Former Prime Minister, Current DPM of Montenegro – Igor Luksic

American Times with Prime Minister of Montenegro – Igor Luksic

A pragmatic approach to politics is too often limited to the Western world where contrasting notions of a country’s trajectory is the very definition of democracy. When you juxtapose the West versus the Rest you realize the fundamentals of this idea are true; which is to say, the Rest tend to struggle to be pragmatic in their approach to economic development due to historic mindsets. For this reason we were thrilled to meet a man who views the success of his country not only though FDI influx within a relatively narrow series of sectors but through internal human capital development starting at the earliest ages. Culture and tradition is indeed important to one’s identity but should economic development be at the behest of traditional mindsets? Prime Minister (PM) of Montenegro, Mr. Igor Luksic, doesn’t think so.

During our sit down with the amiable and oft realistic, a political mindset seemingly lost on many of today’s leaders, we recognized immediately this wasn’t an interview about what the country can offer via a spoken syllabus but rather a narrative on what’s today’s initiatives mean for tomorrows reality. Breathing life into a project which requires fresh perspectives as a prerequisite to our very viability.   

When discussing with Mr. Luksic what can transform Montenegro from an emerging nation to middle-income status we paid close attention to the country’s near term NATO accession and more mid-long term EU progress as major contributing factors with the PM noting that, “To tie NATO into an economic development tool we must realize that an immediate precondition for investors is stability through security and rule of law. We think this is particularly important factor for American investors that seek more security, guarantees and so forth, than maybe investors from other nations”. Mr. Luksic goes on to further the correlation between NATO accession and EU membership, a seemingly total different entity, “It is not by chance that most Eastern European EU nations were first NATO members or joined at the same time. The NATO accession process has the ability to streamline internal policy which can be necessary for EU accession process as they are rooted in the same set of values.”

It appears that either one of these accession opportunities represent components of the larger picture where each one is a milestone, a path to prosperity and confidence indicator to Western investors. When you have the buy-in from respected or at least well known entities one tends to benefits from association and association sells. From this perspective the country is certainly on to something that could, as the Premier puts it, “inspire other regional countries to join as well.” But of course, they are looking out for their best interests first and foremost, and with this comes the sometimes brutal task of asking yourself hard questions and recognizing your flaws. It takes a real leader to recognize ones flaws but it takes an even braver one to present solutions. PM Luksic does just that when he describes what’s needed for the long-term prosperity of his beloved nation of 600,000 residents. With that, sometimes words are best left written as they were spoken:

 

…the largest obstacle as a society we need to overcome is what I like to call the genetics of society. I think we need to engage in dialogue about how policy should be made. Not only for the next year or two or the for the life of the current parliament, but rather a long term, extended dialogue about policies that should bring about the vision for Montenegro in 2030. This is something that should just be done.

 

Aside from the associative value that international organizational membership will bring to investors, let us take a look into the more detailed aspects of what it will take to see your people and economy thrive in the long term. What does this require from your vantage point as current Prime Minister?

I don’t believe in the narrow logic of focusing on one or two sectors. I think a good entrepreneur can find opportunity in any field of our economy. However, that “good” entrepreneur is what we need from our own people. The goal is to awaken that approach within our people. They should leave the notion that a paternalistic State should provide any services or things they need from cradle to retirement. We need to discard this notion in favor of more entrepreneurship, more innovations and generally, a more proactive approach. Given the globalized settings of the new world I wholeheartedly believe that this is the only way forward. As such, I think interaction of our people with those from innovative countries is quite important for transfer of knowledge perspective but also their can-do attitude.

Indeed we noticed prior to our meeting that you are an advocate for entrepreneurship and your point is well taken regarding what the extra value that Western investment brings from a transfer of knowledge perspective. What are some things that can be accomplished internally to help develop then nurture that desired mindset?

As insinuated before, the largest obstacle as a society we need to overcome is what I like to call the genetics of society. I think we need to engage in dialogue about how policy should be made. Not only for the next year or two or the for the life of the current parliament, but rather a long term, extended dialogue about policies that should bring about the vision for Montenegro in 2030. This is something that should just be done. Of course politicians in general can always find issues for a quarrel but when there are certain policies anchored within the system it makes reaching these goals much easier. For example, our integration agenda is obviously a major anchor for development but it cannot be the only one, we can and should pursue this agenda as well.

Recently we had a special government meeting where a lot of time was spent on structural reforms. We looked at the pension system, mechanisms for introducing public-private partnerships (PPP) within the health and education system, the latter of which needs continuous overhaul, as well as labor market discussions. In all these fields we need to make continuous strides congruent with today’s world and speed.

 

They [Montenegrins] should leave the notion that a paternalistic State should provide any services or things they need from cradle to retirement. We need to discard this notion in favor of more entrepreneurship, more innovations and generally, a more proactive approach.

 

What specifically are you considering when you mention the healthcare system?

When looking at the health PPP framework we are recognizing the need to motivate and incentivize specialists and general practitioners to remain a part of the private sector while providing special services for the public sector. The same can be said for the education system.

Educating the youth for a dynamic new world is of paramount importance for any nation. In the case on Montenegro they will also be the people who you can mold into the strong entrepreneurs mentioned early. Let’s elaborate on this for a moment.

A recent survey suggests that if there are strong curricula at kindergarten that it serves to expand the total cognitive capability of the child for life. So, we need to recognize that a high-quality education at a very early age is paramount to our nation’s future success. We believe that this can certainly be obtained through not only our public educational system but through private schools and other educational services.

When we look at technology adaptation of our youth though it is interesting to see that between the ages of 15-24 our youth are at the same level of proficiency of their Western counterparts. With this we can see a strong basis for a private school to develop further these basic skills. With this notion I believe it will be only a matter of time before creativity will explode and it will be them that will push the system to change.

What are some challenges and solutions regarding the labor force and pension system?

We need to make sure our pension system is sustainable so we’ve raised the retirement age to 67, our labor market needs to be further liberalized so private firms can hire and fire as needed without much government intrusion. Our job as public officials should be to create a suitable environment which allows people to find new work.

All of this is structural. I speak of this at length because it is the most important factor for the long term competitiveness of an economy which in the end should also serves as a confidence factor for would-be investors.

Although we recognize and have begun discussions on things that need reform we need to be able to double task on the implementation, the anchoring side of things. With that said, we have made some very nice strides regarding the overall ease of doing business within our country and of course this is best illustrated by the World Bank report where we ranked number 90 in 2008 and today are ranked at 44. So that is a tremendous improvement but there is still a lot to be done.

What are some of the accomplishments you’re most proud of?

It’s more prudent to look at the broad picture of where we were and where we are today. When you look at the early 1990’s when Yugoslavia dissolved we were the poorest and least developed area that emerged. Today, according to various indicators we lag only Slovenia and Croatia in terms of development trajectory. Couple that with our ever increasing rankings from institutions like the World Bank, when we look at some key milestones such as WTO membership, NATO’s near-term accession and the integration process within the EU we should take pride in the fact that we are hitting some nice marks.

As such the biggest takeaway is our track record of dramatic changes that have occurred and the movements we are currently making; we are ever changing. What you see in Montenegro today is not what you will see next year or in 5 years, you will see a continuously better Montenegro. But as with any investment, the early entrant reaps the largest rewards.

Earlier you mentioned a true and serious entrepreneur can come and create opportunities. When you consider this notion sometimes there may be some creative and therefore disruptive investments occurring that require a change in archaic legislation that may need amending. How open is the government in hearing the needs of the business community and making necessary changes based on those needs?

Absolutely, I think the government has been quite open to listening to the business community. I think if we close ourselves off and think that we are always right than we are wrong. We need to have a constant ear open to the business community. For example, some of the tourism projects could not have been made a reality if we did not listen to investors. Importantly, projects like Porto Montenegro help develop our image, not only as a rising yacht docking and resort coast but as a serious investment destination. People throughout the world have learned about that project which in return creates attention for Montenegro.

Personal Message:

I don’t think you’ll find a lot of places in the world where you can do good business and enjoy your stay. You are in Europe but in a country that boasts an emerging atmosphere where strong returns are available and a beautiful Mediterranean climate in which to do it. I think as time moves on investors anywhere will not only consider where profits can be made but where they can live a nice life, whether it’s for the investor himself or an employer enticing his people to take an assignment.

Tags: