Although both the states now had more freedom to do as they pleased then they did as Federal Republic of Yugoslavia , Serbia and Montenegro was still a Sovereign State united under one government . Serbia and Montenegro was a country in southeastern Europe , formed from two former republics of the Socialist Federal Republic of Yugoslavia ( SFRY ) : Serbia and Montenegro . Following the breakup of Yugoslavia , it was established in 1992 as a federation called the Federal Republic of Yugoslavia ( FRY ; ) .