The Government of Montenegro has concluded an Agreement on Cooperation in the Field of Tourism and Real Estate Development with the Government of the United Arab Emirates (UAE). Mashala!
We can analyze the agreement from three (and probably more) important aspects.
1. Constitutionality
Laws may suspend some other laws, if there are reasons and interests for doing so, but the Constitution of Montenegro, or Article 140, paragraph 3, cannot be suspended:
"It is prohibited to distort and restrict free competition and to encourage an unequal, monopolistic or dominant position in the market," which this agreement undoubtedly does.
2. Obligations and rights
Our Government HEROICALLY accepted to provide land "on the edge of the sea" with an area of about 20 million m2 (media data that no one has denied) without a public tender and lease it to the investor for 90 years, build the necessary, very expensive infrastructure, and provide other important prerequisites for the "Entity" - the Investor to implement the Project without hindrance. Failure to do so means paying enormous damages to the Investor.
Once we provide all this, the UAE Government will have a somewhat easier job of "ENCOURAGING the selected Entity to submit a financial feasibility study" (Article 3, paragraph 2 of the Agreement), with a firm promise that the UAE "will not be subject to any dispute resolution mechanisms provided for in the contracts, programs and agreements concluded between the Entity and the Government of Montenegro".
Montenegro's obligation is clear, indisputable and collectable against all assets and property, and any dispute would only increase that obligation for interest and court costs.
The UAE Government has distanced itself from any disputes between the Government of Montenegro and the Investor with the Agreement, and the Investor does not offer (nor does anyone ask for) any tangible/collectible guarantees for the fulfillment of its obligations.
3. Economic interest
The Ministry of Finance, in its Opinion on the Proposal for the Law on the Adoption of the Agreement, indicated that the implementation of that law will require additional allocations from the budget of Montenegro, which were not planned in the Budget for 2025, nor in the Fiscal Strategy for the period 2024–2027.
The necessary financial resources will be determined after the location is selected, and the location will be selected by the Investor. That is, when Montenegro's obligation is definitive, regardless of the amount.
We have some parameters, at the level published in the media, for two localities:
a. Big beach
The necessary infrastructure, whatever that means, would cost 20 billion euros and would have to be built by Montenegro. The planned land area for the Project is 20 million m2, of which 1/3 is privately owned, which would have to be expropriated by the State.
Montenegro's financial obligation, excluding the value of the land it owns, would amount to 25 billion euros, which is almost 9 times more than the original revenues of the 2025 Budget. Montenegro does not have these funds, it would have to borrow for that amount (if someone were to give it a loan or buy back bonds), or 40 thousand euros "per capita".
b.
I would like to remind you that 12 years ago, the "Buljarica" Project was in the phase of a Master Plan and the selection of the best bidder. The plan was to build a residential complex for 120–000 residents (permanent and tourist), with a land area of 150 million m000, 18 thousand apartments and 2 villas, and the land would be leased for 42 years. All similar to what is happening now for Velika Plaza.
The Master Plan for the Development of Tourism in Montenegro 2001–2020 predominantly planned the construction of hotel capacities, with an economic goal of 2,9 billion euros in annual revenue at the end of the planning period. This plan was abandoned long ago and the construction of “mixed-use” settlements, i.e. apartments for sale, became dominant. The result is excessive and unplanned development, without adequate infrastructure, and today we are not even half of those planned goals and have only just reached the parameters from 1989.
The announced investor has publicly announced that he is interested in building and selling several tens of thousands of apartments on the coast, which, according to previous practice, is the fastest and safest way for him to return and multiply the invested capital.
There is no public data on how much investors earn from building and selling apartments in condos and similar hotels by the sea.
However, I will cite official data from Bar, where an investor was allowed to build 2023 apartments as part of a condo hotel and sell them, according to the DUP adopted in 600. As it is written in the text of the DUP, the investor's earnings will be 789 million euros.
The "South" project plans to build and sell several tens of thousands of apartments, so do the math.
The final decision on the Government Agreement will be made by the Parliament of Montenegro, without a Spatial Plan (which is a constitutional obligation), without a specification of the necessary infrastructure, without data on financial resources, at the expense of the Budget, without a Fiscal Strategy for the next ten years, how long the implementation of the Project will last, and without any calculation of what and how much benefit Montenegro will receive from this agreement.
Therefore, it is necessary to first conduct a Feasibility Study, and then make decisions at the Assembly.
Bonus video:
