Kosovo – Not there yet!

In recent times, few countries have received more financial support per capita by the international donor community than Kosovo. Since the NATO bombings and consequent defeat of Serb troops in 1999, Kosovo has been “ruled” and “supported” by a series of international organisations, with the UN leading the way. Since the time of the declaration of independence in 2008, the main chunk of financial and technical support for the Kosovo Government comes from the US and EU. This means that for more than 10 years this little country of 2 million inhabitants have enjoyed almost unlimited support of some of the richest and most competent collection of states and organisations in the world. With such friends how could things go so wrong?
Kosovo today is still suffering from irregular supply of electricity, to the extent that it deters private economic activity. The unemployment rate hover around 40%, a rate that in any other country would drive masses of unhappy citizens on to the streets. Youth unemployment is five times higher than the EU average. Almost 30.000 young Kosovars enter the labour market every year, while there are only 3.000 new jobs being created. Emigration is the only option for many. The financial remittance from Kosovo Diaspora makes up about one third of GDP. Donors cover approximately another third. Scrap metal is the number one export. Correction, since the scrap is actually cut up cars imported from Western Europe, it should be considered re-export. For every one euro exported, Kosovo imports goods for ten euro. In a land known for its peppars, the large majority of food articles in the shops are imported from Serbia(!), Macedonia and Croatia. This is clearly not a sustainable economic model. Yet all the wise men of the US, EU, multilateral organizations and their respective millions of dollars/euro have so far been unable to create a strong private sector and a political class who are capable of running a state that cares and does something about energy supply, social services, employment, and so on. On the opposite, an unhealthy relationship of dependency is emerging between Government and Donors, and the large presence of international organisations is distorting the labour market by pushing up salary levels far beyond what the private sector would be willing to pay. As a consequence Kosovo is becoming even less attractive as an investment destination.
That said, the euphoria of independence from Serbia is still going strong among the population. Of course a young state needs time to find its feet, but it also needs space to learn how to walk alone. The time will come when freedom and statehood are no longer enough to please the population. Kosovo is ill prepared for a drop in Diaspora remittances or the day when the international donor community moves on to new hotter spots around the world.
It’s time for Kosovo and its international friends to put the economy before politics, common good before greed, and start building a true European state where the rule of law is implemented (not only a piece of paper), enterprises flourish, the public sector hires staff depending on ‘what’ they know, not ‘who’ they know, and corruption is a sad left-over from days gone by.
One would have expected more from the EU and US, but it is not too late to change the course. In the end, if we cannot succeed in small Kosovo, what can we expect to achieve in Afghanistan and Iraq?

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About Jakob Modéer

22 years of corporate and international investor experience as well as private sector development project management, consultancy in private sector policy and business advisory services, and direct consultancy to companies in South East Europe (and now a blogger on socio-economic issues)
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