Greece Should Stay in Euro Even in Default, Montenegro Says
Greece should fight to stay in the euro region even if it defaults, said Montenegro’s Igor Luksic, prime minister of the former Yugoslav nation that unilaterally adopted the single currency almost a decade ago.
“It’s even better to go through a sort of a default or whatever that will be a managed one rather than going back to the drachma,” Luksic, 35, said in a telephone interview today from the capital, Podgorica. “The true long-term response is to keep the euro rather than leave the euro.”
Montenegro, with a population of about 662,000, became independent in 2006. It shifted to the euro when the currency was introduced in 2002, having previously used the Deutsche mark. Along with Kosovo and Andorra, it uses the currency without a formal agreement, according to the European Central Bank. Montenegro is not a member of the 27-nation European Union.
“It’s always better to keep yourself linked to a strong currency” because it forces a country to “confront all the problems” including the black economy, selling state assets and structural changes, he said.
Luksic said that if Greece were to default and continued to use the euro, it should be possible for the country to rejoin the single currency as a full member after revamping its economy. “I believe so. I don’t see any reason why they can’t,” he said.
EU leaders won’t let the sovereign-debt crisis damage the euro, Luksic said.
‘Optimistic’ on Euro
“I’m quite optimistic about the euro’s survival,” he said. “I don’t think there is a doom-day about the euro itself. The disadvantages of such a decision would be so enormous compared to the advantages the euro has.”
Montenegro hopes to begin EU membership talks next year and join the bloc by “the end of this decade,” Luksic said.
Montenegro was officially named a candidate for EU membership in December. The country is aiming to follow former Yugoslav partners Slovenia, which joined the bloc in 2004 and adopted the euro in 2007, and Croatia, which has ended entry talks and targets becoming an EU member in 2013.
Montenegro’s banking industry is still recovering from the global recession, the International Monetary Fund said in a May report. The “euroization” of the banking sector “limits the ability of the central bank to provide liquidity support to lenders, said the IMF, which called for the application of “conservative” capital and liquidity requirements.
The country’s biggest lender is Crnogorska komercijalna banka AD, owned by Hungary’s OTP Bank, followed by NLB Montenegro banka AD, a unit of Slovenia’s biggest bank Nova Ljubljanska banka d.d. and Hypo Alpe-Adria Bank International of Austria, according to data from Montenegro’s central bank.
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