Montenegro is closing in on European Union membership. Croatia’s experience suggests businesses have less time to prepare than they think.
It’s been a long old slog, but Montenegro does finally appear to be closing in on EU membership. This week, the EU’s member states agreed to start work on drafting Montenegro’s accession treaty, 14 years after the country opened accession negotiations. Podgorica has closed 14 (of 33) negotiation chapters, and its government believes that it could become a full EU member by the end of 2028. Any Accession Treaty must be approved by the European Commission, the European Council, and the European Parliament, before being ratified by all existing members. Whether all that can be done by 2028 is a moot point, but it does now seem certain that Montenegro, and not one of the other prospective members (such as Albania, Moldova, Serbia, or Ukraine) will become the next state to join the bloc.
What then, does that mean for businesses in the country of around 600,000 people?
Rather more than some of them reckon. Small countries joining the EU tend to find that the bulk of the adjustment happens years before the flag goes up outside the Berlaymont. Croatia, the last state to join (in 2013), watched its tourism receipts climb smartly, its borrowing costs fall, and 300,000 of its working-age citizens depart for Germany and Ireland. Small, tourism-dependent economies get the sweetest version of the bargain and the rawest one in the same decade.
Start with the euro, an oddly helpful legacy. Montenegro adopted the single currency unilaterally in 2002, when it was still in a shrinking union with Serbia. Brussels frowned, as Brussels generally does, but could hardly force a small Adriatic republic to mint its own notes purely to satisfy protocol. Two decades on, that status has turned into a time-saver. Croatia spent three years in ERM II before adopting the euro in 2023; useful fiscal discipline, but tedious for any Croatian firm with foreign-currency debt. Montenegrin companies will skip that stage. SEPA membership, since November 2024, already handles their cross-border invoicing as though they were inside the bloc.
A synthetic-control study of Croatia’s first decade inside the bloc put a useful number on tourism’s accession dividend: roughly three million extra overnight visitors a year by 2017, a 23 per cent uplift on the counterfactual. The mechanism is not mysterious. EU membership makes a country easier to package into European tour operators’ offerings. Montenegro, despite its size, already clocks 15 million overnight stays a year; Porto Montenegro and the Luštica Bay developments are ready to absorb more. The less glamorous side, such as staffing a hotel in Kotor in August, is where the trouble begins.
Wages are rising fast even before membership, thanks to ‘Europe Now‘, a wide-ranging economic reform programme, which nearly doubled the minimum wage between 2022 and 2024 (it now sits at 600 to 800 euros depending on qualification). Accession will accelerate the climb. Nominal wages in comparable economies have risen 20 to 30 per cent in the five to seven years around EU entry. For a country where tourism is 30 per cent of GDP and intensely labour-heavy, that is a margin problem. Croatia lost 300,000 working-age citizens to Germany and Ireland in its first decade inside the bloc. Applied proportionally, that would gut Montenegro’s professions entirely.
Paperwork
The EU’s acquis runs to more than 100,000 pages: food labelling, waste directives, data protection, the lot. A Eurochambres survey last year found compliance costs worried Montenegrin and Serbian companies more than market access. Certification is the dullest, costliest part; conformity-assessment bodies are multiplying, but finding specialist staff to run them is hard in a country this size. GDPR and the NIS2 cybersecurity directive are already partially transposed. A handful of Montenegrin technology firms have realised this makes them, briefly, the most compliance-ready suppliers in the Western Balkans, and are selling into the region on that basis.
Take tax enforcement. Montenegro’s headline rates on corporate and personal income are low by regional standards, and EU membership will not force them up. What it will force up is collection. The informal economy is thought to account for close to 30 per cent of GDP, and declared tax bases typically expand five to 10 per cent in the first five years after accession elsewhere in the region. For the family-run restaurants, construction outfits and apartment-rental operators that comprise much of the real Montenegrin economy, this is a cultural shift more than a legal one. Public procurement rules, which require open tenders, will pinch in the same direction.
Then there is the money. Croatia absorbed 12.1 billion euros in EU funds over its first decade, though absorption rates sat below 60 per cent at one point before climbing to 72 per cent by 2022. The half-finished Bar-Boljare motorway, connecting the coast to Serbia, would welcome a pipeline of the sort that paid for Croatia’s Pelješac bridge. Whether Montenegrin ministries can handle the administrative load is the honest question. The Montenegrin Employers Federation’s Business Agenda 2025, produced with the ILO, is refreshingly direct about the gaps: slow public administration, thin skills provision, patchy digital infrastructure. That it is a private-sector document, not a ministerial one, is telling.
The treaty could be signed in 2027 and ratified across 27 parliaments (with referenda in several) some time after. The following year, 2028, remains Podgorica’s stated target; Marta Kos, the EU’s enlargement commissioner, has been careful not to promise it. Either way, the work has started. Montenegrin firms of any scale already keep at least one eye on what Brussels expects: they supply Croatian or Italian partners who do. The rest will learn on the job, painfully, as other new entrants did.
Photo: Dreamstime.