Tivat: The Next Monaco

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The idea for the development, says Munk, came to him while on holiday. For the past 20 years his family has chartered a yacht on the Mediterranean. In that time, he couldn't help noticing how the old marinas at Monaco, St. Tropez, Antibes and elsewhere had no easy way to expand even as more and more huge yachts came off the production lines. As a result, berth rental prices shot up. At Antibes, for example, they've risen nearly 30% in five years.

So when the government of what was then Serbia and Montenegro approached him in 2004 with an idea to privatize an old Austro-Hungarian-era arsenal not far from Kotor, Munk met Djukanovic and says he "fell in love" with him. Djukanovic lent him a government helicopter to look at the site: "It was mind-blowing," Munk recalls. "I saw these frigates and warships and submarines and thought that here a superyacht would feel right at home."

Some eyebrows were raised in Montenegro when the government agreed to a $5 million sale price for about 62 acres (25 ha) of land and a half-mile (0.8 km) stretch of palm-shaded shoreline facing a wide bay backed by mountains. But, contends Djukanovic, "you either sell the land or buy a project. We bought a project." In addition to creating an estimated 5,000 jobs when finished, the investors agreed to clean up the waters around the site, buy out about 480 workers who lost their jobs when the shipyard shut down, and upgrade Tivat's sewage and water-supply systems. Munk is even offering local students scholarships to Canadian universities. Initial hostility from opposition politicians who accused him of planning to auction off the land for a quick buck has abated. "This is just the kind of project that Montenegro needs," says Rade Ratkovic, a professor at the Faculty for Tourism, Hospitality and Trade Management in the port city of Bar. "We should award him a title: Count Munk of Tivat."

Munk isn't the only one smitten by the charms of Montenegro. The luxury hotel chain Amanresorts is renovating two of the finest sites on the coast. And an influx of Russians is already making it the fastest-growing tourist destination in the world. Billboards promising "choice properties" in Russian Cyrillic script line the avenues of coastal towns like Becici. Property prices have shot up, rising as much as fivefold in Tivat over the past five years. A building boom, meanwhile, is gobbling up green space. Pavle Jurlina, a pharmacist in Tivat, says his cousin just sold off land that had been in the family for more than 150 years, ever since his great-great-grandfather bought it with profits from prospecting for gold in California. Ratkovic, the tourism professor, says Montenegro's government needs to put a brake on the "construction frenzy" of apartments and houses, and should instead provide more incentives for hotel developments that generate more long-term revenue. The country still suffers from a yawning income gap between rich and poor, and closing it is going to take more than a few luxury "oases" like Porto Montenegro, says Mirjana Kuljak, an economics professor at the University of Montenegro.

Montenegro has a long way to go in other respects, too. Crumbling roads make it difficult to reach some of the more attractive destinations. Raw sewage flows from Kotor and Tivat into the Bay of Kotor, and there are daily power outages. Still, the tiny country has achieved a good deal in a short time. Less than a decade ago, NATO warplanes were bombing targets in Montenegro in the campaign to drive Milosevic out of Kosovo. And now? Budva's "Jaz" beach hosted the Rolling Stones last summer and in September will stage part of Madonna's 50th birthday tour.

Djukanovic has played a leading role in most of his country's turbulent events over the past 20 years. With offhand pride, he says that his European colleagues now confide in him that Montenegro has become "boring." For diplomats, that is probably true. But for Peter Munk and the well-heeled visitors who may one day flock to the marina, hotels and cafés of Porto Montenegro, the thrill is yet to come.