BUDVA, Montenegro: Tiny Montenegro will take a huge step toward integrating with the West when it becomes the 29th member of NATO this week, but it risks paying a heavy price for spurning Russia.
For nearly a decade after Montenegro split from Serbia in 2006, Moscow cultivated close ties with the former Yugoslav republic, and money poured in from Russian investors and tourists.
It was a love affair underpinned not just by commercial and diplomatic logic but also by historic, religious and linguistic ties between the two Slav countries.
“Back in 2006 Montenegro was advertised as a desirable destination for Russians, because it is a beautiful country and an Orthodox Christian one,” said Vadim Verhovski, a Russian investment banker who, with partners, has invested €25 million ($28 million) to buy land near the coastal town of Budva.
Now the romance has turned to rancour. Montenegro blamed Russia for an alleged plot to assassinate its prime minister last October which officials said was aimed at blocking its entry to NATO. The Kremlin called that absurd.
In April, Russian foreign ministry spokeswoman Maria Zakharova warned of a “surge of anti-Russian hysteria” in Montenegro.
The chill is hitting tourism: latest available data, for March, showed Russians accounted for 7.3 percent of all tourist overnight stays that month compared to nearly 30 percent in March 2014 and 19.2 percent in March 2016.
Advertising hoardings in Russian, promoting luxury apartments with views of the Adriatic, were once ubiquitous along the coastal highway. Now they have vanished, and Russian-language signs have largely disappeared from shops.
Prime Minister Dusko Markovic said a recent Russian ban on imports of wine from Montenegro was linked to its NATO membership. Moscow said it had discovered banned pesticides in the wine.
“We are prepared for any decision (by Russia) and nothing is going to deter us from the path we decided to take,” Markovic told reporters.
In an e-mailed statement to Reuters, he said: “The Balkans for centuries has been the scene of a struggle between the West and the East. Like other states in the region, Montenegro has strong links with the East, but in the 2006 we made a key decision that we would like to adopt Western standards and values.”
Handy Location
For a country of just 650,000 people with 2,000 military personnel and an area smaller than Connecticut, Montenegro has strategic value out of proportion to its size.
Its dramatic Adriatic coastline, the source of its appeal to tourists, is also attractive in strategic terms because of its easy access to the Mediterranean.
A former senior government official, who declined to be named, said Moscow made an official request in September 2013 to use the Montenegrin port of Bar as a naval logistics base en route to Syria. After pressure from NATO, the government declined.
“The strategic position of our country is important (to NATO) and especially the Adriatic Sea,” Markovic said.
When the alliance welcomes Montenegro at its summit in Brussels on Wednesday and Thursday, it will mark its first expansion since neighbors Albania and Croatia joined in 2009.
The country is surrounded by NATO members or hopefuls, except for Serbia, which maintains military neutrality.
“Montenegro may be small, but its presence at the NATO summit as a new member is a message to the Western Balkans to show (that) the path toward Europe is open,” a senior NATO official told Reuters. “It is also a message to Donald Trump that NATO is growing, it has new friends.”
Divisive Issue
Still, NATO is a divisive issue among Montenegro’s own people. Many see Russia as a historic friend — a traditional ally against the Ottoman Empire, and the first nation to establish diplomatic relations with Montenegro in 1711.
Many remember a 1999 NATO bombing raid that killed 10 people in Montenegro, part of a wider intervention by the alliance to end Serbian leader Slobodan Milosevic’s campaign of ethnic cleansing in Kosovo.
“A vast majority (of people) supports Russia, you cannot exclude emotions,” said Dragan Krapovic, mayor of Budva, which counts around 1,000 Russians in a population of 16,000.
“Russia supported Montenegro’s independence referendum, and many people invested money after that. Now they feel cheated,” he said.
Since the October election, Montenegro has been in political paralysis, with all opposition parties boycotting parliament. Some analysts fear that NATO membership could deepen the crisis.
“The move could even prove to be destabilising from a domestic perspective, given deep societal divisions on the subject,” said James Sawyer of the Eurasia Group, a political risk consultancy.
“The good governance reforms that are supposed in theory to be part of the NATO accession process have largely been cosmetic, while many other important reforms remain to be done.”
Verhovski, the Russian investor, bought 13 hectares of land south of Budva a decade ago, to build a tourist complex including a hotel and villas. Bogged down by the process of getting permits, he has yet to lay a single brick, but he hopes to finally start construction this year.
“There is a lot of potential in Montenegro for investment in infrastructure, for example, or ski resorts. Montenegro has a lot to offer. And we hope that with NATO membership it will become more predictable for investors,” he said.
“Russians will continue to come to Montenegro. Maybe in the short run less Russians will come, but in the long run I believe they will continue to come. Where else they would go?”
End of the affair: Montenegro jilts Russia by joining NATO
End of the affair: Montenegro jilts Russia by joining NATO
India accelerates free trade agreements against backdrop of US tariffs
- India signed a CEPA with Oman on Thursday and a CETA with the UK in July
- Delhi is also in advanced talks for trade pacts with the EU, New Zealand, Chile
NEW DELHI: India has accelerated discussions to finalize free trade agreements with several nations, as New Delhi seeks to offset the impact of steep US import tariffs and widen export destinations amid uncertainties in global trade.
India signed a Comprehensive Economic Partnership Agreement with Oman on Thursday, which allows India to export most of its goods without paying tariffs, covering 98 percent of the total value of India’s exports to the Gulf nation.
The deal comes less than five months after a multibillion-dollar trade agreement with the UK, which cut tariffs on goods from cars to alcohol, and as Indian trade negotiators are in advanced talks with New Zealand, the EU and Chile for similar partnerships.
They are part of India’s “ongoing efforts to expand its trade network and liberalize its trade,” said Anupam Manur, professor of economics at the Takshashila Institution.
“The renewed efforts to sign bilateral FTAs are partly an after-effect of New Delhi realizing the importance of diversifying trade partners, especially after India’s biggest export market, the US, levied tariff rates of up to 50 percent on India.”
Indian exporters have been hit hard by the hefty tariffs that went into effect in August.
Months of negotiations with Washington have not clarified when a trade deal to bring down the tariffs would be signed, while the levies have weighed on sectors such as textiles, auto components, metals and labor-intensive manufacturing.
The FTAs with other nations will “help partially in mitigating the effects of US tariffs,” Manur said.
In particular, Oman can “act as a gateway to other Gulf countries and even parts of Eastern Europe, Central Asia, and Africa,” and the free trade deal will most likely benefit “labor-intensive sectors in India,” he added.
The chances of concluding a deal with Washington “will prove to be difficult,” said Arun Kumar, a retired economics professor at the Jawaharlal Nehru University.
“With the US, the chances of coming to (an agreement) are a bit difficult, because they want to get our agriculture market open, which we cannot do. They want us to reduce trade with Russia. That’s also difficult for India to do,” he told Arab News.
US President Donald Trump has threatened sanctions over India’s historic ties with Moscow and its imports of Russian oil, which Washington says help fund Moscow’s ongoing war with Ukraine.
“President Trump is constantly creating new problems, like with H-1B visa and so on now. So some difficulty or the other is expected. That’s why India is trying to build relationships with other nations,” Kumar said, referring to increased vetting and delays under the Trump administration for foreign workers, who include a large number of Indian nationals.
“Substituting for the US market is going to be tough. So certainly, I think India should do what it can do in terms of promoting trade with other countries.”
India has free trade agreements with more than 10 countries, including comprehensive economic partnership agreements with South Korea, Japan, and the UAE.
It is in talks with the EU to conclude an FTA, amid new negotiations launched this year for trade agreements, including with New Zealand and Chile.
India’s approach to trade partnerships has been “totally transformed,” Commerce and Industry Minister Piyush Goyal said in a press briefing following the signing of the CEPA with Oman, which Indian officials aim to enter into force in three months.
“Now we don’t do FTAs with other developing nations; our focus is on the developed world, with whom we don’t compete,” he said. “We complement and therefore open up huge opportunities for our industry, for our manufactured goods, for our services.”
