Montenegrocan "catch-up" if it fulfils the relevant criteria. This depends on how seriously it addresses the necessary reforms and obtains results on the ground. Montenegro should now focus on strengthening its capacity to implement the Stabilisation and Association Agreement which is under negotiation, but also promote in parallel the overall reform agenda. Montenegro should also complete the establishment of the legal and institutional set-up for an independent country following its independence in June 2006.

The SAA is an association agreement which, against the background of Montenegro's status as a potential EU candidate, aims at supporting the country's efforts to integrate into the European political and economic mainstream.

Besides the main objective, to support Montenegro's way towards further EU integration, the agreement establishes a number of advantages for Montenegrin nationals on the EU's internal market. Furthermore the agreement contributes to the establishment of a stable and predictable legal environment for potential EU investors.

The Stabilisation and Association Agreement (SAA), which is under negotiation, is the first comprehensive Agreement between the EU and Montenegro and covers areas such as:

• Political dialogue;
• Regional cooperation;
• Eventually, the free movement of goods and at a later date, to a certain extent, the other freedoms of the EU internal market; i.e. free movement of services, capital and workers. After transitional periods, a free trade area will be created; the trade provisions of the future SAA are likely to be asymmetrically in favour of Montenegro. With a few exceptions, this means that the EU will grant unlimited duty free access to the market of the enlarged Union for all products. On the Montenegrin side, tariffs for industrial products will also have to be phased out after a transitional period. Also tariffs for agricultural products should be reduced but may remain for a number of sensitive products;
• Approximation of Montenegrin legislation to the Community ‘acquis communautaire’, including precise rules in the fields of competition, intellectual property rights and public procurement.

All the countries in the region have a European perspective. Before moving to the stage of negotiating accession, Montenegro needs to demonstrate its capacity to fulfil obligations under the SAA and to continue implementing reforms before being granted the status of ‘candidate country’ and later potentially open accession negotiations.

In the next 3 years, community assistance to Montenegro will reach the level of 97.3 million EUR. Of this, 40 to 45% will be allocated to Montenegro’s socio-economic development. This will include programmes aimed at fighting poverty through, for instance, improving access to employment, developing the private sector and SMEs and providing vocational training. A substantial part of this assistance will also be allocated to the fight against corruption.

The EU’s financial assistance to Montenegro has up until now been provided through CARDS. CARDS assistance to the former State-Union of Serbia and Montenegro including Kosovo amounted to more than 2.5 billion EUR for the period 2000-2006. In 2005-2006, Montenegro received a total CARDS assistance of 46.5 million Euros. The last CARDS programmes are ongoing and the assistance will continue being dispersed. It will then gradually be replaced by the new Instrument for Pre-Accession Assistance (IPA) . In the next three years, IPA assistance to Montenegro will reach 97.3 million Euros; its main objective is to help the country to face the challenges of European integration, to implement the reforms needed to fulfil EU requirements and progress in the Stabilisation and Association Process as well as to lay the foundations for fulfilling the Copenhagen criteria for EU membership. Other financial assistance programmes exist; these include the ‘Community programs’ managed by line DGs which are specific programmes destined to regional initiatives such as joint projects between two countries. Another type of assistance is the multi-beneficiary IPA which also concerns several countries working together for a joint programme thus improving regional cooperation.