Whilst I'd agree with most of this article, what it doesn't mention and which is something that does give rise to a bit of concern is the way that the Montenegrin government issued a number banking licences a couple of years ago, took all their fees but not many months later suddenly changed the law and withdrew the licences, effectively making those banks illegal.
If a government can do this, without recourse to any effective appeal, in one area, it has the potential to do so in others. Ian. http://iansawyer.com http://iansawyer.ath.cx The state has grown used to treating its taxpayers as a farmer treats his cows, keeping them in a field to be milked. Soon however, in cyberspace, the cows will have wings...... -- "The Sovereign Individual" ~~~~~~~~~~~~~ > -----Original Message----- > From: R.A. Hettinga [mailto:[EMAIL PROTECTED] > Sent: 19 January 2005 15:33 > To: osint@yahoogroups.com; [EMAIL PROTECTED]; > [EMAIL PROTECTED]; [EMAIL PROTECTED] > Subject: [N-B] "Microstate": A Mouse Roars > > > <http://online.wsj.com/article_print/0,,SB110608639391629354,00.html> > > The Wall Street Journal > > January 19, 2005 > > COMMENTARY > > > A Mouse Roars > > By VLADIMIR KAVARIC > January 19, 2005 > > > PODGORICA, Serbia and Montenegro -- Since the publication in > 1776 of "An > Inquiry Into the Nature and Causes of the Wealth of the > Nations" by Adam > Smith, the impact of free-market activity and international trade on > economic development is well-known. The experience of recent > decades shows > that the most successful countries with the highest growth > rates are those > that have implemented pro-market policies and allow freedom > in economic > affairs. That's why a transition economy like Montenegro sees its best > chance in openness, private initiative, international competition, and > economic freedom. > > Montenegro, the smallest state of the former Yugoslavia with > little more > than 600,000 inhabitants, presents its economic development > concept with > the slogan "Montenegro -- Microstate." Microstate in this > case has nothing > to do with the size of the population or the country. Rather, the > Montenegrin Microstate concept, developed by Professor > Veselin Vukotic, > assumes a minimal role for the state in the economy, low taxes, simple > business regulations, a stable institutional framework, and > the protection > of property rights. > > The first steps on this road have already been taken. > Montenegro adopted > the euro as the country's legal tender and thereby minimized > the inflation > taxation of its citizens. Without that step, the central bank in > Montenegro, a transitional economy with weak institutions, > would have been > under constant pressure to print money. > > The adoption of the new tax law will introduce one of the > lowest corporate > tax rates in Europe: a mere 9%. Capital-exchange restrictions > have been > eliminated and the repatriation of profits made by foreign > investors in > Montenegro is free. Interest rates are market determined and > more than 99% > of the prices are freely set. Treating foreign investors just > like domestic > ones, enjoying the same rights and legal protections, is intrinsic to > Montenegro's privatization, investment and business > regulations. In order > to encourage new business development, the required starting > capital for a > limited liability company has been reduced to ¤1. The > aluminum industry, > which accounts for 60% of total exports, is in the process of being > privatized. The tender for Telekom Crna Gore, the national fixed-line > operator, is also already underway. Tourism is another area where > Montenegro has enormous potential to expand. A majority of > hotels are still > state-owned but those are now all up for sale while the > country is open for > new investments. According to the World Tourism Organization, > Montenegro's > tourism industry will be one of the fastest growing in the world. > > The biggest obstacles to economic freedom at the moment are > high government > expenditures and the large number of administrative barriers. > A reform of > the judicial system would also significantly improve the > business ambience. > These barriers are, for the most part, part of the old > socialist legacy. > > As anywhere else in the world, the most vigorous objections to the > implementation of economic freedom in Montenegro come from > rent-seeking > groups, monopolists, and people that benefit from state > redistribution. > > But Montenegro also has to overcome a barrier that is peculiar to its > political situation. As one of the basic preconditions for signing the > Association and Stabilization Agreement with the EU, Brussels > insisted on > the "harmonization" of economic systems between Serbia and Montenegro. > Given the fact that Montenegro wants to develop an open and > service-oriented economy while Serbia wants to protect its > agriculture and > inherited heavy industries, the harmonization of these > systems is more than > just problematic. The most illustrative example is the > harmonization of > custom rates. Through this process, Montenegro was forced to > increase its > custom rates from an average 2.8% to 6%. Montenegro even had > to increase > custom rates for those products that it doesn't produce > itself, such as > sugar and textiles. > > There are, however, new encouraging developments in this > area. At a recent > conference in Maastricht, the EU proposed a more flexible > approach to the > accession process of Serbia and Montenegro, the so-called "dual track" > path. This dual track process demonstrates that the EU > recognizes that the > economic realities of Serbia and Montenegro are quite > different and that > they need to be taken into account. > > Accepting and acknowledging the economic realities of Serbia > and Montenegro > would present a new era in interstate relationships in the Balkans. > Montenegro would be given the opportunity to take full > responsibility for > its economic policy. At the same time, the international > community would > gain stable relations in the region based on respecting > mutual interests. > An open economy in Montenegro would add to the competitive > landscape of the > region. More competition (and not harmonization) will lead to > prosperity in > this part of Europe. > > Mr. Kavaric is deputy finance minister of Montenegro. > > -- > ----------------- > R. A. Hettinga <mailto: [EMAIL PROTECTED]> > The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> > 44 Farquhar Street, Boston, MA 02131 USA > "... however it may deserve respect for its usefulness and antiquity, > [predicting the end of the world] has not been found agreeable to > experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' >
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