The Minister of Economic Development approved a US Agency for International Development (USAID) memorandum this week that will assist Montenegro in fulfilling its obligations to a 2005 energy treaty known loosely as the Athens Memorandum.

The Athens Memorandum is a non-binding agreement signed by the European Union (EU) and eight Balkan countries – Albania, Bosnia, Bulgaria, Croatia, Macedonia, Montenegro, Romania and Serbia – in an attempt to form a South East European electricity market that meets the criteria of EU environmental standards. Eventually the regional market will become part of Europe’s existing common market.

The amount of money allotted by USAID to fund the program is unknown

at this time.

"In our communications with USAID we have expressed our interest in cooperating on these projects. These are primarily regulatory activities related to gas," said Gvozdenovic.

"An agreement on the construction of Adriatic-Ionic gas pipeline has already been signed with Albania and Croatia. The measures were taken in order to ensure better quality in the storage of gas in Montenegro," said Gvozdenovic.

The 400-kilometer Adriatic-Ionic pipeline is a work-in-progress that is expected to be completed in 2011. The bulk of the pipeline will run nearly 130 kilometers from Ploce to the border of Croatia and Montenegro. That stretch of the pipeline alone will cost approximately 80 M euros. It is estimated that the entire project will cost close to 240 M euros.

"The USAID technical assistance should support the fulfillment of the obligations arising from the Athens Agreement taken over by Montenegro. That is also a step forward in the fulfillment of Montenegro's obligations in the EU accession process, cooperation with

the regional partners and international community," said Joe Taggart, head of USAID in Montenegro.

Montenegro took its first step towards becoming a member of the EU last year by signing a rapprochement deal that allowed Montenegrin products to be sold on the EU market. However, the country is yet to be recognized as a member state or even an official candidate.

To gain membership a country must meet the standards of the Copenhagen criteria, which says a state must have a stable democracy, a functioning economy and agree with the terms and conditions of the EU.

Headquartered in Washington D.C., USAID provides economic, development and humanitarian assistance around the world in support of the foreign policy goals of the United States. USAID gave $6 million worth of assistance to Montenegro last year, down from $16 million in 2005.

Montenegro’s economic growth in the past several years has largely been driven by its tourism industry. Tourism revenues climbed to 480 M euros last year – more than one-fifth of Montenegro’s total economic activity.

And this year’s statistics indicate that tourism is as big as ever. 

According to MONSTAT, the official statistical office of Montenegro headquartered in Podgorica, approximately 36,412 tourists filtered through the country this past April, up from about 34,734 last year. 

All in all, Montenegro is expecting 1.3 million tourists before the end of the year – a 13% increase over last year.  

But despite the upswing in tourism some posh hotels have unexpectedly high vacancy rates. High prices are suspected to be the cause, forcing tourists to find less expensive alternatives. 

“The prices of the Queen of Montenegro hotel in Budva have increased by 15% compared to last year, as we offer better services this year,” said Dragan Ivancevic, the company’s director. However, the move seems to have backfired and due to lackluster attendance the hotel does not plan to increase its prices next season.

According to Ivancevic, the ongoing construction along the coast, which is snarling traffic and disrupting the tranquility of the area, is primarily to blame for the lack of patrons. Worse still, the hotel’s investors are troubled, “We have a problem with partners who lost confidence in us because of insufficient preparation for the season,” said Ivancevic.

The government is also concerned about the balancing act that must be performed in order to continue to build upon Montenegro’s tourism boom. “We have to be very careful with the price-quality ratio,” said Minister of Tourism and Environment Predrag Nenezic. The Minister elaborated that it is important for hospitality sector players to offer better quality goods and services without pricing themselves out of the market and scaring tourists to other destinations in the highly competitive global tourism industry. “This is what we’ve been trying hard to do. As a government, we are trying hard to create the right environment and regulatory framework, to plan, to open human capital, to promote the brand and to drive as much capita