Thursday, January 08, 2009

Montenegro's economy on verge of collapse


Jan 8th 2009 | PODGORICA
From The Economist print edition

A RECENT Montenegrin video, released on the internet, shows two shrieking teenagers filming the speedometer of their car as they roar through a tunnel at 260kph (160mph). Although the appearance of the film earned the boys criminal charges, at least they did not crash. In a curious manner, the video mirrors Montenegro’s present fate. After three years of breakneck growth, the economy is rapidly slowing down. It is has not quite crashed—but the aftershocks could still be nasty.

The capital, Podgorica, has been expanding fast in recent years. Flats and offices have sprouted all round the city’s edge as developers flush with cash from sales of villas and apartments on the coast to Russian, British and other investors have poured the proceeds into new property. But in the past few months, as the number of foreigners investing in coastal property has dried up, so has the cash. Workers at many building sites across the city have lost their jobs. Property prices have fallen by 50% or more.

Down by the coast things are as bad or worse. Planned developments, many aimed at rich Russians, have been scaled back, though the government hopes to lure Gulf Arab investors to take their place. Growth figures say it all. In 2006, the year it declared independence, Montenegro’s economy grew by 8.6%. In 2007 it accelerated to 10.7%. Last year the government forecast 8%, but the correct figure will be lower. And in 2009 the government is planning for growth of only 5%—and the IMF is talking of a mere 2%.

That will be disappointing to the Montenegrins, even if in these hard times some growth is better than none. But the government is also grimly aware that, besides coping with the general fallout from the global financial crisis, it faces two home-grown problems. The biggest is a huge aluminium factory on the edge of Podgorica. Its fumes are toxic, it makes a loss and it consumes gargantuan quantities of subsidised electricity. It is controlled by Oleg Deripaska, a Russian tycoon well known in Britain and elsewhere, who is now locked in disputes with the Montenegrins. Aluminium prices have crashed; unless he keeps getting subsidised electricity from the government, he will, he says, have to shut the whole place down.

In any other country this might not be front-page news. The problem for tiny Montenegro, with a population of only 650,000, says Sasa Popovic, an economist, is that the factory and its related industries account for a vast 40% of GDP. So its closure would be a huge political blow to the government of Milo Djukanovic, the prime minister.

He has already been embarrassed by a second matter. In December the government had to bail out a troubled bank owned, in large part, by his brother and, to a lesser extent, by his sister and himself. That Prva Banka was considered the family bank lured large numbers of people, companies and even government departments to transfer their accounts to it. But the end of the boom means that many of the bank’s borrowers cannot pay back their debts. “We are very nicely packaged from the outside,” says Daliborka Uljarevic, a financial analyst, “but when you open the box it does not look so nice inside.”

Gordana Djurovic, Montenegro’s Europe minister, admits that the bank affair seems “unusual” but insists that no laws were breached and that the cost of doing nothing was higher than the cost of doing something. Understandably she is keener to talk about good news. Just before Christmas Montenegro lodged a formal application for the status of candidate to join the European Union. Formal candidacy is “realistic” by December, claims Ms Djurovic.

Montenegro may by then have a new government. An election may even be called for March 29th. Mr Djukanovic is currently riding high in the polls, but much of that reflects the disarray of the opposition rather than his own personal popularity. Mr Popovic reckons that Montenegro’s economy may not crash but go into a kind of hibernation. That might give the opposition a chance to reorganise and make up lost ground—which explains why the prime minister may choose to go to the country sooner rather than later.

7 comments:

Anonymous said...

can i get a what what!..hahah

Tom said...

Real mature.

You think this is a good thing?

Whether or not you agree with the current leaders of Montenegro, all of its citizens would be adversly affected by any sort of economic collapse.

Tom said...

By the way, Montenegro's economy has been growing by double digits since its independance, and has only recently slowed to a single digit growth rate. Now, compared to the rest of Europe, and the world for that matter, I'd say their economy is doing well.

Of course, to the high-minded Albanian Americans, any sort of progress is viewed as bad news. To them the only solution is outright secession for Malsia. Why would anyone hope for further integration? Why don't we just solve differences through civil wars?

Anonymous said...

Hi Thomas,

You apparently are not Albanian-Montenegrin nor Albanian-American, this is quite evident given your baseless commenets herein.

Understand something here, no one is alluding that an economic collapse is a "good thing," its just a fact that is being noted for those interested.

I agree that all citizens of Montenegro would be adversely affected by a collapse, but those that stand to lose the most are the corrupt leaders in Podgorica/Cetinj -- i.e., Milo and his cronies, those same greedy boys that set up this economic mess.

They pumped the economy with bogus land sales, coupled with illegal transfer of deeds in what was the quickest get-rich-quik scheme in this countries short and volatile history.

True that its economy has been growing in double-digits, but with all economies that balloon in such a fashion with the rise in general level of prices are far exceeding the rise in personal income, hence you are now seeing a nose-dive into a Balkan-style recession.

And for us "high-minded Albanians", economic progress less social/political rights is obsolete, even you should know this much.

Gezim

Tom said...

I'm curious as to how you can be so sure that I'm not an Albanian-American. I hope you're not assuming that based on the fact that I have yet to post any hateful remarks about the Montenegrin government or its people.

I've been an observer of this site for quite some time, but have only recently begun to comment on certain issues. I'd like to think I'm playing Devil's Advocate, but in reality I view all issues through a non-biased lens. As an Albanian-American fortunate enough to be born in the U.S.A, I can never truly comment on how life is like in that country, but I have visited several times, so I feel that I am able to speak objectively about certain subjects.

One thing I've noticed on this site is that there is constant negativity being posted throughout. Even the title of the blog, "Free Malesia", suggests that the authors would only be satisfied with complete and total independence from Montenegro.

What happened to tolerance?

The authors of both the articles and certain posts I've seen seem to have an agenda already in place when commenting. This agenda is entirely anti-Montenegrin, therefore there is no chance to ever look at any issue objectively, as their minds have already been made up long ago.

Basically this agenda boils down to two points:

1. Montenegro belongs to the Albanians, so one must view the current government as they would an occupation.

2. The Montenegrins are intent on ethnically cleansing the country of all non-Slavic minorities.

You may not agree with the above statements, but it seems perfectly clear to me that most posters on this blog view them as gospel.

That is my biggest problem with other Albanian-Americans. I am constantly referred to as a "serbofile", "anti-Albanian", or other equally ignorant terms just because I don't believe in the two aforementioned points.

In order to understand any controversial issue, one must make an effort to view things from an objective and non-biased standpoint. As an American of Albanian-Montenegrin descent, I feel that I am able to do just that.

It's a shame that most others like me cannot. And that goes for Americans of Balkan descent.

Anonymous said...

Listen "Tom" --

Your comments are truly appreciated here, but you are missing the (banana) boat.

No one is calling you a Serbo-fil, but I understand why people may think that you are one; and that's not because you don't post "hateful remarks," it's just that your remarks are shallow and do not consider the reality that Albanians in Montenegro are victims (and have been for decades) of minority suppression and discrimination in the realms of education, employment, politico, cultural preservation, and even environmental protection, just to name a few. And its not me or others on this blog that invented this, you can find literture from the U.S. Congress, State Department, and even well-known NGOs that make similar assertions.

There is data out there that points to this argument, some of us have seen it, read it, and dare I say, analyzed it.

The two-point agenda you allude to is dead wrong:

1. Montenegro does not belong to Albanians. But understand this -- there are territories within this state that were aligned with the Southern Slavs in 1878 that were illegally "taken" from Albania, even you know this. And it is no coincidence that the territories in question -- Plav/Gusij, Malesi, Ulqin, Ana e Malit -- are the same territories that are populated with a majority of Albanians today. But not to regress from your point, no one is crying foul here, all anyone asks for is greater self-governance in these regions, is that a crime?

Secondly, we all know that Montenegrins are not ethnically cleansing us, that outburst is unjust to all. But what we do know is that Montenegro is making social, political, and economic conditions to dire that Albanians have no other choice than emigrate or assimilate. Now you draw the conclusion to this.

Finally, trust me, you are not a special case just because you look at this mess through a different lens. We all do. I do. But sometimes we have to take off those lenses and see what is really there -- inconsistencies in a state that claims equality for all. Keep those cloudy lenses on and your posts will read the same way over and over ...

Cheers!

Almir

Tom said...

My name IS Tom, by the way. I can understand if by putting my name in quotes you think I'm using it as an alias, but there are Albanians out there with generic Western names. Not all of us can be named "Gezim", "Almir", or "Gjelosh." And having a name like Tom doesn't make me any less Albanian. Not saying that's what you were implying. Just saying...

It's very difficult for me to believe that you all view things objectively when I see the types of posts and its comments that suggests that any action by the Montenegrin government, even postive ones, has some twisted ulterior motive that will result in adversely affecting Albanians in some way.

It would help if there were links to certain NGO articles and studies that you mentioned. All I have to rely on is eyewitness testimonies by my relatives, and what I've seen firsthand during my several visits to the region. Of course, that's never enough, as when I head down there it's usually out of pleasure and not to research socio-political issues.

I still stand by my two points unless I am proven otherwise. You may sound like one of the more rational Albanian-Americans, but I'd say you represent the minority. The vocal majority, on the other hand, makes it very hard for anyone outside the inner-circle to take these issues seriously.

If the Albanian minority is truly being denied rights, etc, then I would do what I could to bring attention to that fact. However, I have yet to see any convincing evidence of anything of the sort. Anti-terror squads apprehending a group suspected of planning terrorist acts doesn't quite scream "oppression" to me.

I'd be nervous too if I were part of the Montenegrin government. The vocal majority of Albanians in Montenegro AND the diaspora scream "independence" at every opportunity. I see nothing but maps of Greater Albania whenever I go to Albanian functions.

Rather than assimilate into Montenegrin society, Albanians have chosen to play the role of the victim. Albanian politicians in Montenegro are accused of being "traitors" and pandering to the Slav-led government.

Albanians in Montenegro need more representation, but there are very few educated Albanians that are willing to turn to politics. Most would rather emigrate to other countries, which causes a HUGE brain drain for the community. The uneducated ones are left to decide their own fate. This often leads to violence, which is certainly not a solution.

I'm more than willing to have an intelligent debate about the topic. After all, a debate where everyone agrees with eachother is not a debate.