Anti-corruption watchdog Transparency International (TI) has voiced “profound concern” over a controversial agreement between Montenegro and the United Arab Emirates (UAE), warning that it could undermine the Balkan country’s bid to join the European Union.

In a statement issued on May 28, TI said the Agreement on Cooperation in Tourism and Real Estate Development – ratified earlier this month – contains provisions that "may jeopardise Montenegro’s European Union accession process, particularly concerning Chapter 5 on Public Procurement."

The Montenegrin parliament is set to vote on the agreement on May 29, amid growing scrutiny over its compliance with EU standards and domestic legislation.

"While the pursuit of foreign investment is commendable, the provisions within this Agreement raise significant issues," TI said. "The agreement allows contracts and subsequent deals with UAE investors to bypass laws on public procurement, tenders, and competition principles."

Montenegro signed the agreement in late March, paving the way for major Emirati investments, including the development of Velika Plaza into a large-scale tourism complex by UAE-based real estate firm Eagle Hills. The government has promoted the project as a strategic opportunity to attract billions of euros in foreign capital.

However, environmental groups and sections of civil society have criticised the deal as a potential land grab that threatens natural resources and democratic oversight.

Transparency International warned that the exemptions granted to UAE investors could violate EU regulations and the Stabilisation and Association Agreement (SAA) between Montenegro and the EU. “This effectively enables the direct award of contracts without competitive bidding, undermining the principles of transparency and equal treatment,” the group said.

Montenegro, which aims to close all negotiation chapters by the end of 2026 and join the EU by 2028, has made notable progress in aligning its public procurement laws with EU standards. The European Commission’s 2024 report acknowledged a moderate to good level of preparedness in this area, highlighting recent improvements in the electronic procurement system.

TI warned that implementation of the agreement in its current form could reverse this progress. "The adoption of the Agreement threatens to reverse this progress. The implementation of provisions that are in conflict with EU laws on public procurement could stop or disrupt negotiations related to Chapter 5," the statement added.

The agreement has already faced domestic pushback. In April, President Jakov Milatović returned it to parliament for reconsideration, citing concerns that it may be unconstitutional and incompatible with Montenegrin laws.

TI urged lawmakers to ensure the agreement aligns with the constitutional framework and EU obligations. “We call on the Government to thoroughly check the provisions of the agreement, including the necessary amendments in order to maintain the standards of transparency, competitiveness and the fight against corruption,” the organisation said.

The watchdog also recommended initiating a “comprehensive public debate” involving civil society, legal experts and EU representatives, to fully assess the implications of the deal.

Calling on the European Commission to monitor the situation closely, TI stressed the importance of transparency and accountability in public administration. “By allowing exemptions from standard procurement procedures, the agreement creates opportunities for favouritism and misuse of public funds,” it warned.