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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