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 Can Kosovo survive on it's own ? « View previous topic :: View next topic » 
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PostPosted: 18 Nov 2005 09:58    Post subject: Can Kosovo survive on it's own ? Reply with quote

Joined: 17 Nov 2005
Posts: 2

According to Albert Rohan, the Austrian diplomat who is Ahtisaari's deputy and represents the EU in the process of negotiations for the final status, Kosovo can survive on it's own.

Mr Rohan quotes the World Bank, while the World Bank's main argument is Kosovo's coal reserves!

I am not sure coal reserves alone would be enough for an independent economy to survive. It takes much more. What are other arguments ?
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Kujtim Dobruna
PostPosted: 18 Nov 2005 17:37    Post subject: interesting summary Reply with quote

Joined: 16 Nov 2005
Posts: 3

maybe the following text could answer your question:)

The UN Kosovo Standards Implementation Plan calls for Kosovo to develop a “framework for a sustainable, competitive market economy.” For a small, landlocked region emerging from a socialist economy and years of conflict, without the sovereignty or stability required to attract investment, the creation of a viable economy of any sort is a challenge. Indeed, Kosovo’s uncertain status has contributed to high unemployment and an economy verging on collapse. Despite these enormous problems, Kosovo has adopted policies and created economic infrastructures that not only are in compliance with UN standards, but also position it for future growth.

In its March 2004 progress report on standards implementation,
the UN stated that “substantial progress has been made to lay the foundations of a market economy in Kosovo. A stable macro-economic framework has mainly been achieved through the introduction of the Euro as the currency in use, and the [legally imposed] inability for the Kosovo Budget to run a deficit.”

The report also cites “development of sound banking and insurance supervision. Basic economic legislation has been put in place, and the tax system was built in a simple and transparent way that does not put a heavy burden on enterprises.” This in combination with Kosovo’s duty-free exports, a low average import tariff of 10%, and the rehabilitation of infrastructures key to economic development, are all consistent with a nation poised to deliver the benefits of a free market economy to its people.

Kosovo has made continuous progress in privatization, primarily through spin-offs and liquidation. A 31 July 2005 World Bank economic briefing, after another round of completed privatization, reported “The privatization process is now advancing steadily, following amendments to the Kosovo Trust Agency (KTA) legislation in April 2005.” This legislation streamlined documentation needed for privatization. In late September 2005, the KTA board launched a ninth wave of privatization, which will include 22 Socially Owned Enterprises.”

Liberal Market Policies
In its 31 July 2005 briefing, the World Bank joined the UN in recognizing Kosovo’s important gains in implementing liberal market policies. Despite pervasive unemployment, particularly among young people, a weak industrial sector and an unreliable electric supply, “Kosovo is one of the most liberal trading regimes in the world,” the World Bank reported. Most capital goods and industrial inputs are imported duty free. The World Bank also observed that, “Use of foreign exchange has been legalized for all domestic transactions, establishing the Euro as the de facto local currency. This has provided stable exchange rate and low inflation.”

Kosovo’s power supply difficulties are now being addressed. Rehabilitation of the Kosova A power station is in early stages.

Common Economic Area
In its April 2005 report, the Independent Commission on the Balkans concluded that “the interdependence of states is much more vital to the future of the Balkans than was the case in any other part of Europe. These are small and unattractive markets. Their economic sustainability depends on the creation of a common economic area that will attract foreign investors. In this sense, the regional approach is a necessary precondition for development.” Clearly a critical factor for the creation of a sustainable, independent state of Kosovo and for the long-term stability in the wider former Yugoslavia will be the creation of a Common Economic Area.

Economic growth and recovery in the context of a market-oriented economy are the vital underpinnings for democracy-building and to prevent the violent upheavals experienced in the past. This can only be achieved if there is a free flow of goods, services, capital and people among all of these countries. The alternative will most likely be continued regional political instability rooted in deep poverty and deprivation.

Potential for the Future
The World Bank’s 17 May 2004 Kosovo Economic Memorandum states “Kosovo’s future depends critically on its ability to open its borders and benefit from international trade. Empirical evidence demonstrates that small states can achieve high growth rates when the economy is open, there are no controls on capital flows, the business environment is unencumbered by regulation, and a liberal labor market exists, resulting in a mobile labor force.” The memorandum also praises Kosovo’s extremely liberal trading regimes.

For Kosovo to capitalize on its liberal trading policies and achieve sustainable economic growth, it will need to create a sound, secure financial environment for investors — the kind of environment only a sovereign state can create.

Sectors that hold the greatest potential for economic growth are mining, energy, and agriculture. According to the World Bank (31 July 2005 economic briefing), “Kosovo has abundant resources of lignite, lead and zinc, ferrolnickel, magnesite, and crushed stone, and relatively low transport costs to Western European markets. In particular, utilization of lignite resources (by attracting private investment) holds potential for the energy sector to become an engine of growth rather than a drain on public resources.”
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