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Montenegrin President Djukanovic Defends Record, Offshore Holdings

Montenegrin President Milo Djukanovic acknowledged his country's need for reforms to tackle a "deficit in the rule of law" that contributes to shortcomings in democratic and economic development in his and other Western Balkan states.
Montenegrin President Milo Djukanovic acknowledged his country's need for reforms to tackle a "deficit in the rule of law" that contributes to shortcomings in democratic and economic development in his and other Western Balkan states.

The president of Montenegro, Milo Djukanovic, has downplayed past European criticism but acknowledged a "deficit in the rule of law" in the country he has led for most of the past three decades, and defended his use of offshore companies as part of "my choice where I will do business."

In a wide-ranging interview with RFE/RL's Balkan Service, the 60-year-old head of state also predicted his Adriatic coast country of 620,000 will be the European Union's next new member.

Djukanovic: Nothing Wrong With Doing Business Where Taxes Are Lower
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He also chided the president of neighboring Serbia for an anti-European policy of offering patronage to the region's ethnic Serbs.

Djukanovic also de-emphasized his role in a contentious law on religion that arguably cost his long-ruling party of communist successors its majority to a pro-Serbian opposition in 2020 and ushered in two years of government instability.

"My position is that all the countries of the Western Balkans should have their place in the EU, but that will be reached after unconditionally realized, high-quality, comprehensive social reforms," Djukanovic said. "So I don't believe in shortcuts on the path to the EU."

He expressed optimism about Montenegro's ability to accomplish those goals and what is widely regarded as its front-runner status for any eventual EU enlargement.

"I think that the message from Montenegro has been clear so far: We are ready to meet the conditions, above all in the area of the rule of law, that have become a key point of the negotiation agenda with the EU," he said. "After that, we want to achieve membership in the EU, and we think that based on what has been done so far, Montenegro could be the first next member of the EU."

EU enlargement has been on hold since Croatia's entry in 2013 and was dogged for years by differences among member states even before Brexit, the United Kingdom's withdrawal from the union, further polarized arguments.

The debate has picked up recently with accelerated membership bids by Ukraine, Moldova, and Georgia since Russia's invasion of Ukraine in February reset the political and security calculus on enlargement, including in the Western Balkans.

Djukanovic acknowledged his country's need for reforms to tackle a "deficit in the rule of law" that contributes to shortcomings in democratic and economic development in his and other Western Balkan states.

He cited a desire among the region's "reform governments" to make meaningful changes. "I think it is very important to emphasize the political readiness of the reform governments in our region to eliminate these deficits and to achieve membership in the EU on the basis of the implemented reforms -- that is, on merit," Djukanovic said.

But he also blamed some of the harshest EU assessments of Montenegro's progress toward membership on "geopolitics" within the bloc and some members' reluctance to enlarge. He declined to point any fingers at specific opponents of enlargement.

'Clear Elements Of A Captive State'

Djukanovic has led Montenegro as prime minister or president with brief interruptions since 1991, including through a bitterly divisive split from Serbia after a referendum in 2006.

The European Commission said in a strategy document in 2018 that the countries of the Western Balkans -- shorthand for Albania, Bosnia-Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia -- show "clear elements of a captive state" that include links to organized crime and corruption throughout government.

Speaking to RFE/RL, Djukanovic dismissed that as "one view" and rejected suggestions of ongoing "state capture." He criticized "very one-sided and superficial evaluations" by outsiders who presumed that "the only important thing is to change the government and everything will get better."

"Such sharp-edged assessments in that period were, in my view, insufficiently grounded in reality not only in Montenegro but in the Western Balkans [and] the consequence of EU geopolitics that were very much concerned with -- and I'm not even sure that it has been decided even today -- what the future of the countries of the Western Balkans should be, whether EU membership or not," he said.

He cited Montenegro's membership in NATO, completed in 2017, as acknowledgement of how far the country had come since the breakup of Yugoslavia in the early 1990s and independence in 2006.

"You don't think that blind people live in NATO, that admission to the Euro-Atlantic alliance is decided by people who don't follow what's happening in the Western Balkans region with the same sensitivity as people from the EU?" he said.

Offshore Holdings? 'Yes.'

Some of the most persistent criticisms of Montenegro's leadership throughout Djukanovic's tenures as prime minister and president have been its failure to tackle organized crime and corruption.

The disclosure as part of the "Pandora Papers" leak of millions of documents in 2021 that Djukanovic and his son were beneficiaries of offshore trusts in the British Virgin Islands furthered suspicions of high-level involvement in wrongdoing.

While not illegal, such secret accounts are sometimes used to hide illicit funds and avoid taxation at home. Djukanovic has previously stated that he established his trust when he was not in public office but engaging in business.

In response to RFE/RL's question as to whether the Montenegrin head of state should be investing in such tax havens, Djukanovic said simply, "Yes."

"I think that my obligations while I am the president of the country are to work in the interest of that country and to unconditionally respect the constitutional and legal system of that country," he said. "The moment I finish my state function, and you will allow that I have given my 30 years to state functions in Montenegro, and when I decide to do business, it is my choice where I will do business."

Djukanovic said he had registered Montenegrin companies whose management rights are currently transferred to others while he holds state office and stressed that business outside Montenegro "is definitely not illegal" and there's nothing immoral about pursuing it "where there are lower taxes."

"I have devoted a good part of my life to government affairs," he said. "When I try to get involved in business activities, I look for the most favorable environment where I can get involved. I repeat to you that it is prejudice when we talk about offshore business like illegal business."

He said Montenegrin officials' record in combating organized crime, including clans involved in drug trafficking, should not be underestimated despite a decade of related violence that has killed at least 170 people in Montenegro and Serbia but produced just 18 prosecutions.

"This is a problem with which the entire European security system is struggling," he said, adding that "the state is always stronger than any crime" and international cooperation is helping improve the situation with every passing week.

"It is not easy for a small country like Montenegro to deal with this problem outside the context of the global struggle," Djukanovic said.

Church Politics

Djukanovic's Democratic Party of Socialists (DPS) had ruled since 1991 but was voted out of power in 2020 amid opposition to a new law widely seen as targeting the assets and influence of the Serbian Orthodox Church in Montenegro.

Subsequent governments led by pro-Serbian parties and social liberals have largely failed to introduce deep reforms, and Prime Minister Dritan Abazovic lost a no-confidence vote last month that is likely to result in new elections.

Abazovic's negotiation of a "basic document" on state relations with the Serbian Orthodox Church was a major factor in his coalition's downfall.

That text was driven in part by Abazovic and the Serbian church in Belgrade's desire to reboot following Djukanovic and his DPS party's willingness to force the 2019 law on religion through parliament over an opposition boycott.

Djukanovic downplayed his role in the passage of the law two years ago, telling RFE/RL that he had "retreated to the background to manage from the shadows" at the time.

He said it was "simply impossible" to regulate such a crucial area of society through the 50-year-old, Yugoslav-era legislation that preceded it. "I thought that it was the last moment to pass that law," Djukanovic said.

Serbian church representatives were among the most active organizers of street protests to oppose the 2019 law and demand the DPS's ouster in the August 2020 elections, and Serbian nationalism appeared to crest as votes were tallied showing the pro-Serbian opposition had enough votes to form the next government.

Some of the tensions have spilled over into relations between Podgorica and Belgrade, who have long bickered over questions of ethno-nationalism and Montenegrin nationhood stemming from shared history, religion, and language.

Around one-third of Montenegrin citizens regard themselves as Serbs, and more than half the country worships at services administered by a local arm of the Serbian Orthodox Church, whose openly political involvement in Montenegrin affairs was heavily criticized during the independence drive of the mid-2000s.

Djukanovic said his cooperation with Serbian President Aleksandar Vucic "has been greatly reduced in recent years due to the differences in policies personified by Mr. Vucic and me."

He suggested he has "doubts" about Vucic's pro-European ambitions.

"If someone promotes a policy where the state of Serbia would appear as a patron over Serbs in other countries, that is not European policy," Djukanovic said. "That policy in the '90s, you remember, led us to war."

Written by Andy Heil based on an interview conducted by Milos Teodorovic of RFE/RL's Balkan Service

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