EN    EN EN 
 
EN    EN  EUROPEAN COMMISSION 
Brussels, 9.11.2010 
SEC(2010) 1329 final 
  
COMMISSION STAFF WORKING DOCUMENT 
 
KOSOVO∗ 2010 PROGRESS REPORT  
 
  
accompanying the 
 
COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
 
Enlargement Strategy and Main Challenges 2010-2011
 
{COM(2010) 660 final} 
                                                 
∗ Under UNSCR 1244/1999 
 
EN 2   EN TABLE OF CONTENTS 
1. Introduction................................................................................................................ .. 4 
1.1. Preface................................................................................................................... ....... 4 
1.2. Context ................................................................................................................... ...... 4 
1.3. Relations between the EU and Kosovo........................................................................ 5 2. Political criteria .......................................................................................................... .. 6 
2.1. Democracy and the rule of law .................................................................................... 7 2.2. Human rights and the protection of minorities .......................................................... 13 2.3. Regional issues and international obligations............................................................ 21 3. Economic criteria ....................................................................................................... 22 3.1. The existence of a functioning market economy ....................................................... 22 3.2. The capacity to cope with competitive pre ssure and market forces within the Union
............................................................................................................................... ..... 28 
4. European standards .................................................................................................... 29 4.1. Internal market ........................................................................................................... 30 
4.1.1. Free movement of goods............................................................................................ 30 4.1.2. Movement of persons, services and right of establishement...................................... 31 
4.1.3. Free movement of capital........................................................................................... 32 4.1.4. Customs and taxation ................................................................................................. 32 4.1.5. Competition............................................................................................................. ... 34 
4.1.6. Public procurement .................................................................................................... 34  
4.1.7. Intellectual property law ............................................................................................ 35 4.1.8. Employment and social polic ies, public health policy............................................... 36 
4.1.9. Education and research .............................................................................................. 38 4.1.10. WTO issues ............................................................................................................. ... 39 
4.2. Sectoral Policies......................................................................................................... 39 
4.2.1. Industry and SMEs..................................................................................................... 39  
4.2.2. Agriculture and fisheries............................................................................................ 40 4.2.3. Environment............................................................................................................. .. 41 
4.2.4. Transport policy ........................................................................................................ . 43 
 
EN 3   EN 4.2.5. Energy .................................................................................................................. ...... 45 
4.2.6. Information society and media................................................................................... 46 4.2.7. Financial control....................................................................................................... .. 48 
4.2.8. Statistics .............................................................................................................. ....... 49 
4.3. Justice, freedom and security ..................................................................................... 49 4.3.1. Visa, border management, asylum and migration...................................................... 49 
4.3.2. Money laundering ...................................................................................................... 52  
4.3.3. Drugs................................................................................................................... ....... 53 
4.3.4. Police.................................................................................................................. ........ 53 
4.3.5. Fighting organised crime and terrorism ..................................................................... 55 4.3.6. Protection of personal data......................................................................................... 56 
 
EN 4   EN COMMISSION STAFF WORKING DOCUMENT 
2010 Progress Report 
1. INTRODUCTION  
1.1. Preface 
Since March 2002, the Commission has reported re gularly to the Council and Parliament on 
progress made by the countries of  the Western Balkans region. 
This report largely follows the same struct ure as in previous years. The report: 
– briefly describes the relations between Kosovo1 and the Union; 
– analyses the political situation in Kosovo in terms of democrac y, the rule of law, 
human rights, protection of minorities, and regional issues; 
– analyses the economic situation in Kosovo; 
– reviews Kosovo’s capacity to implement Euro pean standards, that is, to gradually 
approximate its legislation a nd policies with those of the acquis , in line with the 
European Partnership priorities. 
The period covered by this report is from  to mid-September 2009 to early October 2010. 
Progress is measured on the basis of decisi ons taken, legislation adopted and measures 
implemented. As a rule, legislation or meas ures which are under preparation or awaiting 
Parliamentary approval have not been taken into account. This approach ensures equal 
treatment across all reports and pe rmits an objective assessment. 
The report is based on information gathered  and analysed by the Commission. Many other 
sources have also been used, including cont ributions from the Kosovo authorities, the EU 
Member States, the EU Special Representati ve in Kosovo, the EU rule of law mission 
(EULEX), European Parliament reports2 and information from va rious international and non-
governmental organisations. 
The Commission draws detailed conclusions regarding Kosovo in its separate communication 
on enlargement, based on the technical analysis contained in this report. 
1.2. Context 
In July, the International Court of Justice (ICJ) issued an ad visory opinion, which concluded 
that Kosovo's declaration of independence di d not violate general international law or 
Security Council resolution 1244 (1999). The UN General Assembly adopted on 9 September 
a joint resolution tabled by Serbia and co-sponsor ed by EU Member States as a follow up to 
                                                 
1 Under UNSCR 1244/1999 
2 The EP rapporteur on Kosovo is Ms Ulrike Lunacek. 
 
EN 5   EN the ICJ opinion. The resolution aims at opening the way for a process of dialogue between 
Pristina and Belgrade to promote cooperation, achieve progress on the path to the European 
Union and improve the lives of the people.  
To date, Kosovo has been recognised by 71 UN Member States, including 22 EU Member 
States. 
During the reporting period, th e UN Secretary-General issued four reports on Kosovo ─ in 
September 2009, in January, April and June 2010. The Secretary-General noted that the 
changing circumstances on the ground have led to  gradual adjustment of the functions and 
priorities of the UN mission in Kosovo. The stra tegic goal of mission is to promote security, 
stability and respect for human rights.  
KFOR, the NATO-led military presence, continues to provide security throughout Kosovo. 
During the reporting period, its presence has been  gradually reduced. In this context, the 
Kosovo Police has taken over responsibility for th e protection of certain cultural and religious 
sites.  
The situation in northern Kosovo remained tens e, but stable. The Kosovo authorities opened 
an office providing services to citizens. The enthronement of the Serbian Orthodox patriarch 
was organised as per the tradition in the patr iarchate premises in Kosovo. The enthronement 
ceremony proceeded in a peaceful atmosphere unde r the supervision of the Kosovo Police. 
The lack of dialogue between Belgrade and Pr istina has prevented progress in improving the 
lives of local communities. 
In July, Kosovo signed a stand-by agreement with the IMF. In September, the Constitutional Court ruled that  it is unconstitutional to hold at the same 
time the office of President of Kosovo and of Chairman/President of a political party. 
Following the ruling, the President of Kosovo resigned. The LDK then withdrew from the 
governing coalition. Elections have  been called for 12 December. 
1.3. Relations between the EU and Kosovo 
Kosovo is part of the Stabilisation and Association Process . The stablisation and association 
process dialogue (SAPD) was launched in Januar y. The first cycle of meetings was completed 
in July. The sectors covered include "justice,  freedom, security"; "innovation, information 
society, social policy"; "the internal market, competition, consumer/health protection"; "economic and fiscal matters"; "transport, eneg ry, environment, regional development" and 
"agriculture, fisheries, forestry, food safety". In July, Kosovo hosted the plenary SAPD meeting and the first SAPD civil society di alogue meeting, which was co-chaired by the 
European Economic and Social Committee. To promote economic dialogue, the fiscal 
surveillance mechanism with the European Comm ission continued with meetings being held 
on a bi-annual basis. 
In November 2009, in the context of the munici pal elections, a delegatio n of Members of the 
European Parliament visited Kosovo. In July, the European Parliament adopted a resolution 
on Kosovo. It encouraged EU Member States to step up their comm on approach towards 
Kosovo. The European Parliament underlined that  the prospect of acce ssion to the EU is a 
powerful incentive for the necessary reforms in Kosovo and called for pract ical steps to make 
this prospect more tangible both to  the government and to citizens. 
 
EN 6   EN The EU rule of law mission (EULEX) continues to operate in Kosovo and to fulfil its 
mandate. The situation in northern Kosovo has ha d an impact on EULEX activities, such as 
the continuous presence of customs offici als at gates 1 and 31 and the staffing of 
Mitrovicë/Mitrovica court. EULEX has also ma de a number of arrests in the north. There 
have been a number of threats and attacks ag ainst EULEX personnel. Th e situation needs to 
normalise. The EU has re-confirmed its commit ment to Kosovo by opening an EU House in 
northern Mitrovicë/Mitrovica. Th e Italian Ambassador to Kos ovo has been nominated as 
facilitator for the north. The H ead of the Greek liaison office in Pristina has been nominated 
as facilitator for the protection of religious and cultural heritage in Kosovo. They have made 
an important contribution in thei r respective areas. This has in creased the EU visibility and 
influence. The authorities need to ensure full and unconditional cooperation with, and support 
for, EULEX. 
In February, the EU Council renewed the manda te of the EU Special  Representative in 
Kosovo for six months. The mandate was extend ed in August for a further six months. The 
EU Special Representative is also the intern ational civilian repres entative for Kosovo.  
In April, Kosovo hosted the second high-leve l forum for donor coordination. The government 
reported to donors on the progress made as rega rds donor coordination. This forum has now 
been established as a mechanism to revi ew and assess progress with socio-economic 
development and the effectiveness of  assistance delivered in Kosovo.  
Kosovo continues to benefit from the Instrume nt for Pre-accession Assistance (IPA), macro-
financial assistance, the Instru ment for Stability (IfS) and ot her sources of funding. Kosovo 
participates in the IPA multi-beneficiary prog rammes including in an IPA crisis response 
package developed in 2008. The package is fu lly operational in 2010. A total of €508 million 
of EU assistance has been committed to Ko sovo for the period 2008–2011. In September, the 
Commission transferred the first tranche of  macro-financial assistance to Kosovo.  
The multi-annual indicative planning document for 2011-2013 is being prepared. It will 
identify the main areas and pr iorities for IPA assistance. 
During 2010, a total of €67.3 million granted in  the IPA annual programme for 2010 was 
allocated in close coordination with the Mini stry for European Integration and government 
institutions. The EC program mes are continuing to support the rule of law, public 
administration reform, communities, culture, youth and wider socio-economic issues, including trade, regional development, e ducation, employment and agriculture.  
To improve participation by civil society  in policy dialogue and fo rmulation, €1.7 million was 
set aside under IPA 2008. Areas such as th e environment and equal opportunities (anti-
discrimination measures and social inclusio n of vulnerable groups) are receiving special 
attention. A further €3  million are earmarked under IPA 2009 for the benefit of civil society, 
including protection of minor ity rights and empowerment of disadvantaged groups. The 
European Instrument for Democracy and Huma n Rights is also suppor ting these issues.  
2. P
OLITICAL CRITERIA  
This section examines the progress made by Kosovo towards meeting the Copenhagen 
political criteria, which require stability of institutions guaranteeing democracy, the rule of 
law, human rights and respect fo r and protection of minorities . It also monitors regional 
 
EN 7   EN cooperation, good neighbourly relations with enla rgement countries and Member States and 
compliance with international oblig ations, such as cooperation w ith the International Criminal 
Tribunal for the former Yugoslavia (ICTY). 
2.1. Democracy and the rule of law 
Parliament The Assembly adopted revised ru les of procedure, aligning them with the Constitution. The 
2010 budget has allowed the Assembly administrati on to employ additional thematic experts 
to support the work of committees. The Assembly's secretariat has extended the range of services offered to committees by strengthening its research capacity. In teraction between the 
Assembly and civil society has improved. Public h earings have been orga nised in a number of 
areas of legislation.  
In February, the Assembly adopted the 2010 Acti on plan on European Integration. The first 
report on its implementation was ad opted in September. In June, the Assembly adopted laws 
on the rights and responsibilities of Assembly  members, on parliament ary investigation and 
on the Official Gazette. 
Cooperation has improved between the Committee for European Integration and the other 
Assembly committees as well as with the new Ministry for European Integration. The 
Committee still needs to increase substantiall y its financial and admi nistrative capacity.  
Parliamentary oversight of the executive branch is exercised by means of regular 
parliamentary questions and plenary sessions attended by members of the government. This 
mechanism needs to be made more effective, including by the request and provision of written 
reports. 
Concerns remain as regards the management of  human resources by the Assembly secretariat. 
It needs to set up a transparent and merit-ba sed recruitment process.  Committees have under-
spent their budget allocations for 2009 and for the first quarter of 2010. The high turnover of 
qualified staff has impeded capacity building effort s. The Assembly's capability to effectively 
scrutinise legislation for compliance with EU norms needs to be improved. Kosovo's 
legislative strategy for 2009 and for 2010 has only been partially implemented.  
In November 2009, Kosovo organised local electi ons. These were the first elections run by 
Kosovo's Central Election Commission, with th e support of the OSCE. The elections were 
conducted in an orderly manner and with par ticipation of all communities in Kosovo. The 
Political Parties Registration Office is now fully operational 
Voter turnout was very low in northern Kosovo. In May, Serbia organised parallel local by-
elections in northern Mitrovicë/Mitrovica.  
The local elections have reveal ed some systemic shortcomings in Kosovo's electoral system, 
such as the complaints and appeals proce ss and the provisions on election observation. The 
electoral system is not in line with intern ational standards. The capacity of the Central 
Election Commission's secretariat remains limited. 
In November, following the no-confidence vo te to the government, the Assembly was 
dissolved. General elections have been scheduled for 12 December. 
 
EN 8   EN Overall , the Assembly has made some progress on institution-building and incorporating the 
agenda for European integration in its wor k. The legislative framew ork has been further 
strengthened. A public accounts committee was established. However, the Assembly's 
capacity remains weak. Effective management of human resources is esse ntial in this regard. 
The process of executive oversight needs to be  improved. The shortcomi ngs of the electoral 
system need to be addressed and the Assembly's role in revising legislation to ensure quality needs to be strengthened. 
Government 
The main structures of government are complete. Six ministers were replaced in April, during 
the first major ministerial reshuffle since the last general elections.  
A new Ministry for European Integration was cr eated and a Minister ap pointed. The Ministry 
incorporated the former Agency for coordinatio n for Development and European Integration. 
The Ministry coordinated successfully the first SAPD cycle, in close cooperation with other 
government departments. It needs to consolidate th is central role in order to ensure effective 
follow-up on SAPD conclusions and realistic prio ritisation of Kosovo's  legislative agenda. 
There has been some progress in the reform of local government ad ministration. Kosovo has 
achieved significant progress as regards decentralisation. In April, the government extended 
the decentralisation action pl an for two more years. 
The Ministry of Local Government Administ ration conducted a capac ity assessment of 
municipalities, covering a full rang e of public services. Its findings  need to be addressed and a 
mechanism put in place for regular updates. 
In January, the authoriti es endorsed a comprehensive appro ach to northern Kosovo with the 
aim of completing decentralisation and lo cal government reform and improving socio-
economic conditions. A coordinator to oversee its implementation has been appointed. The Ministry of Local Government Administration has appointed a m unicipal preparation team for 
northern Mitrovicë/Mitrovica.  
However, the capacity of the Ministry to superv ise local authorities shou ld be strengthened, in 
accordance with the principles of the Eu ropean Charter of Local Self-Government. 
Contrasting interpretations of legislation on  self-government ofte n blocks cooperation 
between central and local authorities. This n eeds to be resolved by addressing the matter to 
the competent courts. 
Following the withdrawal of LDK from the govern ing coalition, the government received a 
no-confidence vote by the Assembly. 
Overall , the government has strengthened its capac ity to implement the European integration 
agenda. There has been progress on local governme nt reform. However, important challenges 
remain in implementing legislation and impr oving the quality of municipal services.  
Public administration  
There has been progress as regards public ad ministration reform. In May, Kosovo adopted 
two key laws in this area: on civil service and on the salaries of civil servants. The 
Independent Oversight Board law was adopted  in July. In September, the laws on 
administrative disputes and on state administra tion were adopted. The Ministry of Public 
 
EN 9   EN Administration set up a department for public ad ministration reform and European integration 
in October 2009. The inter-ministerial commit tee on public administration reform met at 
regular intervals. It provides high-level politic al guidance in this area. Strategic development 
plans have been adopted by two Ministries. 
Kosovo's public administration institute conducted a training  needs assessment and, on that 
basis, has designed new training curricula. The strategic development plan for the institute 
was adopted in September. 
However, the legal framework remains to be fully implemented. In order to allow timely 
implementation of the civil service legislati on, the necessary implementing rules that have 
been put in place need to be implemente d as a matter of prio rity. The 2006 law on 
administrative procedures is still poorly di sseminated and implemented. Ensuring sufficient 
representation of minority co mmunities in the public service remains a concern. 
Less than one third of the public administratio n reform strategy has been implemented. In 
September, the government adopted a revised st rategy reflecting achieve ments and challenges 
to date.  
In July, Kosovo adopted a new law on the ombudsperson. However, the recruitment of 
deputies is delayed. The persisting weakness of the ombudsperson institution should be 
addressed. The authorities should ensure prompt responses to all enquiries and 
recommendations from the ombudsperson. 
The decisions of the inter-ministerial comm ittee need to be formalised and widely 
disseminated. Reforms must be properly budgeted for, in continuous consultation with the 
Ministry of Economy and Finance. The strate gic development plans need to be properly 
implemented across Kosovo’s administration. The capacity of the department for public 
administration reform and of the department for civil service administration needs to be 
strengthened. 
Overall , public administration reform in Kosovo  remains a major challenge. Establishing a 
professional, accountable, accessible, represen tative public administration and ensuring 
delivery of public services  to all in Kosovo needs to be addr essed as a matter of high political 
urgency. This is a key European Partnershi p priority. The capacity  of Kosovo’s public 
administration remains weak.  
Civilian oversight of the security forces 
During the reporting period, Kosovo has adopted its  National Security Strategy and legislation 
on classification of information and security cl earances. Two security oversight bodies were 
established ─ the Committee for the Kosovo Intelligence Agency and the Committee for the 
Kosovo Security Forces. However, democratic oversight over the securi ty sector is still 
developing and needs to be strengthened.  
Judicial system 
There has been progress in the judicial sector . By adopting laws on courts, Kosovo Judicial 
Council, Kosovo Prosecutorial Council and prosecution, Kosovo has launched a major 
judicial reform. Furthermore,  law on courts introduces a new salary system, which will 
significantly improve the situation of judges. Ho wever, plans need to be made and resources 
allocated to prepare for implementation of th ese major reforms. The Ministry of Justice 
 
EN 10   EN demonstrated limited capacity to prepare, im plement and evaluate policies on justice. 
Implementation of the Law on mediation also re quires further efforts. A law on mutual legal 
assistance in criminal matters, extradition and tr ansfer of sentenced pe rsons and a law on child 
abduction are still missing. 
The Ministry of Justice assumed further respons ibilities for internati onal legal cooperation – 
dealing with requests to and from all countri es. The capacity and security of the unit 
responsible need to be  enhanced. UNMIK remains the formal  point of contact  with Interpol 
and the ICTY. Kosovo has signe d a bilateral agr eement with Belgium on transfers of 
sentenced persons and other ad hoc agreements . It also continued cooperating with some 
countries on the basis of r eciprocity. There is no legal cooperation between Kosovo and 
Serbia. This has had a particul arly negative impact on civil, criminal and property-related 
cases. EULEX can facilitate such cooperation. 
The Committee for Bar Examinations has been appointed and the first examinations have 
been organised. The first prospective judges and prosecutors have graduated from the Kosovo 
Judicial Institute in December 2009. 
The vetting process of judges and prosecutors ha s been successfully co mpleted. In all three 
phases including the Supreme C ourt, District Courts, Muni cipal Courts, associated 
Prosecutors Offices, Commercial Courts and Sp ecial Chamber, the President has appointed 
over 340 candidates. In October 2010 the Independent Judicial  and Prosecutorial Commission 
organised an ethics exam in order to identify additional suitable candidates for the remaining positions. Judicial Council needs to build on the guidelines and procedures established by the Commission once it assumes full responsibility for recruitment, vetting and selection of the 
candidates. 
Political interference  in the re-appointment proce ss and proposals made by the Kosovo 
Judicial Council is an issue of serious concer n. The number of applications for reappointment 
from members of minorities has been lower th an needed to fill all the positions. Cases of 
intimidation of members of Serb community have been reported. Serbia has not been 
constructive in creating right political climate in this process. As a result, the Inter-ethnic balance of judiciary is not ensured. 
The eight members of the Kosovo Judicial Counc il have appointed their President, who has 
started to address critical st rategic and logistic issues. Th e Council has started adjudicating 
disciplinary cases, but its capacity in this ar ea is limited. A court management manual has 
been approved. Cooperation with EULEX will be  essential to ensure its implementation. 
Higher salaries within judici ary have also been approved. 
However, managing appointments, resignations a nd transfers has remained a major challenge 
in the transitional environment caused by the reappointment process. The Council has been 
unable to ensure the independence and impartiality of the judicial  system. It needs to be more 
proactive to voice the concerns and act decisive ly in disciplinary cases. It also needs to 
develop its capacity to deal with  a number of strategic issues such as reform, of judiciary, 
budget, staffing and training. All the recommendations  of the Judicial Audit Unit still need to 
be implemented. A procedure to select a new dir ector of the Council's secretariat needs to be 
launched. 
 
EN 11   EN The Constitutional Court started operating, dealt with a number of compla ints and issued its 
first judgments upholding core principles of  human rights and fundamental freedoms. 
However, the court needs to be further strengthened.  Its secretariat is not fully staffed yet.  
In September, the Court ruled th at it is unconstitutional to hold at the same time the office of 
President of Kosovo and of Chairman/Preside nt of a political party. Subsequently, the 
President of Kosovo resigned.  
The overall performance of th e Kosovo justice system rema ins weak. There is still  
a significant backlog of court cases and the ove rall efficiency is very low. Along challenges 
such as corruption and nepotism, the continued po litical interference at different levels and in 
different forms in a number of cas es, including in the work of th e Kosovo Judicial Council, is 
of serious concern. In several instances, judges and prosecutors have refused to deal with 
sensitive cases. There have been reports of  threats and intimidation against them. Some 
municipalities have continuously refused to comply with court decisions. The low level of 
enforcement of court decisions is a major impe diment to creating confidence in judiciary. The 
Special Chamber of the Supreme Court still need s to be made fully operational and all local 
judges need to be appointed. Current situa tion undermines interethnic relationships and 
exercising of property rights. Implementation of  the Case Management Information System 
was hindered by the lack of network connection in a number of district, municipal and minor 
offence courts. Some judges are still reluctant to  use it. More intensive training at the court 
level in the regions is needed. 
The Mitrovicë/Mitrovica court st ill consists solely of EULEX judges and prosecutors and is 
operating with limited capacity. The rule of law in northern Kosovo is not fully guaranteed. EULEX task force for north is focusing on crim es affecting daily lives  of people in Kosovo 
and has made first arrests. Cases related to the events of March 2004 are still pending. Kosovo 
institutions also fail to att ach sufficient importance to suppor t investigations and judicial 
follow-up of war crimes. 
Improvements in cooperation between police and prosecution have been noted. However, the 
overall coordination between law enforcement and judiciary and within j udiciary needs to be 
further enhanced in order to tackle crime pr oactively. Poor management and lack of support 
staff has further undermined pr osecution efforts. Supervisi on of the regional prosecution 
offices by the Office of the State Prosecutor ha s not been adequate. The Office of the State 
Prosecutor and the Ministry of Justic e has also shown limited cooperation. 
Following the promulgation of the law on pardo n, sixty-two prisoners have been pardoned by 
the President of Kosovo. This has included some  serving sentences for serious crimes and a 
majority of prisoners who had been refused conditional release. The assessment process of cases prepared for pardon needs to be improved. 
Overall , Kosovo has made progress in this sector. Ma jor reform process of judiciary has been 
launched by the adoption of the law on courts, which should also improve the situation of 
judges. Vetting process has also been largely completed. However, Kosovo is still at an early 
stage of addressing priorities in the area of justice. Political and other interference is an issue of serious concern. The large ba cklog of court cases and the la ck of effectiveness of the 
judicial system continue to impede rule of law in Kosovo. This needs to be addressed by 
increasing efficiency of the system rather than by increasing the staff numbers. Further 
improvement in the cooperation among all relevant  agencies is also urgently needed to 
address the existing challenges. 
 
EN 12   EN Anti-corruption policy 
Kosovo has made some progress on tackling corruption. The lega l framework on anti-
corruption has improved. The law on financing of political parties has been adopted, but is not fully in line with European standards. One of the key weaknesses of the law is that it neither 
prohibits nor strictly regulates donations from legal entities which provide goods or services 
to public administration. The following three laws  have also been adopted: the Law amending 
and supplementing the Law on preventing conflicts of interest in exercising public functions, 
the Law on the Anti-Corruption Agency and th e Law on declaration of the origin of the 
property and gifts of senior pub lic officials. As a result of  the adoption of this law, 
declarations of assets have b een published online. However, the declaration of assets of some 
senior officials has not been published. This  is a matter of serious concern. Available 
information revealed discrepancies between the income and properties of senior Kosovo 
officials. This indicates widesp read corruption at high levels in  Kosovo persist. This fact has 
not been followed-up by public debate or inves tigations of the relevant bodies, showing a 
distinct lack of political will in fighting corruption. 
The Assembly has adopted the anti-corrupt ion strategy and action plan for 2009-2011. The 
conditions for the work of the Anti-Corruption Agency have improved. The Agency has 
revised the action plan. It has also started monitoring impl ementation of the action plan and 
has received reports from about 40 agencies involved. However, they demonstrate limited ownership and commitment to implement it. Wh ile the relation between the Anti-Corruption 
Agency and the prosecution has improved, it still needs to be intensified. There has been a raise in the number of cases related to mi smanagement of public funds which have been 
reported to the Anti-Corruption Agency. Public  awareness has increased. During the reporting 
period, the chief executive officer s of five independent agenci es have been dismissed or 
demoted on grounds of weak performance and alle ged corruption. Concerns  persist as regards 
sufficient justification substantiating such action.  
Kosovo Police has established its  Directorate against economi c crime and corruption, which 
however needs to operate in a professional manne r free of political interference. The Kosovo 
Customs Service, the correctiona l service and the police have conducted a number of internal 
investigations leading to a range of sancti ons, including suspensions. Additional prosecutors 
have been appointed to the Special Prosecution Office. Within the Special Prosecution Office, 
an anti-corruption task force has been create d. However, EULEX has c ontinued in exercising 
its executive mandate in cases related to high profile corruption cases. The Kosovo authorities 
and EULEX have initiated a number of investig ations, notably the cen tral bank governor, the 
minister of transport and others . Senior officials of  the government have shown restraint in 
this regard. 
The delivery of results in the fight against co rruption on the part of Kosovo authorities needs 
to be improved considerably. The major concer ns still revolve around the work of the public 
sector, procurement, the judiciary and law enfo rcement, with the numbe r of final convictions 
in corruption cases remaining very low. Ther e is no mechanism for tracking investigations, 
indictments, prosecutions and convictions that would ensure transparency on the status of 
corruption cases. The inter-ag ency cooperation on co rruption is insufficient and results in 
inconsistent implementation of legislation, strategies and acti on plans as well as information 
to public. The inter-ministerial working grou p on anti-corruption measures has failed to 
deliver tangible results. The Directorate against economic crim e and corruption in the Kosovo 
Police lacks proper equipment and needs streng thening. Law enforcement agencies need to 
step up considerably their efforts to fight inte rnal corruption, free of pol itical inte rference.  
 
EN 13   EN The legal framework is still incomplete and does not fully comply with European standards. 
Further provisions need to be  adopted to protect whistleblow ers along with legislation on 
liability of legal persons. The La w on conflicts of interest lack s relevant reporting obligations. 
Conflicts of interest cases continue to be la rgely under-reported and not adjudicated. Lack of 
political will and appropriate commitment of au thorities involved in legal drafting resulted in 
unclear legal provisions. The provi sions regulating the system of sanctions in this law and in 
the law on declaration and origin of the property and gifts of se nior public officials are not 
clear enough. Furthermore, the procedure before courts prov ided for in this law is 
cumbersome. Political interference and nepotis m in reappointments, reassignments and 
dismissals need to be avoided. The appeal proce dure before courts provided for in the Law on 
declaration of property and gift s is cumbersome. A track record on implementation is missing. 
In the main, limited progress has been made by key institutions on implementation of  the 
sector-specific strategic objectives. Focused repo rting by key agencies needs to be improved. 
Most of the corruption cases repor ted are related to courts. This is a matter of serious concern. 
Low-level corruption in health or education ins titutions is another concern and impedes equal 
access to services by all citizens. 
In order to step up the efforts in the fight ag ainst corruption, the Kos ovo authorities need to 
dedicate their efforts to establishing a f unctioning system of checks and balances. This 
includes a modern financial control system, tr ansparent accountability mechanisms, vigorous 
methods to address and avoid inappropriate  political interferen ce and nepotism in 
appointments, reassignments and dismissals, pa rticularly in rule of law institutions.  
Overall , some progress has been achie ved in the fight against co rruption. However, corruption 
remains prevalent in many areas and still constitutes a very serious concern. Following the partial revision of the legislative and ins titutional framework, Kosovo still needs to 
demonstrate results in investig ations, indictments, prosecuti ons and convictions in anti-
corruption cases.  
2.2. Human rights and the protection of minorities 
Observance of international human rights law As regard the ratification of human rights instruments , as Kosovo is not a member of the 
UN nor the Council of Europe, it is  not subject to the framewor ks with these international 
bodies for regular reporting and coope ration on human rights (including the European Court 
of Human Rights ).  
However, Kosovo should continue to cooperate  according to ad hoc arrangements and report 
on human rights to UN treaty bodies and Council of Europe mechanisms. Recommendations 
from these bodies should be implemented. 
Limited progress has been made with regard to the promotion and enforcement of human 
rights . Constitutional Court started to play its ro le in terms of protecting human rights and 
fundamental freedoms. Kosovo continued to imp lement the strategy and action plan for 
human rights for 2009-2011.  
However, human rights mechanisms are not e fficiently coordinated both at central and 
municipal levels. It is not a llowing for effective reporting on human rights enforcement. The 
central human rights units remain constraine d by lack of funding and training. Their poor 
 
EN 14   EN inter-action with the ministries' admini stration and poor communication with the 
ombudsperson do not contribute to enhancing awar eness on human rights. At municipal level, 
the human rights units have not re ached a satisfactory level of performance. Most of them are 
marginalised within the municipal stru cture and thus largely ineffective.  
Overall, there has been limited progress in this  area. Both the institutional framework and the 
financial commitment of Kosovo are inappropr iate for implementation of the human rights 
legislation. Ensuring full respec t for human rights is a key Eu ropean Partnership priority. 
Civil and political rights 
The government needs to do more as regards the prevention of torture , allegations of ill-
treatment  and excessive use of force by police and prison staff. St rong efforts are need in the 
fight against impunity . Some positive trends can already be observed. 
In the area of access to justice, there has been  limited progress. The Legal Aid Commission is 
continuing to cooperate with the Chamber of Advocates and NGOs to ensure access to justice 
for all. A Law on legal aid has been adopted. Additional publicity campaigns have been mounted to improve implementa tion of the programme on free legal aid. Five more offices 
have been opened in addition to the five already existing. A legal aid office has been opened in north Mitrovicë/Mitrovica with  three Kosovo Serb employees.  
However, the growing backlog of cases, leng thy procedures, perception of widespread 
corruption within the judiciary, limited capacity of legal aid offices to assist victims in 
criminal proceedings, non-implementation of the Law on mediation, insufficient number of 
judges in the reappointment process, improper conduct of contested civil proceedings and unexecuted verdicts have dented public conf idence in the capacity, professionalism and 
fairness of the judiciary, thereby limiting effective access to justice. 
The Ministry of Justice facili tates access to justice for vict ims (of trafficking, domestic 
violence, etc.) and minorities via a network of  court liaison offices which, however, are not 
fully functional. There are some overlaps with  the Legal Aid Commission. In the north of 
Kosovo, access to justice is still impaired by th e lack of Kosovo Albanian and Kosovo Serb 
judges and prosecutors. EULEX has had to deal w ith the most serious cases, especially when 
suspects have been in pre-trial detention for l ong periods. This leaves a large backlog of cases 
that need to be tackled by local authorities. In other areas inhabited by non-majority 
communities, numerous obstacles stand in the wa y of access to justice. The backlog of civil 
cases includes a large number w ith an inter-ethnic dimension. Th e failure to resolve them is 
also eroding confidence in the judiciary. Finall y, the lack of legal cooperation with Serbia 
leads to denial of ju stice in some cases.  
Access to justice for vi ctims of trafficking, bo th children and women, needs to be improved. 
Various agencies protecting victims and invest igating traffickers need to build up their 
capacity. There is a lack of forensic units speci alising in cases of rape , trafficking of human 
beings and domestic violence.  
Overall, Kosovo has achieved limited progress in this area. A number of  obstacles are still 
limiting access to justice in Kosovo. Kosovo is at an early stage in ensuring access to justice. 
As regards the prison system , a number of security concerns have been addressed and 
material conditions improved in correctiona l and detention centres. Allegations of ill-
 
EN 15   EN treatment and/or excessive use of force by police and prison sta ff have decreased. There were 
a limited number of reports of ill-treatment in the Dubrava detention centre. EULEX has 
started to train the units working there. The Law on execution of criminal sanctions has been 
adopted. A separate space for juvenile female detainees has been allocated. The decision has 
been taken to build the Kosovo Forensic Psychiat ric Institute to address the lack of adequate 
detention facilities for offenders with dimini shed mental capacity. Some progress has been 
made on dealing with prisoners with special need s. The Ministry of Ju stice has continued to 
supervise sentences and community service work  imposed by the court for juvenile offenders. 
The number of reports of ill-treatment a nd excessive use of force has decreased.  
However, overall conditions in prisons and dete ntion facilities continue  to be an issue of 
concern. The cell size mentioned in the Law on execution of penal sanctions does not meet 
EU standards. The Prisoner Escort Unit still cannot perform its task adequately, due to lack of equipment and low security standards. There are no plans for management of the increasing 
number of drug addicts in the prison populati on. Efforts have been renewed to address 
disciplinary issues. However, there have been  reports of unchallenged  misconduct, nepotism, 
corruption and political interference amongst the staff. Oversi ght is inadequate and does not 
allow systematic investigation of claims or protection of whistle-blowers. Alternatives to 
detention need to be used more frequentl y. The range of community-based programmes for 
juvenile offenders continues to be limited and f acilities to imprison j uveniles are lacking. The 
Service has no adequate information system that  can record and provide reliable information 
on the prison population. This impedes the produc tion of statistics, on re cidivism for instance, 
and the definition of working so cial reintegration programmes. 
Most Kosovo Serb detainees remain in the Mi trovicë/Mitrovica detention centre. Only a few 
are in the Gjilan/Gnjilane and Prishtinë/Priština detention centres. These centres are not equipped for long-term correctio nal detention. Cooperation betw een the Service headquarters 
and the Mitrovicë/Mitrovica deten tion centre needs to be improved. 
Overall, some progress has been achieved with regard to correctional f acilities. Kosovo starts 
to address its objectives in this area. 
As regards freedom of expression,  limited progress can be re ported. The Law on access to 
public documents has been adopted. Its implementa tion will be crucial. J ournalists continue to 
receive pressure, including from elected offici als, in reaction to th eir reporting. The media 
structure remains conducive to the strong infl uence by partisan and ownership interests on 
journalists. The Kosovo authorities  remain one of the biggest a dvertisers in the print media 
generating a dominant position over the media. The journalists face difficulties in accessing 
official documents. Professional education a nd training for journa lists is improving. 
Investigative journalism needs to be stre ngthened. Inconsistencies between the Law on 
defamation and insults and the Criminal Code have not been resolved. This creates legal 
uncertainty on the defamation provisions. 
The board of the public broadcaster  RTK has been appointed and is operational. All 
management positions have been filled. Howeve r, a long-term financing model for RTK has 
yet to be found. RTK was on the brink of bankr uptcy and had to be rescued by emergency 
funding from the Kosovo budget. The independence a nd impartiality of RT K are still not fully 
ensured. RTK and the Independent Media Commi ssion remain in dispute about whether RTK 
is fulfilling its commitments on minority broadcasting in terms of hours provided on television and signal co verage for radio.  
 
EN 16   EN Overall, limited progress can be reported on fr eedom of expression. It is not fully guaranteed 
in practice and the media st ructure is conducive to str ong political interference.  
Freedom of association and assembly  has not improved. NGOs participate on an ad hoc  
basis in the legislative process as well as in the work of central admi nistrations. Government 
plans to amend the Law on freedom of associa tion in non-governmental  organisations have 
raised concerns within civil society . Public understanding of the ro le of civil society remains 
low. The latter continues to depend mostly on international funding pr eventing any long-term 
strategy. The monitoring capacity of NGOs  is increasing, but remains limited.  
Overall, no progress can be reported in this area. The environment in which NGOs operate 
needs to be significantly improved. The governme nt does not make sufficient use of civil 
society expertise. 
In relation to freedom of religion , there has been some pr ogress. The transfer of 
responsibility for the guarding of  historical and religious si tes, including Serbian Orthodox 
ones, from KFOR to the Kosovo Police reflec ts a safer environment. The Reconstruction 
Implementation Commission, chaired by the C ouncil of Europe, is progressing on the 
implementation of its mandate to restore 34 or thodox sites damaged in March 2004. A third of 
the works remains to be carried out. The Catholic cathedral construction was completed in 
Pristina.  
However, a small number of religious herita ge sites, including Se rbian Orthodox churches, 
Orthodox and Muslim cemeteries have been va ndalised. The legal framework allowing for 
religious freedom and activities should be adap ted. Religious communities are still required to 
register as NGOs. Some small de nominations claim that they ar e being discriminated against 
by the authorities, including by being prevented to open a cemetery.  
Overall, there has been some progress on freed om of religion. Reconstruction of religious 
sites continues but more needs to be done to r econcile the various religious communities. This 
is a key priority of the European Partnership. 
Economic and social rights 
In the area of women’s rights , limited progress can be reported. The Law for protection 
against domestic violence was adopted. The Agen cy for Gender Equality (AGE) continued to 
facilitate, promote and monito r the implementation of the Ge nder Equality Programme (2008-
2013) eventually approved by the Assembly.  
However, the lack of access to justice for vi ctims of domestic violence remains a problem. 
While criminal law says that crimes of bodily  harm committed in a domestic relationship 
must be prosecuted ex officio , courts often fail to prosecut e them. Undue termination of 
prosecution was frequent. Incomplete invest igations, poor cooperation between police and 
prosecutors and failure to arrest  offenders all increased victims’  vulnerability to recidivism, 
while allowing perpetrators to go unpunished. St aff in institutions assisting victims of 
domestic violence needs training. Their limite d knowledge of the legal framework does not 
allow for appropriate level of legal representation.  
Overall, limited progress can be reported with regard to women's rights. The legal framework 
has been strengthened but the overall enforcemen t of the relevant legi slation remains uneven 
and therefore has a limited impact on women's lives.  
 
EN 17   EN Protection of children’s rights has improved sli ghtly. Progress has been made in the area of 
juvenile justice by adoption of a revised and impr oved juvenile justice co de. This brings better 
standards for implementation by the court and prosecution and probation system concerning 
juveniles and children. Kosovo i ssued its first report on the im plementation of the convention 
on the rights of the child. 
However, implementation of the child rights st rategy and action plan needs more political and 
financial commitment. Children from minorities cu rrently face an even higher risk, with an 
estimated poverty rate of 60%. The social assist ance scheme is not adapted to reducing child 
poverty: the vast majority of poor children live in  households that receiv e no social assistance. 
School drop-out rates, access to justice for ch ildren and child forced begging and trafficking 
remain of concern. Awareness on these problems is low among the public and authorities. 
Efforts to identify and prosecute perpetrators need to be ste pped up. Facilities need to be 
adapted to the needs of juvenile offenders. 
Overall, child protection remains weak. Tangible efforts are needed to guarantee and enforce 
children’s rights. 
Limited progress can be reported on socially vulnerable groups and persons with 
disabilities . The implementation of the Action Plan for People with Disa bilities (2009-2011) 
continued, including monitoring activities. The g overnment promoted the inclusion of persons 
with disabilities by supportin g some projects and at various instances such as the Equal 
Professional Opportunities Days, th e International Day of Persons  with Disabilities and the 
International White Cane Day. The government decided to formalise the sign language. The 
Ministry for Education, Science and Technol ogy has launched the implementation of the 
strategic plan for organising incl usive education for ch ildren with special educational needs in 
pre-university education in Kosovo, 2010-2015.   
Overall, limited progress can be reported in this area. The needs of the socially vulnerable groups and persons with disabilitie s require more commitments.  
In the area of labour and trade unions rights,  the Law on strikes has been adopted.  
Trade unions representing public services orga nised protests during the reporting period, 
affecting the health and educati on sectors, public administration, justice, correctional services, 
mining, fire services, the police and energy utilit ies. All the protests resulted in salary 
increases and, in some cases, improvements in working conditions. There is still no Labour 
law. Labour inspectorates' resources remain poor and do not allow for effective monitoring 
across Kosovo.  
Overall, the labour and social legislation remains inadequate. The adoption of the Labour law 
and the Law on the economic and social council remains urgent. Other challenges are linked 
to the low capacities in this sector. The dial ogue between the trade un ions and the government 
needs to be enhanced ( see also 4.1 Internal Market ).  
The government continued to implement the anti- discrimination Law. It carried out an anti-
discrimination campaign with special empha sis on discrimination on grounds of sexual 
orientation or age. It combined  broadcasts on public  television with a se ries of brochures, 
published in all official languages, each highligh ting common examples of one particular type 
of prohibited discrimination.  
 
EN 18   EN However, implementation and monitoring of anti-d iscrimination legislation need to be further 
ensured. Awareness on lesbian, gay, bisexual and transgender (LGBT) issues remains low. 
Debates on homosexuality are excep tional in the public and private spheres. The high level of 
formal protection provided by law has to be  effectively implemented. (please see on the 
Ombudsperson Law under public administration ) 
As regards  property rights, the actual access to and enjoym ent of property is not fully 
ensured.  
Two local members of the Supervisory Board of the Kosovo Property Agency (KPA) have 
been appointed as well as the Agency's deputy director. 40,855 claims ha ve been recorded, of 
which 26,468 have been adjudicated by the Ko sovo Property Claims Commission. All but a 
hundred adjudicated claims are pending re-notif ication. Implementation of eviction orders 
improved following the signature by the KP A and Kosovo Police of a memorandum of 
understanding for this purpose. UNHCR offices in Serbia were allowed by the Serbian 
government to deliver to the di splaced owners the pending decisi ons affecting their properties 
located in Kosovo.  
However, actual repossession remains a long and difficult process. 414 decisions have been 
implemented, of which 102 have led to physical  repossessions, while 312 have been placed 
under the administration of the KPA. The work  of the Supreme Court panel for appeals 
against contested KPA decisions is stopped until  the appointment of a local judge. Property 
cases continue to be the bulk of the civil cases backlog before the courts, including 
approximately 21,000 compensation claims. Trials in  property cases are often repeated due to 
irregularities, either in the judgment or in th e proceedings. Inter-ethnic property disputes are 
unduly prolonged before the local courts. KPA' s compensation scheme for socially-owned 
apartments has yet to be accompanied by appropriate legislation. There is still no law on sales of apartments where tenure rights exist. Some  land registry books remain in Serbia. Only a 
few municipalities have propert y rights registers connected to  the central land registry. 
Expropriation procedures are sometimes misused for corruption purposes leading to the lack 
of compensation for the owners. 
Overall,  there has been limited progress in the area of property rights. The weak enforcement 
of the property-related legislation is the major obstacle to protect and enforce property rights, 
which is a key European Partnership priority. 
Respect for and protection of minorities, cultural rights 
There has been limited progress in this area. The increased capacities of the Ministry for 
Communities and Return (MCR) and the d ecentralisation process are providing a good 
framework for future improvement ( see also 2.1 ). Many people from minority communities 
continue to utilize parallel services for e ducation, social protection and health care. 
As regard the enforcement of cultural rights , the Ministry for Culture , Youth and Sports has 
formally established the department for cultur al heritage. Its mandate  entails overseeing seven 
regional centres for cultural heritage. The mini stry has chaired a meeting of the forum for 
exchanging technical information on cultura l heritage, raising public awareness on the 
subject. The Council for Cultural Heritage has b een established. The Ministry of Environment 
and Spatial Planning has continued chairing  the inter-ministerial working group on 
implementation of protective zones. 
 
EN 19   EN However, cultural heritage sites are affected by damages, demolition and inappropriate or 
illegal constructions in their vi cinity. The department for cultu ral heritage requires enhanced 
capacities. The integrated conservation strategy ha s not been adopted yet. The Law on cultural 
heritage, which gives the mandate to Kosovo  to oversee protection, preservation and 
promotion of cultural heritage, is  not fully implemented. The list of protected cultural heritage 
sites has not yet been approved. The laws to protect Velika Ho ča/Hoçë e Madhe and the 
historic centre of Prizren have not yet been adopted. Laws regard ing cultural heritage are not 
harmonised with the Law on spatial planning. Only  a few municipalities have finalised their 
municipal development plans addr essing heritage sites. Some construction activities carried 
out by the Serbian Orthodox Church itself go unregulated by local and international 
institutions. The inadequate communicati on between the Serbian Orthodox Church and 
Kosovo institutions contributes to the vulnerability of many religious and cultural heritage sites. The Head of the Greek liaison office in Pr istina, in his capacity as EU facilitator, has 
undertaken constructive effort s to address this issue. Cooperation among the relevant 
ministries needs to be enhanced.  
Overall, there has been limited progress in the he ritage area. Many sites re main at risk and the 
legal framework is weakly implemented and remains incomplete. (see also Freedom of 
religion ) 
Access to education for minority communities has been enhanced. The Ministry for 
education, science and tec hnology organised broad cons ultations on the curriculum 
framework in order to inter alia  provide mother tongue educati on as a subject for Albanian, 
Bosnian, Serbian and Turkish communities as guaranteed by law. The review by the independent commission of the existing curricul um teaching materials in Serbian paves the 
way for the development of a revised curric ulum. The curriculum on Romani language and 
culture has been adopted. The Gorani comm unity families have accepted a compromise 
responding to their needs as rega rd the curricula in use.  
However, learning Albanian or Serbian langu age is not compulsory for the Serbian and 
Albanian communities, respectively. Trainings are urgently needed to ensure the use of new language curricula, which is key to deve lop interactions between communities. 
The Law on the use of languages is increasingl y implemented in the judiciary. A large 
majority of municipalities have adopted the regulations according to the Law.  
However, the decreasing knowledge of the sec ond official language by civil servants and 
employees of public companies raises legi timate concerns. Municipalities and public 
institutions’ websites are not sy stematically providing informati on in all official languages. 
Municipal capacities and resour ces dedicated to im plement the law are scarce. The Language 
commission produced its first report on implem entation of the law; it covers only some 
administrations. The commission's status and res ources are inadequate to meet all its legal 
obligations, in particular to raise awareness on its existence and mandate. 
The minority media fund and its distribution ar e not assessed by any transparent process. The 
situation of minority media has not improve d. Following disconnection of 26 uncertified 
antennae of Telecom Serbia, six attacks were  carried out on legally operating antennae in 
northern Kosovo. Five transmitters were destro yed. Telecom Serbia antennae in the north 
continued to operate as previously. Follo wing a system overload, the Kosovo energy 
corporation disconnected power supplies to th e North. A Serbian company established an 
alternative supply source to this part of Kosovo. However, the Serbian utility has been 
 
EN 20   EN unsuccessful in its subsequent billing and co llection efforts: despite  concerted campaigns, 
these remain at less than 20%.  
There has been little progress towards deeper reconciliation between communities. The status 
of the minority communities remains protected an d guaranteed by law. In general, inter-ethnic 
incidents have been decreasing and limited to sensitive areas. The institutions mandated to 
address communities' concerns are numerous. Th e Ministry for Communities and Return has 
developed its capacities and engaged in a constr uctive collaboration with municipalities. The 
Community Consultative Council meets regularly  and is increasingly consulted by relevant 
executive bodies. 
However, inter-community tensions continue to  hamper a sound reconciliation and integration 
process. The relevant institutions are not properly coordinated and streamlined to address minority concerns. The communities' position share in the public administrations and companies is low. Employment opportunities for minority communities are particularly 
scarce. Integrating communities requires mo re focus and more political commitment. 
In the area of refugees and internally displaced persons , some progress can be reported. 
Since January 2010, more than 1600 members of  minorities returned voluntarily to Kosovo. 
This is a sharp increase in a difficult regional context. The Ministry for Communities and 
Returns strategy was adopted on 12 February 2010. The municipal return officers have been 
given a stable legal status as part of the municipal communities' offices. The government 
allocated some financial resources to facilitate the return process. The government promoted a 
safe and dignified return of refugees and in ternally displaced pers ons. Some pieces of land 
were allocated for long-term use (99 years) for landless returnee families in order to guarantee 
the sustainability of the return  process. The government is c ontinuing to run humanitarian bus 
lines which are used by many members of minority  communities in isolated areas to commute 
to urban areas for basic services and shopping. 
However, some incidents have occurred. Munici pal return strategies are yet to be fully 
implemented. A higher level of s ynergy is necessary between th e frameworks put in place for 
voluntary returns and forced retu rns. Employment opportunities in places of return are scarce. 
Overall,  the returns process remains a challenge for Kosovo’s institutions. Limited access to 
property, delayed property restitution proceedings  and the scarcity of  economic opportunities 
continue to be the main obstacles to sustai nable returns. Many displaced persons are still 
living in difficult conditions. 
As regard the Roma, Ashkali and Egyptian  communities, limited progress can be reported. 
Their situation remains a very serious concern.  
The Office for Good Governance has set up a m echanism to monitor the implementation of 
the strategy for integration of the Roma, As hkali and Egyptian communities. The government 
adopted the operational plan for the resettle ment of families living in Cesmin Llug/ Česmin 
Lug and Osterode lead-contaminated camps. Th e Ministry for Communities and Return and 
Mitrovicë/Mitrovica municipality are constr uctive to resettlement the families. The 
government promoted the civil registration of Roma, Ashkali and Egyptian communities, 
including by offering to register  free of charge. Upon its reques t, Kosovo participated in the 
Roma Decade steering committee as an observe r allowing it to engage with key actors on 
regional Roma issues.  
 
EN 21   EN However, enhanced political willingness is  needed. The living conditions of these 
communities and their access to education, health  care and social protections remain very 
serious concerns. There is stil l no comprehensive plan to regul ate the informal settlements. 
The weak communication between the municipal a nd central authorities prevents them from 
solving the legal status of informal settlements. The lack of civil status registration is a further 
obstacle to access to services. Reintegration of  forced returnees from Roma, Ashkali and 
Egyptian communities is of particular concern (see also migration policies ).  
The authorities need to increase their commitment  to address urgent issu es affecting the lives 
of the Roma, Ashkali and Egyptian communities.  
Overall , there has been limited progress on integrat ion of minority communities. It is a key 
European Partnership priority. 
2.3. Regional issues and international obligations 
Cooperation with the  International Criminal Tribunal for the former Yugoslavia (ICTY) 
has continued. The Court has initia ted a partial re-trial in the ca se against Ramush Haradinaj. 
The Working Group on Missing Persons, bringing together delegations from Belgrade and 
Pristina and chaired by the International Comm ittee of the Red Cross (ICRC), continued to 
meet regularly. Excavation and de-mining works have started on the Bela ćevac and Košare 
sites respectively, where human remains of  Kosovo Serbs are allegedly buried. The 
Government allocated some funds and the support of the Kosovo Security Forces to carry out 
these excavations. The Law on the establishment of the department of forensic medicine 
(previously the office for missing persons and fo rensics) reorganises th e latter and paves the 
way for developing local forensic s capacities. Its mandate in th e field of forensic medicine 
and missing persons operations remains identical.  
However, in August 2010, a to tal of 14,631 persons were stil l missing as a result of the 
conflicts in the regi on. Of these, 10,402 were related to the conflict in Bosnia and 
Herzegovina; 2,392 cases to the conflict in Croatia and 1,837 to the conflict in Kosovo 
according to figures provided by the Internatio nal Committee of the Red Cross. During the 
reporting period, only 48 cases were solved. Progress was sl ow and mainly based on 
information made available from internatio nal archives and Serb ian police and army 
documents. Kosovo is yet to respond to reque sts on gravesite locations. Research has not 
started in Livoq Lake. The Commission on missing persons is performing poorly even after 
additional human resources have been allocat ed to its secretariat. Furthermore, the 
Commission remains exclusively composed of Kosovo Albanians. The issue of compensation 
for the families of missing persons was not addressed. The legal framework remains inadequate; it neither gives a le gal personality to missing pers ons nor recognises the right-to-
know of the missing persons' families. 
Overall, limited progress can be reported; serious  challenges still rema in. It is a complex 
process requiring an enhanced political com mitment, supported by financial and technical 
resources. Unless they are addressed, the i ssue of missing persons will continue fuelling 
resentment, hindering the reconciliation process and adversely affecting the overall political 
climate in Kosovo. 
External representation of Kosovo remains a ch allenge. UNMIK is the signatory, on behalf of 
Kosovo, for a number of international agreements and regional initiatives. Some of the parties 
 
EN 22   EN to these agreements insist that Kosovo be represented by UNMIK. Kosovo stresses the need 
to respect the Constituti on, which stipulates that responsibil ity for international representation 
lies with the Pristina authorities. The authoritie s have stated they are not willing to accept to 
take part in regional cooper ation structures under UNMIK. 
Kosovo has participated regularly in meetings of the Regional Coopera tion Council (RCC). It 
also took part in the EU-Western Balkans Hi gh-Level Meeting held in Sarajevo in June. 
However, Kosovo did not attend the latest RCC Board meeting in September. The Kosovo 
authorities did not organise a meeting of the Central European Free Trade Agreement 
(CEFTA) sub-committee on customs and rules of origin, which Kosovo chaired during the reporting period.  
Kosovo needs to ensure its eff ective participation in  cooperation initiatives, such as the RCC 
and CEFTA to keep pace with regional develo pments. In particular, concerning CEFTA, 
Kosovo needs be constructive in order to ensure the agreement's implementation.  
Kosovo continues to participate in the En ergy Community Treaty, the European Common 
Aviation Area Agreement and the South-East  Europe Transport Observatory without 
obstacles. Kosovo participated in the techni cal negotiations for th e Transport Community 
Treaty, the signing of which has been delayed. 
Kosovo continued to participate as an observe r in the Investment Compact for South-East 
Europe, which is designed to improve the inve stment climate and encourage private-sector 
development in the region. 
The demarcation between the territories of Kosovo and the former Yugoslav Republic of 
Macedonia  as well as Kosovo and Albania  has been completed. Efforts are underway to 
complete the demarcation with Montenegro.  
Overall , regional cooperation remain s a matter of serious concern. An acceptable and 
sustainable solution for the participation of bot h Kosovo and Serbia in key regional fora needs 
to be agreed as soon as possible. This is  essential for inclusive and functioning regional 
cooperation.  
3. E
CONOMIC CRITERIA  
In examining the economic developments in Kosovo, the Commission’s approach is guided 
by the conclusions of the Eur opean Council in Copenhagen in June 1993, which stated that 
membership of the Union requires the existe nce of a functioning market economy and the 
capacity to cope with competitive pressure  and market forces within the Union. 
3.1. The existence of a functioning market economy 
Economic policy essentials In April, the government of Kosovo adopted its medium-term expenditure framework 
(MTEF), covering the years 2011-2013. In July, an  agreement was reached with the IMF on 
an 18-month programme supported by a €109 million Stand-By Arrangement (SBA). 
Subsequently, the MTEF’s fiscal scenario was updated and brought into line with the IMF 
agreement. The fiscal deficit targets for 2010 and 2011 did not change substantially but 
revenue and expenditure estimates were adjusted and made more realistic. Some new 
 
EN 23   EN legislation is submitted to the government with  no link to the MTEF. The fiscal surveillance 
mechanism with the European Commission con tinued with meetings being held on a bi-
annual basis. Overall , political consensus on the fundame ntals of market-oriented economic 
policies has been maintained. However, th e consistency of policy formulation and 
implementation needs to be reinforced and th e link between policy priorities, structural 
reforms and public expenditure remained weak. 
Macroeconomic stability 
The international economic and financial crisis ha d a limited impact on Kosovo’s economy. 
The main effect has been a drop of remittances, and reduced external demand and prices for Kosovo’s main exports. Real GDP growth dece lerated from 5.4% in 2008 to 4.0% in 2009. In 
2008, growth was driven by government investme nt and private consumption. However, in 
2009 and the first half of 2010 growth was almo st entirely driven by government consumption 
and investment. Private consumption grow th was subdued at 2.1% in 2009, whereas 
government consumption grew by 16.4%. Neverthele ss, their shares in GDP remained almost 
unchanged, at close to 95% and 18%, resp ectively. After more than doubling in 2008, 
government investment continued to grow ro bustly by over 30%, reaching about 10% of 
GDP, while private investment recovered from a slump in the previous year and expanded by 
a real 5.0% in 2009. The donor sector contin ued to wind down its share in the economy. 
Imports of goods and services grew by a real 3.5% and declined in no minal terms due to a 
strong price effect. Exports decreased by 1.8%, mainly because of reduced foreign demand 
and lower international prices for base metals  and articles made from  base metals. Though 
their availability improved some what over the year, economic stat istics still remain weak and 
do not allow a comprehensive assessment of the economic situation in Kosovo. GDP per 
capita
3 reached €1,790 in 2009, equal to 7.6% of the EU-27 average compared with 7.1% in 
2008. Overall , Kosovo’s economic growth was mainly driven by increased government 
expenditure. There are growing risks to the sustainability of this growth profile. 
Exports of goods started to recover in the final months of 2009 thanks to the reopening of the 
second production line of Ferroni keli, the lead and zinc mini ng and processing company, 
which is Kosovo’s biggest exporter. For the whole year exports reached 4.2% of GDP but 
were still below the 5.1% recorded in 2008. In the first seven months of 2010 exports of goods increased by a nominal 107% over the same  period last year. Imports of goods fell 
marginally to 49.6% of GDP in 2009, down from  50.2% in 2008. Their stru cture has changed, 
shifting from consumption goods to machinery and transport equipmen t, largely linked to 
accelerated public infrastructure  spending. By the end of July 2010, imports of goods posted a 
12.3% nominal increase with more than thre e quarters of commodity  groups registering 
positive growth rates. 
The coverage ratio of exports of goods as a pe rcentage of imports (12-month moving average) 
has increased since it bottomed out at 7.8% in September 2009 and st ood at 12.1% in July 
2010, still extremely low. Compared to a defici t of 43.4% of GDP in 2008, the trade balance 
improved slightly in 2009, posting a deficit of 43.3% of GDP. Fr om January to July 2010, the 
trade deficit increased to EUR 992 millio n compared to EUR 949 million in the 
corresponding period of the previous year, as gain s on the exports side were more than offset 
by increased imports. 
                                                
 
3 A measure using PPP is not available for Kosovo. 
 
EN 24   EN In 2009, the current account defici t (including official transfer s) widened to 16.4% of GDP 
from 15.7% in 2008. The increase in the deficit wa s driven by a lax fisc al policy, poor exports 
of goods performance and by a severe reductio n in the income account, which dropped by 
more than half – from 4.0% of GDP in 2008 to  1.8% in 2009. The main factor contributing to 
the worsening of the income account was the drop in net investment income. Workers’ 
remittances and official transfers totalled 12.9% and 6.4% of GDP respectively. The surplus 
on the capital and financial account (12.7% of GDP) was not enough to cover the current 
account deficit in 2009 and, as a result, reserv e assets declined by €154.0 million. The capital 
account posted a surplus of 2.6% of GDP – a tenf old increase over the previous year, mainly 
because of repayment of World Bank debt with  the help of substantial donor support. Net 
foreign direct investment dr opped by 19% to 7.1% of GDP. Po rtfolio investments (-1.5% of 
GDP) and loans (-1.9% of GDP) turned negative. Net errors and omissions remained 
significant at 2.9% of GDP, illustrating that the ba lance of payments statistics do not capture 
properly all inflows and outflows from the country. Overall , external imbalances remained 
significant and their financing le d to a reduction in reserves as  net capital inflows declined. 
Unemployment in 2009 remained very high an d stood at 45% according to the Labour Force 
Survey. In the first half of 2010, the numbe r of registered unemployed shrank by 0.2% 
compared with the first half of 2009. This drop was driven by the decrease in semi-skilled and 
skilled unemployment, whereas unskilled unemp loyment increased on average by 0.3%. By 
the end of June 2010, unskilled unemployed accounted  for 60% of total regi stered job seekers. 
An estimated 30,000 young people, mostly low-skil led, enter the labour market every year 
without many employment opportunities and chan ces of professional development. Labour 
continues to be Kosovo's most important e xport item which generates an inflow of 
remittances financing a large share of domes tic consumption. Information about the labour 
market remained scarce and doubts about its accur acy persist. Moreover, official data do not 
provide a sound picture of the labour market given the high share of informal employment. 
The time lag between p ublication of labour force survey data and the reporting period has 
been shortened and the latest survey, cove ring 2009, was published in July 2010. There have 
been some positive developments, like increa sed participation and employment rates. 
However, the employment rate was only 26 %, and youth and long-term unemployment 
remained particularly high, at 73% and 82% of  all unemployed. The structure of employment 
shows that labour has shifted mainly towa rds non-tradable sectors – some 17% were 
employed in trade, 13% in e ducation, 10% in administration, 8% in construction and only 
10% in manufacturing. Overall , in spite of positive growth, the economy is not creating 
enough jobs to absorb the young new entrants and reduce pressures on the labour market. Unemployment remains very high.  
Annual inflation in 2009 was negative at -2.4 %. Monthly inflation rates became positive by 
the end of 2009 and since then accelerated to reach 5.9% (year-on-year) in August 2010 when 
there was a pronounced spike due to surging br ead prices. Bread and cereals prices alone 
contributed 2.3 percentage points to the headlin e inflation. By the end of August, the goods 
and services with positive contri bution to inflation had a total we ight of close to 75% in the 
whole CPI basket. The surge in this indicator over the summer months thus reflected more 
broad-based inflationary pressures. Consump tion patterns were focused on tradable goods and 
services, which make up about th ree quarters of the CPI basket. Overall , inflation remained 
volatile, mainly because food and fuel pr ices weigh heavily in the calculation. 
Kosovo is using the euro as official currency and the Central Bank of Kosovo (CBK) has only 
limited policy instruments. The growth in br oad money decelerated from 23.6% in December 
2008 to 11.2% in December 2009 and even tu rned negative after May 2010, following a 
 
EN 25   EN substantial reduction in public non-financial co rporations' deposits. Th e monetisation of the 
economy, measured by the ratio of average broa d money to GDP, increased from 32.4% in 
2008 to 38.0% in 2009. The central bank’s efforts we re directed mainly towards improving its 
supervision of the financial sector. In June , the Law on the Central Bank was revised to 
strengthen CBK’s independence and accountabili ty and open up the possibility of limited 
emergency liquidity assistance. Overall , the monetary framework continued to function well 
and financial stability was preserved. 
The budget deficit increased from 0.2% of GDP in 2008 to 0.8% in 2009. The underlying 
deficit was, however, much higher, rising to about 6.0% of GDP in 2009, if a one-off 
€200 million dividend payment received from Po st and Telecommunications of Kosovo 
(PTK) is taken into account. Total revenue (excluding the PTK dividend) remained unchanged from 2008 at 24.5% of GDP. Total e xpenditure increased by  a nominal 24.1% to 
30.5% of GDP in 2009. Spending on wages and sa laries was up from 5. 9% of GDP to 6.8%, 
driven by salary rises for public employees. As a result of a better execution rate for 
investments and an additional loan to support the Kosovo Energy Corporation (KEK), capital 
expenditure and net lending rose from 7.6% of  GDP to 11.7%. Government deposits at the 
central bank dropped from €414 million (10.8% of GDP) in 2008 to €342 million (8.8% of 
GDP) at the end of 2009. In December 2009, th e Assembly adopted a law on public debt, 
which placed limits on state and municipal borrowing. In no event shall the total debt (guarantees included) exceed 40% of GDP. In 2009, Kosovo assumed obligations towards the 
World Bank, which stood at 6.4% of GDP at th e end of December. Total government debt, 
including recognised international debt and borro wing from the IMF, stood at 6.8% of GDP at 
the end of August 2010. A debt management unit ha s come into operation within the Treasury 
of the Ministry of Economy and Finance. 
In 2010, a dividend payment was received from PTK, of €80 million, af ter the one of 2009. 
By the end of August, the underlying revenue growth, net of dividends, was a nominal 13.4%. 
It was underpinned by a strong performance of border and domestic taxes collection. The 
expenditure growth pattern remained unchange d and capital outlays along with expenditure 
on wages and salaries kept gr owing at double-digit rates. Th e average monthly public-sector 
net wage increased by 16.4% in the first quarter of 2010 comp ared with the corresponding 
period of 2009. Mainly as a result of the one -off dividend payment from PTK, the budget 
accumulated a surplus of €85 million by the end of August. Overall , the budget faces growing 
risks, as expenditure is growing much faster than tax revenue, and is increasingly financed by 
one-off revenue and reduction of accumulated deposits. 
Fiscal planning remained ad hoc , with government expenditu re initiatives already 
substantially departing from budget plans and the medium-term expenditure framework by the 
beginning of 2010. In March, the government aw arded a contract for the building of the 
Vermica-Merdare motorway. This infrastructure  priority had not been included in the 2010 
budget or the MTEF. The project is estimated at about €1 billion (about 25% of GDP) and is 
expected to be completed in four  to five years. In May, in an  attempt to limit fiscal risks – 
notably those stemming from the motorway projec t – and revert to fis cal sustainability, a 
staff-level agreement was reached with th e IMF on an 18-month programme, supported by a 
€109 million Stand-By Arrangement. It was approved by the IMF Executive Board in the second half of July. The fiscal  framework was updated in order to incorporate formally the 
measures agreed under the IMF programme a nd reflect fully the estimated cost of the 
motorway construction. To limit th e deterioration of the budget de ficit, selected excise rates 
were increased with effect from the begi nning of July. The La w on public financial 
management and accountability was amended to  ensure that any spending initiative 
 
EN 26   EN introduced in mid-year budgeta ry reviews in 2011 and subse quent years will be fully 
compensated by credible new revenue measures or  offset by expenditure cuts. As a result of 
the agreement with the IMF, th e 2010 deficit target remained almost unchanged at 3.4% of 
GDP but revenue and expenditure estimates have  been adjusted and made more realistic. 
Overall , policy predictability, consistency a nd transparency remained a challenge. 
Due to Kosovo’s relatively low level of integration into the global economy and lax fiscal 
policy, its economy was largely shielded from the global economic crisis and continued growing in 2009. Economic growth was increa singly driven by government expenditure, 
while external imbalances remained significant. The importance of fiscal policy for maintaining economic stability increased. The pressure on the labour market did not abate and the economy still faces daunting structural problems. Overall , the macroeconomic policy mix 
has been effective in sustaining economic stabilit y but is increasingly vulne rable as a result of 
strong government expenditure growth. 
Interplay of market forces 
The Privatisation Agency of Kos ovo continued the privatisation of  socially owne d enterprises, 
albeit mainly small businesses, with limite d macroeconomic impact. At the beginning of 
2010, the agency started liquidation of socially  owned enterprises for which there is no 
investor interest in privatisa tion. Some progress was made with  the privatisation of publicly 
(State) owned enterprises. The government hired a transaction advisor for privatisation of the 
Post and Telecommunications of Kosovo. The govern ment also hired a tr ansaction advisor for 
privatisation of the distribu tion and supply functions of th e public electricity company 
(Kosovo Energy Corporation). This privatisation and the transaction for the development of 
the new Kosovo power plant have suffered some delays, partly re lated to the energy market 
model to be used. Provisions on concessions, u nder the public procurement law, have not 
been adopted, which affected the legal environment for these companies. Overall , there has 
been some progress with the privatisation pr ocess, especially c oncerning publicly owned 
enterprises. 
Market entry and exit 
Online registration of businesses started in June. The Kosovo Bu siness Registration Agency’s 
register now includes about 45,00 0 active companies (the resp ective number at the end of 
2008 was 67,950) out of a total of around 97,000. In formation on registered companies is 
available online. In 2009, the number of new and re-registered ente rprises was about 7,500 
and remained almost unchanged over the previous  year. A new project to establish one-stop-
shop facilities (22 in total) where companies can obtain various licences at the same time started in eight municipalities. Fees for st arting and closing a business are low, but the 
relatively large number of inactive firms in the business register suggests that the market exit 
regulations and implementation thereof could be improved further. Overall , weak 
administration and the rule of law, unrelia ble energy supply, limited access to finance, 
corruption and poorly defined property righ ts hinder market entry and exit.  
Legal system 
The legal system continued to exhibit poor accessibility and e fficiency, and some areas are 
not covered by relevant courts. There have be en some improvements in enforceability of 
contracts, although informal methods of enforcem ent continue to be widespread. The situation 
regarding property rights remains a cause for con cern. Only a few municipalities have digital 
 
EN 27   EN immovable property rights registers. These are not linked to the central land registry and there 
is a lack of communication between municipal and central authorities. Some land registry 
books remain in Serbia. In general, the inabili ty of authorities to implement legislation 
comprehensively remains a major obstacle to pr otecting property rights . In cooperation with 
EULEX, the Kosovo courts are in  the process of investigati ng several high-level corruption 
cases. Overall , the existing legal framework remain s underdeveloped and its implementation 
remains poor. The difficult and costly legal enfo rcement of contracts and prevalent corruption 
continued to hamper the business environment. 
Financial sector development 
The financial sector expande d by 24.2% in 2009, taking the to tal value of assets to 
€2.8 billion or about 72% of GDP. The banking s ector is still predominant and accounted for 
78.6% of assets, followed by pension funds ( 13.6%), microfinance institutions (4.7%), 
insurance companies (2.9%) and financial interm ediaries (0.2%). The number of commercial 
banks (eight) and pension funds (two) remained the same, whereas another three microfinance 
institutions (taking their numb er to 19) and one new insurance company (making them 11) 
started up activities during 2009. The degree of concentration of the banking system has 
declined but remains high, with  81% of the assets managed by three banks. More than 90% of 
the assets in the sector are handled by banks under foreign ow nership. The net profit of the 
banking sector decreased by 30.5% in 2009, leading to a lower retu rn on average assets (1.4% 
compared with 2.4% in 2008) and on average equity (13% compared  with 24.7% in 2008). 
Non-performing loans increased from 3.3% of total loans in 2008 to 4.3% in 2009 but the 
banking system’s capital adequacy ratio remained at a comfortable 18%. Banks have remained profitable in 2010 as well. Their inte rest income remained buoyant and retained 
profits increased by about 50% by the end of July. Overall , financial intermediation deepened 
at a much slower pace while the banking sector remained stable and profitable. 
Credit activity continued growing in 2009, albe it more slowly in co mparison to previous 
years. Banking sector loans gr ew by a nominal 8.9% to reac h one-third of GDP in 2009 and 
expanded by 11.3% (year-on-year) by end- August. In 2009, credit to non-financial 
corporations grew by 4.6% and credit to house holds by 22.3%. By end-August, the growth of 
credit to non-financial corpor ations decelerated to 4.1%, while credit to households 
accelerated to 28.5%. As a result, the structure of credit has changed and the share of credit to 
households increased at the expense of other non -financial corporations , whose share declined 
by more than 3 percentage points to below 70% . The low level of production and the high 
dependence of the Kosovo economy on imports were reflected in the sect oral distribution of 
loans to private enterprises. The services sector continued to attract most of the credit but its share fell by 7 percentage points in 2009 to 70.7%  of the credit to non-fi nancial corporations 
by the end of the year and continued to fall in 2010. Credit to industry, the energy sector and 
construction has been steadily expanding (47% annual growth in  2009) and reached a quarter 
of all credit to non-financial corporations. Th is trend continued in 2010 and by end-August its 
share was already 28% of all non-financial cor porations' credit. The maturity structure of 
loans improved somewhat and loans with maturity  longer than two years increased to 70% of 
the total loan portfolio in 2009 (up from 62% in 2008). 
After increasing by 20.8% in 2009, growth in de posits decelerated to 11.1% (year-on-year) by 
end-August. Households deposits grew by about  25% and, with a share of 67%, made up the 
majority of total deposits. By the end of 2009, total deposits increased to 45.1% of GDP from 
37.5% in 2008. The loans-to-deposits ratio decreased over the year to 74%, well below the informal benchmark that loans-to-deposits shoul d not exceed 80%, but then rose again to 78% 
 
EN 28   EN in August. The annual average in terest rate spread between loans and deposits dropped from 
10.6% in 2008 to 10.1% in 2009, still very high. Th is decrease was predominantly driven by a 
reduction of 0.4 percentage points in the interest  rate on loans, as there was only a small 0.1 
percentage point increase in the annual averag e interest on deposits.  Nevertheless, average 
lending rates remained high at about 14.4%. The 12-month moving average spread started to 
increase again in 2010, on the back of falling deposit interest rates, and stood at 10.4 percentage points in August. As in the previ ous year, the spread is  narrower for loans to 
households than for loans to non-financial corporations. Overall , commercial banks have 
become slightly more cautious in their cred it expansion and lendi ng conditions remained 
tight. 
3.2. The capacity to cope with competitiv e pressure and market forces within the 
Union 
Existence of a functioning market economy Macroeconomic stability has been preserved but fiscal and external vulnerabilities have been 
increasing. The policy mix is increasingly vulnerable as a result of strong government 
expenditure growth. Unemployment  remains very high, revealing d eep structural problems in 
the economy. Inflation remains volatile, with f ood and fuel prices maki ng a big contribution. 
Poor governance and ad-hoc  policy-making have contribute d to a high level of economic 
uncertainty. Overall , macroeconomic vulnerabilities have  increased and deep structural 
problems continue to hamper the economy. The w eak rule of law, corr uption, high level of 
informal activities, poor infrastructure, and a subsidised and unreliable electricity supply, 
impair the efficiency of market mechanisms.  
Human and physical capital 
Some progress was made in the education sector  with certification of teachers and vocational 
training. A new teacher licensing system is being set up, along with a Board on vocational 
education and training to ensure effective mode rnisation of vocational training institutions in 
Kosovo. However, education is still hampered by financing constraints, lack of adequate 
facilities and poor-quality teaching. The Ministry  of Education is deve loping higher education 
curricula to address demand and skills mismatches on the labour market. Some schools continue to operate on multiple shifts. Their physical condition remains poor as they lack 
appropriate buildings, teaching ma terial and equipment. The rese arch capacity of universities 
and research institutes is still very weak. Overall , little progress has been made towards 
improving the quality of education and ther e are low incentives for lifelong learning. 
Total investment equalled around  26.3% of GDP in 2009, an incr ease over the previous year 
24.4%. Private investment, althoug h increasing in real terms, decreased in absolute and 
relative terms and its sh are in total investment dropped by ab out 10 percentage points to about 
60%. The largest share of public investment  was channelled into  improving the road 
infrastructure. The sudden decision to start a large motorway project led the government to 
reconsider its investment prio rities. In May, an international consortium was selected to 
develop the Pristina Internati onal Airport under a public-private partnership with a concession 
for twenty years. Mobi le telephony penetration increased to  71% and four mobile operators 
(two mobile network operators  and two mobile virtual network operators) are active on the 
market. Broadband penetration stands at 6.4%. Overall , there were marginal improvements in 
the physical capital but the decr ease in private investment to a five-year low as a share of 
GDP could hamper improvement on the supply side. 
 
EN 29   EN Sectoral and enterprise structure 
Kosovo’s enterprise sector remains dominated by micro-enterprises. More than 90% of the 
enterprises employ less than four people. The economic structure is highly concentrated on 
the retail sector, with about half of all ente rprises operating in this  field. A Law on Economic 
Zones has been adopted and the pr ocedure to establish six zones,  one at central and five at 
municipal level, has started. The informal sector  remains large. This is due to weaknesses in 
tax and expenditure policies, as well as in la w enforcement. It reduces the tax base and the 
efficiency of economic policies. As a meas ure to combat the informal economy, the tax 
administration started to issue fi scal numbers and install fiscal  cashiers. Providing a reliable 
electricity supply remains a challenge for pr ivate sector development. Despite some 
improvements in billing and co llection in 2009, about 42% of the energy entering the KEK 
network was not paid for. Overall , there has been almost no change  in the enterprise structure 
and large informalities in the economy persist. The large informal sector remains an important challenge. 
State influence on competitiveness 
Regulatory authorities remain weak. The new la w on mines and minerals as adopted in July 
seriously undermines the independence of  the Independent Commission on Mines and 
Minerals by handing over responsibility for licensing and the appointment of the chief 
inspector of the Mining Inspectorate to the Government. The government  has proposed to the 
Telecommunications Regulatory Authority to pla ce a five year moratorium on the issuance of 
any further mobile telephony lic ences, which, if approved, woul d hurt consumer interests and 
reduce competition in the sector. Budget transf ers and subsidies remained unchanged from 
2008 at 3.5% of GDP. The public electricity co mpany KEK continues to receive substantial 
subsidies from the state budget for electricity im ports and loans for financing its investment 
programme. The government took some first step s to address a number of weaknesses in the 
public procurement system. Overall , the role of the state in the economy has been on the rise. 
Economic integration with the EU 
The openness of the economy, m easured by the value of impor ts and exports of goods and 
services as a ratio to GDP, increased to 70.9% from 68.9% in 2008. Exports to the EU 
Member States showed a steep decline of 24.7%, down from 48% in 2008 to 41.5% of total 
exports in 2009. This was mainly due to lo wer external demand and prices for Kosovo's 
export of nickel. Exports to CEFTA countries declined by 15.3% but their share of total 
exports remained almost unchanged at 32.0% in 2009. The EU and CEFTA countries 
remained the main origin for Kosovo’s impor ts, with shares of 38.7%  (36.4% in 2008) and 
36.1% (37.2% in 2008) respectively. Difficulties related to the recognition of the customs 
stamps hamper trade with some CEFTA countri es. With almost three quarters of the new 
foreign investment inflows in 2009, the EU count ries remain the biggest investors in Kosovo. 
Overall , economic integration with the EU remained low. 
4. E
UROPEAN STANDARDS  
This section examines Kosovo’s capacity to grad ually approximate its le gislation and policies 
with those of the acquis related to the internal market, sect oral policies and justice, freedom 
and security, in line with the Stabilisati on and Association Process and the European 
Partnership priorities. It also analyses Kosovo’s administrative  capacity. In each sector, the 
 
EN 30   EN Commission's assessment covers progress ac hieved during the reporting period, and 
summarises Kosovo's overall level of preparation.  
4.1. Internal market 
4.1.1.  Free movement of goods 
There has been some progress in the area of standardisation . A new Law on standardisation 
was adopted in October 2009, accompanied by a by-law on the functioning of the Kosovo Standardisation Agency (KSA) within the Mini stry of Trade and Industry. New technical 
committees (in which companies participate actively)  have been established in five product areas, 
bringing the to tal number up to fourteen. 
The Kosovo Standardisation Agency is not a member of any European or international 
standardisation organisation. Meanwhile, under  a memorandum of unde rstanding with the 
Ministry of Economy, Trade and Energy of Albani a, the KSA is able to adopt and distribute 
European standards (ENs) within Kosovo. To date, around 2,180 EN- and ISO/IEC-based 
standards have been adopted as Kosovo standa rds, out of which around a third are harmonised 
European standards. The KSA is considered understaffed.  
There has been some progress on conformity assessment . In the reporting period eleven new 
conformity assessment bodies were accredited set up, bringing the total to fifteen. The Law on 
technical requirements for products  and conformity assessment still has to be revised in order 
to take on board the 2008 horizontal acquis  on marketing of products. 
Some progress has been made on accreditation . In addition to the existing technical 
committee for testing and calibration laboratories,  a new technical committee for certification 
and inspection bodies has been set up. A memo randum of understandi ng on accreditation was 
signed with Turkey in November 2009. In N ovember 2009, the Directorate for Accreditation 
in the Ministry of Trade and Industry signed a contra ct with the European co-operation for 
Accreditation (EA). This is a first st ep towards becoming a member of EA. 
There has been some progress on metrology . New administrative in structions cover the 
conversion of measuring groups, au thorisation of entitie s responsible for the technical control 
of vehicles and authorisation of institutions responsible for verification, conformity assessment and official measuring of liquids . A strategy for development of Kosovo’s 
metrology infrastructure for 2010-2014 was a dopted in June. The new Kosovo Central 
Laboratory for Metrology started its operatio ns in March 2010. In addition, a separate 
laboratory for the quality control of precious metals was established. 
There has been little progress on  market surveillance . A new Law on market inspection was 
adopted in July, streamlining procedures and re sponsibilities for market  surveillance based on 
the horizontal acquis  from 2008.  
A new General Product Safety Unit was established in the Market Inspectorate of  the Ministry 
of Trade and Industry, for the time being dealing with the market surveillance of construction 
products, machinery, toys and low-voltage electri cal equipment. The total staff of the Market 
Inspectorate increased and the number of annual  inspection cases went up, albeit from a low 
base.  
There has been some progress in the area of consumer protection . In December 2009, the 
Consumer Protection Programme for 2010-2014 wa s adopted and implementation started. 
 
EN 31   EN This programme aims to stre ngthen the legitimacy of the Council for Consumer Protection 
and its supervisory activities, along with the tr ansparency and accountability of institutions 
responsive to consumers. A Centre for Consum er Protection was esta blished in Pristina, 
where consumers can obtain free advice on co nsumer products and services. Administrative 
capacity remains low. The Consumer Protection Office in the Ministry of Trade and Industry 
employs only one member of staff.  
Overall, there has been some progress on the legal framework. However, approximation with 
the acquis in the area of free movement of goods is limited and the administrative capacity of 
transposition and implementation is insufficient. Considerable efforts are still needed in this 
respect. 
4.1.2.  Movement of persons, services  and right of establishment 
Limited progress has been made in the area of free movement of persons .  
Little progress has been made in reforming the coordination of social security systems. Work 
has started on a strategy framework, but exper tise and resources in this area are lacking.  
Little progress was achieved in the provision of services . A working body for the 
coordination of legislative harmonization has been  established within the Ministry of Trade 
and Services. The legal framewor k is not compatible with the acquis . Statistics on services are 
incomplete, making it difficult to develop policies in this area. The administrative set-up to 
achieve gradual alignment with Euro pean Standards is insufficient. 
Some progress has been made on postal services . The Assembly of Kosovo approved the 
Law on Postal Services, which replaces the la w on Postal Services of 2003. This is intended 
to provide for the establishment of a regulator y authority responsible for postal services. 
There has been limited progress in financia l services. The Law on the Central Bank was 
amended in July. It strengthens its independe nce and accountability, modernise its corporate 
governance and provides a basis for limited em ergency liquidity assistance. The Law on 
Deposit Guarantee Schemes adopted early Octobe r, provides for a coverage level of €2,000, 
which takes into consideration the level of Kosovo's economic development. Staff turnover in 
the supervision of banks has been stabilized  and staff trainings ha ve been carried out. 
Supervision is migrating from a rules base d CAMEL approach (Capital adequacy, Asset 
quality, Management, Earnings, and Liquidity ) to a more forward looking risk-based 
approach. Two Internal Committees were establ ished to assess the existing situation on Basel 
I and Solvency I implementation and develop a roadmap for future Basel and Solvency II Implementation. Consolidate supervision has b een implemented in practice, but the fully 
fledged formal legal base is still missing.  
There have been no particular developments to  report as concerns non-banking fields, the 
securities markets and investment funds. 
There was no progress on right of establishment . Alignment with EU standards on the 
recognition of professional qua lifications is limited.  
Limited progress has been made in the area of company law . A project to establish one-stop-
shops to set up companies continued to be implemented. No progress has been made on 
auditing . 
 
EN 32   EN Overall , preparations in the area of movement of persons, services and ri ght of establishment 
as well as company law are at an early stage.  
4.1.3.  Free movement of capital 
Kosovo already has a very liberal regime concerning capital movements. As regards free 
movement of capital , no restrictions exist on foreign owne rship or investment in the financial 
sector or in other assets. In 2010, foreign direct investment incr eased compared to its level in 
2009 that was a year affected by the global econo mic crisis. Foreign banks manage over 80% 
of the assets in the banking sector. Kosovo do es not have a stock exchange or a financial 
market. 
Some progress has been made on payment systems . The Central Bank Board adopted a 
National Payments Strategy that was develope d in cooperation with  the Government in 
September 2009. The strategy focuses on the in troduction of a real-time gross settlement 
system and, as a part of this, the possible replacement of the current electronic interbank 
clearing system by integrated retail payment system. As con cerns international payments, 
Kosovo is in the process of negotiating an in terim SWIFT code (an ISO 3166-1 user assigned 
code) in the absence of UN membership. 
Overall , the system for capital movements is very liberal, but continued efforts are necessary 
to gradually introduce Basel II risk and capital management re quirements, and to establish a 
legal framework compatible with EU st andards on the free movement of capital. 
4.1.4.  Customs and taxation 
There has been some progress in the area of customs . At the end of 2009, administrative 
instructions were adopted on implementation of the Customs and Excise Code and on internal 
inspection. The Customs Service updated the st rategic operating framework for the period 
2010-2012. This is a key document for the mid-term expenditure framework of the government, given that over 65% of Kosovo’s pub lic revenue continues to be collected at the 
border. In this light, the Customs Service’ s operational independence, free from political 
interference, remains essential.  Cooperation agreements were signed with France, Finland, 
Turkey, Albania and Montenegro. These aim to counter incorrect decl arations of Kosovo’s 
imports and to lead to harmonisation of tr ade statistics with the countries concerned. 
The overall staffing level of the Customs Servic e is progressively increasing until the end of 
2010. The International Unit in the Customs Service has been made responsible for monitoring the progress towards closing the gap vi s-à-vis EU standards, as identified by last 
year’s blueprint exercise. The Customs Servi ce stepped up its efforts to counter corruption. 
The number of staff working on internal a udit increased. Memoranda of understanding on a 
coordinated approach against co rruption were signed with the police, the Tax Administration 
and the Anti-Corruption Agency. In January, a joint customs-taxation action plan against 
corruption was adopted. In addition, the Custom s Service and the Police are stepping up their 
cooperation on integrated border management in order to increase supply chain security. This 
included conversion of the 24-hour customs cont rol room into a national centre for border 
control where the two institutions work together.  
Units of the Customs Service continued to pa trol on all roads, excep t in northern Kosovo. 
This has reduced smuggling. Starting in March,  EULEX tightened up its checks at gates 1 and 
31 in northern Kosovo, using additional camer as and a new network server. The actual 
 
EN 33   EN clearance is done at Mitrovic ë/Mitrovica terminal. The data are shared with the Kosovo 
Customs Service and the Serbian Customs Admi nistration, contributing to ongoing criminal 
investigations on both sides. Ov erall revenue collected by the Customs Service for the first 
seven months of 2010 was around €445 million, i.e. 11% higher than for the same period in 
2009.  
The present IT system is being replaced by the Asycuda World system (Automated SYstem 
for CUstoms DAta, provided by UNCTAD) that  will support amongst others use of the 
integrated tariff of Kosovo. Further work is necessary to ensure compliance with EU IT systems. 
All members of the Independent Review Board ha ve been appointed. The Board needs to take 
immediate steps to deals with appeals by busin esses and taxpayers agai nst decisions of the 
Customs Service and the Tax Administrati on. Since 2008, a backlog of over 1,000 cases has 
built up. 
Serbia and Bosnia-Herzegovi na do not recognise Kosovo’ s customs stamps, despite 
assurances received from the UN SRSG c onfirming their compliance with UNSC 1244/99. 
The Serbian Tax Administration operating in  the north of Kosovo has been issuing 
documentation to Serbian firms in Kosovo which en ables them to sell pro ducts to Serbia. This 
parallel documentation conflicts with the concept of Kosovo as a single customs area in which 
only the appropriate Kosovo institutions ar e empowered to issue such documentation. 
Overall, Kosovo's customs legislation remains larg ely in line with the EU  standards. Specific 
areas requiring attention are the fight ag ainst smuggling and counterfeiting, where 
enforcement capacity needs to be enhanced, as well as further extending checks and supervision to northern Kosovo. The Independent Review Board urgently needs to become 
fully operational and the backlog of cases needs to be reduced. 
There has been some progress in the area of taxation . In January 2010, amendments were 
adopted to the Laws on personal and corporate income tax, clarifying taxation of resident 
versus non-resident persons and firms, avoiding double taxation and specifying tax 
declaration procedures. A ne w Law on VAT entered into fo rce on 1 January 2010, ensuring a 
high degree of alignment with the EU acquis . The VAT registration th reshold was left at 
€50,000, which makes many companies not liable to VAT. In addition, administrative 
instructions were adopted in December 2009 on implementation of the amendments to the 
Law on tax administration and procedures and on integrity standards for the Tax 
Administration of Kosovo that entered into force in 2009. In May 2010 a tax compliance 
strategy was adopted aiming in particular to reduce the opportunities for evasion and 
avoidance, increase early and effective co llection and improve taxpayer education.  
In the third quarter of 2009, the Tax Administ ration started issuing fiscal numbers to 
businesses. So far, 44,000 numbe rs have been issu ed. In this process, more than 31,000 
inactive businesses have been deleted from th e Tax Administration da tabase. In March 2010, 
installation of fiscal cashiers at  businesses started. In preparation for the new IT system, an 
upgrade of the current SIGTAS (integrated system for tax management) system was 
completed in July 2010. Electronic declaration forms for all types of tax are now available 
from the website of Tax Administration. Also, the Tax Administration e-filing system is now 
operational. 
 
EN 34   EN In February 2010, an Office for Strategic Planning and Modernis ation was established in the 
Tax Administration to develop st rategic projects, such as intr oduction of a new IT system and 
of fiscal cashiers, and action to  follow up last year’s EU bluepr int exercise. In the same month 
a new Tax Investigation Unit was set up. In or der to raise th e level of ta x collection, 
automated exchanges of information were esta blished in July 2010 with  the Treasury and the 
Customs Service, along with a debt management t ool that will facilitate  a centralised review 
of debtors. 
The tax revenue was €131 million in the first se ven months of 2010, 13% higher than in the 
same period in 2009. 
Overall , there has been some progress in the ar ea of taxation, in particular as regards 
legislative alignment. However, further effo rts are still needed to ensure effective 
implementation of the legislati on, to enforce tax payments and to reduce the sizeable informal 
economy. 
4.1.5.  Competition 
There has been some progress in the area of competition . The Law on Protection of 
Competition was adopted early October. The purpose of the law is to align Kosovo's 
competition rules with the European Union acquis, in particular by clarifying dominance 
abuse rules and introducing merger rules, and it strengthens enforcement procedures. 
Concerning administrative capacity, the Independent Ko sovo Competition Commission 
continued its activities and investigated severa l suspected breaches of competition rules. Its 
capacity was enhanced by the addition of support staff to the five Commission members. The 
Competition Commission signed a memorandum of understanding with the competition 
authorities of Albania and the form er Yugoslav Republic of Macedonia. 
No progress took place concerni ng state aids. The draft Law on state aid is pending before 
the Assembly, which provides, amongst others, fo r establishment of an independent state aid 
commission for approval of aid. 
Limited progress has been made in the legislative framework. Some progress has been done 
concerning the administrative capacity, and overall, on the capacity to implement anti-trust  
policy. However, overall, the implementation of competition and state aid policy in Kosovo is 
at an early stage. Experienced  and specialised staff are lack ing. Procedures for cooperation 
with other entities involved in competition issues, such as ec onomic regulators, need to be 
strengthened. There is a need for awareness-ra ising to familiarise the private sector with 
competition rules. The Competition Commission needs to be more involved in the competition aspects of privatisation of large publicly owned enterprises (eg, PTK -Post and 
Telecom of Kosovo). 
4.1.6.  Public procurement 
Limited progress can be reported in the area of public procurement. The Government 
presented the draft of a new public procurement law to the Assembly. The law is yet to be 
adopted. Provisions on concessions in the curre nt legal framework diverge significantly form 
the acquis. 
As regards administrative capacity, the perfor mance of the Procurement Review Body has 
been improved by a more systematic publication of  decisions as well as in terms of the legal 
 
EN 35   EN argumentation of decisions. The credibility of  this institution rests on it building an 
authoritative track record of revi ew decisions in both official languages as well as of avoiding 
conflicts of interest resulting from interaction with policy-makers. Credibility also depends on 
the transparency of the work of the Procur ement Review Body, includ ing how decisions are 
reached.  
A new plan for the certification of procurem ent officers has been prepared; permanent 
certificates will be offered to persons who ha ve undergone training in three consecutive years . 
However, procurement officers remain in a weak position and subject to intimidation, 
coordination mechanisms of the main stakeholders  in the public procurement system still need 
further strengthening, in particular  to reduce the scope for corruption. 
Therefore, accountability for procurement pro cesses needs to be broadened to include not 
only procurement officers, but also their supe riors, both at administrative and at political 
levels. Also, training and certifi cation of persons active in the field of procurement therefore 
need to be improved, particularly given the small number of licensed procurement officers in Kosovo compared with the overall budget spent on procurement.  
Other challenges include the high turnover of procurement officer s at both local and central 
levels and monitoring implementation of procurement contracts.  
Many public bodies under the government budget still carry out thei r own procurement 
processes and do not make use of the Public Procurement Agency as the main executing and 
contracting authority, despite the fact that the necessary administrative instruction was issued 
in June. In the cases of basic goods and servic es, if this agency were to implement more 
framework agreements and organise procurem ent government-wide, budget resources could 
be used more efficiently than when each organisation carries out  its own individual 
procurement. 
The value of public procurement contracts awar ded remained at the same level in 2009 on 
around 20% of Kosovo’s GDP. Open procedures increased to account for 85% of the total value of signed contracts in 2009 and negotiate d procedures decreased to 11%, with other 
procedures being used very marginally.  
The Auditor General recommended strength ening the monitoring and follow-up of 
procurement activities, including actions aimed at  helping to ensure th at oversight agencies’ 
recommendations are implemented  and that officials are held accountable for their actions. 
Overall , Kosovo needs to improve the legal fram ework in the field of concessions, to 
strengthen the position of public  procurement officers vis-à-vis their hierarchy further, to 
increase training in or der to have independent  procurement experts in key positions and to 
reinforce regulation of the cont ract implementation phase of th e public procurement process. 
Administrative capacity and coordination mechanis ms of the main stakeholders in the public 
procurement system still need further strengt hening, in particular to  reduce the scope for 
corruption. 
4.1.7.  Intellectual property law 
There has been limited progress in the area of intellectual property rights . The IPR Strategy 
and Action Plan 2010-2013 was approved in June.  
 
EN 36   EN There has been some progress concerning copyrights and related rights. A Law on the 
protection of topographies and integrated ci rcuits was approved in June. The Office for 
Copyrights was set up in June 2010 but is not fully  operational yet. Th e existing Copyright 
Law needs to be amended to furt her align it with EU standards. 
There has been limited progress in the area of industrial property rights . Three draft laws 
are pending before the Assembly, concerning Patents, Trademarks and Industrial Design. 
aimed at ensuring a higher degree of compliance with the acquis , the TRIPS Agreement and 
other international sta ndards. An electronic trademark, desi gn and patent registration database 
was established replacing the paper-based system. 
The capacity to implement patent, trademark a nd industrial design legislation remains low, 
despite an increase in the staff of the Offi ce for Industrial Property. Registration of trade 
marks, patents and industrial designs increased , but not enough to cope  with the high number 
of requests. 
Some progress took place concerning  enforcement of intellectual property rights. In January 
2010, the Law on customs measures for the prot ection of intellectual property rights was 
adopted, followed by an administrative instruc tion to implement it. The staff working on 
intellectual property rights in the Customs Service increased subs tantially, ensuring a 
presence of intellectual property rights offi cers at every customs point. High levels of 
counterfeiting and piracy pers ist. However, the administrative capacity to implement 
intellectual and industrial prop erty rights remains insufficien t and implementing provisions 
are still needed. The responsibil ities of the various bodies dea ling with enforcement, along 
with the division of responsib ilities between them, are not clearly defined. Awareness of 
issues relating to intellectual property rights needs to be rais ed both inside the government 
and among the population at large. 
Overall , the framework of industrial property rights legisl ation has yet to be finalised. Some 
progress has been made concerning legisla tion and administrative capacity. However, 
enforcement remains very weak. significant efforts are needed on enforcement and public awareness-raising. Kosovo’s intellectual propert y rights system remains at an early stage. 
4.1.8.  Employment and social polic ies, public health policy 
Kosovo has made limited progress towards the a lignment with European standards in this 
sector.  
Kosovo has adopted a sustainable employment  development programme aiming at the quick 
creation of employment through a public work s programme. It adopted its employment 
strategy 2010-2012 including an operational pl an and a Youth Action Plan. The Law on 
vocational training, re-training and employment of people with disabilities was adopted. The 
registration of unemployed people was impr oved, including among women, Roma, Ashkali 
and Egyptians and persons with disabilities. Th e Ministry of Labour and Social Welfare has 
mediated in the employment of 524 jobseeke rs from all minority communities including 
Roma, Ashkali and Egyptian communities as a measure to positively impact the labour market. 
However, employment policies require more commitment from the government. The public 
employment service has low capacities. The capac ity-building plan for the ministry and the 
public employment service still needs to be a dopted. The social partners are poorly involved 
 
EN 37   EN in employment policies and measures. The labour market is underdeveloped with a substantial 
informal segment. Participation and employment rates remain dramatically low. Unemployment remains persistently hi gh especially for women and young people. 
Unemployment duration is extreme and the bul k of unemployed are fully disconnected from 
the open labour market. There are limited incentives for jobseekers and employers. 
Disadvantaged groups deserve more attention. 
Limited progress can be reported as regards social policies . The White Paper on social 
policies has not been adopted leaving Kosovo w ithout strategic prioriti es in this area.  
The legal framework remains weak and inade quate to face the prac tical challenges. In 
particular, the Labour Law  still needs to be adopted. 
There has been limited progress in the alignmen t with European standards in the area of 
health and safety at work . The labour inspectorate needs to imp rove its capacity for effective 
monitoring of implementation of relevant legislation. The new municipalities are not covered 
by labour inspectors.  
The social dialogue was improved with the adoption of th e Law on strike. However little has 
been done in the area of social  dialogue. Due to the lack of La bour Law as an essential legal 
act, the adoption of other fundamental pieces of  legislation, such as the trade union Law and 
the Law on the socio-economic council have been  postponed. Clear criteria for participation 
in the latter have not been established yet.  Trade unions of the public services organised 
protests during the reporting period. 
In the area of equal opportunities some instruments to promote women's rights are in place, 
but progress in actual achievement of gender equality and law enforcement needs to be 
furthered. Women's participation in the labour market remains extremely low and 
representation of women in decisi on-making remains a challenge.  
There has been limited progress in the area of social inclusion  including anti-discrimination  
(see also 2.2. ). The decentralisation of home care services has con tinued to show no progress. 
The legal framework necessary to regulate effective provision of th ese services is still at the 
drafting stage. The services are still mainly provided by civil society organisations. The Council for Social and Family Serv ices, the enti ty responsible for licensi ng providers of social 
services, is not fully functional – its financ ial and operational struct ure are not regulated 
properly and the necessary legal framework is  not available. A first seminar on social 
protection and social inclusion between the Commission, the authorit ies and civil society 
representatives took place in September 2010. Lack of employm ent opportunities is an overall 
challenge that impacts negativel y on social inclusion. Adequate  actions to address social 
inclusion of specific groups includin g Roma returnees are still lacking. 
As regards social protection,  the non-existence of a health insurance law and, hence, health 
insurance system puts additional constraints on  average Kosovo families. Many health care 
services need to be financed directly by the citizens instead of being covered by an insurance 
scheme.  
However, it seems that the main financia l mechanisms under this law are based on the 
contributions from formal employment , which is fairly low in Kosovo.  
 
EN 38   EN There has been limited progress in the area of p ublic health. The Ministry of Health endorsed 
the new health strategy (2010- 2014) in 2009, focusing on reducing morbidity and mortality by 
improving the quality of health services. The poor quality of health data at central and 
municipal levels and the parallel Kosovo- Serb systems remain obstacles to policy 
development. The Ministry of Health needs to  clearly specify budget allocations for mother 
and child health care. Under the mid-term expenditure framework for 2011-2013, financial resources will be focused on infrastructure and re construction, while very  little is budgeted for 
primary health care and prevention. Maternal and child health in Kosovo is considered the 
poorest in Europe and neighbouring countries. The infant mortality rate is considered to be 
between 35 to 49 per 1,000 live birt hs. In the north, lead contamin ation is still threatening the 
health of all citizens living close to the contamin ated areas. Overall, the health sector remains 
very poor and strongly needs greate r attention from the authorities. 
Overall , little progress can be reported in the employ ment, social policies and public health 
sectors. Poor administrative capacity and the l ack of an adequate legal framework remain 
serious obstacles to enhancing these sectors. 
4.1.9.  Education and research 
Some progress can be reported in the field of education  concerning the alignment with 
European standards. Extensive consultations ha ve taken place with a view to modernise both 
the Law on pre-university education and the Law on higher education. The Ministry for 
Education, Science and Technology has led the process to design the new curriculum 
framework. The government adopted a stra tegy for health promotion in schools. 
The National Qualifications Authority (NQA) ha s been established. The acting director was 
appointed as well as four staff and its board. The Council for Vocational Education and 
Training (CVET) has become operational. Kosovo has further addressed the multiple-shift issue, which requires continued attention and re sources to build additional school facilities. 
However, resources at municipal level remain  poor hindering the enforcement of key legal 
provisions under municipalities' responsibility. Pre-service trai ning is currently limited to a 
faculty that requires modernisation. Teacher li censing and the new curriculum framework will 
call for significant investment in institutional development of pre- and in-service teacher training.  
CVET experiences limitations in its capacity and f unctionality. It needs to  step up efforts to 
effectively modernise vocational training institu tions, in particular to train students in line 
with labour market demands, European stan dards and Kosovo qualifications framework. 
Qualifications requirements in the VET sector ar e not sufficiently linked with those of general 
and higher education. 
Kosovo has developed and adopted its first su bject curriculum for the Romani language, 
history and culture for primary schools. A series of public debates have been held to promote 
and raise awareness about it. Teaching material is in use for the Romani, Bosniac and Turkish 
subject curricula.  
However, the textbooks in Romani are not av ailable yet. Minority communities are often 
negatively portrayed in hist ory textbooks. (See also under political criteria, cultural rights ) 
 
EN 39   EN Research  has been made a priority. The research  council has developed the National Strategy 
for Science for the coming five years aiming at gradually increasing investment in research 
and stimulating cooperation with industry and EU  and international part ners. As international 
cooperation partner, research ent ities have the possibility to a pply for research projects under 
the Seventh research framework programme . Kosovo has organised some information 
sessions on FP7 and nominated FP7 contact poin ts. The ministry has established a fund for 
scientific research allocating 1 million euros to key areas for the economic development. 
Overall , some progress can be reported concerning the alignment with European standards on 
education and research. However, all effort s need to be affordable and coordinated. 
Management capacity is weak, the ability to st eer the education process at local level too. 
Quality control, minority inclusion and teaching curricula are all issues that need to be 
addressed. Efforts to strengthen the research capacity are necessary to ensure implementation of the national strategy. 
4.1.10.  WTO issues 
Kosovo is not a member of the WTO and has taken no formal steps to join it. 
4.2. Sectoral Policies 
4.2.1.  Industry and SMEs 
Some progress has been made in the area of industry and SMEs . 
The business register now includes some 45,000 ac tive companies. Information on registered 
companies is automatically made available online. From June, online registration of businesses became possible. A one-stop shop pilot project started in eight municipalities and 
is being progressively extended. 
Kosovo is committed to implement the Small Business Act for Europe and identified as 
priorities: the promoting entrepreneurship, improving online access for SMEs and benefiting 
more from the single market. In the ab sence of a clear strategy framework for  the 
development of SMEs , the activities of the Ministry of Trade and Industry’s SME Support 
Agency are guided by the Small Business Act. The administrative capacity of the agency 
remains limited. 
In December 2009, the Ministry of Trade and Industry produced the industrial strategy for 
Kosovo for 2010–2013. The main purpose was to provi de a basis for raising the quality of 
industrial policy. The document pr ovides an analysis of Kosovo’ s industrial sectors together 
with ideas to improve their competitivene ss and employment opportunities. The strategy 
envisages a greater role for industry in contributing to GDP , exports and investments. 
However, this strategy was not adopted by the government and therefore contains no 
implementation plan or policy measures. 
Administrative instructions have been drafte d to help with implementation of the Law on 
economic zones. The number of companies ac tive in the Drenas and Mitrovicë/Mitrovica 
business parks increased. 
In the beginning of 2010, investment protecti on agreements were signed with Austria, 
Belgium and Luxembourg.  
 
EN 40   EN The main barriers encountered by businesses in Ko sovo remain the lack of a reliable supply of 
electricity, limited access to finance and insufficient rule of law. 
Overall , the administrative capacity and strategy fr amework for SME development need to be 
strengthened further. Adequa te coordination between strate gies and plans that affect 
development of this sect or is advisable. The newly drafted industrial strategy of Kosovo needs 
to be developed and turned in to effective policy measures. 
4.2.2.  Agriculture and fisheries 
Continuous legislative activity in the areas covered by the Ministry of Agri culture, Forestry 
and Rural Development has led to few texts being adopted by the Assembly. In February, 
amendments to the Law on forests were adopted, reflecting the transfer of responsibilities for 
forestry management to municipal level. Th e draft Law on genetically modified organisms 
has been withdrawn. Planned amendments to the Law on organic farming, to take account of the most recent EU legislation, have still not  been adopted. These amendments are also 
intended to establish Kosovo’s national insp ection and certificatio n bodies for organic 
farming. Certification is current ly performed by two foreign accredited companies. The Law 
on irrigation of agricultural  lands was amended in July. 
A vineyard register has been established. The farm accountancy data network (FADN) was 
further developed. However, the data are not used in policy-making. Collection and 
processing of agricultural trade st atistics need further improvement. 
The Ministry has started to implement the National Agricultural and Rural Development Plan 
for 2009-2013. It introduced a scheme consisting of coupled payments to farmers, in the 
sectors of cereals and livestock, plus assistance for the dairy, fruit and vegetables sectors at 
farm level. To this end, a Payment Unit was established in the Mini stry, responsible for 
receiving and assessing applications for national assistance, actual payment and checks on the 
spot, although selection of the beneficiaries requires further imp rovement and is hampered by 
the lack of a farm register and unclear property titles.  
In February 2010, the government adopted th e forestry development strategy for 2010-2020 
and the accompanying action plan. Priority areas for this strategy include management and protection of forest resources an d developing the forest  industry. Further efforts are needed to 
enhance coordination and transparency between ins titutions on issues such as stone and gravel 
extraction from forest land. Memoranda of unde rstanding on forestry matters have been 
signed by 37 municipalities, who will need to develop the capacity to manage the powers 
devolved to them in this area. The new law in creased penalties for illegal logging, but this still 
remains a source of concern and application of these penalties depends on the capacity of the 
police and courts to prosecute cases. 
In September, the Government approved the regulation on the organisation and competences 
of the Monitoring Board and the Regulation on the establishment of the scientific board of the 
Kosovo Food and Veterinary Agency (KFVA); th e members of both are still to be appointed. 
Also in September, the Government adopted  an Administrative Instruction on the new 
organisational structure and th e functioning of the Agency. A memorandum of understanding 
has been signed between the relevant institutions and the Food and Veterinary Agency for the transfer of several existing cont rol bodies to the Agency. Howeve r, the transfer of inspection 
 
EN 41   EN powers from municipalities to the Agency, as prov ided for by the Food Law, has not yet been 
completed.  
Some progress has been made on setting up the IT infrastructure for Kosovo’s animal 
identification, registration and movement control system. This system is not fully operational. 
Data entry has begun for certain species, but this is still not systematic and some animal births 
and movements are not reported. Controls at liv estock markets are insufficient and the overall 
picture is blurred by illegal slaughtering and animal smuggling. No facilities for processing 
animal by-products exist. A pre-feasibility study for establishing a rendering plant was 
completed. In the meantime, these animal by-products  will have to be dumped in landfill sites. 
Regulations to transpose the EU hygiene packag e have still not been  adopted. The planned 
upgrading of agrifood establishments remains at  an early stage, although progress was made 
on assessing and categorising dairy plants , slaughterhouses and meat processing 
establishments. A group of experts has been  set up to assess the existing agrifood 
establishments in the light of EU practices on hygiene, pr oduction and food handling. This 
assessment is expected to result in a strate gy to upgrade Kosovo’s agrifood establishments. 
The infrastructure and equipment of the pre- selected veterinary border inspection points 
remains poor. 
The Law on plant protection and production needs to be further aligned to EU standards. The 
equipment and staffing at the KVF A laboratory are insufficient for the agency to carry out its 
role. 
Most of the European standards on fisheries  do not apply to Kosovo, which has no marine 
fishing. 
Overall , Kosovo has made limited legislative progre ss in the area of agriculture and food 
safety. Whilst the legal framework needs to be updated, the main ch allenges facing Kosovo 
lie in implementation of laws and strategies, as the administrative capacity in various institutions remains weak, and human resources are not used in most efficient way. Efforts 
should be stepped up to strengthen and ensure  more systematic animal registration and 
upgrade agrifood establishments. 
4.2.3.  Environment 
There has been substantial progress in the area of horizontal legislation , with Laws on 
environmental impact assessment and on Stra tegic Environmental Assessment adopted in 
September, as well as implementing rules on pub lic participation in environmental impact 
assessments. Cooperation between environmen tal NGOs and the ministry continued and 
around 20% of the projects envisaged in the en vironmental action plan have been completed. 
In the field of air quality , some progress can be reported, with the adoption of a Law on 
protection from air pollution and of implemen ting measures to monitor discharges from 
mobile sources. The air quality strategy remains to  be adopted. One of fo ur planned air quality 
monitoring stations came into operation. The air pollu ters’ inventory remains to be compiled. 
No progress has been made on defining institutio nal roles and responsibi lities in this field.  
 
EN 42   EN There has been limited progress in the area of waste management . The new Law on waste 
providing for decentralisation of powers in this  area and for further alignment with EU 
standards remains to be adopted . Additional implementing legislation has been adopted. 
Establishment of an integrated waste manageme nt system has not begun. The ‘polluter pays 
principle’ is still insu fficiently applied and the bill collec tion rate by waste utilities remains 
low.  
With regard to water quality , little progress ca n be reported. A new Law on water which 
should regulate the ownership of water resources and the responsibilities of municipalities for 
water management and establish river basins an d a Kosovo water institute has still not been 
adopted. A feasibility report on the quality of  drinking water was completed, recommending 
establishing a drinking water quality department within the National Institute for Publish Health. There is a clear lack of  human resources in this field and insufficient investment in 
infrastructure: there is only one waste water treatment plant in Kosovo. Only 70% of the 
population are connected to drinking water main s and only a third to sewage systems. Bill 
collection rates for the water utilities decreas ed. The institutional responsibilities for dam 
management are not clearly allocated. The safety  of large infrastructure, such as dams, dykes 
and water intakes, requires appropriate mana gement and monitoring that is not properly 
ensured at the moment. 
Further efforts are needed to enhance coordina tion and transparency between institutions on 
the licensing and control of stone and gravel extraction from river be ds (following damaging 
extraction from the River Drin i i Bardhe) and from forest land (at Novo Brdo, a UNESCO 
protected site).  
In the field of nature protection, a Law on nature protection was adopted in September. 
Some activities have been carried out  to identify important bird areas.  
Some progress was made in the area of industrial pollution cont rol and risk management  
with the adoption of a Law on integrated pol lution prevention and control. Implementing 
legislation remains to be adopted. 
No progress can be reported in the areas of chemicals  and civil protection. In the area of 
noise , some  administrative instructions were a dopted to implement the Law on noise 
protection. 
In the area of climate change , Kosovo is not a party to either the UN Framework convention 
on climate change or to the Kyoto Protocol. Kosovo has no climate change strategy and has 
not established a greenhouse gas in ventory. It continues to have a lack of resources and staff 
shortages. Implementation of climate ch ange legislation remains problematic.  
As regards administrative capacity , some efforts have been made to improve coordination 
between ministries and bodies with environm ental responsibilities. The administrative 
instruction bringing the Hydro-Meteorological In stitute under the remit of the Environmental 
Protection Agency has not been signed. The ad ministrative departments responsible for the 
environment continue to experience an acute l ack of resources. The budget of the ministry is 
the lowest of any ministry in Kosovo and d ecreased compared with 2009 (as a result of 
funding cuts to secure financing for the rout e 7 road building programme). Staff shortages 
 
EN 43   EN make it difficult for the Ministry and the Agen cy to carry out their responsibilities. Some 
duties have been transferred to  the municipal level, but muni cipalities often lack staff and 
expertise. The authorities have made a commitme nt to involve civil soci ety in the process of 
harmonising legislation with acquis , however this is not fully ensured.  
Overall , alignment with EU environmental standa rds is still at an  early stage although 
progress can be observed in adopting legi slation. In addition, implementation and 
enforcement of environmental legislation remain  problematic. Further efforts are needed to 
establish effective administrative and institutional infrastructure and to improve channels for coordination between institutions with environmen tal responsibilities at all levels and with 
civil society. Billing and collection rates fo r water and waste utilities need to improve. 
Investment in the field of the environment, in particular in environmental infrastructure, remain to be considerably increased.  
4.2.4.  Transport policy 
There has been some progress on trans-European transport networks . Kosovo continued to 
participate actively in implementing the 2004 memorandum of understanding on development 
of the South-East Europe Core Regional Tran sport Network and in the South-East Europe 
Transport Observatory. Work ha s started on Kosovo’s main ro ad infrastructure project, 
construction of the highway from the Albanian  border to Pristina. However, the size and 
scope of the project is not proportional to the fo recasted traffic flows, and the cost of this 
project has led to budget cuts in  other ministries and insufficien t resources have been set aside 
for routine road maintenance. 
In the area of road transport , there has been some progress in building the capacity of the 
Transport Planning Unit within the ministry. Ho wever, the ministry continues to be heavily 
involved in the practical aspect s of road management rather than focusing on developing 
strategies and policy. Th e Department of Road Infrastructure  is being reorganised to draw a 
clearer distinction between maintenance and su pervision and road network development. In 
the run-up to the Transport Community Treaty, b ilateral agreements on access to the transport 
markets of Albania, Bulgaria and Turkey ha ve been signed. A multi-annual action plan for 
road safety was adopted in May; an action plan  will need to be prepared to implement the 
strategy. The Road Transport Inspectorate n eeds to be strengthened. Due to a number of 
constraints linked to status (and not being able to join the A ETR), Kosovo has not been able 
to implement the digital tachograph. 
Some progress can be reported in rail transport . A consolidated law c overing all aspects of 
the rail sector is being drafted, with a view to attracting investment  in the railways and 
opening the rail market. The rail ways regulatory body is not yet operational. The president of 
its board has been appoin ted, but the Director-General has still not been selected. The legal 
act separating the infrastructure and operati ons sides of Kosovo Ra ilways (KR) has been 
signed. The legal documents for unbundling Kos ovo Railways into a railway undertaking and 
an infrastructure manager is underway is und er preparation. In para llel, the 2012 network 
statement is being prepared. 
The agreement with the former Yugoslav Repub lic of Macedonia on railway border crossings, 
based on the harmonised regional model prepared by the SEETO, is in the final stages of the 
procedures in the two foreign ministries. The passenger transpor t fleet has been modernised. 
 
EN 44   EN Rail freight transport increased by 11% in 2009, mainly thanks to increased trade from 
Kosovo’s biggest exporter, the nickel producer  Feronikeli. KR posted positive financial 
results thanks to strict cost management and the improvement in  freight traffic (and despite 
rail transport not being a governme nt priority). Howeve r, the railway sector  suffers from the 
lack of qualified personnel and managerial independence. 
As a land-locked country w ithout a fleet, most of the maritime transport acquis  will not 
apply to Kosovo. An update of the multi-modal strategy was adopted in December. This will 
be followed by separate sector al strategies. There has be en no progress as regards combined 
transport . 
There has been significant progress on air transport . Substantial legislation under the 
European Common Aviation Area (E CAA) Agreement has already been transposed and full 
implementation of the first transitional phase  of the Agreement might be possible by the 
beginning of 2011, provided efforts continue in  all areas, including state aid and working 
time. The national aviation security and quality control programmes were adopted in December 2009. Progress continued in the air tr affic management field where the single 
European sky legislation has been transposed to  a high degree. Further efforts are needed to 
complete regulatory alignment with the single European sky within the ISIS Programme. The 
government needs to strengthen capacity and attr act professionals on air transport regulation 
and on implementation of aviation sta ndards to meet ECAA requirements. 
In May, an international consortium was selected to develop Pristina international airport 
under a public-private partners hip with a twenty-year concession. An Aircraft Accident 
Investigation Commission has been establishe d in the Office of th e Prime Minister. In 
December, the Ministry of the Interior adopted a National Civil Aviation Security 
Programme, establishing practices, procedures and regulations to protect the safety of 
passengers, crew and ground personnel in Kosovo. 
Overall , there has been some progress on investme nts in existing and new roads. However, 
the transport infrastructure remains underdevelope d. The contract to build route 7, signed this 
year, is so big that it is crowding out invest ment elsewhere. Developments in aviation have 
been positive. The Ministry of Transport and Communications does not ha ve the capacities to 
deal with all matters in the transport sector, a nd the slow establishment of regulatory agencies 
is hampering Kosovo’s implementation of EU sta ndards. Extra efforts need to be made to 
increase road safety and development of the ra ilway sector need to be given higher priority. 
 
EN 45   EN 4.2.5.  Energy 
The energy sector continues to face serious pr oblems. The low level of electricity billing and 
collection continues to put a st rain on the electricity utility’ s finances. Electricity supply 
therefore remains uncertain in Kosovo, with  power cuts still occurring frequently. 
The government’s energy strategy for 2009-2018 was adopted in April. The main pillars of 
the strategy consist of security of suppl y, restructuring the sector, developing and 
rehabilitating generation capacity, developi ng transmission and distribution, promoting 
foreign investment, promoting energy efficiency  and renewable energy use and developing 
gas infrastructure. 
There has been no development in the past year regarding security of supply.  There is no oil 
stocks  law or strategy; the level of Kosovo’s oil stocks is unknown. As a result of obstruction 
from Serbia, Kosovo’s electricity transmission system operator (KOSTT) continues to find it 
difficult to participate as an equal partne r in regional commercial mechanisms. Losses 
incurred as a result are passed on to cons umers. KOSTT has filed a complaint against EMS 
(the Serbian Transmission System Operator) with the Energy Community Secretariat. The 
Energy Community Secretariat; in its preliminary view, considers that EMS ‘failed to fulfil its 
obligations under the Energy Community Treat y. With the support of EU and other donors, 
the operator has made good progress on increas ing the transmission network capacity and 
network security. However, pending resolution of  its dispute with Serbia, the operator cannot 
participate in the regional mechanisms. 
Progress was made regarding the internal energy market and implementation of the Energy 
Community Treaty (ECT). Plans for developm ent of the new Kosovo power plant (lignite 
power development project) have been reconfigure d. The initial installed capacity will be two 
units of 200-300 MW, the Sibovc lignite fiel d will be developed immediately and 
participation in the Kosovo B power plant will be included in the package to be offered to 
investors with a view to refurbishment. Th e legal unbundling of the distribution and supply 
functions of the Kosovo Energy Corporation (KEK ) is due at the end of 2010 with a view to 
privatisation. Until completion of the new Kos ovo power plant project, the other functions 
will remain integrated in KEK. KEK’s billing and collection rate remains very poor. As well 
as very high technical and commercial losse s, in 2009 KEK collected the payments for only 
65% of the energy which it supplied, resulti ng in a loss of some €36 million. The volume of 
cash collected has increased. However, this is partly offset by an increase in electricity 
supplied. Low levels of bill collection (and non-cost-recovery tariffs) continue to fuel an 
unsustainable growth in power demand. 
A study and action plan for the decommissioning of the operati onal unit of Kosovo A were 
finalised in March 2010. Kosovo has established a number of working gr oups to prepare this 
closure, which the Prime Minister has committe d to achieve by 2015 in order to comply with 
the Large Combustion Directive. 
A package of three laws (on energy, on electri city, on the energy regulator) was adopted in 
October. The package was preceeded up by exte nsive discussions with Kosovo’s partners on 
the market model to attract private-sector i nvolvement in generation, distribution and supply. 
The new laws also aim to align Kosovo’s legisl ation with the EU's s econd internal energy 
market package although that alignment will require implemen ting legislation and 
 
EN 46   EN strengthening the role of the regulator. The ne w market model foresees private ownership in 
generation and supply with the aim to allow more  players on the Kosova n electricity markets. 
A new Framework Law on natural gas was adopt ed in November. Although Kosovo does not 
have a gas market, government policy is to promote participation in regional gas supply 
projects with a view to br inging pipeline gas to Kosovo.  
A significant drop in import prices and ongoing gove rnment subsidies to KEK led the Energy 
Regulatory Office (ERO) to maintain existing electricity transmission and retail tariffs. 
However, a gradual increase in tariffs is require d to reflect actual cost levels and to attract 
private investment in the dist ribution and supply functions. A gr adual decrease in government 
subsidies would facilitate this process. The institutional and legislative capacity of both the 
ministry and the regulator need further st rengthening. Attracting and maintaining qualified 
staff remains a problem. 
In the area of energy efficiency and  renewable energy, the energy efficiency law has still 
not been adopted. As well as aligning with the acquis  on energy labelling, ecodesign, energy 
performance of buildings and energy end-use e fficiency, the law is in tended to provide the 
legal basis for establishing an energy efficiency agency and to lay down the procedures for 
setting up an energy efficiency fund to promot e projects on energy effi ciency and renewable 
energy sources. The ministry has prepared a draf t national energy efficiency plan covering the 
period 2010-2018, aiming to increase efficiency by 9% by 2018.  
As regards renewable energy, pr eparations are under way to put out to tender the Zhur 
hydropower plants. The first three wind turbines in Kosovo, with a total capacity of 1.35 MW, 
have been authorised by the re gulator, which also received seve n applications to build wind 
turbines in Kosovo. The regu lator has adopted competitive feed-in tariffs for small 
hydropower and new wind energy. Ho wever, further efforts need to be made towards creating 
a regulatory environment favourable for the use of renewable energy sour ces in all the sectors 
required by the EU renewable energy acquis. Regulatory measures a nd support actions need 
to aim at promoting the use of renewables for all energy purposes. 
In the area of nuclear safety  and radiation protection,  the Law on protection from non-
ionising radiation, ionising radi ation and nuclear security was a dopted in February. It provides 
for establishment of a radiation protection agen cy by the Ministry of Environment and Spatial 
Planning. This has not yet happened. In additi on, the law is of a very general nature: 
transposition of the EU nuclear safety and radiation protec tion acquis into na tional legislation 
and regulations in the nuclear fiel d has therefore not yet started.  
Overall , Kosovo has finally made some progress on le gal alignment, and ha s tried to reconcile 
the need to meet Energy Community Treaty ob ligations with attracti ng private investors. 
Major challenges remain to be addressed in connection with implementing energy laws and policies include enforcing electricity paymen ts, managing demand while  aligning tariffs to 
costs, and creating conditions for foreign investment in Ko sovo’s energy industry as a 
foundation for economic growth. 
4.2.6.  Information society and media 
There has been little progress as regards electronic communications and information 
technologies . The Telecommunications Regulatory Au thority (TRA) adopted its 2010 work 
 
EN 47   EN plan in January. The Ministry of Transport and Telecommunica tions has developed a strategy 
and action plan to create an internet exchange  point. Kosovo has neithe r an internet country 
code top-level domain name nor an international dialling code. 
The regulator adopted a Regulation on carrier sel ection and carrier pre-selection and also the 
Regulation on radio stations for which a fre quency spectrum licence is not required. Fixed 
telephony penetration, with two licensed operato rs, is still low at 5%. Mobile telephony 
penetration was 71% (at the end of 2009) with four mobile operators (two mobile network 
operators and two mobile vi rtual network operators) activ e in the market. Broadband 
penetration is 6.4%. Eleven licensed operators pr ovide internet services, of which four are 
national operators and the others provide locally. 
In terms of market regulation, there has be en little activity. The Telecommunications 
Regulatory Authority faces substantial constrai nts in preparing and implementing legislation 
in the form of lack of human resources, expertise, and constraints on its financial 
independence. As a consequence the TRA does not  have the necessary capacity and authority 
to conduct its tasks of an independent regulatory authority to the fullest. 
The process for privatising PTK (Post and Te lecom of Kosovo) has been launched and is 
expected to be finalised by th e end of 2010. This privatisati on is part of the agreement 
between Kosovo and the IMF. 
There has been limited progress in the area of information society services . The Law on 
personal data protection has been adopted. Th e Law on preventing and fighting cybercrime 
has been adopted in June. The 2005 Law on inform ation society services  is not being fully 
implemented and e-government services have yet to be developed. 
There has been subs tantial progress on audiovisual policy and media , notably improvements 
in the funding and administrative capacity of  the Independent Media Commission (IMC). The 
number of employees increased from 21 to  28. The Council issu ed a Regulation on 
audiovisual commercial communications aiming to align Kosovo’s legislation with the 
Audiovisual Media Services Directive on adve rtising. The Council completed the process of 
relicensing broadcasters. Neverthe less, the Assembly has still not completed the appointment 
of IMC members. The government has begun ame nding the IMC law. The current draft fails 
to preserve the Council’s independence in line with European standards on media regulation. 
Kosovo has not made any progress towards reachi ng the target objectives of digitalisation, 
meaning for this process to be finalised by 2015, in line with the region al approach towards 
completing the digitalisation by 2015). Kosovo is not a member of  the International 
Telecommunication Union and has an insuffici ent frequency allocati on for this purpose. 
In February, Serbian television producers launched the TV Mreza network linking four 
Serbian-language television stations from around Kosovo and covering 80% of Kosovo’s 
Serbian minority. 
The independence of the public service broadcas ter (RTK) and its financial sustainability are 
not fully ensured, making it vulnerable to politi cal interference. The six-month emergency 
funding provided by the Assembly was meant to be a temporary soluti on to save RTK from 
bankruptcy whilst long-term solutions were f ound. This emergency f unding has been renewed 
 
EN 48   EN for a further six months and the Assembly has made little progress towards finding solutions. 
As public fee collection for RTK was suspended, the broadcaster could not allocate 5% of this 
fee to the fund to support minority, multiethnic a nd other special media, as required by law. 
Disbursement of the fund, which restarte d last year, was therefore halted again. 
Inconsistencies between the Law on Defamation and Insults and th e Criminal Code have still 
not been resolved. According to European standards defamation should not be a criminal offence. Kosovo does not apply the penal provis ions on defamation, but since they remain on 
the statute book, legal uncertainty persists. This will be resolved under the process of revising Kosovo’s criminal code. 
The Association of Independent Broadcast Me dia of Kosovo, which in cludes all electronic 
media, both Kosovo Albanian and Kosovo Serb br oadcasters, is an ex ample of constructive 
cooperation between communities. 
Overall , limited progress has been made in the area  of information society and media. The 
level of competition is still low, and the independence of Telecommunications Regulatory 
Authority needs to be strengthen ed. The regulator’s efforts in the area of a udiovisual policy 
and media contrasts with the inability of polic y-makers to find a solution on the sustainable 
financing of the public broadcaster, which is  now having an impact on media pluralism in 
Kosovo. It is important to preserve and reinfo rce the independence of the Independent Media 
Commission in the process of amending the IMC Law. 
4.2.7.  Financial control 
There has been some progress on public internal financial control (PIFC) . Work is ongoing 
to update the existing PIFC policy paper. Admini strative instructions ha ve been adopted to 
support implementation of the Internal Audit Law. They cover the temporary licensing of 
auditors and the functioning of audit units and internal audit committees. Internal audit is slowly moving from mere compliance testing to being used as a managerial tool. A Treasury 
Rule on the principles of financial manage ment and control systems has been adopted. 
Treasury rule number one on public internal fina ncial control has been rewritten to strengthen 
financial management and control practice and the related functio ns of the Central 
Harmonisation Unit. The Central Harmonisation Unit for financial management and control has been reinforced and pilot activities have be en carried out involving budget users at central 
and local levels. Training of auditors continue d, resulting in more a uditors being certified. 
As regards external audit , the Office of the Auditor-Genera l adopted new operational tools, 
including a new regularity audit manual, performance audit guidelines, a quality framework and interim audits, all aiming at better dialogue with the audited bodies. In June 2010, 
external audits for 33 munici palities were completed. In th e 2009/2010 audit year, audits by 
the Office of the Auditor-General more than dou bled. The follow-up of external audit reports 
and recommendations by budget organisations impr oved, partly thanks to better cooperation 
with the Parliamentary Committee on oversight of public finance management and its co-
operation with the Office of the Auditor Genera l. The financial independence of the office 
needs to be strengthened. The government still can influence its budget and expenditure. 
Overall , there has been some progress in this area,  even if Kosovo still remains at an early 
stage of introducing in ternational standards and good practices. Kosovo needs to increasingly 
 
EN 49   EN focus on developing financial management and cont rol systems, raising awareness of its PIFC 
policies and starting using internal audit as an advisory and consulting tool for management. The development of external audit is on track. The financial independenc e of the Office of the 
Auditor-General remains a source of concern. 
4.2.8.  Statistics 
There has been some progress in the area of statistical infrastructure . Cooperation with 
certain producers and users of statistics has improved. A memorandum of understanding was 
signed with the Ministry of Agriculture. However, the Statis tical Office of Kosovo still lacks 
human and financial resources. O ffice space remains insufficient, and the staff situation in the 
IT department is particularly weak. 
There has been limited progress on classifications and registers. Introdu ction of the NACE 
Rev. 2 classification of economic activities into the bus iness register has started. The business 
register is operational, but is  not updated regularly. The necess ary administrative data are not 
provided by the Tax Administration. The Law on ta x procedures needs stil l to be amended in 
order to allow transmission of individual data to the Statistic al Office of Kosovo. 
There has been progress in the area of sectoral statistics.  The Census Law has been adopted 
early October. The preparations for the April 2011 population and housing census have 
continued. However, financing of the census still needs to be secured and the communication 
campaign needs to be intensified. With regard to other areas of social statistics, preparations 
for introducing the quarterly labour force survey  have been completed and the timeliness of 
the household budget survey has improved. 
There has been some progress in macroeconom ic statistics. Timeliness of national accounts 
according to the expenditure approach has improv ed significantly. An action plan for further 
development of national accounts was produced in February 2010, but the Statistical Office 
does not yet produce quarterly national accounts. The Centra l Bank started publishing the 
balance of payments on a quarterly basis. The basket for the consumer price index has been 
updated.  
Progress has been made in the area of agricult ural statistics. The agricultural price indices 
have been updated with 2005 as new the base year and the quality of the agricultural 
household survey has increased further. Munici pal waste statistics has been published for the 
first time. Major improvements in business statis tics are required. The qua lity of the external 
trade data from the customs authorities needs to be considerably improve d. Preparations in the 
area of sector statistics are moderately advanced. 
Overall , there has been some progress in sector st atistics, but further significant efforts are 
needed to improve in particular business and macro-economic statistics. The resources 
situation remains weak. Preparatory work for the 2011 census needs to be reinforced. 
4.3. Justice, freedom and security 
4.3.1.  Visa, border management, asylum and migration 
Kosovo has no visa policy . The law on foreigners regulating the entry and residence of 
foreigners in Kosovo is not fully implemented.  Administrative instructions implementing the 
law have been signed by the Minister of Inte rnal Affairs. Most of the UNMIK travel 
documents expired in August 2010. Old Yugoslav passports have remained valid during the 
 
EN 50   EN reporting period, but the number of holders of th ese passports has decreased. Amendments to 
the law on travel documents have been adopted  to prepare for issui ng biometric passports. 
Kosovo passports, identification car ds and civil status documents have high technical security 
standards. Progress has been achieved in dig italisation of civil stat us registers and in 
connecting civil status offices to internet. Howeve r, the law on civil status needs to be adopted 
and administrative instructions further implem enting the law need to be put in place. The 
quality of civil status data, s ecurity and control over the collect ion of civil status data and 
issuance of civil status documents are an impo rtant concern. These deficiencies need to be 
addressed before biometric passports are issued . Furthermore, a Kosovo-wide address system 
needs to be put in place and made functional to obtain reliable data for civil registration 
purposes. 
As regards border management , Kosovo has made some progre ss. Further steps have been 
taken on implementing the integrated border  management strategy. Its implementation 
however needs to be speeded up. A joint opera tional centre between pol ice and customs has 
been established. Kosovo food and veterinary serv ices have been granted access to this centre, 
which however needs to be used by these serv ices in practice. A one-stop joint facility 
(Police, Customs Service and Food and Veteri nary Agency) has been inaugurated at the 
Glloboqica/Globocica border crossi ng point. This brings the numbe r of crossing points with a 
one-stop facility to two. 
A roadmap has been designed for the transfer  of responsibility fo r green border/boundary 
surveillance. Kosovo Police took over responsibility from KFOR  for surveillance at the 
border with Albania. Staff from Kosovo Police  have been successfully redeployed to take 
over these new tasks. The Kosovo Customs Service signed bilateral agreements on cooperation and mutual assistance in custom s matters with Albani a, Finland, France, 
Montenegro and Turkey. Kosovo Police and EULEX visited Frontex. 
However, full implementation of the integrated  border management strategy requires further 
efforts and equal participation and responsibility of all agencies involved. The relevant law is 
not fully implemented. Not all administrative in structions related to the law have been 
adopted. Border checks are not carried  out in line with EU standards.
 Kosovo authorities lack 
planning capability and owners hip when it comes to identifying IT border management 
solutions. Kosovo needs to ensure EU-comp liant border management system is made 
operational as soon as possible. Kosovo failed to demonstrate politic al will to ensure 
implementation of this EU fina nced project. The border with Montenegro is not demarcated. 
There have been incidents at the border betw een the former Yugoslav Republic of Macedonia 
and Kosovo, which have illustrated the limits  of police cooperation between the two. The 
enforcement capacity of the Ko sovo Customs Service and border  police need to be improved 
and the fight against cross-border crime inte nsified. Kosovo borders/boundary are still not 
fully secured, including the cha llenges in detecting and handli ng cases of forged documents. 
The north remains a particular challenge. EULEX  has intensified its patrolling, registering 
and checking operations at gates 1 and 31 a nd along the border/boundar y with Serbia. The 
data collected at the two gates are shared with the Kosovo Customs Service and Serbian customs. However, full customs controls at gate s 1 and 31 were not rest ored, due to political 
circumstances. 
Overall, Kosovo is at an ear ly stage of addressing the ch allenges of integrated border 
management. Progress on visa policy needs to be developed in line with EU standards. 
 
EN 51   EN In the area of asylum,  limited progress has been achieved. So me administrative instructions to 
implement the Law on asylum have been adopted. The number of asylum requests is still low, 
but it has considerably increased (from 31 in 2009 to 131 in January – September 2010) 
causing challenges for Kosovo authorities. A temporary shelter accommodating 20 to 30 
asylum-seekers has been opened. This is insuffici ent. Some decisions on asylum status have 
been issued with help of EULEX. The acting head of the division for asylum within the 
Department for Citizenship, Asylum and Migrat ion has been appointed. All members of the 
administrative appellate body have also been appo inted and held a first meeting in July. Many 
of the asylum-seekers who have arrived in Ko sovo during the reporting period have left for 
other destinations without ade quate control by Kosovo authorities. Cases have been reported 
in which the refugee status determination ha ve not been achieved within reasonable time. 
An explanatory guide about th e rights and obligation of as ylum-seekers needs to be 
developed. The capacity of the Department fo r Citizenship, Asylum and Migration in the 
Ministry of the Interior and of  the police to deal with asylum-seekers and their applications 
remains weak. Training needs to be enhanced. Ko sovo is still to develop a reliable database 
for asylum seekers. No identification document has been issued to as ylum applicants by 
Kosovo authorities, as provided for in the Law on asylum. In 2009, Kosovo was fifth in the 
list of countries of orig in of asylum applicants in EU Member States. 
Overall, preparations in the area of asylum are still at an early stage. 
Kosovo has achieved progress in the field of migration . An office for issuing temporary and 
permanent residence permits for foreigners has been opened in July. A number of agreements 
have been signed on readmitting persons to  Kosovo. In June, a law on readmission was 
adopted. The law broadly meets EU requirement s. The Department for Citizenship, Asylum 
and Migration has continued to deal with read mission requests from European countries in an 
efficient way and needs to continue to do so. A ssistance offered to forced returnees covers 
only seven days after their arrival in Kosovo . The revised strategy for reintegration of 
repatriated persons and an action plan have been adopted during the reporting period based on 
a thorough assessment of gaps. The action plan pr ovides a good basis for improvement in this 
area. An executive board on reintegration and re lated working groups have been put in place 
to strengthen coordination of re integration efforts. Regulation, wh ich clarifies the role of the 
municipal return officers in the reintegration pr ocess has also been adopted. A fund has been 
created and €500,000 allocated for reintegration of  repatriated persons. Sustainable funding of 
reintegration needs to continue in the future. 
However, reintegration remains a challenge and further efforts by Kosovo authorities are 
necessary. Capacity to handle re integration of forced return ees needs to be strengthened. 
Communication between central and municipal levels on readmission is insufficient. The 
municipalities do not have adequate human a nd financial capacity fo r providing sufficient 
assistance to repatriated persons.  The Division for Foreigners, Vi sas and Residence Permits in 
the Department for Citizenship, Asylum and Mi gration is still understa ffed. The process of 
handing over administrative tasks su ch as issuing residence perm its from the border police to 
the Department is ongoing. Furthermore, prom oting legal migration and fighting against 
irregular migration remain major challenges, despite some arrests of irregular migrants. There are no proper detention faciliti es for irregular migrants or asylum seekers pending their 
expulsion. 
Overall , Kosovo has started to tackle some of the mi gration challenges, but is still at an early 
stage of the process. Readmission requests from European countries continued to be handled 
 
EN 52   EN in an efficient way by Kosovo authorities. Effo rts and capacities of Kosovo to reintegrate 
repatriated persons need to be further enhanced . Fight against irregula r migration and dealing 
with foreigners remain major challenges for relevant agencies. 
4.3.2.  Money laundering 
Limited progress has been made on addres sing economic/financial crime and money-
laundering, which is a key European Partnershi p priority. The Law against money-laundering 
and financing of terrorism has been adopted in September. In June, the Ministry of Economic 
and Financial Affairs has signed a technical arrangement on the tran sfer of the responsibilities 
of the Financial Intelligence Centre from EULEX  to the Financial Intelligence Unit in the 
Ministry within six months of the entry into force of this law. Kosovo needs to be ready before the transfer can take place. 
Cooperation between the Customs Service and the Financial Intelligence Centre has 
improved. The Centre has also improved its coop eration with banks. The Directorate against 
Economic Crime and Corruption in the Kosovo Police has been established. Investigators 
from this Directorate have been seconded to th e special task force under the authority of the 
Special Prosecution Office. In cooperation with  EULEX, an operation ha s been launched with 
the aim of identifying illegal activity in relatio n to the import and export of large amounts of 
cash at Kosovo’s airport. 
In practice, however, the capac ity of Kosovo to investigate and prosecute economic crimes 
remains limited. Large amounts conti nue to be invested in real estate, restaurants and casinos 
have continued without adequate supervision. Business-related financial transactions on 
private accounts and large numbers of entities do ing business without being registered have 
been widespread. Very few inve stigations and no judicial fo llow-up have been delivered by 
Kosovo authorities related to m oney-laundering and related crimes. 
The relevant department within the Kosovo Polic e is not fully staffed and regional units lack 
the expertise and equipment. The police need to  significantly step up its efforts to tackle 
money-laundering. Prosecutors and judges lack the relevant financ ial expertise and resolve to 
tackle the problem. Insufficient resources within the Special Prosecution Office have been dedicated to financial matters.  
Given the heterogeneous status of the NGOs in  Kosovo, the lack of systematic reporting by 
the office for registration of NGOs within the Ministry of Public Administration to the 
Financial Intelligence Centre is a concern. Business organisati ons do not systematically report 
cash-based transactions higher than €10,000 to the Centre. There is a lack of transparency 
regarding the output of the Centre. Adequate preparations need to be made by the Kosovo 
authorities to ensure effective functioning of  the Centre under Kosovo authority. Kosovo 
needs to make the agency to manage confiscated assets fully operational.  
Overall , money-laundering remains an issue of se rious concern and Kosovo is at an early 
stage in this area. Kosovo continues to lack ad equate technical and hu man resources able to 
face this complex crime. In these circumstances , Kosovo needs to make considerable efforts 
to be able to cope with the transfer of responsibilities from EULEX , which needs to happen 
only once Kosovo is ready. 
 
EN 53   EN 4.3.3.  Drugs 
Kosovo has made a limited progress in the fight against drug trafficking. Flows include heroin 
and synthetic drugs coming from the Middle  East through Greece and the former Yugoslav 
Republic of Macedonia along one of the main Balk an routes to European markets. There is 
also a growing domestic market for marijuan a and other drugs. Kosovo is also growing 
producer of drugs. Organised crime groups ope rating from Kosovo are involved in smuggling 
cocaine from South America to Europe. 
The security of the storage room from which dr ugs were stolen last year has been upgraded. 
Kosovo Police have conducted a number of operations during the reporting period. All police 
regional narcotic investigation units have been centralised to  the Directorate against Drug 
Trafficking. This has brought positive results in  terms of information flow. Authorities have 
carried out a number of training sessions fo r law enforcement bodies and public awareness-
raising events about the da ngers of the drug abuse. 
However, seizures, arrests and successful court verdicts remain at a low level in comparison 
to the challenge Kosovo is f acing. Weaknesses in border mana gement, corruption within law 
enforcement agencies and a lack of equipmen t hamper the fight agai nst drug trafficking. 
Proper customs control equipment allowing trucks  to be scanned exists at only one border 
crossing point. Despite the increase of capacity , canine units are not us ed at border points. 
After the break-in at the storage room last year , the case remains pending and the perpetrators 
have not been found. Policy guid elines for undercover investig ations related to drugs are 
missing. The activities stemming from the anti-narcot ics action plan are still at an early stage 
of implementation. Statistics on se izures, arrests and prosecutions  are unreliable. Data-sharing 
with most of the neighbouring countries is poor. There are not enough Kosovo Serb officers 
in the police narcotic investigations force. Ca pacities to investigate drug trafficking in the 
north remain limited. There are no comprehensiv e plans for management of the increasing 
number of drug addicts w ithin the prison population. 
The cooperation with the Europ ean Monitoring Centre for Drugs  and Drug Addiction started 
in 2010. Kosovo is committed to develop cooperation with the Centre. The work plan for joint 
activities has been prepared and the first join t Needs Assessment Report has been produced in 
July 2010. 
Overall , Kosovo’s fight against drug trafficking is s till at an early stage. Serious efforts are 
needed to address this issue. 
4.3.4.  Police 
Kosovo has made some progress as  regards policing. A number of administrative instructions 
related to the law on police have  been adopted (e.g. on the use of  force, use of firearms or 
promotion procedures). Police have adopted its 2010-2015 strategic development plan. They 
have contributed to drafting of various strate gies such as crime prevention, community and 
intelligence-led policing, small and light arms control and coll ection. Police have continued to 
respond to cases of illegal possession of w eapons, including their confiscation. Kosovo has 
adopted a strategy for integrated emergency ma nagement system. The acting director-general 
of police has also issued a number of emergency operational orders.  
Kosovo Police have taken over new tasks from KFOR entailing operational challenges such 
as securing a cultural herita ge and religious sites and secu ring the border with Albania. 
 
EN 54   EN Kosovo Police managed well the security of the enthronement ceremony of the Serbian 
Orthodox Church patriarch. Agreements on intern ational police cooperation have been signed 
with Albania, Austria, Croatia, France and th e former Yugoslav Republic of Macedonia. The 
police have also improved their crowd and riot  control capability. Information flows within 
the police have improved following the creation of  the centralised regional units and changes 
in the chain of command. 
The job descriptions of the senior manageme nt, including the two Deputy Directors, have 
been approved and signed by the Minister of the Interior together with the new structure of 
the police. A new salary system for officers has been adopted, invo lving additional budget 
expenditure.  
However, police also need to build-up its intelligence-led policing capability to tackle serious 
crime, as its effectiveness in dealing with organised and complex crimes continues to be 
limited. The police need to be more pro-active in theirs approach to tackling crime. The Kosovo Police Information System needs to be upgraded to serve as an operational EU standards-compliant IT soluti on. Currently, Kosovo’s vehicle information system is not 
connected to this system, which limits performa nce of the police related to cases of stolen 
vehicles. EULEX has access to the Kosovo Polic e Information System. However, the limits 
placed on this access complicate independent ex ercise of EULEX’s executive mandate in 
some cases. 
Given the estimates of large amounts of weap ons possessed by the public, police need to 
enhance its activities to confiscate and destr oy them. Efforts on following up hate and ethnic-
based crimes need to be increased. All newly established municipalitie s are not yet equipped 
with police stations, while police presence is maintained. 
The strikes within the police during the repo rting period have illustrated managerial 
deficiencies, dysfunctional trade unions and political interferen ce. The restructuring of the 
police is a challenging process that needs to  be accompanied by a comprehensive review of 
allocation of resources. In this context, the pe rformance-based indicators system still needs to 
be established.  
The disciplinary mechanisms within police and oversight mechanisms of  police need to be 
reinforced. Corruption, nepotism and political inte rference remain issues of serious concern. 
A better division of responsibilit ies between the Police Inspecto rate of Kosovo and the Police 
Standards Unit is needed. The newly appointed ac ting director for the Po lice Inspectorate of 
Kosovo needs to contribute to these efforts.  Police also need to improve procurement 
processes in order to fully comply with the legislation in force.  
International police cooperation is hampered  by the political circumstances, preventing 
Kosovo from integration into international and regional coope ration mechanisms. It is an 
issue of concern that the police officers are sti ll not authorised to arrest an internationally 
wanted person provisionally on the basis of an Interpol want ed notice. EULEX continues to 
play an important role in facilitating info rmation exchange particularly with Europol. 
Overall , Kosovo Police have managed general public  safety and secur ity well, albeit in 
difficult situations. They have taken on increas ed responsibilities in a number of areas (e.g., 
protection of cultural sites) and performed them  in a professional manner. However, in terms 
of investigative capacity, ability to fight orga nised crime, corruption or any other complex 
 
EN 55   EN type of crime and use modern tools and procedur es, Kosovo Police remain at an early stage of 
development.  
4.3.5.  Fighting organised crime and terrorism 
Limited progress has been achieved in tackling organised crime . A strategy on crime 
prevention has been adopted. A law on cyber crime has been adopted and is compatible with EU standards. Additional special prosecutors ha ve been appointed to deal with organised 
crime. Kosovo special prosecutors have been in volved in investigations  of serious organised 
crime and financial crime and have represented the Special Prosecutors Office in trials. In 
some cases, they have worked in mixed team s with EULEX special prosecutors who have 
also exercised executive powers independently. Eurojust experts will visit Kosovo in the 
coming weeks. Ministry of Justice has adopt ed organisational structure of the agency 
managing confiscated and sequestrated criminal assets. A budget has also been allocated and 
a chief executive officer has been appointed. However, the agency still needs to be made operational. 
Kosovo also needs to step up c onsiderably its efforts to tack le organised crime. Organised 
criminal networks active in Ko sovo are involved in  international drug trafficking, smuggling 
of migrants, trafficking of stolen vehicles and firearms and smuggling of cigarettes.
 There is 
no adequate system to reward informants. The lack of a witness protection framework 
continues to inhibit activities in this area. There is still no po ssibility to tap mobile phones of 
one operator for investigative pu rposes. The police directorate against organised crime lacks 
equipment. Political interference and poor in tra- and inter-agency  cooperation hinders 
effective fight against organised crime. The Customs Service and border police need to 
reinforce their enforcement capacity. Kosovo lack s a track record of c onvictions related to 
organised crime. It is of serious concern that  the readiness of Kosovo judges and prosecutors 
to participate, or even take the lead, in adj udicating cases of corrupti on or organised crime is 
sometimes paralysed by threats against themselves or their families.  
Overall, sustained efforts, supported by clear political will, are needed in the fight against 
organised crime which remains a matter of very serious concern and affects the rule of law 
and the business environment. In the north, pol ice and judiciary efforts remain hampered by 
the political situation. 
There has been limited progress in tackling trafficking in human beings . Kosovo remains a 
place of origin, transit and destination of victims of trafficking for commercial sexual 
exploitation. The inter-minister ial working group has continued to meet on a monthly basis. In 
a recent case, Kosovo Police have responded well to an Interpol request concerning a trafficking case. There have been  a number of arrests related to the case of smuggling of 
human beings across the River Tisza. The Mi nimum Standards of Care for Victims of 
Trafficking have been adopted . Efforts have been made in th e field of prevention, with an 
information campaign in educational institutions and at border crossing points, including the 
airport. The number of convictions has in creased slightly over the reporting period.
 
However, the number of victims of traffickin g identified remains low and does not fully 
reflect the scale of the phenomenon even though there has been a decrea se in the numbers of 
trafficked persons across the whole region. Mo st of the victims have been local women 
trafficked for sexual purposes. Child traffick ing and exploitation for forced begging is an 
increasing problem. The capacity of Kosovo institu tions to investigate, prosecute, convict and 
sentence trafficking in human beings need s to be further strengthened. The level of 
 
EN 56   EN punishment of perpetrators is not always adequate. There has been a number of police 
operations and searches of premises during th e reporting period, but the results are limited. 
Police regional units have continued to face difficulties in identifying presumed victims. 
Procedures are in place to allow victims to provide an onymous testimony, but witness 
intimidation has remained a serious problem and witness protection does not exist. Only a few 
victims have assisted in investigation of their traffickers duri ng the reporting period. 
Trafficking-related corruption also needs to be addressed. Some shelter facilities for victims 
exist, but reintegration services remain fragmented. 
Overall, Kosovo’s efforts in the fight against traf ficking in human beings are at an early stage 
and much more needs to be done. In particular , the judicial follow-up to police operations is 
ineffective and perpetrators need  to be appropriately sentence d. Kosovo need to enhance its 
action to identify and assist all victims, includi ng those trafficked for fo rced labour and forced 
begging. 
Kosovo has made some progress in the fight against terrorism . The capacity of the counter-
terrorism unit within the Kosovo Police has b een enhanced. A law on money-laundering and 
financing of terrorism has been adopted. Terrori sm has been included in  the national security 
strategy adopted during the repo rting period. However, operati onal police capac ities remain 
low and only few practical results have been delivered. 
Overall , Kosovo remains at an early stage of being able to tackle terr orism in a strategic 
manner. 
4.3.6.  Protection of personal data 
Kosovo has made limited progress in personal data protection. In April, Kosovo has adopted a 
law on the protection of persona l data. The government has al so appointed members of the 
national agency for the protection of personal da ta. However, the agency is not operational. 
The principles set out in the framework law require further re gulation, in particular on data 
protection in the law enforcement sector. The establishment of security, intelligence and law enforcement bodies and upgrading of databases has not been accompanied by parallel measures to protect pers onal data. An adequate review of the implications of the new law for 
various agencies in the area of justice and home affairs has yet to be carried out. Individuals 
in Kosovo are not informed about their rights regarding protection of their personal data.  
Overall , the lack of personal data protection in Kosovo is an issue of a serious concern. 
Achieving adequate personal da ta protection is key to Kos ovo enhancing its international 
cooperation in the area of justice and home affa irs. Kosovo still needs to make major efforts 
in the area of personal data protection. 
 
EN 57   EN Statistical annex  
STATISTICAL DATA (as 14 October 2010)            
Kosovo under United Nations Security Council Resolution 1244/99  
            
Basic data Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Population (thousand)  : : : 1 985 2 016 2 041 2 100 2 127 2 153 2 181p 
Total area of the country (km²)  10 887 10 887 10 887 10 887 10 887 10 887 10 887 10 887 10 887 10 887 
            
National accounts Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Gross domestic product (GDP) (million national currency) 1) : 1 624 1 735e 1 797e 3 007e 3 068e 3 192e 3 434e 3 841e 3 902p 
GDP (million euro) 1) : 1 624 1 735e 1 797e 3 007e 3 068e 3 192e 3 434e 3 841 3 902p 
GDP (euro per capita)  : : : 905e 1473e 1 482e 1 520e 1 612e 1 784e 1 790p 
GDP (in Purchasing Power Standards (PPS)  per capita)  : : : : : : : : : : 
GDP per capita in PPS (EU-27 = 100)  : : : : : : : : : : 
Real GDP growth rate (growth rate of GDP volume, national currency, % change on previous year)  : : 1.2e 3.1e : : : : : : 
Employment growth (national accounts, % c hange on previous year)  : : : : : : : : : : 
Labour productivity growth: GDP growth per person employ ed (% change on previous year)  : : : : : : : : : : 
Real unit labour cost growth (national accounts,  % change on previous year)  : : : : : : : : : : 
Labour productivity per person employed (GDP in PPS per per son employed, EU-27 = 100)   : : : : : : : : : : 
Gross value added by main sectors (%)                      
Agriculture and fisheries  : : : : : : : : : : 
Industry  : : : : : : : : : : 
Construction  : : : : : : : : : : 
Services  : : : : : : : : : : 
Final consumption expenditure, as a share of GDP (%)  : 163.1 151.6 147.5 109.7e 111.9e 111.5e 114.0e 112.8e 109.9p 
Gross fixed capital formation, as a share of GD P (%) 2) : 40.7 34.5 29.3 19.4e 19.3e 20.6e 21.7e 24.4e 26.3 
Changes in inventories, as a share of GDP (%)  : : : : 3.9 4.2 4.4 4.3e 4.1e 3.6 
Exports of goods and services, relative to GDP (%)  : 16.6 12.5e 10.4e 7.1e 7.0e 8.9e 10.4e 13.8e 15.5p 
Imports of goods and services, relative to GDP (%)  : 120.4 98.6e 87.1e 40.1e 42.5e 45.5e 50.3e 55.1e 55.4p 
            
Industry Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Industrial production volume index (2000=100)  : : : : : : : : : : 
            
Inflation rate Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Annual average inflation rate (CPI, % change on previous year)  : : -1.0 0.3 -0.8 -2.1 -1.5 2.8 12.4 9.7 
 
EN 58   EN Balance of payments Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Balance of payments: current account total (milli on euro)  : 228 -104 -204 -209 -248 -226 -331 -602 -642 
Balance of payments current account: trade balance (million euro)   : -646 -890 -941 -983 -1 079 -1 173 -1 368 -1 668 -1 690 
Balance of payments current account: net services (million euro)  : 10 -23 -14 -18 -8 29 51 82 172 
Balance of payments current account: net income (million euro)  : 141 154 152 138 139 159 186 156 70 
Balance of payments current account: net current transfers (million euro)  : 723 655 599 655 700 759 800 829 806 
of which government transfers (million euro)  : 809 661 490 372 348 320 301 289 319 
Net foreign direct investment (FDI) (million euro)  : : : : 43 108 289 431 341 278 
Foreign direct investment (FDI) abroad (million euro) 3) : : : : 0 0 -6 -10 -25 -10 
of which FDI of the reporting economy in EU- 27 countries (million euro)  : : : : : : : 0 2 1 
Foreign direct investment (FDI) in the reporting economy (million euro) 3) : : : : 43 108 295 441 366 288 
of which FDI of EU-27 countries in the reporting economy (million euro)  : : : : : : : 72 64 66 
            
Public finance Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
General government deficit/surplus, relative  to GDP (%)  : : 8.4 2.2 2.7 : : : : : 
General government debt relative to GDP (%)  : : : : : : : : : : 
            
Financial indicators Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Gross foreign debt of the whole economy, relative to GDP (%)  : : : : : : : : : : 
Gross foreign debt of the whole economy, relative to total exports (%)  : : : : : : : : : : 
Money supply: M1 (banknotes, coins, overnight dep osits, million euro) 4) 761 971 998 891 713 572 : : : : 
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro) 4) 761 1 096 1 126 1 111 1 128 1 092 : : : : 
Money supply: M3 (M2 plus marketable instruments, million euro)  : : : : : : : : : : 
Total credit by monetary financial institutions to resident s (consolidated) (million euro)  3 26 87 233 374 514 637 892 1 183 1  289 
Interest rates: day-to-day money rate, per annum (%)  : : : : : : : : : : 
Lending interest rate (one year), per annum (%) 5) : : : : 14.7 14.4 14.5 14.6 14.8 14.1 
Deposit interest rate (one year), per annum (%) 5) : : : : 2.8 2.9 3.0 3.3 4.2 4.0 
euro exchange rates: average of period - 1 euro = … national  currency 1) 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 
Effective exchange rate index (2000=100)  : : : : : : : : : : 
Value of reserve assets (including gol d) (million euro)  62 296 337 423 311 278 356 647 670 501 
            
External trade Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Value of imports: all goods, all partners (million euro)  : : : : 1 050.4 1 180.0 1 314.6 1 576.1 1 930.0 1 933.8 
Value of exports: all goods, all partners (million euro)  : : : : 56.6 48.9 81.7 147.3 196.4 165.3 
Trade balance: all goods, all partners (million euro)  : : : : -993.8 -1 131.1 -1 232.9 -1 428.8 -1 733.6 -1 768.5 
Terms of trade (export price index / impor t price index)  : : : : : : : : : : 
Share of exports to EU-27 countries in value of total exports (%)  : : : : 29.3 37.9 35.7 42.6 47.7 43.1 
Share of imports from EU-27 countries in value of total imports (%)  : : : : 40.3 38.4 34.2 35.2 36.2 39.0 
 
EN 59   EN Demography Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Natural growth rate: natural change (births minus deaths) (per 1000 inhabitants)  : : : 12.8 14.1 14.5 12.6 12.4 12.7 12.5 
Infant mortality rate: deaths of children under one year of age per 1000 live births  : : 11.2 15.1 11.8 9.6 12.7 11.1 9.8e 8.4 p 
Life expectancy at birth: male (years)  : : : 67.0 : : : : : : 
Life expectancy at birth: female (years)  : : : 71.0 : : : : : : 
            
Labour market Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Economic activity rate (15-64): share of  population aged 15-64 that is economically active (%)  : 45.6 52.8 50.3 46.2 49.2 52.3  46.8 46.2 48.1 
Employment rate (15-64): share of population aged 15-64 that is in employment (%)  : 19.6 23.8 25.3 27.7 28.5 28.7 26.2 24.1 26 .1 
Employment rate male (15-64) (%)  : 31.1 39.4 42.8 46.4 45.8 46.1 40.1 37.7 39.7 
Employment rate female (15-64) (%)  : 8.1 8.8 8.3 9.9 11.7 11.8 12.7 10.5 12.5 
Employment rate of older workers (55-64): share of populati on aged 55-64 that is in employment (%)  : 16.7 18.4 20.1 23.9 25.2 26.3 24.6 23.8 27.9 
Employment by main sectors (%)                      
Agriculture  : : : : : : : : : : 
Industry  : : : : : : : : : : 
Construction  : : : : : : : : : : 
Services  : : : : : : : : : : 
Unemployment rate: share of labour force that is unemployed (%)  : 57.1 55.0 49.7 39.7 41.4 44.9 43.6 47.5 45.4 
Share of male labour force that is unemployed (%)  : 51.8 45.2 40.3 31.5 32.9 34.6 38.5 42.7 40.7 
Share of female labour force that is unemployed (%)  : 69.9 74.5 71.9 60.7 60.5 61.6 55.2 59.6 56.4 
Unemployment rate of persons < 25 years: share of labour forc e aged <25 that is unemployed (%)  : 80.0 77.7 74.9 66.5 70.5 75.5  70.0 73.0 73.0 
Long-term unemployment rate: share of labour force that is unem ployed for 12 months and more (%)  : 47.6 47.3 42.7 34.9 34.7 41 .1 37.1 38.9 37.1 
            
Social cohesion Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Average nominal monthly wages and salaries ( national currency)  : : : : : : : : : : 
Index of real wages and salaries (index of nominal wages and sa laries divided by the CPI) (2000=100)  : : : : : : : : : : 
Early school leavers - Share of population aged 18- 24 with at most lower secondary education and not 
in further education or training (%)  : 5 304.0 5 005.0 : 3 011.0 2 988.0 2 195.0 2 124.0 2 530.0 : 
            
Standard of living Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Number of passenger cars per 1000 population  : : : : : 50.2 69.9 68.7 74.1 : 
Number of subscriptions to cellular mobile telephone services per 1000 population  : : : 158.7 169.5 : : : 376.2 369.1 
            
Infrastructure Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Density of railway network (lines in operation, per 1000 km²)  : : : : 39.5 : : : : : 
Length of motorways (thousand km)  : : : : : 0.0 0.0 0.0 0.0 0.0 
 
EN 60   EN  
: = not available 
p = provisional value e = estimated value 
1) No official national currency exis ts. Euro is the currency in use. 
2) Investment: including Donor sector, General government, Private investment (Housing and Other). 3) The balance of payments sign conventions are used. For FDI abroad a minus sign means  investment abroad by the reporting econ omy exceeded its disinvestment in the period, while an entry without 
sign means disinvestment exceeded investment. For FDI in the repo rting economy an entry without sign means that investment into  the reporting economy exceeded di sinvestment, while a minus sign 
indicates that disinvestment exceeded investment. 4) In 2000 the banking sector of Kosovo was at the initial st age of its establishment. Therefore all deposits at the commercial  banks at that point in time were transferable. 
5) Since January 2008 interest rate on loans in cludes disbursement fee charged by banks. 
6) Data collected from the Koso vo Energy Corporation (KEK).
 Innovation and research Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Spending on human resources (public expenditure on educ ation in % of GDP)  : : : : : : : : : : 
Gross domestic expenditure on R&D in % of GDP  : : : : : : : : : : 
Percentage of households who have Internet access at home (%)  : : : : : : : : : : 
            
Environment Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Greenhouse gas emissions, CO2 equivalent (tons, 1990=100)  : : : : : : : : : : 
Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP)  : : : : : : : : : : 
Electricity generated from renewable sources in % of gross electricity consumption  : : : : : : : : : : 
Road share of inland freight transport (% of tonne-km)   : : : : : : : : : : 
            
Energy Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Primary production of all energy products (thousand TOE)  : : : : : : : : : : 
Primary production of crude oil (thousand TOE)  : : : : : : : : : : 
Primary production of hard coal and lignite (thousand TO E) 6) : : 3 853 4 507 3 944 4 455 4 553 4 681 5 466 7 842 
Primary production of natural gas (thousand TOE)  : : : : : : : : : : 
Net imports of all energy products (thousand TOE)  : : : : : : : : : : 
Gross inland energy consumption (thousand TOE)  : : : : : : : : : : 
Electricity generation (thousand GWh)  : : 3.2 3.2 3.5 4.0 4.0 4.3 : 5.3 
            
Agriculture Note 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 
Agricultural production volume index of goods and services (producer  prices, previous year=100)  : : : : : : : : : : 
Total utilised agricultural area (thousand hectare)  : 539 : : : : : : : : 
Livestock: cattle (thousand heads, end of period)  289 347 319 : 335 352 382 322 342e : 
Livestock: pigs (thousand heads, end of period)  59 75 110 : 55 47 68 40 27e : 
Livestock: sheep and goats (thousand heads, end of period)  193 230 116 : 106 152 113 152 180e : 
Production and utilisation of milk on the farm (total  whole milk, thousand tonnes)  : : : : : : : : : : 
Crop production: cereals (including rice) (thousand tonnes, harvested production)  : 459 396 : 408 441 392 295 438e : 
Crop production: sugar beet (thousand tonnes, har vested production)  : : : : : : : : : : 
Crop production: vegetables (thou sand tonnes, harvested production)  : 169 135 : 150 159 172 117 177e :