VZCZCXRO9617
RR RUEHBW RUEHPOD
DE RUEHPOD #0126/01 1020902
ZNR UUUUU ZZH
R 110902Z APR 08
FM AMEMBASSY PODGORICA
TO RUEHC/SECSTATE WASHDC 0747
INFO RUCPDOC/USDOC WASHINGTON DC
RUEHBW/AMEMBASSY BELGRADE 0336
RUEHLJ/AMEMBASSY LJUBLJANA 0005
RUEHVB/AMEMBASSY ZAGREB 0139
RUEHTI/AMEMBASSY TIRANA 0100
RUEHPOD/AMEMBASSY PODGORICA 0828

UNCLAS SECTION 01 OF 03 PODGORICA 000126 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
COMMERCE FOR DAS DYCK 
 
E.O. 12958: N/A 
TAGS: PREL ECON ETRD MW
SUBJECT: MONTENEGRO EAGER FOR U.S. BUSINESS 
 
 
SENSITIVE BUT UNCLASSIFIED 
 
¶1. (U) Summary: PM Djukanovic and other senior GOM officials 
assured visiting Commerce DAS Dyck April 4 of their eagerness to 
attract U.S. trade and investment.  They also described many 
billions of dollars worth of infrastructure and other investment 
opportunities coming available in the near future that could be 
of interest to U.S. companies.  Economy Minister Gvozdenovic 
reiterated his plans to lead a mission to the U.S. in May to 
attract U.S. business.   End Summary. 
 
 
 
Tourism Opportunities Abound 
 
----------------------------- 
 
¶2. (U) Tourism accounted for 22 percent of Montenegro's GDP in 
2007 and looks on track to continue or even expand in terms of 
importance for the overall economy in coming years.  Minister of 
Tourism and Environmental Protection Predrag Nenezic highlighted 
upcoming greenfield investment opportunities, including six 
locations on the coast -- Ada Bojana, Velika Plaza (Long Beach), 
Ostrvo cvijeca (the Island of Flowers), Valdanos and Kumbor 
(ex-military sites). The invitations for expression of interest 
have been announced and the official tenders will likely be 
released by mid-summer. Some of these projects will be enormous 
in scope, with Velika Plaza potentially involving an investment 
of over 10 billion.  Minister Nenezic highlighted the potential 
for ecotourism, noting that nearly 20 percent of the country is 
protected, including four national parks with a fifth to be 
created next year. 
 
 
 
Strong Focus on Infrastructure 
 
------------------------------ 
 
¶3. (SBU) GoM interlocutors, including the PM, also highlighted 
infrastructure projects, especially critical for the continued 
growth of the tourism sector. Among the first such priorities is 
a water supply project for coastal municipalities, which is 
already underway with World Bank and EBRD funding and should be 
completed by September 2009. 
 
 
 
¶4. (SBU) Reconstruction of the railway, currently very 
under-utilized, and improvement of the energy sector -- last 
year the energy deficit in Montenegro was roughly 40 percent -- 
also topped the list of upcoming projects. The GoM plans to 
develop the country's hydro potential (currently Montenegro uses 
just 17 percent of its potential), and improve the current 
thermo-electric plant in Pljevlja, including the construction of 
a second block in that plant. Energy sector development also 
will factor highly in Minister Gvozdenovic's investment trip to 
the U.S. next month, which is aimed at increasing interest among 
American businesses for investments in tourism and energy 
projects. (Note: The econ/commercial section has been working 
closely with the Ministry to support this effort. End note.) 
 
 
 
Progress, But Still No Consensus on Highway Project 
 
--------------------------------------------- -------- 
 
¶5. (SBU) The PM has made road improvements a priority. He is 
focused on two large highway projects -- the south to north 
Bar-Boljarai highway, which will ultimately provide a better 
road link to Belgrade, and the east-west Montenegrin segment of 
the Adriatic-Ionian Highway, which will connect Croatia and 
Albania through Montenegro. 
 
 
 
¶6. (SBU) DAS Dyck raised Bechtel's interest in participating in 
road infrastructure projects with the PM and with Transport 
Minister Lompar, emphasizing Bechtel's excellent track record 
with similar projects in the region. Lompar, a cautious 
decision-maker, told DAS Dyck that the GoM is looking for 
partner (s) for the highway project under a public-private 
partnership model. He noted that the GoM is in contact with 
Bechtel, but conceded that the company is not interested in the 
project under the PPP model. Then, in a considerable reversal 
 
PODGORICA 00000126  002 OF 003 
 
 
since we last spoke with him, Lompar said that if by October the 
PPP model looked unfeasible, the GoM would look at other 
options, including financing the project itself. 
 
 
 
¶7. (SBU) The PM said public expectations for this project are 
quite high. He recognized how difficult the project would be, 
but reiterated how serious he is about making progress. (Note: 
Early cost estimates predict this will be the most expensive per 
kilometer road project ever competed in Europe. End note.) He 
was positive about dealings with Bechtel and expressed 
understanding of the benefits of their proposed plan -- namely 
the speed with which they could begin construction. He told us 
GoM must choose a "highly reputable" partner by this summer; if 
not, he implied the GOM might consider a fast-track approach 
such as that proposed by Bechtel. 
 
 
 
Remaining Privatizations in 2008 
 
-------------------------------- 
 
¶8. (U) GoM interloctors told DAS Dyck that although Montenegro 
has privatized about 80 percent of its communist-era state-owned 
companies, a few of the largest remain. The Port of Bar, 
Institute Simo Milosevic (a health center in Igalo), and the 
national tobacco company should all be privatized in 2008. In 
some cases, the GoM is hoping to find strategic partners to 
avoid completely privatizing key companies, including Montenegro 
Airlines, probably the Airports (Podgorica and Tivat), and 
possibly the country's electricity company, EPCG. 
 
 
 
Continuing and Strengthening an Important Partnership 
 
--------------------------------------------- -------- 
 
¶9. (SBU) The PM Prime stressed that he sees the U.S. as a 
crucial strategic partner, encompassing much more than our 
already positive political relationship. He told us that he 
would like to see not only increased U.S. private sector 
investment, but one truly large project, significant enough that 
it could pave the way for more U.S. companies to begin doing 
business in Montenegro. 
 
 
 
¶10. (SBU) DPM Lazovic spoke positively of U.S. investment to 
date, particularly regarding those projects with which he has 
been personally involved. The GoM's strategic partnership with 
Microsoft has been very successful on both sides, he said. 
Beyond E-governance (a project already well underway), there 
will soon be a Microsoft academy established within the 
University of Montenegro.  Microsoft and the GoM will also open 
innovation centers around the country. (Note: Most Montenegrin 
schools lack computers, which means that most students get only 
limited IT exposure before joining the workforce. End note.) 
 
 
 
Comment 
 
------- 
 
¶11. (SBU) All meetings were positive and highlighted the GoM's 
strong desire for increased American investment.  Djukanovic -- 
known as a decision maker who gets things done -- told DAS Dyck 
that the country is realizing its potential and can shoot for 
some large, expensive, and previously unimaginable projects. 
Stressing the GoM's need for a "strategic partner" in the 
economic arena in order to continue the country's development, 
he enthusiastically lobbied for this strategic partner to be 
American. 
 
 
 
¶12. (SBU) Although individual ministries' agendas and competing 
egos sometimes get in the way, all GoM officials are bullish on 
economic prospects and seemed to be more on the same page about 
priorities than previously. With the "new" activist PM -- 
perhaps the source of this newly united economic message -- now 
at the helm, the next year or should be a busy economic period 
for the GoM, with numerous large greenfield tenders and the 
 
PODGORICA 00000126  003 OF 003 
 
 
remaining privatizations set to be announced. 
MOORE