The old Yugoslav naval base at Tivat on the coast of Montenegro is a derelict place. Colossal jetties stretch out from an abandoned work yard piled with crumbling concrete, twisted metal rods and broken glass. In one corner, a Cold War-era submarine, its giant propeller exposed to the summer winds, is being slowly dismantled by a local crew in flip-flops. The berths are fouled with paint chips and rusted metal, and until a recent scavenging operation, explosives lay on the seabed.
The naval base may be ugly and unglamorous, but thanks to a group of high-profile foreign investors, Tivat is about to be reborn. Next month, construction begins on a new marina for megayachts that its backers say will help turn this lowly industrial town into a glistening new Monaco. Its current appearance notwithstanding, Tivat is fortuitously situated on the so-called Venice-Corfu leg, the fastest-growing cruise destination in the Mediterranean and a pleasure ground for some of the world's wealthiest people. Montenegro's roads are crumbling, its power supply sporadic and its sewage system inadequate, but its coastline is one of the most spectacular on the Mediterranean.
For Peter Munk, 80, the Hungarian-born Canadian who heads the mining giant Barrick Gold, that potential makes Montenegro a prime candidate for development. Relaxing in shorts and bare feet on his chartered 162-ft. (49 m) yacht on the deep blue waters near Tivat, Munk says Monaco was also a relatively backward town before it transformed itself and swaths of the French Riviera with it into the playground it is today. Tivat, or Porto Montenegro as the marina area is being renamed, will have a similar effect, Munk declares: "The whole Adriatic is going to be lifted up by this new Adriatic Monaco."
Munk, who built Barrick from nothing into the world's biggest gold-mining company, invested his own money to start the Montenegro project. But in recent months he has brought in an A list of fellow investors, including former banker Lord Jacob Rothschild and his son Nathan, French luxury-goods magnate Bernard Arnault and Russian mining billionaire Oleg Deripaska.
Munk's project is one of the biggest in a region long riven by wars and political turmoil. Montenegro was sealed off from the outside world by the violent breakup of Yugoslavia in the 1990s, and later by its political alliance with Serbia. But since winning independence from Belgrade in 2006, it has seen a rush to develop its pristine coastline, sparking worries among some locals that their patrimony may be sold off in unsustainable ways. "Montenegrins have good reason to be incredulous," says Prime Minister Milo Djukanovic, during an interview in the just-completed Hotel Splendid in the bustling resort town of Becici. "We have a long history of wars and conflict, not peace and development. But our mission is to break with that past."
The country's high mountains and valleys are still largely undeveloped; its Tara River canyon has the deepest gorges in Europe, and ancient cities and monasteries dot the rugged coastline. The old, walled trading city of Kotor, a few miles down the coast from Tivat, was founded by the Romans and ruled for nearly four centuries by the Venetians, who left their architectural mark. There have been more recent periods of glory, too. Back in the 1970s, the red-tiled resort island of Sveti Stefan was a summer retreat for the likes of Sophia Loren, Kirk Douglas and Doris Day. But Montenegro slipped into obscurity in the 1990s. Djukanovic and others unwisely sided with Serbian strongman Slobodan Milosevic and sent troops into Bosnia and Croatia. It wasn't until 1997 that Djukanovic broke with Milosevic, a divorce completed nine years later with the declaration of independence.
Munk recalls his first meeting with Djukanovic in 2004 when Montenegro was still joined to Serbia. "He said to me: 'I am going to get independence and I want to raise the standard of living of my people. The way I can do this is turn this into another Monaco.' I told him, 'If you mean what you say, then you've got one of the only men in the world who can make it happen.'"
Explaining his vision today, Djukanovic says: "We are a small country. We have no space for mass tourism. We want to use every inch of territory that we have to attract the highest-paying guests. We have the frame; now we want to fill it with a beautiful picture." The development at Tivat is the centerpiece of these ambitions. The plan includes an 800-berth marina, a golf course, a resort village and several hotels. Where an old corrugated-iron warehouse stood, the Four Seasons is building its first resort on the Mediterranean, to open in 2010.