Südosteuropa 57 (2009), H . 2/3, S . 235-260 DEMOCRACY AND MARKET ECONOMY ILIR DEDA Kosovo: Internationalized Democracy-Building Abstract. By taking stock of the situation in early 2009 and the preceding two years, the present article investigates the quality of democracy, market economy and political management in Kosovo . The article is based on ambitious conceptsof “constitutional democracy”, “sustainable market economy” and “strategic management” that have been defined and operationalized to guide a biannual global expert survey of democracy and market economy conducted by the Bertelsmann Foundation . The democracy questions of this survey not only refer to free and fair elections, but also to the freedom of the media, the rule of law, the institutional, rep- resentative and cultural consolidation of democracy and the state framework of democratic rule . The quality of market economy is assessed by a set of questions that assess welfare, fairness, environmental and education policies in addition to the functioning of free markets and property rights . Finally, the questions on strategic management seek to evaluate whether and through what means political elites are able to develop state capacity, build broad societal support, use external advice and cooperate with neighbors and in international organizations . Ilir Deda is the Executive Director of the Kosovar Institute for Policy Research and Develop- ment (KIPRED) in Prishtina, Kosovo . He holds an M .A . in International Affairs from The New School, New York . Introduction The period covered in this study (2007-2009) marks significant changes in Kosovo and the crucial time during which Kosovo’s final status shifted from international administration to the declaration of independence and the con- solidation of the new state . The new Kosovo’s institutions are overseen by the International Civilian Office (ICO), the North Atlantic Treaty Organization-led (NATO) Kosovo Force (KFOR), and the European Union (EU) rule of law mis- sion, EULEX . The international presence has helped build democratic institu- tions, but has also severely limited the discretion of elected political representa- tives in Kosovo, which tends to undermine their democratic accountability and reinforce a culture of dependency . The consolidation of the state faces serious difficulties because of state’s questionable international legitimacy, weak gov- 236 Ilir Deda erning institutions to support the rule of law and the market economy, and the control neighboring Serbia has over the Kosovo Serbs and the northern part of the country . History and Characteristics of Transformation Kosovo became an independent state on 17 February 2008 with the declara- tion of independence from UN administration and subsequent recognition by most Western countries . In the former socialist Yugoslavia, Kosovo was an autonomous province, the status of which was gradually enhanced from the Federal Constitution of 1946 to the one of 1974 . The enactment of the latter ren- dered Kosovo a constituent entity of Yugoslavia, as one of the two autonomous provinces of Serbia, with far reaching autonomy and effective veto powers at both the Serbian and the Federal levels .1 Furthermore, it required a consensus of the Republics and the Autonomous Provinces for all decision-making issues, including the alteration of the Constitution .2 In 1989, Belgrade abolished Kosovo’s autonomy, in violation of both Kosovo’s and the Federal Constitution, and established a repressive police and military regime . Kosovar Albanians were expelled from the public service . Throughout the 1990s, Kosovo was ruled directly from Belgrade, with the local Serb com- munity playing a significant role in implementing Serbia’s rule over Kosovo . The majority of Kosovar Albanians, led by the Democratic League of Kosovo (Lidhja Demokratike e Kosovës, LDK), chose peaceful resistance that aimed at defying the exercise of Serbia’s authority over the territory and at building a system of “parallel government institutions” . The failure of peaceful resistance to provide a political solution, combined with increasing repression from Bel- grade, culminated in armed conflict in 1998, with the emergence of the Kosovo Liberation Army (Ushtria Çlirimtare e Kosovës, UÇK) . The conflict was brought to an end through NATO’s military intervention in the spring of 1999 . Following the end of the war, in June 1999, an international administration was established in Kosovo through UN Security Council Resolution 1244, which governed the territory until early 2008 . The United Nations Interim Administration Mission in Kosovo (UNMIK) was designated as the authority holding civilian responsi- bility over Kosovo, while NATO’s presence in Kosovo (KFOR) was responsible for the security portion of this international mission 3. 1 Cf . the Constitution of the Socialist Federal Republic of Yugoslavia (1974), Articles 1 and 2 . 2 Arhiv Jugoslavije, available at <http://www .arhivyu .gov .rs/active/sr-latin/home/glav- na_navigacija/leksikon_jugoslavije/konstitutivni_akti_jugoslavije/ustav_sfrj_1974 .html>, 31 August 2009 . 3 UNSCR 1244, available at <http://daccessdds .un .org/doc/UNDOC/GEN/N99/172/89/PDF/ N9917289 .pdf?OpenElement>, 31 August 2009 . Kosovo 237 Interethnic clashes in March 2004 left many Serbs fearful for their future . The March riots led to a growing belief among much of the international community that continuing failure to resolve the final status of Kosovo would lead to yet more insecurity and instability . The result was the 2005 report by the United Nations (UN) special envoy and Norwegian diplomat, Kai Eide, who called for the settlement of Kosovo’s final status . That same year, the Secretary General of the United Nations appointed Martti Ahtisaari, the former Finnish President, as the Special Envoy of the Secretary General on Kosovo’s future status . In March 2007, after a year of negotiations with Belgrade and Pristina, Ahtisaari recommended independence as the best way to promote stability and security in Kosovo in the long run .4 The plan envisaged the end of UN Resolution 1244, provided for UNMIK’s departure and the transfer of its remaining powers to the Kosovo government, . It also mandated that the European Union (EU) deploy a political mission to oversee the implementation of the settlement (the International Civilian Of- fice / European Union Special Representative), a police and justice mission to strengthen the rule of law, as well as a continuing military mission to guarantee overall security under a NATO-led international military presence . Due to Rus- sia’s threat to use its veto power if Ahtisaari’s proposal was introduced at the UN Security Council, the UN Secretary General mandated that a “troika” (United States, European Union, Russia) undertake another four months of negotiations with Prishtina and Belgrade on Kosovo’s final status . The “troika’s” mandate ended in December, without achieving an agreement between the parties . In coordination with Washington and Brussels, Kosovo’s Assembly adopted a Declaration of Independence on 17 February 2008, declaring Kosovo a sov- ereign state . This ended the almost decade-long United Nations protectorate . Sixty four states have recognized the independence of Kosovo as of December 2009, including 22 of the 27 EU member states . Kosovo’s authorities pledged to fully implement the provisions of Ahtisaari’s Comprehensive Status Proposal . The Assembly invited the EU to deploy its rule of law mission (EULEX), and the establishment of the International Civilian Office (ICO) to supervise the implementation of the Ahtisaari plan . United Nations Secretary General Ban Ki-moon ordered the UN and its Kosovo mission UNMIK to operate under a “status neutral” framework days before Kosovo’s Constitution came into effect in June . The period under international administration has been characterized by competing goals when it comes to state-building . The international administra- tion was guided by a vague aim to establish substantial autonomy, as ambigu- 4 Letter dated 26 March 2007 from the Secretary General addressed to the President of the Security Council, available at <http://www .unosek g/docref/report-english.or .pdf>, 19 October 2009 . 238 Ilir Deda ously stipulated in United Nations Security Council (UNSC) Resolution 1244 .5 Kosovo was administered under the authority of Chapter VII of the UN Charter with the stated goal of pacifying a threat to international peace and security rather than genuine state-building . This factor was not only in conflict with the aspirations of the Kosovo Albanian majority, but it has also hampered genuine institution-building efforts and the empowerment ofthe local citizenry . During UNMIK administration, Kosovo established democratically elected institutions of self-government, but the Special Representative of the UN Secretary General retained so-called reserved powers, i . e . exclusive legislative authority in fields of sovereignty-related matters . With the declaration of independence, UNMIK’s role and mandate fundamentally changed, with the UN mission becoming “status neutral” 6. Democracy Stateness Despite Kosovo’s declaration of independence, its democratic institutions do not have a full monopoly on the use of force, instead sharing authority with the international security presence in the country . From June 1999 to June 2008, the United Nations Interim Administration Mission (UNMIK) in Kosovo was designated as the authority holding civilian responsibility over Kosovo,