YU court says German Mark in Montenegro illegal

BELGRADE, Jan 27, 2000 -- (Reuters) The Yugoslav constitutional court said on Wednesday that Montenegro's decision to use the German mark as parallel legal tender was illegal and called on Podgorica to drop it.

Acting on the request of the Yugoslav central bank and a minor leftist political party, the Patriotic Alliance, the court gave a 15-day deadline to the pro-Western government in the smaller Yugoslav republic to respond to its ruling.

It did not say what other steps it would take if there was no response.

In a first reaction to news from Belgrade, a senior Montenegrin government official told Reuters the government in the Montenegrin capital Podgorica would ignore the decision.

"Our stance is widely known. We recognize neither the federal Yugoslav institutions nor their decisions," he said.

Two months ago, the same court said it was suspending the Montenegrin government's monetary moves, insisting they violated the constitution of the federal state comprising Serbia and Montenegro. Podgorica took no notice.

"Montenegro has endangered the functioning of the monetary and foreign exchange systems of Yugoslavia, payment operations and the implementation of monetary policy," state news agency Tanjug quoted judge Milomir Jakovljevic as saying on Wednesday. Podgorica introduced the German mark as a parallel currency alongside the weakening Yugoslav dinar on November 2 to protect its tiny economy from inflation spilling over from Serbia.

It set up a monetary council and banned the Yugoslav central bank from controlling its finances.

The government of Montenegro has said the dual currency scheme was only legalizing the status quo, as the German mark has been widely used illegally in both republics for years.

Ties between the two republics have deteriorated since 1997, when Montenegro elected pro-Western President Milo Djukanovic who said the country should work towards rejoining the world.

This was in sharp contrast to the policies of Yugoslav President Slobodan Milosevic, which pushed the country into even deeper isolation. Yugoslavia has been under various sanctions for almost 10 years.

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