"Nato foreign ministers have just taken the historic decision to start accession talks for Montenegro to become the 29th member," alliance head Jens Stoltenberg said.
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"This is a good day for Montenegro, for the western Balkans and for the whole alliance," Stoltenberg said to applause from the 28 Nato foreign ministers meeting in open session to approve the decision.
"It makes clear Nato keeps its door open (and bolsters) ... our vision of a Europe whole and at peace."
Montenegro Foreign Minister Igor Luksic said Nato's decision reflected the great efforts his country had made to modernise and meet western civil society norms.
"Today we open a new chapter ... it is a great day for my country and for the alliance," Luksic said.
"It is great news for the western Balkans, for its unity and security," he said.
Russia last week described the expected decision on Montenegro as a "serious blow by the euro-Atlantic bloc."
"This sort of initiative has the real potential to bring about confrontation. It will not promote peace and stability in the Balkans nor in Europe in general," Moscow said.
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"It will only further complicate relations between Russia and Nato."
The small Balkans country of just over 600,000 people won its independence in 2006 following the bloody break-up of what was Yugoslavia.
It had been part of a federation with Serbia, a long-time Russian ally which Moscow has always regarded to be part of the same Slav family.
A Nato-led air campaign in 1999 forced Serbian forces out of its rebel Kosovo province, which went on to declare independence in 2008.
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