Early Warning Report Number 14 KOSOVO July - September 2006

Political and institutional stability Economic and social stability Inter - ethnic relations Public and personal security Kosovo

EARLY WARNING REPORT KOSOVO

Report # 14

Political and institutional stability Economic and social stability Inter-ethnic relations Public and personal security

July – September 2006

Disclaimer

The views expressed in this report are those of the authors and do not necessarily represent the views of either UNDP or USAID.

In this report, “Kosovo” refers to the UN administered territory according to UN Security Council Resolution 1244. Authors:

Bekim Baliqi - Political and institutional stability Avdullah Hoti - Economic and social stability Rrezearta Reka - Inter-ethnic relations Adnan Dragaj - Public and personal security

Reviewers:

Besnik Pula, Independent Analyst Agim Demukaj - Economist, IMF Liaison Office Prishtina Driton Gashi - Senior official for security policy, Office for Public Safety, Prime Minister’s Office Dejan Radivojevic - National Priogramme Analyst Levent Koro - National Priogramme Analyst

UNDP Support Team:

Flora Kelmendi – EWS Project Coordinator Mytaher Haskuka – National Programme Analyst

Production: Rrota, www.rrota.com Layout: Arbër Matoshi Ardian Veliu Korab Etemi Shpat Paçarada Cover: Kushtrim Balaj

Your comments and feedback are important for further development of the reports. Please forward these to: [email protected] EARLY WARNING REPORT KOSOVO - Number 14

Selected Economic Indicators

Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Jun Jul-Sep Trend 2005 2005 2005 2005 2006 2006 Population (in ,000) (a) 1,999* 2,033 ** Increase GDP growth rate (annual), % (a) 3.7 -0.5 4.0 ** Increase GDP per capita, € (a) 1,105 * 1,107 ** Increase KCB, million € (b) 641.5 656.2 * Increase Workers’ remittances, million € (a) 375.0 * 347.0 ** Decrease Foreign assistance, million € (a) 462.0 *) 388.0 ** Decrease KPST fund, million € (c) 145.8 167.5 (May) 177 Increase (Dec) (d) (Sep)(k) KTA fund, million € (e) 113.1 234.9 (Apr) 256.1 Increase (Dec) (Aug) (h) Bank deposits, million € 704.8 (Feb) 731.2 (May) 765.8 (Aug) 809 844.6 (Apr) 881.6 Increase (Nov) (e) (Aug) (h) Commercial bank loans, million € 356.5 (Feb) 400.1 (May) 401.8 (Aug) 435.7 (Nov) 459.7 (Apr) 476.4 Increase (e) (Aug) (h) Trade balance, million € -219.1 -308.5 -723.4 -1028.4 -537.5 -761.3 Increase (Jan-Mar) (Jan-Apr) (Jan-Aug) (Jan-Nov) (Jan-Jun) (Jan-Aug) (j) Registered job-seekers (j) 303,095 311,230 314,446 319,721 323,201 324,835 Increase (Jan) (May) (Aug) (Dec) (May) (Sep) Consumer Price Index, % (compared to 101.4 (May) 100.0 (May) 98.5 (Aug) 101.9 (Nov) 102.9 (May) 101.3 (Aug) (f) Decrease (Jan May 2002) *** – Sep 2006) Basic pensions (per month), € 40 40 40 40 40 40 Same Voluntary returns 2,126 1173 (g)

* Estimated ** Projected *** In January 206, SOK changed the methodology for compiling CPI. Therefore the comparison of currently produced CPI with the CPI from before January 2006 is not possible Sources: a) IMF (2006), Aide Memoire of the IMF Staff Mission to Kosovo, May 22-31, 2006. b) MEF (2006), Budget 2006, MEF, Government of Kosovo, Prishtinë/Priština. c) KPST (2005), Annual Report 2005, KPST, Prishtinë/Priština. d) Assessment obtained from KPST through e-mail. e) BPK (2006), Monthly Statistics Bulletin, No. 56, BPK, Prishtinë/Priština, April 2006. f) SOK (2006), Price Statistics Division, Consumer Price Index, SOK, Government of Kosovo, Prishtinë/Priština. The rest of the figures are from UNDP (2006), Early Warning Report No. 12: October - December 2005, UNDP, Prishtinë/Priština, op. cit. g) United Nations High Commissioner For Refugees Kosovo. h) BPK (2006), Monthly Statistics Bulletin, No. 56, BPK, Prishtinë/Priština, August 2006. i) Ministry of Labor and Social Welfare, 2006. j) This is the trade deficit for the period Jan-Aug 2006, Statistical Office of Kosovo k) This figure is reported at KPST’s website, date of release Sep 6, 2006

1 Conducted during the first half of June by UBO Consulting under UNDP/EWS supervision.

EARLY WARNING REPORT KOSOVO - Number 14

Selected Indicators from the Opinion Poll Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Jun Jul–Sep 2006 c) Trend 2005 a) 2005 a) 2005 a) 2005 a) 2006 b) Political pessimism, % (“very dissatisfied” or “dissatisfied” with current 38.6 35.8 41.0 40.2 43.4 38.7 political trends) Economic pessimism, % (“very dissatisfied” or “dissatisfied” with current 71.1 69.9 68.8 73.3 76.0 70.0 economic trends) Willingness to protest due to economic reasons, % 62.9 63.5 57.4 69.3 62.8 44.0 Willingness to protest due to political reasons, % 48.9 48.4 45.4 56.2 45.5 30.6 Satisfaction with UNMIK’s performance*, % 29.7 41.4 34.5 35.9 30.5 29.9 Satisfaction with SRSG’s performance*, % 81.2 81.7 69.8 72.0 70.5 34.5 Satisfaction with PISG’s performance*, % 81.2 67.7 48.7 51.0 43.3 27.2 Satisfaction with Assembly’s performance*, % 73.7 63.0 59.0 56.2 45.4 43.0 Satisfaction with KFOR’s performance*, % 81.0 87.3 84.3 86.3 81.0 83.6 Satisfaction with KPS performance *, % 86.9 84.4 84.5 84.2 81.8 81.5 Feelings of insecurity (“Somewhat unsafe“ or “very 38.1 36.6 36.7 42.9 35.5 42.7 unsafe“ while outdoors)

* includes “satisfied” and “very satisfied” Sources: a) UNDP (2006), Early Warning Report No. 12: October – December 2005, UNDP, Prishtinë/Priština, op. cit. b) UNDP (2006), Opinion Poll: January – June 2006. c) UNDP (2006), Opinion Poll: July – September 2006.

EARLY WARNING REPORT KOSOVO - Number 14

Table of Content

FOREWORD ...... 9

EXECUTIVE SUMMARY ...... 11 Key issues and highlights...... 11 Summary of Trends...... 11 Methodology...... 12

POLITICAL AND INSTITUTIONAL STABILITY...... 13 Introduction...... 13 Main issues during July – September 2006 ...... 13 Conclusions...... 20

ECONOMIC AND SOCIAL STABILITY...... 21 Introduction...... 21 Main issues during July – September 2006...... 21 Conclusions and policy recommendations...... 30

INTERETHNIC RELATIONS...... 31 Introduction...... 31 Main issues during the reporting period July-September 2006...... 31

PUBLIC AND PERSONAL SAFETY...... 37 Introduction...... 37 Security incidents and protests during the reporting period (July – September)...... 37 North Kosovo: status expectations and security challenges...... 39 Community confidence...... 40 Corruption and Organized Crime...... 42 EU crisis management mission and Kosovo Action Plan...... 42 Conclusions...... 43

Annex 1...... 45 Selected results of the opinion poll...... 45

ANNEX 2...... 51 Events during the period July- September 2006...... 51

EARLY WARNING REPORT KOSOVO - Number 14

List of Acronyms

BPK Banking and Payments Authority of Kosovo MEF Ministry of Economy and Finance BIRN Balkans Investigative Reporting Network MEM Ministry of Energy and Mining CA Collective Agreement MoH Ministry of Health CBAK Central Banking Authority of Kosovo NATO North Atlantic Treaty Organisation CDHRF Council for the Defence of Human Rights and OPS Office for Public Safety Freedoms ORA Partia Reformiste/Reform Party CPI Consumer Price Index OSCE Organisation for Cooperation and Security in EAR European Agency for Reconstruction Europe EC European Council PDSRSG Principal Deputy Special Representative of the Secretary General EFC Economic and Fiscal Council PISG Provisional Institutions of Self Government ESI European Stability Initiative POEs Publicly Owned Enterprises EU European Union PER Project on Interethnic Relations EUPT European Union Planning Team for Kosovo RTK Radio Televizioni i Kosovës (Public TV Broadcaster EWR Early Warning Report of Kosovo) EWS Early Warning System SEE South-East European FIQ Forum for Civic Initiative SOEs Socially Owned Enterprises ICG International Crisis Group SOK Statistical Office of Kosovo IMF International Monetary Fund SRSG Special Representative of the Secretary General ISSR Internal Security Sector Review SRSG Special Representative of the Secretary JIU Judicial Inspection Unit General KEK Korporata Energjetike e Kosovës (Energy SSDAT Security Sector Development Advisory Team Corporation of Kosovo) UN United Nations KFOR Kosovo Force UNMIK United Nations Interim Administration Mission KIPRED Kosovar Institute for Policy Research and in Kosovo KJPC Development Kosovo Judicial and Prosecutorial Council UNOSEK United Nations Office of the Special Envoy for Kosovo KPC Kosovo Protection Corps UNSC United Nations Security Council KPS Kosovo Police Service USAID United States Agency for International KTA Kosovo Trust Agency Development LDK Lidhja Demokratike e Kosoves/ Democratic USIP United States Institute of Peace League of Kosovo

EARLY WARNING REPORT KOSOVO - Number 14

Foreword

This edition of the Early Warning Report (EWR) is the fourteenth in the series that commenced in Au- gust 2002, under the sponsorship of United States Agency for International Development (USAID) and the United Nations Development Programme (UNDP). Covering the period from July to Sep- tember 2006, the report covers the second quarter of Phase IV of the Early Warning System which will continue through to June 2007. It follows the tradition of previous reports by examining the evolving situation in Kosovo under four main areas covering political, economic, social and security issues. A particular feature of Phase IV is that every quarterly report will draw from the expertise of a diverse pool of analysts.

This edition of the Early Warning Report is published in a period of intensive and important developments with the ongoing negotiations regarding the final status of Kosovo dominating the political situation. In that regard, continued monitoring of early warning indicators may prove to be a necessary tool for obtaining insight into potential conflict-causing factors as well as the opinion of Kosovans on the negotiations’ process.

The EWR Number 14 includes four topics: political and institutional stability, the socio-economic situation, interethnic relations and personal and public security. The analysis of these issues is supported by data from a public opinion survey carried out by the “UBO Consulting” agency during the second half of September 2006. This extensive survey measures the perceptions of citizens about some of the main issues that preoccupy Kosovo’s society. Some important highlights of the survey are:

● Similar to previous reporting period approximately 58 percent of respondents thought that Ko- sovo’s unresolved political status is the most threatening issue to stability, followed by social and economic problems comprising 18% of respondents, these figures in June were 56 and 26 percent respectively.

● K-Albanians and K-Serbs continue to be deeply divided in their preferences for Kosovo's future political status. Independence of Kosovo within present borders remains the preferred option among K-Albanians (95.7 %) while the majority of K-Serbs respondents (70%) stated that Kos- ovo should be an autonomous province within Serbia.

● Satisfaction with the performance of the main institutions has dropped. The biggest decrease is with regard to the SRSG, followed by the PISG.

While the report might be of interest to the general reader, its primary intention is to provide monitoring and conflict prevention proposals for action by key actors within the PISG and local leadership, development actors, United Nations Interim Administration Mission in Kosovo (UNMIK) and the International Community.

We remain confident that the set of analyses presented in EWR Number 14 will stimulate much thought and discussion among readers and that it will attract appropriate attention from the rel- evant political and other actors in Kosovo. It gives us great pleasure, therefore, to extend our ap- preciation and gratitude to the contributing authors for their perceptive analyses of the situation in the past three months, and to all those who supported us in the process of completing this edition of EWR.

Frode Mauring UNDP Resident Representative

EARLY WARNING REPORT KOSOVO - Number 14

EXECUTIVE SUMMARY - In late August 2006, the World Bank committed US$ 8.5 million for a project to open a Key issues and highlights new lignite mine, to build a new lignite power plant and to refurbish parts of the existing power stations. This is viewed as the first - Negotiations on the future status of Kosovo step toward a long term stabilization of the dominated the political situation. During the energy sector in Kosovo, which is one of the period under review, seven rounds of status most important preconditions for a stable talks took place in Vienna on “technical” is- business environment. sues such as decentralization, minority rights and protection of cultural and religious herit- Summary of Trends age. A high level meeting between Kosovo and Serbian political leaders, lead by Special Envoy Martti Ahtisaari resulted in no visible - K-Albanians and K-Serbs continue to be compromise. Decentralization of govern- deeply divided in their preferences for Kos- ment continued to be the most contentious ovo’s future political status. Independence of and complex issue. Kosovo within present borders remains the preferred option among K-Albanians (95.7 - This reporting period was marked by increas- %) while the majority of K-Serbs respond- es discontent and opposition. The Vetëven- ents (70%) stated that Kosovo should be an dosje movement continued to organize autonomous province within Serbia. Only protests in opposition to the status talks 10% of K-Serbs respondents see partition of claiming that they are dividing Kosovo’s terri- Kosovo as the best solution for the final sta- tory. They accuse Kosovo’s negotiation team tus whereas in June 2006, 46.5% of K-Serbs for ignoring the citizens’ will for independ- favoured this option. ence. Moreover, a special plenary session of the Kosovo Assembly held in September was - Approximately 58 percent of respondents marred with criticism aimed at both ruling see Kosovo’s unresolved political status as and opposition parties on the way the Unity the most threatening issue to stability, fol- Team was handling the status process. lowed by social and economic problems comprising 18.4 percent. Looking at the fig- - A new constitution drafted by Serbia’s political ures along ethnic lines, unresolved political leaders that declares Kosovo as an integral part status of Kosovo is seen as the number one of the republic was voted in by a national ref- threat to stability by K-Albanians (61%) and erendum on 28 and 29 October with a 51.6 % Others (51.5 %). K-Serbs see aggravation of majority in favour. This act is being interpreted interethnic relations as most threatening by K-Albanians as a provocation of the politi- (45.8 %) followed by unresolved political sta- cal atmosphere in Kosovo during this crucial tus (31 %). phase. For K-Serbs, the new constitution is being used to support their position on the final - Compared to June 2006, satisfaction with status question and as an affirmation of their the performance of the main institutions has demand that Kosovo should be an autono- dropped. The biggest decrease is with regard mous province within Serbia. to the SRSG, a drop of 36%, followed by the PISG for 16%. Compared to March 2005 the - Elections within the Democratic League of biggest decrease is with regard to the As- Kosovo (LDK) became a central domestic po- sembly, more than 30%. litical event. Given that the LDK is the leading partner of the ruling coalition and the largest - Economic and political pessimism has de- political party in Kosovo, the ongoing infight- creased in September compared to June ing is expected to have direct repercussions 2006. This declining trend marks a change on political stability. from the previous reporting period, when the trend was on the rise (December 2005 till - No significant changes within the economy June 2006). are observed. Increasing unemployment and poverty rates continue to be areas of con- - Readiness of respondents to protest for po- cern. litical and economic reasons has decreased

11 EARLY WARNING REPORT KOSOVO - Number 14

compared to June 2006. This trend is declin- METHODOLOGY ing for the past two reporting periods (De- cember 2005 and June 2006). Also. Kosovans The Kosovo Early Warning System Project is aimed at are much more prone to protest due to eco- building the capacity of local analysts to foresee po- nomic situation (44%) than due to political tential crises, and based on its findings to advise on situation (31%). This is in line with indicators crisis prevention policies. The Reports are intended of pessimism where a higher degree of pes- as strategic planning, response, and policy tools for simism is reported about the economy (70%) development and peace-building actors in Kosovo by compared to political situation (39%). deriving recommendations for preventative measures from trend analysis and - Approximately 37 percent of respondents the monitoring of key sector indicators of fundamen- see uncertainty over final status of Kosovo as tal conflict-causing factors. The Early Warning System the paramount problem facing Kosovo, fol- Project is a UNDP regional initiative; at present most lowed by unemployment – 34 percent, and SEE UNDP Programmes produce Early Warning Re- poverty – 15 percent. In previous reporting ports (EWR) on a periodic basis. The Kosovo Reports periods unemployment was considered the are co-funded by USAID and UNDP. The Kosovo EWR’s number one problem facing Kosovo. are produced quarterly.

- Feelings of insecurity have increased by al- The Kosovo Early Warning Report Nr. 14 is written by most 7% compared to previous reporting local analysts and it is based on statistical analysis of period. Additionally, the willingness of K-Al- an opinion poll conducted by UBO Consulting during banians to work with K-Serbs and vice versa the second half of September 2006. The survey was has decreased among both ethnic groups. based in face-to-face interviews, and included 1,250 The decline is smaller among K-Albanian respondents: 851 K-Albanians, 203 K-Serbs, and 196 respondents (5%) but much larger among K- respondents from Other minorities (42 Bosnian, 19 Serb respondents (21%). Gorani, 34 Turk, 53 Ashkali, 24 Roma, 23 Egyptian, and Other 1). The sample was selected through ran- - Although interethnic relations have not been dom sampling method and was stratified on basis of significantly aggravated since the March geographic regions that are based on telephone area 2004 events, they are tense and continue codes (7) and municipalities (30) and urban rural ratio to be such as perceived by the respondents. (1:1). The percentage of K-Serbs who believe that the relations are tense and will continue to be such, has increased by 17 % (40.7 % in June to 57.1% in September); for K-Albanians this percentage dropped by 6 % from June to September.

12 EARLY WARNING REPORT KOSOVO - Number 14

Chapter 1 2. Main issues during July – September 2006 Political and Institutional Stability Author: Bekim Baliqi 2.1 Final Status Negotiations

1. Introduction The three-month period under review was marked by the intensification of the final status negotiations. Seven rounds of talks were held during this period, During the period July - September 2006 negotiations known also as the Vienna meetings. A high-level po- on the future status of Kosovo continue to dominate litical meeting between Kosovo and Serbian political the political situation. Most of the political and dip- leaders, including presidents and prime ministers lomatic activities of the Kosovo Government were from both delegations, was described as a “historical focused on this issue. Media and public opinion paid occasion”. However the meeting did not succeed to special attention to the final status talks and various reach an agreement and nor did it bring the positions statements of Kosovan and international actors. of both parties closer. Following this top-level meeting, the Contact Group (CG) called on both parties to During the period under review, seven rounds of sta- engage constructively and show flexibility on negoti- tus talks took place in Vienna on “technical” issues ation issues. The Contact Group Statement notes that such as decentralization, minority rights and protec- Prishtinë/Pristina has shown flexibility on the decen- tion of cultural and religious heritage. A high level tralization issue, but pointed out that more progress meeting between Kosovo and Serbian political lead- was necessary in implementation of the Standards. ers, lead by Special Envoy Martti Ahtisaari resulted in Representatives of the Contact Group also demanded no visible compromise. Meanwhile, the pressure from that Belgrade show greater flexibility and asked it to public opinion on the Kosovo Unity Team is increas- begin considering reasonable and workable compro- ing. The criticism originates not only from civil society, mises. Furthermore, the CG concluded that a ‘solution organizations like the Vetëvendosje Movement and should be acceptable to Kosovo’s people.’ the media but also from members of parliament from majority as well as opposition parties participating in The UN Special Envoy, President Ahtisaari visited the status-talks. Prishtinë/Pristina and Belgrade in an effort to bring the diametrically opposed proposals closer. Dur- Other topics that influenced the political and -insti ing the month of August and September, rounds of tutional stability during this three-month period in- talks continued in Vienna. At the Contact Group for- cluded: elections within the Democratic League of eign ministers meeting held on 20 September 2006 Kosovo (LDK), several violent incidents in the form in New York and chaired by U.S. Secretary of State of car explosions directed against some high ranking Condoleezza Rice, the Group reaffirmed its commit- LDK politicians, implementation of standards and the ment to achieve a negotiated settlement within 2006. proposition of new Serbian constitution defining Ko- Ministers encouraged the Special Envoy to prepare a sovo as an integral part of Serbia. comprehensive proposal for a status settlement and on this basis to engage the parties in moving the ne- This chapter will examine major political develop- gotiation process forward. On 12 September 2006, ments in relation to the overall political and institu- the UN-Security Council also discussed Kosovo`s fu- tional stability of Kosovo. The analysis is supported by ture status calling for stronger efforts on both sides the Early Warning Report opinion poll findings cover- toward progress on the stalled talks. Nevertheless, ing the period July-September 2006. The main con- negotiations on the determination of Kosovo’s final cerns and trends in the political situation during this status made little progress. Both sides continued to period will be discussed. have polarised positions on the status issue. Kosovo Albanian leaders insisted that their goal of independence remained the only realistic option.

1 This term describe the Kosovo Delegation to final status negotiations. 2 Ambassador Frank G. Wisner U.S. special representative to the Kosovo status talks described the meeting in this way. See more in: http://usinfo.state.gov 2. August 2006 ( accessed 12.10.2006) 3 Contact Group statement, from 24. July 2006, Vienna. Available from http://www.unosek.org/unosek/en/docref.html (accessed 12.10.2006)

13 EARLY WARNING REPORT KOSOVO - Number 14

Belgrade and K-Serbs continue to insist on the policy final status, more seriously. The Serbian government of “more than autonomy; less than independence,“ has promoted the idea that separation as an option that formally retains Kosovo within Serbia. As ex- would classify Serbs as a destructive influence on the pected, the crucial dilemma for the status question negotiation process, which they say, might seriously remains full autonomy or “conditionality” especially damage the position of their delegation while auto- in relation to minority and sovereignty issues. These matically favouring demands of K-Albanians. This has different positions are also confirmed in the opinion perhaps influenced the opinion of K- Serbs. . poll results from September 2006. . An overwhelming majority or 95.7% of K-Albanian respondents chose The shift in preferences of K-Serb respondents may also independence of Kosovo within present borders as be due to the changed strategy of the Belgrade negotia- the best solution, while the majority of K-Serbs re- tion team that have now started to give more priority to spondents (70%) stated that Kosovo should be an the formation of Serb dominated municipalities and the autonomous province within Serbia. Only 10% of K- establishment of stronger relations with Belgrade than Serbs respondents see partition of Kosovo as the best to the option of Kosovo`s division. solution for the final status of Kosovo. Compared to When asked as to when the negotiation process the EWS opinion poll findings in June 2006 (see Table should be completed, 80.2% of the total respondents Table 1.1: Best option for future political status of Kosovo

K-Albanians K-Serb Sep-05 Dec-05 Jun-06 Sep-06 Sep-05 Dec-05 Jun-06 Sep-06 Independence of Kosovo within present borders 90.2% 93.4% 95.1% 95.7% 1.0% 0.5% 0.0% 0.5% Partition of Kosovo 0.7% 0.0% 0.2% 0.1% 9.3% 8.0% 46.5% 10.8% Autonomous province within Serbia 0.0% 0.0% 0.0% 0.0% 86.6% 89.5% 35.0% 70.0% Unification with Albania 9.1% 5.4% 2.7% 2.5% 0.0% 0.0% 0.0% 1.0% Don’t know 0% 1.2% 2.0% 1.7% 3.1% 2.0% 18.5% 17.7%

Source: EWS opinion poll, September 2005 - September 2006

1.1), there is a huge shift in the opinion of K-Serb re- stated that they want to see the process completed spondents on the final status, specifically on “partition by the end of this year. Greater impatience in relation of Kosovo”. In June just 35% of people preferred the to the completion of final status is noticeable among option of Kosovo becoming an integral part of Serbia K-Albanians and among other, non-Serb minorities while 46.5% favoured the option of the partitioning with 83.9% and 63.3% respectively wanting to see of Kosovo. This shift in preferences among K-Serb re- the process completed by the end of the year. K-Serb spondents may be attributed to the fact that Belgrade respondents are somewhat less anxious with just has taken the principle of the Contact Group, which 43.3% wishing the same (see Table 1.2 below). These excludes the partitioning of Kosovo as a solution to findings suggest that the overwhelming majority of Table 1.2: Opinions relating to completion of negotiation process K-Albanian K-Serb Others Total weighted

By the end of this year 83.9% 43.3% 63.3% 80.23% Next year 2.5% 3.0% 4.6% 2.62% When the standards for Kosovo are fulfilled 1.1% 18.2% 6.6% 2.42% Never 0.0% 7.9% 0.5% 0.50% Don’t know 12.2% 25.6% 23.0% 13.67% Does not answer 0.4% 2.0% 2.0% 0.55% Total 100.0% 100.0% 100.0% 100.00% Source: EWS opinion poll, September 2006

4 Platform on the Future Status for Kosovo and Metohija, adopted by the Serbian negotiation team on 5 January 2006, available from http://www.kc.gov.yu/D-ENGLISH/dokumenti-eng/001.html (access 15.10.2006) 5 See Early Warning Report Kosovo, Number 13 January-June 2006 6 “Other” or non-Serb communities refer to: Turks, Bosnians, Roma, Ashkali and Egyptians

14 EARLY WARNING REPORT KOSOVO - Number 14

K-Albanian and non-Serb respondents are very opti- icë/Kamenica, Viti/Vitina and in Northern Mitrovicë/ mistic that the negotiations will be completed within Mitrovica, whilst also expanding the municipality of 2006. This outcome might also be an indication of a Novobërdë/Novo Brdo.10 high level of expectation among these two groups concerning the desired outcome of the status talks. The opinion poll findings for this period also show that K-Albanians and K-Serbs have very different 2.2 The Decentralization process preferences on the question as to who should decide about the decentralization plan in Kosovo. While 62.2 During the period under review, decentralization of % of K-Albanians respondents believe that decentrali- government continued to be the most contentious zation should be decided by Kosovo negotiators in and complex issue of the final status negotiation cooperation with the international community, 19.3% process. Belgrade and K-Serbs see decentralization declared that the contribution of all three parties is as the chance to protect and articulate their “national crucial to deciding on this issue. On the other hand, interest” in Kosovo. While seeking the establishment 56.7% of K-Serbs responded that the future decentral- of Serb municipalities in Kosovo they also seek con- ization plan should be decided by the international stitutional and legal protection. The international community in cooperation with the Prishtinë/Pristina community views decentralization as key to the inte- and Belgrade teams. Almost 30% of K-Serb respond- gration of minorities and to the building of a multi- ents preferred only the international community and ethnic Kosovo. Many Kosovo Albanians, however and the Serb negotiation team as the decisive factors. (see particularly members of the Vetëvendosje Movement Figure 1.1 below). perceive decentralization as a conduit for Belgrade to achieve the de facto partition of Kosovo before the 2. The future of Mitrovicë/Mitrovica determination of the final status. The growing resent- and Northern Municipalities ment on this matter during the month of August and September, suggests that decentralization will be the Another important topic, discussed in the Vienna- most critical issue of all status-related issues. The out- meetings, that might affect the political stability of come may well fuel protests of K-Albanians against Kosovo, is the problem of the divided town of Mitro- the political establishment and the international vicë/Mitrovica. Plans for the organization and/or community. integration of the Mitrovicë/Mitrovica municipality differ very significantly between Prishtinë/Pristina Besides the diverging views on the concept of decen- and Belgrade. The current Kosovo proposal for Mitro- tralization, the number of municipalities expected to vicë/Mitrovica is the ‘one city (managed jointly by the emanate from the technical negotiations is a point of board), two municipalities’ integration plan, drafted contention between the two delegations. Belgrade at the request of the Kosovo Negotiating Team by requests that 16 new municipalities be established Kosovo’s former Prime Minister Bajram Rexhepi.11 The through the territorial reorganization of local self- Belgrade team, on the other hand, asks for two sepa- government units in Kosovo whereas the Prishtinë/ rate administrations for north and south Mitrovicë/ Pristina position is that five municipalities plus one Mitrovica. The resolution of the problem of northern municipal unit in the Northern part of Mitrovicë/ Kosovo and the divided city of Mitrovicë/Mitrovica Mitrovica is the maximum political concession possi- was not included as a sole agenda during the nego- ble as part of the Reform on Local Self-Government. tiations process. However, many experts and inter- The Prishtinë/Pristina delegation propose to join the national organizations suggest that the problem of villages of Lipjan/Lipljan and Graçanica/Gracanica, to Mitrovicë/Mitrovica remains the most dangerous is- form a municipality in Obiliq/Obilić, as well as form- sue in the long-term and concluded that ‘no solution ing new municipalities in Gjilan/Gnjilane, Kamen- for Kosovo can last without a solution for Mitrovicë/

7 For the importance of decentralization to the status settlement, see also Contact Group statement from 31 January 2006,London, available from http://www.eu2006.at/de/News/information/0102Kontaktgruppe.html (accessed 14.10.2006) 8 see. Platform of the Serbian Negotiation Team on Decentralization, available from http://www.kosovocompromise.com/pages/kosovo_tommorow/ sub_links/11_2/frame.html (accessed 14.12.2006) and D. Janjic, S. Cvijic, D. Nenadic, and N. Durdevic: “Why is decentralisation important for Kosovo status talks?” White Paper presented at a special seminar of the NATO Parliamentary Assembly. available from http://www.fer.org.yu/pix/izdanja/ The%20White%20Paper-Kosovo%20decentralization.zip (accessed 14.10.2006) 9 According to the Prishtinë/Pristina delegation, this solution would enable more than 75 % of the K-Serbs to live in self-governed municipalities. The Prishtinë/Pristina negotiation team argues that the plan is both a serious offer and a compromise towards the requests of Belgrade, all with the aim of pro- tecting the political and human rights of this community while providing an opportunity to integrate into the political and institutional reality in Kosovo. 10 Report of Radio Television of Kosovo (RTK) from 12 July 2006 available from http://www.rtklive.com/site/index.php ( accessed 19. 09 2006) 11 See also Igor Milic and Krenar Gashi: Mitrovica Faces Formal Division. Balkan Insight, 4 May 2006 available from http://www.iwpr.net/?p=brn&s=f&o=261641&apc_state=henpbrn (last access 14.10.2006)

15 EARLY WARNING REPORT KOSOVO - Number 14

Figure 1.1: Opinions on who should decide on the decentralization plan

70%

60.2% K-Albanian 60% 56.7% K-Serb

50% Others

40% 39.3%

29.6% 30% 28.1%

21.9% 19.3% 20% 16.9%

10.8% 10% 7.1% 3.6% 2.5% 0.5% 1.9% 1.8% 0% International International The negotiatin Don't know NA community community teams of together with the together with the Kosovo and Serbia Kosovo Negotiating negotiating teams

Source: EWS opinion poll, September 2006

Mitrovica.’12 The violent incidents on Ibar/Ibër Bridge dination Center for Kosovo lead by Sandra Raskovic- and the operation of parallel structures in northern Ivic, has made calls to K-Serbs to refuse any coopera- Kosovo continue to reflect negatively on the general tion or assistance from Kosovo institutions. political and institutional stability of Kosovo.13 UNMIK Police Commissioner Kai Vittrup was the one of the The PDSRSG Steven Schook expressed in the media first senior international officials to publicly acknowl- that the establishment of a Framework for a Provi- edge the existence of parallel security structures in sional International Mission in northern Kosovo might the north of Kosovo. Vittrup stated that parallel struc- be necessary after the final status solution.16 The rep- tures constitute a political rather than a security prob- resentatives of the Serb National Council for Northern lem, which should be resolved with the resolution of Kosovo viewed this statement with deep scepticism the Kosovo status.14 As a preventive measure Kosovo and criticized Mr. Schook’s statement.17 But many in- Forces (KFOR) in mid-July, deployed five hundred ad- ternational experts came to the conclusion that for ditional soldiers to northern Kosovo in order to main- Mitrovicë/Mitrovica and northern Kosovo a significant tain security and stability in the region.15 Meanwhile, international commitment will be needed to provide some of the northern municipalities with a Serb ma- security and stability, to carefully oversee political jority continue to boycott the PISG institutions and and institutional reunification, and encourage ethnic have decided to refrain from any cooperation with integration.18 Kosovo authorities. A directive from Belgrade’s Coor-

12 Yll Bajraktari and Christina Parajon: “No Stable Kosovo Without a Solution for Mitrovica.” United States Institute of Peace, July 2006, available from http:// www.usip.org/pubs/usipeace_briefings/2006/0724_mitrovica.html (accessed 02.08.2006) see also ICG: “Bridging Kosovo’s Mitrovica Divide”, Europe Report N°165, 13 September 2005 available from http://www.crisisgroup.org/home/index.cfm (accessed 14.10.2006) 13 The recent Report of the United States Institute for Peace warned also that the eventual territorial separation of Kosovo may affect the escalation of stability in Southern Serbia (Presevo Valley), Macedonia and Bosnia. See Daniel Serwer and Yll Bajraktari: Kosovo, “Ethnic Nationalism and Its Territorial Worst”, USIP- Special Report 172, August 2006, Washington available from http://www.usip.org/pubs/specialreports/sr172.html (accessed 29.10.2006) 14 Koha Ditore, Prishtinë/Priština 2 July 2006 15 KFOR Press Release, 21 July 2006 available from http://www.nato.int/kfor/press/pr/pr/2006/07/21.htm (access 29.10. 2006) 16 Zëri, Prishtinë/Priština 31 July 2006 18 Report by Radio Kontakt Plus, Mitrovica 2 August 2006 18 See Research Paper with proposals from H. Binnendijk, Ch. Barry, G. Cordero, L. Nussbaum, M. Sinclair: “Solutions for Northern Kosovo. Lessons Learned in Mostar, Eastern Slavonia, and Brčko.” Center for Technology and National Security Policy, August 2006 available from www.ndu.edu/ctnsp/Def_Tech/DTP%2034%20Mitrovica.pdf (accessed 26.10.2006)

16 EARLY WARNING REPORT KOSOVO - Number 14

2. Growing Opposition and Discontent of all Serbs are not satisfied with the negotiation process Parties to the Status Process while only 2% are satisfied. In comparison to the EWS poll of June 2006, where 45 % of K-Serbs were neither While the high-level meeting between Kosovo and satisfied nor dissatisfied, there has been enormous Serbian political leaders was taking place 24 July, upsurge of dissatisfaction among K-Serbs with the hundreds of Kosovo Albanians took to the streets in status talks. This increasing level could be the result of protest against the negotiations. The Vetëvendosje dissatisfaction among K- Serbs with the performance Movement together with other associations and non- of its negotiation team and with the fact that more governmental organizations organised the demon- and more countries do not exclude independence as strations. The speakers and the slogans used claimed a solution for Kosovo’s final status. Among K-Albanian that the status talks are dividing Kosovo’s territory respondents, 13.5% are satisfied, 21.9% are not and and accused the Kosovo delegation of ignoring the 38.9% are neutral or neither satisfied or dissatisfied citizens’ will for independence. A more controversial with the current course of the negotiations process. protest against decentralization took place in Gjilan/ These figures suggest a small decline in optimism Gnjilane, where all local branches of K-Albanian politi- among K-Albanians and an increasing level of pes- cal parties, except the reformist party ORA, joined the simism among K-Serbs with the development of the Vetëvendosje Movement and other organizations in negotiation process. protest.19 As Table 1.3 below suggests, the unresolved political The growing discontent and opposition to the status status, followed by the current social and economic process even surfaced in the central institutions. Dur- problems and the aggravation of interethnic rela- ing the first week of September, a special plenary ses- tions are perceived as the most threatening issues sion of the Kosovo Assembly on the final status nego- to stability. Perceptions vary according to ethnicity. tiation talks was marred with criticism aimed at both The majority of the K-Albanians respondents (60.8%) ruling and opposition parties on the way the Unity and of Other communities (51.5%) view the unsettled Team was handling the status process. The deputies of status as the key to the stability of Kosovo, while the the Kosovo Assembly warned the negotiating team to majority of K-Serbs (45.8%) consider the aggravation be very careful with the decentralization issue, and not of interethnic relations as a threat to political stabil- to allow the process to develop on an ethnic basis.20 ity followed by the problem of unresolved political status (31.0%). Compared with the June 2006 opinion With final status talks possibly coming to an end poll findings, there is an increase in the percentage of and the chances of a compromise appearing rather respondents among all ethnic communities (50.5% to distant, the uncertainty is proving to be increasingly 58.4%), who consider the unresolved political status frustrating for both K-Albanians and K-Serbs. The as the most threatening factor to the political stability results of the opinion poll shows that 60% of the K- of Kosovo (see Table 1.3 below). Table 1.3: Circumstances mostly threatening to the stability of Kosovo K-Albanian K-Serb Others Total Jun-06 Sep-06 Jun-06 Sep-06 Jun-06 Sep-06 Jun-06 Sep-06 Further aggravation of interethnic 3.2% 2.8% 45.6% 45.8% 4.9% 7.1% 5.8% 5.7% relations Current social and economic 23.7% 19.2% 10.1% 8.9% 31.1% 17.3% 23.4% 18.4% problems Deterioration of relations with 0.8% 0.4% 1.8% 3.9% 0.5% 0.5% 0.9% 0.6% neighbouring countries Deterioration of relations with 1.9% 2.2% 1.4% 0.0% 2.2% 1.0% 1.9% 2.0% international community Unresolved political status of Kosovo 53.3% 60.8% 22.1% 31.0% 36.6% 51.5% 50.5% 58.4% Lack of rule of law 2.6% 2.6% 8.8% 3.9% 4.9% 3.1% 3.1% 2.7% Corruption and mismanagement 8.9% 5.5% 0.0% 3.0% 2.7% 6.1% 8.0% 5.4% Source: EWS opinion polls January – September 2006

19 “Hundreds rally in Kosovo capital against talks on final status in Vienna” report by news agency Kosovalive, Prishtinë/Priština 24 July 2006 available from http://www.kosovalive.com/?cid=2,2&mode=all (access 29.10 2006) 20 See report by news agency Kosovalive, 2 September 2006 available from http://www.kosovalive.com/?cid=2,2&mode=all (accessed 29.10.2006)

17 EARLY WARNING REPORT KOSOVO - Number 14

Another concern, which affects the negotiation proc- cases of misuse of political positions, corruption, and ess relates to the new constitution drafted by Serbia’s low standards of local administration. In this context, political leaders that declares Kosovo as an integral accusations of corruption and political nepotism part of the republic. The constitution was voted in were directed at the Government not only by the by a national referendum on 28 and 29 October with opposition but also by diverse civil society organiza- a 51.6 % majority in favour. 21 This act is being inter- tions.23 Local media have reported on several political preted by K-Albanians as a provocation of the political scandals, the central one being the grave situation in atmosphere in Kosovo during this crucial phase. For K- the health sector, especially at the University Clinical Serbs, the new constitution is being used to support Center in Prishtinë/Pristina, Kosovo’s main and largest their position on the final status question and as an public medical institution. affirmation of their demand that Kosovo should be an Compared to the previous reporting period (June autonomous province within Serbia. Milan Ivanović 2006) the percentage of K-Serb respondents that are one of the K-Serbs political leaders and the president dissatisfied or very dissatisfied with the current politi- of Serbian National Council, stated that a “Yes” vote cal situation remains very high (81.3%). Among K-Al- for the new Serbian constitution is a vote for Kosovo banian respondents there is a slight decrease in the and Metohija within Serbia, while a boycott of the ref- level of dissatisfaction, namely from 42% in June 2006 erendum is a vote for Kosovo’s independence.22 to 36.2% in September 2006 (see Table 1.5). These findings suggest that the ongoing political status 2. Satisfaction with current political situation quo has generated a constant dissatisfaction with the and institutions political situation.

Opinion poll findings for this reporting period show Table 1.5: Percentages of respondents “dissatisfied” or “very that satisfaction with the political situation in Kosovo dissatisfied” with the current political situation (%) is very low with only 14.8% of the K-Albanian respond- Sep-O5 Dec-O5 Jun-O6 Sep-O6 ents expressing satisfaction and only 1.8% being very K-Albanians 38 36.7 42.1 37.1 satisfied. Likewise, only 4.4 % of K-Serb respondents are very satisfied while only 0.5% reported that they K-Serbs 98.5 96.1 82 81.3 were satisfied with the current political direction (see Others 28 36.8 30.6 18.9 Table 1.4 below). Source: EWS opinion polls September 2005 – September 2006 Table 1.4: How satisfied are you with the political direction Kosovo is Opinion poll findings show that UNMIK continues to presently heading towards be perceived as the institution that holds the main K-Albanian K-Serb Others responsibility for the current political situation in Ko- Very satisfied 1.8% 4.4% 3.1% sovo (46.3%). Just over 29% of respondents consider the PISG structures as responsible.24 This could be Satisfied 14.8% 0.5% 26.0% due to the lack of information related to the powers Neither satisfied nor dissatisfied 38.5% 10.3% 39.3% of UNMIK and PISG. There is however, a continuous Dissatisfied 29.3% 46.3% 16.3% fall in the percentage of those who perceive UNMIK as having greater responsibility for the current po- Very dissatisfied 7.9% 35.0% 2.6% litical situation, and a corresponding increase in the Source; EWS opinion polls, September 2006 percentage who view PISG as responsible (see Figure 1.2). This decrease is most notable since June 2004, During this reporting period, satisfaction with the when additional competencies were transferred to domestic political developments continues to be low the PISG and when the new SRSG Jessen-Petersen ar- affecting in turn the credibility of the political insti- rived (see Figure 1.2). tutions. Dissatisfaction is perhaps closely related to

21 See“Serbs approve constitution with last-minute votes.” Reuters, 29 October 2006 available from http://today.reuters.com/news/articlenews.aspx?type=worldNews&storyid=2006-10-29T205606Z_01_L29872179_RTRUKOC_0_US-SERBIA-REFERENDUM. xml&src=rss (accessed 21.11.2006) 22 See “Ivanović:` Yes` at the referendum is also vote for the Kosovo and Metohija”, RTS (Serbian Radio Television), 23 October 2006 available from http:// www.tvmost.com/index.php?navigate=vesti (accessed 21.11.2006) 23 See “Corruption and Organized Crime: Reflections on the Status Negotiations.” Report Nr.3 of the NGO “Çohu”, 4.October 2006 Prishtinë/Priština available from http://www.cohu.org/CORRUPTION%20AND%20ORGANIZED%20CRIME.htm (accessed 30.10.2006) 24 Distribution by ethnicity indicated that there are not enormous differences. While 46.8% of K-Albanians and 44.8% of K-Serb respondents see UNMIK as responsible, 29.7 percent of K-Albanians and 38.9% of K-Serbs regard PISG responsible. 7.7% of first group and 7.9% of second one political parties as responsible for current political situation.

18 EARLY WARNING REPORT KOSOVO - Number 14

Figure 1.2: Perceptions on responsibility for political situation

80 72 UNMIK 70 65 60 62 PISG 60 57 52 50 48 46 40 34 30 30 28 22 20 17 18 13 15 10

0 Jun-O3 Mar-O4 Jun-O4 Dec-O4 Jul-O5 Dec-O5 Jun-O6 Sep-O6 Period

Source: EWS opinion poll, June 2003-September 2006

The PISG continued in its efforts to implement the the 13 Standards set by the Contact Group25. Standards for Kosovo and have undertaken several initiatives in this regard. The European Commission in Nevertheless, the political institutions in Kosovo con- cooperation with the Kosovo Government and UNMIK tinue to be the object of harsh criticism from the pub- has initiated an Action Plan, focusing their achieve- lic and the media. The high rate of unemployment, a ment on the implementation of the European Partner- lack of economic development and social prosperity ship, which also includes all elements of the Stand- in combination with accusations of corruption, nepo- ards. After a meeting with Prime Minister Agim Çeku tism and the apparent inability of politicians to solve in mid-August, the Contact Group representatives in these problems, perhaps go some way to explain the Kosovo voiced their optimism that Kosovo institutions growth of dissatisfaction with governing institutions will fulfil all Standards within the given time, including in Kosovo.

Figure 1.3: Levelofsatisfaction with main institutions in Kosovo

100 UNMIK 80

e SRSG g

a 60 t

n PISG e

c 40 r e

P 20 Assembly 0 KFOR KPS 2 3 3 3 4 4 4 5 5 5 5 6 6 O O -O O O -O O O O O O O - r- ul - r- ul - r- n- - -O n- - ov a J ov a J ov a u p ec u p N M N M N M J Se D J Se Period

Source: EWS opinion poll, November 2002- September 2006

25 See “Contact Group officials optimistic Kosovo to fulfill Standards.” Report by news agency Kosovalive, 15 September 2006 available from http://www.kosovalive.com/?cid=1,2,421 (accessed 22.11. 2006)

19 EARLY WARNING REPORT KOSOVO - Number 14

EWS opinion poll findings (Figure 1.3) show a huge de- speculated in the media that violent incidents, such cline in the level of satisfaction with key institutions in us two consecutive car explosions in Gjilan/Gnjilane Kosovo from June to September 2006. The biggest de- involving the car of the Minister of Interior, and advi- crease is with the SRSG where satisfaction levels have sor to the Minister of Local Government Administra- fallen from 70.4% in June 2006 to 34.5% in September tion and one another incident in Ferizaj/Urosevac, 2006. This can be explained by the departure of SRSG are consequences of the friction between these rival Soren Jessen Petersen in June 2006, who enjoyed a factions.26 Thus far however, no official statement has high level of popularity among Kosovans. Satisfaction been given as to who could be behind such acts. levels toward the Assembly of Kosovo have also fallen from 45.4% in June 2006 to 43% in September 2006. 3. Conclusions This decline may be a result of a loss of trust in this institution due to accusations of corruption and misuse The negotiations on Kosovo’s final status, which is of the Assembly budget, with for example, the pur- the main political and institutional concern during chase of expensive official automobiles. Accusations this three-month period, have taken a very dynam- of this nature were directed at the former Speaker of ic course. However, so far the negotiation process the Assembly Nexhat Daci. Levels of satisfaction with shows that both sides are not likely to make the hard KFOR and KPS continue to be high. decisions or the significant concessions necessary to achieve a status resolution. Prolonged uncertainty 2.6 Elections in the Democratic League of over the outcome of negotiations and the contra- Kosovo (LDK) dictory statements of international actors involved in the process, have had a negative impact on the The forthcoming elections for party president in the general political stability in Kosovo. Lack of trans- Democratic League of Kosovo (LDK) have become a parency from the negotiation teams and confusion central domestic political event. Given the fact that about the issues discussed, in particular the question the LDK is the leading partner of the ruling coalition of decentralization, has generated growing opposi- and the largest political party in Kosovo, the infight- tion and frustration among the public in Kosovo with ing is expected to have direct repercussions on po- the process . litical stability. The possible fragmentation of LDK into various splinter groups may also lead to an insti- The problem of the divided city of Mitrovicë/Mitrovi- tutional crisis. Since LDK is the main political party of ca and of parallel structures in northern Kosovo con- the coalition government, fragmentation would lead tinue to contribute inter-ethnic tensions. An increase to a government crisis and create a deep institutional in violent incidents may eventually lead to a spiral of vacuum in Kosovo. violence, which would seriously threaten security in Kosovo and in the region. In this context, outside po- The main political figures of the LDK have gathered litical influence, such as disagreement with the even- around the President Fatmir Sejdiu. However, the tual definition of Kosovo’s status, could provoke the former Speaker of the Kosovo Assembly, Mr. Nexhat destabilization of the political situation. Daci, has also announced his candidacy for the party’s leadership. With the LDK internal elections starting on Other issues that threaten the political and institu- 7 September 2006, the divisions between supporters tional stability are the rivalries between divergent of the two groups in local party structures have be- partisan groups within LDK. The course of the LDK come more open to public view. Electoral campaigns elections suggest that the possible fragmentation of inside local party structures were accompanied by the party may lead to a government crisis and to insti- verbal accusations. Some local political observers tutional instability.

26 For more details see chapter on Public and Personal Security.

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Chapter 2 With regard to macroeconomic indicators as presented in the see “Selected Economic Indicators” Table in the introduction to this report, the following trends can Economic and Social Stability be noticed during this reporting period. First, projec- Author: Avdullah Hoti tions about the 3% growth rate of GDP for 2006 have improved to 4% according to latest results. This is a sig- 1. Introduction nificant growth rate given that last year the growth rate was negative. Second, the increase in GDP per capita is almost negligible. Third, bank deposits and loans are This chapter focuses on issues related to economic both increasing suggesting that there is still money and social stability during the reporting period July held by households and firms that could be used for – September 2006. Political and institutional stability commercial purposes. This is also a sign of the stabil- (discussed in Chapter 1) as well the extent to which ity of the financial sector and of the economy at large. the state can provide public and personal security de- Fourth, workers’ remittances, foreign assistance and the pend largely on economic and social stability in the Consumer Price Index (CPI)28 are decreasing which sug- country. Therefore, a number of issues considered in gests a decrease in aggregate demand. This is an issue other chapters of this report (in Chapters 1 and 4 in of concern requiring the attention of policy-makers as particular) might be better understood within the in the short term it may have negative implications for context of the economic and social situation. economic activities. On balance, the decrease in workers’ remittances and in foreign assistance is unlikely to 2. Main issues during be offset by the increase in commercial loans which July – September 2006 could ensure an unchanged level of aggregate spending vital to reach a new projected growth rate of 4%. Fifth, the number of registered job-seekers is increas- 2.1 Changes in economic ing. Even though, and as explained later in this chapter, indicators and perceptions this number may not be accurate, it is still too large as unemployment is directly related to poverty and other This section summarises the main developments in social problems. economic indicators during the reporting period. Be- fore any data is presented it is worth noting that al- What are people’s expectations regarding the current though significant progress has been made toward in economic situation? Findings from the opinion poll increasing the capacity of the PISG to produce good of September 2006 suggest that the economic pes- economic data27, the existing data is still at a rudimen- simism continues to be high although there is a de- tary level and does not allow a thorough analysis of the crease since the previous opinion poll of June 2006 economic situation or future prospects. Moreover, the (Figure 2.1). This high level of economic pessimism lack of data prevents international firms to have a clear implies lower spending by households and firms, vision of the economic potential of Kosovo therefore which affects the aggregate demand along with oth- decreasing potential Foreign Direct Investment (FDI). er macroeconomic indicators.

Figure 2.1: Economic pessimism during the period July 2002-September 2006

80 70 60 50 40 30 20 10 0 Percent of total respondents of total Percent

Jul-02 Nov-02 Jul-03 Mar-04 Mar-03 Nov-03 Jul-04 Nov-04 Mar-05 Jun-05 Sep-05 Dec-05 Jun-06 Sep-06

Source: EWS opinion poll, July 2002 to September 2006

27 During the period 2003 to 2006, SOK has been continuously supported by the European Agency for Reconstruction (EAR) to develop its capacities to. (among other things, produce national accounts. SOK has also received support to implement its annual Labour Force Survey. 28 As noted in the reference to the Table on “Selected Economic Indicators” that precedes this report, the methodology for calculating CPI since January 2006 is different from what it was until December 2005. Given that the CPI in the previous Early Warning Report (EWR No 13) for the period January – June 2006 follows the same methodology as in this report, it can be said that there is a decreasing trend in CPI.

21 EARLY WARNING REPORT KOSOVO - Number 14

Data on the satisfaction of respondents’ with Kosovo’s that a very small percentage of respondents (2%) current economic direction indicates that the propor- think that local government is responsible for the tion of K-Serbs “dissatisfied” or “very dissatisfied” is economic situation. In the decentralization process, much higher than for the K-Albanians and Other com- the competencies of local government (such as pro- munities (Table 2.1). Since the majority of K-Serbs live cedures to speed up the transfer of property rights) in enclaves these results suggest that prospects for toward creating a friendly business environment are the economic situation within enclaves are not prom- not to be neglected. So far, it seems that people are ising relative to the economic situation outside. This unaware of the competencies of their local govern- raises the issue of the future economic sustainability ment. of enclaves which may provide politicians and the international community with reason to encourage and Findings from the opinion poll of September 2006 convince K-Serbs to fully integrate with the rest of the indicate that the proportion of people ready to joint communities in Kosovo. The integration of K-Serbs protests because of the current economic situation with other communities would provide them access has decreased compared to the last opinion poll of to a larger market, which increases opportunities for June 2006 (especially among K-Albanian respondents, income and employment. see Table 2.3). There are two explanations for this (an Table 2.1: How satisfied are you with the economic direction Kosovo is presently heading towards? K-Albanians K-Serbs Others Total Weighted Very satisfied 1.2% 0.5% 1.5% 1.16% Satisfied 6.3% 10.7% 6.23% Neither satisfied nor dissatisfied 19.5% 8.9% 14.3% 18.55% Dissatisfied 51.6% 44.3% 52.0% 51.18% Very dissatisfied 16.9% 43.8% 14.8% 18.41% Don’t know 3.9% 2.0% 6.6% 3.93% Does not answer 0.6% 0.5% 0.55% Total 100.0% 100.0% 100.0% 100.00% Source: EWS opinion poll, September 2006

There are no large differences in opinions between K- economic and a political one). First, this decreasing Albanians, K-Serbs and Other communities as to who trend in the readiness to join protests might be a sign is responsible for the current economic situation in of the improving economic situation, which is in line Kosovo (Table 2.2). Even though many responsibili- with the expected positive growth of 4% for this year. ties are now taken over by the Provisional Institutions Secondly, due to the negotiations on the final status of Self-Government (PISG), 46% of respondents still of Kosovo, many politicians are encouraging people attribute responsibility for the current economic situ- not to engage in protests as this may delay the deci- ation in Kosovo to UNMIK. It is interesting to note sion about the final status of Kosovo.

Table 2.2: In your opinion, who is responsible for the current economic situation in Kosovo? K-Albanians K-Serbs Others Total Weighted UNMIK 45.6% 45.8% 46.4% 45.66% Kosovo Government 36.7% 37.9% 24.5% 36.01% Local governments 2.6% 3.0% 1.0% 2.51% Business community 0.4% 6.9% 0.5% 0.75% Political conditions 0.4% 0.31% Bad Management 0.1% 0.10% Don’t know 12.8% 5.9% 24.5% 13.10% Does not answer 1.5% 0.5% 3.1% 1.56% Total 100.0% 100.0% 100.0% 100.00% Source: EWS opinion poll, September 2006

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Table 2.3: Respondents’ readiness to join protests that could be organized due to the current economic situation (%) Sep-O5 Dec-O5 Jun-O6 Sep-O6 K-Alb K-Serbs Others K-Alb K-Serbs Others K-Alb K-Serbs Others K-Alb K-Serbs Others Yes 57.6 76.2 36.1 63 73.7 62.7 61.6 35.9 34.4 45.6 32.0 33.7 No 34.9 15 46.3 29.7 14.8 21.1 32.5 49.3 50.8 43.1 56.7 54.1 Does not answer 7.5 8.7 17.6 7.4 11.5 16.2 5.9 14.7 14.7 11.3 11.3 12.2 Total 100 100 100 100 100 100 100 100 100 100 100 100 Source: EWS opinion poll, September 2006

2.2 Recent developments Downsizing of UNMIK and its implications: Since UN- and their economic implications MIK’s establishment in 1999, the international community has financed UNMIK’s expenditures (person- The third quarter of 2006 (July – September) is char- nel, goods and services), which during the period acterized by a number of events that are likely to af- 1999-2006 amounted to €2.6 billion.29 Of these ex- fect economic outcomes in the future. This section penditures, €602 million (23%) are thought to have summarizes these events and also discusses their been injected directly into Kosovo’s economy.30 This expected impact on economic outcomes. This discus- contribution is comparable to the effect of invest- sion sets the background for further analysis in the ment on GDP growth. UNMIK’s expenditures created following sections in this chapter. about 2.600 jobs in private businesses31 while an additional 3.250 local employees were hired by UNMIK Free Trade Agreements (FTA) and their effect on the level itself. The concern now is the economic impact of the of trade: To date, a number of FTAs have been signed downsizing of UNMIK once the final status of Kosovo by UNMIK on behalf of the PISG under the auspices of is decided. A significant number of local UNMIK em- the Stability Pact for South-East Europe. . Discussions ployees are expected lose their jobs. In addition, the are also ongoing to establish a single FTA among departure of the international staff working for UN- South-East European (SEE) countries and to join the MIK is expected to produce a decrease in demand for Central European Free Trade Agreement (CEFTA). goods and services. However, a report prepared by Kosovo’s delegation has participated in the first two the EU Pillar of UNMIK32 suggests that the downsizing rounds of negotiations regarding the amendment might produce positive effects on Kosovo’s economy. of the CEFTA (June 29 and July 25/26 2006). These Decreased wages and prices will stimulate employ- FTAs are expected to affect the level of exports and ment and private expenditure and will make Kosovo’s imports in Kosovo and therefore the current account economy more competitive that will, in turn, have a in the balance of payments. In the short term, the ex- positive effect on the trade balance. Though, it may isting large trade deficit may deteriorate further since take some time until these positive effects partly off- imports are likely to increase as firstly, the removal of set the negative effects (decrease in employment and tariffs is expected to encourage the imports of foreign in the demand for goods and services). goods and secondly due to low productivity as some domestic businesses may lose ground in competi- A World Bank grant for energy: In late August 2006, the tion with foreign businesses resulting in the substitu- World Bank committed US$ 8.5 million for a project to tion of locally produced goods with imported goods. open a new lignite mine, to build a new lignite power Nonetheless, in the long-term foreign competition plant and to refurbish parts of the existing power sta- will enforce domestic firms to increase productivity tions. The Ministry of Energy and Mining (MEM) and and improve the quality of their goods. Other ben- Pillar IV of UNMIK have already launched a campaign efits of becoming part of the free trade area include: to attract foreign investors into the energy sector that (i) an enlarged market that provides more business is considered to be strategic for the future develop- opportunities, and (ii) the establishment of a stable ment of Kosovo. This might be the first step toward a and business-stimulating environment which might long term stabilization of the energy sector in Kosovo, increase the possibility of FDI (very much needed to which is one of the most important preconditions for help boost economic activity in the country). a stable business environment.

29 UNMIK’s Impact on the Kosovo Economy: Spending Effects 1999-2006 and Potential Consequences of Downsizing (UNMIK EU Pillar Report July 2006). 30 Ibid. 31 This is due to the increased demand for goods and services by UNMIK, private businesses had to increase employment to meet this increased demand.

32 UNMIK’s Impact on the Kosovo Economy: Spending Effects 1999-2006 and Potential Consequences of Downsizing (UNMIK EU Pillar Report July 2006)

23 EARLY WARNING REPORT KOSOVO - Number 14

The launching of the Instrument for Pre-Accession (IPA) On 22 September 2006, the SRSG signed a regulation by the EU: The EU has launched the IPA to replace the that transformed BPK into CBAK. This was done in co- CARDS program. The IPA is a new EU support instru- operation with the International Monetary Fund (IMF) ment for the Western Balkans for 2007-2013 and will with the aim to increase the role of Kosovo’s institu- take a more specific line on pre-accession preparations and the strengthen independence and capaci- tions. It stresses the particular need to assist countries ties of the CBAK as the main supervising authority in for their eventual integration within the European the financial sector in Kosovo. This will certainly con- Union and to ensure that the assistance provided tribute to further increase financial stability, which through the IPA prepares the countries for the time the former BPK has so far managed to establish and after their accession. A meeting organized by the EU maintain. Since Kosovo is using the Euro as the legal was held in Prishtinë/Pristina on 20-22 September; tender this is contributing to a stable inflation rate representatives from most of the line Ministries of the and a monetary policy that is managed by the Euro- PISG participated. The objective of the meeting was pean Central Bank (ECB). An important change that to explain this opportunity to the PISG. IPA allocations is likely to affect the work of CBAK in the future is the for Kosovo for the period 2007 – 2009 are as high as € composition of its Board. Three out of five members 194.2 million.33 Now it remains for the PISG to develop of this Board will be Kosovans.34 Two of the Kosovan projects and prepare itself to attract funds from this members are to be proposed by the PISG, which is an program. issue that raises concerns. They might find it difficult to find the necessary professional experience regard- Negotiations for the status of Kosovo and their eco- ing monetary policy instruments in an open market nomic impact: Since last summer, negotiations for the economy. The PISG may well propose individuals that future status of Kosovo are underway. It was initially have political support and each of the two coalition planned that the status was to be decided by the end parties may want to appoint their own members. This of 2006. Recent developments (that are summarized seems to be already an issue as a month has passed in other chapters of this report) suggest that the deci- since the regulation has entered into effect and there sion may be postponed until the first quarter of 2007. are no nominations from the PISG which could sig- Although this may be regarded as a political event, it nal the challenge of finding suitable candidates with has implications for the economic situation in Kosovo. professional experience as well as political support. Until the final status of Kosovo is decided, in the eyes of foreign firms economic stability remains unclear. 2.4 Foreign trade This negatively affects the level of FDI to Kosovo and also the level of trade. The trade deficit in Kosovo is still an issue of concern for future development. Imports are increasing con- 2. Financial sector and the transformation of BPK tinuously, while exports are lagging behind. In August 2006, imports amounted to €130 million compared to As indicated in the Table of Selected Economic Indica- €106 million in August 2005 (Table 2.4, column 2). The tors, the level of deposits and loans shows an increas- coverage of imports with exports is extremely low. In ing trend that is a sign of stability of the financial August 2006, this coverage ratio was 7.2% (column 5). sector and higher confidence in it. This is even more Note that the decrease in imports in the first quarter of important now that foreign assistance is decreasing. this year is mainly attributed to the landslide close to The financial sector in Kosovo is overseen by the now the main border with Macedonia as noted in EWR 13. Central Banking Authority of Kosovo (CBAK), (the former Banking and Payments Authority of Kosovo, 2.5 High unemployment and its consequences BPK). The sector in Kosovo is broadly regarded as stable , which is key to ensuring that deposits (and Labour market developments are an important indi- therefore loans) will continue to increase. However, cator for poverty, since employment/unemployment interest rates are too high to allow for a significant in- is directly related to household income and consump- crease in loans both for consumption and investment tion. Some of the labour market outcomes (high un- purposes. employment and low participation) observed today in Kosovo are a consequence of previous developments and demographic characteristics.35 Despite the lack of

33 Multi-Annual Indicative Planning Document for Kosovo 2007-2009.

34 The previous Governing Board was composed of 7 members and only 2 were Kosovans. 35 In the early 1990s, some 145,000 workers were dismissed from their jobs, which constituted about 60 percent of employment in 1989. Further, Kosovo is known for its young population and large-scale emigration, which both influence the size and the age composition of its domestic labour force. Nearly one- third of the population is under the age of 15, implying a large number of new entrants into the labour force each year.

24 EARLY WARNING REPORT KOSOVO - Number 14

Table 2.4: Exports and imports for the period January 2005 – August Data from the Ministry of Labour and Social Welfare 2006 (figures are in million €) (MLSW) indicates that the number of persons regis- Percent of tered as unemployed has continuously increased (Ta- Period Export Import Trade balance coverage ble 2.5). However, this data is not very reliable since 1 2 3 4=2-3 5=2/3 people may decide to get listed in order to be eligible Jan-05 2.555 65.092 -62.537 3,9 for drawing benefits from the only existing program of social assistance in Kosovo that targets poor house- Feb-05 2.817 66.867 -64.05 4,2 holds.38 Others that are in fact unemployed may not Mar-05 4.163 101.2 -97.037 4,1 be registered. It is hard to say whether these factors Apr-05 4.191 101.018 -96.827 4,1 balance each other. May-05 4.436 104.31 -99.874 4,3 Jun-05 3.876 103.101 -99.225 3,8 The employment creation in Kosovo is still weak de- Jul-05 4.245 109.305 -105.06 3,9 spite the flexible labour market framework. . The legal Aug-05 3.27 106.532 -103.262 3,1 framework that regulates the labour market imposes little constraints on employers. Labour taxation is set Sep-05 4.609 104.872 -100.263 4,4 at internationally low levels and employment protec- Oct-05 5.083 115.329 -110.246 4,4 tion is less restrictive than in other transition countries Nov-05 4.949 89.453 -84.504 5,5 as well as most OECD countries. Kosovo Cluster and Dec-05 4.745 112.943 -108.198 4,2 Business Support (KCBS) in its 2005 report39 40 found Jan-06 2.761 58.689 -55.928 4,7 that Kosovo has the least rigid employment regula- Feb-06 3.922 73.621 -69.699 5,3 tion of all SEE countries (Figure 2.2). Mar-06 7.168 99.261 -92.093 7,2 Figure 2.2: Rigidity of employment index in Kosovo and in SEE Apr-06 7.607 112.702 -105.095 6,7 countries (2005) May-06 7.989 117.526 -109.537 6,8 (As the index approaches 100 it means that the labour market Jun-06 7.607 112.702 -105.095 6,7 is more rigid) Jul-07 9.527 112.465 -102.938 8,5 100 Aug-06 9.421 130.338 -120.917 7,2 Source: SOK, External Trade Statistics, August 2006 80 63 57 60 data, it is obvious that Kosovo suffers from chronic la- 49 38 bour market failure, with the young, females and the 40 30 28 long-term unemployed bearing a disproportionate 20 23 20 burden of this failure. The unemployment rate is as Rigidity Index of Employment high as 40%36 and is predominantly long-term.37 0

B&H S&M Kosovo Croatia Albania Bulgaria Romania Macedonia

Source: KCBS (2005) for Kosovo and World Bank (2005) for other SEE countries Table 2.5: Registered unemployed and their structure (2000-2006) 2000 2001 2002 2003 2004 2005 2006 Dec Dec Dec Dec Dec Dec Sep Registered job-seekers 208,074 237,958 257,505 282,305 301,982 322,752 324,835 Increase (in percentage) - 14.4 8.2 9.6 7.0 6.9 0.6 Gender (in percentage) Females 43.2 44.1 44.5 45.4 45.7 46.4 46.6 Males 56.8 55.9 55.5 54.6 54.3 53.6 53.4 Source: Ministry of Labour and Social Welfare

36 World Bank (2006): Interim Strategy for Kosovo, Report No. 35262-XK. 37 An earlier World Bank (2003) study estimated that 88 percent of the unemployed in 2002 were first time job seekers, while only 2 percent had been laid- off. This implies that, unlike in other transition economies, unemployment in Kosovo is not a consequence of restructuring, but of structural imbalances, low employment growth and large labour inflows. 38 One of the conditions to draw these benefits is to have no employed person in the household and the working age household members should be registered as unemployed. These benefits are low and are unlikely to have any effect on employment/non-employment choice of individuals through affecting their reservation wage. The only effect of these benefits relates to inflating the number of registered unemployed. 39 KCBS (2005): Business Conditions Index in Kosovo 2005; Kosovo Cluster and Business Support, Prishtinë/Priština. 40 For more information on this methodology see World Bank (2005).

25 EARLY WARNING REPORT KOSOVO - Number 14

Although a Collective Agreement (CA), was signed employment conditions six months from now, 76% of in February 2004 by three social partners (MLSW, K-Serbs expect these conditions to be unfavourable Chamber of Commerce of Kosovo and the Confed- compared to 46% of K-Albanians and 54% of Other eration of Independent Trade Unions) it is still not communities (Table 2.8). clear when it will be enforced. Although initially it was meant to start from January 2005, it is not likely Given the poor employment prospects in Kosovo, one to happen in the near future as its budgetary im- option is to emigrate abroad to secure income for the plications are estimated at more than €60 million household left behind. Around 20% of the population annually (not including implications for the private is abroad and most of the emigrants are of working employers). Given this favourable/flexible labour age.41 Data from the opinion poll of September 2006 market legislation, it remains a puzzle why unem- suggest that the intention to emigrate is rather high ployment is still so high. (38% for K-Albanians, 32% for K-Serbs and 43% for other communities). But, as Table 2.9 below shows, Data from the opinion poll of September 2006 sug- unlike 66% of K-Albanians that tend to emigrate due gests that more than half of K-Albanians and two- to the unfavourable economic situation of their fami- thirds of K-Serbs think that business conditions are lies, K-Serbs tends to emigrate mainly (55%) due to unfavourable (Table 2.6), which is directly related to the dissatisfaction with the current political situation job creation. More or less similar answers are given in Kosovo. This is an issue of concern for policy makers with regard to the assessment of current employ- to improve the political situation and to make it more ment conditions (Table 2.7). In a further question on promising especially for K-Serbs.

Table 2.6: What is your assessment of the current business conditions? K-Albanians K-Serbs Others Total Weighted Unfavourable 54.5% 68.5% 63.3% 55.89% Neither favourable nor unfavourable 13.7% 24.6% 18.4% 14.68% Favourable 3.2% 0.5% 0.5% 2.85% Don’t know 25.9% 5.4% 17.9% 24.15% NA 2.7% 1.0% 2.44% Total 100.0% 100.0% 100.0% 100.00% Source: EWS opinion poll, September 2006 Table 2.7: What is your assessment of the current employment condition? K-Albanians K-Serbs Others Total Weighted Unfavourable 56.3% 55.7% 67.9% 56.94% Neither favourable nor unfavourable 10.2% 24.1% 14.3% 11.30% Favourable 2.1% 1.0% 0.5% 1.95% Don’t know 28.9% 18.7% 16.8% 27.57% NA 2.5% 0.5% 0.5% 2.23% Total 100.0% 100.0% 100.0% 100.00% Source: EWS opinion poll, September 2006

Table 2.8: What are your expectations regarding employment conditions six months from now? K-Albanians K-Serbs Others Total Weighted Unfavourable 46.2% 76.4% 53.6% 48.43% Neither favourable nor unfavourable 8.2% 16.3% 12.8% 8.98% Favourable 3.6% 2.6% 3.36% Don’t know 39.1% 6.9% 29.6% 36.62% NA 2.8% 0.5% 1.5% 2.60% Total 100.0% 100.0% 100.0% 100.00% Source: EWS opinion poll, September 2006

41 World Bank’s report on Labour Market in 2003 and Riinvest Institute’s report on Labour Market and Unemployment in 2003

26 EARLY WARNING REPORT KOSOVO - Number 14

Table 2.9: What would be the reason of your emigration? K-Albanians K-Serbs Others Total Weighted Unfavourable economic situation in family 66.2% 9.2% 65.9% 62.72% Joining the family 9.5% 12.3% 5.9% 9.49% Better economic opportunities abroad 21.8% 15.4% 17.6% 21.21% Dissatisfaction with the current political situation in Kosovo 1.2% 55.4% - 4.41% Studies 0.3% 0.27% DK/NA 0.9% 7.7% 10.6% 1.91% Total 100.0% 100.0% 100.0% 100.00% Source: EWS opinion poll, September 2006

2.6 Prices, consumption and poverty CPI increases in late autumn until March when it starts to decrease. This is due to domestically produced ag- CPI decreased by 0.2% between July and August ricultural goods covering the domestic market bring- 2006.42 This is attributed to lower prices for vegetables ing prices down. (for which prices decreased by 8.3%) and fruits (for which prices decreased by 3,0%). For milk, cheese and The level of prices is directly linked to the level of eggs, prices increased by 3.7%. While for electricity, gas consumption and living standards of households. and other fuels they increased by 1.2% and operation A World Bank study43 suggests that poverty in Ko- of personal transport equipment increased by 2.4 %. sovo has increased in recent years. The World Bank estimates suggest that 37% of the population live in Even though the methodology for calculating the CPI poverty. This figure is in line with the negative eco- has changed since January 2006 (which makes the nomic growth rate of last year. This year the economic CPI data for 2006 not directly comparable to that until growth is projected to be positive (4%), but whether December 2005), the overall trend of CPI for this year or not this will be the case remains to be seen. (January – August 2006) is broadly comparable to the CPI trend during the same period of 2005, but slightly Overall, only 27.7% of surveyed individuals in the at a higher level. This is expected and is in line with opinion poll of September 2006 have reported that the projected increase in GDP for 2006 of 4%. they are satisfied or very satisfied with their household economic situation (Table 2.10). This percentage Figure 2.3 shows the CPI behaviour for the period is extremely low for the K-Serbs (3.9%). This might be January 2005 – August 2006. As expected, each year due to the fact that before the conflict of 1999, most

Figure 2.3: CPI for the period May 2002 – August 2006 (May 2002=100)

106 104 102 100 98 96

CPI (May 2002=100) CPI (May 94 92

May-02 Aug-02 Nov-02 Feb-03 May-03 Aug-03 Nov-03 Feb-04 May-04 Aug-04 Nov-04 Feb-05 May-05 Aug-05 Nov-05 Feb-06 May-06 Aug-06

Source: Source: SOK, CPI for August 2006, August 2006

42 Data from Statistical Office of Kosovo, September 2006 43 World Bank (2006): Interim Strategy for Kosovo, Report No. 35262-XK.

27 EARLY WARNING REPORT KOSOVO - Number 14

of the K-Serb adult population were employed. After for certain budget organizations is offset by savings in the conflict this has changed, which negatively affect- other areas. The decisions made at this meeting include: ed the economic situation of K-Serbs. (i) sufficient funds to be allocated to Kosovo Protection Table 2.10: How satisfied are you with your household’s economic situation? K-Albanians K-Serbs Others Total Weighted Very satisfied 2.9% 0 1.5% 2.68% Satisfied 26.8% 3.9% 20.4% 25.04% Neither satisfied nor dissatisfied 41.7% 38.9% 30.1% 40.85% Dissatisfied 23.0% 38.9% 29.6% 24.38% Very dissatisfied 3.6% 16.7% 13.8% 5.04% Don’t know 0.8% 1.0% 2.6% 0.94% Does not answer 1.1% 0.5% 2.0% 1.08% Total 100.0% 100.0% 100.0% 100.00% Source: EWS opinion poll, September 2006

Data from the MLSW (as of August 2006) indicates Table 2.12: Is your family receiving remittances (money) from family that some 41,053 households in Kosovo with 176,007 members living abroad? members are receiving social assistance. This is K-Albanians K-Serbs Others Total Weighted around 9% of the estimated 2.03 million people liv- Yes 56.8% 1.5% 33.3% 52.11% ing in Kosovo. Due to high levels of emigration, the level of remit- No 41.1% 93.9% 65.3% 45.68% tances received by households in Kosovo is significant Does not answer 2.1% 4.5% 1.4% 2.21% and is thought to contribute to alleviating poverty. As Total 100.0% 100.0% 100.0% 100.00% indicated in the Table “Selected Economic Indicators”, Source: EWS opinion poll, September 2006 this year the level of annual remittances is estimated to be €374 million, which is slightly lower than in 2005 (when it was €375 million) but still significant com- Table 2.13: What is the amount of money your family is receiving each pared to the level of GDP. In line with other studies, month from family members living abroad? (per month in €) data from the opinion poll of September 2006 shows K-Albanians K-Serbs Others Total Weighted that nearly 30% of the respondents have family members abroad (Table 2.11), but only 52% of these emi- Up to 100 21.30% 0.00% 25.00% 20.31% grants remit (Table 2.12). The amount remitted var- 101-200 22.00% 0.00% 29.20% 21.11% ies considerably (see Table 2.13), with just over 40% 201-300 15.10% 0.00% 16.70% 14.28% remitting up to €200 a month. These remittances are 301-400 3.10% 0.00% 4.20% 3.01% helping finance consumer expenditure in Kosovo. 401-500 4.40% 0.00% 4.20% 4.12% Table 2.11: Do you have family members living abroad? Over 500 6.20% 0.00% 0.00% 5.53% Total Na 27.70% 100.00% 20.80% 31.60% K-Albanians K-Serbs Others Weighted Total 100.00% 100.00% 100.00% 100.00% Yes 29.1% 31.5% 31.1% 29.40% Source: EWS opinion poll, September 2006 No 70.0% 64.5% 67.9% 69.57% Does not 0.8% 3.9% 1.0% Corps (KPC) to enable it to complete the reconstruc- answer 1.02% tion of houses destroyed during March 2004; (ii) some Total 100.0% 100.0% 100.0% 100.00% money to be allocated to the Ministry of Health (MoH) Source: EWS opinion poll, September 2006 for imports of pharmaceuticals for hospitals and to pay outstanding obligations to suppliers. MoH was also ad- 2.7 The government budget vised to prepare a list of essential pharmaceuticals that could be considered for exemption from custom duties. During the third quarter of this year, the Economic and This will certainly have an impact on budget revenues Fiscal Council (EFC) met to discuss the 2006 Budget Mid but the pharmaceuticals will help reach other objec- Year Review. It was concluded in this meeting that the tives that are of strategic importance (better health of budget is balanced since the increase in expenditure the population, decrease in mortality etc.).

28 EARLY WARNING REPORT KOSOVO - Number 14

In November 2005, the Government signed the “Let- portant that municipalities reach the target to make ter of Intent” which among others things, commits the them accountable and less dependent on the cen- Government to cut 10% of jobs in the public sector by tral budget. Nonetheless, property tax introduced in the end of 2008. So far the government has stopped 2003, is an important source of revenue for munici- recruiting new staff (with some exceptions), but a palities that can be used for local needs and priorities. detailed plan as how to cut these jobs is still lacking. Municipalities are also encouraged to collect this tax The job cuts will become more difficult due to sev- and to reach the target, which makes them eligible for eral developments. Firstly, the Government is taking a portion of the Incentive Grant of € 8 million. In Janu- over more responsibilities from UNMIK and therefore ary 2007 this will be allocated by the central govern- the number of the Ministries is expected to increase. ment to those municipalities that reach the target. Even though some UNMIK employees will continue to work for the Government following the transfer of An important development during the third quar- competencies, new hiring will most likely take place ter of this year was the budget hearing (held during to fill vacancies that are now kept by UNMIK officials. 2-22September) organised by MFE where all gov- Secondly, the decentralization process that is now un- ernment institutions (i.e. the PISG) presented their der discussion will involve new jobs at the local level financial needs for 2007. This activity is part ofthe that have to be financed largely by the central budget preparations for the 2007 Government Budget. It is as the newly to be created municipalities will unlikely planned that the overall budget for 2007 will amount be self financing, at least in the short term. to € 690 million (€ 10 million less than in 2006) which is in line with the Medium Term Budget Framework The Government is tightening eligibility criteria for 2007-2009. people to draw social benefits. This will certainly have positive effects on reducing government expendi- But are people satisfied with the way that Kosovo tures in this programme, which will contribute to re- Consolidated Budget (KCB) is managed? Results from ducing the budget deficit for this fiscal year. But, this the opinion poll of September 2006 show that a sig- decision seems to ignore the fact that an increasing nificant number people (44%) still think that there is proportion of the population are living in extreme careless spending on luxury goods by government poverty. institutions (Table 2.14). This is worrisome given the need to finance capital expenditures (e.g. building There has been improvement in the collection of schools and hospitals, repairing roads etc.) property tax by some municipalities, but MEF suggests that many municipalities are not reaching their 2.8 Privatization of SOEs target.44 So far, only Lipjan/Lipljan has achieved the target. Other municipalities that may reach the target During the last three months, the Kosovo Trust Agency include: Obiliq/Obilic, Kamenice/Kamenica, Gllogovc/ (KTA) continued privatizing SOEs through the methods Glogovac, Vushtrri/Vucitrn, Prishtinë/Prishtina, Ra- of spin-off and liquidation. In its meeting of 18 July, the hovec/Orahovac and Suhareke/Suva Reka. Although Board of the KTA launched the 18th wave of privatisa- the proportion of the revenues from property tax tion of SOEs.45 The prices achieved for companies is in total government revenues is negligible, it is im- rather low when compared to the prices achieved for Table 2.14: In your opinion what is the main problem in the management of Kosovo Consolidated Budget? K-Albanians K-Serbs Others Total Weighted Insufficient capacities and expertise 15.9% 17.2% 16.8% 16.00% Careless spending in luxury goods 46.1% 17.2% 36.2% 43.74% Non-transparent spending 12.5% 2.5% 11.2% 11.78% Too many public sector employees 3.2% 19.7% 3.1% 4.16% DK 19.5% 19.7% 29.1% 20.09% NA 2.9% 23.6% 3.6% 4.22% Total 100.0% 100.0% 100.0% 100.00% Source: EWS opinion poll, September 2006

44 As of July, these municipalities are: Novobërdë/Novobrdo(2%); Viti/Vitina (29%); Shterpce (31%); Gjakove (32%); Skenderaj (40%); Peje (40%); Istog (41%); Fushe Kosove (45%); Gjilan (45%); Malisheve (48%); Dragash (48%); Deqan (48%); and Ferizaj (49%) (data from MEF). 45 Some 32 SOEs are offered to potential buyers: (i) 21 SOEs will be privatised via Regular Spin-off, creating 28 NewCos; (ii) 1 SOE postponed from a previous wave will be privatised, creating 1 NewCo; (iii) 5 SOEs will be re-tendered, creating 5 NewCos, (iv) 2 SOEs will be tendered via Special Spin-off, creating 3 NewCos, (v) 2 SOEs will be re-tendered via Special Spin-off, creating 2 NewCos.

29 EARLY WARNING REPORT KOSOVO - Number 14

SOEs in Serbia and Macedonia. So far, the income from political situation in Kosovo as the motivating factor SOEs that are sold has amounted to € 256 million (as of to emigrate. This calls for attention from policy mak- August 2006). There is a concern that this money has ers to create an enabling environment especially been withdrawn from the economy and is negatively for the K-Serbs. The existing flexible labour market affecting the level of economic activity. For those com- regulations are not helping to create more jobs, sug- panies that are privatized based on the special spin-off gesting that poor employment creation is probably there is no data to comment on whether the level of a consequence of the overall economic situation. investment and employment is kept according to the From this perspective, government policies should agreed plan between KTA and the buyer. target labour demand rather than labour supply (i.e. less spending in training the unemployed and more Results from the opinion poll of September 2006 show spending in programmes that target private sector that the proportion of people satisfied with the privati- employment creation). zation process in Kosovo is rather low (Table 2.15). FTAs that are signed so far (and the efforts to establish Table 2.15: How satisfied are you with privatization process in Kosovo a single FTA among SEE countries) are expected to de- Total teriorate the trade deficit in the short term as domestic K-Albanians K-Serbs Others Weighted businesses may lose ground in competition with for- Very satisfied 1.2% 1.5% 4.6% 1.40% eign businesses. Satisfied 12.8% 0.5% 14.8% 12.19% Neither 23.3% 22.7% 26.5% 23.43% Kosovo can now benefit from the Instrument for Pre- Dissatisfied 33.4% 42.9% 24.5% 33.41% Accession (IPA)46 of the European Union, which has al- Very dissatisfied 12.6% 14.3% 8.2% 12.41% located € 194.2 million for Kosovo for the period 2007 DK 15.6% 17.2% 18.9% 15.92% – 2009. The government should create an intra-minis- NA 1.2% 1.0% 2.6% 1.25% terial task force, as there are strict rules and regulations Total 100.0% 100.0% 100.0% 100.00% on how to draw funds from this program. Source: EWS opinion polls, September 2006 Acting upon the requirements of the Letter of Intent signed last year, the government has now stopped re- 3. Conclusions and policy cruitment of new staff (though there are some excep- recommendations tions). However, it will be difficult to maintain this policy line because of increased competences of the PISG and Following the discussion about macroeconomic indi- the decentralization process, both of which require an cators, the projected 4% growth rate of GDP in 2006 increase in posts in the government sector. will be difficult to achieve in the face of decreasing international assistance and workers’ remittances. The Regarding the spending of the government budget, re- increasing trend in bank loans may partly offset the sults from the opinion poll of September 2006 suggest negative effect on aggregate spending resulting from that a significant number of respondents think that this decrease, however, interest rates are too high to there is careless spending of the KCB on luxury goods. allow for a significant increase in loans. If the final sta- This is important as it may relate to people’s readiness tus of Kosovo is decided in the coming months of this to pay taxes. The government should take steps to year, then foreign assistance may be substituted with change the attitude of people or be more transparent some other donor support. The possible downsizing and explain the necessity of its spending. of UNMIK will also make it difficult to achieve the projected economic growth rate of 4%. In the short term, The KTA is continuing the privatization of SOEs, though such downsizing will imply more job cuts in a situation the price of companies that are sold hardly match their where unemployment is already too high. The govern- values. The concern is that the money collected so far by ment should take steps to mitigate this negative effect the KTA from the privatised SOEs has been withdrawn through creating an environment that promotes busi- from the economy, which is expected to negatively af- ness and employment creation. fect the level of economic activity. Given the perceived stability of the financial sector in Kosovo, there is no Based on people’s perception, employment prospects strong reason why part of this money should not be remain weak and may push many to consider emigra- deposited in commercial banks in Kosovo which would tion (especially among K-Albanians). K-Serbs cite the greatly benefit the economy.

46 Multi-Annual Indicative Planning Document for Kosovo 2007-2009.

30 EARLY WARNING REPORT KOSOVO - Number 14

Chapter 3 2. Main issues during the reporting period July-September 2006 Interethnic Relations Author: Rrezearta Reka 2.1 Negotiations for the Final Status

More delicate issues have been discussed during this 1. Introduction three-month period, especially the issue of decentralization, meaning interethnic relations have continued In spite of considerable improvements towards pro- to be tense. The inflexible positions of both negotiat- tecting the rights of minority communities47 in Kos- ing teams have not contributed to the improvements ovo, the issue of interethnic relations remains highly of these relations. Furthermore, the Referendum for complex. Non-Serb minorities are considered to be the new Constitution of Serbia as well as the prolon- well integrated and their relations with K-Albanian/K- gation of the status decision have created a highly Serb communities have been normalized. However, anticipatory atmosphere in Kosovo. The course of the interethnic relations between K-Albanians and K- negotiations is not perceived so optimistically by the Serbs have remained delicate and tense. It is these re- citizens of Kosovo, as can be seen from the following lations and particularly, the enjoyment of these rights Table 3.1. by K-Serbs, that are the central to the negotiations for the final or “future”48 status. Table 3.1: Level of satisfaction with the current course of the negotiation process for Kosovo’s future political status ( by ethnicity) The third quarter of 2006 was marked by wide public K-Albanian K-Serb Others Total discussion and media coverage of the latest develop- Satisfied 13.5% 2.0% 25.0% 13.51% ments regarding the negotiation process, specifically Neither satisfied nor in relation to reports from the Contact Group and oth- dissatisfied 38.9% 6.9% 25.0% er international reactions regarding negotiations and 36.14% future status. In particular, the most recent activities Dissatisfied 21.9% 60.1% 12.8% 23.61% of the Serbian Government, regarding the Referen- Don’t know 24.4% 30.0% 33.7% 25.33% dum, held on 28-29 October 2006, and a new Con- stitution adopted by the Serbian Parliament on 30th Does not answer 1.3% 1.0% 3.6% 1.41% of September 200649 received wide media and public Total 100.0% 100.0% 100.0% 100.00% attention. UNMIK, on the other hand, have “…neither Source: EWS Opinion Poll September 2006 allowed nor prohibited”50, the Referendum which was also held in some municipalities of Kosovo. The high percentage of K-Serb respondents (30%) who did not have an opinion with regard to the negotia- Apart from institutional developments, K-Albanians, tion process is concerning as it may indicate that this K-Serbs and all other ethnic groups living in Kosovo, community does not have sufficient information on are somewhat confused about what the future holds. the course of negotiations. However, all communities All of the Kosovan communities rely on official state- seem to be impatient about the length of the nego- ments for any information regarding the final status tiation process for Kosovo’s final status. As discussed and its resolution. Until now, however, the negotia- in Chapter 1, 83.9 % of K-Albanians believe that the tion teams of Kosovo and Serbia have had completely negotiations should be completed by the end of this opposite stances towards the status. The UN Special year; 43.3 % of K-Serbs share the same opinion along Envoy for Kosovo´s status talks Martti Ahtisaari did not with 63.3% of Other communities. Although there are as yet, announce any concrete proposals. According major differences in the perceptions towards the sta- to him, the process of “preparing for the final propos- tus among these communities, these findings might als for the status of Kosovo”51is still ongoing. as both indicate that they agree to some extent that the soon- negotiation teams present extreme stances (for more er the status is resolved the better. details on the issue see Chapter 1).

47 UNHCR’s Position on the Continued International Protection Needs of Individuals from Kosovo, June 2006. 48 The international community has used the term “future status” rather than “the final status” in press statements. 49 “The Balkans: Troubling Times”, The Economist, p. 38, 7 October, 2006. 50 Shala, Sebahate, “Kosovar Serbs respond to the referendum against independence”, Daily newspaper LAJM,( 13 October, 2006), pg. 2. 51 Statement of Ahtisaari´s Spokeswoman, 24 October 2006, www.balkanweb.com

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In addition, all citizens generally lack information pendence is the best option, while 70% of K-Serbs see as to what the future may hold, whether it is about the option of an autonomous Kosovo within Serbia the post-status environment or the effects of decen- as the most satisfactory solution (see Chapter 1, Table tralization. It has often been said that the negotiating 1.1). Although interethnic relations have not been teams and the PISG representatives should commu- significantly aggravated since the March 2004 events, nicate more with the people about the process and they are tense and continue to be such as perceived by its progress.52 While 40.5% of K-Albanian respondents the respondents (see Table 3.3). The percentage of K- see uncertainty over the final status as the paramount Serbs who believe that the relations are tense and will issue (see Table 3.2 below), according to some studies continue to be such, has increased by 17 % (40.7 % in decentralization and the ambiguity surrounding it, is June to 57.1% in September); for K-Albanians this per- one of the main fears for this community as well as centage dropped by 6 % from June to September. the international community.53 Besides the activities of the Vetëvendosja movement, the signing of the While negotiations may put extra pressure on the petition against decentralization by 30.000 citizens of leaders to invite K-Serbs into the institutional life of Gjilan/ Gnjilane54 indicates insecurity over the issue. Kosovo, public appearances only may not be sufficient to mend relations between the communities. In addition, Mitrovicë/Mitrovica remains a hot point in On the other hand, the political vagueness of K-Serbs anticipation of future status, parallel institutions still (i.e., between Belgrade and Prishtinë/Pristina), and operate and the fear of a territorial division following the readiness to vote in the latest Referendum, is not the status is very evident.55 The Kosovo government particularly helpful. Almost half of K-Serb respond- will not have any authority in those northern districts ents (47.5%) think that the attitude of K-Albanian where Serbian government institutions will continue leaders is the main factor that causes the tension in to operate. Moreover, and as confirmed in the Opin- relations (see Table 3.4 below), an increase from 36.1 ion Poll results of September, the K-Serb community % since June 2006. At the same time, 37.6% believe in Kosovo sees insecurity as a paramount issue; K-Serb that insufficient efforts of K-Albanians for the integra- respondents cited public and personal security as the tion of K-Serbs are responsible, (which is slightly high- paramount problem facing Kosovo ahead of unem- er than the June opinion poll –when 29.6% reported ployment at 19.7%. This may reveal the perceived fear the same). K-Albanian respondents on the other of this community regarding security in Kosovo that hand, stated that the main responsibility for making may have been deepened since the last bomb attacks relations tense falls upon the influence of Belgrade in Klinë/Klina. (55.5%), along with the lack of readiness of Serbs to Table 3.2: Opinions on paramount problems facing Kosovo be integrated (27.6%). K-Albanian K-Serb Others The unresolved political status is perceived as a threat- Poverty 14.7% 4.4% 22.4% ening circumstance to the stability of Kosovo by 60.8% Public and personal security 0.2% 22.2% 0.0% of K-Albanians, 31% of K-Serbs and 51.5% of Other respondents (for more details see Table 1.3, Chapter 1). Interethnic relations 0.4% 12.8% 2.0% However, for 45.8% of K-Serbs, further aggravation of Unemployment 34.3% 19.7% 42.3% interethnic relations is a threat to the stability in Kos- Uncertainly over final status of Kosovo 40.5% 5.9% 17.3% ovo. The data infers a lack of mutual trust between K- Albanian and K-Serb communities meaning relations Undesirable final status outcome 1.9% 17.2% 2.6% between these two communities remain brittle. Social problems 0.6% 0.5% 1.5% Source: EWS Opinion poll, September 2006 2.2 The return process restrained by the negotiations process and an unstable economy Disparities between K-Albanians and K-Serbs regarding options for the status of Kosovo continue with the The legal framework for the facilitation of the Process same intensity as measured by the latest EWS Opinion of Return is in place, with the Protocol on Returns and Poll. Around 95.5% of K-Albanians believe that inde- Displaced signed by UNMIK, Prishtinë/Pristina and

52 Salihu, Bul, “Shpjegojuni Qytetarëve se çka po ndodh”, Interview with Steven Schook, p.3, Daily Newspaper “Express”. 53 “…Belgrade uses the internationally accepted term “decentralization” as a code name for its planned ethno-territorial separation in Kosovo…”, USIP- Unit- ed States Institute of Peace, Special Report No. 172, August 2006. 54 RTK Morning Program, 30 October, 2006. 54 Judah, Tim, “Diplomats Plan Mission for Independent Kosovo”, Balkan Insight, 26 October 2006.

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Table 3.3: Opinions on inter-ethnic relations between Albanians and Serbs (%) Mar-O5 Jun-O5 Sep-O% Dec-O5 Jun-O6 Sep-O6

K-Albanias K-Serbs K-Albanias K-Serbs K-Albanias K-Serbs K-Albanias K-Serbs K-Albanias K-Serbs K-Albanias K-Serbs Relations are and will continue to be tense 21..2 81..3 23..0 76..0 18..8 98..5 12..9 83.2 11.6 40.6 5.5 57.1 Relations are tense, but some improvements have recently occurred 32.2 13.4 32.2 14 24.3 0.5 30.1 14.2 31.4 24 24.1 23.2 Relations are tense, but considerable improvements have occurred 19.9 4.8 18.1 20 0.5 18.5 0.5 14.2 13.8 13.3 8.4 Relations are not so tense 13.1 0.5 12.3 0.6 16.3 0 18 1 11.2 2.3 11.8 0.5 Relations are not tense at all 13.5 0 14.4 0 20.6 0.5 20.5 1 6.1 0.5 13.7 0.0 100 100 100 100 100 100 100 100 100 100 100 100 Source: EWS Opinion polls, March 2005 – September 2006 Table 3.4: Opinion poll on the factors causing tense relations between Albanians and Serbs (%) Sep-04 Dec-05 Jun-06 Sep-06 K-Albanias K-Serbs K-Albanias K-Serbs K-Albanias K-Serbs K-Albanias K-Serbs Insufficient efforts by Albanians for 1.4 51 3.2 33.3 1.9 29.6 2.2% 37.6% integration of K-Serbs Lack of readiness by K-Serbs for integra- 42.5 0 32.8 0 20.7 7.9 27.6% 1.7% tion into Kosovo society Attitude of K-Albanian leaders 1.7 42.5 1.4 60.9 0.6 36.1 1.3% 47.5% Attitude of Serb leaders 11.9 0 9.7 1.6 5.2 0.5 7.8% 3.9% Belgrade’s influence 39.4 0 52.7 0.5 59.2 15.3 55.5% 2.2% Source: EWS, opinion polls, September 2004 - September 2006

Belgrade together with a revision of UNMIK’s Manual Table 3.5: Feeling of safety from crime and violence while at home (by for Sustainable Return56. This framework enables the ethnicity) establishment of cooperation mechanisms between K-Albanian K-Serb Others municipalities in Kosovo where returnees want to re- Very safe 45.4% 5.9% 48.5% turn and the municipalities in Serbia, where the displaced are currently living. This is an action that helps Somewhat safe 33.1% 37.4% 33.2% facilitate the return. An amount of € 8.8 million for re- Somewhat unsafe 18.8% 29.1% 15.3% turn projects that are implemented in 2005/2006 has Very unsafe 1.9% 26.1% 2.6% been made available from the Consolidated Budget of Kosovo (2005). However, the return process continues NA 0.8% 1.5% 0.5% to be slow57. According to the same source, the nego- Source: EWS Opinion Poll, September 2006 tiation process together with the uncertainty over the (55.2%) as shown in Table 3.5 below feel somewhat status has impeded the process of returns. Taking into unsafe or very unsafe while at home. account that security and unemployment present two Furthermore, the latest attack in Klinë/Klina as well as paramount issues for K-Serbs living in Kosovo, these events following in northern part of Mitrovicë/Mitro- two issues are essential conditions for meeting the will vica (see Chapter 4), are a direct hindrance to the ef- of the people to return and stay in Kosovo. forts towards the process of return. As reported by a local newspaper, if the returnees are not provided While most communities feel safe or somewhat safe with jobs, then the newly built houses will only serve when within their homes, this is not the case with as “holiday houses”58 for the elderly, as the younger the K-Serbs living in Kosovo, the majority of whom ones will be looking for jobs elsewhere59 However,

56 See the Legal structure for the returns- Revised Manual for Sustainable Return, Standards for Kosovo and Applicable Law. 57 Position of UNHCR on the Continued International Protection Needs of Individuals from Kosovo, Section II, June 2006. 58 Minci, Fisnik, “Shtepise e Rindertuara vetem per Pushime“, p.7, Daily Newspaper Koha Ditore, 27 September, 2006. 59 Susuri, Bashkim, “Gjatë pesë vjetëve, 42.000 të kthyer”, p.18, Daily Newspaper Koha Ditore, 18 October 2006.

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the general mood in the field on the issue of returns slightly higher: 45.6% and 32 % respectively. This is an is optimistic among the citizens although a decrease indicator that the economic situation rather than the is noted both among K-Albanian and K-Serb respond- political situation, is more concerning to the two com- ents (see Table 3.6). munities. However, the responsibility for the economic Table 3.6: Readiness of respondents to accept the return of refugees in Kosovo (in %) Sep-04 Mar-05 Dec-05 Jun-06 Sep-06 K-Albanians K-Serbs K-Albanians K-Serbs K-Albanians K-Serbs K-Albanians K-Serbs K-Albanians K-Serbs I agree with the return of 61.4 98 75.3 99 79.8 97.4 60.6 92.6 59.00% 80.30% refugees to Kosovo I disagree with the return 30.3 0 24.7 1 20.2 2.6 27.7 0.9 26.40% 1.50% of refugees to Kosovo Source: EWS opinion polls, September2004 - September 2006 2.3 Political and economic situation: a major situation, again as perceived by the respondents, falls concern for the citizens of Kosovo mainly on UNMIK (as discussed in Chapter 1).

Neither K-Albanians nor K-Serbs are very satisfied with 2.4 Cultural distance and the the political and economic direction in which Kosovo effects of media and stereotypes is heading. Overall political pessimism is expressed by 38.7% of the respondents in September, whereas Ethnic and cultural distance remains high between economic pessimism is high as confirmed by 70% of communities in Kosovo, and this distance is mostly the respondents. accentuated in relations between K-Albanians and

Figure 3.1 Trends: Political and economic Pessimism

80.0 75.3 76.0 Political 70.0 70.0 71.8 70.7 71.0 70.0 Pessimism 67.7 68.7 65.0 67.7 66.1 60.0 63.5 Economic 58.0 Pessimism e 52.7 g 50.0 a

t 45.4 n 47.9 e 40.0 41.7 46.6 38.8 c 38.6 r e 37.3 41.0 43.8 38.7 P 30.0 31.8 35.7 20.0 10.0 0.0

Jul-02 Nov-02 Mar-03 Jul-03 Nov-03 Mar-04 Jul-04 Nov-04 Mar-05 Jun-05 Sep-05 Dec-05 Jun-06 Dec-06 Period Source: EWS Opinion Polls, July 2002 – September 2006

Dissatisfaction with the economic situation is a com- K-Serbs. Although this may be understandable, con- monality shared by all communities living in Kosovo sidering that it has not been so long since the end of (as discussed in Chapter 2). As confirmed by the ma- the conflict, it can be assumed that the media has an jority of respondents, the economic direction in which important role in the creation of stereotypes and prej- Kosovo is heading is perceived very negatively. Dis- udices that widen the gap between communities in satisfaction is expressed by more than 60% of K-Alba- Kosovo. According to “BIRN” (the Balkans Investigative nians and by more than 80% of K-Serbs while 60% of Reporting Network), “the image of Kosovo, as portrayed Other communities feel the same. When asked if they by Serb daily newspapers, is far from the reality”60. Fur- would join public protests due to the current political thermore, according to the same source, Serbs living situation, most K-Albanians and K-Serbs responded in Kosovo are informed by the news as broadcasted negatively: 54.4% and 54.7 respectively. However, the directly from Serbia. In addition, as can be seen from percentage of both K-Albanians and K-Serbs willing to the daily press in Kosovo, Serb officials have not been join public protests due to the economic situation is very attentive with their statements.61

60 “Me gjuhë dhe terminologji të 1986”, Daily Newspaper Lajm, 30 September 2006. 61 Kambanat e Artemijes në Moskë”, Daily Newspaper Lajm, 12 October, 2006, and “Serbët të pambrojtur”, Daily Newspaper Koha Ditore, 15 October 2006.

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As far as contacts with persons from other ethnicities are Other communities responded positively to most of the concerned, K-Albanians seem to have had the least con- questions pertinent to interethnic relations. These posi- tact of this nature with 77% stating that they haven’t had tive responses may be due to the assumption that the contact with a person from another ethnicity in the last status of Other communities has improved in the last three months. For K-Serbs, this percentage was around years, after the establishment of UNMIK. Also, most of 25%. The high percentage of K-Albanians who did not the greatest concerns of the Other communities are is- have any contact with a person of another ethnicity may sues that involve unemployment and poverty. Regard- be due to the actual lack of contact as K-Albanians might less of these positive responses, the living conditions of not have the opportunity to meet others in daily life since some groups categorized under Other communities, they are the majority community in many areas. The fact such as the Roma, remain quite poor and require atten- that only 1.4 % of K-Albanians would deliberately avoid tion. 65 Further, the issue of the Turkish language and the such contact creates room for hope. effects of its initial parliamentary prohibition need to be 66 Table 3.7: Frequency of contacts of given ethnicity with other ethnicities further assessed, regardless of its approval as the official language in the second voting. It is considered that K-Albanian K-Serb Others such actions may serve as a potential for worsening the On more than three occasions 11.0% 40.9% 59.2% relations between Turks and K-Albanians,67 which have One to two occasions 10.6% 33.5% 20.4% otherwise been amicable. Some of the other communities feel that “some communities in Kosovo have been I haven’t had any contact 77.0% 25.1% 18.4% privileged… [as] when minorities are mentioned, it is Deliberately have avoided contact with usually meant for the Serbs…”68 person from another nationality 1.4% 0.5% 2.0% Total 100.0% 100.0% 100.0% 3. Conclusions Source: EWS Opinion Poll, September 2006 Based on the analysis of the Opinion Poll results, it can In response to the question do you agree or disagree be concluded that the mutual lack of trust between the to live in the same street with Serbs, the positive and K-Albanian and K-Serb communities is still high. Both negative responses are split evenly among the K-Al- communities have polarised attitudes and perceptions banian community, however it should be noted that towards the possible solutions for the final status of there is a slight negative trend in this regard. Kosovo. While a large majority of K-Albanian respond- Table 3.8: Readiness of Albanians and Others to agree/disagree to live in the same street with Serbs? Dec-02 Dec-05 Jun-06 Sep-O6 K-Albanians Others K-Albanians Others K-Albanians Others K-Albanians Others Agree 9.90% 42.00% 41.00% 64.50% 48.77% 61.20% 43.9% 83.2% Disagree 90.10% 58.00% 59.00% 35.50% 40.66% 26.78% 49.1% 7.1% Source: EWS Opinion Polls, December 2002 – September 2006 Working in the same work place with a Serb does not ents believe independence is the only solution, K-Serb present a problem for 46.5 % of K-Albanian respond- respondents on the other hand believe that only an ents, while 47.9% stated that they would disagree. autonomous province within Serbia could be a satisfac- There is a smaller percentage of K-Serb respondents tory solution. If a common solution is not found, it may wanting to share the workplace with an Albanian, with be that both communities will try to reach objectives 37.4% affirmative responses and 53.2% negative. The unilaterally in the presence of opposing aims. positive trend with K-Albanian respondents complies with the fact that the number of minority members Serbs living in Kosovo may object to independence as working in the PISG and Kosovo Police Service has in- an option for final status due to the fear of some sort creased.62 In this regard the KPS with 20% of positions of revenge by K-Albanians after the acquirement of occupied by members of non-Albanian communities this status. Security still presents a paramount issue for is considered the institution with the best level of K-Serbs. In this regard the majority of the K-Albanian community integration.63 Other minorities have also community in Kosovo is obliged to respect and provide responded positively to employment opportunities in for the rights of this community and other communi- interethnic working environments like in the KPC.64 ties living in Kosovo, by respecting the whole package

62 Point 8- Security Environment, Position of UNHCR on the Continued International Protection Needs of Individuals from Kosovo. 63 Paper on the Integration of Minority Communities in the Post-status Kosovo, by KIPRED, 19 July, 2006, Copyright by USAID. 64 “Edhe 27 anëtarë të pakicave në TMK”, Daily Newspaper Lajm, 29 September 2006. 65 Kastrati, Sami and Gazmend Syla, Interview with Livia Plaks, Head of PER (Project on Interethnic Relations), Daily Newspaper Koha Ditore, 30 September, 2006. 66 Kastrati, Sami,”Beteja për Zyrtarizimin e Gjuhës Turke”, Daily Newspaper Koha Ditore, 5 September, 2006. 67 Sahatçia, Teuta, “Çka na u desht kjo”, Daily Newspaper Koha Ditore, 27 July 2006. 68 Zeqiri, Naim, “Romet, Ashkalinjet dhe Egjiptianet te Margjinalizuar”, Daily Newspaper Infopress, 30 September, 2006.

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of Applicable laws and especially by the “Framework for efforts take a more coordinated form with the prac- the Protection of Community Rights in Kosovo.”69 There tical inclusion of all stakeholders, acting upon the is a potential threat that there will be an organized mass legislation. Also, it is highly desirable for the leaders departure of K-Serbs from Kosovo after independence. of both communities to embark on communication activities with their respective communities - in- Cultural distance between all communities in Kosovo forming them on the main developments in Kosovo, remains high. Besides the willingness to share the the negotiation process, the concept of potential so- workplace with members of other communities, as well lutions to the status, etc. K-Albanian leaders should as the willingness to live in the same street with other approach the communities in a less “bureaucratic” community members, the refusal to enter marital rela- way - visiting locations, religious premises, schools, tions with members of other communities is evident etc. In order to make the effect stronger, the media among every community. Stereotypes and prejudices should publicize these events as well as good exam- may be the main cause for barriers in communication ples and success stories. The K-Serb community on between communities. And these stereotypes and the other hand, should respond more positively to prejudices are a consequence of misinformation and encouragement from the PISG institutions to inte- incorrect media portrayals of communities, which pose grate into the institutional life. a threat to undermine the efforts of the PISG toward a practical improvement in interethnic relations. The institutions of Kosovo should be also focused in planning the post-status environment in Kosovo. The Other communities living in Kosovo, according to the citizens need to know what will be waiting for them “on above data, seem to be more optimistic and satisfied the other side”. It is also necessary to strengthen even with some of the issues in Kosovo, which may be con- further the efforts for the return process; to communi- trary to the belief that they represent marginalized cate to the public and make these efforts more visible; groups in the society. This general optimism may be publicize good examples from the returns; watch out for explained by the fact that the situation of human rights problems with the process70; run an intensive campaign regarding these communities, especially access to the for the return process; encourage the engagement of institutions and decision-making in general, is signifi- civil society in integration activities with the returnees cantly higher than in the past. However, this optimism and to emphasize the importance of the returns and is not to be taken for granted. The institutions of Kosovo the final status. need to maintain this optimism and even increase the satisfaction of Other communities. Needless to say, acts Since high percentages of both communities do not that would potentially undermine this achievement object to sharing the workplace with each other, it is (the case with the Turkish language), pose a threat of considered useful to undertake activities that build irritating otherwise amicable relations. upon such commonalities. Projects in promoting professional closeness through multi-ethnic workplaces Among the more positive conclusions from the data, all and interethnic neighbourhoods, could all contribute communities are in favour of the return process. to the easing of interethnic relations.

As compared to previous reporting periods, there is a Decentralization as a process needs to be discussed smaller percentage of communities willing to engage even further. Public discussions are considered critical in public protests due to the political and economic to explain to the citizens the concept, ways and out- situation. This is a positive development that may be come of decentralization. In particular, special atten- explained as a result of the communities being tired of tion needs to be directed towards possible solutions for violence during the conflict and after. It is also an indica- Mitrovicë/Mitrovica and their effects for the inhabitants tor that the citizens of Kosovo are willing to find institu- of Mitrovicë/Mitrovica. tional solutions to the problems. All communities are in favour of the return of minori- One of the main recommendations towards the res- ties in Kosovo. Therefore, besides building houses for toration of interethnic relations are intensive and in- returnees, the institutions need to be more active and creased efforts for building the trust between com- creative in creating opportunities for employment, munities, especially between the K-Albanian and education and social activities once the returnees are K-Serb communities. It is recommended that these settled.

69 Framework for the Protection of Community Rights in Kosovo, by UNOSEK- guaranteeing the highest level of rights and liberties of all citizens and communities, published in Daily Newspaper Koha Ditore, 8 August. 70 The case with the house that was locked by the construction company as a result of non-payment;

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Chapter 4 2. Security incidents and protests during the reporting period Public and Personal Safety (July – September) Author: Adnan Dragaj 2.1 Pointed attacks and security threats

1. Introduction One of the most sensitive and concerning security is- During the reporting period July-September, a sues during this reporting period, that has also had number of security incidents occurred in the form an impact on the ongoing process of status definition of attacks against K-Serb returnees, interethnic con- and institutional sustainability, are the attacks against frontations, and pointed bomb attacks against high- K-Serb returnees and high ranking PISG officials. ranking PISG officials. The dissatisfaction with the lack of transparency in the process of negotiations Following the attack in Klinë/Klina on 20 June, when a for status and decentralisation caused several pro- K-Serb returnee was shot dead in front of his house,71 tests, foremost in some urban areas (Prishtinë/Pris- there were also two reported bomb-attacks against K- tina, Gjilan/Gnjilane, Vitia/Vitina). Serbs during September 2006. On 11 September, the newly constructed home of a K-Serb returnee72 was The northern part of Kosovo, that is still mainly gov- blown up in the village of Shtupel/Štupelj, close to erned in a parallel way, remains one of the biggest the city of Klinë/Klina. According to the municipality security problems. As the definition of status looms, coordinator of Klinë/Klina, Stojan Dončić, no one was tensions on both sides of the Ibër/Ibar River are ris- in the house at the time and there were no injuries. 73 ing. This chapter will discuss the situation in the The most grievous assault was the one in Klinë/Klina north, the measures that have been taken by securi- on 19 September. KPS reported that four K-Serbs ty institutions and the perception of local authorities were wounded as a result of an explosion in an apart- while the status talks are nearing completion. ment located in the ethnically mixed area.74

The chapter will also discuss the tension among In a statement related to these incidents, UNMIK ethnic groups as well as the efforts of the PISG to spokesperson Neeraj Singh pointed out that similar improve security perceptions and the situation of incidents, regardless of their seriousness, would fall minorities (foremost that of K-Serbs) and also their within a usual crime statistic in other countries but in efforts to identify the best modality to involve com- Kosovo, they have a totally different security impact.75 munities in a collaborative way with security institu- He also pointed out that for Glas Javnosti, “the latest tions. security incidents should not be immediately linked to the ongoing political process.”76 In terms of the current preparation and future of security arrangements, the final section of the chapter On 15 September a bomb exploded under the parked will analyse the successor security mission of the EU car of the Minister of Internal Affairs. He was not at the and the Action Plan for Kosovo which illustrates the scene during the attack and was not injured. The next common security policy of the PISG and EU during day, another bomb explosion destroyed another four and after the status settlement. vehicles, one belonging to the adviser at the Kosovo Ministry of Local Self-Government.77

Although, all PISG representatives and UNMIK publicly condemned these attacks, security institutions

71 UNHCR: Briefing Notes, 22 September 2006. Available at: http://www.unhcr.org/cgi-in/texis/vtx/news/opendoc.htm?tbl=NEWS&id=4513b490b. 72 Built by UNDP returns project funded by Kosovo Consolidated Budget.

73 B92 (News Agency), 12 September 2006. Available at: http://www.b92.net/eng/news/society-article.php?yyyy=2006&mm=09&dd=12&nav_category=113&nav_id=36715 74 RTK (Kosovo public TV broadcaster), 20.09.2006. Available at: www.rtklive.com (archive) 75 UNMIK , Press Briefing Notes, 27/09/2006. Available at: http://www.unmikonline.org/dpi/transcripts.nsf/0/10FB2DBB46FA44CEC12571F70025FF88/$FILE/tr270906.pdf. 76 Glas Javnosti, 7/08/2006. 77 Southeast European Times, 17/09/2006. Available at: http://www.setimes.com/cocoon/setimes/xhtml/en_GB/features/setimes/newsbriefs/2006/09/17/nb-01. See also: RTK, 17/09/2006, ibid.

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have not as yet, come out with a public statement On 1 September, thousands of protesters in Vitia/ and have not shared any concrete information about Vitina demonstrated against the status negotia- the perpetrators or their eventual captivity. It remains tions, calling this process “politically” motivated and unclear if these attacks are related to political rival- “harmful”. All political fractions and diverse asso- ries.78 The Minister of Internal Affairs, during the ple- ciations of the municipality joined this protest.84 In nary parliamentary session on 23 November, accused a similar action at the beginning of September, all the Serb secret services of involvement in the recent political parties and local organizations in Gjilan/Gn- bomb attacks79. jilane, agreed to create an “organizational council for protests” against what they said to be decentraliza- 2. Protests due to the current tion along ethnic lines.85 The main reason for this, as political developments stated by the organizers, is the fact that Gjilan/Gnji- lane would be surrounded by newly created Serbian During this reporting period, the negotiation process municipalities. They also claimed that Gjilan/Gnji- for the status definition and the legal position of the lane has been brought to a dead end because the K-Serb minority was followed by protests in Prishtina/ Negotiation Team failed to inform the public about Priština, Gjilan/Gnjilane and Vitia/Vitina. On 23 Au- the process.86 The move was intended to challenge gust, the movement Vetëvendosje organized protests the lack of transparency of the negotiation process in front of the Kosovo Assembly against the status ne- and was in line with similar actions carried out dur- gotiations. The protest took place during the talking- ing April 2006. 87 session between United Nations Special Representa- tive of the Secretary General Martti Ahtisaari and the Bearing in mind the number of organisations and citi- Kosovo Negotiation Team.80 The KPS arrested 72 pro- zens that have participated in demonstrations, dissat- testers, releasing 52 later on, while the remaining 20 isfaction with the decentralisation and status defini- faced a court offence.81 tion process can be considered as an indicator for the increased readiness to protest, especially in the case The KPS Spokesperson Sheremet Ahmeti indicated of an ´unsatisfactory solution´ that does not reach the that the main reason for this reaction against the expectations of the majority. 88 members of Vetëvendosje was because “they hindered the institutional functionality”.82 The local hu- In this sense, the movement Vetevendosje claims that man rights organisation the Council for the Defence the outcome of the decentralisation process will be of Human Rights and Freedoms (CDHRF), stated the non-proportional empowerment of K-Serbs in that the KPS is using unnecessarily harsh provisions terms of territoriality (legal regulation of future mu- against members of the movement and accused se- nicipal-status) as well as territorially defined cultural curity institutions of seriously undermining the right and religious heritage sites and their direct link to of free speech and gathering.83 Serbia89 Table 4.1: Respondents’ readiness to join protests that could be organized due to the current political situation (%) Sep-05 Dec-05 Jun-06 Sep-06 K-Albanians K-Serbs K-Albanians K-Serbs K-Albanians K-Serbs K-Albanians K-Serbs Yes 49.7 86.6 54.5 83.2 46.9 34.8 31.8% 27.1% No 50.3 13.4 45.5 16.8 53.1 65.2 54.4% 54.7%

Source: EWS Opinion Poll, September 2005 – September 2006

78 Anes Alic, Tensions rise in Kosovo end game, ISN Security Watch, 27/09/06. Available at: http://www.isn.ch/news/sw/details.cfm?ID=16718. 79 “Aktualitete Kosovare”, 24/11/2006. Available at: http://www.ereniku.net/Aktualitete06.html 80 RTK, 23/08/2006, ibid. 81 RTK, 24/08/2006, ibid. 82 Interview with news agency “Kosova Press”. Available at: http://www.kosovapress.com/ks/?cid=1,26,3274&PHPSESSID=b706c4e3a851ad4de1aa7367891cbe58 83 CDHRF, statement, 20/10/2006. Available at: http://fbksh.msshost.com/hp/index2.php?option=com_content&do_pdf=1&id=643. 84 RTK, 01/09/2006, ibid. 85 Ibid. 86 RTK, 04/09/2006, ibid. 87 In April 2006, Vetëvendosje members distributed “the treaty against decentralisation, ‘exterritoriality’ and re-colonisation” to over 600 citizens of Gjilan/ Gnjilane (among them police officers, officials and administrative workers of municipality). Vetëvendosje!,Oferta e negociatorëve Kosovarë për copëtimin e Kosovës, weekly journal “Vetëvendosje!”, Nr. 33, 2/05/2006, p 4. Available at: http://vetevendosje.org/sh/images/stories/Gazeta/vetevendosje_33.pdf. 88 As it is repeatedly declared from all K-Albanian political leaders. 89 Ibid. Vetövendosje expressed the readiness to continue with these protests throughout the process.

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3. North Kosovo: status expectations lished a military base in Leposaviq/Leposavic - de- and security challenges ploying 300 soldiers. UNMIK is also planning to install an additional 500 police officers, which, according to police commissioner Vein Hissong, are to be deployed 3.1 Major security incidents also upon request of the local K-Serb authorities95. In during the reporting period concrete terms, UNMIK police undertook the operation “Transitional Security 3”, locating the officers at As indicated in previous EWRs, North Kosovo (respec- check-points 1 and 31 in Mitrovicë/Mitrovica which tively North Mitrovicë/Mitrovica) remains one of the impacts somewhat on the mandate of the KPS96. main security concerns. The main flash point is the symbolic bridge on the Ibër/Ibar River that divides the Slavisa Ristic, the mayor of the northern municipality city into the southern and northern parts. During this of Zubin Potok, looks at things rather differently stat- reporting period the bridge was closed at least three ing that “Serbs suspected the real intention [of troop times90 due to two major incidents which occurred deployment] was to prevent the area from uniting nearby. The first occurred on 27 August in a café on with Serbia […] otherwise, I see no reason to beef up the northern side, when a bomb exploded wound- the presence of police forces.”97 This statement indi- ing at least nine people, among them one British UN cates the fact that any additional effort to increase the policeman and eight local K-Serbs. After the attack, presence of security institutions is understood mainly several hundred K-Serbs gathered to protest,91 which as an effort to cut what are considered by K-Serbs to also resulted in “the subsequent violent response be natural ties with Serbia. Mr Ristic’s statement is against non-Serb passers-by”.92 The other incident however, contradictory to the June 2006 decision of occurred on 25 September when K-Albanians and all mayors of the northern municipalities (including K-Serbs were involved in a clash close to the bridge. Mr Ristic) who in, unilaterally suspended all coopera- According to Larry Miler, the UNMIK Press Officer for tion with the PISG98 arguing that the reason for the the Mitrovicë/Mitrovica region, “police reacted imme- suspension was because of the “Kosovo police’s fail- diately and arrested 8 minors who were released after ure to solve several murders there.”99 While discussing the questioning”.93 these public statements of the municipality mayors in the north, Joachim Rücker (SRSG), in an interview for 3.3 Increased safety measures and the news agency Reuters, warned Serbs “not to try to the current security situation separate Kosovo”100.

Gerrard Gallucci, UNMIK’s Regional Administrator for KFOR commander Roland Kather stressed in almost Mitrovicë/Mitrovica, stated that the situation in the every press-briefing the resolute readiness of NATO north is “calm on the surface but potentially volatile”.94 troops to react to any provocation or potential vio- Apparently, the potential for volatility lies somewhere lence. Nevertheless, there should also be an imme- between the unwillingness of northern K-Serb au- diate preventative and inclusive security strategy in thorities to be integrated in the rest of Kosovo and place that aims at the administrative and institutional the determination of the PISG and the International reintegration of this part of Kosovo, to secure the Community to hinder separation. The unilateral and borders with Serbia, and demilitarise illegal groups. intense investment on both sides, to achieve separate As recommended by the European Stability Initiative settlement goals, can possibly produce unprecedent- (ESI), there is a need for a strong commitment to pre- ed violence if the security measures are not planned pare the deployment of a special successor-mission and implemented carefully. KFOR have now estab- after UNMIK “which can respond strongly to any at-

90 RTK: 28/08/2006, 25/09/2006, 26/09/2006, 28/09/2006, ibid. 91 RTK: 27/08/2006, ibid. 92 Joachim Rücker (SRSG), UNSC meeting, S/PV5522, 13 September 2006, p 3. 93 Ibid, 26/09/2006. 94 Ibid. 95 B92, Balkan Insight, 4 September 2006. Available at: http://www.b92.net/eng/insight/in_depth.php?id=92&nav_id=36489&start=0. International forces deployed along the borders were followed by the requests of northern K-Serb authorities to do so, arguing that they were having problems with the KPS. For this see: RTV21, 09/08/06. Available at: http://www.rtv21.tv/site/?id=5,0,0,0,0,1343. 96 RTV21, ibid. According to deputy UNMIK Police Chief Hisong, this will happen also with the other border passes. 97 Ibid. 98 Ibid. 99 The Christian Science Monitor, 19/07/2006. Available at: http://www.csmonitor.com/2006/0719/p07s01-woeu.html?s=hns. 100 Reuters, 12/09/2006. Available at: www.reuters.com

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tempts to use force to influence political destination ern part”108. The recent statement by SRSG Rücker of northern Kosovo.”101 There is a clear evidence of par- also pointed out this problem. During an interview allel Ministry of Interior of Serbia (MUP) troops in the for the German newspaper “Süddeutschezeitung” north, which for example, runs a police station with a he was quoted as saying that “restructuring of the staff of 70 plain-clothed officers, nearly matching the KFOR forces in Northern Kosovo followed the UNMIK capacity of the KPS in the area.102 analysis that there are tendencies for partition.”109 Ac- cording to an United States Institute of Peace (USIP) 3.2 Differences in perceptions Special Report, the ethno-territorial separation of Ko- sovo would produce new violence, displacement, and As the future status settlement draws close, there broad repercussions to ethnically unstable parts of are different perceptions between K-Serbs and K- the region.110 Such tendencies must be hindered and Albanians in relation to the recent growing secu- in line with Contact Group statements, which have re- rity presence in the north. An increased presence peatedly said that division is not acceptable. of KFOR troops, KPS and UNMIK police is seemingly more convenient to K-Albanians since it results in 4. Community confidence increased security and freedom of movement. On the other hand K-Serbs fear that increased security 4.1 How tense are the inter-ethnic relations? measures in ‘North’ and ‘South’ Mitrovicë/Mitrovica , would undermine their only controlled urban area103 EWS opinion poll findings show a decline in the and their intense ties to Serbia. Although, as noted in number of respondents who view inter-ethnic re- the previous section, for the K-Serb authorities, the lations as tense (see Table 3.3. Chapter 3). Namely, presence of the international security forces is also a 21.2% of K-Albanians and 81.3% of K-Serbs answered kind of “control mechanism” for KPS also deployed in positively in March 2005, whereas the proportion in the region. September 2006 was 5.5% for K-Albanians and 57.1% for K-Serbs. Although the trend declined on both K-Albanians fear that the creation of a northern Mitro- sides, half of K-Serbs still expect tense inter-ethnic re- vicë/Mitrovica municipality (as proposed by Kosovo lations as compared to K-Albanian respondents. negotiation delegation) could strengthen the process of total separation, leaving them “on the wrong As pointed out above, there are concrete indications side”.104 This fear is strongly supported by the declara- for a higher potential of open inter-ethnic clashes as tions of Serbian officials such as Sanda Raskovic-Ivic105 the decentralised status of municipalities and the sta- who offered the “separation as alternative if there is tus of Kosovo are close to be defined. On the other no other solution”106. The declaration of the heads of hand, there is a decline in opinions regarding tense northern municipalities for the cutting of all ties with interethnic relations. This paradox can perhaps be the PISG, have been properly counteracted by the explained by a “reserved readiness” of some extrem- Contact Group in August, which found such a unilat- ist groups that are capable of increasing violent par- eral move as “worrying”. 107 ticipation and intensity, as was the case during the March-2004 clashes.111 It is indeed very difficult to The UNMIK Administrator in the north, Mr. Gallucci, foresee such tendencies only with the help of opinion pointed out an important issue by stressing that any polls. However, there should be a permanent effort incidents provoked by K-Serbs in the north could to identify the potential and the ability to initiate and have “bad reflections for the K-Serbs in the south- carry out massive violence.

101 ESI, Mitrovica: Kosovo´s Litmus Test, Discussion Paper, 28 April 2006. Available at: www.esiweb.org. 102 I. Dugolli & L. Peci, Enhancing Civilian Management and Oversight of the Security Sector in Kosovo, KIPRED & Safeworld, November 2005. See also: Interna- tional Crisis Group, ibid, p 26. 103 ESI, Mitrovica: Kosovo’s Litmus Test. Discussion Paper, Berlin, 28 April 2006. Available at: http://www.esiweb.org/index.php?lang=en&id=156&document_ID=75 104 USIP, Press Brifing,No Stable Kosovo Without a Solution for Mitrovica, July 2006. Available at: http://www.usip.org/pubs/usipeace_briefings/2006/0724_mitrovica.html 105 Head of the Serbian Co-ordination Center for Kosovo. 106 BBC ALBANIAN.com, 11/08/2006. Available at: http://www.bbc.co.uk/albanian/news/2006/08/060811_kos_ser_ivic.shtml 107 RTV21, 04.08.06\ http://www.rtv21.tv/site/?id=5,0,0,0,0,1292 108 Ibid. 109 RTK: 18/09/2006, ibid. 110 Yll Bajraktari, Kosovo: Ethnic Nationalism at Its Territorial Worst, USIP Special Report, August 2006. Available at: http://www.usip.org/pubs/specialreports/sr172.pdf 111 In relation to the March events, nobody expected such violence or its potential. Also at that time, the status definition process was not initiated and offered no additional reason for increased the potential of increased aggression as is currently the case in the historical processes that Kosovo is going through

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4.2 PISG efforts and obstacles to increase and other benefits paid by Belgrade.113 However, many the security for communities other administrative procedures and documents also tie K-Serbs directly to Serbia rather than to the Kosovo While final status talks are ongoing, the PISG has administration. As mentioned, in the northern part of shown a continuing determination to secure current Kosovo there is practical involvement of the Serbian and future sustainable security and rights for all mi- MUP-structures, Serbian passports and identification norities in Kosovo, with special emphasis on K-Serbs. documents are exclusively in use, in addition, the car Practical steps in this direction are also the work of plates are those of Serbia. All these administrative and the Advisory Council of Communities, which is trying security practices that are directed from Serbia can be to integrate communities into the society by means seen as a way to systematically separate the northern of collaborative consultations with all ethnic groups. part of Kosovo from all PISG and UNMIK structures. By the end of 2005 this council started with intensive meetings including all political community repre- 4. Can collaborative community sentatives and the Serbian Orthodox Church aiming projects strengthen security? to identify all the concerns and the possible ways to resolve them together. One important element to help increase security, especially in the ethnically mixed areas, is to develop and There is a commitment from the PISG to motivate pub- implement projects that aim to involve communities in lic opinion with the aim to raise awareness for the long- collaborative planning for their security together with lasting safety for K-Serbs and other minorities. This is local authorities and security institutions.114 An interna- evident through the public declarations and speeches tional NGO, Saferworld, has carried out such a project by Prime Minister Çeku and President Sejdiu, but also in the village of Germova. The result of this project was unremitting visits in areas populated by the K-Serb that communities came to to work together with local minority. Nevertheless, the attempt of Prime Minister NGOs, KPS and international military forces.115 Çeku to visit the K-Serbs in Hoça e Madhe/Velika Hoča for example failed, due to the rejection of local K-Serbs Up to now, OSCE and UN based agencies were in to meet with him. In order to achieve positive results it charge to develop community based policing116. In is crucial for both sides to engage in a reconciliation- relation to the future European Mission, that will be like process. As noted also by SRSG Rücker, if there is no focused on these issues, it can become very impor- wish even for dialogue from Çeku’s interlocutors, then tant to involve the PISG much more directly in plan- “its power to succeed is somewhat limited”.112 ning and implementation of multiethnic projects that Belgrade continues to use sometimes unusual meth- aim at the sustainability of common security. ods with the intention of keeping K-Serbs away from the administrative structures of the PISG. An example In terms of cooperation with security institutions, it of this, as pointed out by Mr Rücker in September dur- is very encouraging to see that in comparison to July ing the SC meeting, is the directive of Belgrade authori- 2004, opinion poll findings show that the degree of ties that K-Serbs working for the PISG in Kosovo must trust toward the security institutions in Kosovo has in- give up their PISG salaries or else lose the extra salaries creased strongly among K-Serbs (See table 4.2). Table 4.2: Percentage of respondents “satisfied” or “very satisfied” with the work of security institutions K-Albanians Jul-O4 Nov-O4 Mar-O5 Jun-O5 Sep-O5 Dec-O5 Jun-O6 Sep-O6 KFOR 85.6 85.7 84.9 92.9 89 90.3 85.1 86.7 UNMIK Police 44.2 41.6 54.7 63.7 61.1 56.9 51.1 59.9 KPS 89.9 88.2 92.7 90.3 90.3 89.4 86.6 86.4 K-Serbs Jul-O4 Nov-O4 Mar-O5 Jun-O5 Sep-O5 Dec-O5 Jun-O6 Sep-O6 KFOR 10.7 10.6 14.7 6.4 25.3 28.4 25.8 41.4 UNMIK Police 3.7 4.8 6.1 2.1 5 13.1 21.7 35.5 KPS 1.8 0.5 4 1.6 5 2.5 14.7 9.4 Source: EWS Opinion Poll, September 2005 – September 2006

112 Joachim Rücker (SRSG), UNSC meeting, S/PV5522, 13 September 2006, p 3. 113 Joachim Rücker (SRSG), UNSC Meeting, Ibid. Most of the K-Serbs receive two salaries, one from PISG budgets, and another directly form Serbia. 114 D. Helly and S. Rynn (Saferworld), Community safety in Kosovo: Lessons learned, ISIS Europe, European Security Review, June 2006. Available at: www.isis-europe.org. 115 Ibid. 116 Ibid.

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5. Corruption and Organized Crime is weak and overburdened with cases. In addition, it is reported that “prosecutors or judges are often afraid Organized crime can be seen as a direct security to pursue difficult cases for personal safety or political threat, whereas corruption poses an indirect threat reasons”.121 (considering long term effects in the economy and public investments). . Corruption in Kosovo is thought 6. EU crisis management mission to originate mostly from nepotism and is considered and Kosovo Action Plan122 to be “widespread at all levels throughout the government and private industry”117. Besides the implementation of strategic planning and the efficient involve- After the scheduled and complete withdrawal of UN- ment of security institutions, the cutting of corruptive MIK, one of the key players with reserved powers in ties will also be a determining factor. terms of security and rule of law in Kosovo will be the European Union. As pointed out in the joint Report Technically speaking, the establishment of the Anti of Havier Solana and Olli Rehn, who both refer to the Corruption Agency, and the recently ratified anti- “joint Action” of the European Council123, the EU is part corruption law,118 are insufficient instruments if the of the broad preparation for post-status Crisis Man- prosecutors and judges are unwilling to follow up the agement in Kosovo. They used the “International Cri- cases as presented by the auditing institutions. Al- sis Mission” as a working term indicating that Kosovo, though corruption is one of the most grievous prob- after the status resolution, will continue to be treated lems and is one of the issues that has recently been as a country in crisis.124 They specifically pointed to the most discussed and reported in the media, opinion powers of the future EU mission in Kosovo in terms of poll respondents think that other issues are of greater “intervention” and “correction”, thereby defining the importance (see Table 1.3. Chapter 1). According to initial frame of the ultimate competencies (especially: the September 2006 findings, only 5.4% of total re- rule of law) this mission would embody. 125 This also spondents see corruption as the circumstance that means that the post-status institutions of Kosovo will threatens stability. – in declared areas - be limited in their decision-making status, and in particular cases, “officials can be also On the other hand, organized crime has a strong re- removed”126 from respective positions. This mission- gional component because most of the trafficked hu- configuration indicates comparisons with Bosnia and man beings and suspicious cargos are brought from Herzegovina, very problematic to implement in the abroad. UNMIK Police and KFOR have “provided sup- specific case of Kosovo, whilst also establishing multi- port and conducted operations, in the domain of bor- ple decision-making layers. Concretely, this would im- der security and control”.119 However, results are low ply that such a decisional configuration may replicate as illegal activities still remain high despite their en- on the current power sharing situation: i.e., locally gagement. In the official crime statistics120 of KPS for voted Institutions, future International Mission (in- example, there are only 13 registered cases of traffick- cluding the powers of EU), NATO forces, and the ten- ing with human beings during the reporting period dencies of K-Serbs in the northern part of Kosovo to (July-September 2006). remain governed by parallel institutions. This has the potential to produce a feeling of status-quo among The next challenges relate to the recent handover of the majority population (e.g., the case during the ad- most of the security competences to local institutions. ministration under UNSCR 1244), depending on the The biggest problem lies with the legal system which precise outcome of status definition (next SC resolu-

117 U.S. Department of State, Kosovo: 2006 Investment Climate Statement. Available at: http://www.state.gov/e/eb/ifd/2006/62006.htm 118 In this law for example, there is no distinction between bribery and gift. Both are contextually used as “dhurata” (gift). 119 ISSR Report, Oct 2006. 120 In this statistic there are only two reported cases of bomb attacks during the September 2006: in Ferizaj/Urosevad and Pejë/Pec. Whereas, during the same month, the two separate attacks against high ranking officials in Gjilan/Gnjilane are not registered. 121 ISSR Report, Oct 2006. 122 Kosovo Action Plan for the Implementation of European Partnership is a joint document of UNMIK Office of European Integration and the Agency for Euro- pean Integration, Office of the Prime Minister of Kosovo. This plan was officially introduced in August 2006. It inherited and included the UN standards for Kosovo by fitting them into the agenda of EU integration partnership. 123 European Council, COUNCIL JOINT ACTION (2006/304/CFSP) of 10 April 2006 on the establishment of an EU Planning Team (EUPT Kosovo) regarding a possible EU crisis management operation in the field of rule of law and possible other areas in Kosovo,Official Journal of the European Union, 26 April 2006. 124 Joint report by Javier Solana, EU High Representative for the CFSP, and Olli Rehn, EU Commissioner for Enlargement, on the Future EU Role and Contribu- tion in Kosovo, Brussels, July 2006. 125 Joint report by Javier Solana, EU High Representative for the CFSP, and Olli Rehn, Commissioner for Enlargement, ibid. 126 Ibid.

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tion). This may provoke similar aggression in the fu- status talks it is strongly recommended that security ture as occurred during the riots in March 2004. institutions in Kosovo increase efforts to find the perpetrators and bring them to justice. The European Planning Mission known as the Europe- an Union Planning Team for Kosovo (EUPT),127 which is The recent bomb attacks have had a negative im- already active in Kosovo, can possibility follow these pact on the security situation, especially the attack public perceptions and trends in order to shape the against the Minister of Interior. Having in mind that “crisis management” mission of the EU accordingly. the Ministry of Interior is a newly created institution, which started to operate under difficult political cir- The Kosovo Action Plan, initiated between the Euro- cumstances, these kind of attacks affect the ongoing pean Commission, UNMIK and the Office of the Prime creation of such institutions. To that end, efforts to in- Minister on October 2005, was unable to predict and crease security for all high officials that are involved in plan all developments due to the undefined status. As sensitive sectors, especially during the status defini- a “roadmap” for the implementation of the European tion process should be strengthened. Partnership criteria (standards) this document also includes a section on justice, freedom and security. The The current and systematically growing protest move- main priorities pointed out in the security section are, ments against the final status talks are a clear sign border issues, money laundering, strengthening local that there is lack of communication from the authori- capacity in narcotics investigation, crime investigation ties on developments in this regard. Therefore, there and the strength of the KPS, the independence of the has to be a strong institutional effort to consider the future academy for public safety, strengthening pre- claims of protesters in order to secure the legitimacy vention of human trafficking while also fighting organ- of any eventual decision and to give a sustainable ized crime128. These security priorities are important for perspective for the implementation of whatever deci- a common security policy for EU integration, but are sion is reached. insufficient to cope with specific internal security problems in Kosovo itself. For example SRSG Martti Ahtisari, The northern part of Kosovo remains a potential gave a signal to NATO representatives that the KPC threat for personal and public security. Bomb attacks now have the permission to build a core-army with and inter-ethnic confrontations during the reporting 2500 armed troops which are supposed to be trained period are obvious indicators of the threat and the by NATO129. Considering the positive role played by the tense security situation. The increased security meas- KPC during the last years in Kosovo,130, the Action Plan ures of NATO forces and UNMIK police produce differ- – along with the status definition - should also inte- ent perceptions and expectations among K-Serbs and grate the role of the KPC in this direction. The plan also K-Albanians. This situation is closely related to the dif- mentions the “regular fighting of crimes regardless [of ferent expectations of both ethnic groups about the the] ethnic background of perpetrators” but does not legal character of the status settlement. incorporate precisely any inter-institutional connectiv- ity to prevent and undermine inter-ethnic crisis (espe- The EU is strongly committed to play a key role in Kos- cially in the northern part of Kosovo). ovo after the status is defined. This commitment is re- flected in the current preoperational phase (EUPT) and 7. Conclusions also the complementary Kosovo Action Plan that aim, among other things, to implement necessary security standards while preparing Kosovo for the integration This reporting period was marked by security inci- partnership with the EU. The EU structures involved in dents that tended to undermine the efforts of the the preparation and later on in the implementation of PISG, UNMIK and KFOR to create an environment of the mission should be very cautious with the envisaged sustainable safety and trust between ethnic minori- “intervention” and “corrective” powers that have the po- ties (foremost K-Serbs) and the majority population. tential to create multiple decision making layers that Considering the negative effects that such attacks can paralyse rather than unify the security institutions cause with respect to interethnic relations and final involved in achieving public and personal security.

127 European council decided “on 10 April to establish an EU planning team regarding a possible future EU crisis management operation in the field of rule of law and possible other areas in Kosovo.” For more see: www.eupt-kosovo.eu/ 128 UNMIK (Office of European Integration) and Office of the Prime Minister (Agency for European Integration Kosovo),Action Plan for the Implementation of European Partnership, August 2006. 129 Der Standard, 21 Oct 2006. Available at: http://derstandard.at/?url=/?id=2632591. 130 International Crisis Group, An Army for Kosovo?, Europe Report N°174, 28 July 2006, p 17. Available at: www.crisisgroup.org.

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Annex 1. In order to increase the reliability of opinions from Selected results of the opinion poll minority groups an over-sampling procedure was applied for the K-Serb community and non-Serb mi- Note: The opinion poll for this report was conducted nority sub-samples. Specifically, the percentage of re- by UBO Consulting during the second half of Septem- spondents belonging to minorities was much higher ber 2006. within the sample than is their percentage within en- tire the population of Kosovo. The opinion poll was based on face-to-face interviews, and included 1,250 respondents: 851 K-Alba- Three sub-samples were selected through a random nians, 203 K-Serbs, and 196 respondents from Other sampling method and was stratified on the basis of minorities (42 Bosnian, 19 Gorani, 34 Turk, 53 Ashkali, geographic regions that are based on telephone area 24 Roma, 23 Egyptian, and Other 1). The target popu- codes (7) and municipalities (30) and urban rural ratio lation was over 18 years of age. (1:1).

K-Albanian K-Serbs Others Total Prishtinë/Priština 25.4% 36.5% 4.6% 23.9% Mitrovicë/Mitrovica 11.0% 35.5% 20.4% 16.5% Prizren 18.2% 35.7% 18.0% Peja/ Pec 12.7% 2.0% 17.9% 11.8% Ferizaj/ Urosevac 11.9% 8.1% Gjakova/ Djakovica 12.6% 4.9% 13.3% 11.4% Gjilan/Gnjilane 8.2% 21.2% 8.2% 10.3% Total 100.0% 100.0% 100.0% 100.0% Employment Unemployed (looking for work) 34.8% 25.6% 41.8% 34.4% Unemployed (not looking for work) 7.4% 3.9% 5.6% 6.6% Working in public sector 9.4% 25.6% 6.6% 11.6% Working in private sector 9.4% 7.4% 8.2% 8.9% Employed from time to time 4.1% 4.9% 3.1% 4.1% Pensioner 10.0% 9.4% 11.7% 10.2% Housewife 15.5% 9.4% 14.8% 14.4% Student/Pupil 8.9% 10.8% 5.1% 8.6% Farmer 0.5% 3.0% 3.1% 1.3% Gender Male 51.4% 50.2% 50.0% 51.0% Female 48.6% 49.8% 50.0% 49.0% Education Mean years of schooling 10.03 12.05 7.94 10.03 Household size Average number of family members 7.23 4.65 6.65 6.72 Age Mean age 37.59 37.33 37.40 37.52

45 EARLY WARNING REPORT KOSOVO - Number 14

Table A1. Trends: Satisfaction of respondents of all ethnic groups with the performance of various institutions – “satisfied” or “very satisfied” respondents (%) UNMIK SRSG PISG Assembly KFOR KPS Nov-O2 63.80 73.10 74.10 76.70 87.80 90.00 Mar-O3 51.90 64.10 74.90 71.90 85.50 87.90 Jul-O3 43.10 71.40 78.10 74.70 81.40 84.50 Nov-O3 28.40 43.10 68.50 65.30 77.60 85.20 Mar-O4 24.90 32.40 73.90 64.30 83.00 84.90 Jul-O4 20.70 71.90 59.10 85.60 89.90 Nov-O4 24.10 69.90 72.20 64.50 80.40 82.90 Mar-O5 29.70 82.00 81.10 73.60 81.00 86.90 Jun-O5 41.35 81.65 67.67 63.06 87.25 84.38 Sep-O5 34.55 69.77 48.72 58.94 85.12 84.50 Dec-O5 35.93 72.04 51.04 56.15 86.32 84.21 Jun-O6 30.47 70.45 43.32 45.39 80.94 81.75 Sep-O6 29.92 34.5 27.2 43 83.63 81.59

Table A2 Trends: Selected indicators(%) Table A3. Trends: respondents’ opinions on prime responsibility about Indicator Political Economic Feelings of political and economic situation (%) Pessimism Pessimism Insecurity Political responsibility Economic responsibility Jul-O2 52.7 70.0 45.7 Period UNMIK PISG UNMIK PISG Nov-O2 31.8 58.0 41.0 Jun-O3 60 17 62 23 Mar-O3 41.7 67.7 47.4 Mar-O4 62 13 65 17 Jul-O3 37.3 65.0 40.4 Jun-O4 72 15 72 19 Nov-O3 47.9 71.8 48.5 Dec-O4 65 18 63 28 Mar-O4 45.4 75.3 43.4 Jul-O5 57 22 58 37 Jul-O4 46.6 70.7 44.8 Dec-O5 50 44 28 52 Nov-O4 38.8 67.7 51.2 Jun-O6 48 34 45 36 Mar-O5 38.6 71.0 38.0 Sep-O6 46 30 46 36 Jun-O5 35.7 66.1 36.6 Sep-O5 41.0 68.7 36.7 Dec-O5 40.3 63.5 42.9 Jun-O6 43.8 76.0 35.5 Sep-O6 38.7 70.0 42.7

Table A4. Percentages of respondents “dissatisfied” or “very dissatisfied” with the current political situation (%) Nov-O4 Mar-O5 Jun-O5 Sep-O5 Dec-O5 Jun-O6 Sep-O6 K-Albanians 35.1 35.5 32.1 38 36.7 42.1 37.1 K-Serbs 98 97.1 97.4 98.5 96.1 82 81.3 Others 33 25.7 28.2 28 36.8 30.6 18.9 Weighed average (%) 38.7 38.6 35.8 41 40.2 43.9 38.7

46 EARLY WARNING REPORT KOSOVO - Number 14

Table A5. Respondents’ readiness to join protests that could be organized due to the current political situation (%) 5-Sep 5-Dec 6-Jun 7-Jun K-Albanians K-Serbs K-Albanians K-Serbs K-Albanians K-Serbs K-Albanians K-Serbs Yes 49.7 86.6 54.5 83.2 46.9 34.8 31.8% 27.1% No 50.3 13.4 45.5 16.8 53.1 65.2 54.4% 54.7%

Table A6. Respondents’ readiness to join protests that could be organized due to the current economic situation (%) Sep-O5 Dec-O5 Jun-O6 Sep-O6 K-Albani- K-Serbs Others K-Albani- K-Serbs Others K-Albani- K-Serbs Others K-Albani- K-Serbs Others ans ans ans ans Yes 57.6 76.2 36.1 63 73.7 62.7 61.6 35.9 34.4 45.6% 32.0% 33.7% No 34.9 15 46.3 29.7 14.8 21.1 32.5 49.3 50.8 43.1% 56.7% 54.1% Does not 7.5 8.7 17.6 7.4 11.5 16.2 5.9 14.7 14.7 11.3% 11.3% 12.2% answer Total 100 100 100 100 100 100 100 100 100 100 100 100

Table A7. Percentages of respondents “satisfied” or “very satisfied” with the work of security institutions (%) K-Albanians Jul-O4 Nov-O4 Mar-O5 Jun-O5 Sep-O5 Dec-O5 Jun-O6 Sep-O6 KFOR 85.6 85.7 84.9 92.9 89 90.3 85.1 86.7 UNMIK Police 44.2 41.6 54.7 63.7 61.1 56.9 51.1 59.9 KPS 89.9 88.2 92.7 90.3 90.3 89.4 86.6 86.4 K-Serbs Jul-O4 Nov-O4 Mar-O5 Jun-O5 Sep-O5 Dec-O5 Jun-O6 Sep-O6 KFOR 10.7 10.6 14.7 6.4 25.3 28.4 25.8 41.4 UNMIK Police 3.7 4.8 6.1 2.1 5 13.1 21.7 35.5 KPS 1.8 0.5 4 1.6 5 2.5 14.7 9.4

Table A8. Opinions on inter-ethnic relations between Albanians and Serbs (%) Mar-O5 Jun-O5 Sep-O% Dec-O5 Jun-O6 Sep-O6 K-Alba- K-Serbs K-Alba- K-Serbs K-Alba- K-Serbs K-Alba- K-Serbs K-Alba- K-Serbs K-Alba- K- nians nians nians nians nians nians Serbs Relations are and will 21..2 81..3 23..0 76..0 18..8 98..5 12..9 83.2 11.6 40.6 5.5 57.1 continue to be tense Relations are tense, but 32.2 13.4 32.2 14 24.3 0.5 30.1 14.2 31.4 24 24.1 23.2 some improvements have recently occurred Relations are tense, but 19.9 4.8 18.1 20 0.5 18.5 0.5 14.2 13.8 13.3 8.4 considerable improvements have occurred Relations are not so 13.1 0.5 12.3 0.6 16.3 0 18 1 11.2 2.3 11.8 0.5 tense Relations are not tense 13.5 0 14.4 0 20.6 0.5 20.5 1 6.1 0.5 13.7 0.0 at all Total 100 100 100 100 100 100 100 100 100 100 100 100

47 EARLY WARNING REPORT KOSOVO - Number 14

Table A9. Readiness of K-Albanians and Others to agree/disagree to live in the same street with K-Serbs? (%) Dec-02 Dec-05 Jun-06 Sep-O6 K-Albanians Others K-Albanians Others K-Albanians Others K-Albanians Others Agree 9.90% 42.00% 41.00% 64.50% 48.77% 61.20% 43.9% 83.2% Disagree 90.10% 58.00% 59.00% 35.50% 40.66% 26.78% 49.1% 7.1%

Table A10. Readiness of K-Serb and Others to agree/disagree to live in the same street with K-Albanians? Dec-02 Dec-05 Jun-06 Sep-O6 K-Serbs Others K-Serbs Others K-Serbs Others K-Serbs Others Agree 8.50% 97.20% 21.80% 96.40% 47.00% 86.89% 39.9% 95.9% Disagree 91.50% 2.80% 78.20% 3.60% 33.64% 2.73% 50.2% 0.5%

Table A11. Opinions on the final status of Kosovo (%) Nov-02 July-03 July-04 Sep-05 June-06 Sep-06 K-Alba- K-Serbs K-Alba- K-Serbs K-Alba- K-Serbs K-Alba- K-Serbs K-Alba- K-Serbs K-Alba- K-Serbs nians nians nians nians nians nians Independence 84.3 0 87.9 2.9 89.3 0 90.2 1 95.1 0 95.7% 0.5% of Kosovo within present borders Partition of Kosovo 0.5 34.4 0 26.6 0.8 6.5 0.7 9.3 0.2 46.5 0.1% 10.8% Same as now 5.2 2.2 0.5 0 0.1 0 0.1 0 0 4.6 0.1% 8.4% (international protectorate) Unification with 9.8 0 11.5 0 9.7 0 9.1 0 2.7 0 2.5% 1.0% Albania Confederate state 0 2.7 0.1 7.6 0 3 0 3.1 0.2 2.8 0.0% 3.0% within Serbia, such as Montenegro Autonomous prov- 0.1 60.8 0 62.9 0 90.5 0 86.6 0 35 0.0% 70.0% ince within Serbia Total 100 100 100 100 100 100 100 100 100 100 98.4% 93.6%

48 EARLY WARNING REPORT KOSOVO - Number 14

A1. Perceptions on Responsibility for Economic Situation A2. Circumstances most threatening to stability

80 Deterioration of 72 UNMIK relations with 70 Lack of rule of law, international 65 PISG 2.7% Deterioration of 62 63 community 2.0% relations with 60 58 Corruption and neighboring countris 0.6% mismanagement, 5.4% 50 50 46 46 44 Further aggravation 40 of interethnic 37 37 36 relations 5.7% 30 28 23 Current social and economic 20 19 17 problems 18.4% Unresolved political 10 status of Kosovo 58.4%

Jun-03 Mar-03 Jun-04 Dec-04 Jul-05 Dec-05 Jun-06 Sep-06 Period

A3. When should the negotiation process on nal status be completed? A4. Level of satisfaction with the negotiation process 50% 90% K-Albanian 45.6% 46.9% 83.9% 45% K-Serb 80% 40% Others 70% 63.3% 35% 60% 32.0% 33.5% 30% 50% 43.3% 25% 40% 23.9% 20% 19.9% 30% 15% 14.3% 20% 18.2% 10% 10.2% 10% 7.9% 4.6% 6.6% 2.5%3.0% 5% 0% 1.1% 0.0% 0.5% 2.5% By the end of Next year When the Never 0% this year standards for Satis ed Neither Dissatis ed Kosovo are ful lled

49 EARLY WARNING REPORT KOSOVO - Number 14

A5. Does corruption exist and how present is it in these institutions? A6. Your evaluations about the exent of presence of corruption are based on ?

KPS 6 50% 45.1% K-Albanian UNMIK Police 10 43.4% K-Serb Non governmental 42.4% 11 Others organisations 40% Banks 15

Education 16 31.7% Local Administration 17 30% 29.6% 25.5% Courts 18 27.6% 23.2% International organisations 18 20.2% Customs 23 20%

Central administration 23

Healthcare / hospitals 31 10% PTK 33 4.9% KTA 48 2.9% 3.6%

KEK 51 0% 0 10 20 30 40 50 60 Personal experience Talks with Information Does not (in order to get a relatives and through media know Percentage service,money,gift et friends

A7. Support for the activities of Vetvendosje movement 50% 44.8% 40% K-Albanian K-Serb 31.8% Others 30%

22.4% 20% 17.5% 17.7% 16.8% 14.9% 11.3% 10% 6.6% 4.1% 4.1% 1.0% 1.4% 0% 0% 0.5% I fully support I support I support up I do not I strongly and I would join but to some support oppose them if I am I would not extent invited join

50 EARLY WARNING REPORT KOSOVO - Number 14

ANNEX 2 Events during the period July- September 2006

July 2006

07 July Report of the SRSG Søren Jessen-Petersen addressed to the UN Security Council.

18 July Prishtinë/Pristina and Belgrade delegations in Vienna discussed protection zones around religious and cultural heritage in Kosovo.

19 July Kosovo and Serbian delegation teams further negotiated on the decentralization issue.

July 20 KTA Board approves the launch of the 18th Wave of Privatisation of SOEs. Some 32 SOEs are to be privatized in this round.

24 July High-Level delegations from Kosovo and Serbia hold first Status talks in Vienna. In the mean- time in Prishtinë/Pristina hundreds of Kosovo Albanians protested against this meeting and the negotiation process.

July 25-26 Kosovo participated in the second round of negotiations on an enlarged and amended CEFTA.

27 July The Law on Languages was adopted by Kosovo Assembly. However, the amendment for the Turkish language did not pass due to insufficient votes in favour. Both the Prime Minister and Speaker of the Assembly asked the members of the Assembly to review the amendment again.

August 2006

4 August Statement of the Contact Group on the Situation in Northern Kosovo.

7 – 8 August Prishtinë/Pristina and Belgrade Negotiation team held next round of talks on decentralization and community rights.

14 August U.N. Secretary-General Kofi Annan named the veteran German diplomat Joachim Rücker to be his new Special Representative and head of the UN Interim Administration Mission in Kosovo.

16 August Paul Agda was appointed Head of the EU pillar (effective 1 September, 2006).

23 August In Prishtina/Priština, the movement “Vetëvendosje” organized protests in front of the Parlia- ment against status negotiations during the talking-session between UN Special Representa- tive of the Secretary General Martti Ahtisaari and the Kosovo Negotiation Team. The KPS arrested 72 protesters, releasing 52 later on, while the remaining 20 faced court offences.

26 August Explosive device was thrown at a local café bar in North Mitrovicë/Mitrovica where nine civil- ians were wounded.

27 August In the “Dolce Vita” café in North Mitrovicë/Mitrovica, a bomb exploded wounding at least nine people, among them one British UN policemen and eight local Serbs. After the attack, several hundred K-Serbs gathered to protest, which also resulted in the subsequent violent response against non-Serb passers-by.

31 August A World Bank grant of US$ 8.5 million was allocated to support a project to open a new lignite mine, to build a new lignite power plant and to refurbish parts of the existing power stations in Kosovo.

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September 2006

1 September Thousands of protesters in Vitia/Vitina demonstrated against negotiations, calling this process “politically” motivated and “harmful”. All political fractions and diverse associations of the municipality joined this protest.

5 September Prishtinë/Pristina and Belgrade discussed the the creation of new Kosovo-Serbs majority municipalities in Kosovo.

5 September The first meeting of Trepca Advisory Board took place with representatives from both sides of Mitrovicë/Mitrovica. This meeting is important for the possible revitalization of some parts of Trepca.

7 September The 32nd meeting of the Economic and Fiscal Council took place to discuss the 2006 Budget Mid Year Review.

4 – 22 September MFE held a budget hearing for Central Organizations as a preparation for decisions on the Kosovo budget for 2007.

8 September Kosovo and Serbian delegations further discuss Decentralization, Cultural heritage and Com- munity rights in Vienna-meetings.

11 September A newly constructed home funded by the Kosovo budget through the UNDP returns project was blown up in the village of Shtupel/Štupelj, close to the city of Klinë/Klina. No one was in the house at the time and there were no injuries.

12 September Serbian Prime Minister Vojislav Kostunica announced a new Serbian constitution in which Kosovo is to be defined as integral part of Serbia.

13 September SRSG Joachim Rücker addresses the UN Security Council.

15 September A bomb exploded under the parked car of Fatmir Rexhepi (Minister of Internal Affairs). He was not at the scene during the attack and was not injured.

16 September A bomb destroyed four vehicles, one belonging to Afërdita Syla, Adviser at the Kosovo Minis- try of Local Self-Government.

19 September Bomb attack against a K-Serb home in Klinë/Klina. As a consequence, four members of the family were wounded. The act was condemed by international and local leaders of institutions.

19 September SOK starts the implementation of its annual Labour Force Survey that is a key source of data on the labour market in Kosovo. Data is collected from around 3,200 households and the survey is in accordance with European Union definitions.

20 September The Kosovo Contact Group issues a Ministerial Statement according to which Marti Ahtisaari is supported in finding a realistic solution for Kosova, acceptable to the people of Kosovo and one that preserves the multi-ethnic character.

22 September President Fatmir Sejdiu presented his vision for the future of an independent Kosovo before the Security Council of the Untied Nations.

22 September The SRSG signed a new regulation that transforms the Banking and Payments Authority of Kosovo (BPK) into the Central Banking Authority of Kosovo (CBAK). This new regulation gives more power to the PISG.

52 EARLY WARNING REPORT KOSOVO - Number 14

25 September Due to a fight between K-Albanian and K-Serb youngsters, the main bridge over the Ibër/Ibar is closed.

28 September Free Trade Agreement with Croatia was signed. Croatia recognized the specific economic situation of Kosovo and agreed to exempt certain goods that Croatia exports to Kosovo from liberalization, while fully opening its market to imports from Kosovo. In agreeing on these exemptions, the Kosovo delegation managed to protect certain infant industries and buffer effects for the Kosovo Budget.

30 September New constitution adopted by the Serbian Parliament, for which a referendum is announced. This act of the Serbian parliament, by many, is seen as an effort to further prolong the status negotiations.