Everything on sale in world's newest country

In embrace of foreign investors, Montenegro is selling its assets.

PODGORICA, Montenegro mdash; "For sale: A beer-drinking wolf!" The sign on a winding road leading from Montenegro's capital to the spectacular Adriatic Sea coastline illustrates how just about everything sports a price tag in the world's newest country.

Since 2001 almost 80 percent of Montenegro's state assets have been sold, mostly to foreigners. Two telecommunications companies, a shipyard, an aluminum factory, the only brewery, most of the hotels, capital markets, and the oil import and distribution industries are already in private hands. Outsiders, particularly from Britain, are snapping up prime seaside properties, sending real estate prices soaring.

The embrace of foreign investment comes as the tiny nation, which declared independence from Serbia in June, lobbies to join the European Union, a bid that Montenegrin officials discussed with the EU on Tuesday. "What is still left for grabs is some land on the coastline, the electric distribution company and the main seaport," said Nebojsa Medojevic, an economist who leads Montenegro's main opposition party. Montenegrin authorities say foreign capital is crucial to the country's economy, which suffered during wars and under sanctions in the 1990s.

The opposition, however, says the sell-off is enriching the ruling elite and leaving ordinary Montenegrins with little. Medojevic and other economists say that soon, Montenegro "will be owned" by a few Russian tycoons and English and Irish landlords. In the 1990s, Montenegro's clannish society had an economy that revolved almost entirely around the black markets of smuggled cigarettes and gasoline, which helped people survive international sanctions and the heavy-handed rule of former Yugoslav leader Slobodan Milosevic.

Critics of the way business was done say the government slapped relatively low "taxes" on smuggled goods and used one part to pay teachers, social workers and pensioners. The other part ended up in the pockets of government officials or their allies, making some of them millionaires. Medojevic said little has changed in the current "sales boom.

" "I call it a 'percentage' economy," Medojevic said. "You give me a nice percentage, and I'll give you a good price for the state property." Montenegrin leaders deny any wrongdoing and say the sell-off creates thousands of jobs as the economy, including the tourism industry, surges forward.

In one of the biggest privatizations, Norway's Telenor invested more than $114 million in one of the two previously state-owned telecommunications providers. Also, Austria's Hypo Alpe Adria Group spent $89 million on a new bank and a leasing company. "What this country needs is foreign capital," said Prime Minister Milo Djukanovic, defending his government's decision to sell assets and keep the state budget afloat.

Foreign investments in Montenegro grew from $221 million in 2001 to $485 million last year. Montenegro's investments per capita, $785 last year, are the third-highest in Europe after Estonia's and Czech Republic's, according to the latest government figures. The explosion in Montenegro's property market started in 2001, first with Russian buyers and then British and Irish.

During 2004 and 2005, many foreign property agencies sprung up on the coastline offering "ready to rent" investments. In the past two years, property prices have risen about 20 percent per year, according to government figures. In some exclusive locations, they have grown more than 100 percent annually, and they are still rising, the figures show.

But property is still about 30 percent cheaper than in neighboring Croatia or in most of the Mediterranean states. Companies can be set up with only one euro, about $1.27, as the minimum starting capital with a registration fee of 10 euros, or about $12.

68. As a result, the number of the registered legal entities in Montenegro grew from 8,000 in 2001 to more than 30,000 this year. Many Montenegrins thought that after voting to split from Serbia in May, their nation of 620,000 people could become an international business center like Switzerland or a mecca for the rich like Monaco.

With its pristine mountains and stunning coast, Montenegro might be able to build a tourism industry that is lucrative enough to support its small population. But its roads, hotels and airports have been destroyed by years of neglect and need major foreign investment for repair. The Russian-Montenegrin Montenegro Stars hotel group has invested $63.

38 million in the five-star Splendid Hotel near the coastal resort of Budva, and Britain's Beppler Jacobson spent $17 million on the luxurious Bianca Hotel Spa in the northern mountains. The surge in the private property market is centered mainly on the Adriatic Sea. Mostly Russian, English and Irish buyers are looking for what is left on the 182-mile coastline that features blue seas, white pebble beaches and steep pine forest mountains.

"There is no place like this in Europe mdash; and still with affordable prices," Mike Jennings of London said as he toured the Drobni Pijesak beach where a foreign investor is preparing to start the construction of the Princess Colony, a complex of hotels, villas and swimming pools. Back on the road toward the capital, the wolf Astor drank Montenegrin beer poured through a metal cage into his open mouth. "We figured, if everything is on sale, why not our beer-drinking wolf?

" asked its keeper, who gave only her first name, Zorica.