As component II of the European Union's new financial Instrument for Pre-accession Assistance (IPA), this is the first cross-border programme on the border between the pre-accession countries of the Republic of Serbia and Republic of Montenegro, for the period 2007-2013..

It will be implemented under centralised management.

The total surface of the eligible area is 19,432 km2 with a total of 874,787 inhabitants. The total border length between the two countries is 203 km. The eligible area covers 10,063 km2 on the Serbian side (11 % of its territory), with 604,626 inhabitants, and 9,369 km2 on the Montenegrin side (68 % of its territory), with 270,161 inhabitants.

The actual border area is mainly mountainous and relatively inaccessible, with the economic centres located in the larger towns, at some distance from the border.

Demographic trends are negative, with declining and aging populations in the rural areas and migration and emigration of the working age population to towns and cities outside of the eligible area or abroad.

Economic activities are mainly based on the natural resources, and are concentrated on agriculture, forestry and mineral extraction. However, a significant textile industry is located on the Serbian side of the eligible area.

The transport infrastructure is in need of modernisation and rehabilitation, although the rail corridor between the port of Bar and Belgrade is the principle economic artery of the area. Podgorica international airport is the nearest to the area, some three hours' drive by road.

SME development is slow and requires additional incentives to become a significant economic factor of economic growth, particularly in rural areas.

There are significant opportunities for the development of the tourist sector in the area. On the Serbian side, there is a developed tourist base. However, in Montenegro, fewer and a less developed tourist infrastructure is present in spite of attractive scenery and natural resources. This is a consequence of the area's relatively remote position, inadequate transport infrastructure and lack of investments.

The eligible area's environment remains in good shape, despite some hot spots of pollution and the existing over-burdened waste disposal services that cannot cope with significant or uncontrolled growth in population or industrial activity. The mountains and forests, an important environmental asset of the area, are particularly vulnerable to unbalanced economic utilization, increases in air and water pollution initiated by unsustainable economic growth.

The main challenge for the area is to better utilize its considerable assets and resources to revitalise the economy. The objective of increasing regional co-operation is supported by the absence of language barriers and common historic heritage. Economic and social co-operation between the communities is an effective instrument of confidence building and overcoming conflicts from the past and the existence of new state borders. This is the core goal of the 2007-2013 cross-border programme's strategic approach.

The Programme is implemented by Republic of Serbia, Ministry of finance of and Montenegro Government, Secretariat for European integration.

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