Kosovo says to Serbia’s planned embargo: Don’t worry, Be Happy (Or: You See That Pig, It’s Horse. No, Really!)

A local Kosovo think-tank recently published a report that the planned closure of the Kosovo-Serbia border will have a “minimum impact” on local trade and the supply of goods.  Strangely, the same reported observed that imports entering Kosovo through the Serbia border amounted to “only about 31%.”  Okay . . .

A 31% loss in imports to an already fragile economy is — in any language — hardly a “minimum impact” on local trade.  Indeed, Serbia’s closing of the border as well as a trade embargo will have a significant impact on the Kosovo economy.  Any contrary argument is irresponsible and a display of pure bravado that does nothing to help Kosovo face the facts. 

And Kosovo has to face the facts.  And the fact is that even with millions upon millions of dollars in international investment, along with its trade with Serbia, the Kosovo economy is in trouble.  Kosovo has an unemployment rate of over thirty percent.  The average income is 200 euros a month.  The supply of skilled workers for white collar jobs is limited.  Without question, even a small loss of investment will play havoc to an economy that has trouble standing independently on its own two feet.

And that brings up the larger question of stability in the region.  Sure, it’s important that Serbia and Kosovo have an amicable relationship.  Sure, it’s important that the U.S. and Russia do not enter into a new cold war over the region.  Sure, it’s important that when the unilateral declaration of independence occurs, that the rights of minorities are protected. 

But in the end, it is none of these things that will be the driving force of stability in Kosovo.  It is the inter-relationship between good governance and a sustainable economy that will deliver stability in Kosovo and by extension stability the region.  That is what will take the most work, not negotiations behind closed doors or stump speeches by political leaders.

If political leaders think that independence will be the panacea and that Kosovo will somehow magically turn into a powerhouse of good governance and economic strength, then Kosovo and the rest of the international community are in for a very big surprise.  It takes a lot of planning, committment and will — three things that Kosovo and the international community have failed to ensure.

Any possible embargo Serbia may impose in retaliation against a newly-independent Kosovo will not cause significant harm to Kosovo’s economy, says a policy brief published on Thursday by a local think-tank. Kosovo’s Institute for Advanced Studies, the GAP, published its report on the possible impact that the closure of the Kosovo-Serbia border might have on local trade and the supply of goods.

“There is no room for panic among the Kosovo public,” the GAP concludes, adding that “Serbian producers would lose much more from any such sanction than the Kosovars.”  The report says that claims of expected shortages are misleading, and there are routes other than those through Serbia, for importing products without any need to increase prices.

“The possible disruptions are likely to have only short-term effects, since in the long-term Kosovo faces no difficulty, because all other products may be substituted, and can find other routes through which to reach Kosovo.” Recently, several Serb nationalist politicians have warned that if Kosovo proclaims its independence, it will face retaliatory measures by Belgrade, such as an economic embargo.

According to the GAP report, “the imports entering Kosovo through Serb border crossings during 2007 were only about 31%” of total imports. However, some economists see this as an indication of Kosovo’s continuing excessive reliance on trade routes through Serbia, whose substitution will incur additional costs.  The main Serbian products used in Kosovo are construction materials, which account for an estimated 10.87% of total imports from Serbia, and wheat and cereals which amount to 8%. The report recommends that local government and other stakeholders find alternative sources and routes for importing supplies.

After eight years of UN administration since the end of the war, Kosovo’s economy remains fragile and lacking investment. Local politicians and economists are hoping that Kosovo’s independence will remove the uncertainty, and will help attract more investment to the region.  (Source:  BIRN)


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