Interesting comments from a friend. Stella
----- Original Message ----- Stella: The "Financial Times" (FT - London, UK) was never a friend of Serbia, but this British financial newspaper has never minced words when it comes to money and Kosovo. The article confirms certain information that I knew through other sources since November 2007. Despite a huge 3 billion euros (approximately $3.98 billion) foreign assistance that poured into Kosovo since the end of the hostilities in 1999, the economy is in shambles. In the last lines of the article a Kosovar Albanian economist attributes this to "mismanagement" (read "corruption") "rather than the lack of funds." The foreign assistance to the Kosovo authorities has been wasted in such things as government subsidies for unpaid electric bills to the Kosovo Electricity Corp., and despite the assistance levels Kosovo still suffers from prolonged electric power outages (they literally had to switch off the lights in Albania so that the lights were kept on in Pristina during the February 17, 2008 "independence" celebrations). FT reemphasizes that Kosovo is NOT a member of the International Monetary Fund and the World Bank. This lack of membership retards Pristina's abilities to borrow money from these financial institutions. FT points out that the American taxpayers will shoulder $400 million of Kosovo's foreign debt share, although Serbia continues to pay principal and interest of the foreign debt attributable to Kosovo. The end result is that Kosovo is seeking "voluntary donations" of 1.44 billion euros ($2.29 billion) for the 2009-2011 time frame. The FT article only obliquely addresses the uncertain status of legal ownership of major infrastructure and economic enterprises in Kosovo - Serbia still claims ownership not only of the Kosovo "real estate" but also of whatever it built there while it was exercising actual control. Now the Kosovo Trust Agency may have tried to "privatize" such enterprises, but the legal uncertainty dissuades foreign investors and unemployment is at 40%. Alas, the "independence plan" for Kosovo (like the defunct Annan "Peace Plan" for Cyprus) never addressed these "money details" - it is always "other people's money." Labros ---------------------------------------------------------------------------------------------------- FINANCIAL TIMES - JULY 10, 2008 <http://www.ft.com/cms/s/0/480af8bc-4e98-11dd-ba7c-000077b07658.html> http://www.ft.com/cms/s/0/480af8bc-4e98-11dd-ba7c-000077b07658.html ---------------------------------------------------------------------------------------------------- Kosovo seeks €1.4bn to bolster independence By Neil MacDonald in Belgrade Published: July 10 2008 17:46 | Last updated: July 10 2008 17:46 Kosovo hopes to secure more than €1.4 billion worth of international aid on Friday, at a donor conference meant to invigorate the new state’s weak economy during the next two years. With a mostly young population of around 2 million and 40 per cent unemployment, the Balkan breakaway territory urgently needs to lure foreign investment, boost economic growth and create more jobs, economists say. The one-day conference hosted in Brussels by the European Union comes as a symbolic – as well as economically important – milestone in Kosovo’s quest to become a functioning independent state. Yet the disputed territory already ate up €3bn worth of aid inflows during its nine years as a United Nations protectorate, starting when Nato expelled Serb forces in 1999. Blackouts still happen daily, despite the hundreds of billions spent on refurbishing the outdated power plants outside the capital, Pristina. The conference – chaired by the European Commission and organised with the help of the World Bank – stems from the western-backed “settlement package” for Kosovo, whose ethnic Albanian majority declared independence from Serbia on February 17. Kosovo’s latest “medium term expenditure framework” forecasts “a cumulative spending gap of about €1.44 billion” after stepped up investments in electricity, roads, agriculture, health and education in 2009-2011, the finance ministry says. The new state’s top priority would be “to raise economic growth in order to create more jobs,” said a 128-page draft of the document from late May. The government wants to see more budget support (meaning cash) and less technical assistance than in the past. Kosovo’s finance minister, Ahmed Shala, said donor funds would be spent wisely on solving basic problems, while luxuries such as a world-class football stadium could wait until later. But international financial institutions, which expect to dispense much of the new aid, have questioned whether donors might be throwing large sums down the same black hole. The government, while rightly wanting to scale down its subsidies to the Kosovo Electricity Corporation (KEK), fails to outline a “credible plan” for improving bill collection and eliminating power theft, World Bank analysts warned in comments on the ministry’s draft. Furthermore, the price tag for state creation is hard to predict. The International Monetary Fund, in comments to the ministry, said: “Estimates of status costs are… subject to high variability and likely to change.” Kosovo still lacks membership of the World Bank or the IMF, but the 43 mostly western countries that have so far recognised the new state hold majority shares in both institutions and could extend an invitation even if the UN never does. Serbia’s ally, Russia, blocked the settlement package at the UN Security Council, leaving the EU, with US encouragement, to put the plan for Kosovo’s independence into practice without very clear legal foundations. The costs of carrying out the status plan – also part of the finance ministry’s two-year forecast – include minority protection measures, opening embassies abroad, and paying off old Yugoslav debt. The US has pledged $400m for Kosovo’s debt share, inherited through Serbia from the failed federation. So far, Belgrade refuses to stop paying Kosovo’s debt – one of the costs of insisting on sovereignty – while Pristina threatens to make counter-claims for destruction of property before and during the 1998-1999 war. With improvements in customs and tax collection, Kosovo last year achieved a budget surplus of €300m, while another €700m is effectively frozen in the accounts of the Kosovo Trust Agency, caught between conflicting UN and EU mandates. Kosovo’s problem all along has been mismanagement rather than a lack of funds, said Shpend Ahmeti, an economist in Pristina. <http://www.ft.com/servicestools/help/copyright> Copyright The Financial Times Limited 2008 Picture (Metafile)Picture (Metafile) "FT" and "Financial Times" are trademarks of the Financial Times. <http://www.ft.com/servicestools/help/privacy> Privacy policy | <http://www.ft.com/servicestools/help/terms> Terms © Copyright <http://www.ft.com/servicestools/help/copyright> The Financial Times Ltd 2008.
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