On April 22, 2001, early parliamentary elections were held in Montenegro. On July 2, 2001, newly elected Parliament has nominated the new Montenegrin Government, headed by the previous Prime Minister, Filip Vujanovic. On the same occasion, Parliament has adopted the Program of the
Government of Montenegro, presented to deputies by the president of the
Government. Having in mind the importance of the ongoing processes in South
East Europe countries concerning peace and security in that area and in Europe, as well as the role that development of Montenegro and its future relations with Serbia play in it, we would like to inform you on presented and established tasks of the new Montenegrin Government. We have also enclosed information that contain answers to some questions that are being posed in regard to the future state-legal status of Montenegro.

The mandate of the new Government of Montenegro was determined by agreements made before and after the
elections, among parties that strive for democratic and sovereign Montenegro as an independent international legal
subject. According to this agreement, a one-year mandate has been determined for the Government to provide conditions
for organizing a referendum on state-legal status of Montenegro, and to prepare and propose to Parliament other legal
acts that are in general interest of Montenegro. 

The Program of the new Government of Montenegro, which was accepted by the Parliament, established that the
preservation of the political and security stability of Montenegro was the most important condition of its democratic and
economic development. In accordance with that, the Government will intensify the dialogue with the parliamentary
opposition. The goal is to jointly overcome polarizations, tensions and existing high level of mutual distrust among the
political subjects. It is a prerequisite for the continued work on the reforms that are precondition for the integration into the
European institutions. The agreement should ease the tensions, in order to enable citizens to decide more freely on what is
important for their better perspective. The state issue will also be resolved by democratic and majority will of the citizens
in the referendum that would represent a choice of better solution, not an issue that our destiny depends upon.

The Government will also propose talks to the Government of Serbia on a new model of relations between
Montenegro and Serbia. The Government of Montenegro envisages that new model as the association of two independent
and internationally recognized states. Federation cannot be the solution due to the huge disproportion between the two
states, different level of the economic reforms and the impossibility to create the same economic system. It is impossible to
achieve full equality in a federal state. In such a state, the larger member would inevitably be perceived as hegemonic, and
the smaller one, as the one that blackmails. Therefore, not only do we see the association of the two independent states as
a precondition of the true stability of the relations with Serbia, but as the optimal model of the future relations of the
Balkan states as well. 

The Government of Montenegro is firmly determined to develop comprehensive cooperation with the neighboring and
all other countries, as well as with regional and international organizations, in order to preserve peace, strengthen
stability and improve relations and development of the countries in the region. 

The basic goals of the Government in the field of economy are orientated towards the achievement of the long-lasting
economic development, improvement of conditions for the production, increase of employment and the improvement of
the living standard of our citizens. To this aim, we will speed up the realization of the macroeconomic reforms. They
include measures in the field of monetary policy and the reduction of the inflation rate, restructuring of banking system,
radical reduction of the "gray economy", the reform of fiscal system that includes the reduction of tax rates. The
Government will work on significant enhancement of the privatization of large and public enterprises, and on that basis,
also on the increase of funds to encourage entrepreneurship and employment. As far as the employment is concerned,
particular attention will be dedicated to the support for development programs of small and medium enterprises. With the
assistance of donor funds, the condition of infrastructure will be improved. The program of the price liberalization and
subvention abolishment will be continued and, at the same time, comprehensive measures in socio-economic area will be
adopted so that the socially most vulnerable categories of the society are protected. The conditions in education and
health protection will be improved. In the upcoming period, we plan to continue the reform of state administration and
local self-governance and, to this aim we plan to conduct programs of reorganization and training for good management.
New laws will be passed with the aim to improve internal security - personal security, security of ownership as well as the
traffic safety. 

As far as specific economic areas are concerned, the priority will be development of tourism and agriculture, as the most
important resources of the development of Montenegro. The development of tourism will be conducted in accordance
with the program included in Master plan of the development of tourism by year 2020. In agriculture, a program will be
conducted to increase the production and capacity of agriculture products processing. In achieving these tasks, the
Government will encourage foreign investments and in that way, as well as through the program of privatization, it will
make an effort to provide the inflow of additional funds from abroad. 

The Government will dedicate significant attention to the realization of the adopted program of combating corruption and
organized crime. In that sense, we will continue comprehensive cooperation with the international organizations and
institutions, in association with the Agency for anticorruption and Board for combating organized crime, formed within the
activities of the Stability Pact for South Eastern Europe. The Government will also provide full transparency of the entire
flows of goods and money in Montenegro. 
 

ANNEX

NEW BASES OF PEACE, STABILITY AND COOPERATION 

The Government of Montenegro has presented to the Government of Serbia an initiative and proposals for the
arrangement of future relations between the two states on new foundations. 

Motives for such an initiative are the following:

   a)      Due to the nature of former Serbian authorities, personified in the regime of S. Milosevic, the relations between
      our two states have been poor for long period of time, and practically, Serbia and Montenegro have been
      functioning as two independent states. 

   b)      Based on the experience in functioning of FR Yugoslavia in the past 8 years, the expectations of the citizens of
      Montenegro in FRY as anticipated and projected to be union of the two equal states and their citizens, have been
      betrayed. 

   c)      After the dissolution of the former common state, SFRY, it is inevitable to bring to the conclusion the process of
      dissolution of the rest of once common state. In that way, every republic of former SFRY would become a
      completely equal state in new circumstances, and, on that basis, would strive to build new relations, trust, stability
      and cooperation.  

   d)      As two old and close Balkan states and nations, Montenegro and Serbia cannot make their present poor relations
      good and stable by maintaining and repairing what has become the framework and instrument of manipulation,
      conquers, hatred and war imposed by the former regime. They should independently and freely choose and agree
      upon their relations and possible framework. In that way, their relations would be based on firm and healthy
      grounds, they would correspond to the interests of our nations and states, peace and stability in Montenegro and
      Serbia as well as to the positive processes, stability and cooperation in wider region. 

Basic initiatives of Montenegro are the following:
 

   a)      Like all other states that emerged from the former common state, Montenegro and Serbia would build and
      develop new relations as two completely sovereign, independent states and separate international legal
      personalities. In that way, the principle of equality of all former republics, now states, would be ensured in their
      mutual relations and relations with other states and organizations. Accepting their equal status and character of
      sovereign states, at the same time, they definitely reject any aspirations towards each other. They recognize each
      other as equal states and they are ready to build mutual relations and cooperation on that basis, and to jointly
      contribute to the peace and stability of the region.

   b)      As completely independent state, Montenegro is prepared to build an association of the two independent states
      with Serbia. In that way, they would express mutual closeness and association and would facilitate free movement
      of people, goods, services, capital, information, association and business relations. At the same time, in this way
      they would set an example and give impetus to new relations that should be built and developed upon the above
      mentioned grounds in the region of former joint state and in Europe. This would also be a way of internal
      stabilization in each state, as well as of establishment of mutual trust and stability in relations in that part of Europe.

The contents of the proposal of Montenegro is that Montenegro and Serbia join important areas of economic
development in future association of independent states: free trade, monetary policy based on Euro; common defense
policy, and coordination of foreign policy and international cooperation. Montenegro is interested in building its further
cooperation with Serbia following the pattern of the European Union, in regard to both the essence and the mechanisms.
In that way, and at the same time, the process of association of both states with their neighbors, as well as with the
European Union would be facilitated, and conducted in accordance with the Process of Stabilization and Association.

What are the reasons that made Montenegro opt for such an initiative, after the former regime had been
ousted, i.e. after the new democratic forces had gained the power in Serbia?

There are three basic reasons for this: 1) the time that democratic forces in Montenegro needed to develop, get stronger,
and prevail, in order to successfully oppose to the policy of ruthless power, aggressive chauvinism and war; 2)
determination to preserve peace, stability, and inter-ethnic tolerance in Montenegro, to avoid the risk of blood shed and
war, which was at the same time the message of all important factors of the international community that Montenegro
cooperated with; 3) belief that an agreement on the new start can be democratically negotiated with the new democratic
forces in Serbia, in accordance with legitimate and long-term interests of our states and peoples, the interests of peace and
stability in our countries, both in our relations and in the region in general. 

The previous regime in Belgrade would certainly use such a determination as a pretext for provoking instability, conflicts
and war in Montenegro. Such intentions were apparent even in The Hague in 1991, when Montenegro, as well as other
republics, expressed its readiness to accept the plan proposed at the time. However, that leadership renounced the
offered plan due to the threat that they would be ousted. Such intentions were constantly expressed towards Montenegro
ever since democratic, reformative and pro-European forces won the elections in 1997, and especially after entering the
war with the NATO in March, 1999. It was followed by a decision on forming special paramilitary forces affiliated to the
Yugoslav Army, with the purpose to destabilize Montenegro, close the borders and use the Yugoslav Army to threat
Montenegro.

Just like Serbia, that determined its character of a sovereign state by the Constitution from 1990, which was
unambiguously demonstrated by rightful decision of the Government of Serbia to ignore the federal institutions and
extradite S. Milosevic to the International Tribunal in The Hague, on June 28, 2001, Montenegro as well, but in 1998,
regained its competence over the most functions there had been delegated to the so-called federal state. Montenegro now
has full responsibility over the customs, foreign trade, tax policy, monetary and foreign policy. In that way, and even during
the former regime, Montenegro clearly demonstrated its intention to regain its authority and function as a completely
independent state and independent international legal personality. Montenegro even sent a document to the UN Security
Council, on June 23, 2000, informing them that the Belgrade authorities lost their confidence and that Montenegro itself is
articulating its own interests. 

Is Montenegro an economically viable state, or is it condemned to dependence?

Although one of the least developed countries of the former SFRY, ever since the beginning of the war in 1991,
Montenegro has been a safe haven for large number of refugees, especially from Croatia, Bosnia Herzegovina and
Kosovo. During the exodus of Kosovo population, the number of refugees in Montenegro surpassing the figure of
120,000, and reaching 20 per cent of the total population of Montenegro. That was the main reason why the international
community started providing assistance to Montenegro, making it later available also for the macroeconomic needs, and
infrastructure projects. Still, the largest amount of the total annual foreign assistance that Montenegro is receiving
nowadays does not surpass one quarter (1/4) of the of the annual foreign currency profit that only Montenegrin tourism
and marine industry used to make before the war, which, today, due to the ten-year long crisis in the region, do not reach
even 10 per cent of that previous income.

Therefore, there is no doubt at all that Montenegro has considerable resources for more rapid development in an
environment of peace and stability, good economic policy, faster realization of the reform program, as well as association
with the international surroundings, which is the policy of the Government. An important precondition for that is the urgent
resolving of the state and legal status of Montenegro, so that we can take responsibility for our own development and
assure numerous potential partners of our development policy, economic system and legislation. A decade of economic
and overall catastrophe, imposed by the policy dictated outside of Montenegro, will hold back the development of
Montenegro for almost half a century. The interruption of all economic activities made many created capacities in tourism,
marine industry, industry in general obsolete and collapse, and made a lot of young qualified experts go abroad.
Therefore, we will need time and funds to renew and reform the economy, pre-qualify and train people. Still, it is realistic
to expect that in few years Montenegro would be able to use its vast resources much more successfully, that it would
eliminate its present dependence on additional foreign assistance that is provided for almost all the countries in the process
of transition, and that it would become a good partner to the neighboring countries and countries of the region, in the
prosperous development of its economy.

At the recently held donor conference in Brussels, the delegation of Montenegro clearly expressed the intention to
continue the Macro-economic reform program. The purpose of the program is to maintain price stability, significantly
reduce the role of the Government in the economy, and open the market to true competition. Also, to diminish gray
market considerably; reforms banks; and continue current monetary policy based on DEM, and later Euro, as the only
legal tender. The goal is also to reform the tax system, and reduce tax rates; adopt a new Law on Enterprises; reform the
administration, limit Government expenditure and make the budget transparent. The program will strengthen small and
medium enterprises in the context of the fast and thorough privatization. The tourism and agriculture will be renewed and
intensively developed, as well as the environment, health protection, education, and social welfare. 

Therefore, the higher level of unity or association of economic system and economic policy would equally limit the
economic development of both Serbia and Montenegro. The economy of Serbia, which is dominated by the
processing industry and agriculture, needs high level of protection through the restriction of import and high customs rates.
Unlike the economy of Serbia, the economy of Montenegro is open with the import system and customs rates greatly
adjusted to the European standards. Therefore, it is much more useful for both Serbia and Montenegro to be independent
countries and to adjust their economic systems and policies to the structures of their economies and development
priorities.

Does the policy of the Government of Montenegro endanger the stability in the region?

The basis of the stability in the region of the South Eastern Europe are: favorable inter-ethnic relations in multinational
states; clear, public and genuine renouncement of other states of any kind of pretensions in regard to the neighboring
countries, and in accordance with that, by other states' deprivation of support and assistance to those countries and
organizations or elements that ask for such help, in order to impose solutions. Further factors of stability in the region
depend on the roots and strength of democratic values and rules, as well as general economic and social situation. Stable
domestic situation in each country is a prerequisite of stability in the entire region, and vice versa. 

Ignoring or underestimating these truths could endanger peace and stability within Montenegro, which have been
preserved in hardest conditions during the past decade, as the result of wise policy of the Montenegrin authorities. For
future stability and peace in Montenegro is therefore of utmost importance to respect democratic relations and freely
expressed will of the majority of citizens of Montenegro. Along with that, it is important to preserve harmonic inter-ethnic
relations, taking care that national minorities in Montenegro show loyalty and trust in policy of Montenegro towards ethnic
and religious groups. That they largely support Montenegro to have independent, sovereign international legal status like
other states. Denial of equal position and freely expressed will of citizens of Montenegro would make the majority of its
citizens feel deceived and distrustful, and therefore it could become a base of instability in inter-ethnic relations and in
whole. It would especially negatively affect relations with Serbia, in which earlier policy of aspirations towards
Montenegro, denial of its national existence and hegemony would reappear.  

Montenegro has in no way contributed to the unfavorable development in Kosovo. It was not and it cannot be used as an
excuse for their strive for independence. Furthermore, stability and development of Bosnia-Herzegovina, apart from
internal development, depend on policy and acts of leadership of Serbia and Croatia as well, and not on the decision of
the Montenegrin citizens. The policy of Montenegro towards national and religious communities could be a positive
example and base for cooperation in the region, and not an excuse to be kept as a hostage of someone else's mistakes
and lack of vision for solution of certain regional problems. 

For dialogue with all in Montenegro and with Serbia, for cooperation with the world

The Government of Montenegro is aware that a significant percent of its citizens is firmly determined to preserve certain
framework of common relations with Serbia. It was one of the reasons to initiate the presented model of the association of
two independent states with a series of common functions. In accordance with the provisions of the Constitution of
Montenegro, they will be allowed to choose the form of state order in Montenegro, that is, the community with Serbia, in
free, democratic and transparent procedure. The Parliament of Montenegro will schedule the date of the referendum,
based on the proposal of the President of the Republic, and in accordance with the agreement of parties in Montenegro.
According to the provisions of the agreement, the referendum should be held within the period of one year.  Prior to that,
the Parliament of Montenegro will discuss the provisions of the Referendum Law in order to create conditions for the
participation of all political parties, i.e. the widest expression of the will of citizens regarding the future form of their state. 

The decision of state-legal status of Montenegro could only be made by the citizens of Montenegro in a referendum that
will be organized in accordance with the democratic standards of Europe. Whatever the citizens decide, the state
authorities of Montenegro have the obligation to respect and conduct their decision. Should citizens decide in favor of
independence, the state authorities would have to respect such a decision and act accordingly. 

The Government of Montenegro has already launched an initiative for talks with the Government of Serbia and other
responsible political factors in order to make an effort to find a solution that is most suitable for both states and their
citizens, in the interest of peace, stability and development of Montenegro and Serbia and region as a whole. 

Montenegro is determined to continue peaceful process and negotiate in good faith. It will respect UN Charter, Universal
Declarations on human rights and obligations envisaged by Helsinki Final Act, as well as Paris Charter and all other
international instruments that guarantee human rights and freedoms, the rule of law and democracy. By its Constitution and
appropriate laws, it guarantees rights of ethnic and national communities and minorities in accordance with the obligations
undertaken within CSCE. It also accepts all the provisions contained in Draft Convention of the Council of Europe,
especially those in Chapter II on human rights and rights of national and ethnic groups. Montenegro will respect the
inviolability of frontiers, which can only be changed peacefully and by mutual consent. It accepts all relevant obligations
regarding disarmament and nuclear non-proliferation, as well as security and stability of the region. It also accepts an
obligation to resolve all issues in relation to state succession and regional disputes by mutual consent including arbitration
when needed.  

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