The (Im)Possibility of Development

AIM Pristina, July 15, 2000

Privatisation is the only measure for estimating real chances for the exploitation of country's economic potentials inherited from the previous system. That is why this represents the essential problem for all societies in transition. Apart from those in economic sphere, there are direct consequences in other numerous fields. In short-term the most notable consequence is the impoverishment of the already vulnerable segments of the population. That is why the privatisation process in Kosovo is progressing with difficulty and lags behind that recorded in societies which are not faced with political and legal problems, which is the case of Kosovo. This is the reason for the total lack of progress in this field in the post-war Kosovo.

Apart from the abuses, which are still tolerated, no single case of privatisation has been registered till now. Several facilities were rented and thus put to use. The most typical case of this form of use is the one of the cement works in Djeneral Jankovic (Hani e Elezit). Certain vital facilities were kept alive thanks to humanitarian assistance. Power generation facilities are such an example.

The number of facilities which should be revitalised or kept working in this way, for various reasons, is rather limited. In a rather large number of this type of facilities, UNMIK tacitly allowed the former management and workers to try their hand at bringing them back to life. Apart from numerous attempts, not a single one has managed to get back on its feet. This is understandable, because workers lack working capital, raw materials, spare parts, let alone investments, even the smallest ones. Even the already low salaries are not a certain thing. Many facilities have been simply shut down, and some are used for KFOR's and UNMIK's needs. The Albanian side has occasionally voiced its suspicion that these facilities were taken for political reasons. It is presumed that UNMIK and KFOR are using these institutions in order to avoid being forced to openly prevent their revitalisation.

It is widely believed that UNMIK is mostly in favour of privatisation. Some time ago, Jolie Dickson, chief in charge of reconstruction and development, prepared a document named "The White Letter". It is unknown whether any attempt was made to formalise it, but it is known that it doesn't represent UNMIK's official document. Nevertheless, it is much discussed publicly - both within and outside UNMIK. That means that it should still be counted on.

This document proposes the laying of foundations for starting the process of privatisation, as well as the establishment of the Privatisation Agency, necessary legislation and judicial institutions. Be that as it may, by its practical effects this document has until now truly remained a dead letter.

It is common knowledge here that for a long time that there have been great disagreements within UN Organisation regarding many issues of the Kosovo's present and future. Privatisation is on top of that list. It is considered here that privatisation is disputed because it undermines the integrity of Yugoslavia. It is claimed that Russia is against for purely political reasons, while some other countries, like France and Italy, because of their economic interests. It is no longer just an assumption that parts of "Trepca", in the southern part of Mitrovica, which are controlled by UNMIK , are not allowed to start working on political grounds. On the other hand, installations of "Trepca" which are under Serbian control in the Northern parts of Mitrovica, are working without problem. Opponents of privatisation in New York insist that this process can be launched only after the final resolution of the status of Kosovo. If not, there would be nothing left to privatise. Who would want to buy walls, probably already caved in, and heaps of scarp iron that once were manufacturing machines?

Another important fact for present and future economic trends and, why not, political too, is absolute lagging behind in development and investments Without these there are no prospects for sound resolution of the transition problems. And while reconstruction of Kosovo can be described with ample data on facilities and partially spent money, there is nothing specific on new development prospects. As it is common knowledge, a French firm has invested funds in "Telekom Kosovo" expecting to make a quick profit. There are rumours that the British and French will invest large amounts in power generation facilities - between DM 80 and 120 million. Nevertheless, time will tell whether at all and how will these investments be realised. Until now, there was no mention of the privatisation or even leasing of power-generation facilities and potentials of Kosovo. It seems that everyone is reluctant to raise these issues for fear that they would thus open Pandora's box.

For the time being, tenders for longer-term leasing of facilities are the only kind of attempts made at revitalising old production capacities. They are highly praised, but only on the basis of agreements and offered terms and conditions. Some countries have very negative experiences with tenders. Therefore, before first experiences are gained, tenders should be treated with caution as they have yet to prove themselves. Also, both UNMIK as well as Albanian business circles speak about the increasing number of foreign partners being interested in cooperation and investments. Numerous projects and huge amounts of resources are being mentioned.

Now it, however, seems that they have nothing to do with economic development, which is necessary for the exploitation of natural, material and other Kosovo resources. According to the available information, UNMIK as the official authority, does not have any global or partial programme for the economic and social development of Kosovo. The Albanian side also did not offer any programme or specific development projects.

Apart from financial resources, there are many other local problems which are not being treated properly nor with adequate urgency. Private capital is expected to be the main factor of development. But, apart from "Telekom" and some minor investments, for which the local MEB bank has recently started granting credits, there is no information on any either foreign or domestic private investor being interested in placing his capital here. That does not fall within the jurisdiction of governments or international organisations. Everywhere in the world private capital has its own standard requirements: profit, stable legislative system, investment guarantees, stable judicial institutions and, above all, overall security of the country in question. It seems that Kosovo doesn't meet any of these requirements.

But, these are not the only reasons for Kosovo's falling behind. The Albanians were always proud of the educated members of their community. It is clear now that a very small number of them is capable of helping the society by offering convincing development projects. Even parties that rally a large number of educated members are not capable of doing that. It is well known and an established fact now that reasons for Kosovo's lagging behind in the implementation of projects and placement of funds are also bureaucratic procedures and delays which result from persistence with which some countries are trying to promote their interests within EU. Ensuring facilitated procedures in Brussels, or some similar place, is of paramount importance because EU provides 70-80 percent of resources which are spent on or intended for Kosovo. Just before his recent visit to Kosovo, EU Foreign Policy Commissioner Chris Patten stated that at this pace certain projects will not be implemented until the next century.

Consistent development policy is a precondition of sound economic and social development. Also, apart from money it requires personnel, clear political orientation, as well as legal infrastructure, macro-economic programme and, naturally, concrete projects. And Kosovo doesn't have any of it.

AIM Pristina,

Fehim REXHEPI