Expert: Euro helped Montenegro achieve stability

Zdenek Sychra.JPG

Since its declaration of independence in 2006, Montenegro has made considerable progress towards EU integration and the country's use of the euro has helped it become economically stable and attractive to investors, Zden?k Sychra, a European studies expert at Masaryk University, told EURACTIV Czech Republic in an interview.

Zden?k Sychra is an academic at Masaryk University in the Czech Republic.

He was speaking to EURACTIV.cz’s Lucie Bednárová.

What does EU membership mean for Montenegro?

Put very simply, it is exactly the same as what it means for other Central and Eastern European countries that have entered the EU, i.e. integration into a stabilised area (both from political and security perspectives), economic advantages and opportunities, higher attractiveness of the country and the possibility for direct participation in EU actions.

Especially for Montenegro, a Balkan country and one of the youngest countries in Europe, it is a very valuable benefit. At the same time, it is an opportunity to disengage (in a political sense) from the post-Yugoslavian region, which has been viewed negatively due to developments in the last twenty years.

Although Montenegro has made many significant achievements on the path towards EU membership, such as visa liberalisation, the road will be certainly long and difficult. When do you think Montenegro could become a member of the EU?

I don't expect it to happen in the foreseeable future. The EU has still not absorbed its Eastern enlargement, there are problems connected with absorption capacity and there is also a general distaste among the member states for another quick enlargement.

Moreover, Montenegro will be accepted as part of the group of Balkan states, not independently, so it is supposed to wait for other, less-prepared candidates. In my opinion, it will be in about ten years' time.

The problems that are still to be solved will be much clearer after the European Commission has published its opinion [on Montenegro].

In what fields do reforms need to be made in order to increase the country's chances of becoming an EU member? Is the country succeeding?

It is doing pretty well. It is a hot candidate for getting candidate country status. The Stabilisation and Association Agreement came into force in May, which was a crucial moment and also the first stage towards full membership. Montenegro became an associate country. Comparing the current situation to the time of the declaration of independence, we can see unquestionable progress.

Yet despite all this, we can see some problems: the influence of political elites upon judicial bodies and public administration; insufficient administrative capacity; organised crime; extensive corruption and insufficient success in the fight against it; excessive centralisation of the decision-making process; the shadow economy; and so on.

Despite the aforementioned progress, there is still a problem with the practical implementation and application of new reform laws. These things can be improved step-by-step during the negotiation process.

How would you evaluate Montenegro's progress so far towards EU integration? Are its efforts and ambitions any different from those of other Balkan countries?

First of all, Montenegro has the advantage of not being hit by the war. There have never been any problems with its cooperation with the International Criminal Tribunal for the former Yugoslavia. The current economic situation is relatively good. Despite the negative effects of the economic crisis, some important structural reforms have been made. Montenegro is also special as it uses the euro, but without any link to the EU's Monetary Union. 

So, integration is quite fast and has been aided by the pro-European orientation of successive Montenegrin governments.

How are the Western Balkan countries viewed in the EU member states?

It is almost impossible to give an answer. Each country should be viewed separately. There are different views on Croatia and Serbia, for example. The links EU member states have with the Western Balkan countries also play a very big role and appear in their approaches.

Montenegro has a good image. It is appreciated for its gradual and calm transition towards independence, economic reforms, political stability and cooperation so far. In terms of public opinion in the EU, Montenegro is considered as good a candidate as Serbia or Macedonia.  It is not viewed like Croatia, which is unequivocally preferred, or Albania, which is not.

Montenegro adopted the euro in 2002 without entering the euro zone. What were the reasons for this?

Before adopting the EU's single currency, Montenegro used the Deutschmark. After 1999, it had two monetary systems: the Deutschmark and the Yugoslav Dinar, which was removed from circulation in 2001. The reason was simple: to eliminate the inflationary pressures caused by the federal central bank and to support economic development in the country. It also brought some budgetary advantages.

The European Union does not like to see a unilateral 'euro-isation' process, but can not really do anything to stop it. But I am convinced that EU leaders will not force Montenegro to return to a national currency because this would negatively affect its economic system. Moreover, it would last for a very short period of time. The fact that we use the euro doesn't mean that we will not have to fulfil all the requirements to enter the euro zone.

Does the euro currency help in the current economic situation?

The euro helped the Montenegrin economy to reach macroeconomic stability and low inflation, and the country has become more attractive and safer for foreign investment.

But due to the economic crisis, its growth has significantly slowed down, leading to negative consequences for financing the country's development, for example in tourism and transport infrastructure. Despite this, it is the only Western Balkan country in which outside investment has grown.

Real estate prices and demand also decreased, yet strong economic growth, a reasonable attitude towards public finance and liberal fiscal and economic reforms put Montenegro in a much better economic state than many Western Balkan and other European countries.

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