Montenegro is a tiny Balkan country with rugged mountains, medieval villages and a narrow strip of beaches along its Adriatic coastline.
The place is a hidden treasure, located roughly opposite the sea from Bari, Italy, and the ferry ride takes about 10 hours, if you are interested in an all night party on the ship.
Famous as the most relaxed and chilled Balkan country, it is a touristy place even though the traveling Germans don’t come here much, you hear some English around, but the huge majority of visitors are Russians.
There are some splendid hotels, especially in Budva, with prices going up to a grand per night, and that’s in Euros, the currency they use here, even though they are not a part of the EU.
Accordingly, the properties are pricey, certainly not for salaried employees from Mother Russia. Whoever is buying them is getting capital out and is permitted to do so. Some 6000 Russians are permanent residents in Montenegro
Accumulated Russian investment reached $1.3 billion in 2016, and this in a sparsely populated country of about 600 thousand, which makes Montenegro’s foreign investment per capita the highest in Europe.
Sign of new times, in my view.
It is clear that what happened in the world in the last 10 years shows how everything works together and is interconnected. The financial crisis of 2008 slowed down the buying power of Europe and US from China, which then weakened so much that they appointed a dictator for life (Xi). Note that strong countries don’t need dictators; they can rely on their political system.
As Chinese demand for raw materials and energy slumped, it destabilized Russia and Saudi Arabia, which is now encircled by Shia countries, led by Iran and has appointed a 34 year old prince with the task to manage. One of his first moves was to gather the rich Arabs under house arrest in a Ritz hotel in Riyadh and shake them down for money. Guess that’s how business is done over there.
In Russia, Putin is still holding to power, but we don’t know what is going on inside the Kremlin and who is in the shadows. So Russia is the wild card.
What we know is that their budget is blown due to the collapse in energy prices.
There is one more domino that has yet to fall – as manufacturers weaken, the orders for industrial machinery drop.
Consider this recent piece of news from Bloomberg:
Thyssenkrupp AG, the steel giant and one the pillars of German economy, looks set to be kicked out of DAX, Germany’s main equity benchmark. The industrial conglomerate has halved its market value during the past twelve months and it is failing to fulfill index membership criteriaof the exchange.
Thyssenkrupp CEO wants to float the company’s elevator unit to generate cash needed to cover unfunded pension liabilities and fix its operations.
Thyssen’s problems demonstrate what ultra low interest rates do to the markets – overinvestment with cheap money and no returns enough to pay out pensions.
The Americans call it a double-whammy.
Montenegro, along with Serbia, has been for a long time in the Russian sphere of influence. The country lies in the region where there are always security challenges, but in stark contrast to, say, Poland, which is easier to conquer with it’s wide-open plains, Montenegro has rugged mountains where only some valleys can be taken, mountains bombed, but that’s it.
During the Balkan war in the 1990’s Montenegro joined Serbia in attacks on Dubrovnik, a city just north along the coast, in Croatia. Subsequently, it was bombed by the US forces flying out of Brindisi, but not as heavily as Serbia.
And you have to be careful in conversations with the locals (and people speak good English here) – you mention the wrong neighboring nation and its bound to send a chill going through the room.
Another problem is the terrible traffic along the coast. I was having a morning coffee on a patio watching a guy with a bag maneuvering between moving cars on a busy street. And it reminded me of a Kevin Hart stand up routine – “I was carrying a bag of chicken and got hit by a car”, he said. “But I never dropped the chicken. If they tell you that these KFC commercials don’t work – don’t believe it.”
Tom Kubiak is the author of The Traveler