Gray made the claim as he criticised the SNP for suggesting that Scotland could emulate the Balkan nation in becoming independent.
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Montenegro’s top UK diplomat has hit back by expressing “deep regret” over Gray’s “incorrect” comments.
The spat can be traced to Gray’s last joust with First Minister Alex Salmond in the Scottish Parliament before Christmas.
Gray unearthed a quote from the SNP website on how a small country in south- eastern Europe had become independent quickly and successfully:
“Montenegro shows us just how easy it can be to become an independent country. Forty days is all it took for Montenegro to regain her freedom. It could be Scotland next.”
Gray then questioned the quote by claiming that Montenegro had only achieved nationhood after “two world wars, the Balkan conflict, ethnic cleansing, a war crimes tribunal and a United Nations peace-keeping mission”.
Amid angry scenes at Holyrood, he added that the SNP web reference “insults the history of that country and that people”.
Montenegro remained part of a smaller federal republic with Serbia following the collapse of the old Yugoslavia in the early 1990s.
The country’s military was also said to have aided Serbian troops when Croatia was attacked during the Bosnian and and Croatian wars.
However, Montenegro secured its own independence in a bloodless manner, severing its union with Serbia after a successful referendum in 2006, a result recognised by its larger neighbour.
The country is also a candidate to become a member of the European Union
The Labour leader’s comments have provoked an angry response from Marijana Zivkovic, the charge d’affaires at the Montenegro Embassy in London.
In a letter to Gray last week, which was copied to UK Labour leader Ed Miliband, the diplomat stated: “I cannot help but feel deep regret about the way you chose to depict [us] in your public statement.
“Your statement that Montenegro was involved in ‘ethnic cleansing’, including your references to a ‘war crimes tribunal’ and a ‘peacekeeping mission’, is simply incorrect.”
She said that Montenegro was the only former Yugoslav republic where “neither war nor devastations took place in the last decade of the 20th century”.
Zivkovic concluded: “I remain open for any further explanations or communications to this regard.”
Ian Hudghton, an MEP and SNP president, said: “Iain Gray regularly gets his facts wrong about Scotland at First Minister’s Questions, but now he has blundered on a wider stage and caused embarrassment to his own leader in London. Mr Gray should withdraw his ill-informed remarks.”
A Labour spokesman said: “Iain Gray will of course reply to the Montenegrin embassy and inform them in full of his comments and the context he made them in. They should not be construed as a criticism of Montenegro.
“The SNP website’s assertion that Montenegro’s path to independence took 40 days and “showed how easy it can be to become an independent country” was facile and ignored the history of the wider region through two world wars and the dissolution of Yugoslavia.
“To re-establish statehood as a modern democracy was a remarkable achievement and should not be referred to glibly as ‘easy’.”