On May 21, Montenegro held a referendum to decide its statehood. According to results announced by the referendum commission, of the 86.5 percent of registered citizens who participated in the voting, a total of 55.5 percent were for independence. With Montenegro gaining formal independence, the state of Serbia and Montenegro ceased to exist, marking the final collapse of the former Yugoslavia.

It's the economy

Montenegro covers an area of 13,800 square km, with a population of 620,000, comprising 268,000 Montenegrins and 199,000 Serbians. When other republics of the Socialist Federal Republic of Yugoslavia claimed independence in succession in 1991, Montenegro also held a referendum, but most of the voters were for living with Serbians then.

Serbia and Montenegro formed the Federal Republic of Yugoslavia on April 28, 1992. However, the United States and the EU had been promoting the independence of Montenegro, in a bid to topple the regime of former Yugoslavian President Slobodan Milosevic.

Montenegro and Serbia suffered together the Bosnia-Herzegovina war, UN sanctions and the NATO bombing. During those critical times, Montenegrins did not desert their Serbian brothers. But when the economy faced a recession and living standards plummeted, Montenegro began to reconsider its relations with Serbia.

Gradually, a divide emerged among the Montenegrins, with one group supporting independence and another, unity. The pro-independence group was more vociferous with both the president and prime minister in favor of Montenegrin sovereignty.

When Milosevic was pulled down in October 2000, Washington supported Montenegro's independence, but Brussels balked for fear of possible turbulence in the Balkan region.

On February 4, 2003, the Federal Republic of Yugoslavia changed its name to Serbia and Montenegro. This happened under the guidance of the EU. The former federation became a loose union, and Montenegro became a quasi-state. The Serbia and Montenegro Constitution gave the two republics the right to determine whether to be independent or not after February 2006.

Even as the EU went slow on Montenegro's independence, the republic was firmly headed in that direction. Those wanting to break away from Serbia seized the advantage of state administration and won the hearts of the minorities such as the Albanians and Bosnians with preferential policies. They were more convincing than the unionists, who focused on corruption charges against pro-independence officials.

Uncertain prospects

It may be only a matter of time before Montenegro gains international recognition after its announcement of independence, but some hard realities have already started to sink in.

Montenegro has a small population. The EU had said more than 55 percent of Montenegrins must vote in favor of independence. This figure was reached, but with only a margin of 0.5 percent or 2,100 votes. This means the unionists are still strong and will play an important role in the politics of the new state. Montenegro could be faced with a highly divided society.

Moreover, the population of ethnic Montenegrins is less than that of the Serbians, Albanians and Bosnians combined. This means ethnic problems will remain prominent.

Montenegro was the one of the least developed of the former Yugoslavia republics. It has no powerful industry or favorable conditions for the development of agriculture. Its economy depended heavily on Serbia. Its only advantage is tourism.

An independent Montenegro will have to grapple with the twin challenges of maintaining stability and developing the economy. This is a cause for worry in some quarters, given the Montenegrin Government's limited economic resources. "Without Serbia, we are only a small dot on the map of Europe," said some.

Serbia will inherit all the political clout of the former Serbia and Montenegro, including the seat in the United Nations and other international organizations.

However, despite the loss of much land space, Montenegro is of strategic geographic importance. It has a coastline of 200 km and the Serbia-Montenegro union's only access to the sea. With Montenegro going independent, Serbia has become an inland state without any link to a seaport.

Serbia will also face stability issues. The independence of Montenegro may further provoke the Albanian-dominated Kosovo to leave Serbia.

However, it's noteworthy that while Montenegro was a republic of the former Yugoslavia, Kosovo is a province of Serbia. Montenegro had a valid, legal basis for independence, but the independence of Kosovo is likely to have an adverse impact internationally. The solution of the Kosovo issue is much more complicated.

In the long run, a Serbia that includes Kosovo remains the largest country in the western Balkan area in terms of population and territory. With sound economic growth, it has the potential to grow into a regional power.

The EU may also find the independence of Montenegro a problem. It has had to recognize a new tiny state in the Balkans to show its respect to the democratic choice of Montenegrins, in addition to being pressed by the United States. But the further fragmentation of the Balkans goes against the drive for the integration of Europe.

For the past 15 years, the United States has been the only beneficiary of the division of the western Balkan area. It has helped it check its European allies, nudge out Russian influence and stipulate many U.S.-led rules. The region has become the laboratory for testing out new U.S. strategies.

Washington stands to gain once again from the independence of Montenegro. It is reported that the United States plans to build up the Montenegro seaport into a military one.

Unity and Disintegration

Serbia and Montenegro had been linked since 1918, when Serbians, Croatians and Slovenians formed a kingdom after the end of World War I. When the Kingdom of Yugoslavia was born in 1929, Serbia and Montenegro were part of it.

The Federal People's Republic of Yugoslavia was founded in 1945, after the victory against Fascists during World War II, and comprised the six constituent republics of Serbia, Croatia, Slovenia, Bosnia-Herzegovina, Macedonia and Montenegro. In 1963, the country was renamed the Socialist Federal Republic of Yugoslavia.

In 1991, Slovenia, Croatia and Macedonia announced their independence, followed by Bosnia-Herzegovina in 1992. Serbia and Montenegro then formed the Federal Republic of Yugoslavia, covering more than 100,000 square km and with a population of 10.54 million.

In 1998, the Yugoslavian Government accused Albanian ethnic militants in Kosovo of violent attacks on civilians and police and sent in the army. In 1999, the U.S.-led NATO bombed the country for 78 days, to stop what they called the ethnic cleansing in Kosovo. The government was finally forced to accept a peace agreement and the UN took charge in Kosovo.

In February 2003, the Federal Republic of Yugoslavia was reconstituted as Serbia and Montenegro. Most governmental power shifted to the two republics. Although the two republics had a common foreign and defense policy, they had separate currencies and customs regulations. Serbia and Montenegro was seen as an extension of the former Yugoslavia, which was a model of the non-alignment movement and of multiethnic coexistence. Montenegro's independence is one of the last acts of the dissolution of the old Yugoslavia that began 15 years ago.

The author is a professor at the China National School of Administration