Walls and Bridges of Business between Albania and Kosovo

AIM Tirana, December 16, 2000

Although the population of Kosovo is much smaller than that of Albania, there are 3.5 times more cars in Kosovo than in Albania. And although the war in Kosovo ended only 18 months ago, in contrast to Albania, as a rule all Kosovars like to insure their vehicles despite much higher insurance rates than those applied in Albania. This fact did not escape INSIG Insurance Company which opened its representation office in Pristina ten months ago.

During ten months of its operation INSIG managed to cash in DEM 12 million. According to INSIG's General Manager Bardhyl Minxhozi "that means that INSIG's profit from car insurance is currently higher in Kosovo, although there are other insurance companies there, than in Albania where INSIG is the only company of this kind".

In early December, INSIG formally opened its branch office in Kosovo. The Albanian Prime Minister Ilir Meta took advantage of this event to visit Kosovo. The media both in Tirana and Pristina underlined the fact that Meta's visit was "the first visit of an Albanian Prime Minister to Kosovo". Actually, before Meta, former Prime Minister Majko also visited Kosovo, but for family reasons. Meta's visit was semi-official since he was welcomed by and talked to UN Administrator for Kosovo, Bernard Kouchner.

Meta also delivered a speech to the Transitional Council of Kosovo in the presence of Serbian minority representatives. In his speech he laid emphasis on the economic relations between Albanians on the both sides of the border, rather than on historic relations, as was common practice till now.

Meta informed that the Albanian Government had undertaken important measures for the improvement of the existing infrastructure which is in such a state which hinders the development of normal economic relations between Albania and Kosovo. Albania attaches priority to investments in the development of the sea port in Durrese as it is planning to turn it into an important port for the breakthrough of goods and people to Albania, Kosovo and further on into the region.

Meta also informed that "in cooperation with the World Bank, the Albanian Government is planning investments for the improvement of the road Durrese-Kuks-Pristina as the main artery for the development of mutual relations". Among future projects, the Prime Minister also mentioned the construction of electric-power line FIERZE-Prizren, as well as telephone lines with optic fibres which would connect Durrese and Pristina.

These projects are either in an initial stage or still on paper. On the other hand, leaving aside the story about INSIG's success, the reality of economic relations between Albania and Kosovo is rather grim. Currently, Kosovo accounts for much smaller share of the total volume of Albania's exports and imports than China.

According to Albanian Finance Minister Anastas Angjeliju, in the course of 2000, only 3 percent of Albanian exports have crossed the Kosovo border. In other words, the only thing that leaves Albania going in the direction of Kosovo are a couple of red vans carrying "Coca-Cola" sign and several kinds of natural mineral water.

Irrespective of this situation, Albania's long-term objective is to encourage the creation of a tax-free Balkan area, which would include Albania, Kosovo, Macedonia and other countries. This will have to be done first by the adjustment of customs tariffs and, later on, by their gradual reduction.

According to Prime Minister Meta "an initiative has already been launched for the elaboration of a study on the elimination of customs barriers with Macedonia. We want to do the same with Kosovo and other countries of the region".

The target set for the coming year is to lower customs tariffs between Albania and Kosovo from 18 to 15 percent. The intention is to regulate the imbalance in trade relations with Balkan neighbours generally, and Kosovo in particular. Albania realises 80 to 83 percent of its imports and exports with Italy, Greece and Germany, while for Macedonia, Kosovo and Montenegro this figure is below five percent.

Irrespective of the fact that Albania has a wide and attractive access to the sea, Macedonia still uses Thessaloniki for its trade and much less the Albanian port of Durrese. On the other hand, at the Macedonian border the Kosovo traders pay only 1 percent tax on their goods. For this they use their old connections which they have established while living in the Yugoslav federation, as well as much better infrastructure which Macedonia has to offer compared to Albania.

"Just like water, the trade follows the shortest route" said a truck driver with Macedonian licence plates who every day waits in long queues to cross the border crossing "Blace". Paradoxically, the shortest way for the Albanian business towards Kosovo leads across Macedonia. It takes some 10 hours to reach Pristina via Kuks along a very bad potholed road and only eight hours by a rather good road over Skoplje.

Actually, infrastructure is not the only obstacle to the economic relations of Albania and Kosovo. After the war, the international authorities which are running Kosovo were resentful towards the idea on the Albanian capital entering Kosovo, first because of the paranoia of the "Greater Albania", and second, fearing that political conflicts and especially crime might be transferred from Albania to Kosovo. A part of the Kosovo press exaggerated the threat of crime coming from Albania.

Without going into much analysis how true or false are these arguments, it seems that for a long time to come they will keep the customs swing-gate down at the border between Albania and Kosovo.

AIM Tirana

Alfred PEZA