Post Conflict Reconstruction As Development: Donors, Context and Institutions in Kosovo
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Post Conflict Reconstruction as Development: Donors, Context and Institutions in Kosovo Mary Venner A thesis submitted for the degree of Doctor of Philosophy at the University of New South Wales, Sydney, Australia School of Social Sciences Faculty of Arts and Social Sciences April 2014 Originality Statement ‘I hereby declare that this submission is my own work and to the best of my knowledge it contains no materials previously published or written by another person, or substantial proportions of material which have been accepted for the award of any other degree or diploma at UNSW or any other educational institution, except where due acknowledgement is made in the thesis. Any contribution made to the research by others, with whom I have worked at UNSW or elsewhere, is explicitly acknowledged in the thesis. I also declare that the intellectual content of this thesis is the product of my own work, except to the extent that assistance from others in the project's design and conception or in style, presentation and linguistic expression is acknowledged.’ Signed ....................................................................... 7 May 2014 Date ........................................................................ i Table of Contents Originality Statement i Acknowledgements vii List of Tables viii List of Figures viii List of Abbreviations ix 1 Introduction 1 1.1 Post Conflict Reconstruction as Development 1 1.2 The Setting for International Involvement 4 1.3 Research Question 6 1.4 Research Strategy 7 1.4.1 Development assistance 8 1.4.2 Multiple actors 9 1.4.3 Extended timeframe 9 1.4.4 The definition of success 9 1.5 Approach and Methodology 10 1.5.1 Kosovo reconstruction as a case study 10 1.5.2 The focus on public finance and the civil service 11 1.5.3 Measuring and explaining outcomes 12 1.5.4 Originality of the thesis 14 1.5.5 Methodology 16 1.5.6 Limitations of the thesis 18 1.5.7 Note on terminology 19 1.6 Structure of the Thesis 19 2 The Theory and Practice of Development Assistance 21 2.1 Ideas and theories 22 2.1.1 Economic development 22 2.1.2 Social and cultural transformation 23 2.1.3 Peacekeeping, post conflict reconstruction and state building 25 2.1.4 Democratic transition and EU-isation 27 2.1.5 Development as social engineering 28 2.1.6 Critical responses and alternatives to development 30 2.1.7 The development agenda in Kosovo 32 2.2 Development Assistance in Practice 33 2.2.1 The aid project model and technical assistance 33 ii 2.2.2 Development assistance effectiveness: does aid work? 37 2.2.3 The aid effectiveness agenda 39 2.3 Summary 41 3 The Context 44 3.1 How Kosovo became an aid project 44 3.1.1 From peacekeeping to development 45 3.1.2 The ‘blank slate’, the ‘lost decade’, and the ‘window of opportunity’ 49 3.1.3 Economic development and the question of ‘ownership’ 51 3.2 Kosovo in June 1999 54 3.2.1 The Albanian Kosovars 55 3.2.2 The other Kosovars: ethnic relations 57 3.2.3 Economic conditions 58 3.3 The First Months 60 3.3.1 Serb exodus 61 3.3.2 Albanian political factions 63 3.3.3 Nostalgia for 1989 64 3.3.4 The challenge of civil administration 64 3.4 Summary 65 4 International Actors: Donors, Projects and Participants 67 4.1 The United Nations Mission in Kosovo (UNMIK) 69 4.1.1 The establishment of UN administration 69 4.1.2 UNMIK structure and organisation 71 4.1.3 UN performance 73 4.1.4 Political achievements 75 4.2 The UN’s Office of Civil Affairs (Pillar II) 80 4.2.1 Establishment, structure and activities 80 4.2.2 Pillar II performance 83 4.3 The European Union in the Western Balkans 84 4.3.1 The Europeanization objective of EU assistance 86 4.3.2 EU effectiveness 88 4.4 The EU in UNMIK (Pillar IV) 90 4.4.1 History, structure and activities 90 4.4.2 Pillar IV performance 92 4.5 EU Development Assistance: EAR and ECLO 93 4.5.1 History, structure and activities 93 4.5.2 EAR/ECLO performance 97 iii 4.6 The United States in Kosovo 101 4.6.1 Objectives of US assistance 101 4.7 United States Agency for International Development (USAID) 104 4.7.1 USAID and public finance management 104 4.7.2 USAID performance 107 4.8 UK Department for International Development (DFID) 109 4.8.1 DFID performance 110 4.9 The World Bank and the IMF 111 4.9.1 IFI involvement in Kosovo 111 4.9.2 World Bank financial assistance 112 4.9.3 World Bank performance 115 4.9.4 The IMF’s role 115 4.10 Relations between actors 117 4.10.1 Conflict between UNMIK Pillars 117 4.10.2 Relations within Pillar IV 121 4.10.3 Relations between international actors and Kosovars 123 4.11 Summary 128 5 Public Finance Management Institutions and Policies 133 5.1 The Significance of Public Finance in Development 134 5.2 Factors Affecting Public Finance Development in Kosovo 135 5.2.1 Donor unity 136 5.2.2 Significant effort and investment 137 5.2.3 Early ‘Kosovarisation’ 139 5.2.4 The post conflict context 141 5.2.5 The nature of the PFM institutions 142 5.3 Overview of PFM development in Kosovo 143 5.4 Revenue Agencies 145 5.4.1 The Customs Service 145 5.4.2 Tax administration 147 5.4.3 ‘Kosovarisation’ 151 5.4.4 EU-isation of the tax system 152 5.4.5 Revenue issues after Independence 154 5.5 Budget, Treasury and Payments 155 5.5.1 Central Fiscal Authority 155 5.5.2 Banking and payments 157 5.5.3 Budget planning and expenditure policy 159 5.5.4 Transfer of budget functions to the PISG 160 iv 5.5.5 Fiscal policy under the PISG 164 5.5.6 The need for a plan: the Kosovo Development Strategy, MTEFs and PIPs 165 5.6 Public Procurement 168 5.6.1 Financial Administration Instruction No 2 1999 170 5.6.2 The 2004 PISG Procurement Law 171 5.6.3 2007 Amendments to the Law on Public Procurement 173 5.6.4 The 2010 Republic of Kosovo Procurement Law 175 5.7 Accounting, Audit and Financial Control 177 5.7.1 Internal Audit: Pillar IV and USAID 1999-2003 178 5.7.2 The EU and Public Internal Financial Control 179 5.8 PFM Outcomes 183 5.8.1 PFM successes 183 5.8.2 PFM failures 187 5.9 Summary 190 6 Public Administration and the Kosovo Civil Service 192 6.1 The Significance of Civil Service Management and Public Administration 193 6.2 Factors Affecting Civil Service Development in Kosovo 195 6.2.1 Failures of international actors 196 6.2.2 The post conflict context and the nature of public sector institutions 201 6.3 The Kosovo Civil Service in 1999 202 6.3.1 Recruitment 202 6.3.2 Civil service pay 204 6.3.3 Employment terms and conditions 206 6.4 Public Administration under the Joint Interim Administrative Structure (JIAS) 207 6.4.1 Terms and Conditions: UNMIK Civil Service Regulation 2001/36 208 6.5 The Civil Service under the Provisional Institutions of Self Government (PISG) 209 6.5.1 ‘Kosovarisation’ 209 6.5.2 Terms and conditions: DFID’s PPP Project and Administrative Direction 2003/2 212 6.5.3 Getting to Westminster: The Senior Public Appointments Committee 215 6.5.4 A guarantee of fair treatment: the Independent Oversight Board 216 6.5.5 Civil Service Salaries 219 6.5.6 EU Pay and Grading project 2004-2005 220 6.6 The Civil Service after 2005 223 6.6.1 Capacity development and public administration reform 223 6.6.2 Functional Reviews and DFID’s FRIDOM project 2008-2010 226 6.7 The Civil Service since Independence 227 v 6.7.1 The new Civil Service Law 2010 228 6.7.2 The Law on Salaries of Civil Servants 2010 230 6.8 Public Administration Outcomes 231 6.8.1 Civil service size and cost 232 6.8.2 Productivity and efficiency 235 6.8.3 Lack of basic legal frameworks, rules and procedures 236 6.8.4 Politicisation 236 6.8.5 Corruption 239 6.8.6 Quality of public services 240 6.9 Summary 240 7 Conclusion 242 7.1 Successes and failures of reconstruction in Kosovo 242 7.2 Factors contributing to successes and failures in institutional development 245 7.2.1 Donors 245 7.2.2 Context 247 7.2.3 The institutions 247 7.3 Issues for development assistance 248 7.3.1 The value of a long-term perspective 248 7.3.2 The window of opportunity versus the need for ownership 249 7.3.3 Donor attitudes to Kosovars and the logic of capacity development 249 7.4 The future 250 Annex 1: Explanation of Interview Codes 252 Annex 2: Major Events in Kosovo, 1999 – 2008 254 References 261 vi Acknowledgements I would like to say thank you to my academic supervisors: Gavin Kitching who got me off to a good start, Marc Williams, who kept me firmly on track, and Elizabeth Thurbon, who was wonderfully reassuring; and to the University of New South Wales for providing the opportunity to do this research and also provided financial support for my fieldwork in Kosovo. To colleagues in Kosovo and elsewhere who provided valuable insights, colourful comments, and access to otherwise unavailable documents; and to the people in Kosovo who gave their time to talk to yet another foreign visitor with a list of questions.