INEXHAUSTIBLE SOURCE OF FOREIGN CURRENCY

Losses and Plunder in the Economy of Kosovo

AIM Pristina, 9 September, 1997

According to analysts during the years of greatest hardships, in other words at the time of the most severe economic blockade Serbia recorded the highest volume of "exports" in Kosovo. It is assumed that in only five years workers employed abroad sent to Kosovo almost 2.5 billion DEM in cash which were used for the procurement of basic necessities, mostly in Serbia or Montenegro. Although it is common knowledge that the Serbian budget for this region is but symbolic, it turns out that Serbia nevertheless registered a major positive balance in these transactions.

The Economic Institute of Pristina prepared a study on losses and plunders in the Kosovo economy registered during the 19990-1995 period. Although it was impossible to obtain data from official sources because the regime - controlled leadership is not at this moment, just before the elections, eager to open up a subject which would vividly describe the incapability of officials and their inclination to destroy, plunder and misappropriate what used to be called social property, this study presents irrefutable proof on the serious economic situation in Kosovo. It is mostly compared with 1989 when 150 thousand Albanians more were employed than is the case today and when the national structure of the leadership was different. But, it is possible that these facts have not influenced the situation in the economy as much as the inability of the regime to start the economic activity.

The state controlled media constantly speak of "great economic results", but do not mention that during the last five years not a single production capacity had been built, that "Trepca" is still unable to consolidate for the lack of labour, that the Electrical Power Industry of Kosovo has no money to invest in the revitalization of thermal power plants which are in operation 35 years, that this year the firm "Sar", from General Jankovic, has recorded the lowest production ever, that only half of "Feronikl's" capacities are working because one technological production line is out and that enormous resources are required to bring it back to normal condition...

This study, which gathered 26 scholars, did not aim at presenting the losses and damages which were the result of the sanctions, but what the economy and population had to endure since 1990, in other words after the suspension of Kosovo's autonomy. The national income amounts to 44.6 percent compared to 1988. At that time the national income realized per capita amounted to US$ 1,109, while in 1996 it was only US$ 495. This is the result of the low level of social product which in 1995 reached 51.1 percent compared to 1994. There are slight changes here, since in 1994 this volume was 45.6 percent of that realized in 1988, but only 42.6 percent of that realized in 1993.

Practically not a single branch of industry reached the results achieved in 1988; in other words the social product was halved in 28 sectors of industry. The structure too shows significant changes as industry and mining now produce only 20 percent of the social product, while in 1988 that percentage was twice as high. A large increase is registered in the power production sector, which accounts for 49.8 percent (earlier 21.6 percent) of the social product, while other sectors, such as non-ferrous metals production and processing, register only a symbolic share of 4.5 percent, in contrast to their earlier great importance.

The share of agriculture and fishing amounts to 36.7 percent or is for 15.4 index points higher than in 1988, while services register only a slight increase. In other words, the overall economic activity relied on the power generation, food and trade sectors. Identical picture show trends in industrial production the level of which is 35.5 percent of that reached in 1988. Or, as experts of the Economic Institute from Pristina put it, industrial production is equal to that of three decades ago.

The best example which can illustrate these developments is the Electrical Power Industry of Kosovo, not because of its high share in these trends but because the government - controlled media always used its example to justify the introduction of coercive economic measures by the Serbian authorities.

Ever since 1990 to this very day the annual production did not go beyond 8 million tons of coal. Eight years ago 5.5 million of MWh of electrical power were generated, while today the annual production is somewhere around 4 million MWh. In other words, in the 1990-1995 period the total amount of generated electrical energy was 12.7 million MWh. Despite the low level of production there was a surplus of energy on the market mostly because of low consumption in the industrial and mining sectors. This situation is best illustrated by the examples of the giants like "Trepca" and "Feronikl" whose consumption of electrical energy decreased by almost 54.5 percent.

The analysts say that the total losses of the economy in the 1990-1995 period amount to US$ 11.2 billion. A major part of these losses, or 8.2 billion, is a result of the unrealized physical volume of production, additional US$ 755.2 million are lost on account of the destruction of production capacities and besides that the economy owes the fired 150 thousand workers additional US$ 2.2 billion for unpaid wages, which is also entered as a loss.

The economy had suffered other losses also. The capital of the Electrical Power Industry of Kosovo is for US$ 448.8 million lower, which is how much the missing or otherwise misappropriated equipment is worth. It is estimated that other enterprises suffered losses in the value of almost billion dollars, while private firms have suffered US$ 780 million worth damages on account of appropriations (taxes and similar) of the Serbian regime. This study also presents various ways in which the population was robbed. For example, electric power consumers have paid US$ 319.1 million more than they owed for the power they used. The bill was by almost 50 percent higher than the actual consumption, because different rates were added, a certain percentage for the maintenance and modernization of the coal-mines, as well as TV rates. The population has been ripped off its US$ 157.8 million in other ways.

Although all indicators point to a low level of economic activity, i.e. destruction of economic capacities, still, this study provides data which do not fit into such developments. The best example is the private sector where the number of private firms is rapidly increasing. While there were only 5,610 firms in 1991, this figure reached 16,821 in the course of only four years. However, concerning the activity, the structure is practically the same. Six years ago the basic activity of 71.2 percent of the total number of private firms was trade. This percent is the same today. If we add the number of catering and other services, it turns out that production is the primary activity of only a symbolic number of these firms.

It is understandable, as this is the easiest way for private businessmen to obtain capital. Money coming from foreign countries is also important as it is estimated that at the moment almost 400 thousand Albanians are abroad, of which only 155 thousand are working. According to the estimates of The Economic Institute of Pristina, the foreign currency inflow from emigration reached the amount of 2.5 billion DEM in the course of five years. This money was used to cover the most urgent needs or was "invested" in food. And when we know that the main suppliers of the Kosovo market are Serbia or Montenegro, it is clear that that is the final destination of these enormous sums. But, it comes laundered and clean, because it enters regular turnover through Kosovo.

AIM Pristina

Ibrahim REXHEPI