Tycoons jostle for a stretch of Adriatic coastline that won Shaw's heart

Montenegro Letter Life moves slowly through the summer heat of Montenegro, and the wail and roar of an official motorcade barely raise an eyebrow on the dusty streets of Podgorica.

The laid-back capital of Europe's newest sovereign country is already inured to the commotion, having welcomed scores of foreign officials since Montenegro voted for independence from Serbia in May.

The latest limousines swept into town yesterday, bringing the leaders of ex-Yugoslav republics to celebrations timed to coincide with the annual holiday that commemorates Montenegro's last declaration of statehood, in 1878.

Montenegrin president Filip Vujanovic welcomed his counterparts from Slovenia, Croatia and Serbia to Podgorica, whose name, which roughly translates as "beneath the mountains", is apt in a country called after the black peaks that bristle along its spine.

The leaders of these republics gathered last in 1990, in a vain bid to prevent the wars that would dismember Yugoslavia and restore some old names to Balkan maps.

Those wars devoured hundreds of thousands of lives in the cause of independence, as nations subsumed for centuries by the Ottoman and Habsburg empires, and then by communist Yugoslavia, paid in blood for the right to rule themselves.

Montenegro stuck with Serbia through the 1990s, a decision that prime minister Milo Djukanovic now calls a strategic move that prevented war with Belgrade; he uses the same logic of survival to justify his own lengthy alliance with Slobodan Milosevic.

While Montenegrin soil witnessed little fighting, its sons certainly went to war.

The old town of Dubrovnik, George Bernard Shaw's "paradise on earth", became a fiery death trap when Montenegrin troops pummelled it with artillery in 1991.

"We step into the future sincerely regretting all that happened . . . and expressing sorrow for the events on the battlefields around Dubrovnik," Mr Vujanovic told Croatia's president Stipe Mesic yesterday.

Only a few dozen kilometres separate the medieval heart of Dubrovnik, where maps still show tourists where Yugoslav army shells landed, and the little booth from which an easy-going officer welcomes you across the border into Montenegro.

The hills from which Dubrovnik made such an easy target climb high on your left, and the road slips in their shadow towards the Bay of Kotor, a tongue of turquoise water that is southern Europe's only fjord and a Unesco world heritage site.

Follow the shoreline through a string of fishing villages to reach the town of Kotor, whose white marble heart of Venetian palaces and squares is guarded by fortified walls, which march improbably up the sheer face of the cliff that towers above the rooftops.

GB Shaw was here too, and braved the dizzying ascent up Mount Lovcen by the road to Cetinje, Montenegro's capital during independence from 1878 until the first World War. At the top, he is said to have cried: "People, am I in heaven or on the moon?"

The journey is still staggering, a serpentine wriggle into the blue sky above Kotor Bay. Here and there, drivers stop to take in the view, enjoy the cooler mountain air and let their cars pause for breath on a roadside thick with wildflowers and the buzz of bees.

Beneath the mountain, jets descend into Tivat airport carrying the latest cargo of tourist euro, dollars, pounds and roubles on which independent Montenegro will depend.

Investors from across Europe - and particularly Russia - are lining up to grab a patch of this Adriatic coastline, and Canadian goldmining magnate Peter Munk has already revealed plans to build a €570 million luxury marina at Tivat.

Half an hour down the coast, the island resort of Sveti Stefan still sits in blissful isolation, facing a coastline that is now studded with holiday villas and apartments.

The former fishing village, which welcomed the likes of Richard Burton and Liz Taylor during its 1960s heyday, is reportedly set for a multi-million euro makeover by Singapore's Amman Resorts, which promises to restore its former exclusivity.

But regular visitors, knowing and relishing the pace of Montenegrin life, remain to be convinced.

"They've been talking about such plans for ages," said one London-based Serb who stays at Sveti Stefan every summer. "And this place hasn't changed in 20 years."