Even with a solution to Kosovo’s disputed status, the province’s economy remains a dire problem with almost half the working population jobless and investment only trickling in.
The province, scene of a bitter 1998-99 war, has one of Europe’s poorest economies. Many villages only have electricity for 12 hours a day. Much of the population lives below the poverty line.
Its registered per capita yearly income in 2005 was an estimated 1,243 euros.
“For eight years we have been standing still, depending mostly on foreign assistance, donations and financial aid from the (Albanian) diaspora,” said Halil Maxhuni, an economist for a non-government group in Pristina.
Kosovo has been in limbo since 1999, when NATO intervened to halt a crackdown by Serbian forces against ethnic Albanians.
As the political front gets easier, with UN special envoy Martti Ahtisaari about to give his status report to the UN Security Council, many fear that the economy will remain a major hurdle.
Kosovo has only a “limited” capacity to solve its challenges, particularly economic, Ahtisaari said in his written status proposal.
Up to 2004, the international community spent between $2 billion and $3 billion in Kosovo a year, mostly on reconstruction and development, according to unofficial estimates.
Pierre Mirel, a European Union official for enlargement, said in Pristina last week that the EU will provide –200 million of assistance for Kosovo over the next two years.
A donor conference may be held for Kosovo once the political agreement is hammered out.
Thin investment
“There hasn’t been any significant foreign investment in Kosovo so far. We need foreign capital,” said Isa Mustafa, a Pristina University professor.
Maxhuni predicted that “financial markets will open up” for Kosovo when its final status is resolved with Serbia. Ahtisaari has proposed that Kosovo be allowed to join international institutions.
“A clear status will for the first time open a path for market economy and essential solution for unemployment and poverty,” said Maxhuni.
Before the conflict, much of the economy was based on industry, mostly energy, mining and metallurgy.
The war wrecked the industrial sector and power supplies.
According to Economic Initiative for Kosovo (ECIKS), a non-profit group surveying the province, up to 43,000 private businesses have opened in Kosovo since the end of the conflict in 1999.
While most of this has been on a small scale, the private sector has become one of the rare legal sources of income for the many unemployed people.
The economy now relies on the thriving black market, with smuggled cigarettes, fuel, construction material and cosmetics now a key source of income for the jobless.
According to a 2005 World Bank report, about 37 percent of Kosovo’s 2 million people live below the poverty line on the equivalent of EUR1.42 a day.
Experts have called for more investment in production. “A market economy will teach us that money is expensive and should be invested carefully, not only in gas stations and restaurants,” Maxhuni said.
(AFP News)