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KOSOVO: Independence Will Not Improve Economy
By Vesna Peric Zimonjic
BELGRADE, Feb 20, 2008 (IPS) - The proclamation of independence in Kosovo has brought widespread celebrations among its ethnic Albanians, but also a realisation that economic difficulties remain – and could worsen.
Kosovo, the long disputed southern province of Serbia, declared independence last Sunday. The bulk of its population of two million is ethnic Albanian.
The economy of Kosovo has been idle for decades now. The reason goes beyond any negligence by the United Nations administration (UNMIK) that has run the province since 1999, or, as Belgrade often says, the indolence of local people.
The roots of economic hardships go back to the times of former Yugoslavia. Billions of dollars were invested in Kosovo, but economic activity collapsed when former Serbian president Slobodan Milosevic abolished the autonomy of Kosovo in 1989 and introduced direct rule from Belgrade.
Thousands of ethnic Albanians in the mining, energy or transportation systems were laid off. They could not be replaced by local Serbs, who lacked the skills for these jobs. In any case the 250,000 Serbs in Kosovo then were too few for the job. Fifteen billion tonnes of deposits of coal, and millions of tonnes of deposits of zinc, lead and bauxite remain under the ground.
Ordinary people turned to survival through farming, small trade or all kinds of services jobs. Thousands went abroad, looking for a better life.
The World Bank says the average annual salary in Kosovo is only about 1,800 dollars, and the per capita gross domestic product less than 1,000 dollars.
It says that 37 percent of the population lives in poverty, on less than two dollars a day. Children, elderly people, families without male breadwinners, the disabled, the unemployed, and non-Serb ethnic minorities like the Roma are the most vulnerable.
A particular problem is the lack of electricity produced by outdated and poorly maintained coal-run plants.
"In order to improve production or even agriculture, Kosovo needs a good supply of electricity," economist Ibrahim Rexhepi wrote in the daily Zeri. "Apart from the millions of dollars coming from people living abroad, we badly need foreign investment." Foreign investment has been low, due to the unstable situation, and lack of proper regulation.
The Kosovo government is currently examining bids for a 4 billion dollar contract to build a new coal-fired power plant. But that is expected to be fully operational only by 2012, Rexhepi said.
The international media widely speculated that Serbia would cut supply of electricity to Kosovo as a reprisal measure for the proclamation of independence, but this did not happen. Serbia is obliged by international agreements to supply electricity to Kosovo within the regionally combined grid that includes Albania, Bosnia-Herzegovina, Bulgaria, Greece, Kosovo, Macedonia and Montenegro. Any shutdown of the Kosovo supply would disrupt or even shut down supply elsewhere.
Nor has Serbia imposed any trade embargo. "Serbia cannot impose an embargo against a part of its territory," trade minister Predrag Bubalo told Serbian media, following the official line that it would not recognise an independent Kosovo. "Apart from that, the embargo would have a heavy impact on Serbs living in the province."
Economists say this explanation is just a façade. "Exports to Kosovo make 5.7 percent of Serbia's export in total," Goran Nikolic from the Serbian Chamber of Commerce told Belgrade B92 TV. "That is an important item, as the exports to Kosovo have reached 535 million dollars in 2007. The goods are mostly food, medicines and construction material."
Rodoljub Draskovic, head of the largest Serbian food company Swisslion-Takovo says his goal is to remain in the Kosovo market. "Our exports were worth more than 22 million dollars last year, Kosovo customers are used to our products," Draskovic told IPS. "This should not be changed."
The Serbian government meanwhile talks of the billions of dollars "stolen" from Serbia by Kosovo. Screaming headlines speak of 'robbery worth 200 billion dollars' or 'theft of billions'.
"The fact is that there is no real record or real calculation of what Serbia does 'possess' in Kosovo, as the whole of former Yugoslavia invested in it," analyst Misa Brkic told IPS. "Such talk only serves the purpose of provoking animosities, frustration and anger among Serbs."
The Serbian government has not reacted to a statement from the Kosovo government at the time of declaration of independence that the plans proposed by Finish negotiator Marti Ahtisaari will form the guidelines for Kosovo.
Under this plan, all the formerly state-owned property in Kosovo will remain with Kosovo, in line with the succession agreements on property after the disintegration of former Yugoslavia (Bosnia, Croatia, Macedonia, Montenegro and Slovenia). Serbia has rejected the Ahtisaari plan. (END)
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