House of Commons - Foreign Affairs

Select Committee on Foreign Affairs Fourth Report

MONTENEGRO

249. We now turn to issues affecting the wider region, beginning with an examination of what is sometimes seen as the next regional flashpoint. Despite its relatively small size (with a population of just 615,000), Montenegro has been pivotal in a volatile region over the past decade. Montenegro's support of Serbia throughout much of this time has been critical to Milosevic's strategic designs. Were it not for Montenegro, Serbia would have been the only Yugoslav republic to reject the European Community's draft arrangements for a general settlement (the Carrington plan) in October 1991. Moreover it is only by virtue of Montenegro's continued union with Serbia that Belgrade has been able to claim to be the successor to the Socialist Federative Republic of Yugoslavia (SFRY).[618] Montenegro was also a supporter of Serbia in the wars in Bosnia and Croatia.

250. Montenegro remains pivotal now but for very different reasons. Since the election of Milo Djukanovic to the Montenegrin presidency in 1997, reinforced by the success of his Better Life Coalition (DZB) in Montenegro's parliamentary elections in 1998, Montenegro has been on a potential collision course with Milosevic. Mr Djukanovic has embarked on a series of sweeping political and economic reforms that have distanced Montenegro from its much larger partner. These changes have been warmly welcomed by the British Government. As the Foreign Secretary put it, "we have gone out of our way repeatedly to show solidarity with Montenegro. I and other European Ministers have met repeatedly with President Djukanovic to show that solidarity."[619]

251. Mr Djukanovic was originally a protegé of Milosevic, but subsequently broke the tie. Since then Milosevic has sought to contain Mr Djukanovic's influence by refusing to accept Montenegro's representatives to the federal parliament and Montenegro's candidate as federal prime minister. Mr Djukanovic has warned that, if Serbia continues to resist change, Montenegro will have no choice but to opt for independence. The fear is that this challenge may so threaten Belgrade as to invite violent reaction. After four wars that have followed the break-up of Yugoslavia, the spectre of civil war now haunts Serbs and Montenegrins, and many observers worry that the last act could be played in Montenegro. Thus Mrs Roberts warned us not to ignore the potential threat to the stability of the region which developments in Montenegro might pose.[620]

252. It was for this reason that the Committee decided that it was important to pay a short visit to Montenegro, following an informal meeting we held in London in February with President Djukanovic. While in the country, we again met the President, along with the Foreign and Finance Ministers, the Speaker of the Parliament and representatives of all the principal political parties, including the Socialist Party, which remains loyal to Belgrade, and one of the two parties representing the Muslim minority. We were deeply impressed by the willingness of Montenegrin politicians to discuss the future of their state in an atmosphere of parliamentarianism, and we are grateful to them for the time which they spent with us.

The Djukanovic agenda

253. Mr Djukanovic's party was the successor to the communists, but had begun to split in 1996 as the majority wished to distance themselves from the Milosevic regime. The party is now committed to building an open and democratic society with an eye towards achieving greater integration with the rest of Europe. In support of those ends, Mr Djukanovic has initiated a programme of political and economic liberalisation which includes judicial, administrative, and electoral reform; development of independent media; and the privatisation of state-owned enterprises, though we heard that privatisation had moved slowly. In addition, he has sought to redefine his republic's relations with Belgrade. According to Mr Donnelly, Mr Djukanovic "has tried...to escape from the shackles that are curently imposed on him by the federal structure without wishing to precipitate a formal division."[621] In August 1999 the Montenegrin government submitted a proposal to the Yugoslav federal authorities which, if it were to be adopted, would give Montenegro the right to maintain its own army, foreign ministry, and currency while remaining loosely linked to Serbia in a confederation. Montenegrin supporters of these proposals told us that they would guarantee equal status for the two republics. The President also made it clear to us that he is prepared to hold a referendum on independence if his plan is not accepted by the Belgrade authorities. We understand that talks between the ruling parties of the two republics broke down last autumn, and that there has been no reply to the August proposals.

254. The collapse of talks was at the time of Montenegro's adoption on 2 November 1999 of the Deutschmark (DM) as a parallel currency alongside the Yugoslav dinar, and the establishment of a monetary authority to ensure currency stability. The Montenegrin government told us that these moves were necessary to protect their economy from what they regard as Belgrade's irresponsible monetary policy. In fact, the adoption of the DM legalised its existing widespread use, creating an opportunity to bring Montenegro's large black economy back into the formal economy. Economic chaos in the aftermath of the NATO campaign had caused the dinar to lose one-third of its value as Belgrade increased the money supply by some 40 per cent. By the end of 1999, Yugoslavia's annualised rate of inflation was 100 per cent and the Montenegrin government argued that economic reform and the attraction of private investment could not be achieved in the absence of price stabilisation. As Mrs Roberts told us, the adoption of the DM was a highly significant move.[622]

255. Opposition politicians in Montenegro told us that the adoption of the DM was an unlawful infringement of the Yugoslav common market which had necessarily resulted in counter-measures. Belgrade indeed responded harshly. The Yugoslav National Bank announced that it would block all transfers of funds between the two republics, leaving some 18,000 pensioners without income and making it impossible for Montenegrin firms to receive payments from Serbia. (Serbia accounts for 70 per cent of Montenegro's trade.) Initially, the Serbian police also blocked deliveries of food into the republic, forcing grocers to purchase their supplies from Croatia and Slovenia, pushing prices up 20 per cent or more. While we were in Montenegro on 7 March, the border was again closed to all goods traffic. On 28 January 2000 Yugoslavia's Constitutional Court ruled that Montenegro's adoption of the DM was illegal. Montenegro, however, has shown no signs of willingness to rescind the measure.

256. Other moves by Montenegro have further harmed its relations with Belgrade. We were aware that there was little support in Montenegro for NATO's actions over Kosovo, though this view was expressed more in sorrow than in anger. Some, like Dr Kaldor,[623] have argued that the opposition in Montenegro was strengthened by the air campaign. Nevertheless, Mr Djukanovic refused to join Serbia in declaring war against NATO in response to the Alliance's actions against Yugoslavia, which included limited bombing of targets in Montenegro. To the contrary, Montenegro granted amnesty to some 14,000 Montenegrins who refused to heed the federal army's call-up during the military campaign. Mr Djukanovic has also pledged his republic's cooperation with the International Criminal Tribunal for the Former Yugoslavia and has vowed to hand over any suspected war criminals—including Milosevic—to The Hague. Montenegro also sheltered refugees during the conflict. The Foreign Secretary referred to his frequent discussions with Mr Djukanovic during the conflict, and spoke of the President's "courage and steadfastness."[624] During the campaign he told us that NATO would "strongly oppose" any attempt to oppose or replace the Montenegrin President, which he told us was the avowed aim of Milosevic.[625] We conclude that developments in Montenegro have been extremely positive for the large majority of the Montenegrin people and for the United Kingdom and its allies, and that the British Government should continue to do all that it can to support the democratic process in Montenegro.

257. The many close links between Montenegro and Serbia give rise to some hope that democratic development in Montenegro will increase pressure for democratic reform in Serbia. Before the conflict over Kosovo, the hope was expressed that a democratic Montenegro would be an engine for change in Serbia. For example, the then Minister of State told us in January 1999 that the changes in Montenegro had been ones for the better, which the Government hoped that the rest of Yugoslavia would follow.[626] We note that the Serb opposition has declared its support for the proposals for the future of Yugoslavia submitted by the Montenegrin Government in August 1999.[627] Though Mrs Roberts wrote that the view that a democratic Montenegro might result in change in Serbia "is dismissed as pious cant,"[628] politicians in Podgorica told us that what was happening in Montenegro would have the eventual effect of strengthening democratic reformers in Serbia. If there are few signs as yet that developments in Montenegro have been a catalyst for similarly far-reaching reform in Serbia, that does not mean that hope should be abandoned. Montenegro does at least act as a base for the Serb opposition, and a route by which they can be provided with assistance. We recognise the validity of the Government's case that "the best way to avert bloodshed in Montenegro is to help secure a change of government in Belgrade."[629] We conclude that support from the United Kingdom for democratic forces in Montenegro is a valuable means of supporting democratic forces in Serbia as well.

Independence considerations

258. Despite federal-republic tensions, it would be quite wrong to see Montenegro as a monolithic entity united in its opposition to Belgrade. As Professor Roberts put it, it was "not for nothing"[630] that the referendum on maintaining links with Serbia held in 1992 voted by 96 per cent (on a 66 per cent turnout) to retain the Federation.[631] Recent opinion polls indicate a growing number of Montenegrins—70 per cent—in favour of at least a greater degree of autonomy for Montenegro. But perhaps only one-third of the population supports outright independence whereas one-third of population wishes to remain a part of federal Yugoslavia and are strongly opposed to independence. The pro-Belgrade Socialist People's Party holds 29 out of Montenegro's 78 parliamentary seats, and although it has particular strengths in the north of the country in areas adjoining Serbia, it is represented in every municipality. As the Foreign Secretary put it, "part of the delicacy and complexity of Montenegro is that about a third of the population are more aligned with Milosevic than Djukanovic."[632] Mr Djukanovic has been under some pressure within Montenegro to clarify his own position as some of his coalition partners are keener on independence than he is and have threatened to leave the coalition if independence is not placed squarely on the agenda. However, as Mr Donnelly put it, "Mr Djukanovic is very realistic about the implications of heading in a direction where only half of the people might want to go."[633] The consistent message we received from the President and his ministers was that options other than independence should be pursued first, but that patience was not infinite. Indeed, it may suit Mr Djukanovic to be under pressure both from those who favour greater independence, and those who oppose it. Mrs Roberts suggested that he was "ever the pragmatist", and that it might suit his purpose to remain on the fence, thus not antagonising either the pro- or anti-independence camps in Montenegro, or his international backers.[634]

259. It is not certain that Belgrade would necessarily oppose Montenegrin independence. We were made aware of a line of argument that Milosevic would ultimately accept a decision by the Montenegrin government to secede from Yugoslavia as it would give him the opportunity to rewrite the federal constitution—something that he has to do if he is to extend his rule beyond 2000, having served as Serbian and now Yugoslav president. The Foreign Secretary could not, however, see the advantage for Milosevic in constitutional terms in causing the dissolution of the Federation because of his position as president of the Federation.[635] There have also been press reports of a speech by Milosevic accepting that the decision as to their future is one for Montenegrins to take.[636] On the other hand, Vojislav Seselj, Serbian deputy prime minister and leader of the ultranationalist Radical Party, has said that any bid for independence would be crushed. Milosevic, it has also been suggested, might welcome a crisis in Montenegro that would distract the attention of the Serbian people from the hardships of daily life. There was certainly a prevalent view in Montenegro that it was part of Milosevic's purpose to destabilise Montenegro.

260. The United Kingdom and its partners favour a resolution of the current crisis which sees Montenegro remain within what the FCO described as a "more devolved and democratic FRY."[637] The secession of Montenegro and the resulting break-up of Yugoslavia, it is feared, would destroy any chance of eventually re-integrating Kosovo into Yugoslavia—remote though that possibility now seems—and would perhaps encourage separatists elsewhere in the region (notably the Bosnian Serbs and the Albanians of western Macedonia).[638] Mrs Roberts also suggested that Western policy makers were concerned that an independent Montenegro would increase pressure for an independent Kosovo because then Yugoslavia would cease to exist and therefore UNSCR1244 would fall into abeyance so far as it affirmed Yugoslavia's territorial integrity and sovereignty over Kosovo.[639] This is, however, not a clear matter of law—both Professor Greenwood and Professor Lowe suggested that Yugoslavia might then be constituted by Serbia alone.[640] Moreover, there is no reason to imagine that independence would be achieved peacefully, given the divided loyalties of the population and the strong presence of federal troops on the territory of Montenegro, a matter which we examine further below.[641] The FCO informed us that "the UK and its partners have been careful to warn Montenegro of the dangers of pursuing political aims which would give Belgrade a pretext for intervention."[642] They regarded this warning as having headed off pressure for a referendum on independence.

261. The view was expressed to us by Charles Meynell, Editor of the East European Newsletter, that Montenegrin independence would serve Balkan stability and make for better relations with the West by ensuring that "Serbian nationalists-chauvinists could not inflict such regional damage again for at least several generations."[643] However, Dr Woodward told us that it would be wrong for the West to use the Montenegrin independence question as a means of putting pressure on Milosevic.[644] We agree. We recognise the potential for further conflict which any precipitate move towards independence may cause. As Commissioner Patten and High Representative Solana said in their report to the Lisbon European Council, "we should continue to encourage the [Montenegrin] government to act responsibly on the issue of independence."[645] However, the right of the people of Montenegro to determine their own future must be paramount. We recommend that the Government continue to encourage the maximum degree of autonomy for Montenegro without endangering regional stability.

262. One solution sometimes proposed is that a new constitution for Yugoslavia could give equal status to Serbia, Montenegro and Kosovo. Dr Jones Parry of the FCO told us that he had been exploring the possibility of Kosovo having a similar status to Montenegro as far back as 1996.[646] We found strong and universal opposition in Montenegro to any suggestion that Kosovo should have the same status as Montenegro. We were told that Kosovo had always been part of Serbia, and did not have the historical claim to independence of Montenegro, nor their legal right under the constitution of Yugoslavia. As Dame Pauline Neville-Jones told us, any move for independence for Kosovo "turns the burner up under the issue of Montenegro like anything."[647] We recommend that the FCO should take into account the deep anxieties of Montenegrins in any future discussions on the independence of Kosovo.

Military threats

263. There is perennial concern that the Montenegrin government's moves towards independence could trigger a military crackdown. There are various ways in which this could occur, though the international community needs to be aware that Milosevic might try to engineer a local crisis in Montenegro as a pretext for the federal army to intervene, ostensibly to keep the peace. Jane Sharp suggested that, if the opposition began to bite in Belgrade, it would be in keeping with Milosevic's nature to divert attention by causing a crisis in Montenegro.[648] According to Mrs Roberts, "with nowhere to go but The Hague, [Milosevic] might yet be tempted to use the threat of Montenegrin secession as a cause around which to rally a dispirited Serbian population."[649] The Foreign Secretary described the situation in March as "very tense", and confirmed that the Committee was right to be worried. He viewed developments "with grave concern."[650]

264. Military intervention by Belgrade is in no sense inevitable. We were told in Montenegro that it would be difficult for Serbia to take control in Montenegro; and that there was little public support in Belgrade for military action against Montenegro, and little enthusiasm among the ordinary Yugoslav soldiers for any such action.[651] Although Yugoslavia's Second Army, numbering some 10,000 to 12,000 soldiers, is stationed in Montenegro and is commanded from Belgrade, many of the troops are themselves Montenegrin (though they may nevertheless have mixed loyalties).[652] Numerous paramilitaries of Montenegrin origin also returned from Kosovo following KFOR's occupation of the province. However, the Yugoslav army are present in Montenegro because they have always been there. The Montenegrin Government also enjoys the support of the Montenegrin police, which also number about 10,000 but obviously lack the arsenal at the army's disposal, though, according to Mrs Roberts, they are being transformed into "something resembling a national guard" and are regarded by the Montenegrin Government as better motivated than the Yugoslav army.[653] Christopher Cviic of Chatham House also suggested that Russia had "for its own reasons, and to the annoyance of Milosevic, taken Montenegro under its wing."[654] Nevertheless, at the very least, the potential of a military threat is a useful lever for Milosevic.

265. At the end of hostilities over Kosovo, a part of the Military Technical Agreement (agreed, the Foreign Secretary told us, with the United Kingdom's wholehearted endorsement[655]) provided for federal forces to return to Serbia, not Montenegro. However, we were told in Montenegro that forces had indeed been redeployed to Montenegro after their exodus from Kosovo. We understand that the Montenegrin government has raised this matter with NATO headquarters in Brussels. We took this issue up with the Foreign Secretary. He and his officials did not confirm or deny that there had been any breach of the Military Technical Agreement, but they confirmed that officers in Montenegro had been replaced by hardline Milosevic supporters.[656] We recommend that the British Government request NATO to examine closely the allegation that the Military Technical Agreement has been breached by troop movements into Montenegro.

266. The Yugoslav military has already engaged in several provocative actions. During NATO's campaign, the army took effective control of Montenegro's border crossings while the navy seized Montenegro's main port of Bar, blocking the importation of most raw materials, industrial goods, and humanitarian aid, though the threat of military intervention was obviously lessened during the time that Milosevic's forces were still in Kosovo.[657] When in August the Montenegrin government raised the prospect of a referendum on independence, army troops deployed in the capital. More recently, in December, the army moved to take control of the airport outside Podgorica in response to the passage of legislation by the Montenegrin Parliament asserting ownership of the two international airports in Montenegro (Podgorica-Golubovci and Tivat on the Adriatic coast).

267. Montenegrin politicians were sober in their view that any military conflict with Belgrade would result in civil war inside Montenegro. Professor Roberts told us that the danger of civil war was "very great, especially granted the traditions of violence in Montenegro,"[658] while Tim Judah told us that he "would not underestimate the chances of a war, and a very bloody war, in Montenegro."[659] Mrs Roberts told us that, if conflict broke out, it "could be bloody, dividing villages and even families."[660] We believe that it is imperative that Western policy is directed towards prevention of a civil war in Montenegro.

268. During the Kosovo campaign, the Foreign Secretary told us that NATO had "warned of the gravest consequences if there was a military move" against President Djukanovic. This was a formula repeated on several occasions.[661] He refused to be drawn over whether there would be military assistance to Montenegro if there were an attempt to destabilise or overthrow the Djukanovic government. However, the Foreign Secretary and his officials did not rule out military intervention, and told us that, once the Kosovo campaign had ended, the Alliance was "of course, militarily, in a much better position to ensure consequences are indeed grave". At the same time, our attention was also drawn to the "legal niceties" of any such action[662]—if there are doubts about the legality of the Kosovo campaign,[663] there are at least as many doubts about the legal grounds under which the United Kingdom and its allies might intervene militarily in defence of Montenegro. In March 2000 the Foreign Secretary told us that he regarded it as "very important to keep him [Milosevic] guessing as to what we would do if he was to take precipitate or violent action."[664] Equally we should be wary of giving the Montenegrins unrealistic expectations of our response.

269. We received no representations in Montenegro for any form of military assistance. There is some evidence that NATO officials have made it clear that support for Montenegro does not imply military intervention in the case of an attack from Belgrade.[665] We appreciate that FCO ministers and officials are reluctant to be drawn as to the concrete assistance they are prepared to offer Montenegro if a military threat becomes more real. However, the formula of "grave consequences" and "very close monitoring" does appear rather threadbare. In the analysis of Dr Woodward, the fact that the West does not know how to support Montenegro's negotiations with Belgrade is one manifestation of a lack of coherent strategy.[666] Mrs Roberts thought that it was helpful to keep Milosevic guessing about what the reaction would be to a threat to the security of Montenegro, though she also advocated an increased visibility of "some form of security presence", perhaps by the use of the port of Bar to supply KFOR.[667] Two of our witnesses, Dr Kaldor and Charles Meynell, argued that the establishment of a security presence in Montenegro would enhance regional stability.[668] Jane Sharp told us that "a build up of Western troops in the region and guarantees of support to Djukanovic in case of aggression from Serbia should help to deter another crisis."[669] We strongly agree, and see the merit of keeping Milosevic guessing as to the West's reaction to any military intervention or other attempt at destabilisation by him in Montenegro. We recommend that Milosevic should be in no doubt, however, as to the willingness of the United Kingdom and its partners to protect the democratic government of Montenegro.

Financial assistance

270. Montenegro is under severe financial pressure. It had been one of the poorest of the republics in the former Yugoslavia, and now suffers from the double bind of international sanctions against the FRY and sanctions from Belgrade. The blockade imposed by Serbia on trade with Montenegro had harmed many Montenegrin firms. The example of a refrigerator company, the largest market for which had been Serbia, was described to us during our visit. The fact that Belgrade is responsible for air traffic control in Montenegro is also a means of exercising economic pressure on the Djukanovic government—tourist flights can be prevented, for example. Control of air traffic, of course, also has military implications. The FCO described the "impoverishment of Montenegro" as a "Milosevic tactic" and "economic blackmail" designed to stir up "social dissatisfaction and unrest."[670]

271. The war over Kosovo has had its own adverse consequences. According to Mrs Roberts (and this was also confirmed during our visit) the tourist industry, once the mainstay of the economy, is now moribund.[671] A particular strain has been put on Montenegro by the number of refugees it has received. Montenegrin ministers told us that Montenegro had received more refugees in relation to its population—12 per cent of the population had been refugees—than Albania and Macedonia, but had received less aid than these countries. The Foreign Secretary acknowledged the very considerable difficulties caused to Montenegro by having to accommodate 90,000 to 100,000 Kosovo Albanian refugees during the war.[672]

272. Professor Roberts told us that constructive outside assistance was necessary to help Montenegro cope with the "potentially very serious problems" which its economy faced.[673] It is also clearly in our interests not to allow the Montenegrin economy to degenerate into the black market and corruption to which it has always been susceptible, and which is less able to thrive when exposed to the audit of EU and other western partners.[674] Western states, including the United Kingdom, have backed up their pledges of political support for Mr Djukanovic with some financial and technical assistance. For example, we received warm praise of the work of the Know How Fund (KHF) in Montenegro. Mr Djukanovic told us that the KHF had been the first foreign assistance received, and for several years, the only assistance received. The bilateral assistance described to us by the FCO was principally of a technical nature.[675] Areas of help include the provision of experts on privatisation and the regulation of public utilities.

273. The EU has provided project assistance since the Kosovo crisis, though we were told that nothing had been received before the crisis. We were also told that there were no problems with the use of aid in Montenegro—auditors from Brussels had audited each project, and that what was required now was more budget support, in particular for social welfare. In November 1999, FCO officials said that _16 million in aid was being provided by the EU, and in March the Foreign Secretary said that "quite a lot of resources" had gone into Montenegro since the end of hostilities, and perhaps more per capita than anywhere else in the region.[676] Commissioner Patten also visited Montenegro in March to demonstrate, according to the Foreign Secretary, "in a very visible way the European Union's commitment to and support for Montenegro."[677] On 20 March the Commissioner announced a doubling—from _10 million to _20 million—of the EU's contribution to Montenegro under its year 2000 OBNOVA programme. The Commission has announced that it is "urgently discussing with the Montenegrin authorities priority use for this additional money." According to the Commission, this brings to _82.7 million the total amount made available by the EU to Montenegro since April 1998, including humanitarian assistance of _18 million and food security of _10.4 million.[678] _44.3 million had by late March already been contracted or paid. The Commission said that the EU expected to make further substantial amounts available in food security and humanitarian assistance to Montenegro in 2000.[679]

274. The normal sources of macroeconomic financial support for a sovereign country have, however, not been available. Montenegro cannot receive assistance from organisations like the International Monetary Fund which are obliged by their Charter to support only states which are members—Yugoslavia is not a member and Montenegro is only a part of Yugoslavia.[680] According to the Foreign Secretary, there was nothing which could be done about the IMF, because an amendment of its Charter would be necessary. However, he went on to describe how the World Bank had found "an imaginative way around" its Charter by establishing a Trust Fund for Montenegro.[681]

275. Up until recently, there have also been some problems with European assistance. The Montenegrin government told us that, while the EU's General Affairs Council had agreed that financial assistance should be provided, EcoFin (the meeting of EU Finance Ministers) had concluded that assistance could not be given to Montenegro as it was not a state. This was confirmed to us by the Foreign Secretary, who told us that EcoFin had "looked at this question on a couple of occasions and feel that they cannot offer financial assistance to Montenegro because they can only do so where the IMF would be engaged." We also understand that there was bureaucratic opposition to assistance to Montenegro from the European Investment Bank (EIB) because of Yugoslavia's outstanding debts. We were told in Montenegro that a similar problem had arisen in the case of the European Bank for Reconstruction and Development (EBRD). At meetings in London with the EBRD, the Montenegrin government had been told that the Bank was prepared to work with Montenegro, but that there was no political clearance from "major shareholders"[682] to do so. We find it bizarre, if true, that "major shareholders" are holding up aid from the EBRD to Montenegro. We recommend that the Government take prompt action to ensure that the EBRD is able to work in Montenegro and report back to the Committee as to the position of the major shareholders of the Bank.

276. Montenegro is told that it cannot be assisted because it is not independent, and at the same time that it should not push for independence because of the destabilising effect on the region. This places the Montenegrin government in a dilemma, recognised by the Foreign Secretary.[683] They say, as Mrs Roberts put it, "we are caught in this situation where we cannot receive aid from international financial institutions and we cannot fully solve our economic problems because we are not independent but you do not want us to be independent."[684] Dr Woodward went so far as to claim that the "Montenegrin progress towards independence is generated solely by frustration that until the sanctions are lifted they cannot get access to any credit because they cannot be members of the International Monetary Fund."[685]

277. Mrs Roberts called for a "genuine attempt to find a way round the political and bureaucratic obstacles which prevent Montenegro from gaining meaningful access to international financial institutions."[686] She also warned of the adverse electoral consequences for the Djukanovic coalition if the economy failed, and the potential which this gave to pro-Milosevic forces in Montenegro to blame the West for the failure.[687] It is immediate macroeconomic assistance which will be of most benefit to Montenegro, rather than longer-term project assistance. As the Foreign Secretary put it, "the issue really of concern to President Djukanovic is not the assistance for development and humanitarian aid purposes, but the budgetary assistance for macro-financial stability which it cannot get from the IMF." He told us that he was pushing for changes within the EU to free up the bureaucratic log-jam.[688] We are aware that innovative solutions have been found to assist, for example, Palestine. We are also aware that economic discontent in Montenegro is hardly likely to be conducive to regional stability. It has certainly been frustrating that, whilst Europe has dallied and bureaucrats have found excellent ways to say no, democracy building and the democratic potential of Montenegro have been put at risk.

278. Recent news has been better. We very much welcome the recognition in the report presented by Commissioner Patten and High Representative Solana to the Lisbon European Council that "the fact that Montenegro is not a state must not remain an obstacle to its receiving urgently needed assistance."[689] The European Council meeting in Lisbon on 23 and 24 March subsequently gave fresh impetus to assisting Montenegro. The Council's conclusions spoke of its support for Montenegro's "efforts to achieve democratic reform and economic prosperity." The Council underlined the "urgent need for substantial assistance to Montenegro." The conclusions continued:

690

279. We were pleased that EU Finance Ministers were reported as agreeing on 8 May[691] to provide _20 million of "special budgetary assistance" to Montenegro. It was also reported that they had made progress towards allowing EIB guarantees to go ahead. Assistance to Montenegro will show the people of Serbia and Montenegro the concrete benefits of adhering to Western norms. The money involved is small and the potential benefit of heading off military conflict is enormous. We very much welcome the new urgency which the European Council has given to support for Montenegro, and we encourage the Government to drive forward the Council's commitment in the months to come. We recommend that the Government press for any remaining bureaucratic obstacles to macroeconomic assistance for Montenegro from the European Union to be removed.

280. As far as sanctions are concerned, the Foreign Secretary specifically recognised that Montenegro needed to be treated differently from Serbia, telling us that partner governments were trying to ensure that "any economic measure that bears on Serbia and [is] aimed at the regime in Belgrade does not have an impact on Montenegro."[692] According to the EU, "Montenegro has been exempted from the EU sanctions regime against the FRY wherever possible."[693] Some measures already taken by the EU (such as exempting Montenegro Airways from the flight ban to EU destinations, the oil embargo and some aspects of financial sanctions[694]) have certainly been very welcome. We recommend that the Government, with its European partners, should keep under constant review the sanctions regime against Yugoslavia, moderating it where possible to assist Montenegro.

281. There is also the separate issue of the trade regime applied by the EU to Montenegro. Under this, for example, the duties imposed on exports from Yugoslavia to the EU could be modified to take account of the products which clearly originate in Montenegro, such as aluminium, wine, and processed wood. The Foreign Secretary told us that EU Foreign Ministers had tasked the European Commission to "try and find creative ways forward with the trade and economy of Montenegro,"[695] and he later told us that the EU was looking "at ways in which we can provide alternative markets for their exports and their trade."[696] There is certainly discontent at present in Montenegro that too little has been done to help Montenegrin exports into EU markets. We agree with the Foreign Secretary that the EU should find creative ways to improve the trade regime which applies to Montenegrin goods to remove the discriminatory duties which apply even to products which clearly originate in Montenegro.

Stability Pact

282. The Stability Pact amounts to a commitment to Montenegro. There was, however, a strong feeling among Montenegrin politicians that the Pact had been too long in preparation, and that there had been too little concrete achievement. We were also told that it had been wrong not to allow Serbia and Montenegro in at the beginning: Serbia was, after all, the main cause of instability. According to Montenegrin ministers, Serbian participation would help democratic forces in Serbia, while exclusion suited the Milosevic regime's propaganda. Mrs Roberts also told us that Montenegro had been very aggrieved to have received only observer status in the Stability Pact.[697] The Foreign Secretary told us that it would be "very difficult" for some form of Montenegrin project to be included under the Pact, though he appeared optimistic that this would happen.[698] We were also pleased, at an informal meeting we held with Mr Bodo Hombach, Special Co-ordinator of the Stability Pact, to note his strong support for Stability Pact assistance for Montenegro. The Stability Pact Financing Conference, held in Brussels from 29 to 30 March, did produce projects for Montenegro,[699] and it is important that tangible help is provided to Montenegro as soon as possible so that ordinary Montenegrins can see the advantage of co-operation with the West rather than with Milosevic. We recommend that every effort is made to give concrete support to Montenegro through the Stability Pact.

FCO presence

283. Montenegro makes no use of the Federal Ministry of Foreign Affairs, which it regards as having no legitimacy. Instead it has begun to establish its own diplomatic network, and has a representative in London. We were told that there had been an increasing interest from other states in establishing missions in Podgorica rather than operating through Belgrade. These missions had a variety of names—trade, information or liaison offices, for example. There is no permanent British representation in Montenegro. The British Council has taken on the running of British Government programmes, for example civil service training, and the director of the British Council Office is British honorary consul. We were impressed by his commitment, as well as that of the FCO officials who visit Montenegro frequently. But this does not amount to the sort of presence which will allow the FCO to have a full understanding of developments in Montenegro, where the link with the United Kingdom is regarded as particularly important. We wish to see the FCO adopt an imaginative solution which will allow the establishment of a British representative office in Podgorica.

284. During our visit to the British Council in Podgorica we met a number of students who told us how difficult it was to obtain British visas. These could not be issued except in Belgrade through the Brazilian Embassy.[700] By contrast, Schengen country visas are issued by the Italian Consulate in Podgorica. We recommend that visas to visit the United Kingdom should be issued in Podgorica.

Conclusion

285. The government of Montenegro needs all the political and financial assistance it can get in order to remain a force for the good within Yugoslavia. Montenegro is small, and it will cost very little in absolute terms to assist it. Doing so could help to avert another crisis in the Western Balkans and show the people of Serbia the benefits of adopting European norms. We can be proud of what the United Kingdom has done so far, but our recommendations on Montenegro are intended to give the House another opportunity to stiffen the resolve of western opinion formers in support of democratic Montenegro.

618 This claim is, however, contested by the United Kingdom and most other states. Back

619 QC485. Back

620 Ev. p. 112. Back

621 QC82. Back

622 Ev. p. 113. Back