Despite the impressive figures that point to a booming economy (with real GDP growth unofficially projected by the EBRD at 7% in 2007), not all is well in Montenegro. The World Bank, and other international observers, have pointed out that two of the "key challenges" that Montenegro needs to confront on its way to EU membership are "weak governance and the perceived wide prevalence of corruption."

Having gained independence in 2006, Montenegro has nearly completed the state-building processes that have monopolised the public agenda and the attention of its decision makers for the past decade. Citizens' and media attention is increasingly turning to governance issues, and given that reform efforts in a number of crucial areas have been underway for some years, the lack of progress is disappointing.

While reliable data on the scope and nature of corruption are difficult to come by for most countries, the little information that is available for Montenegro is not encouraging. Freedom House's Nations in Transit 2007 report shows a decline in the ranking on corruption from the previous two years, in large part due to the lack of transparency in the privatisation process, delays in adopting the Action Plan for the Implementation of the Programme for the Fight against Corruption and Organised Crime, and the failure to adopt changes to the conflict of interest law. Two recent national surveys of small businesses showed that over 50 (and sometimes much higher) percent of entrepreneurs are asked for bribes by various officials.

Montenegro shares many aspects of corruption with other post-communist states: the legacy of large, non-competitive bureaucracies, underdeveloped market economy, scarcity of resources, and lack of democratic governance. However, there also exist Montenegro-specific factors that not only inform the causes and forms of corruption in the country, but also constrain other reforms: one, a relatively short experience of a state that is able to exert its administrative authority over the entire society; two, a ruling party that - as the successor of the League of Communists - has been in power, albeit with internal transformations, for 60 years; three, a small population where it is almost a statistical certainty that persons in key leadership positions will be related; and, four, the legacy of a close relationship with the larger and more developed Serbia that has marginalised certain Montenegrin institutions. A number of these conditions directly impact on political corruption, which in its many facets, presents the biggest challenge for Montenegro.