bosnia report
New Series No: 23/24/25 June - October 2001
Aid conditioned by reforms
by Milka Tadic-Mijovic

The money promised by foreign donors is Montenegro’s last chance to make a real start at structural reforms and a transition.


The Donors Conference for the Federal Republic of Yugoslavia (FRY), which took place in Brussels on 29 June, was held with celebrations because of Milosevic’s extradition. FRY received an aid package of 1.28 billion US dollars. Most of this money will be invested in the rebuilding of Serbia, while Montenegro will be assigned, according to a new estimate, about ten per cent. Besides these already approved funds, the conference was of great significance because the reprogramming of the FRY debt was also agreed.

Three delegations arrived in Brussels from FRY - representing the Federal Government, the Government of Serbia and the Government of Montenegro. It is interesting that the delegates from Zizic’s Federal Government, who are so zealously committed to maintaining the common state, did not submit a single project relating to Montenegro, not even one that Serbia and Montenegro could use jointly!

Belgrade’s two governments

So Belgrade was represented in Brussels by its two governments, whose representatives spoke with one voice. A detail from the conference illustrates this well : Boris Begovic, a member of the Federal delegation, pulled out of one discussion so that the Serbian minister of finance Bozidar Delic would get extra time.

In addition, both the Serbian and the FRY governments received significant assistance from the international community in preparing for the Donors Conference, particularly from a team of experts from the EU, while Montenegro was more or less left on its own. In this very serious business of drawing up projects, it received expert help from only one specialist from Europe.

Nevertheless, according to some participants in the conference, despite certain defects the Montenegrin papers presented in Brussels were drawn up more coherently, because they relied on real processes and reforms initiated here several years ago. The Serbian papers, on the other hand, were just a list of well-packaged promises. But they were far more effectively marketed.

The conference clearly revealed the following: Serbia, after the fall of Milosevic, is starting from scratch, while Montenegro, after the introduction of the Deutschmark and legal regulations in certain areas, is already a step ahead. The question, therefore, is whether Podgorica will maintain this advantage, or whether internal frictions, postponement of structural reforms and political instability in Montenegro will allow Belgrade to catch up and overtake it.

All three delegations returned from their journey satisfied. But was the conference in Brussels truly a great success, as the public is being told?

For although the conference invitation definitely stated that only new funds would be considered, and not previously approved aid packages or money dedicated to humanitarian needs, that is not how it was. Out of the total of around 120 million US dollars allocated to Montenegro for this year, 98 million dollars assigned to our Republic by the Americans at the end of last year were also included. The same thing happened to Serbia.

So is there any room left for optimism in Podgorica?


US aid frozen

If one deducts the funds already approved for Montenegro, the sum allocated in Brussels is hardly impressive. One must not forget, however, that because of the political circumstances and the independentist aspirations of our local leadership, almost all the West’s aid has been frozen. Of the aid promised by the Americans, since the New Year not a single dollar has reached the government in Podgorica!

After the Donors Conference, finance minister Miroslav Ivanisevic stated that he expects some of the money won in Brussels to arrive soon. According to information obtained by Monitor, Washington made a promise that the first aid package, consisting of ten to fifteen million dollars, will be sent off soon. The budget deficit, partly caused by this freezing of international aid, could then to some extent be remedied.

How quickly the rest of the funds will arrive remains to be seen. This will depend above all on the implementation of the projects presented by Montenegro, as well as on the readiness of its new government to get to grips with real reforms.

Donors who have been present in Montenegro over the past few years have had numerous negative experiences with the local authorities. For instance, it is no secret that the money assigned to certain concrete projects was spent elsewhere. Because of these experiences, foreign control will be far tighter than it has been up to now.

‘After Brussels, we have a great chance to get at last even what was approved for us earlier. How quickly the remaining funds will arrive depends largely on us. First, it is important that we present our projects to donors in the right way, but also that we continue with our evident reform efforts. Despite all the criticism in the country, our reform breakthrough has been recognised worldwide. For if Stanley Fisher, the deputy managing director of the World Bank, says that Montenegro has achieved evident reforms, through the introduction of the Deutschmark and our institutional reforms, then that means something’ - claims Ljubisa Krgovic, chairman of the Central Bank of Montenegro and one of the participants in the Brussels conference.

Nevertheless - despite this praise in the official documents of the World Bank and the European Union, whose representatives chaired the conference - criticisms of Podgorica could also be heard: for its budgetary spending, fiscal policies and privatisation. Because it is no longer the West’s darling, the new government must immediately set about reforming the tax system, controlling budgetary spending and facing up to the defects involved in our massive voucher privatisation, including the privatisation of big systems. Failures will no longer be tolerated.

It is interesting that during the Donors Conference certain countries and institutions already opted for separate support to Serbia and to Montenegro, while others directed their aid to FRY. Minister Ivanisevic insists that in both cases there exists ‘a mechanism for the allocation and distribution of funds as between Montenegro and Serbia’. According to Ivanisevic, the most important conclusion of the Donors Conference is that the international community will ensure monitoring of the distribution of funds between Serbia and Montenegro.

From Serbia, from the cabinet of deputy premier in the FRY government Miroslav Labus, rumours of Belgrade’s generosity are already spreading. Belgrade apparently deserves much credit for ensuring that Montenegro was allocated ten per cent of the aid total, when based on population it should really only get five per cent. These calculations are wrong: aid is never assigned according to mere population figures, but is a combination of many factors. Besides, if one were to look through the Serbian prism and calculate everything according to population figures, then Montenegro should get more than five per cent since Kosovo was not represented at the Conference.

Not a penny for Podgorica

Montenegro has already seen the generosity of Belgrade’s new government in the period from 5 October to today. Out of all the foreign aid the Federal government has received from the international community, not a penny has been sent to Podgorica. Here, of course, we are not even including the generosity extended during celebrations of the Serbian New Year, when certain people ‘played soldiers’ on Ivan Milutinovic Square, nor that extended to the ‘Together for Yugoslavia’ coalition during the election campaign.

Because of this attitude on Belgrade’s part, it could be said that one of the biggest achievements of the Montenegrin delegation in Brussels is that it fought hard, albeit under the FRY umbrella, for an autonomous approach. This autonomy, however, will not mean a great deal if the money is not spent, above all, on structural reforms and the transition.

This article has been translated from Monitor (Podgorica) - of which Milka Tadic is editor - 6 July 2001. For a translation of her important recent article: ‘British ambassador seeks kingmaker role in FRY’, see news index on this site


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