—
MONTENEGRO 2007 PROGRESS REPORT
N° SEC(2007) 1434
•
accompanying the
•
COMMUNICATION FROM THE COMMISSION
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL
•
Enlargement Strategy and Main Challenges 2007-2008
N° COM(2007) 663 final
—
Key findings of 2007 Progress Report
—

A Stabilisation and Association Agreement (SAA) with Montenegro was signed on October 15, 2007. It provides a framework for further economic, political and institutional development, provided that the agreement is properly implemented.

Political criteria

Montenegro has made good progress in establishing the necessary legal framework and institutions following independence. In October, Parliament adopted a constitution broadly in line with European standards. It has continued making progress in administrative and legal reform. The main political parties adopted a declaration on the basic constitutional principles of rule of law committing that these principles would be incorporated into the Constitution. This allowed the admission of the country to the Council of Europe. There has been progress in establishing the necessary framework for respecting human rights and protection of minorities. Montenegro is committed to regional cooperation in South-East Europe and ratified the CEFTA agreement.
However, judicial reform is just beginning. Corruption is widespread. Public administration has to be significantly strengthened. The conditions of refugees and displaced persons, including Roma, give cause for concern.

Economic criteria

Montenegro has made further progress towards establishing a functioning market economy, though at a slower pace. Major reforms are needed to enable it to cope over the long term with competitive pressure and market forces within the Union.
Macroeconomic stability improved. The rapid economic growth helped create jobs while inflation remained subdued. Large foreign direct investments supported economic activity. A prudent fiscal policy was pursued, resulting in a continued budget surplus. Trade openness and the alignment process with WTO rules supported further economic integration with the EU.
However, there are still some risks to macroeconomic stability. Energy prices increased substantially. The very high growth of consumer credit and of asset prices signalled widening macroeconomic and financial imbalances. Though unemployment declined, it remained high. Increasing labour costs continued to erode the country’s competitiveness.

European standards

The country has made some progress in alignment with European standards and in strengthening its administrative capacity, leading to the signature of the SAA with the EU. Good progress was achieved in areas such as customs and taxation, competition, public procurement, free movement of capital, and agriculture.
However, progress remained limited in social and employment policies, energy, environment as well as justice, freedom and security. Montenegro needs to continue to improve its legal, political and administrative capacity to ensure a successful implementation of the SAA.

The Commission has decided to establish its Delegation in Podgorica with the aim to have it operational by end-2007.

Montenegro’s European Union Financial Assistance 2007-2011 under the Instrument for Pre-Accession Assistance (IPA):

Montenegro 2007 Progress Report n° SEC(2007) 1434, November 6, 2007 (full report)

Public document n° MEMO/07/446, November 6, 2007 (full)