Montenegro is faced with a future without Russian money

Montenegro has long been a magnet for super yachts, tourists and real estate speculators from Russia. But the Adriatic-rim country has promised to align itself with sanctions against Moscow and the future looks uncertain without guarantees of Russian money inflows.

In the wake of Vladimir Putin’s invasion of Ukraine last month, the small Balkan EU candidate country that joined NATO just five years ago is faced with a major problem.

The application of sanctions imposed by Brussels on Moscow could threaten the economic balance of the country with 620,000 inhabitants, a quarter of which GDP is based on tourism to which Russians have contributed the most. over the past ten years.

“We love the Russians. And we rely on them,” Danica Kazanegra Gregovic, director of Gulliver Montenegro’s travel agency, told AFP in Budva on the Adriatic coast.

On the city’s main promenade, Russian is heard more often than Montenegrin. At the seaside resort, a whole series of shops and schools are dedicated to thousands of Russian expatriates.

Like many, Ms. Gregovic on the impact in Montenegro of a series of sanctions aimed at Russian financial institutions as well as flight bans to Europe.

The time couldn’t be worse. Tourism professionals are relying heavily on the high season to attract people eager to take a vacation after it has been devastated by the pandemic.

“We’ve survived two horrible tourist seasons. We’re going to get more hits than we want,” Ms. confession. Gregovic.

– “Preferred destination” –

To make matters worse, the investments that have helped real estate development in the coastal regions seem to be drying up as the Russians find it increasingly difficult to draw money into the country.

For years, lax investment laws, the fact that Russians do not require visas to go to Montenegro, have encouraged the influx of Russian money, sparking a frenzy of construction of the villa once intact.

“Most of the money invested on the coast came from Russia,” said Dejan Milovac, deputy director of Le Mans, an anti-corruption group. “Montenegro is a very favorite destination for wealthy Russians who want to buy real estate or hide their assets.”

Russians have also benefited greatly from “gold passports”, a program that provides citizenship to foreign investors of up to 450,000 euros in the country. More than 60% of these passports have been issued to Russians in the past 14 months.

But since the raid, nothing has been sold in Budva, two different real estate agents have confirmed to AFP.

“Everything has stopped. Construction has stopped, people are having a hard time operating,” said Jovan, 44-year-old bar owner from Budva. “We’re only a few months out of the season and it’s all causing problems for our business”.

Authorities are trying to allay fears after promising to strengthen sanctions against Moscow in line with European measures.

These sanctions have not yet been applied because of disputes between political factions, but the government has pledged measures to alleviate the economic consequences of the conflict, including rising fuel and food prices.

“Unfortunately, war has come and we have to look at other markets,” Foreign Minister Dorde Radulovic told AFP, judging that we should take advantage of this to change.

– “Much has been lost” –

“Maybe it’s high time for us to try to diversify our economy. Maybe it’s high time we don’t depend on just one sector, namely tourism.”

Montenegro and Russia have maintained relatively harmonious relations for centuries based on their Slavic and Orthodox heritage and their alliances during the wars of the 20th century.

In 2006, Montenegro seceded from Serbia and turned to the West, but relations with Russia remained relatively stable, apart from a cold snap in 2016.

The Montenegrin power then accused Moscow of formulating a coup plan aimed at preventing the country from joining NATO, which the Kremlin has always denied.

Despite everything, Montenegro remains a favorite destination for Russians who want to vacation, migrate or invest.

For Russian expatriates, life is complicated. Many were cut off from Russia, no longer had access to their Russian accounts, had their credit cards blocked.

“Maybe it’s our fault because we haven’t explained how dangerous (Putin) is,” sighs Marat Gelman, a Russian art collector who opposes the Russian president.

“Anyone who is somehow related to Russia will lose a lot.”

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