Saturday, August 22

MONTENEGRO AS DR.PAVLOV' DOG:TRIANGLE OR CIRCLE?

The EU has warned Podgorica of the importance of asset forfeiture as a critical rule of law reform, calling asset forfeiture an important tool for penetrating criminal enterprises.

With its adoption of a robust resolution on Montenegro earlier this month, the European parliament has become the latest EU institution to voice its serious concern over the Balkan country's complacency on its eventual accession.

Parliament's resolution is a damning indictment of the Montenegrin government's sclerotic pace of reform, clear recalcitrance and utter irresponsibility.

"The aim of this law is to hit the negative social phenomena of corruption and organized crime where they are most vital, through economic power, as financial gain is the most common motive for such crimes".

MEPs are rightly worried to see how little progress Montenegro has made in addressing fundamental issues around the protection of foreign investors in the country.

The resolution has highlighted the Montenegrin government's contempt not just for EU rules, but also for the rulings of EU member state courts, and, to my mind, confirms the serious concerns already voiced about the country's suitability - indeed, its ability - to become an eventual EU member under its current leadership.

It is the government's downright disregard for the rule of law within Montenegro which has led to the numerous international arbitration cases against the state that risk endangering the country's fundamental financial stability.

I fail to understand how the Montenegrin government can be so complacent about the incredibly dire situation in which it finds itself - and which it itself has created.

Although the possibility of asset seizure is now part of the criminal code, Montenegro has been urged for years to tighten laws on the confiscation and management of crime assets.

Earlier this month the country's prime-minister Milo Đukanović once again dismissed out of hand any negotiated settlement of the Podgorica aluminium plant (KAP) dispute. It is this arrogant posturing that is jeopardising the country's long-term economic stability.

The government's cavalier treatment of foreign investors has led to a raft of commercial disputes in international courts that could cost the country in excess of €1bn. That’s almost a staggering 30 per cent of the country's GDP.

This would cripple the economy in a period when the state will be facing what the IMF is calling, "substantial repayments of eurobonds and commercial bank loans" over the next five years, peaking at eight to nine per cent of GDP a year in 2015, 2016 and 2019.

The IMF's recent report on Montenegro warns that the country's "public finances are subject to numerous risks" and the European commission, in its own conclusions on Montenegro, spoke of the "risk of a new round of contingent liabilities for the public finances" of the state.

The KAP dispute may be the most flagrant example of the government's contempt for foreign investors, but unfortunately it is far from being the only one, as the massive claims against the state show.

It is due to its complete disregard of our repeated demands for a negotiated settlement and the non-application of the rule of law in Montenegro that we, like many other foreign companies, have had to resort to international courts.

While we have always said that we support Montenegro's eventual EU membership, and continue to do so, that cannot be at any cost.

The recent reports and resolutions from the European council, commission and parliament rightly recognise this fact.

How can Montenegro aspire to EU membership when it refuses to respect the jurisdiction of EU member state courts and the fundamentals of EU law?

We can only hope that the Montenegrin government will at last consider the repeated and resounding calls from the EU to take all the necessary measures to resolve the KAP dispute and the multiple other cases against it that are impeding its progress and imperilling its prosperity.

If it does not, Montenegro could well see its path to the EU blocked.