Mitrovica is a dying town. Many other towns across South East Europe are suffering from the consequences of de-industrialisation and unresolved ethnic tensions. But nowhere else has the combination produced a social and economic crisis as severe as in the divided town of Mitrovica.
Mitrovica used to be a one-company town built around the Trepca mining and metallurgy complex, once a flagship company of Kosovo employing close to 22,000 people. Production has collapsed completely, and employment in Trepca has dropped to about 3,100 receiving stipends or salaries for doing maintenance and clean-up work. The one-company town was left without its company.
Ethnically motivated expulsions after the conflict in 1999, left the town today divided between a majority-Albanian part south of the river Ibar with about 66,000 inhabitants and a confined area of 1,5 square kilometers of urban North Mitrovica with a Serb majority of 13,402 and an Albanian minority of 2,100. A total of 2,585 families have been displaced from their homes and apartments on both sides of the river. There has basically been no progress on returns or property restitution in Mitrovica since the conflict.
The private sector both north and south of the river Ibar is too weak to make up for the dramatic collapse in employment. In the South, the private sector employs 5,400 individuals and generates about 43 percent of monthly cash income. This yields an average monthly per capita cash income of 38 euros. Some families receive additional incomes from rent paid by the international community and remittances from the Albanian diaspora abroad. The existing private sector is predominantly trade, construction and basic services. A study by the Ministry of Labour and Social Welfare found that 72.5 percent of micro-enterprises are family based and nearly half are ‘on the survival level’.
The economy in North Mitrovica is entirely dependent on outside subsidies. It is a bubble economy by all means. Nearly 64 percent of monthly cash income derives from direct budget transfers from Belgrade paying for salaries of 4,100 health, education and university staff as well as pensions and social assistance. The Kosovo budget contributes nearly 22 percent, half of which is spent on salaries for the civil service and the other half on social transfers including pensions, social assistance and stipends to former Trepca workers. These outside subsidies yield an average monthly per capita income of 102 euros. Of this, only 14 percent are generated by the economy. Very little is produced in North Mitrovica and there are no investments.
In 1991, Mitrovica was a multi-ethnic town with
a population of 82,837 Albanians, 10,698 Serbs and Montenegrins and 11,350 Bosniacs and
Roma. Mitrovica was proud of its multi-ethnic football team once making it
Today Mitrovica is known for a bridge that has become a symbol of division, barbed wire separating the Serb north from the Albanian south part of the town. Mitrovica has become known for its division and ethnic clashes. The latest outbreak of violence in Mitrovica on 17 and 18 March triggered ethnic clashes across Kosovo, leaving 19 dead, 730 homes and 29 churches and monasteries damaged or destroyed, and over 4,000 Serb and other minorities internally displaced.
Mitrovica is a microcosm for all of Kosovo. If present trends continue, Mitrovica will be a dead town. Mitrovica’s division and unresolved political status reinforces its social and economic crisis and fuels ethnic tensions.. Most international attention and resources have been spent on maintaining the status quo and paying for soldiers, policemen and an expensive international administration. Too few funds have been spent on development. Too little effort has been made to find a lasting solution for the Mitrovica problem taking into account fears and concerns on both sides. The uncertainty over Mitrovica’s future keeps the town trapped in a downward spiral. The same is true for Kosovo.
Five years after NATO’s bombing campaign successfully ended the ethnic cleansing of the Albanian population by Serb police and paramilitaries, ethnic tensions resurfaced and NATO troops and the UN suddenly found themselves caught in the cross fire between angry young crowds, groups of Albanian extremists and the beleaguered Serb community. For a brief moment the world turned its attention back to Kosovo, the rooms at the famous Grand Hotel on Mother Theresa Street were booked out and several high-level delegations, including Chris Pattern, Javier Solana, NATO Secretary General and the French Foreign Minister, passed through Pristina, the dusty capital and home to about 300,000 inhabitants. The violence reminded international media and policy makers of the Kosovo problem- a unique combination of an unresolved political status and a looming social and economic crisis. The impressive achievement of rebuilding Kosovo immediately after the war and establishing more or less multi-ethnic governing institutions from scratch in only a few years seemed in shambles. Public and unofficial statements of diplomats, politicians and analysts echoed uncertainty, a sense of failure and a lack of vision. The atmosphere in Pristina, Brussels and Washington was full of doubts: can there ever be a true multi-ethnic Kosovo? Will Kosovo be divided along ethnic lines? Will Kosovo remain an international protectorate forever?
The long-term vision for Kosovo is clear: the future of Kosovo lies in Europe. Even this no-man’s land run by a UN appointed Special Representative, protected by NATO troops and policed by a force composed of 48 different nationalities will one day join the European Union.
The two main challenges facing Kosovo today is the continued political uncertainty over Kosovo’s future status combined with a serious economic development challenge. Mitrovica is truly a microcosm of the Kosovo problem. Just like maintaining the status quo in Mitrovica will inevitably lead to further economic decline and more violence in the future, the Kosovo problem can no longer be put on ‘stand by mode’.
Local political leaders and the EU need to take
the lead and seriously engage in the double challenge of state-building and
economy–building. The Kosovo leadership needs to offer a credible and realistic
proposal to the Serb community living in Kosovo and engage in direct negotiations
with Belgrade immediately. Kosovo leaders need to show that they understand
the fears and concerns of the Serb community and both sides – Pristina and
Belgrade- need to work hard on reaching a compromise agreement addressing
the issue of returns and property rights and the future role of
Serious efforts need to be made by domestic and
international actors to turn this major setback into an opportunity. Mitrovica
holds the keys to success or failure. A significant breakthrough in returns,
property restitution and transforming the role of the Republic of Serbia
in Kosovo from parallel government to long-term donor in Mitrovica prepares
the ground for real progress Kosovo-wide. In February, ESI presented a package
proposal to local leaders composed of three elements: full resolution of
property rights and restoration of freedom of movement in 2004, the development
of a joint development and assistance strategy for Mitrovica region and the
redrawing of municipal boundaries to create a majority Serb but multi-ethnic
North-Mitrovica and Zvecan municipality.
This proposal has been discussed and presented to all leaders and policy
makers, and it has received the support of the Contact Group and many senior
politicians on both sides. By making such a proposal, the Albanian leadership
would proof its commitment to creating conditions for the Serb community
to live and integrate fully in Kosovo. By accepting such a proposal, especially
the return of Albanians north of the river Ibar,
the Serb leadership would show its commitment to accepting and supporting
the authority of the Kosovo governing institutions, including the police
service, the judiciary and municipal structures. By engaging in direct negotiations
with Belgrade on the future of
The immediate international response in the wake of the recent violence to send more troops and step up arrests of extremist elements is crucial but it needs to be complemented by a clear political and economic vision.
The political vision for Kosovo is an undivided,
democratic, multi-ethnic and sovereign state firmly anchored in European
structures and institutions, extending the maximum amount of protection and
rights to its minority communities. The economic vision for Kosovo is a functioning
market economy integrated regionally and with Europe, slowly catching up
Membership of the EU is the only credible future strategy for Kosovo and the region. The risk of further instability in Kosovo is a matter of deep concern to the European Union and we cannot allow the process to slip back into ‘stand-by mode’. The example of Mitrovica shows that freezing the conflict by maintaining the status quo only fuels further ethnic tensions and actually makes the situation worse.
The EU has committed itself politically to bringing Kosovo closer to Europe. Already today, European institutions and member states are by far the largest donor and contribute the bulk of international troops in Kosovo. At a speech in Belgrade in April last year, the President of the European Commission Romano Prodi reaffirmed that the historic process of Europe’s unification will not be complete until the countries of the Balkans join the Union. ‘We want you to become members of the Union- with no ‘ifs’ and ‘buts’’. 
The rhetoric of ‘Europeanisation’ underlies many programmes in Kosovo, including the ‘standards before status’ document. The weakness of the ‘standards before status’ process, however, is its unclear outcome and a list of benchmarks that are difficult to measure. The promise of a possible review date and the beginning of status negotiations in mid-2005 is too vague to galvanise the political support that is needed to make difficult political choices. Clear and measurable benchmarks are needed. Data on returns and property restitution in each municipality, for example, could be made public on a monthly basis, the same goes for crime statistics, in particular crimes directed against minorities. This would create benchmarks that can actually be measured and public information that can be openly discussed. It would also serve as a tool to identify model municipalities, best practices and areas that need significant improvement.
But the ‘standards before status’ process should
not single Kosovo out as an anomaly. In fact, the standards reflect European
criteria and preconditions and as such are also applied to
The ultimate responsibility lies with the Kosovo leadership. But the EU has the experience and the means to help Kosovo reach this goal.
The European Union might need to rethink its existing institutional tools. Existing instruments, the European Agency for Reconstruction and the EU Pillar as part of UNMIK, responsible for creating an enabling environment for private sector led growth, are insufficient to take on the task of helping Kosovo along. The recent appointment of Fernando Gentilini as special EU envoy by Javier Solana on 29 March is a first step in the right direction. The extension of a European Partnership programme to Kosovo as defined by United Nations Security Council Resolution 1244 marked another important step. The partnership document clearly states that its aim is to provide the necessary guidance to ensure a stable future for a secure, democratic and multi-ethnic Kosovo with its place in Europe.’  These are important steps, but there need to be more.
An additional factor hampering Kosovo’s development is a crisis of political representation as a result of its unresolved political status. The UN administration is above the democratic process, since its officials do not feel accountable to the people of Kosovo but to the capitals and institutions paying their salaries. At the same time, the overall responsibility of UNMIK as ultimate arbiter enshrined in the Security Council Resolution 1244 continues to shield Kosovo’s nascent political institutions from real responsibility. They can afford to live in a comfortable limbo of demanding more competencies while not fully exercising those already transferred. Even in areas like education, health policy and tax administration, a complete transfer of powers and responsibilities has not necessarily translated into more local policy initiatives or creative reforms. Kosovo politicians are allowed to get away with this, since most voters do not yet hold their own politicians accountable for economic development, social reforms or the provision of health care. Most reform legislation in Kosovo is actually drafted by foreign experts and a number of officials seem to enjoy the well-established blame-game between UNMIK and the Kosovo institutions, with both parties unwilling to take full responsibility.
The end result is total confusion and a severe crisis of political representation. An extensive survey done by UNDP in 2003 on perceptions of local government revealed the extent of confusion of Kosovo citizens over who is responsible for what and who can be held accountable. The complexity of Kosovo’s existing governance structures have left the public, at best, bewildered and, at worst, disenchanted. For each service, UNMIK is held responsible by 5-30 percent of respondents. Even in clearly transferred competencies such as pension payments, health care and education, approximately 10 percent of Kosovars hold UNMIK responsible. Consequently, the gap dividing the public from both UNMIK and Kosovo institutions and the mistrust felt towards democratic institutions is growing. In fact, North Mitrovica is the only place in Kosovo without democratically elected municipal officials. The democratic deficit could not be more apparent.
What is needed are clear-cut competences and lines of authority. Kosovo institutions need to be held accountable for their actions by their own electorate and progress needs to be measured against actions not words. The same is true for Kosovo Serb leaders. They need to feel accountable to the Serb community in Kosovo and not to Belgrade.
A point in fact is domestic security. Holding Kosovo authorities responsible for their failure to immediately condemn the violence on the first day is justified. Holding them accountable for the failure of KFOR and police to restore order and protect lives and churches is unjust, since these competencies remain fully reserved in the hands of UNMIK. In order to measure the sincerity and commitment of Kosovo’s leadership to protect all citizens irrespective of ethnicity against violence and discrimination, local authorities and the Kosovo Police Service have to be clearly responsible. There needs to be a clear command structure with an identifiable leadership that can be held personally and politically accountable. In fact, there needs to be a Kosovo Ministry of Interior with a clear mandate for domestic security working in partnership with KFOR and UNMIK police.
Addressing these manifold challenges requires a serious international and local engagement. In the wake of the recent violence, Mitrovica must be even more of an immediate priority for the Kosovo leadership and the international community. As Kosovo’s microcosm, Mitrovica is the ultimate testing ground for the willingness of the Kosovo Albanian and Serb leadership to reach a locally negotiated compromise solution.
At the outset of direct negotiations between Pristina and Belgrade, the international community has to set out two guiding principles: a final settlement needs to be based on an agreement accepted by both sides and the option of partition along ethnic or territorial lines is ruled out from the start. The Contact Group and the European Union should announce this explicitly and firmly reject all demands for a territorial solution to the problem of minorities in Kosovo. This is a precondition to bringing all partners around the negotiating table. Partition is clearly the least favoured option by the international community, it is unacceptable to the Albanian majority and it is an indirect call on Kosovo Serbs living south of the river Ibar to pack their things and go. Partition only rewards those who want ethnically ‘clean’ regions.
What is clear in Mitrovica is also true for the rest of Kosovo. Political stability cannot be achieved without development. If Kosovo is not to remain an island of instability within the region, the economic development agenda needs to be more central as a key to stability. The political strategy needs to be complemented by an economic strategy. The EU needs to help Kosovo ‘catch up’ with the rest of Europe.
Kosovo’s development challenge is serious. Kosovo
has the fastest growing population in Europe. Estimates predict that 30,000
new youngsters will enter the labour force every
year in the course of the next five years. Real jobs are scarce. Only about
15 percent of the labour force have an official job. By far the largest employer is
agriculture, employing around 140,000. The agricultural sector is predominantly
subsistence agriculture characterized by extremely low productivity and average
land holdings of two hectares for families of seven. Most farmers do not
produce for the market. In Viti municipality, a
rural municipality in southeast Kosovo bordering with
These youngsters, mostly unskilled or inadequately skilled, are pressing on to a labour market that already shows signs of contraction. Today, 12 percent of the population lives in extreme poverty, international funds are declining and employment is dropping. The two main sources fuelling Kosovo’s short-lived post-war boom, donor money and remittances from the Albanian diaspora abroad, have declined sharply over the past two years. Economic indicators show a worrying trend: private consumption has decreased as jobs are being cut, investments in machinery and capital goods have decreased as well. Foreign investors are reluctant to invest in Kosovo given the political uncertainties and Kosovo’s comparative disadvantage. Despite an increase in domestic production, Kosovo continues to run an import deficit close to 1 billion euros. Estimates of GDP per capita – range from 690 to 1,200 euros annually. There is a real risk that Kosovo will fall behind even more.
However, the economic and social challenge facing
Kosovo is not fundamentally different from those which the EU has been dealing
The term ‘cohesion’ first came into use in the
late 1980s. In article 130A of the Treaty on the European Union, there is
an explicit commitment to promote ‘harmonious’ development and reducing disparities
between more and less developed regions. Within its current and future borders
the EU, thus, explicitly engages in a process of economy-building involving
fundamental structural transformation and led to real convergence. The Irish
economic miracle is the result of EU cohesion policies combined with sound
domestic policy making successfully attracting foreign investment. Irish
GDP has risen from two thirds of the EU average when it joined in the 1970s
to 118 percent today.
In essence, the EU structural and cohesion funds focus on three main areas:
- improving the physical infrastructure of the economy
- raising the level of human capital through enhancing skills and education levels
- and directly assisting the private sector with productivity-enhancing investments.
Kosovo’s physical infrastructure suffers from years of neglect, under-investment, destruction and a very slow process of restructuring and reform. With one third of the population under the age of fifteen and an antiquated education system not responding to the needs of the market, Kosovo also faces an enormous human resource challenge and serious skills deficits. Mitrovica’s industrial and economic collapse is repeated across Kosovo. The former industries have largely collapsed, and the existing private sector consists mostly of small and micro enterprises based around the family unit engaging in trade, service and construction activities. Without targeted assistance, the private sector cannot create the jobs needed to employ Kosovo’s young population. These problems are not unique to Kosovo. The entire region needs to gain access to EU development assistance modeled on the structural and cohesion funds.
What distinguishes EU development strategies for member states and accession candidates from the current EU -funded assistance in Kosovo are the three guiding principles of the EU structural and cohesion funds: additionality, development planning and partnership. Additionality means that EU funds are added to domestically financed public investments, there is no assistance without local co-financing. Development planning foresees that each project is embedded in a long-term development programme developed by the recipient country. The emphasis on local development planning guarantees that each project is really tailored to local needs and reflects the best interests of the recipient community.
Most importantly, the region needs financial
commitments commensurate with the challenge these countries face. Pre-accession
aid to the ten candidate states in Central and Europe is € 3 billion annually.
The financial package for
Other countries in South Eastern Europe are suffering from the consequences of de-industrialisation, and other regions are suffering from unresolved ethnic tensions. But nowhere has the combination of the two produced a social and economic crisis as severe as in Kosovo, and in particular in the divided city of Mitrovica. Now is the time for local politicians to send a dramatic signal to the outside world, in particular to Brussels. Europe needs to be convinced that Kosovo is serious about its commitment to multi-ethnicity, democracy and future EU membership. The Kosovo leadership needs to show that it is willing to find compromise solutions that answer the real needs of Kosovo. There are no alternatives. If Mitrovica can be solved, Kosovo can be solved. If Mitrovica fails, Kosovo could become Europe’s West Bank.
 Mitrovica- The bridge to the future. Micro-enterprises. Situation and perspectives, February 2001.
 Romano Prodi, Belgrade Speech, 9 April 2003
 www.europa.eu.int, Thessaloniki Agenda
 European partnership document
 The Kosovo mosaic. Perceptions of local government and public services in Kosovo, Pristina, March 2003
 The lack of reliable statistics is an additional impediment to Kosovo’s economic development. The current estimates of GDP are based on multiple sources of educated guesswork, limited trade and tax data and other sectoral or micro studies. Given that Kosovo’s actual population is also unknown- estimates range from 1.75 to 2.4 million people- GDP per capita calculations are extremely difficult.
 The Road to Thessaloniki: Cohesion and the Western Balkans, 12 March 2003, www.esiweb.org
 Building Capacity: Applying EU Experience to the Western Balkans, John Bradley, presented at the LLA/Wilton Park Conference in May 2003 in Oslo.
 Brussels plans Bulgaria-Romania aid, by Oana Lungescu, BBC Correspondent in Brussels, 9 February 2004.