  floods.  The  Ministry  of  Interior  has 
established a national Urban Search and Rescue team, and a national flood rescue team. At the 
international  level,  Montenegro  signed  an  agreement  with  the  Republic  of  Slovakia  on 
cooperation  and  mutual  assistance  in  case  of  natural  and  other  disasters.  However, 
Montenegro  is  still  at  an  early  stage  in  policy  development  for  the  civil  protection  sector. 
Significant efforts are needed on the reinforcement of administrative capacities. 

Little  progress  was  made  in  the  area  of  climate  change.  No  progress  was  made  on  general 
policy  development;  a  comprehensive  climate  strategy  is  still  to  be  developed.  Climate 
considerations are regularly integrated in the forest policy, and also increasingly in the energy 
policy,  but  substantial  efforts  are  required  in  order  to  fully  integrate  climate  change  into 
sectoral policies and strategies. 

Montenegro  regularly  associated  itself  with  the  EU  positions  in  the  international  context. 
While having previously associated itself also with the Copenhagen Accord, the country has 
not  yet  put  forward  a  mitigation  commitment  by  2020.  Montenegro  should  consider  taking 
mitigation  commitments  consistent  with  those  of  the  EU  and  its  Member  States  for  the 
purpose of the post-2020 climate agreement to be reached by 2015.  

As  regards  alignment  with  the  climate  acquis,  Montenegro  is  still  at  a  very  early  stage. 
Montenegro  took  initial  steps  to  identify  stationary  installations  for  the  purpose  of  future 

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implementation of an Emissions Trading System. Alignment advanced only with F-gases and 
ODS  Regulations,  and  with  the  Fuel  Quality  Directive.  Significant  efforts  are  required  to 
strengthen the country’s monitoring, reporting, and verification capacities  

Montenegro  participated  regularly  in  climate  work  under  the  Regional  Environmental 
Network  for  Accession  (RENA).  A  successful  high  level  event  was  organised  in  June  2012 
under RENA on EU-Montenegro Climate Cooperation. Efforts are needed to raise awareness 
at all levels and to promote cooperation between all relevant stakeholders 

Some progress was made regarding administrative capacity. The administrative capacity of 
the EPA has improved. Under the recently adopted decree on the organisation of the public 
administration,  the  Hydro  Meteorological Office and  the  Seismological  Office  were  merged 
into a single institution called the Hydro Meteorological and Seismological Office. The heavy 
reliance on temporary staff and the high staff turnover remain issues of concern. The shortage 
of  administrative  capacity  to  address  climate  change  and  the  ad  hoc  inter-institutional 
cooperation are delaying the preparation and implementation of a climate policy in line with 
the  acquis.  The  administrative  structure  on  climate  change  should  be  considerably 
strengthened,  and  capacity  building  support  is  required  in  order  to  address  the  significant 
capacity, cooperation and coordination needs in the area of climate change.  

Conclusion  

Montenegro has made little progress in the area of environment and climate change. There are 
first signs of improvement with the adoption of legislation on waste management, air quality 
and chemicals and with regard to the administrative capacity and efforts undertaken towards 
aligning with the climate acquis. Further attention is needed in the areas of water quality and 
waste  management.  The  effective  implementation  of  the  EIA  and  SEA  acquis  needs  to  be 
ensured. Considerable efforts are required to align with and implement the environment and 
climate  acquis,  as  well  as  to  strengthen  administrative  capacity  and  inter-institutional 
cooperation.  Environment  and  climate  change  considerations  need  to  be  more  systemically 
taken into account in other policy fields and planning documents. The lack of political priority 
and  adequate  financing,  as  well  as  limited  awareness  of  environmental  and  climate 
requirements are hampering progress in this field. Preparations in this area are still at an early 
stage. 

4.28.  Chapter 28: Consumer and health protection 

There has been some progress in the area of consumer protection. A Decree on Organisation 
and  Method  of  Operation  of  Public  Administration  has  been  adopted  by  the  Government, 
providing  for  the  establishment  of  an  Administration  for  Inspectorial  Affairs,  which  will 
comprise  almost  all  inspectorates  dealing  with  supervision  of  market  and  consumer 
protection. The Market Inspectorate launched its new site with a view to improving consumer 
protection  awareness.  The  Arbitration  Board  has  improved  its  track  record  from  two  cases 
in 2010 to six cases in 2011. The two consumer protection NGOs still have limited outreach 
and  weak  capacity  to  ensure  effective  public  support  for  improving  consumers’  rights. 
Montenegro has started to address its priorities in this area. 

There has been some progress on product safety-related issues. Market surveillance activities 
have continued. The 2012 Annual Market Surveillance Plan covers six product categories and 
envisages  ten  joint  inspection  activities  in  the  different  regions  of  Montenegro.  Since 
May 2011, when the National System for the rapid exchange of information was established, 
until the end of 2011, 79 dangerous products were monitored by the Market Inspectorate, and 
one  dangerous  product  was  found.  Revision  of  the  current  general  product  safety  law  is 

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necessary  to  ensure  alignment  with  the  EU  acquis.  Montenegro  has  started  to  address  its 
priorities in this area. 

No  progress  can  be  reported  as  regards  non-safety-related  issues.  The  Law  on  Consumer 
Protection  has  yet  to  be  adopted  to  align  national  legislation  with  several  EU  Directives, 
including  those  dealing  with  unfair  commercial  practices,  unfair  terms  of  contract  and 
injunctions, distance selling, certain aspects of timeshares and sales of consumer goods, and 
with Commission recommendations on arbitration and mediation in disputes. Preparations in 
this area have started. 

There  has  been  some  progress  in  the  area  of  public  health.  The  national  strategy  for 
improving the quality of health protection and the safety of patients was adopted in February 
2012. Implementation of e-health is still slow.  

Some  progress  can  be  reported  as  regards  tobacco  control.  A  rulebook  on  pictorial  health 
warnings on  tobacco  product packaging entered into force in January 2012. Enforcement of 
the  law  limiting  the  use  of  tobacco  products,  which  extends  the  areas  where  smoking  is 
prohibited, poses challenges. Montenegro has started to address its priorities in this area. 

There has been good progress with regard to communicable diseases. Amendments to the law 
on  protecting  the  population  against  communicable  diseases  were  adopted  in  June 2012 
aiming  at  aligning  with  the  acquis.  They  expand  the  list  of  communicable  diseases  and 
recognise  an  obligation  to  define  cases  in  which  infectious  diseases  that  might  constitute  a 
threat  to  global  public  health  need  to  be  reported,  in  line  with  International  Health 
Regulations.  An  information  system  for  microbiological  diagnostics  has  been  set  up  in  the 
Institute for Public health. Montenegro has been downgraded to a high-risk country, mainly 
due to challenges with regard to the quality of polio surveillance. Further efforts are required 
with a view to developing  capacities  to prevent HIV transmission in all health  care  settings 
through  the  provision  of  safe  blood  and  blood  products.  Continued  efforts  are  needed  to 
provide affordable and equitable treatment, care and support services for all people infected 
and  affected  by  HIV.  Monitoring  and  evaluation  needs  to  be  strengthened  in  the  area  of 
communicable diseases, notably with regard to vulnerable communities. Preparations in this 
area are on track. 

Good  progress  has  been  made  in  the  area  of  blood,  tissues,  cells  and  organs.  The  Blood 
Transfusion Institute was registered in December 2011. It consists of the reference institution 
in  Podgorica  and  eight  regional  units.  The  Ministry  of  Health  has  set  up  a  Commission  for 
Blood  Transfusion  as  an  advisory,  multi-disciplinary  body.  The  Statute  of  the  Blood 
Transfusion  Institute  includes  plans  for  putting  in  place  internal  and  external  monitoring  of 
the quality of work, in line with the acquis. Training on quality assurance control has started. 
Several  rulebooks  have  been  adopted  in  the  area  of  tissues  and  cells.  Preparations  in  these 
areas are on track. 

No  progress  can  be  reported  in  the  area  of  patients’  rights  in  cross-border  healthcare. 
Preparations in this area still need to be launched.  

Some  progress  can  be  noted  in  the  field  of  mental  health.  Activities  have  been  initiated  to 
assess  the  training  needs  of  and  develop  training  plans  and  programmes  for  staff  providing 
mental  health  services.  The  first  therapy  guidelines  for  schizophrenia  diagnostics  have  been 
developed in cooperation with the WHO. Further efforts are needed to establish community-
based  mental  healthcare  as  an  alternative  to  institutionalisation.  Montenegro  has  started  to 
address its priorities in this area. 

Some  progress  has  been  made  in  the  field  of  drug  abuse  prevention  as  regards  substitution 
treatment for drug abusers and the establishment of a substance abuse register that may help 

EN 

59 

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monitor needs for treatment and care. National programmes for the early detection of cervical 
and  colorectal  cancer  were  adopted  in  September 2011.  Efforts  have  been  made  to  raise 
awareness of early detection of breast and cervical cancer. A national strategy for preventing 
the  harmful  use  of  alcohol  is  under  preparation.  Montenegro  has  started  to  address  its 
priorities in these areas. 

Conclusion 

Some  progress  has  been  made  in  the  fields  of  consumer  and  health  protection.  Legal 
alignment needs to continue in the area of consumer protection. Overall, preparations in these 
areas are moderately on track. 

4.29.  Chapter 29: Customs union 

Some  progress  has  been  made  in  customs  legislation.  Legislation  was  adopted  to  align  the 
nomenclature  of  the  national  customs  tariff  with  the  EU  Combined  Nomenclature  for  2012. 
The  decree  also  contains  customs  tariffs  set  by  the  SAA  and  FTA  agreements  that 
Montenegro  has  signed  with  other  countries.  The  parliament  enacted  a  new  law  on  the 
customs  tariff  with  a  view  to  further  aligning  it  with  the  acquis  on  the  tariff  and  statistical 
nomenclature  and  the  Common  Customs  Tariff.  Preparations  in  the  area  of  customs 
legislation are moderately advanced.  

Some progress can be reported in building up Montenegro’s administrative and operational 
capacity. Under the systems for the electronic exchange of pre-arrival data (SEED) project, 
new  protocols  on  automated  data  matching  between  the  customs  administrations  of 
Montenegro  and  Serbia  and  Bosnia  and  Herzegovina  were  signed  in  March  and  June 
respectively.  Other  agreements  have  been  concluded  with  national  bodies  and  neighbouring 
countries  for  operational  cooperation,  amongst  others  at  the  border  crossing  points,  for 
training, intelligence and veterinary and phyto-veterinary checks. Further efforts are needed to 
enhance management capacity, especially at strategic level and through greater involvement 
of the business side of the customs administration in leading IT developments. There is still a 
clear  need  for  a  comprehensive  business  and  IT  strategy.  Understaffing  of  the  IT  units 
remains an issue of concern. Further efforts are still needed to strengthen internal control in 
order  to  effectively  prevent  and  detect  corruption  and  other  misconduct.  Preparations  for 
future  membership  of  the  Common  Transit  Convention  will  need  to  be  stepped  up. 
Preparations are moderately advanced. 

Conclusion 

Some  progress  has  been  achieved  in  customs  legislation.  A  new  law  on  the  customs  tariff 
further aligns legislation with the Common Customs Tariff. In the areas of administrative and 
operational capacity, the implementation of existing procedures and working methods needs 
to be stepped up. Preparations for possible accession to the Convention on a Common Transit 
Procedure  need  to  be  enhanced.  Overall,  preparations  in  the  field  of  customs  union  are 
moderately advanced. 

4.30.  Chapter 30: External relations 

Some progress can be reported in the field of the common commercial policy. Montenegro 
was  formally  accepted  as  a  member  of  the  WTO  in  December,  and  officially  joined  on  29 
April.  A  new  law  on  foreign  trade  in  dual-use  goods  entered  into  force  in  July,  aimed  at 
aligning  with  the  dual  use  acquis.  No  further  progress  can  be  recorded  regarding 
administrative  capacity.  The  department  for  multilateral  trade  cooperation  and  international 
economic  relations  in  the  Ministry  of  Economic  Affairs  needs  to  be  strengthened. 
Preparations in the area of the common commercial policy are moderately advanced.  

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60 

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As  regards  bilateral  agreements  with  third  countries,  Montenegro  continued  to  negotiate 
bilateral free trade agreements with Belarus and Kazakhstan in line with its obligations under 
the FTA with Russia. A free trade agreement with EFTA countries was signed in November 
and entered into force in July. In the context of its WTO accession negotiations, Montenegro 
signed  a  free  trade  agreement  with  Ukraine.  In  September  2011,  a  bilateral  investment 
promotion agreement was concluded with Azerbaijan and ratified by the Parliament in June, 
as  well  as  the  agreement  on  economic  cooperation  with  the  United  Arab  Emirates. 
Montenegro continued to play an active role within CEFTA.  

There  are  no  developments  as  regards  development  policy  and  humanitarian  aid.  The 
required legal framework needs to be established. Preparations in these areas still need to be 
launched.  

Conclusion 

Some  progress  has  been  made  in  the  area  of  external  relations.  Montenegro  has  become  a 
member  of  the  WTO.  Overall,  preparations  in  the  area  of  external  relations  are  moderately 
advanced. 

4.31.  Chapter 31: Foreign, security and defence policy 

The  regular  political  dialogue  between  the  EU  and  Montenegro  continued  to  cover  foreign 
policy issues. (Concerning relations with other enlargement countries and Member States, see 
Political criteria 2.3 — Regional issues and international obligations.) 

As  regards  the  common  foreign  and  security  policy  (CFSP),  in  the  reporting  period 
Montenegro  aligned  itself,  when  invited,  with  all  relevant  EU  declarations  and  Council 
decisions  (100%  alignment).  (As  regards  the  International  Criminal  Court,  see  Political 
criteria 2.3 — Regional issues and international obligations.) 

Six  more  countries  recognised  Montenegro  as  an  independent  State.  There  are  still  38 
countries that have not yet recognised Montenegro since it gained independence in 2006.  

A Political Director and European Correspondent were appointed in January. Amendments to 
the Law on Defence entered into force in February. 

Montenegro implemented all UN Security Council and EU restrictive measures. 

No additional developments can be reported concerning conflict prevention. 

As  regards  non-proliferation,  Montenegro  is  participating  in  some,  but  not  all,  international 
export control arrangements and instruments concerning the non-proliferation of weapons of 
mass  destruction.  Compliance  with  international  commitments  on  small  arms  and  light 
weapons (SALW), including the aims of the EU strategy on SALW, is continuing with the aid 
of national laws and control systems. In December, Montenegro ratified the amended Protocol 
II  to  the  Convention  on  certain  types  of  conventional  weapons  (CCW),  which  entered  into 
force in June.  

With  regard  to  cooperation  with  international  organisations,  in  October  2011  Montenegro 
presented its second Annual National Programme, launching the second cycle of the NATO 
Membership  Action  Plan  (MAP).  The  second  cycle  was  completed  in  June  2012.  Since 
October 2011, Montenegro has been a member of UNESCO’s Executive Board. Montenegro 
continues  to  participate  in  the  international  operations  ISAF  in  Afghanistan  and  UNMIL  in 
Liberia. 

As  regards  security  measures,  Montenegro  continued  its  work  on  practical  arrangements 
necessary  to  comply  with  the  Council  Decisions  on  information  security,  including  on 
handling of classified information. Preparations for introducing the communication networks 

EN 

61 

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for associated countries (Associated Countries Network) have advanced.  

As  regards  the  common  security  and  defence  policy  (CSDP),  and  in  particular  civil  and 
military  crisis  management,  in  December  Montenegro  ratified  the  agreement  with  the  EU, 
establishing  a  framework  for  Montenegro’s  participation  in  the  EU  crisis  management 
operations. The agreement entered into force in April. Montenegro has been participating in 
the EU operation ATALANTA in Somalia. 

Conclusion 

Montenegro  has  made  some  progress  in  the  field  of  foreign,  security  and  defence  policy. 
Montenegro  has  aligned  itself  with  all  EU  declarations  and  Council  Decisions  and  has 
continued  to  actively  contribute  to  regional  stability.  Overall,  preparations  are  moderately 
advanced in this area. 

4.32.  Chapter 32: Financial control 

Some progress can be reported in the area of public internal financial control (PIFC). After 
the completion of the legislative framework in 2011, efforts continued to integrate managerial 
accountability  into  the  management  systems  of  the  Montenegrin  public  administration. 
Financial  management  and  control  (FMC)  in  public  bodies  has  improved  with  the 
appointment  of  additional  FMC  managers  at  national  level  and  in  municipalities,  the  pilot 
establishment of FMC systems in selected ministries, and various training activities. A self-
assessment exercise to support the monitoring of FMC progress was completed. With regard 
to internal audit, about half of the entities that are required to set up an internal audit unit have 
done  so,  although  not  all  units  have  yet  appointed  audit  staff.  Some  internal  auditors  were 
appointed, although none of them with an internationally recognised certificate. The Central 
Harmonisation Unit (CHU) developed an Internal Audit Manual and recruited auditors were 
trained on how to use it. Some pilot audits were launched.  

While  the  legal  framework  for  PIFC  is  in  place,  there  is  weak  capacity  to  assume  legal 
responsibilities. Montenegro adopted a strategy  for  the  further  development  of  PIFC  for  the 
period 2012-2017, but without explicit plans on how managerial accountability arrangements 
will  be  strengthened.  Concerns  remain  with  regard  to  implementation  capacity.  Significant 
efforts are needed in order to introduce international standards in internal audit and to address 
the  existing  critical  shortage  of  internal  audit  staff.  A  certification  programme  for  auditors 
needs to be adopted too. Preparations in the area of PIFC are at an early stage.  

Some progress can be reported in the area of external audit. The introduction of performance 
audit  (PA)  has  started  with  the  establishment  of  a  performance  audit  unit  and  the  intensive 
training of auditors. An annual report on activities of the State Audit Institution (SAI) for the 
period  October  2010-October  2011  was  published  in  November.  The  SAI  performed  14 
audits, thereby broadly fulfilling its audit plan. The overall efficiency of the SAI continued to 
improve,  and  there  was  better  acceptance  of  audit  recommendations  by  audited  entities. 
However,  real  separation  between  the  SAI  and  the  Audit  Authority  remains  to  be  achieved, 
despite the new Law on the Audit Authority for EU funds, which was adopted in March. An 
SAI  Strategic  Development  Plan  and  improved  audit  methodology  are  in  the  preparation 
stage. Amendments to the current legislation on the SAI need to be adopted to guarantee the 
SAI’s financial independence. Preparations in this area are at an early stage.  

No progress can be reported in the areas of protection of the EU’s financial interests and 
protection  of  the  euro  against  counterfeiting.  Preparations  in  these  areas  are  at  an  early 
stage.  

EN 

62 

   EN 

Conclusion 

There has been uneven progress in the field of financial control. While the legal framework 
for  PIFC  is  in  place,  practical  implementation  is  lagging  behind,  particularly  at  local  level. 
Montenegro needs to strengthen managerial accountability arrangements in the context of the 
public  administration  reform.  Financial  independence  of  the  SAI  should  be  guaranteed  in 
practice. Overall, preparations are at an early stage. 

4.33.  Chapter 33: Financial and budgetary provisions 

No progress can be reported as regards traditional own resources, VAT resources and GNI 
resources. Montenegro is not yet aligned with the acquis in these areas. However, differences 
between  the  systems  in  Montenegro  and  the  EU  continue  to  be  limited  in  terms  of  basic 
principles and institutions for the underlying policy areas affecting correct application of the 
rules  on  own  resources.  For  progress  in  the  underlying  policy  areas,  see  Chapters  16  — 
Taxation, 18 — Statistics, 29 — Customs union and 32 — Financial control. 

There  has  been  little  progress  in  the  area  of  administrative  infrastructure.  Administrative 
capacity  of  the  institutions  in  the  underlying  policy  areas  affecting  indirectly  the  own 
resources  system  (customs,  taxation,  statistics,  financial  control)  needs  to  be  further 
strengthened. In addition, a fully operational coordination structure will be required in order 
to ensure the correct calculation, accounting, forecasting, collection, payment and control of 
own  resources  and  reporting  to  the  EU  for  implementation  of  the  own  resources  rules. 
Preparations in this area are at an early stage. Effective tools to fight against tax evasion and 
fraud and to decrease the informal economy need to be developed. 

Conclusion 

Limited progress has been made as regards financial and budgetary provisions. In due course, 
a coordinating body needs be set up to steer pre-accession preparations in the own resources 
field. The administrative framework for the application of the own resources rules needs to be 
established. Overall, preparations are at an early stage.  

EN 

63 

   EN 

Statistical Annex 

Note
1) 
2) 

Note
3) 

2001 
615 
13 812 

2007 
625 
13 812 

2001 
1 295 
2 106 
: 
: 
1.1 

2007 
2 681 
4 290 
9 990 
40 
10.7 

2008 
628 
13 812 

2008 
3 086 
4 917 
10 700 
43 
6.9 

2009 
630 
13 812 

2010 
616b 
13 812 

2011 
618 
13 812 

2009 
2 981 
4 731 
9 685 
41 
-5.7 

2010 
3 104 
5 035b 
10 143b 
40e 
2.5 

2011 
3 290f 
5 323f 
10 546f 
: 
2.8f 

STATISTICAL DATA  
Montenegro 

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

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

Agriculture and fisheries 
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 (2005=100) 

Inflation rate 
Annual average inflation rate (CPI, % change on previous year) 

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

4) 
4) 
4) 
4) 

Note

Note

Note

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

Note

Note

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) 5) 
6) 
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 (%) 

7) 

EN 

64 

: 
: 

: 

: 

11.9 
20.8 
3.9 
63.4 
100.2 
17.5 
5.9 
38.4 
62.0 

2001 
86.8 

2001 
23.0 

2001 
: 
: 
: 
: 
: 

: 
: 
: 
: 

: 

: 

2001 
: 
: 

2001 
: 
: 
: 
: 

: 
: 

: 
: 
: 

: 
: 

: 

: 

9.1 
13.6 
7.3 
70.0 
108.5 
32.3 
1.5 
44.4 
86.7 

2007 
100.9 

2007 
4.2 

2007 
-1 059 
-1 544 
395 
31 
59 

2 
568 
115 
7 

683 

461 

2007 
6.6 
27.5 

2007 
: 
: 
592 
1 557 

2 728 
2 213 

: 
9.3 
3.4 

: 
: 

: 

: 

9.3 
13.5 
7.7 
69.5 
113.8 
38.3 
2.3 
39.6 
94.0 

2008 
99.1 

2008 
9.2 

2008 
-1 561 
-2 025 
346 
46 
73 

9 
582 
74 
6 

656 

378 

2008 
-0.4 
29.0 

2008 
: 
: 
512 
1 209 

2 339 
2 754 

: 
9.4 
4.1 

: 
: 

: 

: 

10.0 
13.6 
6.5 
69.9 
106.2 
26.7 
0.4 
32.1 
65.4 

2009 
67.5 

2009 
3.4 

2009 
-881 
-1 322 
350 
5 
85 

5 
1 066 
33 
2 

1 099 

782 

2009 
-3.6 
38.2 

2009 
: 
: 
: 
: 

: 
: 

: 

: 

9.2 
13.5 
6.1 
71.2 
105.6 
21.1 
1.7 
34.7 
63.1 

2010 
79.4 

2010 
0.5 

2010 
-764 
-1 267 
410 
-22 
114 

16 
552 
22 
19 

574 

287 

2010 
-4.9 
40.9 

2010 
: 
: 
: 
: 

: 
: 

: 

: 

: 
: 
: 
: 
105.7f 
19.2f 
: 
39.4f 
66.3f 

2011 
71.2 

2011 
3.1 

2011 
-634 
-1 306 
528 
26 
117 

6 
389 
12 
-9 

401 

205 

2011 
-5.4f 
45.2f 

2011 
: 
: 
: 
: 

: 
2 358 

: 
2 152 

: 
1 911 

: 
9.4 
3.9 

: 
9.6 
3.3 

: 
9.7 
3.0 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
euro exchange rates: average of period - 1 euro = … national 
currency 
Effective exchange rate index (2005=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) 
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 
Life expectancy at birth: male (years) 
Life expectancy at birth: female (years) 

Labour market 
Economic activity rate (20-64): share of population aged 20-64 that is 
economically active (%) 
* Employment rate (20-64): share of population aged 20-64 in 
employment (%) 

Employment rate male (20-64) (%) 
Employment rate female (20-64) (%) 

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

Agriculture 
Industry 
Construction 
Services 

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 (%) 
Long-term unemployment rate: share of labour force that is 
unemployed for 12 months and more (%) 

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/HICP) (2000=100) 
* Early school leavers - Share of population aged 18-24 with at most 
lower secondary education and not in further education or training (%)

1.000 

1.000 

1.000 

1.000 

1.000 

1.000 

: 
490 

: 
337 

: 
397 

: 
416 

: 
303 

2007 
2 073.0 
455.0 
-1 618.0 
: 
69.2 
45.4 

2008 
2 530.0 
416.0 
-2 114.0 
: 
62.3 
42.7 

2009 
1 654.0 
277.0 
-1 377.0 
: 
48.4 
37.5 

2010 
1 657.0 
330.0 
-1 327.0 
106.0 
56.1 
37.7 

2011 
1 823.0 
454.0 
-1 369.0 
100.9 
50.0 
35.7 

: 
: 

2001 
: 
: 
: 
: 
: 
: 

2001 
5.5 

Note

Note

2007 
3.0 

2008 
4.1 

2009 
4.4 

14.6 

7.4 

7.5 

5.7 

: 
: 

Note

2001 
: 

: 

: 
: 
: 

3.1e 
25.8e 
2.1e 
69.1e 
21.2 
: 
: 
: 

72.1 
77.2 

2007 
: 

: 

: 
: 
: 

8.1e 
13.8e 
3.8e 
74.3e 
19.3 
18.1 
20.9 
: 

72.8 
78.1 

2008 
: 

: 

: 
: 
: 

7.6e 
15.3e 
6.1e 
71.0e 
16.8 
15.9 
17.9 
: 

72.9 
77.6 

2009 
: 

: 

: 
: 
: 

6.5e 
14.0e 
6.7e 
72.8e 
19.1 
18.0 
20.4 
: 

2010 
2.9b 

6.7b 

73.5 
78.4 

2010 
: 

: 

: 
: 
: 

6.2 
13.9 
6.1 
73.9 
19.7 
18.9 
20.7 
: 

2011 
2.2 

4.4 

: 
: 

2011 
: 

: 

: 
: 
: 

5.6 
13.0 
6.0 
75.5 
19.7 
19.5 
20.0 
: 

: 

14.2 

13.4 

15.6 

15.5 

15.7 

Note

2001 
211.0 
91.6 

2007 
338.0 
179.9 

2008 
416.0 
195.2 

2009 
463.0 
255.0 

2010 
479.0 
262.1 

2011 
484.0 
256.6 

: 

: 

: 

: 

: 

: 

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 (km) 

Innovation and research 
Spending on human resources (public expenditure on education in % 
of GDP) 
* Gross domestic expenditure on R&D in % of GDP 
Percentage of households who have Internet access at home (%) 

Environment 
* Greenhouse gas emissions, CO2 equivalent (tons, 1990=100) 
Energy intensity of the economy (kg of oil equivalent per 1000 euro 
GDP) 
Electricity generated from renewable sources in % of gross electricity 
consumption 
Road share of inland freight transport (% of tonne-km)  

Note

Note

Note

Note

2001 
161.0 
639.6 

2007 
285.6 
1 097.9 

2008 
298.5 
1 611.5 

2009 
283.9 
2 496.5 

2010 
267.1b 
2 201.4b 

2011 
278.2 
1 875.0 

2001 
18.1 
: 

2001 
: 

: 
: 

2001 
: 
: 

2007 
18.1 
: 

2007 
: 

: 
: 

2007 
: 
384.4 

2008 
18.1 
: 

2008 
: 

: 
: 

2008 
: 
: 

2009 
18.1 
: 

2009 
: 

: 
: 

2009 
: 
: 

2010 
18.1 
: 

2010 
: 

: 
: 

2010 
: 
: 

2011 
18.1 
: 

2011 
: 

: 
51.4 

2011 
: 
: 

: 

: 

: 

: 

: 

: 

60.3 

33.2 

43.0 

64.1 

52.5 

43.1 

EN 

65 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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) 

Note

Note

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)  13) 

9) 
10) 
10) 
10) 
11) 

12) 

2001 
: 
- 
: 
- 
: 
: 
2.5 

2001 
107.0 

518p 
178e 
21e 
244e 
194e 

4p 

: 
: 

2007 
795 
- 
795 
- 
9 
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 

: 
: 

2009 
622 
- 
622 
- 
-18 
606 
2.8 

2009 
: 

516 
101 
12 
200 
152 

3 

: 
: 

2010 
1 267 
- 
1 267 
- 
-20 
1 268 
4.0 

2010 
: 

516 
96 
11 
198 
143 

17b 

: 
151 

2011 
: 
- 
: 
- 
: 
: 
: 

2011 
: 

783 
87 
21 
232 
202 

18 

: 
150 

: = not available 
- = not applicable 
p = provisional 
f = forecast 
e = estimated value 
b = break in series 
* = Europe 2020 indicator 
The  balance  of  payments  sign  conventions  are  used  for  FDI.  For  FDI  abroad  a  minus  sign  means  investment  abroad  by  the  reporting 
economy exceeded its disinvestment in the period, while an entry without sign means disinvestment exceeded investment. For FDI in the 
reporting  economy  an  entry  without  sign  means  that  investment  into  the  reporting  economy  exceeded  disinvestment,  while  a  minus  sign 
indicates that disinvestment exceeded investment. 
Footnotes: 
1) 
2) 

The figure for 2010 is estimated on the results of the 2011 population census, the figures from 2003 to 2009 are to be revised. 
For private agricultural holdings, data on areas are estimates based on data Overall Cadastre. The data on area are obtained by 
estimates. Total land includes: agricultural area, forests and non-agricultural land. 
Montenegro unilaterally uses the euro as the sole legal tender.  
Data according to NACE Rev. 1.1. 
As of 31 December. Instead of standard M1, data under national definition of M0 are provided. Monetary base (M0) is comprised 
of  banks`  deposits  with  the  CBM  (settlement  account  and  reserve  requirement  account)  and  the  estimated  amount  of  cash  in 
circulation.  Monetary  aggregate  M1  is  comprised  of  M0,  demand  deposits  by  the  non-banking  sector  held  with  banks  and  the 
CBM,  in  EUR  and  other  currencies,  excluding  deposits  by  the  Central  Government.  Monetary  aggregate  M11  comprises  M1 
increased by the Central Government’s demand deposits in EUR and other currencies. Monetary aggregate M2 includes M1 and 
the non-banking sector’s time deposits with banks, in EUR and other currencies, excluding deposits by the Central Government. 
Monetary aggregate M21 comprises M2 increased by the Central Government’s time deposits in EUR and other currencies. 
As of 31 December. Instead of standard M2, data under national definition of M11 are provided. 
As of 31 December. Instead of standard M3, data under national definition of M21 are provided. 
Age group refers to persons aged 15 or more years until 2004; from 2005 onwards age group 15-64 is used. 
2011,  for  private  agricultural  holdings,  data  on  areas  are  estimates  based  on  data  Overall  Cadastre.  The  data  on  area  are 
obtained by estimates.  
2001 - 2009 - Number of livestock in 1000, including enterprises and cooperatives and households.  
2001 - 2009, calculated net quantity in 1000 tonnes, including enterprises and cooperatives, and households.  
Includes  households,  enterprises  and  cooperatives;  from  2010,  data  includes  all  cereals  (wheat,  ray,  barley,  oats,  grain  maize, 
buckwheat); from 2000 to 2009 only data on wheat included.  
2011, includes households, enterprises and cooperatives. 

3) 
4) 
5) 

6) 
7) 
8) 
9) 

10) 
11) 
12) 

13) 

EN 

66 

   EN