Montenegro
Montenegro shows phase-transitions: EU target 2028 (3 chapters closed Dec 2024) vs. $944M China highway debt (1/4 of total debt). Tourism is keystone at 30% GDP. Debt down from 105% to 61.3% (2020-24).
Montenegro exists because mountains exist. The name itself—Crna Gora, 'Black Mountain'—describes the terrain that sheltered a tiny Slavic principality from Ottoman conquest for centuries while empires rose and fell around it. What the geography preserved, modern debt may now constrain.
In the 9th century, three principalities emerged on Montenegro's territory: Duklja, Travunia, and part of Rascia. By 1042, Stefan Vojislav led a revolt that established an independent Duklja under the Vojislavljević dynasty. Serbian rule absorbed the region by the late 12th century; after Serbia fell to the Ottomans at Kosovo in 1389, local nobles—the Balšić and then the Crnojević families—maintained a shrinking rump state in the mountains. The Venetians controlled the coast (including Kotor) from 1420 to 1797; the Ottomans nominally controlled the interior from 1496, though Montenegro's inaccessible terrain allowed a unique autonomy denied to other Balkan peoples. From 1516 to 1852, prince-bishops of the Petrović-Njegoš dynasty ruled from Cetinje, blending religious and secular authority in defiance of Istanbul.
The Congress of Berlin in 1878 finally recognized Montenegrin independence—the same summit that created modern Serbia and Bulgaria. In 1910, Montenegro became a kingdom. World War I ended that kingdom; in 1918, the Podgorica Assembly voted for unification with Serbia into what became Yugoslavia. For 83 years, Montenegro's identity submerged into the Yugoslav federation—first under the Kingdom, then Tito's socialist republic, finally the rump state with Serbia after 1992. NATO bombing in 1999 and Serbia's international isolation finally prompted divorce. A 2006 independence referendum passed with 55.5%—barely above the EU-required 55% threshold—and Montenegro peacefully separated. Since independence, the country has pursued EU membership while borrowing heavily. In 2014, Montenegro took a $944 million loan from China Exim Bank for the Bar-Boljare highway—a project two feasibility studies declared financially infeasible. That debt now represents roughly one-quarter of total national debt, with contract terms allowing Chinese asset access upon default.
Today, tourism operates as the economy's keystone, generating roughly 30% of GDP through the spectacular Adriatic coastline from Kotor to Ulcinj. Montenegro targets EU membership by 2028, having received a positive Interim Benchmark Accession Report and closed three additional negotiation chapters in December 2024. The government reduced public debt from 105% of GDP in 2020 to 61.3% in 2024. In January 2024, Montenegro renegotiated the China loan's currency hedging to manage exchange rate risk. GDP growth holds at 3.2% for 2025, though inflation persists at 4%. The population is just 620,000—smaller than Louisville, Kentucky.
By 2026, Montenegro tests whether a microstate can complete EU accession while managing Chinese debt overhang. Success requires closing remaining chapters while tourism revenues service the highway loan. Like the mountains that protected it for centuries, Montenegro's terrain now constrains its options.