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Kosova On The Eve Of The General Elections

Report to Congressman Ben Gilman, chairman, U.S. Delegation to the European Parliament, and Congressman Henry Hyde, chairman, International Relations Committee, U.S. House of Representatives

From Shirley Cloyes, Balkan Affairs Adviser, and Joe DioGuardi, President, AACL

As you know, we postponed our pre-election trip to Kosova because of the terrorist attacks on New York and Washington. When we arrived in Kosova’s capital, Prishtina, at the end of September, we were overwhelmed by the expressions of sympathy from every Kosovar that we met. At the entrance to our hotel was a poster of an American flag, and beneath it in Albanian were the words, “We share your sadness.” This poster, we learned, was duplicated and handed out to the 30,000 Kosovar Albanians who attended a rally on September 15 to show solidarity with the American people and gratitude for the pivotal role that the United Stated played in ending Serbia’s genocidal war against Kosova. You undoubtedly have since received U.S. Ambassador John Menzies’ tribute to the people of Kosova for their outpouring of support in the wake of the tragedy, which also included a blood drive. In an incredibly moving way, Albanians have once again demonstrated that they are America’s friends in the Balkans.

The Albanian demonstration of support for the United States throughout the Balkans and in the American Diaspora coincided with official Slavic intransigence in Macedonia and in the Presheva Valley. While ethnic Albanians have disarmed and signed peace agreements in Macedonia and in southern Serbia this fall, the Macedonian and Serbian governments have violated their pledges to the United States and NATO to grant full civil and human rights to the Albanian majority in Presheva, Medvegje, and Bujanoc and to the sizeable Albanian population (at least one-third of the country) in Macedonia. We appreciate the appeal that you made to Secretary of State Colin Powell in September, supported by our documentation, to correct once and for all the history of egregious human rights abuses in that led some Albanians in Presheva and Macedonia to resort to arms in 2000.

The Politics of Kosova

The purpose of our trip was to assess the political and economic climate in Kosova in advance of the general elections on November 17. As you know, we (but not the entire The purpose of our trip was to assess the political and economic climate in Kosova in advance of the general elections on November 17. As you know, we (but not the entireCivic League Board of Directors) have allied ourselves with the Alliance for the Future

The purpose of our trip was to assess the political and economic climate in Kosova in advance of the general elections on November 17. As you know, we (but not the entireCivic League Board of Directors) have allied ourselves with the Alliance for the Future of Kosova (AAK), led by former KLA Commander Ramush Haradinaj. After only seven

months in existence, the AAK emerged from the October 28, 2000, municipal elections as the third leading party (out of 30) in Kosova. Since the beginning of 2001, Ramush Haradinaj has been serving as a member of the presidency, along with Ibrahim

Rugova (LDK) and Hashim Thaci (PDK), and reports to Hans Haekkerup, the head of the United Missions in Kosova (UNMIK).

Although LDK was the clear winner in the October 2000 elections, this party, according to opinion polls, will not capture the overwhelming majority in the November elections. As a result, it will have to form a coalition government with the other two leading parties. As Mahmut Bakalli, former president of Kosova during the Communist era and a backer of the AAK, pointed out in a lengthy meeting with us, a coalition government based on cooperation among three parties (and ideally some of the smaller parties as well) would be the best outcome for Kosova. We agreed with him that Kosova should try to avoid Albania’s unsuccessful political “dualism,” in which a single, dominant party is ineffectively countered by a weak opposition. Bakalli, like us, believes that Haradinaj is the only political leader who genuinely embraces the idea of a three-party government as a first step to a democratic, and ultimately independent, Kosova. Consequently, he is backing AAK as a “third force”—one that seeks to unify, not divide, the political forces in Kosova (including some of the smaller parties) in a pluralistic system.

Both Mahmut Bakalli and Ramush Haradinaj stressed to us that Kosova must earn independence by first building a functioning government and by establishing a viable relationship with non-criminal Serbs and other minority communities. All of the analysts in Kosova that we respect believe that this can happen only through genuine power-sharing among the parties in a coalition government.

While we were in Prishtina, Angelika Beer, a leading member of Germany’s Green Party, declared that peace in the Balkans cannot be achieved apart from the independence of Kosova. (She and German Foreign Minister Joshca Fischer visited the AAK headquarters during our visit.) It should be noted that Germany, Britain, and the United States share this viewpoint, and they are the leading partners in the NATO campaign in Macedonia and in the anti-terrorist initiative in Afghanistan. We believe that the U.S. government should ratify the independence of Kosova as the path to a just and lasting peace in the Balkans concurrently with efforts to end the Arab-Israeli conflict by embracing a two-state solution there.

Kosova’s Economy

There were clear and gratifying signs of economic growth since our last trip to Prishtina a year ago. How much of this growth is the result of the postwar infusion of funds from European and American donors and how much is the result of money from the Diaspora is yet to be determined. Because privatization law has yet to be enacted, foreign investment in Kosova has been very limited. Tim O’Neill, the co-head of the department of Trade and Industry, is pushing to get this law passed before the elections and has called for an adjustment in America’s OPIC rules so that Kosova’s lack of status as a sovereign state does not impede its ability to attract investors and to access Western capital.

In his twelve years in the Balkans, O’Neill said that he has never seen a society as motivated as Kosova to progress. The fundamentally entrepreneurial spirit of Kosovars is everywhere apparent in a vibrant trade and services sector. Taxes are also being collected—VAT was instituted in July and an income tax is imminent. This year’s budget consists of 35 percent of the operating funds from donors (down from 50 percent last year) and 65 percent from taxes. USAID has also funded a program to create a professional accounting system that meets international standards as an essential part of the transition to a free market economy, and on October 2, the Kosovar business community and UNMIK’s Pillar IV inaugurated the Kosova Chamber of Commerce. Meanwhile, UNMIK is actively working to develop effective commercial legislation and to identify lower risk business enterprises and industry sectors that can attract private investment immediately. We brought a few Italian investors to Kosova to explore these opportunities with Fabio Maresi Cerrara, UNMIK’s Business Development Officer, and Gilles Everts, an economist who is policy adviser to the Department of Trade and Industry.

Nevertheless, because Kosova is the only entity in the former Yugoslavia that has not been allowed to privatize and because access to loan guarantees and funding through OPIC is blocked under current rules, Kosova is in no position to attract major outside investors and to accelerate capital projects–especially repairing and rebuilding the infrastructure, which is woefully inadequate after ten years of disinvestments during the Serbian occupation and destruction during the war. The need to revamp the electrical power system is a case in point. Kosova’s two turbines, which were built during the Tito era and not properly maintained during the occupation, present enormous challenges. While they are being repaired, Kosova lacks funds to import sufficient electricity to meet the demand. When we met with Andy Bearpark, the head of UNMIK’s Pillar IV, he said that Kosova must build another power plant within the next five to seven years, which it cannot do without access to large-scale, long-term loans. He has warned the international community that, “the price it is paying by delaying final status goes up daily.”

Likewise, Muhamet Mustafa, economics professor and president of Riinvest, stressed that resolution of final status–without which there can be no real long-term privatization and investment–is essential for economic independence and growth. Limited private investment has also meant limited competition, which has enabled corruption to flourish in those industries that have monopoly status in Kosova.

We did not have a chance to travel to the rural areas, which would have given us a more comprehensive understanding of Kosova’s economy. However, we were given an excellent overview by Giuseppe Zampaglione, the World Bank’s representative in Kosova. The Bank has just completed a comprehensive economic analysis of Kosova, including a poverty assessment that is based not only on the level of individual consumption but also on the opportunity for education and healthcare. According to this study, 12 percent of the population lives in deep poverty (below DM 3.5 per day) and needs emergency social assistance to subsist. Thirty-eight percent of the population lives

just below the poverty line, primarily because of the occupation and the war, and the Bank has been successfully empowering this group to take advantage of future growth opportunities. Because the majority of this group lives in rural areas and are farmers, the

Bank is working to develop a modern agricultural sector that will increase productivity and to generate job opportunities in related industries.

We urge you to witness Kosova’s accomplishments firsthand by visiting Kosova after the elections, and we hope that you will ask the U.S. Congress to authorize OPIC to operate in Kosova, to increase current aid levels, and to earmark appropriations for infrastructure projects and professional training programs.

October 15, 2001

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