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Montenegro’s use of the euro as its national currency is incompatible with European Union law, the bloc’s finance ministers are set to warn.The Balkan state of 623,000 people unilaterally adopted the single currency in January 2002, when euro bank-notes and coins started circulating in the then 11-nation eurozone.Montenegro’s authorities defended the action as a step towards independence and future EU membership for a land that, at the time, formed part of one state with Serbia.According to a draft statement prepared for an EU finance ministers’ meeting in Luxembourg on Tuesday, the ministers will state: “Unilateral ‘euroisation’ is not compatible with the treaty [on monetary union], which foresees the eventual adoption of the euro as the endpoint of a structured convergence process within a multilateral framework.”The EU and European Central Bank have not obstructed the euro’s use in Montenegro – or in Kosovo, where it also circulates – but the issue has become more pressing since the country gained independence in 2006.The EU will sign a stabilisation and association agreement with Montenegro on October 15, a first step to EU membership.To join the eurozone, a country must have a budget deficit of no more than 3 per cent of gross domestic product and a public debt of no more than 60 per cent of GDP or less. It must also meet certain criteria on the exchange rate, inflation and interest rates.In theory, Montenegro already meets some of the tests. It has a budget surplus of 3 per cent and a public debt of 35 per cent of GDP.Diplomats said the EU would not take the bizarre step of asking Montenegro to abandon the euro as a prelude to re-adopting it later. Rather, the aim was to underline the legal and economic preconditions of eurozone membership.As in the days of Noah....
