Oligarch finds a place in the sun in Moscow-on-Sea

Letter from Podgorica:It is easy to understand why one foreign property owner in Montenegro calls it Moscow-on-Sea.

At tiny Tivat airport, crammed between sheer peaks and the Adriatic shore, jets roar in daily from Moscow and St Petersburg, their passengers breeze through immigration without the need for a visa and, a few miles south on the packed beaches of Budva, Russian is the lingua franca.

Yuri Luzhkov, the nationalist mayor of Moscow, is one of scores of rich Russians who have bought plots of prime land in Montenegro, as it attracts a surge of foreign investment since winning independence last year from Serbia.

Oleg Deripaska, who at the age of 39 is Russia's richest oligarch and the one closest to the Kremlin, owns the aluminium smelter and bauxite mine that produce most of Montenegro's exports, and he wants to buy a coal mine and a power station that provides electricity for one-third of its 650,000 people, deals that would give him control of over half the nation's economy.

Led by Nebojsa Medojevic, Montenegro's opposition has temporarily blocked Mr Deripaska's purchase of the power station and mine. He also wants to scrap the smelter contract that the oligarch negotiated with former prime minister Milo Djukanovic.

Mr Djukanovic stepped down last year but is still Montenegro's most powerful politician, his influence undiminished by a long-running Italian investigation into his alleged involvement in a massive cigarette-smuggling operation.

His brother is one of Montenegro's richest businessmen, one of a coterie of nouveaux riches whose flamboyant display of wealth is particularly jarring in a small country where a senior doctor or university professor makes only €300 each month.

Mr Medojevic sees a small, super-rich "fraternity" snapping up his country's prime assets in "colonial" style: Mr Deripaska, for example, is discussing co-operation in Russia with controversial Canadian gold mining tycoon Peter Munk, who is building a massive mega-yacht marina at Tivat.

Mr Munk, in turn, holds a major stake in Trigranit - a Hungarian developer which has big plans for Montenegro - alongside financier Nathaniel Rothschild, who is a key adviser to Mr Deripaska.

But Montenegro's financial chiefs insist Mr Medojevic and others have nothing to fear.

"We have not received a single report to indicate illegal money has been used in a major project," economic development minister Branimir Gvozdenovic told The Irish Times in Montenegro's capital, Podgorica.

"We have to stimulate growth by opening doors to foreign investment, ensure that we are the most competitive country in the region and allow investors to invest in all projects where they think they can make a profit.

"Then the state will spend the tax revenue in vital areas like infrastructure, health, education, social issues."

Mr Gvozdenovic says Montenegro hopes to attract a billion euros in foreign direct investment this year.

He dismisses fears that national security could be jeopardised by selling vast swathes of the economy to one man - Mr Deripaska - who is close to a Kremlin that stands accused of using financial levers to exert political pressure on other states.

"Our national interest is served if the economy is growing, national security is supported by a strong state, and the state is strengthened by a big budget," says Mr Gvozdenovic.

But at least one of his cabinet colleagues is wary about the growing power of Mr Deripaska.

"It's not about which country they come from, but if one man or firm controls the bauxite mine, the aluminium smelter, the power station and the coal mine, then I think we've put too many eggs in one basket," warns interior minister Jusuf Kalamperovic.

One of Mr Kalamperovic's tasks is to oversee Montenegro's hunt for war crimes indictees, amid persistent reports that genocide suspect Radovan Karadzic, leader of the Bosnian Serbs during a 1992-5 war, is hiding in the remote mountains between Bosnia and his native Montenegro.

Last month police in Budva arrested Serb police general Vlastimir Djordjevic, who had been on the run for six years from charges of crimes against humanity for his part in Belgrade's crackdown on Kosovo's separatist rebels in 1998-9.

Serb officials claimed Djordjevic had lived in Montenegro for several years, while Montenegrin media insisted that he arrived on a Russian airliner only a few weeks ago.

United Nations investigators believe Djordjevic spent several years in Russia, and it is remarkable that he was finally captured just days after an unexplained visit to Budva by Sergei Lebedev, the head of Russia's shadowy Foreign Intelligence Service.

Mr Kalamperovic calls this coincidence. Many other people, as often happens in independent Montenegro, felt the long hand of Moscow pulling the strings.