By Dusko Mihailovic PODGORICA, April 25 (Reuters) - Montenegro wants to apply for European Union candidate status in the next two months and hopes that political instability in the Balkans will not lead the EU to delay its progress, a senior official said.

"If we apply soon, Montenegro could become a candidate during 2009 and open accession negotiations in January 2010," Deputy Prime Minister Gordana Djurovic said in an interview, adding an application could be submitted in May or June.

"That's our plan. We believe it is the right time for a technical decision by the (EU) Council of Ministers to open up the application process."

The former Yugoslav republic of some 650,000 people voted to end its loose union with Serbia in 2006, and has since enjoyed strong growth and a positive image as a tourism hotspot.

Freed from the wartime baggage of its neighbour, it signed a Stabilization and Association Agreement with the EU in 2007.

This month, it also signed an agreement with the EU that paves the way to World Trade Organisation accession, a key move to fostering reforms needed to build the functioning market economy required for EU membership.

The West says its main challenges are weak institutions and corruption in a tight-knit society that prefers getting things done through personal ties and political patronage.

Djurovic said Montenegro knew membership cannot come overnight, and was ready for negotiations. It was also prepared to delay its application up to a couple of months if the EU asked it to.

"ENLARGEMENT FATIGUE"

But she said a delay would have less to do with the country's potential and more with "enlargement fatigue" among European publics and governments, that saw 12 new members added in the last four years.

A lot of Europeans are wary of letting Balkan states into the bloc due to the region's lingering reputation as a hotspot for ethnic violence, crime and corruption.

Torn apart by the brutal wars that followed the break-up of socialist Yugoslavia in the 1990s, the region enjoyed an uneasy quiet since 2001, but was seen as destabilised again by Kosovo's secession from Serbia in February.

The loss of the cherished province led to violent protests in Serbia and ethnic Serb areas in Bosnia and north Kosovo, and caused the Serb government to collapse, divided over whether the country should move to the EU, which backed Kosovo independence.

Macedonia, left out of NATO because of a long dispute with Greece, was also in crisis after the Albanian minority walked out of government and brought on an early election.

But Montenegro thought its stability and small size was a key advantage for quick EU accession, and did not want to be grouped with other Balkan hopefuls.

Instead, it advocated "a regatta approach", with countries going in separately, one by one, Djurovic said.

"No one should be held hostage to regional problems," she said. "We don't feel we were up to now, and would like that to be the case in the future too, although we are aware the stability question is a primary issue and a common interest."

"We are going to carry out further reforms one way or the other since we are doing it for citizens' benefit, not because of formal EU membership," she added.

"But it will be very important to us that the European Union acknowledges our results, so we keep up our momentum."

(Writing by Ellie Tzortzi)

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