Kosovo Economics, politics and future perspectives

(2010)

Presented by

Selver Islamaj

1

Index:

I. PREFACE  3 

1. BASIC DATA OF KOSOVO  4 

1.1 POPULATION  4 

1.2 CURRENCY  5 

1.3 GROSS DOMESTIC PRODUCT ‐ GDP  5 

1.4 INFLATION  5 

1.5 UNEMPLOYMENT  5 

1.6 POVERTY  6 

1.7 URBANIZATION AND PEOPLE  6 

2. KOSOVO GOVERNMENT  7 

2.1 PARTIES IN KOSOVO  7 

2.1.2 PARTIES  7 

2.2 MINORITIES IN KOSOVO  9 

2.2.1 DIFFERENT PROBLEMS WITH ETHNICITIES AND CRIMINALITY  10 

3. POLITICAL SYSTEM OF KOSOVO ACCORDING TO ISMAYR  12 

3.1 INTEGRATION IN KOSOVO? – A CHANCE FOR MINORITIES?  13 

4. POLITICAL PROCESS UNTIL 1989  15 

4.4 DEVELOPMENTS FROM 1989 UNTIL 1999  19 

4.5 DEVELOPMENT SINCE 1999  22 

5. EDUCATION AND HEALTH  23 

5.1. EDUCATION  23 

2

5.2. HEALTH  25 

6. ECONOMY, LABOUR, POVERTY AND FUTURE PERSPECTIVES  28 

6.1. POVERTY AND LABOUR  28 

6.2. ECONOMIC TRENDS  32 

6.3. CRIMINALITY  34 

6.4. IMPORT AND EXPORT  36 

6.5. AGRICULTURE, INDUSTRY AND OTHER SECTORS  39 

6.5.1. AGRICULTURAL SECTOR  39 

6.5.2. INDUSTRY  44 

6.5.3. CHALLENGES THAT KOSOVO HAS TO FACE  46 

6.6. RESOURCES  47 

6.6.1. NATURAL RESOURCES  47 

6.6.2. TREPĆA‐TREPÇA  51 

7. EVERYDAY LIFE  57 

8. FUTURE PERSPECTIVES  58 

9. EPILOGUE  60 

X. REFERENCES  61 

X.I BOOKS  61 

X.II INTERNET  63 

X.III DAILY NEWSPAPERS  65 

3

 

 

 

 

 

 

 

 

I. Preface 

In this work, I dedicate myself to a region that covers for some years the attention of

the media. Since the year 2008, a decision was made as Kosovo became an

independent state and has to deal with different issues, I want to show the

development of this process. Another reason is that the historical background is

included, so the events are understandable.

I also want to see if that Kosovo would be able to survive alone, or a project that is

doomed to failure. I will show some economic data from recent decades, and see that

as a starting point for further development. Also important is the coexistence of ethnic

groups, as well as their attitude towards further development. I used some of my

papers, which I wrote during my time at College.

 

 

 

 

 

4

 

 

1. Basic data of Kosovo 

1.1 Population The number of Kosovar population is estimated about 1.9 million inhabitants (the

OSCE 2001, estimated the number to around 2.4 million). A large number of people

lives in the Diaspora such as Switzerland, Germany, France, Sweden, US etc. We

speaks here of about 800 000 – 850 000 people.1

This graph below shows some trends how the demography will change. I try to picture

how many people live in Kosovo, and will try to make a future perspective.

We estimate the rural population to be 1.3 million. Together, this means that the rural share is about 65 percent and urban is about 35 percent. (Kosovo Poverty Assessment, World Bank)

Graph 12

The population of Kosovo until 2001 separated in different age-groups and with three

different future developments without migration.

0-14 15-64 over 65 Version Year

Total in 1000 1000 % 1000 % 1000 %

658 41,5 854 53,9 73 4,6

1981

1993

1584

2100 850 40,4 1145 54,5 105 5,0

814 32,8 1530 61,7 137 5,5 Low

Version

2001

2021

2482

3171 713 22,5 2219 70,0 239 7,5

875 34,4 1530 60,2 137 5,4 Middle

Version

2001

2021

2542

3455 912 26,4 2204 66,7 239 6,9

1 http://www2.dias-online.org/files/laenderberichte/Kosovo_2005.pdf, Page 2 of 16. 2 http://www.kosova.de/archiv/politik/d-graphie.html

5

906 35,2 1530 59,5 137 5,3 High

Version

2001

2021

2573

3759 1131 30,1 2388 63,5 239 6,4

(Source: For 1981- Registration of the Population; for 1993 – just estimated from Dr.

Hivzi Islami; for the years 2001 and 2021 - Projektion of the Belgrade Demographic

Research Institute).

1.2 Currency 

The official currency is EURO, it can also be paid with Serbian dinar in the Serbian

enclaves. Some shops also accept dollars.

1.3 Gross domestic product ‐ GDP 

€ 1,840 GDP (2010). (GDP of Kosovo in US$: 3.8 billion US$ 2005, 4 billion US$

2006, 4.6 billion US$ 2007, 5.6 billion US$ 2008)

Economic growth: 2.2% (2002), 3.1% (2003), 3.2% (2004), 3.9% (2005), 4% (2006),

3.9% (2007), 5.4% (2008)

1.4 Inflation 

3.6 % (2002), 1.1 % (2003), 1.5 % (2004), -0.5 % (2005).

1.5 Unemployment 

57.1 % (2001), 55 % (2002), 49.7 % (2003), 42-43% (2008).

6

 

 

1.6 Poverty 

According to the World Bank 37% of the population live below the poverty line (income

below € 1.37 per day per adult) 15% below the limit of extreme poverty (income below

€ 0.93 per day per adult).3

Albanian media report that the current poverty is much higher than expected.

Currently, moving the numbers of people who live under € 0.93 per day at 18% and

the number of people who earn under is € 1.86 per day for around 50%.(Express,

Tuesday 2nd of August 2006, Page 10. (Albanian Press)).

1.7 Urbanization and People 

Most recent estimate (latest year available, 2004-06)

Poverty (% of population below national poverty line) 37%

Urban population (% of total population) 37%

Life expectancy at birth (years) 74 (m), 81 (w) years

Infant mortality (per 1,000 live births) 35

Illiteracy (% of population age 15+) 6%

 

 

 

3 http://de.wikipedia.org/wiki/Kosovo#Bev.C3.B6lkerung, also on the home page http://ec.europa.eu/comm/enlargement/serbia_montenegro/kosovo_political_profile.htm.

7

2. Kosovo Government4 President: Fatmir Sejdiu (LDK)

Prime Minister: Prime Minister Hashim Thaçi

Government: LDK, PDK

Parliament elections every 4 years

Ministries: interior, finance, health, economic, transport, justice, trade and industry,

Minister of Education etc. 5

 

2.1 Parties in Kosovo6 

Parliament Elections 20077

Party in Parliament

PDK (Alb.) 34,3% 37 seats

LDK (Alb.) 22.6% 25 seats

AKR (Alb.) 12.3% 13 seats

LDD (Alb.) 10.0% 11 seats

AAK (Alb.) 9.6 % 10 seats

2.1.2 Parties 

Civil society and the political landscape of Kosovo are divided along ethnic lines. The

multi-party system is dominated by the two major Albanian parties, LDK and PDK.

Founded in 1989, "Democratic League of Kosovo (LDK) has long been the main

political force of resistance against Serbian rule under the future President Ibrahim

Rugova. The Democratic Party of Kosovo (PDK) is currently the largest party. It

represents part of social democratic positions and is (since 1999), the main political

successor to the KLA paramilitary organization. Chairman of the PDK is the current

Prime Minister Hashim Thaçi.

4 http://www.parties-and-elections.de/kosovo.html, also http://www.assembly-kosova.org/?krye=elections&lang=al 5 http://www.assembly-kosova.org/?krye=komision&lang=en, also www.unmikonline.org/civiladmin/index.html. 6 http://www.parties-and-elections.de/kosovo.html, also http://www.assembly-kosova.org/?krye=elections&lang=al 7 Commission of Elections in Kosovo

8

The LDK with 45.4% (2004) and the PDK to 28.9% (2004) are still the main parties. It

is however strange that the government is not provided by such a large coalition, but a

constellation of parties with a weaker party AAK-LDK 8.4% (2004).

The seats for minorities are also guaranteed by the principle of population distribution

(see chart).

Graph 2 – Die Assembly of Kosovo8

 

8 http://www.assembly-kosova.org/?krye=grup&lang=en

9

Graph 3 – Ethnicities in Kosovo9

 

 

 

2.2 Minorities in Kosovo 

The majority of Kosovo are Albanians. These data from 2000 due to a World Bank

estimate the effect this is to the following percentage: (This estimate may be further

clarified by a table, but the listing numbers from the year 1993 as the background.)

• 88% Albanians

• 7% Serbs

• 5% remaining (Turks, Bosniaks, Torbeschen, Gorani, Croats, Roma and Ashkali)

9 http://upload.wikimedia.org/wikipedia/commons/e/e3/Kosovo_eth_Verteilung_2005.png

10

Graph 410

Ethnic structure of Kosovos population from 30th of July 1993

Nationality Number in %

Albanians 1.845.000 87,8

Serbs 140.000 6,6

Muslims 50.000 2,4

Montenegrins 10.000 0,4

Turks 10.000 0,4

Others 45.000 2,1

Kosova 2.100.000 100,0

(Source: KIZ-PR, KIZ-PR = Kosova Information centre Prishtinë)

Compare: Graph 3 – Ethnicities in Kosovo

The population of the year 1993 is not exactly as the Albanians didn’t give true

numbers because they had to join the army and therefore to avoid that, most of the

young people moved to Europe or abroad to escape military service.

Next Census (Registration) of the Kosovo population will take place from April to

August 2011.

2.2.1 Different Problems with ethnicities and criminality 

According to a UNDP (United Nations Development Programme) among the

inhabitants of Kosovo in the second half of 2005 survey, the individual ethnic groups

identified as having the largest current problem (in percent of the ethnic group):

10 http://www.kosova.de/archiv/politik/d-graphie.html

11

• Albanian

Unemployment (33.8%), uncertainty over the future status of Kosovo (28.3%), poverty

(19.4%), corruption (4.8%), the fate of missing persons (4.3%), electricity supply

(3.6%), prices (1.2%) unsolved murders (1.0%).

• Serbs

Personal and public safety (30.7%), poverty (15.3%), relations between ethnic groups

(12.9%), unemployment (12.4%), uncertainty over the future status of Kosovo (9.9%),

Organized crime (6.4%), fate of missing persons (3.0%), electricity (1.5%).

• Other minorities

Unemployment (43.5%), uncertainty over the future status of Kosovo (20.4%), poverty

(17.6%), electricity (9.3%), prices (2.8%), relations between ethnic groups (2.8%),

corruption (1.9%), social problems and health care (both 0.9%).

Amnesty International accused in 2007 of the Government lack of protection of

minorities and the non-persecution of Serbs committed war crimes. Due to long-lasting

connections between political extremism and organized crime a close relationship

between parts of which emerged from the KLA's political establishment and criminal

structures.

A report by UN special envoy Kai Eide appointed in October 2005, the following

problems:

• Police and judiciary are fragile institutions of Kosovo. [...] There is still the

presence of international police officers will be required with executive power.

Furthermore, international judges and prosecutors are essential in the coming years.

• Corruption and organized crime are among the biggest threats to the stability

of the province. The PISG (Provisional Institutions of Self-Government) had not done

enough to combat corruption. Clan solidarity and the law of silence also make it

difficult for international police and prosecutors, to investigate a crime.

12

 

 

 

3. Political System of Kosovo according to Ismayr 

Quote: „The head of the UN adopted on 14th of May 2001 a law for the Administration

of Kosovo Constitutional Framework for Provisional Self-Government.“ (Wolfgang

Ismayr)

Based on this document the first parliamentary elections took place on 17th of

November 2001, awarded to 120 seats, of which 100 were awarded seats in

proportional representation. 10 seats are reserved for the Serb community and 10 for

the other minorities in Kosovo (see Figure 2). A president and a government head the

country.

When the Parliament repealed the decisions the subject was almost dealing about the

question of independence. For these efforts they use the common argument that the

former Yugoslav republics have detached from the South Slavic Federation in the

1990s. Namely for this reason with the enforcement of self-determination of peoples.

Quote: "Kosovo and Vojvodina were formally only legally provinces of the Republic of

Serbia in the last valid Constitution of the Socialist Federal Republic of Yugoslavia

(SFRY) in 1974, however, functionally equivalent to the Republics. Thus is not Serbia,

but the SFRY, the subject of international law, part of which was the province of

Kosovo. Not only with the end of the SFRY, but also with the end of the FRY, there

was the international subject no longer existing, and thus would grant Kosovo's

independence." (Ismayr)

After the international peacekeeping troops marched into Kosovo there left a larg

number of Kosovo-Serbs the country (the Serbian government talks about 230 000

people, according to ESI11, there were about 65 000).12 There is a significant number

of Albanians living in neighbouring Macedonia, and in the border areas of Montenegro

and southern Serbia. It's after the Armed conflict in West - Macedonia in 2001 where a

11 www.esiweb.org 12 The Article of „Neue Zürcher Zeitung“ from 21st of March.2005 shows other details, because the number of refugees since 1999 is estimated to be around 65 000. http://www.esiweb.org/pdf/esi_fiveyears_press_id_32.pdf.

13

coherent, mono-ethnic area was created. A major obstacle to the stabilization of the

region lies in the "Albanian question", which emerged at the status of Kosovo.(Ismayr)

 

3.1 Integration in Kosovo? – A Chance for Minorities? 

When we speak about integration, it is important to pre-define this term for more detail.

Quote: "Integration is the manufacture or formation of a unity or wholeness of the

individual elements. This must represent the acquired unit more than the sum of the

combined elements. The integration allows for the merger, the individual factors have

to exist in its particularity, should not detract from their character, but order them only

to join the institutions and acknowledge them."

We have to make a further differentiation: Integration should not be confused with

assimilation, for integration of different ethnic groups requires the recognition of ethnic

differences. (Brems Michael)

The integration process is only important if the integration process has failed. There

are three integration types designed by Smend: the personal, functional and factual

integration.

Quote: "The personal integration is especially evident in the case of leaders, rulers,

monarch, but also by judges, civil servants and officials of any kind for performance-

border merger political whole."

Quote: "The functional integration in any type of "collectivization of life forms" seen the

integration of primitive ways, to the purely intellectual processes of elections and

votes."

Quote: "Substantive integration is finally through symbols, flags, customs, and the

state of values." (Brems)

14

To ensure its survival, the state should share the political process with the individual

ethnic groups. Integration is only possible if they can be integrated with their whole

identity. An integration process is only successful if the communities can keep their

own identity - to define this whole thing - at least in part. (Brems)

Important is, a clear definition of the concept of integration from that of the Nation -

Building. The fact is that Kosovo should create a stable political and effective entity,

which would be needed. If this should happen, there should not be a melting of

different nations, because this would not be in the sense of integration. Formulated in

other words, this means that you should try in the example of Kosovo to protect the

distinct cultural identities and encourage more participation in political processes.

(Brems)

 

 

 

 

 

 

 

 

 

 

15

 

 

 

4. Political Process until 1989  

The independence movement pointed to the result, that after the two Balkan wars of

1912/1913, the independent state of Albania was declared and appreciated. It should

be mentioned, however, that this is not a state of all Albanians, because Kosovo was

integrated into the territories of today's former Yugoslav Republic of Macedonia, and

into the Kingdom of Serbia.

While the Serbian government tolerated the formation of an autonomous Albania, they

rejected a border demarcation on ethnic characteristics or lines. This can be found in a

memorandum to the Conference of Ambassadors in 1913 stated:

"...Areas with a mixed Serbian - Albanian population, where the forced Islamization,

Albanianisation and repression of the Serbian people was supported for centuries

should not be covered into Albania. Serbia and Montenegro would never agree to

Kosovo and Metohija with Pec, Decani and Djakovica, which has always been the holy

land of the Serbian people, and therefore should not be awarded to another ... "

(Baierl)

They began to secure the rule of Serbia with repression in Kosovo against the Kosovo

- Albanian people. This repressions were widened through an oppressive regime from

Serbia, which in turn led to further tensions between Serbs and Albanians. Dealing

with the local Albanian population found its justification in the fact that, the Albanians

were considered as a foreign body on Yugoslav territory. The Serbs saw Albanians as

the "Turkish enemy" and ruled Kosovo with an iron hand, because they saw it as "old-

Serbian" territory, and used these policies to "liberate" the area. It can be seen in this

context, like the beginning of the realization of the idea of a Greater Serbia, which was

monitored continuously by the Serbian leadership. The concept of the Idea of Greater

Serbia understood to be a union of all people of the Balkans into a linguistically

homogeneous nation, dictated by a centralized state. (Baierl)

16

According to a census of 1921, lived since 1918 in the newly formed Kingdom of

Serbs, Croats and Slovenes almost 440 000 Albanians. But they were not recognized

as a minority and their language was less worth than that of the Gypsies. There was

also a clear position in the government in Belgrade formulated, that the Albanians

were "absolutely no people, but divided among themselves and hostile tribes with no

common language, writing and religion." This led to the discrimination law below.

(Brunner)

Against the Albanian population in Kosovo, as already described, there was a policy of

discrimination followed especially in the field of culture and education. While in

Yugoslavia, other minorities had the right to teach in their mother tongue and also

received financial support in the areas of education and religion, this implies denying

the Albanians in Kosovo. (Baierl)

Furthermore, many Albanians also refused because of the reprisals to send their

children in Serbian schools, why the illiteracy rate stood at the Albanians in the

interwar period at 75 percent.

Another consequence of this repressive assimilation of the Serbs against the Kosovo -

Albanians led to a migration of about 45 000 people from Kosovo between the two

world wars. (Mainly towards Albania and Turkey). The occupation of Kosovo through

the Italians and Germans between 1941-1944 is seen as a relief for the Albanian

population. It was a temporarily unification of Albanian-populated territories of Western

Macedonia, Kosovo and Albania (See Graph 6). For the population of Kosovo, this

meant an end to the oppression of the Serbs since Kosovo was given its own

administration, police and judiciary, their own schools and cultural institutions. This

new balance of power took advantage again of the Albanians to take revenge on their

former tormentors. Expulsion and persecution of the Serbian population was the result,

forcing a large number of Serbs to flee Kosovo, mainly colonists were forced to leave

the country. 

 

 

 

 

 

 

17

Graph 513

On end of November 1943 Tito partisans decided in the Bosnian Jajce to create the

new federal Yugoslavia. 1945 representatives of Kosovo - Communists proclaimed at

a meeting of the "Serbian Liberation Front," that it was the wish of the Kosovo

population, that Kosovo becomes part to the Republic of Serbia.

This decision was made at the People's Assembly Kosovo - Metohija in June 1945,

after which the Serbian Parliament adopted a law on the establishment of two

autonomous regions in the republic of Serbia, namely, Vojvodina and Kosovo –

Metohija.

However, it was so that Vojvodina had already an autonomous status as an

"autonomous province" before 1945, and this lead because of the new law that

Vojvodina became an "autonomous province" while Kosovo was given just the status

of an "Autonomous Region".

Against this new regulation, however, there was resistance, which led to the guerrilla

war against the new Communist rulers, their military and police. This has led to a

13 Designed by the Author (Selver Islamaj)

18

powerful Police control in Kosovo, which was seen as "the most dangerous part of the

country."

The highlight of the recent policy of repression against Kosovo - Albanians was in

1950. It has carried out a systematic disarmament, in which the search of the

residence went often violently against the Albanian population. Only with the

introduction of the new Federal Constitution of 1963 the pressure and the repressive

policies against the Albanians were soften down. Finally, a new status was decided for

Kosovo and they proclaimed the area an "Autonomous Province" so that it was treated

constitutionally like Vojvodina.

Another improvement for the Albanians in Kosovo brought the Brioni - Plenum 1966.

Key points were the federalization of the state structure, liberalization, and change on

the national question and democratization of public life. (Baierl)

The Constitution of 1974 redefined the position of the Autonomous Province of Kosovo

within the federation.

Here an excerpt from the Constitution of 1974:

Article 1 of the Constitution from 1974 defines the "Socialist, Federal Republic of

Yugoslavia" as "a state voluntarily federated nations and their Socialist Republics and

the" autonomous provinces "Kosovo and Vojvodina, which are in the Association of

the Republic of Serbia ..."(Albert Dushi and Mihailo Mladenović)

Article 2 of the Constitution explicitly mentions the two "autonomous provinces", Article

4 deals with "the equality of peoples and nations" and the "socialist province" is used

as a "socio-political community in which the working people and citizens, the peoples

and nations their sovereign implement the rights" are defined. Article 5 then maintains

“the status and borders of the republics and autonomous provinces" must not be

changed without the consent of the unit. (Baierl)

It is clear that the Constitution of 1974, raised the value of the position of Kosovo

within Yugoslavia extraordinarily, although it remains in the structure of the Republic of

Serbia. Kosovo was granted high level of self-determination, however, it was virtually

put on equal level with the republics.

The article 280 of the Constitution of the Socialist Autonomous Province of Kosovo,

adopted in February 1974, says:

19

"In the Socialist Autonomous Province of Kosovo realizing and protecting the

sovereign rights of the workers and citizens, peoples and nations, equality and

national freedom, they create self-governing socialist economic and political ensure

relations and the conditions for the development of equal relations;..." (Dushi and

Mladenović)

Major areas of responsibility were delegated by the Federation to Kosovo. The right of

participation in the Kosovo policy of the Federal Republic of Yugoslavia is mentioned.

Furthermore, it has it’s own constitution and provincial parliament, that was able to

pass laws. Also, courts and its own administration were established. (Baierl)

It was due to the resentment of the new Constitution that the Serbian Republic was

unsatisfied with the situation. For Serbia, this was similair to power loss, since the

former "territory of Kosovo" was no longer of much political control from Belgrade. Not

even the defense, national security, economic planning and justice were under control

of Belgrade anymore. Disadvantage of these developments was the increasing

independence of the republics, which in turn led to conflicts in the federation and to

conflicts between different nationalities within the republics.

The consequence had nationalistic tendencies in Serbia. Especially with the coming to

power from Milosevic as Serbian President, the conflict between Kosovo-Albanians

and Kosovo-Serbs went to a new level of escalation.

 

 

4.4 Developments from 1989 until 1999 

The development after 1989 for that is the mass rally of Serbs and Montenegrins in the

village of Kosovo Polje in April 1987 important. The nationalist tendencies already

mentioned here came up, which resulted in a row on the conflict between Serbs and

Albanians. 

In 1989, the Serbian parliament also began to change the Constitution so far as to

restrict the independence of Kosovo. The control of the police, courts, and important

political institutions and language issues came again under purely Serbian control.

The result of this policy was mass demonstrations on the part of Albanian population

and clashes with Serbian security forces.

20

Because of the oppression of the Albanian culture and re-Serbisation policy, on the

side of Kosovo was held a referendum by the Albanians in September 1991 for a

"sovereign and independent state of Kosovo".

There was a "shadow government" led by Rugova. The policy of "Democratic League

of Kosovo (LDK)" was based on three principles: (Baierl)

1) No use of force

2) Internationalize the Kosovo problem

3) Infiltrate Serbian government

These two "governments", first, the official Serbian government and the other part, the

"shadow government" of Kosovo-Albanians, led to a stable but explosive situation

ended in 1995.

After the Dayton peace agreement, in which a total solution for the post-Yugoslavian

countries world was formulated, there were two million Albanians from Kosovo, not on

the agenda (the so called “Dayton’s Forgotten").

Unlike the Albanians, the Montenegrins with a population of 645 000 was given an

own republic within the new Federal Republic of Yugoslavia. A further consequence to

the disappointment of Dayton was a radicalization among the Kosovo-Albanians and

the disposal of non-violent principles of the LDK. This was followed by 1997, the first

violent action of the Albanians against Serbian institutions and government members.

One consequence of these acts was the establishment of the Liberation Army - KLA14,

which led to an increasing repression by the Serbian special police and army. (Baierl)

From 1998 and even 1999, a massive repression against the Albanian population in

Kosovo was led to quell the secessionist aspirations and the Rise of the KLA.

Only after military conflicts and massacres in Kosovo, the Western community tried

with the "Rambouillet-Agreement to" impose a solution for the future of Kosovo.

This was again rejected by the Serbian government because they saw it as a result of

the secession of Kosovo. In response to the rejection and to prevent on the grounds a

humanitarian catastrophe, NATO led between 24th of March 1999 and 9th of June 1999

air strikes against the Federal Republic of Yugoslavia, with the de facto surrender and

the implementation of the Kosovo Force - KFOR. (Ismayr)

14 UÇK – Ushtëria Çlirimtare e Kosovës dt. Befreiungsarmee des Kosovo.

21

From a legal point of view such a military operation in terms of the UN - Charter is not

without any doubt justified. In Article 2, paragraph 4 of the UN - Charter is pointed out

a prohibition of force, so that the aggressive war against Yugoslavia in terms of

international law is not justifiable.

Original wording of the UN - Charter Article 2, paragraph 4:

"All Members shall refrain in their international relations from the threat or use of force

against the territorial integrity or political independence of any state, or in any other

manner inconsistent with the Purposes of the United Nations."15

With the deployment of international troops began the mandate of the UN, which

provides in its Resolution No 1244 of the UN Security Council, 10th of June 1999 a

special status for Kosovo.

An excerpt of the text of the UN - Resolution No. 1244:

"The Security Council decides that a political solution to the Kosovo crisis on the

general principles in annex I to this resolution and the subsequent comments in the

principles and other required elements in Annex II is based"16

However, there is a contradiction in the UN resolution that looks like this: on the one

hand, the sovereignty and territorial integrity of the Federal Republic of Yugoslavia is

confirmed, on the other hand, there are calls for "substantial" autonomy for Kosovo. A

majority of Kosovo-Albanians interpreted this for a self-determination, which in turn is

also demanded by the majority of Albanian politicians. Belgrade insists, in return again

on the inviolability of the borders of the state and does so from secession.

It is the definition of Kosovo's development important to show not only its historical

development, but also taking very much closer the economic development. This fact

finds its legitimacy, as economic recovery in Kosovo could also mean political stability.

 

15 http://www.hrweb.org/legal/unchartr.html 16 http://www.uni-kassel.de/fb5/frieden/regionen/jugoslawien/un-sr-res-1244-1999.html.

22

4.5 Development since 1999 

After the withdrawal of Serbian troops from Kosovo, left also much of the Serbian

population. It is also said that they have been expelled, what has happened to some

extent, but most of it has fled of fear that the Albanian population would take revenge

on them. 

At first real riots occurred in 2001, which were not directed against the minorities in the

country, but should serve as an attention to their poor economic situation. Although the

economy was still so bad, but people in the country were still busy with reconstruction,

and were able to draw on help from their relatives abroad.

Until March 2004 (Vedran Džihić, Christine von Kohl), the situation was normalized in

many areas, when there was serious unrest in the region. The key factors were the

deaths of two Albanian children, and a missing child.17 A more active conflict was the

result of several dozen dead people and over 100 injured. All the newspapers in the

West took advantage of the opportunity, and pushed to the stress of an ethnic conflict.

They accused that the UN mission in Kosovo had failed because they could not

prevent such unrest.18 But there is also much more to report about that region that is

for the better good of all, like a documentary filmed by a team of international

observers that shows Mitrovica in another point of view, which is exactly the opposite

of the mood described in most western media.19

The people in this town try to make the best out of their miserable situation by counting

on each other, and also try to leave behind the past.

This city is also seen as a major economic factor for Kosovo (see the topic about the

resources).

17 FAZ 15.April 2004. 18 taz. 27.5.2004. 19 http://www.esiweb.org/index.php?lang=en&id=48.

23

5. Education and Health 

 

5.1. Education 

The education system in Kosovo is similar to the ones in Former Yugoslavia with just

small changes and consists nine years of compulsory basic, primary school and lower

education, supplemented by three or four years of secondary educations that is split in

Pharmacy, Medicine, Technical School, Economy School, Gymnasium. The

government is planning to amalgamate all vocational education programs into grades

10-12. Furthermore the government is currently planning to make upper secondary

education and one year of pre-primary education compulsory.

“Approximately 498,000 students were enrolled in the public education system as a

whole in the 2008/2009 academic year, 73% of them at the pre-primary and basic

(grades 0-9) level. The facilities for basic education consist of 547 main basic schools

(grades 0-9) and 422 satellite schools (grades 0-5). Main basic schools can have 1-5

associated satellite schools under their management. Upper secondary schools

consist of 44 gymnasium (general education) and 65 vocational schools.” (Public

Expenditure Review Report World Bank 2010)

Graph 6: Enrolments by Level

Source: Public Expenditure Review Report World Bank 2010

There is still an equality in education in Kosovo, as the poverty rate is high there is just

less possibility to educate more than one child, and mostly the boys are sent to high

schools or University and as second choice the girls can take advantage of education

if the older brother doesn’t want a high education. But it depends mostly on the region

and also on the economical status if they can get a higher education. There is less

difference for boys or girls, it is particularly equal for both sexes.

“In 2005/06, the net enrolment rates for upper secondary education were estimated at

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24

74% on average, varying from 67% for the poorest quintile to 81% for the richest, and

between 67 percent for girls and 81% for boys. Overall, Kosovo’s secondary enrolment

rate is among the lowest in Central and South Eastern European region, similar to that

of Albania (74%) and Romania (73%) and well below Macedonia (82%), Bulgaria

(88%) and Hungary (91%).” (Public Expenditure Review Report World Bank 2010)

But the main problems lye also in the quality and the investments of the government,

those are really low and can’t fulfil all needs for the young generation. In 2008 the

government was spending on education around 4.3% of the GDP that is the lowest in

the Region.

The Salaries are also on a low level, where there is not much enthusiasm to work hard

and with much quality. But the problem is that you can’t raise the salaries in education

and leave the other sectors beside. A table shows the income of teachers based on

their qualification.

Graph 7: Salary based in qualification

Source: Public Expenditure Review Report World Bank 2010

The is mostly problematic for basic daily needs and therefore many teachers are

teaching in more than just one school.

The schools in Kosovo teachers more stuff and also more buildings for students, as

there are over 45 pupil in one class in the secondary schools and the teachers have

many problems to teach with high quality because of the missing attention of the pupils

in their class and also of the missing resources. Furthermore they need changes in

investments and also pay more attention that there will be changes that can keep up

with the neighbours.

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25

 

 

5.2. Health 

The Kosovo health system is mainly tax funded where the government spends about

3% of the GDP and 10% of general government expenditures as you can see it in the

graph below.

“Kosovo is among the few health sectors that still have a Shemasko health care model

the centrally planned, National Health Service (NHS) model of the former Soviet

Union. Under this direct-provision model, the financing, risk pooling, and provision of

health care is integrated and managed by the same organization and the budget is

derived from the general state budget.” (Health Financing Reform Study. World Bank

2008)

The Ministry of Economics and Finances transfers health funds from the central

budget to hospitals of around 51%, to the municipalities of around 26% and to the

Ministry of Health for other services around 22%.

Graph 8: Government expenditures on Health 2004-2007

Source: Health Financing Reform Study. World Bank Report 2008

It seems that Kosovo has the worst health outcomes in the Balkans, as it can bee

seen in the graph below on every indicator - life expectancy, maternal death rates,

infant and child mortality, immunization rates and tuberculosis incidence – where

Kosovo ranks below the neighbouring countries. The result of preventable problems

comes up, when we have a look on the child mortality rates, that are twice as high as

that of his neighbours. “About one-third of children under-five suffer from vitamin A deficiency, and 20 percent

have stunted growth. Environmental problems such as air pollution, waste

4

Figure 1.1 - Key Functions in the Health Financing System

Cost sharing/user fees

Health services

The population

Collection of funds

Provision of services

Purchasing of services

Pooling of fundsCoverage

Coverage

Choice?

Choice?

Contributions

Entitlement?

Ste

war

dshi

p of

fina

ncin

g

(gov

erna

nce, reg

ulat

ion

and

prov

isio

n of

info

rmat

ion)

Source: Kutzin, 2001

8. The Kosovo health system is predominantly tax funded. Government health spending is about 3 percent of gross domestic product (GDP) and 10 percent of general government expenditures (table 1.2). The Ministry of Economics and Finance (MEF) transfers health funds from the central budget to hospitals (51 percent), to municipalities in the form of an earmarked health grant for the provision of PHC services (26 percent), and to the Ministry of Health (MOH) for other services (22 percent) (MEF 2007). Figure 1.2 provides an overview of the flow of public health funds. The current level of government spending manages to cover about half of total health expenditures while patients co-finance care out-of-pocket at the point of service use. In the absence of recent household survey data and accounting systems in health facilities, the level of private spending is extrapolated based on estimates from the 2002 Living Standards Measurement Survey (LSMS) and more recent Household Budget Surveys (HBS).

Table 1.2 - Government Expenditures on Health, 2004!07 Kosovo 2004 2005 2006 2007 (est) Government expenditures on health (! million)

64.6 71.4 68.3 70.1

Government expenditures on health (% of GDP)

2.8% 3.2% 3.0% 3.1%

Government expenditures on health (% of general government expenditures)

10.4% 9.6% 9.8% 9.8%

PHC grant (% of government expenditures on health)

28% 25% 26% 27%

Source: MEF; Ministry of Local Government and Administration (MLGA)

26

management and heavy metal pollution affect the population’s health: the Mitrovica

municipality reports the highest blood lead levels in the world.” (Public Expenditure

Review Report World Bank 2010)

Graph 9: Health Indicators for Kosovo and Neighboring Countries, 2007

Source: Public Expenditure Review Report World Bank 2010

The main problem is that corruption is even in the case of health very profitable and

widespread as the government and the institutions are weak. Corruption leads to

private gain and informal payments for health care. It happens mostly that a visit in a

hospital will cost you another visit in a private clinic that is leaded by some of the

doctors in the public hospital.

The low affectivity of the government to prevent such things costs the population a

huge amount of money, as one control in a private clinic costs just for an x-ray

between 20-40 Euros, and if you live in the Diaspora than you have mostly to visit

those to get “better” results, because in public clinics nobody pays much attention on

you. The graph below shows the so called out-of-pocket payment for health care in

Kosovo.

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27

Graph 10: Trends in Health Expenditures in Kosovo

Source: Public Expenditure Review Report World Bank 2010

“Any future health financing reform in Kosovo must therefore be built on principles of

good governance, transparency, responsibility, and accountability for results, which

would require investment in standard financial management systems in insurance and

health facilities, financial audits, quality and utilization control in all health care

facilities, and keeping managers and health staff responsible and accountable.”

(Health Financing Reform Study. World Bank 2008)

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28

6. Economy, Labour, Poverty and future perspectives 

6.1. Poverty and Labour 

As we seem to have the main problem with literature of this topic I have to base the

facts on the publications made by the World Bank, NGO’s and some statistic data on

the Internet page of the Ministry of Transportation and Infrastructure.

With a GDP per capita of €1,850, is Kosovo one of the poorest countries in Europe.

Poverty remains persistent and widespread: according to the latest available data

(from 2007) 45% of the population is living below the national poverty line, and an

estimated 17% are extremely poor – i.e., unable to meet basic nutritional needs.

Extreme poverty is disproportionately high among children, the elderly, and

households with disabled members and female-headed households. (World Bank

Report 2010)

Graphs 11 and 12: Absolute poverty

Source: World Bank staff calculations from HBS data.

However, the narrowness of the poverty gap suggests that poverty is not deep.

The indicator of poor households is mostly the education and also if the house is

iv

70 percent of the people with vocational and tertiary education report being salaried employees, compared to 25 percent of secondary educated individuals.

The poor are concentrated in rural areas and in Mitrovica and Ferizaji

10. The majority of the poor live in rural areas. Rural and urban residents faced the same likelihood of poverty, about 42 percent, in 2003. However, by 2005, urban poverty had declined by about 5 percentage points and rural poverty had increased by a similar magnitude (Figure v), so that more than two-third of all the poor now lived in rural areas. Poverty in rural areas is highly correlated with lack of land, livestock or agricultural equipment.

11. Poverty incidence varies widely across regions. In 2003, Mitrovica, Ferizaji, Gjakove and Prizren had higher incidence of poverty compared to the rate for all of Kosovo. By 2005, only Mitrovica and Ferizaji maintained that distinction. Pristina, together with Gjilani had one of the lowest poverty rates in 2003. However, while this has worsened by 2005 for Pristina, it was still lower than the average for all of Kosovo. Furthermore, while Pristina has lower incidence of poverty than the Kosovo rate, it ranks as the highest contributor to poverty. Indeed, 3 of every 5 poor people live in only three regions – Pristina, Prizren and Mitrovica.

Non-income dimensions of welfare show better outcomes, but are beset by inequities in access to, and low quality, of key public services

12. Finally, while non-income dimensions show better outcomes, they suffer significant inequities and poor quality. More specifically, there are sizeable differences in access to secondary and tertiary education between the richest and the poorest households. Furthermore, rural families have substantially lower access to central heating and tap water compared to urban families. Also, both quality of water and quality of health services are known to be lower in rural areas.

13. Moreover, a large fraction of the population reports being deprived on multiple dimensions. For instance, about 8 percent are materially poor and have no access to indoor water tap and proper sanitation. Just as many, exactly 9 percent, are poor and have no access to telephone connection or bathroom in the dwelling (Figure vi). These rates are much higher than Romania (or Georgia and Russia) where only 1 percent of the population reported being deprived on multiple dimensions.

14. This brief profile of the poor suggests that a diverse group of households faced hardships during the period under review. Such widespread poverty is not surprising in the context of prevailing macroeconomic conditions.

Figure v: Rural and urban poverty trends

44.2

12.5

49.2

18.1

42.1

15.6

37.4

14.0

010

2030

4050

% o

f the

pop

ulat

ion

Rural Urban2003/04 2005/06 2003/04 2005/06

Absolute poverty Extreme Poverty

Source: World Bank staff calculations from HBS data.

EXECUTIVE SUMMARY

1. About 45 percent of the population in Kosovo is poor, with another 18 percent vulnerable to poverty. The persistence of poverty levels in the first half of this decade is not surprising within the context of prevailing macro-economic conditions characterized by slow growth, low incomes and tight expenditure constraints. Without the safety net provided through migration and remittances, the welfare of a large fraction of the population would have been even worse. However, the good news is that poverty is shallow in the sense that many people are just above or just below the poverty line. The shallowness of poverty also implies that a small positive change in incomes, through employment generating growth, can pull many people out of poverty.

Living standards have stagnated

2. Overall economic stagnation is reflected in the lack of progress in improving living standards. About 15 percent of the population is estimated to be extremely poor, defined as individuals who have difficulty meeting their basic nutritional needs (Figure i). About 45 percent (that is, a little over 2 in 5 Kosovars) report a consumption level below the poverty line, which in 2002 prices is set at 43 Euros per adult equivalent per month. These poverty rates are very high compared to neighboring countries (Figure ii) and unlike many countries in the region, have not changed over time.

3. Only the top 20 percent of the population had a small positive growth in consumption, between 2003 and 2005, while the rest had negative growth. Among the poorest groups, the losses were substantial. The poorest fifth of the population experienced consumption loss of around 10 percent. Examining the changes in consumption separately for urban and rural areas shows that consumption declined for nearly all rural populations, while in urban areas only the bottom fifth of the population reported decreased consumption.

4. In addition to stagnant poverty a large fraction of the population is vulnerable. A shock that reduces incomes by 25 percent could send an additional 18 percent of the population below the poverty line. A similarly positive increase in the incomes of the population can lift as many out of poverty. This reflects the phenomenon that while poverty is widespread, it is shallow in the sense that a large fraction of the population is just around the poverty line. About 40 percent of the vulnerable are estimated to live in Pristina and Prizren.

Figure i: Absolute and Extreme Poverty Rates

43.545.1

13.6

16.7

1020

3040

50E

xtre

me

10.0

20.0

30.0

40.0

50.0

Abs

olut

e

2003/04 2005/06

Confidence Interval

Source: World Bank staff calculations from HBS data.

29

headed by a man or a woman. Households with female heads have higher poverty

incidence. The poverty incidence is estimated to be higher by 4 percentage points for

female-headed households compared to male heads of households. However, over

time, this gap has not widened, which suggests that despite the difficult macro-

economic situation, female headed households seems to have managed their way of

living in these bad situations. The estimated poverty incidence for Serb heads of

households has increased over time, though data quality issues which appear to be

more serious here than general, imply that the magnitude of the deterioration in these

trends should be treated with caution. (Kosovo Poverty Assessment, World Bank)

But there seems to be also another factor for the poverty in Kosovo, that is related to

the high rate of unemployment that lies officially at around 40% but unofficially it is

about 60%, as we can estimate a employment rate of around 29% in Kosovo, seems

to be the unofficial number more correct. Related to that, Kosovo seems to have the

weakest employment rate in Europe and has to face on the other side a huge

percentage of young people that is the highest in Europe. Kosovo’s labour

participation rate lies at 53% among the working age population and is substantially

below the average among all transition economies, which is around 65%.

The main problem is that the young generation has to face the bigger problems, as

there are less for to many people. Every year around 30.000 young people move into

the market, but there are at the same time just 10.000 new working places that can be

offered each year. As we already mentioned that there is a high rate of young people

in Kosovo, we have to deal with that. The unemployment rate at the young people is

estimated to be over 70%, but we never have exact numbers. This Graph from the

World Bank shows the problems we have in nowadays.

30

Graph 13: Youth unemployment Rate

Source: World Development Indicators (2005).

But there is more the difference between young male and female as we can see the

reports that mostly the men are participating in the market and young women have still

the problem to become part of it. As another graph from the World Bank in 2008,

shows we have to face the obvious problem and must change the situation. Maybe we

have to see it also from another view of point, as mostly women are attending in

schools like High-School, Economic-School etc, and the young men are trying to

become part of the labour market. It is also a big problem that we have to face, that

the older generations are more close to traditions and on the other side, the money is

missing to educate more than one child. As women are less employed than men, there

comes a calculation that the dependence on the husband is much higher in many

levels.

Educating a girl is changing in this decade, as we can see a positive development of

young girls from the rural areas visiting in higher numbers high-schools, economy-

schools and also Universities. But nevertheless the chances are still worse for them to

get employed as we can see in the graph below.

Figure 1.1: Kosovo displays the highest youth unemployment rate in the ECA region.

70.0 -

60.0 - 6 M K D

50.0

6 P O L 6 H R V

30.0 - * G E o BGR

20.0 - M ” A OM

10.0

0.0

0 1000 2000 3000 4000 5000 6000 7000

GDP per capita

Source: World Development Indicators (2005). Data for Kosovo from World Bank Estimates using 2005

LFS .

0

0

10.

Pays

Young individuals in Kosovo are poorer than average. Children and young people under age 24 are disproportionately likely to live in extreme poverty.

Approximately 45 percent of the PO ulation lives in poverty and 17 percent in

extreme poverty (World Bank 2007). Individuals under age 25 comprise about 57

percent of people facing extreme poverty, with young people aged 15 to 24 comprising 22.4 percent (UNDP 2006).

B

Forty percent of all unemployed in Kosovo are between 15 and 24 years of age.

LFS estimates indicate about 30 percent of the WAP and about 38 percent of all the pool of unemployed in Kosovo i s comprised of youth between 15 and 24 years

of age.

Within the broader problem of youth labor market outcomes, this report

particular attention to Youth in Jeopardy (i.e. extreme poor and unemployed youth). The traditional focus for discussion o f youth employment problems has been on

unemployment. In addition, this report raises awareness of a group o f vulnerable youth (or youth in jeopardy). The government o f Kosovo w i l l need to focus and prioritize i t s

youth policy agenda. Currently, there are 163,000 young individuals in Kosovo who are

unemployed. As such, the government may consider the possibility to target interventions

and limited resources to those who need them the most through the creation of safety-nets for vulnerable groups of the population. Youth in jeopardy constitute an important group

at risk in Kosovo and one that i s less likely than others to benefit from future

improvements in labor demand. B y focusing on those in need, Kosovo can avoid creating an underclass o f excluded groups, poverty traps, and intergenerational transmission of

poverty:

* The groups most at risk in terms o f income poverty include children, the elderly, female-headed households, the disabled, the unemployed, precarious job holders, residents o f secondary cities, and non- Serb ethnic minorities.

9

31

Graph 14: Male and Female Employment Rates

Source: World Bank calculations using 2003-05 LFS data. Estimates for 2006 from SOK (2006).

There is also the problem of poverty of the young generation that is unemployed. The

risk to end up poor is higher in less educated families or in rural areas, as the people

in towns have more opportunity to get employed. A report from the World Bank in 2008

about the young generation mentions that “Twenty percent of all unemployed youth in

Kosovo are extreme poor, defined as those living in households in the first [poorest]

consumption quintile. This group is at high risk to face social exclusion, long-term

poverty, and lack of second chances. The majority of youth in jeopardy are women

and low-educated youth. Youth in the Mitrovica region display a higher risk of facing

extreme poverty and unemployment at the same time.”

As we know the Mitrovica region was in earlier times much better situated because of

Trepca, but this will be treated later.

5. Despite improvements since 2003, young females display the worst

employment outcomes in the labor market. Employment outcomes for females are less

favorable than those for males, especially among youth. For females, employment and

participation rates are very low, not only for young women but for the overall female

working-age population. As expected, employment rates among female youth are lower

than among females on average. However, while labor market indicators for young males

have been stable (roughly unchanged) since 2003, labor market indicators among females

(albeit worse than among males) improved between 2003 and 2006 (Figure 11.1).

90.0 -

80.0 -

70.0 -

80.0 -

50.0 -

40.0 -

30.0 -

Figure 11.1: Young females participate very little in the labor force compared to young

males, and the few participants are likely to be unemployed.

77.7 80.9

E.; . - , +

*. - - - - - .. . . - - --I -. 64.7 60.6 61.3

-15-24 - I- -15-64

Male Employment Rates

30.0 -

20.0 -

30.0 4

-15-24 - I- -15-64

17.6 21.2

15.6

'O'O 1 -15-24 - I- - 15-64

Female Employment Rates

-15-24 - I- -15-64

40.0 50'01 30.0 4

20.0 4 11.9 11.9

10.2

4.4 5.6 %7

"." I

2003 2004 2005 2006. 2w3 2004 2005 2006'

Male Unemployment Rates

100.0 7

-15-24 - I- -15-64

80.0

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53.8

A1 1 _... 40.04 m . . . 32.9 34.3 . . . 30.9

30.0

20.0

.. . - .. - - - - - - .. 2w3 2004 2005 2 w

Male Labor Force Participation Rates

80.0 ,

Female Unemployment Rates

100.0,

2003 2004 2005 2006.

Female Labor Force Partlcipatlon Rates

80.0 ~

70.0

50.0 I -15-24 - I- -15-64

!

..

2003 2004 2W5 2006'

Source: World Bank calculations using 2003-05 LFS data. * Estimates for 2006 from SOK (2006).

6. Employment and participation rates are higher for young individuals with

higher levels of education. Employment and participation rates are higher among youth

aged 20 to 24 than among youth aged 15 to 19. This occurs because youth in the latter

group are largely enrolled in secondary education. For youth aged 20 to 24, having

15

32

6.2. Economic trends 

We should have in our mind that Kosovo is a young state and has to deal with different

problems. One of them is the low GDP and also low rate of production for export. One

thing is interesting as we have a look on the graph below that show us, Kosovo made

never depts. It is a phenomenon that was brought up by the LDK-Government, as this

never invested all the money they had. They had from 2000 until 2007 every year a

budget that was not invested of around 300 Million Euros. Maybe this can be seen as

a factor for the problems we still have to face.

Graph 15: GDP and Debts

Source: Webpage of the Ministry of Economic and Finances

Nevertheless Kosovo’s economic growth has been solid since the end of the conflict in

June 1999. The reconstruction of houses and infrastructure can be seen as an engine

for this process. Most of these investments were done by the people living uproad and

also with some help of the international donor-funds. The growth of GDP had an

average of 4% and reached in 2008 5.4%.

Europe & Lower-

POVERTY and SOCIAL Kosovo Central middle-

(est.) Asia income

2008

Population, mid-year (millions) 2 446 3,435

GNI per capita 2,510 6,052 1,905

GNI (US$ bllions) 5.4 2,697 6,543

Average annual growth, 2000-08

Population (%) 1.5 0.2 1.0

Labor force (%) .. .. ..

Most recent estimate (latest year available, 2004-06)

Poverty (% of population below national poverty line) 37 36 ..

Urban population (% of total population) 37 36 47

Life expectancy at birth (years) 74 69 71

Infant mortality (per 1,000 live births) 35 28 31

Child malnutrition (% of children under 5) .. 5 13

Access to an improved water source (% of population) .. 92 81

Illiteracy (% of population age 15+) 6 3 11

Gross primary enrollment (% of school-age population) 93 103 112

Male 93 104 113

Female 93 102 110

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1995 2005 2006 2007 2008

GDP (US$ billions) .. 3.8 4 4.6 5.6

Gross domestic investment/GDP .. 23.3 25.1 26.2 28

Exports of goods and services/GDP .. 7 9 10.4

Gross domestic savings/GDP .. -12 -11.3 13.2 16.6

Gross national savings/GDP .. -1.8 1.4 1.3 -2.8

Current account balance/GDP .. -25.1 -23.7 25.7 30

Interest payments/GDP .. 0 0 0 0

Total debt/GDP .. 0 0 0 0

Total debt service/exports .. .. .. .. ..

Present value of debt/GDP .. .. .. .. ..

Present value of debt/exports .. .. .. .. ..

1995-05 2005 2006 2007 2008

(average annual growth)

GDP .. 3.9 4 3.9 5.4

GDP per capita .. 2.5 2.5 2.6 3.6

Exports of goods and services .. .. .. ..

Kosovo at a glance

33

Graph 16: Real GDP Growth 2005-2008

Source: Investment Promotion Agency of

Kosovo

The other South-eastern European Countries had a higher growth rate and the income

gap between Kosovo and his neighbours widened. But on the other side, the global

economic crises didn’t have much effect on Kosovo, and that for it reached also 4%

growth in 2009. This year seems to be also not very successful for Kosovo, as the

growth rate is staying at the same level. It is estimated to be around 4.6% according to

the IMF. One reason why there is a low inflation rate on the other side is because

Kosovo established firstly the „Deutsche Mark“ and after 2002 they took the Euro as

the local currency. The negative effect is that exports to non-European countries are to

expensive as Euro has an higher exchange rate to Dollar and „Schweizer Franken“,

those are the most important countries for export and import trade for Kosovo, as there

is a good connection with those two because of the huge Albanian Diaspora.

As we can see the global financial and economic crisis had a small impact on the real

growth of the economy of Kosovo. That shows that this country is not integrated into

the world market, or on a very low level that there is no influence that can be seen.

Maybe the people from uproad showed it, as they didn’t bring the last years as much

money into Kosovo as they were used to do so. The banking sector has remained

stable, with deposits as well as credit to the private sector continuing to grow in double

digits. But they have high debt-rates that don’t go under 12% and most of the people

can’t pay back, so they have to face insolvency and lose their grounds or homes. Over

35% of Kosovo lands are owned by the banks now and its growing each year, but this

34

is unofficially spokes, because they don’t show any statistics to prove that, as there is

the possibility that the people will not ask for credits anymore.

The deal to become member of the World Bank, was that Kosovo has to agree on

taking on responsibility of debts for past Federal Republic of Yugoslavia that has to the

International Bank for Reconstruction and Development (IBRD) amounting about €381

million. To help Kosovo administrating for repaying the debt, a Bank-administered

multi-donor trust fund was established. Thus far, the trust fund has received US$ 150

million from the United States, €5 million from the European Commission, and US$

0.75 million from the Swiss Government. (World Bank Report 2010) In 2009 already

Kosovo was able to pay a huge amount, about one-third of the IBRD loan, using some

money from the Trust Fund and an additional fund from the budget. “However, Kosovo

is facing other contingent liabilities (mostly towards the Paris and London Clubs) which

could be similar or greater in amount to the IBRD debt. In the event that Kosovo

assumes these liabilities, the consequences for debt sustainability would be

significant. Otherwise, a debt sustainability analysis (DSA) undertaken by the IMF and

the Bank indicates Kosovo’s risk of debt distress is moderate.” (World Bank Report

2010)

6.3. Criminality 

As we know in the Balkans the organized crime is a thread for the existence of most of

the countries. We have all the countries that have to face this problem, from Croatia

southwards to Greece. A report from the UN in March 2008 shows this serious case

and gives an overview of the main parts of their activities. “Assessing trends in

organized crime is challenging. Organized crime is even more difficult to measure than

conventional crime, because its detection is almost entirely reliant on state action.

Failure to act could be due to lack of capacity or it could be due to corruption.” (UN-

Report 2008)

As we can see the main problem for this region seems to be the high unemployment

rate, high level of poverty, low wages and the desire to live a modernized western life.

A mix of all these factors seems to have a positive effect on the organized crime.

Although “all countries of the region have ratified the United Nations Convention

35

against Transnational Organized Crime,” (UN-Report 2008) the reality shows the

opposite effect. It’s difficult to fight the organized crime if the politicians are part of it,

as it is also in Kosovo on a high rate.

The main areas where they are active are trafficking of Drugs, Humans and Weapons.

It is roundly agreed that drug trafficking, and specially heroin trafficking, is the highest

value criminal activity in South East Europe. It is estimated that something on the

order of 80 tons of heroin passes through the region to reach consumers in West

Europe every year. (UN-Report 2008) If we have a look on this report we ca see that

the activity of ethnic Albanians from Kosovo and the former Yugoslav Republic of

Macedonia is more difficult to detect in the official figures, since only citizenship, and

not ethnicity, is recorded. Most of the Kosovars have not only the UNMIK-passports

but also those from Serbia.

But the rate of crimes and drug smuggling participating by Albanians is falling over the

last years.

“In short, the single most notorious Balkan organized crime phenomenon – the role

played by ethnic Albanian traffickers in West European heroin markets – appears to be

in decline. Similar trends are seen in the other major organized crime markets

involving the region.” (UN-Report 2008)

The other areas where the crime is also situated is trafficking of people and smuggling

migrants, as after the fall of the Communism there was much confusion and the lack of

institutions and also the desire of the people to move into the Western countries

became after a while saturated. Nowadays the need to leave is because many people

hope to get a better future perspective and pay over 3000 Euros to come into the

European Union.

The citizens of two former source countries in the region (Bulgaria and Romania) have

not needed a visa to travel to the EU since 2002. For migrant smugglers at least, this

should represent a significant loss of client base. (UN-Report 2008)

If Kosovo, the last country in this region, becomes part of the visa liberalization there

will get lost the possibility of smuggling migrants. But the other case is that in some

areas, there is evidence that human trafficking was related to demand generated by

the presence of international forces, and as these gradually move out of the region,

demand should decrease. Kosovo has this problem on a high rate as the

representation of internationals is for a long term and the reports of trafficking woman

in Kosovo increased during this period.

36

The corruption is also decreasing in the region, but in Kosovo is the main problem of

the missing transparency and we have still to many actors. The main problem seems

to be in economic crime.

These offences are particularly difficult to measure, but there are two areas where

South East Europe leads the world in victimization according to the crime victim

surveys: payment of bribes and consumer fraud. (UN-Report 2008) Kosovo and

Albania seem to have the highest rates in the region. In Kosovo the Haradinajs are

known to be involved in many of these actions, but it was never made public.

As many politicians are involved in the organized crime, we will have to do much to

change this situation for a better good for the people.

 

 

6.4. Import and Export 

Kosovo’s economy restarted from the ground level after the war in 1998-99 where it

didn’t have much experience with external trade in the pre-war time. Therefore Kosovo

has a low capacity level for export as it is not orientated on that, and it has a low level

of production at all. That’s the reason why Kosovo makes over the years a widened

deficit and should try doing something to make the misbalance smaller. “Its exports of

goods covered only 10,3% of its import of goods in 2008. IMF projects a current

account deficit of 37% of GDP in 2009, up from 30% in 2008. (Economic Briefing

Report World Bank 2010)

From the year 1999 Kosovo imported almost all goods for consumption and also all

the raw material, as there was no production at the immediate period. The raw

material was used for the reconstruction and mostly paid by the people living in the

Diaspora, but also with foreign assistance of International Organizations. The improve

the economy and keep the step with the growth of it, there was the need of importing

more machinery and raw materials into Kosovo over the years.

About 40% of construction materials as well as agro processing are bow being

produced domestically and playing an important role. However as economy grew, also

imports grew steadily. Imports increased steadily from 2005 to 2008 from 1.16 billion

Euros up to 1.93 billion Euros or by 66.6%. The increase is illustrated in Table 1 total

imports 2005-2008 below. (Economic Briefing Report World Bank 2010)

37

Table 1: Total imports 2005-2008

As we can see the imports of Kosovo are about 50% of its GDP, therefore the trade

balance there is unfavourable as we have a large growing trade deficit. The economy

of Kosovo is based on the structure of imports and needs to find a balance.

“The main commodities in the import structure in 2008 were: Mineral Products with

387 million Euros (about 20.1% of the imported goods); Prepared foodstuffs, beverage

and tobacco with 262 million Euros (13.6%); Machinery, appliances etc. with 235

million Euros (12.2%); Base metals and articles of base metals with 179 million Euros

(9.3%); Products of chemistry or allied industries with 138 million Euros (7.2%);

Transport means with 130 million Euros (6.7%); and Vegetable products with 104

million Euros (5.4%).” (Economic Briefing Report World Bank 2010)

Most of these products can be produced in Kosovo itself, but there is still a problem

with the subventions and taxes, as it is less expensive to import something than to

produce it in the country. Over the years, if nothing changes there may lead this

phenomenon to more imports and less production, and we will have to face the

problem of high unemployment in combination with a higher poverty rate.

As already mentioned, there was no tradition in producing for export over a decade

and it went on after the war in 1999. After the privatization process there were many

problems with the TRUST-Agency, which managed this process. There were

companies sold without any basements or security plans, because most of the

employees were fired or the companies machinery was sold and they changed the

production or even stopped it at all as it happed to Farmakos, Printeks and other

companies in the country.

After the privatization of Ferroniekel there is a small production for the export-market

but also on a very low level. The export is moving around 6% of the GDP, that is

10times lower than the imported goods. We can see on Table 2 an increase of exports

from 56 million Euros up to 199 million Euros from 2005-2008, but nevertheless it

Kosovo Quarterly Economic Briefing

2009 (1)

!

!"#"$"!%&'"()#!*+,!-.'"()#!/001"/002!

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+*,-%!0%*%!,+!-6#.,$"*7!8*,-%!,&&"9'+!,'-!/%'&%!+/%!:9**%'+!,&&"9'+!0,#!,'-!#+644!*%(,6'#!"'%!".!+/%!

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=*"-9&+6"'!*%#9(%-!,+!+/%!6((%-6,+%!=%*6"-7!C"#+!6(="*+#!0%*%!6'6+6,44)!'%%-%-!."*!+/%!+*%(%'-"9#!

*%&"'#+*9&+6"'!%.."*+#!(,6'4)!.6','&%-!;)!H6,#="*,!*%(6++,'&%#!,'-!."*%6<'!,##6#+,'&%7!K"0%$%*!06+/!

+/%!%5=,'#6"'!".!%&"'"(6&!,&+6$6+)!6'!!"#"$"!("*%!(,&/6'%*)!,'-!*,0!(,+%*6,4#!0%*%!6(="*+%-7!8/%#%!

6'$%#+(%'+#!/,$%!.9%4%-!-"(%#+6&!=*"-9&+6"'!,'-!#4"04)!=*"$6-%-!."*!6(="*+!#9;#+6+9+6"'!6'6+6,44)J!,'-!

4,++%*!"'%!/%4=%-!%5="*+#!+"!%(%*<%7!Q;"9+!R?A!".!&"'#+*9&+6"'!(,+%*6,4#!,#!0%44!,#!,<*"!=*"&%##6'<!,*%!

'"0!;%6'<!=*"-9&%-!-"(%#+6&,44)!,'-!=4,)6'<!,'!6(="*+!#9;#+6+9+6"'!*"4%7!K"0%$%*!,#!%&"'"()!<*%0J!

,4#"!6(="*+#!<*%0!#+%,-64)7!

>(="*+#!6'&*%,#%-!#+%,-64)!.*"(!B??S!+"!B??3!.*"(!T171U!;6446"'!+"!T172@!;6446"'!"*!;)!UU7UA7!8/6#!

6'&*%,#%!6#!6449#+*,+%-!6'!G*,=/!1!+"+,4!6(="*+#!B??S"B??3!;%4"07!

6"&!78!

!"#"$"!6(="*+#!,*%!,;"9+!S?A!".!6+#!GHI7!

!"#"$"!+*,-%!;,4,'&%!6#!+"+,44)!9'.,$"*,;4%!

06+/!,!$%*)!4,*<%!,'-!<*"06'<!+*,-%!-%.6&6+7!

K"0%$%*J!+/%!#+*9&+9*%!".!6(="*+#!/,#!

6(=*"$%-!06+/!6'&*%,#%!6'!6(="*+!"*6%'+%-!6'!

=*"-9&+6"'!&,=,&6+6%#!,'-!*,0!(,+%*6,4#7!"

B??S! B??U! B??F! B??3!

1J???!

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G*,=/!17!8"+,4!6(="*+#!B??S"B??3!OM9*"!(6446"'P

!

8,;4%!17!8"+,4!6(="*+#!B??S!"!B??3!

2005 2006 2007 2008

total imports ! 1,157,494,096 1,305,880,834 1,576,188,154 1,928,238,469

!"#$%&'!!()(*+(*%),!-..*%&!".!/"+"0"!

8/%!(,6'!&"(("-6+6%#!6'!+/%!6(="*+!#+*9&+9*%!6'!B??3!0%*%V!C6'%*,4!I*"-9&+#!06+/!T@3F!(6446"'!

OB?71APW!I*%=,*%-!.""-#+9..#J!;%$%*,<%!,'-!+";,&&"!06+/!TBUB!(6446"'!O1@7UAPW!C,&/6'%*)J!,==46,'&%#!

38

doesn’t change much as the GDP and the imports were growing at the same time.

Table 2 Total Exports from 2005-2008

“The main commodities in the Kosovo’s export structure in 2008 were: Base metals

and articles of base metals with 124.1 million Euros (63.3%); followed by Mineral

products with 17.9 million Euros (9.1%); Prepared foodstuffs, beverages and tobacco

with 10.5 million Euros (5.4%); Vegetable products with 8.9 million Euros (4.5%);

machinery, appliances electrical etc. with 8.4 million Euros (4.3%); Plastic, rubber and

articles thereof with 6.4 million Euros (3.3%); and Hides, skins leather with 4.8 million

Euros (2.5%).” (Economic Briefing Report World Bank 2010)

As we can see the main export factor seems to be the base metals and articles of

base metals that has grown up to 4-times from 2005 until 2008. It has reached over

60% of goods and is still growing. Ferronikel is the main producer for base metals that

is export oriented, mostly on articles of iron and steel. The development in this sector

is important for the future of Kosovo’s economy, as the mining sector should become a

main sector for the improvement of Balance of Payments, economic recovery and

finally economic growth.

Because of so many sunny days and much water Kosovo has a potential of exporting

energy, especially after the new investments planned in the energy sector, which

includes over 70 Hydro centrals to produce green and cheap energy. As I will show

later there is a huge export potential in mineral exploitation from Trepça mines and

other that exist and maybe some that will be developed in the future.

Kosovo Quarterly Economic Briefing

2009 (1)

!

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+!"6,7!6.8!69"%#,!7!-:!;67!!+!"6,7!$%"&!'0(H10!

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2005 2006 2007 2008

total exports ! 56,285,286.95 110,775,630.87 165,114,357.15 198,465,135.60

!!!"#$%&'!!()(*+(*%),!-..*%&!".!/"+"0"!

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C9-8?#"7!-:!P!99-.%Q!,%!69!!!LC-9"!-9%!."!8!/69"%#,!7!-:!%9-.!6.8!7"!!,31!B&!7!!"968!!8!I!,-C+!."7!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!0!Y-?9#!V!B%+!!7!9%!7!86"6!C?;,%7&!8!;@!Z!."96,!56.Q!-:!"&!![!C?;,%#!-:!K-7-I-!/Z5K31!

39

6.5. Agriculture, Industry and other sectors 

6.5.1. Agricultural sector  If we have a look at the natural resources of Kosovo, than we have in our minds the

young and vital labour force, which can help improving the production of agricultural

goods for the basic needs and also for exports. The free access to the EU market can

benefit the farmers and help developing this sector to make it competitive in the

regional market. But since the 1990s, the agricultural-food sector has suffered from a

breakdown in supply chains and there are significant obstacles to increasing

productivity.

“With diminishing opportunities and falling incomes, Kosovo’s agriculture has become

an economic activity of last resort, providing a critical source of income. The lack of

opportunities and falling incomes are the reason behind the very large number of small

and subsistence farms in much of Kosovo and the surrounding region.” (Kosovo

Unlocking Growth Potential: Strategies, Policies, and Actions. World Bank Report

2010)

During the last decades there is a high percentage of movement from the rural areas

to cities or other countries, as there is less economic opportunity to development

because of poor public services and fewer jobs. Therefore these demographic

changes are resulting into transformation to a new economy. However, these shifts are

also indicative of the few opportunities available in rural areas. Although farming

employs an estimated 35% of the total labour force in Kosovo, it is not a vibrant sector.

The majority of farms are operating at a subsistence or semi-subsistence level, while

commercially oriented operators frequently find themselves faced with insurmountable

expansion obstacles: lack of access to credit, land, quality inputs, and high-value

markets as well as degraded infrastructure. Unless Kosovo’s rural areas become more

dynamic and innovative, there is a significant risk that these potentially profitable

farmers will lose out to imports, and that smallholder farmers will remain mired in

poverty. By acting exclusively as an employment buffer, Kosovo‘s agriculture sector is

40

unable to realize its potential as a dynamic economic sector. (Kosovo Unlocking

Growth Potential. World Bank Report 2010)

With some 60% of the population living in rural areas and mostly working in

agriculture, Kosovo has a long agricultural tradition. At the same time, two-thirds of the

poor in Kosovo live in rural areas. In 2006, 49% of the rural households were poor and

18% extremely poor (in urban areas this was 37% and 14%, respectively). (World

Bank Poverty Report 2007) Poverty in rural areas is highly correlated with lack of land,

livestock or agricultural equipment such as tractors, plows, or trailers. In fact,

individuals without productive agricultural assets have the highest estimated incidence

of poverty in the rural population. In 2005, about 10% of households in rural areas

reported being landless and nearly 7 out of every 10 households in this group were

classified as poor. (Kosovo Unlocking Growth Potential. World Bank Report 2010)

Out of a total surface area of 1.1 million hectares approximately 588,000 or slightly

more than half is agricultural land with fertile, nutrient-rich soils. About 90% of

agricultural land is dedicated to livestock activities such as pastures, meadows, forage

crops and some fodder crops for animals. The remaining area is used for grain for

human consumption, vineyards, potatoes, fruit and vegetables. (Food processing

Industry. Report of Ministry of Trade and Industry 2010)

41

Graph 17: Structure of agricultural land

Source: Agriculture and food processing industry. Report by Ministry of Trade and Industry 2008.

The agricultural sector is for the rural economy in Kosovo a main factor and a major

potential source for growth. It is the main source of livelihood for the main rural

population. 90% of the rural population is owning land, 55% of them have livestock

and 15% is able to live by their own food productions. Around 70% of the people in the

rural area depend on agriculture; therefore there is the reason of a high risk of

potentially rural poverty. The average of the rural population is very young as there are

over 60% under 30 years old; there is the unemployment very high. If the agriculture

will develop there will increase employment and growth and a reduction on rural

poverty will be the effect. (World Bank Poverty Report 2007) In Kosovo the main sector and largest employer is still the agriculture. In 2004, it

6. Sector Specific Content

Kosovo is well endowed with agricultural land. Out of the total surface of 1.1

million ha approximately 580,000 ha, or 53 percent, is agricultural land.

With some 60 percent of the population living in rural areas, and with the

majority of these people working in the agricultural sector, Kosovo has a

long tradition in this area. This sector currently contributes with 19 percent to

the GDP of Kosovo and is the main source of income for the majority of the

population. It provides roughly 42 percent of total employment (World Bank

estimate) and accounts for 16 percent of the value of exports.

The arable land in Kosovo is considered to be of good quality. Combined

with the temperate climate that prevails throughout the country, very good

conditions for agricultural production exist (see Appendix for meteorological

data). Due to its fragmentation, the arable land in Kosovo is particularly

suitable for high value crops, such as fruits and vegetables. In addition, the

“socially owned” land that amounts to some 10 percent of the total arable

land surface, can be used for the cultivation of low value crops. The “socially

owned” land can be acquired through the ongoing privatisation process with

relatively low financial means.

Agriculture in Kosovo currently includes approximately 1,800 cooperatives

and commercial farms (both private and public) and 143,000 rural

households, 70 percent of which are defined as farms with an area larger

then 1 ha.

The average agricultural area per household is 3.2 ha. Farms with an area of

0.5 – 2.0 ha dominate the agricultural sector, while only 8 percent of arable

land is divided in units amounting to more than 10 ha.

Types of land in ha

3,500

10,000

16,200

32,000

34,500

60,800

69,800

76,300

81,200

0 20,000 40,000 60,000 80,000 100,000

Tera rosa

Rendzine

Kalkokambisol

Pseudogleje

Kambioli distrik

Deluvijale

Fluvisol

Vertisol

Kambisol Euterik

Structure of agricultural land

Meadow,vineyards andgroves;100,000 ha; 17%

Pastures;180,000 ha; 31%

Arable Land and gardens; 300,000 ha; 52%

17

42

accounted for 25% of Kosovo’s GDP, 16% of the value of total exports and between

25 to 35% of all employment, mostly in the informal sector (AMP, 2006). While its

recorded share of GDP has declined to 19% in 2005, this is not believed to be a

reflection of productivity gains in the sector. (Agricultural and Food processing

Industry. Report of Ministry of Trade and Industry 2008)

The dairy products sector is dominated by imports mainly due to inefficient small

holdings within the sector and severe under-capitalization. Despite a good supply of

local milk, imports of processed dairy products account for more than 70% of locally

consumed products. Kosovo imports around €25 - 30 million of dairy produce

annually, mainly UHT milk, yogurt, fruit yogurt, butter, white cheese and yellow

cheese. About 80% of its imports come from the EU, mainly from Hungary, Slovenia

and Germany. (Kosovo Unlocking Growth Potential. World Bank Report 2010)

Land devoted to crop production has remained stable. According to the SOK

Agricultural Household Survey, agricultural land use remained at the same level of

about 360,000 ha in 2004 and 2005. Livestock ownership also does not show an

increase. Kosovo’s agriculture is dominated by grains (49% of crop land is devoted to

grains), and characterized by small farm size (about 65% of all farms are less than 3

hectares), absence of advisory services, and low productivity all of which constrain its

contribution to growth. Acreage under crops peaked in 2004 (also the only year

estimated GDP growth was higher than the average for the period) but declined by

about 14% in 2005. (World Bank Poverty Report 2007)

The graph below shows the importance of the Agriculture.

43

Graph 18: Macroeconomic and Agricultural Sector Indicators

Source: World Bank Poverty Report 2007

During the conflict in the 1990ies and shortly after 1999, substantial investments were

made mainly in agriculture. The side effect was that the productivity gradually

increased and the number of employed people decreased. The country became

largely food self-sufficient and large quantities of agricultural products were exported

to former Yugoslavia.

There were drastic reductions in the availability of formerly subsidized inputs such as

fertilizer and irrigation. The combination of the loss of markets and reduction in

subsidies resulted in a dramatic decline in the terms of trade for agriculture. In the face

of these shocks, livestock numbers and agricultural land area dropped drastically,

especially for orchards, vineyards, and arable land. The character of agricultural

4

domestic use (SOK, 2005a). That said, it is important to keep in mind that there are few distortions in Kosovo agriculture so that what is emerging is built on comparative advantage.

Table 1.3: Macroeconomic and Agricultural Sector Indicators 2001 2002 2003 2004 2005 Agricultural output 2 Food imports 283 300 330 193 Food exports 1.5 3.8 7.6 10.3 Total ag surface 3 209,058 196,883 n/a 220,506 190,479

Wheat, ag surface 75,070 70,000 n/a 77,783 80,127 Maize, ag surface 75,038 69,000 n/a 100,970 74,079 Vegetable, ag surface 28,000 28,220 n/a 14,419 14,140

Labor market indicators 1 Registered unemployment 282.3 282.3 302 319.7 Workers' remittances 341 341 345 347

Agricultural Household Surveys 2004 and 2005 4, 5

Household size 7.7 7.8 Agricultural population (million) 1.3 1.3 1.3 Agricultural Land (000s) 291 264.9 260.1 Average yield (000s) 6

Grains 3.1 3.4 Vegetables 16.2 12.6 Fodder Crops 4.5 5.8 Fruits 9.7 5.1

Livestock Numbers Cattle (in thousands) 347 318 351.8 335.2 Poultry (in million) 2.2 3.1 2.6 2.2

Source: 1 WB 2006 Interim Strategy; 2 AMP Agricultural Development Plan;3Agricultural Statistical Office-MAFRD (total excludes forage and fruits). 4 SOK Agricultural Household Survey, 2005. Household size 2004 is from the 2004 report, thus not adjusted for changes in the weighting procedure. 5 Agricultural household survey data for the last two years is not comparable to 2001 and 2002 data because of change in methodology. 6Average yield was calculated by taking the unweighted average of yields reported in Tables 4.1 and 12 in SOK Agricultural Household Survey, 2005. Yields are in kg/hectare, while land is in hectares.

C. DISAPPOINTING LABOR MARKET PERFORMANCE

1.9 Sluggish growth has resulted in poor labor market performance in the last two years (Figure 1.1 and Figure 1.2). Overall unemployment rate rose from about 40 percent in 2004 to 42 percent in 2005 (SOK, 2006a). According to the Labor Force Survey conducted by the Statistical Office of Kosovo (SOK, 2006a, 2005b), the unemployment rate among male workers stayed around 30 percent in both years, but 60 percent among female workers. The number of registered unemployed rose from 282,000 in 2002 to 319,000 in 2005 according to official administrative records of registered unemployment (World Bank, 2006). Across age groups, the highest unemployment was among the youth (15-24 year olds) – 67 and 65 percent in 02/03 and 04/05 respectively. Finally, unemployment durations are long – that is, over 80 percent of the unemployed are in such a status for a year or longer.

1.10 Finally, wages remained unchanged throughout the period. Average real monthly wages reported by wage earners in the household remained flat between 2002 and 2005. The

44

production also changed, becoming predominantly subsistence oriented, with smaller

farms reporting in 2005 that 70% of their output was devoted to household needs.

(Kosovo Unlocking Growth Potential. World Bank Report 2010)

Agricultural-food imports are large and growing, from €280 million in 2005 to €470

million in 2008, an increase of 68%. The value of agro-food exports grew even more

rapidly over the same period, from €8 million to €20 million, an increase of 156%. But

exports are dwarfed by imports, resulting in an agro-food trade deficit that grew to

€453 million in 2008. In addition to a lack of competitiveness in Kosovo‘s agricultural

sector, several other factors contributed to this situation. The liberal economic regime

(with lower external tariffs) developed after the conflict exposed the domestic market to

agro-food imports. Out of total agro-food imports, prepared foodstuffs, beverages and

tobacco represent 57% of the value, followed by vegetable products (20%), and live

animals (16%). Prepared foodstuffs and beverages, along with vegetable products, are

also main exported items. Kosovo trades agriculture goods mainly with its neighbours,

in particular Serbia, Macedonia, Albania, and Greece as it is shown in the graph

below. (Agricultural and Food processing Industry. Report of Ministry of Trade and

Industry 2010)

Table 3: Imports and Exports of agricultural goods

Source: Kosovo Unlocking Growth Potential. World Bank Report 2010

 

6.5.2. Industry In the pre-conflict time in Kosovo, there have been four active industrial areas, which

had an impact on their surrounding environment. These are all related to mining and

raw material industries and are located in the following areas:

1. In and around the city of Mitrovice (Northern Kosovo) where lead and zinc mines,

ore concentration plants, lead smelting and refinery plants, a zinc refinery, a sulphuric

acid plant and a fertilizer and battery plant are located;

2. In Obiliq (North West of Prishtina) with the lignite open cast mines, a lignite drying

85

character of agricultural production also changed, becoming predominantly subsistence oriented,

with smaller farms reporting in 2005 that 70 percent of their output was devoted to household

needs (SOK 2005a).

F igure 25: Shifts in Agricultural Land Use and L ivestock Numbers Over the Last Two Decades

Source: SOK (2009).

6.5 With the decline of agriculture output, Kosovo!" agro-food trade deficit has been widening, reflecting a diluted competitive basis. Agro-food imports are large and growing,

from !280 million in 2005 to !470 million in 2008, an increase of 68 percent. The value of agro-

food exports grew even more rapidly over th"#$%&"#'"()*+,#-(*&#!8 million .*#!20 million, an

increase of 156 percent. But exports are dwarfed by imports, resulting in an agro-food trade

+"-)/).# .0%.#1("2#.*#!345#&)66)*7#)7#899:. ;7#%++).)*7#.*#%#6%/<#*-#/*&'".).)="7"$$# )7#>*$*=*?$#

agricultural sector, several other factors contributed to this situation. The liberal economic

regime (with lower external tariffs) developed after the conflict exposed the domestic market to

agro-food imports. Out of total agro-food imports, prepared foodstuffs, beverages and tobacco

represent 57 percent of the value, followed by vegetable products (20 percent), and live animals

(16 percent). Prepared foodstuffs and beverages, along with vegetable products, are also main

exported items. Kosovo trades agriculture goods mainly with its neighbors, in particular Serbia,

Macedonia, Albania, and Greece. Table 23: Kosovar Agro-food T rade (# million) 2005 2006 2007 2008 Imports 285.5 319.4 384.1 473.7 Exports 7.9 11.6 18.1 20.7

Net exports (exports minus imports) -277.6 -307.8 -366.0 -453.0

Source: SOK and Kosovo Customs (2009).

6.6 Agricultural imports from Kosovo!" trading partners, who receive production and export subsidies, place Kosovo farmers at a disadvantage. Production subsidies and export

subsidies are used to support agriculture @A#&%7A#*-#>*$*=*?$#.(%+)71#'%(.7"($. Many of these

countries allocate between one-third and two-thirds of their agriculture spending to subsidies.

These agricultural budgetary transfers vary, but are highest in Croatia, within the SEE region,

45

plant, gasification plant, two thermo power plants, a steam power plant and nitrogen

fertilizer plant;

3. In and around the town of Gllogovc (Central Kosovo), which has ferronikel mines

and metallurgical industry;

4. In Elez Han (South East of Kosovo) where limestone quarries and a cement factory

are located. (Strategic environmental analysis of Kosovo. The regional environmental

center for Central and Eastern Europe 2000.)

The industrialization of these areas took place during the 1960s and 1970s, when

environmental considerations where not included in the design, construction or

operation of the industries. Most industrial installations operated at full capacity during

the 1980s. From 1988 production has decreased significantly. The industrial activities

in Kosovo showed a decline of around 80% on average during the period 1988-1995.

(Kosovo Unlocking Growth Potential. World Bank Report 2010)

Graph 19: Industrial activities in Kosovo

Source: Strategic environmental analysis of Kosovo. The regional environmental centre for Central and

Eastern Europe 2000.

After the Kosovo-conflict 1998-1999, the thermo power plants and the related lignite

mines has begun to operate again (Mirash coal mine production in 2000: 160.000

t/January, 155.000 t/February; Bardi coal mine production: 61,000 t/January, 122,000

t/February); the other industries are idle (Strategic environmental analysis). Since the

1970ies the economic activities were centred in the production of raw materials and

semi-finished products as lead, zinc, coal and some textiles and also in agricultural.

During the period of Communism all heavy industry was public-owned. “The decline of

industrial production in the early 1990s ranges from 30% for coals to 97% for fertilizer.

Production of other products decreased from 70% to 95% between 1988 and 1995.”

(Toward Stability and Prosperity - A Program for Reconstruction and Recovery in,

16 16

Product 1988 Production 1995 Production % Decline

Coal (000 tons) 11,004 7,023 36.1

Lead (tons) 83,448 11,000 86.8

Zinc (tons) 48,547 5,000 89.7

Fertilizer (tons) 70,683 2,000 97.1

Cotton Yarn (tons) 13,361 1,224 90.8

Knitted Wear (tons) 849 260 69.3

Rubber Prod. (tons) 10,143 1,923 81

Cement (000 tons) 246 63 74.4

Table 1. Industrial activities in Kosovo59

Since the conflict in 1998-1999, thermo power plants and the related lignite mines has begun to

operate again (Mirash coal mine production in 2000: 160.000 t/January, 155.000 t/February;

Bardi coal mine production: 61,000 t/January, 122,000 t/February); the other industries are idle.

Over the last two decades, economic activity has centered on the extractive industries, production

of raw materials and semi-finished products (lead, coal, zinc and some textiles) and agriculture.

Heavy industry was largely publicly-owned. The decline of industrial production in the early 1990s

ranges from 30% for coals to 97% for fertilizer. Production of other products decreased from 70%

to 95% between 1988 and 1995.60 The reasons for this decline in the publicly-owned industrial

sector were the general economic crisis in FR Yugoslavia due to the breakup of SFRY, the

economic sanctions imposed and the lack of competitiveness of many companies. In Kosovo

additionally the sector was highly impacted by the so-called “enforcement measures”. These began

in September 1990 and continued throughout the 1990s.

The typical heavy industry of Kosovo paid no heed to the environmental impact it caused. Industry

was energy intensive, not very efficient and characterized by air/water/soil contamination because

of “dirty” production (no filters, untreated waste, leakages etc.). For example, the total area

covered by industrial waste dumps and/or transformed due to open–cast mining extends to over

10,000 ha. So far, no rehabilitation or re-vegetation of the waste dumps has been carried out. It has

been estimated that up to 1,000 ha of productive land was lost annually, due to inadequate solid

waste disposal methods (during the 1980s).61

During and after the conflict heavy industries ceased their operations fully and therefore reduced

environmental impacts to water and air. Currently no industrial production is taking place. This is

due to the fact that the ownership issue has not yet been resolved, and also because of the lack of

maintenance and bad state of most installations. The very few formerly privately owned industrial

companies have been destroyed almost without exception.62

2.2.7 ConsumptionAccording to figures from 1999, about 44% of the total population has access to the water

distribution system. Of the rural population this figure is only 8.4%.63 Most of Kosovo’s water

59 Toward Stability and Prosperity - A Program for Reconstruction and Recovery in, November 3, 1999, European Commission / WorldBank, 160 p., p. 51.60 Toward Stability and Prosperity - A Program for Reconstruction and Recovery in, November 3, 1999, European Commission / WorldBank, 160 p., p. 5161 Shllaku, Luan, Landner, Lars, Environment in Kosovo – Environmental problems related to mineral exploitation, SwedishEnvironmental Research Group & WHO, 1992, 91 p. 2762 Toward Stability and Prosperity - A Program for Reconstruction and Recovery in, November 3, 1999, European Commission / WorldBank, 160p.,p. 5463 Institute for Public Health Prishtina, December 1999

46

November 3, 1999, European Commission / World Bank)

The reason for the decline of productivity is to be found in the crisis of the 1990ies

when Yugoslavia ended up in many countries. Also the sanctions from Europe and the

USA had an effect on this negative development. There was a high use of the mining

in Kosovo by the Serbian government for the war against Croatia and also the

involvement in Bosnia beginning in 1990 and ended with the war in Kosovo 1998-99.

Furthermore you will have some graphs below in another chapter.

Reviving the mining sector will require substantial investment and can only be

accomplished by relying on foreign investors, and possibly some domestic private

investors. However, several obstacles need to be overcome to attract the substantial

FDI required to restart operations. First of all, the assets of these companies, including

mining rights and titles, need to be well defined. More importantly, political risks and

other aspects of the business environment would need to be addressed to attract

quality investors. Also, before beginning the privatization process, environmental

legacy issues would need to be resolved. (Kosovo Unlocking Growth Potential. World

Bank Report 2010)

After the privatization of Ferronikel there is an old sector reactivated that was very

important over decades for Kosovo’s export of raw material. It produced and exported

6,800 tons of nickel per year before 1990, but after the conflict in 1998 the company

was idle. The restarting of this facility has had a major impact on economic activity,

and, in particular, on exports. By 2008, the company employed over 1,000 workers

and exported almost 100 million Euros, which accounted for almost half of total

exports. However, one aspect of the privatization of Ferronikel that should be

reassessed in future privatizations is the subsidized electricity purchases granted to

the investor. (Kosovo Unlocking Growth Potential. World Bank Report 2010)

6.5.3. Challenges that Kosovo has to face

Kosovo has to face many problems for the future if it doesn’t take advantage of the

resources it has. It has to generate a source of economic growth and ensure

environmental and social improvements. The mining and energy sector should

become a main factor for development. Kosovo has abundant resources of lignite,

lead, zinc, ferronickel, magnetite, and crushed stone, as well as duty-free access and

47

relatively low transportation costs to the EU and Central European markets. Because

of the good climate conditions there is a possible growth in agriculture. The cheap

labour is also important for development as you have low costs but very efficient.

Kosovo needs a fiscal sustainability, macroeconomic stability and improving

investments from outside and a new reform in the economic environment.

Infrastructure and energy-sector should be improved to ensure production and

transportation without problems.

Improvements in public administration will have a better affectivity in public financial

management, tax administration, investment planning and reforms.

Another main areas is reducing poverty and unemployment by improving employment

opportunities, mostly for the youth, improving health, education and social services.

6.6. Resources 

 

6.6.1. Natural resources From the Kosovo sides there is clear position that Belgrade was interested in the

resources in Kosovo, and not to the cultural goods or the people that were living there.

This in turn replies Belgrade as propaganda of the Kosovar Albanian side. Many

Internet sites and newspaper articles from both sides put their focus on these

mentioned areas. 

Kosovo is relatively rich in natural resources. It has one of the largest reserves of

usable coal (lignite) in Europe, plus other minerals. But also international newspapers

address often on this subject, like the Neue Zürcher Zeitung on 15th of February 2005,

which titled her page with "The Treasure of Kosovo...", adding it is written that the

mineral rights would go into the billions.

Also it is hosting a very rich biodiversity, concentrated in the area around Sara

mountain in the South West of Kosovo. The mineral reserves in millions of tons are

estimated as follows: (RIINVEST, Centre for economic development, Pristina. Project

study from 1998, “Economic Activities and Democratic development in Kosovo”)

48

Graph 20: Mineral reserves (in mill-tons)

Source: Strategic environmental analysis of Kosovo. The regional environmental centre for Central and

Eastern Europe 2000.

Two large mines, Mirash and Bardh, provide lignite to the power plants. Both mines

are located in the municipality of Obiliq, close to Prishtina. The quality of the Kosovo

lignite is poor with a heating value between 6.24 and 9.21 MJ/kg. The average ash

content according to the EC report is 25%, that’s a reason why close to Obiliq there air

is hardly polluted and living there is more than dangerous for the health of the

inhabitants. The advantage of this coal is the very low content of sulphur, 0.65% to

1.51%. From the late 1960s until 1998 it is estimated that 226 million tons of Kosovo’s

coals were used in the power plants of Kosovo. This amount has thus generated

between 30 and 50 million tons of ash, which is dumped near the power plants and

comes close to Prishtina and sometimes even further. (Kosovo Unlocking Growth

Potential. World Bank Report 2010)

The side effects are that much agricultural land has to be taken out of use because of

so heavy pollution and the urbanization around the areas was since the 1960ies very

slow. Most of the land that has been taken out of use is now under strong erosion and

degradation. Regeneration of these areas is hard and can’t be taken under re-

cultivation soon, as it is hardly polluted and poisoned by the industrial dust. The mines

were not damaged during the conflict, as their use was very important and high

frequented by the Serbian army. Most of the technology and mobile equipment has

been removed and the production of the mines are now on a low level since then.

“In July 1999, the mines resumed production at a rate of about 200,000 tons per

month. Despite the low level of production, there is presently a stock of 500,000 tons

of coal available at the power plants. The ownership structure is uncertain. Ex-workers

who were expelled ten years ago have re-earned to their jobs, but are not paid

18 18

piling up behind flat blocks. The import of non-reusable bottles, the lack of a reuse system for

cans, bottles and the introduction of “throw-away” consumption patterns from the West in recent

years does not help to control the production of waste. The habit of burning household waste has

caused the destruction of plastic waste bins.

Medical and other potentially hazardous waste is currently mixed with municipal waste. Hospitals

are disposing of waste on-site, or simply throwing it in with other waste or attempting to burn it in

pits. This waste contains knives, syringes, bandages, blood-saturated wastes and body parts, thus

posing threats in exposing the public to pathogens.70

Consumption goods are brought in by humanitarian assistance or through import from surrounding

countries. Packaging and content are in many cases not up to the standards of Western Europe.

Food of suspicious origins and expiry dates are being imported without having been inspected and

can be found on the shelves of local shops.

2.2.8 Natural resources

Kosovo is relatively rich in natural resources. It has one of the largest reserves of usable coal

(lignite) in Europe, plus other minerals. Also it is hosting a very rich biodiversity, concentrated in

the area around Sara mountain in the South West of Kosovo. The mineral reserves in millions of

tons are estimated as follows71:

Mineral reserves (in mil.tones)

Lignite 11503,00

Mangan 1,36

Chrom (in 000 tones) 89,00

Bauxit 13,20

Lead and Zinc 42,00

Nickel 20,10

Magnesium 9,70

Two large mines, Mirash and Bardh, provide lignite to the power plants. Both mines are located in

the municipality of Obiliq, close to Prishtina. The quality of the Kosovo lignite is poor. The

average heating value is 6.7 MJ/kg according to the EC report, in which Dr. Sabri Limari as Board

Member of the Kosovo Energy Corporation (KEK) mentions a heating value between 6.24 and

9.21 MJ/kg. The average ash content according to the EC report is 25%, and the data from Dr.

Sabri Limari give an amount of ash from 9.84% to 21.32%. The advantage of this coal is the very

low content of sulphur, 0.65% to 1.51%.72 From the late 1960s until 1998 it is estimated that 226

million tons of Kosovar coals were used in the power plants of Kosovo. This amount has thus

generated between 30 and 50 million tons of ash, which is dumped near the power plants where it

lies in huge hills.

Environmental consequences include the use of potential agricultural soil for waste dumps, as well

as air pollution with dust from the ash hills. Over the years (1960-1990) mining operations and

70 Toward Stability and Prosperity - A Program for Reconstruction and Recovery in, November 3, 1999, European Commission / WorldBank, 160 p., p. 78

71 RIINVEST, Center for economic development, Pristina. Project study from 1998, “Economic Activities and Democratic developmentin Kosovo”.

72 Interview with Dr. Sabri Limari, Prof. in Faculty of Electrotechnic, University of Pristina, and Board Member of Kosovo EnergyCorporation (KEK), as well as Toward Stability and Prosperity - A Program for Reconstruction and Recovery in , November 3, 1999,European Commission / World Bank, 160 p., p. 128

49

regularly. UNMIK is governing the mines currently until the ownership issue is sorted

out.” (Toward Stability and Prosperity - A Program for Reconstruction and Recovery in,

November 3, 1999, European Commission / World Bank)

In the late 1970s were two people responsible to have an eye on the economic

development in Kosovo, and make a possible conclusion and give overview of the raw

materials of the country. "However, the main potential of Kosovo, in terms of the

degree of development most backward part of Yugoslavia, is the feedstock for power

and non-ferrous metallurgy. The Lignite reserves in open pit mines and other Belaćeva

near Prishtina/Pristina are estimated at billions of tons." (Dushi)

Also the number of employees is provided. It may be that these numbers have been

used for adornment, but they show a tremendous improvement in the economy and

the labour situation in Kosovo at this time.

They show the high occurrence of Trepça who has a significant production sole in

Yugoslavia. Thus, the lead production from Yugoslavia, named worldwide on sixth

place, although 80% of production was produced in Trepça. The combine Trepça

employs at that time approximately 15 000 people. (Dushi)

Of course there was much investment in Kosovo's economy, but there was also much

to extract.

"The healthy development of the young industry of the province can be illustrated with

the following information (from 1979): Kosovo participated in the electric power

production of whole Yugoslavia with 7% (heat energy 13%), at the Lignite production

with 21% of the production of Nat tubes with 11% of refined lead with 63% of silver

with 60%, 26% zinc, chromium (ore) with 100% of caustic calcined magnesite with

100%, of raw magnesite with 36%, sintered magnesite with 26%, in production of

batteries with 21%, sulfuric acid with 10% phosphate fertilizer by 12%, Cotton yarn

with 13%, technical rubber products with 14%, of canned vegetables with 3% refined

alcohol with 5%, fermented tobacco with 4%, etc..." (Dushi). This part may be taken as

example that Kosovo has made an important contribution to the Yugoslav production.

Why is that country in the coming years, especially 1990, drawn back into the abyss

lies in the policy of Milošević. There are no investments at all during this periode, but a

lot was taken out of this region, and the industry was incorporated into the Serbian

companies. Thus it can be said that his policies have ruined a decades-long

development, and a new industry must be established.

50

Development process between 1945 and 1980: (Dushi)

• The budget of the social economy have increased in the period 1952-1978 to the

12.3-times, and in the industry up to 16 times;

• The national product of the entire economy grew in real terms legally in the period

1947 to 1979 to 6.1 times - 2.8 times per capita and around 14.6 times in the industry;

• In the social sector in 1979, 78% of the total social product was realized in the

province itself;

• The Industry was the leading activity in the economic structure: their share of the

total social product increased from 16.1% in 1970 to 38.7% in 1979. In the same

period the part of agriculture has been reduced from 58.9% to 20.9%;

• The proportion of agriculture in the total population fell from 80.9% in 1949 to 42.2%

in 1979;

• The number of employees in the social sector increased by 4.4 times in the period

from 1952 to 1979, so that the number of 164 000 employees is reached in 1979;

• The town planning process was intensified: the proportion of urban to total population

increased from 14.6% in 1953 to 32.8% in 1979;

• The number of primary pupils rose from 98 500 in 1948 to 307 500 in 1979, the high

school students amounted from 3 300 up to 74 700. During 1979 the number of

students at the University of Prishtina was about 48 000, so that the University Center

today with regard to the number of students occupied the place second in the country

(Yugoslavia).

There are also some other data mentioned, which play an important role in economic

recovery. Kosovo has vast arable land used for grain production. In addition, there is

the abundance of water (about 1 million/L per second) that irrigation favors.

In addition, other raw materials which are very widespread in Kosovo, as the coal

deposits that are the second largest in Europe. To give further important information

we take the mine area Trepça which was one of the richest regions of Yugoslavia.

51

 

 

 

 

 

6.6.2. Trepća‐Trepça 

Nach dem Ende des Krieges, wird Trepça zum wichtigsten Investitionsgebiet im

südlichen Bereich. Es werden mehrere Tochtergesellschaften gegründet, die sich auf

verschiedene Gebiete spezialisieren. Die Zahl der Arbeiter nimmt stetig zu. Sind es

1960 gerade mal 8.000 werden 1988 22.885 Menschen beschäftigt.20

Einige Graphiken zeigen, dass die Minen in Trepça eine enorm hohe Kapazität

aufweisen.

This region was, is and will be the source economy of Kosovo. Since the Middle Ages,

silver is mined over time also coal and other raw materials. In the interwar period

Belgrade focused on the exploitation of natural resources in the region which has been

done on a high level.21 During the 2nd World War German troops controlled the

territory (1941-1944), from which they gained lead for the weapons industry.

After the war, the most important investment area in the southern part of Yugoslavia is

Trepça. It will set up several subsidiaries that specialize in different areas. The number

of workers is increasing. If there were in 1960 just 8000 employees in 1988 the

number was up to 22 885 people that were employed.

Some plots show that the mines of Trepça have an extremely high capacity.

20 http://www.esiweb.org/pdf/esi_bridges_id_2_b.pdf, S 2. 21 http://www.esiweb.org/pdf/esi_bridges_id_2_b.pdf, S 1. (21.9.06)

52

Graph 21 – The Mine of Stari Trg22

As it can be seen clearly in this graph, the Mines of Stari Trg were exploited the most

in the interwar period, and after the Second World War up to the autonomy

arrangements. The policy of Milosevic, however the mining of zinc went down

substantially, and comes to a halt even for a short time as you can see in the graph.

 

 

 

 

 

22 http://www.esiweb.org/pdf/esi_bridges_id_2_a.pdf, S 9.

53

Graph 22 – Here are the figures ot the graph 1023

Here are the exact figures of the above graphic, which shows a rapid development of

Stari Trg.

23 http://www.esiweb.org/pdf/esi_bridges_id_2_a.pdf, S 10.

54

Graph 23 24

 

 

 

 

 

 

 

 

 

 

 

 

 

24 http://www.esiweb.org/pdf/esi_bridges_id_2_a.pdf, S 11.

55

Graph 24 – Role of Kosovo for Serbia25

It can bee seen that the city of Mitrovica, has played a significant financial role for

Serbia with the surrounding commodity areas. Therefore, it is also easier to

understand why Serbia does not want to miss this area, where they still got about

74.1% of taxes even during the worst times of the 1990ies.

 

 

 

 

 

 

 

 

25 http://www.esiweb.org/pdf/esi_bridges_id_2_a.pdf, S 32.

56

Graph 25 – Export of raw materials to Serbia 1994-199926

Another example that the raw materials of Kosovo, were an important economic part of

Serbia show that data. In the course of 5 years, several million tons of raw materials

were transported from the mines of Kosovo to Serbia.

 

 

26 http://www.esiweb.org/pdf/esi_bridges_id_2_a.pdf, S 36.

57

 

7. Everyday life 

Every day is the conflict between Albanians and Serbs represented in the newspapers.

But mostly, is Belgrade and Pristina meant as main actors. The negotiations will be

printed in every newspaper. With titles such as "Serbia will get forced to acknowledge

Kosovo's independence"27 or "The Serbs put unacceptable conditions says

Ahtisaari28," or "Ryker, I the last."29 These are the front pages that convey clear

messages to the population. But also crime, economic and development are brought

to the foreground. There is a loud criticism of the trafficking of women and poverty,

which are always devoted to articles, such as "Prizren, winner of the trafficking in

women"30, or "rise of poverty"31. The people should get into the awareness that

everything happened in front of them and nothing is done against it. In this case,

UNMIK is taken mostly into crossfire. The people see them as the main actor because

of the failure to built up an stable economy and that because of them the crime rates

increase and the prostitution is promoted by them.

The relationship between the ethnic groups in Kosovo is in many regions very

moderate and can be seen as less tensioned. People try to get over their daily lives as

best as possible, and thereby earn some money. There is not much questioning where

the goods are coming from, but the main thing is that they are available. In Kosovo,

most offered goods come from Serbia, which are boycotted only a few people. A brisk

trade takes place between the groups, and living together is sought, what

unfortunately cannot be seen in the Western media.

In 2004, before the March riots, international groups have drawn up a report on

Mitrovica, which shows life in this city. It is amazing to see that people who were a few

years ago at war with each other, now try to work together.32

27 Focus am 4.August 2006, Titelseite. (Serbisë do t’i imponohet pavarësia.. e Kosovës) 28 Koha Ditore am 8.August 2006, Titelseite. (Ahtisaari: Serbët kanë këkesa të papranueshme) 29 Kosova Sot am 16.August 2006, Titelseite. (Ryker, unë i fundit) 30 Kosova Sot am 14.August 2006, Titelseite. (Prizreni, kampioni i trafikut të femrave) 31 Express am 15.August 2006, Titelseite und S 10. (Thellohet Varferia) 32 http://www.esiweb.org/index.php?lang=en&id=48.

58

 

8. Future perspectives 

In a region where unemployment is over 40%33, and no future perspectives are

offered, it is difficult to predict what will happen in the next few years.

There are several plans for the recovery and the fight against unemployment in this

country that have been proposed and discussed. However, we always meet the same

problems. There can be found no investors from abroad, because of the unclear

situation of the status question.

First and foremost is the interest of Europe to boost the country's economy. There are

some possible strategies that are shown in the graph below.

 

Graph 26 - Porter’s stages of national competitive development34

Key driver of

growth

Source of

competitive

advantage

Country examples

Factor conditions Basic factors of

production

(e.g.,natural

resources, lower

skilled labour)

South Korea, Singapore and

Ireland (before 1980s)

Kosovo today?

Investment Capital

equipment,

transfer of

technology

Japan (during 1960s)

South Korea (during 1980s)

Ireland (after 1980s)

Kosovo within the next decade?

Innovation All four elements

of Porter’s

framework

Germany, Sweden (post-war)

Japan (since 1970s)

Italy (since early 1970s)

Ireland (post 2000)?

Kosovo post-EU membership?

33 http://www.ks.undp.org/?cid=2,32,84 34 http://www.esiweb.org/index.php?lang=en&id=156&document_ID=58. (22.9.06)

59

Here are three methods shown up, which in combination provide a good future

perspective for Kosovo. There are some economic opportunities taken that have been

proved in some other countries and can maybe work also for Kosovo, as this country

has mostly the same conditions, as very young population and also much raw

materials.

To achieve this, three aspects are listed that seem supportive. Here are specific areas

set out in need of support, and also get this also issued, dependent on their

importance.35

1. Current social expenditure, in the areas of income support, health, basic

education, public administration, social infrastructure, etc. This presently

absorbs most of the available finance. This type of expenditure is central to

implementing the government's role in directly supporting and improving the

living standards of the citizens of Kosovo. Given the limited financial resources

available through tax-raising sources, and the low level of income per head in

Kosovo, this is a daunting task.

2. Investment expenditure funded out of the Kosovo budget. This is usually aimed

at repair and maintenance of the fabric of physical and economic infrastructure

rather than at its renewal and development. Also included would be aspects of

human resources, such as vocational training and higher education.

3. Investment expenditure funded through international donors.

The people in that country has a great human potential and are optimistic that there

will be a positive developement soon. Moreover, education is highly valued, and in the

universities there is lack of space, because everyone wants to study. Unfortunately, at

the Universities corruption was also represented and is still existing on a low level, as

many students get their grades not by performance but by bribery. The main problem

ist the old elite that refuses to implement new ideas.

Many people are hoping that the next years will bring prosperity and that will givem

them a clear future.

35 http://www.esiweb.org/index.php?lang=en&id=156&document_ID=58.

60

 

 

 

 

9. Epilogue 

It is difficult to analyze a region like this, since it is provided for outsiders with complex

problems. The people in this region have, although they live at subsistence level, still

an optimistic attitude. They trust that one day everything will return to the good, and

they can enjoy the life they have dreamed of, like free travel to Europe, having a good

and secure job, educating the children and see themselves secure in any other case

needed for living.

Because the situation is heating up again and again by both sides, it is difficult to say

how the development will go in the region. However, we must give them a chance to

prove themselves and get their lives under control. As the prospect of EU accession

would have to stand for all.

 

61

 

 

 

X. References 

X.I Books 

Baierl Sandra; Möglichkeiten und Probleme einer Autonomieregelung für das

Kosovo; Diplomarbeit; Wien; 2001.

Beckmann – Petey Monika; Der jugoslawische Föderalismus; München, Wien;

1990.

Brems Michael; Die politische Integration ethnischer Minderheiten aus staats-

und völkerrechtlicher Sicht; Frankfurt am Main, Wien; 1995.

Brunner Georg, Lemberg Hans (Hrsg.); Volksgruppen in Ostmittel und

Südosteuropa; 1994.

Dushi Albert, Mladenović Mihailo; Sozialistisch Autonome Provinz Kosovo;

Beograd; 1981.

Ismayr Wolfgang (Hrsg.); Die politischen Systeme Osteuropas; Wiesbaden;

2004.

Kohl Christine von, Džihić Vedran, Gashi Dardan (Hrsg.) Balkan diskurs;

Kosovo 2004: Ein Schritt vorwärts, zwei zurück; Wien, Sarajewo, Sofia, Tirana,

Zagreb; 2004.

Noel Malcolm; Kosovo, A Short History; London; 1998.

Toward Stability and Prosperity - A Program for Reconstruction and Recovery

in, November 3, 1999, European Commission / World Bank.

62

Kosovo Unlocking Growth Potential: Strategies, Policies, and Actions, World

Bank Report 2010.

Strategic environmental analysis of Kosovo. The regional environmental centre

for Central and Eastern Europe 2000.

Agricultural and Food processing Industry in Kosovo, Report of Ministry of

Trade and Industry 2010.

Food processing Industry in Kosovo, Report of Ministry of Trade and Industry

2010.

Kosovo Poverty Assessment, World Bank 2007.

Economic Briefing Report about Kosovo, World Bank 2010.

Kosovo, FR Yugoslavia Medium-Term Public Expenditure Priorities, World Bank

2002.

Kosovo Health Financing Reform Study, World Bank 2008.

Kosovo Youth in Jeopardy. Being Young, Unemployed, and Poor in Kosovo. A

Report on Youth Employment in Kosovo, World Bank 2008.

Kosovo Public Expenditure Review, World Bank 2010.

CRIME AND ITS IMPACT ON THE BALKANS and affected countries, UN-

Report 2008.

RIINVEST, Centre for economic development, Pristina. Project study from

1998, “Economic Activities and Democratic development in Kosovo”.

63

X.II Internet 

http://de.wikipedia.org/wiki/Kosovo#Bev.C3.B6lkerung

http://ec.europa.eu/comm/enlargement/serbia_montenegro/kosovo_political_pro

file.htm

http://upload.wikimedia.org/wikipedia/commons/e/e3/Kosovo_eth_Verteilung_20

05.png

http://ec.europa.eu/comm/enlargement/serbia_montenegro/kosovo_political_pro

file.htm

http://www.uni-kassel.de/fb5/frieden/regionen/jugoslawien/un-sr-res-1244-

1999.html

http://www.euinkosovo.org/uk/express/express_article.php?cat=6&id=44&title=

New%20report:%20Kosovo%20Economic%20Outlook%202006&author=Elinor

%20Bajraktari,%20Economic%20Policy%20Office,%20EU%20Pillar&issue=3&d

ate=June%202006

http://www.parties-and-elections.de/kosovo.html

http://de.wikisource.org/wiki/Charta_der_Vereinten_Nationen#Artikel_2

http://www.bmlv.gv.at/ausle/kfor/einsatz.shtml

http://www.bmi.gv.at/oeffentlsicherheit/2005/01_02/artikel_3.asp

http://www.unmikonline.org/justice/index_pillar1.htm

http://www.unmikonline.org/civiladm/index.html

http://www.osce.org/kosovo/

64

http://www.euinkosovo.org/uk/about/about_pillar.php

http://www.esiweb.org/index.php?lang=en&id=156&document_ID=58

http://www.kosova.de/archiv/politik/d-graphie.html

http://www.ks.undp.org

http://www2.dias-online.org/files/laenderberichte/Kosovo_2005.pdf

http://enrin.grida.no/htmls/kosovo/SoE/popullat.htm

http://www.sdc.admin.ch/index.php?navID=21125&langID=6&userhash=75bf71

c282302d14f69319ffe54a04a0

http://www.assembly-kosova.org/?krye=elections&lang=al

http://derstandard.at/Text/?id=2510688

http://www.esiweb.org/pdf/esi_bridges_id_2_b.pdf

www.eciks.org

 

 

 

 

65

 

 

X.III Daily Newspapers 

• Neue Zürcher Zeitung

• FAZ

• Express

• Koha Ditore

• Kosova Sot

• Focus