An independent Montenegro has rough road

PODGORICA, Serbia-Montenegro --With a spectacular coastline and newly declared independence from Serbia, Montenegro could profit from booms in tourism and real estate, and closer ties with the European Union.

But first, the tiny Adriatic country must confront problems it has never fully addressed: chronically bad infrastructure and endemic corruption.

Free from the embrace of big-brother Serbia following Sunday's referendum on independence, Montenegro may get a clearer path toward its proclaimed goal of joining the EU.

But its rediscovered statehood also will test its ability to form a viable economy and push through the strict reforms set by the EU as a condition for eventual membership.

"Montenegro will no longer be able to blame Serbia for all its troubles," Balkan analyst Braca Grubacic said. "Now, Montenegro is on its own."

Montenegro is deeply divided between its pro- and anti-independence factions. With nearly all ballots counted, 55.4 percent of voters chose independence -- just over the 55 percent threshold set by the EU.

Pro-independence Prime Minister Milo Djukanovic has for years accused Serbia of stifling its junior partner in their joint state and blocking its economic progress and integration into the international mainstream. Montenegro also has been tainted by the stigma of Serbia's failure to capture top U.N. war crimes suspects.

Djukanovic promised his people that Montenegro's economy will flourish by restoring the statehood it lost 88 years ago.

The pro-Serbian camp had argued that Montenegro, with a population of 620,000, is too small to be viable on its own. Others say Montenegrins and Serbs have so much in common as two tribes of the same nation -- sharing the same language, Orthodox Christianity and culture -- that there is no difference at all.

"I expect fast economic development and an increase in living standards," Montenegrin President Filip Vujanovic said. "Montenegro was handicapped in its union with Serbia."

Montenegro's economy has been almost fully dependent on the black market since the troubled 1990s, when both Serbia and Montenegro faced international sanctions over their roles in the Balkan wars.

That black market, including cigarette smuggling, helped Montenegro survive the heavy-handed rule of former Serbian leader Slobodan Milosevic. But it also destroyed most of its industry, which is at a virtual standstill and being sold off cheaply to foreign investors.

Per capita income is the equivalent of around $1,000, the average monthly salary is $250 and unemployment is about 30 percent.

Montenegro's tourism, based on soaring mountains and a stunning Adriatic Sea coastline, is the tiny state's main economic trump card. Visitors have stayed away from the republic because of its unstable political situation, but the government now expects independence to fuel a doubling of Western tourists to 600,000 this year.

Many may be wooed back by cactus-studded cliffs and breathtaking vistas. New hotels have been built and old communist-era buildings have been renovated. Real estate dotting the 180-mile coast has been sold, mostly to wealthy Russians.

Hurdles remain, though. Montenegro will have to form its own professional army and apply for membership in international organizations, including the United Nations. The army has been the only institution it has shared with Serbia in the past decade.

It already uses a separate currency -- the euro -- while Serbia has dinars.

"We were already 90 percent independent, but now we are 100 percent independent," Djukanovic said.

An EU envoy for Montenegro, Miroslav Lajcak, said the state's parliament could formally proclaim independence in two weeks, and the 25-nation bloc will recognize it "if everything goes smoothly."

Djukanovic said Montenegro would seek U.N. membership in September, and he hoped it would be first in line to join the EU after Romania, Bulgaria and Croatia.

"Full integration into NATO and the European Union is Montenegro's strategic goal," Djukanovic said Monday.

EU spokesman Altafaj Tardio said in Brussels, Belgium, that once the referendum results are confirmed, the commission will draft a proposal to start talks on a separate aid-and-trade pact with Montenegro. Talks on a so-called stability and association agreement, meant to prepare non-EU countries for possible membership, began last year with Serbia-Montenegro.

Serbia's talks with the EU were suspended earlier this month because it failed to arrest a top war crimes fugitive, Bosnian Serb wartime army commander Gen. Ratko Mladic, and hand him over to the U.N. tribunal in The Hague, Netherlands.

"With independence, that hurdle is gone for Montenegro," Djukanovic said. "We'll no longer be Serbia's hostage."

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Associated Press correspondent Dusan Stojanovic has reported on the former Yugoslavia since 1984.