EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 14.10.2009 
SEC(2009) 1340 
COMMISSION STAFF WORKING DOCUMENT 
 
KOSOVO UNDER UNSCR 1244/99 2009 PROGRESS REPORT  
 
  
accompanying the 
 
COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIA MENT AND THE COUNCIL 
 
Enlargement Strategy and Main Challenges 2009-2010 
{COM(2009) 533 final} 
 
EN 2   EN TABLE OF CONTENTS 
1. Introduction................................................................................................................ .. 4 
1.1. Preface................................................................................................................... ....... 4 
1.2. Context ................................................................................................................... ...... 5 
1.3. Relations between the EU and Kosovo........................................................................ 5 2. Political criteria .......................................................................................................... .. 6 
2.1. Democracy and the rule of law .................................................................................... 6 2.2. Human rights and the protection of minorities .......................................................... 11 2.3. Regional issues and international obligations............................................................ 19 3. Economic criteria ....................................................................................................... 21 3.1. The existence of a functioning market economy ....................................................... 21 3.2. The capacity to cope with competitive pre ssure and market forces within the Union
............................................................................................................................... ..... 25 
4. European standards .................................................................................................... 27 4.1. Internal market ........................................................................................................... 27 
4.1.1. Free movement of goods............................................................................................ 27 4.1.2. Movement of persons, services and right of establishment ....................................... 28 
4.1.3. Free movement of capital........................................................................................... 28 4.1.4. Customs and taxation ................................................................................................. 29 4.1.5. Competition............................................................................................................. ... 31 
4.1.6. Public procurement .................................................................................................... 31  
4.1.7. Intellectual property law ............................................................................................ 32 4.1.8. Employment and social policies................................................................................. 33 4.1.9. Education and research .............................................................................................. 34 4.1.10. WTO issues ............................................................................................................. ... 35 
4.2. Sectoral Policies......................................................................................................... 36 
4.2.1. Industry and SMEs..................................................................................................... 36  
4.2.2. Agriculture and fisheries............................................................................................ 36 4.2.3. Environment............................................................................................................. .. 37 
4.2.4. Transport policy ........................................................................................................ . 38 
 
EN 3   EN 4.2.5. Energy .................................................................................................................. ...... 39 
4.2.6. Information society and media................................................................................... 41 4.2.7. Financial control....................................................................................................... .. 42 
4.2.8. Statistics .............................................................................................................. ....... 43 
4.3. Justice, freedom and security ..................................................................................... 44 4.3.1. Visa, border management, asylum and migration...................................................... 44 
4.3.2. Money laundering ...................................................................................................... 45  
4.3.3. Drugs................................................................................................................... ....... 46 
4.3.4. Police.................................................................................................................. ........ 46 
4.3.5. Fighting organised crime and terrorism ..................................................................... 47 4.3.6. Protection of personal data......................................................................................... 48 
 
EN 4   EN COMMISSION STAFF WORKING DOCUMENT 
KOSOVO UNDER UNSCR  12/4499  2009  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 fr om early October 2008 to  mid-September 2009. 
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 enlargement3, based on the technical analysis  contained in this report. 
In parallel to this report, the Comm ission has adopted a Communication "Kosovo* – Fulfilling 
its European Perspective" to the Eu ropean Parliament and the Council.  
                                                 
1 Under UNSCR 1244/1999. 
2 Until September, the rapporteur for Kosovo was Mr. Joost Lagendijk. Since September, the new 
rapporteur is Ms Ulrike Lunacek. 
3 Enlargement Strategy and Main Challenges 2009-2010 (COM(2009) 533 of 14.10.2009). 
* Under UNSCR 1244/1999. 
 
EN 5   EN 1.2. Context 
During the reporting period, the UN Secretary General (UNSG) issued three reports on 
Kosovo. The November 2008 report led to the full deployment of EULEX under the umbrella of UN authority. In March 2009, the UNSG noted the accelerated process of reconfiguring the 
UN mission in Kosovo (UNMIK) with a view to  adapting its functions to the changed 
circumstances on the ground. The J une 2009 report indicated that the remaining functions of 
UNMIK, reduced to about 10% of  its strength compared to  last year, would include 
monitoring, reporting and facilitating, where necessary and possible, arrangements for 
Kosovo's international engagement. 
KFOR, the NATO-led internationa l military presence in Kosovo, continues to be responsible 
for overall security. In recognition of the evol ving situation in Kosovo, KFOR has initiated a 
gradual reduction of it s presence in theatre. 
In April, the International Court of Jus tice received 36 written submissions presenting 
arguments on whether Kosovo's declaration of independence is in accordance with international law.  
In June, Kosovo became a member of the Inte rnational Monetary Fund and the World Bank. 
To date, Kosovo has been recognised by 62 UN Member States, including 22 EU Member 
States. 
1.3. Relations between the EU and Kosovo 
Kosovo is participating in the Stabilisation and Association Process . Plenary meetings of 
the Stabilisation and Association Process Tracking Mechanism (STM) were held in December 
2008 and June 2009. Six sectoral STM meetings were  held in the areas of innovation, internal 
market, good governance, economy, infrastructure and agriculture during the first half of 
2009.  
In December 2008, EULEX was deployed thr oughout the territory of Kosovo, assuming 
responsibilities in the areas of police, customs and the j udiciary. The mission reached full 
operational capacity in April. Recent incident s resulted in damage to EULEX property; 
Kosovo needs to ensure continuing support for EULEX's work 
In February, the European Parliament adopted a resolution underlining the European Union’s 
commitment to playing a leading role in ensuring the stability of Kosovo and the Western Balkans as a whole and reiterated its willingness to assist the economic and political development of Kosovo by offering clear pr ospects for EU membership. The second 
European Parliament-Kosovo inter-parliament ary meeting took place in April. A joint 
statement was issued, expressing satisfaction with the overall stability of the political situation 
in Kosovo.  
In February, the Council renewed for 12 months the mandate of the EU Special 
Representative in Kosovo, enabling him to conti nue with his close work ing relationship with 
the Kosovo authorities. The EU Special Repres entative is also the International Civilian 
Representative for Kosovo. 
In March, the authorities orga nised a High-Level Forum for D onor Coordination as a follow-
up to the Donor Conference for Kosovo organise d by the European Commission in July 2008. 
 
EN 6   EN Kosovo's authorities gave an account of achie vements and challenges in key sectors of 
reform. Donors expressed their continui ng support for Kosovo's European agenda. 
Kosovo continues to benefit from the Instrume nt for Pre-accession Assistance (IPA), macro-
financial assistance, Community Assistan ce for Reconstruction, Development and 
Stabilisation (CARDS), the In strument for Stability (IfS) and other sources of funding. 
Almost € 500 million has been committed for Kosovo through IPA over the years. The latest Multi-annual Indicative Planning Document 2009-2011, which identifies the main areas and 
priorities of IPA assistance, was adopted in Ju ly. Over € 103 million has been allocated in the 
IPA Annual Programme for 2009. The EC continues to support the strengt hening of the rule 
of law, public administration reform, commun ities, culture and youth, wider socio-economic 
issues including trade and regi onal development, education a nd employment, and agriculture. 
In April, the government appointed the chief ex ecutive of the Agency for the Coordination of 
Development and European Integrat ion as Kosovo's IPA coordinator. 
For the improvement of civil society particip ation in policy dialogu e and formulation €1.7 
million is set aside under IPA 2008. Areas, such as  environment and equal opportunities (anti-
discrimination measures and social inclusion of  vulnerable groups) receiv e special attention. 
A further €3 million are foreseen under IPA 2009 fo r the benefit of civil society, including the 
protection of minority rights and empowermen t of disadvantaged groups. The European 
Instrument for Democratisation and Human Rights also supports these issues.  
In response to the economic crisis, an IPA crisis package  has been created, comprising €200 
million for the Western Balkan region which are expected to leverage investments of at least €1 billion, co-financed by the partner financial institutions. Kosovo will benefit from a share 
of multi-beneficiary funds for co mpetitiveness, SMEs, energy efficiency and banking sector 
regulation. Kosovo benefits from a share of  the €85 million of multi-beneficiary funds 
programmed to boost competitiveness, support SMEs, energy efficiency and banking sector regulation in the Western Balkans. In addi tion, annual IPA funds were programmed to boost 
the infrastructure investments. A total of €25 million were committed to the Infrastructure Project Facility for two projects on water/sewage  networks and the improvement of district 
heating. 
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  
cooperation, good neighbourly relations with enla rgement countries and Member States, and 
respect for international obligations, such as  cooperation with the In ternational Criminal 
Tribunal for the former Yugoslavia (ICTY). 
2.1. Democracy and the rule of law 
Constitution The Constitution of Kosovo is in line with Eu ropean standards, which require stability of 
institutions guaranteeing democracy, the rule  of law, human rights and respect for and 
 
EN 7   EN protection of minorities. Ensuring full respect for the rule of law, human rights and the 
protection of minorities is a key priority in th e European Partnership of 18 February 2008.4 
Parliament  
The assembly annual work plan for 2009 has been adopted and is  in line with the 
government’s legislative strategy. During the repo rting period the assembly carried out its ex 
ante responsibilities as regards the budget. It intervened to safeguard the funding allocated to 
institutions, and reviewed reports on their expenditure ex post .  
The interaction between the assembly and civ il society has improved. The assembly appointed 
the Ombudsman in June 2009. However, dialogue between the assembly and civil society is not sufficiently developed.  
The assembly adopted a resolution on Kosovo's prio rities and strategies for EU integration. 
The assembly action plan was adopted in Februar y. It provides guidance and allocates tasks to 
all assembly committees for overseeing the gove rnment’s implementation of the European 
Partnership priorities. The assembly committee for European integration is tasked with 
monitoring the effective implementation of th e action plan. The committee's financial and 
administrative capacity needs strengthening. Cooperation between this committee and the 
Agency for Coordination of Development and European Integration needs to be developed 
further. Assembly committees need to improve their administrative capacity and technical 
skills to scrutinise legislation. Parliamentary ove rsight of the executive branch needs further 
improvement.  
The 2009 work plan for the Central Electio n Commission has been  adopted. The chief 
executive of the Commission's Secretariat wa s appointed in May. The Political Parties 
Registration Office has been established but is not yet fully operational. The Commission 
continues to rely heavily on OSCE support. Its capacity is weak and staff turnover is high. 
Overall , the assembly has made some progress in  a number of areas, notably as regards 
streamlining its working procedures. The capacity  to scrutinise draft legislation and monitor 
its implementation after adoption is in need of  further improvement. Parliamentary oversight 
of government needs to be enhanced.  
Government  
The main structures of government have been put in place and function in line with relevant 
constitutional provisions. Most senior positions have now been filled with the appointment of 
the Deputy Ministers for Trade, Foreign A ffairs and the Kosovo Security Force.  
Political stability has been maintained. The gov ernment consolidated further its capacities by 
establishing the Ministry for th e Kosovo Security Force, the Ko sovo Security Council and the 
Kosovo Intelligence Agency. However, democratic oversight of Kosovo security sector needs 
to be strengthened. 
In January, the government presented its 2008 annual report to the assembly. The Law on 
Foreign Service and the Law on Consular Services  of Diplomatic and C onsular Missions have 
been adopted. In March, the government orga nised a high level forum taking stock of 
                                                
 
4 Council Decision 2008/213/EC. 
 
EN 8   EN progress made since the Donors’ Conference for Kosovo of July 2008 and updating donors on 
the implementation of reforms. 
The government continued to build its capacity  for EU approximation and to strengthen the 
Agency for Coordination of Development and European Integration.  A revised European 
Partnership Action Plan was adopted in August. Th is is an important step forward, but further 
prioritisation is needed. The government now needs to focus on its implementation. The Agency is acquiring a growing role  in this respect. A new director has been appointed and the 
Agency's working structures have been appr oved. The January strike by its employees was 
resolved. However, the Agency needs more cons istent political guidanc e from the ministerial 
council for European integration. The government 's delivery on EU integration commitments 
needs to be significantly improved. The Ag ency for Coordination of Development and 
European Integration needs to assume a central role in this regard, with increased high-level 
political support to carry out its mandate. 
There has been some progress in the area of local government  administration reform and 
decentralisation, which is a key European Part nership priority. Working groups have been 
formed on legislative reform, establishmen t of new municipalities, devolution of 
competencies and resources, information campaigns, donor coordination and capacity 
building. The Ministry of Local Government  Administration adopted the medium-term 
strategy 2009-2012. Local elections have been announced for 15 November. Kosovo needs to ensure that they are conducted in  line with international standard s. A particular challenge will 
be to ensure that all communitie s take part in the elections. 
However, inter-ministerial cooperation a nd coordination remain weak. The Law on 
Government has not been adopted. The central po licy guiding role of mi nisterial councils is 
not fully implemented. The capacity of local govern ment is still weak. The Law on the City of 
Pristina has not yet been adopted. An effec tive mechanism to monitor and assess the quality 
of service delivery by munici palities is still lacking.  
The security situation remains of concern in th e north. The government needs to strengthen its 
efforts in this respect. Further efforts are needed  to address the reluctance of Kosovo Serbs to 
take active part in Kosovo's institutions, in cluding in the forthcoming local elections. 
There have been cases of politic al interference in appointments to key civil service positions 
(including senior civilian positi ons within ministries, boards of  publicly-owned enterprises, 
Ombudsman's office, Constitutional Court). This has affected the credibility of Kosovo’s institutions to manage appointment proce sses in a fair and transparent manner.  
Overall , the recently established government struct ures function and polit ical stability has 
been maintained. Some progress has been made as regards the adoption of legislation and 
capacity building. There has been certain prog ress in local government reform. Effective 
implementation of decentralisation to the benefit of all communities remains a major challenge. Inter-ministerial coor dination needs further strengthen ing. Political interference in 
high level appointments is an issue of concern.  
Public administration  
 
EN 9   EN The review of tasks and res ponsibilities within the public ad ministration (the functional 
review) has been completed and the majority of its recommendations implemented. Separate 
reviews have been completed for th e Ministry of Public Services,5 the Ministry of Local 
Government Administration, the Ministry of In ternal Affairs and the Kosovo Land Registry. 
Six working groups have been set up to overs ee the public administration reform process. 
They report to the inter-ministerial comm ittee chaired by the Deputy Prime Minister.  
During the reporting period, the Independent Over sight Board resolved 166 appeals by public 
administration employees. The Board is an  autonomous body reporting directly to the 
assembly of Kosovo. The last two of two of  overall eight members were appointed by the 
assembly in July. 
However, important legislation relating to public administration reform is yet to be adopted, 
notably laws on the civil service, on salaries and on the organisation of  public administration 
institutions. These laws are essential in ensu ring the independence of the civil service. A 
clearer distinction is needed between civil servants and political appointments. The Senior Public Appointments Committee is not fully functional. This has hampered the recruitment process for senior positions in ministries. The administra tive capacity of the Committee's 
Secretariat remains limited. The office of the Om budsman needs to be strengthened further. 
Training and certification of civil servants continues to be provided by the Kosovo Institute of 
Public Administration. However, the Institut e has limited capacity and resources, which 
affects the quality and amount of training provided. It needs to be better integrated in the 
activities of the Regional School  for Public Administration. Fu rther efforts are needed to 
reinforce the capacity of institutions in charge of public administration reform as well as to 
allow the transfer of knowledge a nd best practices across the region. 
Overall , there has been some progress as regard s public administration reform with the 
completion and the continuing implementation of the functional review. Key legal acts need 
to be adopted. Ensuring the de livery of public services to all people in Kosovo and 
establishing a professional, accoun table, accessible, representati ve public administration free 
from political interference is a key European Partnership priority. This has not been fully guaranteed. The capacity of Kosovo's public admi nistration remains weak. Substantial efforts 
are needed to ensure the transparency of public appointments.  
Judicial system 
The Law on the Constitutional Court has been  adopted. The six Kos ovan judges, including 
two representatives of minority communities, we re nominated by the Assembly in May and 
appointed by the President in June. The International Civilian  Representative also appointed 
the three international judges in June. However,  Kosovo has still to a dopt a package of four 
reform laws: on Courts, on Kosovo Judicial Council, on Prosecution and on Prosecutorial 
Council.  
The Ministry of Justice gained new responsibilities in the field of internationa l cooperation. 
As of March, its department for legal affairs ha ndles requests from other countries, such as 
extraditions, executing court sentences, transfer ring criminal records, etc. UNMIK remains 
responsible for international judicial coopera tion with countries that  have not recognised 
                                                
 
5 In May, the Ministry of Public Services was renamed the Ministry of Public Administration. 
 
EN 10   EN Kosovo, including for requests coming from Serbia. It continues to be the point of contact 
with Interpol. A clear procedure for internati onal legal cooperation needs to be adopted and 
consistently followed by courts and prosecutors. The administra tive capacity of the ministry 
remains weak. Its legal department needs strengthening. 
During the reporting period, Kosovo adopted a number of other im portant laws related to the 
judiciary: the Law on Notaries , the Law on Contested Procedur e (Civil Procedure Law), the 
Law on the Bar, the Law on Mediation, th e Law on Supplementing and Amending the 
Kosovo Criminal Code, and the Law on Supplementing and Amending the Kosovo Code of Criminal Procedure. The Law on the Temporar y Composition of the Kosovo Judicial Council 
was adopted in December. The Council member s were appointed in July; the Council is 
already operational. However, the law contai ns provisions which are not in line with 
European standards. Its delayed implementation disrupted the activities of the Council, thus 
impacting on the continuity of court ma nagement and the conduct of disciplinary 
investigations for sitting judges.  
Allegations of corruption a nd misconduct in the judiciary have not been adequately 
investigated. The Office of the Disciplinary Couns el responsible for this  activity is not fully 
functional. The Judicial Audit Unit has issued recommendations  regarding the functioning of 
the courts that have not been properly taken into account by th e Kosovo Judicial Council. The 
process of vetting and re-appointing judges and prosecutors in Kosovo has started under the 
supervision of the Independe nt Judicial and Pr osecutorial Commission. However, the 
reluctance of judges and prosecutors from the Kosovo Serb community to be involved in this process remains an issue of concern. The Comm ittee for bar examination is not functional, 
which has narrowed the participation in the process. 
Courts across Kosovo have been equipped with new computers, allowing the installation of 
the court management information system software and the registration in the system of all case data from the old registry books. The sy stem is operational in most Kosovo courts; 
training on how to use it continues.  
EULEX judges and prosecutors have been depl oyed. The Law on Jurisdiction, Case Selection 
and Case Allocation of EULEX Judges and Prosecutors in Kosovo was adopted. EULEX 
made 100 judicial decisions a nd pronounced 27 verdicts, mostly  in criminal cases. The 
mission has also initiated an  investigation into allega tions of organ trafficking. 
There have been several strikes in  the judicial sector. This has resulted in further undue delays 
in a number of trials. There has been no signif icant improvement in re ducing the backlog of 
civil and criminal cases, including by the Su preme Court. The Special Chamber of the 
Supreme Court responsible for cases related to pr ivatisation is paralyse d, due to the lack of 
local judges. This is a matter of serious con cern. Cooperation between the prosecutor's office 
and the police is limited.  
There has been no progress in dealing with cases related to the March 2004 events. The 
handling of criminal cases in this context contin ues to be complicated by a number of issues, 
such as the disappearance of evidence and witne sses’ statements, the displacement of people, 
the refusal of some Kosovo Poli ce officers to cooperate and th e intimidation of witnesses, 
judges and prosecutors. The court in northern Mitrovicë/Mitrovica is  composed of EULEX 
judges and prosecutors only and works with lim ited capacity. Rule of la w in northern Kosovo 
is not guaranteed. Both Kosovo and Serb authoritie s need to make efforts in this respect.  
 
EN 11   EN Overall , Kosovo is at an early stage in addressing prio rities in the area of justice. The justice 
system remains weak, vulnerable to political  interference and inefficient. There is a 
considerable backlog of cases. The structural problems of Kosovo's prosecution service need 
to be addressed. Kosovo's Judicial Council does not function effectively. Kosovo's judiciary is 
still in need of a major reform  and the government needs to en sure the participation of the 
Kosovo Serb community in the process. The Kosovo Serbs also need to take proactive and constructive steps in this regard. Ensuring full re spect for the rule of law is a key European 
partnership priority. 
Anti-corruption policy  
Kosovo has made limited progress in tack ling corruption. The Kosovo Anti-Corruption 
Agency is now fully operational and staffed. Th e Agency signed a series of memoranda of 
understanding with other releva nt institutions, such as the Independent Judicial and 
Prosecutorial Commission (to allow exchange of information on corruption cases in the 
judiciary system), the Financial Intelligence Centre, the Head of EU LEX Prosecutors and the 
Ombudsperson. 
However, the legal framework for tackling corrup tion needs to be urgently improved. Kosovo 
still needs to adopt the Law on the Declaration and Control of Assets and amendments to the 
Law on Anti-Corruption and to the Law on Conflicts  of Interest. The anti -corruption strategy 
and action plan are yet to be adopted. To date , there is no law on the financing of political 
parties. The strength of the supervisory mechan isms and the lack of transparency regarding 
the funding of political parties remain issues of serious concern. The institutional framework 
remains fragmented. There is a lack of coope ration among relevant actors, notably between 
the Agency and the prosecutor's office. The in ter-ministerial working group on anti-corruption 
has also failed to deliver tangible results.  
Overall , there has been limited progr ess in the fight against corruption, which is a key 
European partnership priority. Corruption re mains prevalent in many areas in Kosovo and 
continues to be a very serious concern. The le gislative and institutional framework needs to be 
strengthened. Cooperation betw een the Agency and the prosecutor's office needs to be 
improved. Kosovo needs to develop a track record of investigations, indictments, prosecutions 
and convictions in anti-corruption cases.  
2.2. Human rights and the protection of minorities 
Observance of international human rights law  Kosovo’s cooperation with human rights bodies is  limited since Kosovo is not a member of 
the UN nor of the Council of Europe. Consequently, Kosovo's citizens do not have the possibility to lodge a complaint with the European Court of Human Rights  against Kosovo's 
authorities. As regards the promotion and enforcement of human rights , in December 2008, 
the government approved the strategy and the action plan on human rights for the period 
2009-2011.  
However, the mechanisms to ensure their implementation are not yet in place. Some 
municipal human rights units ar e not operational, in particular in Kosovo Serb majority 
municipalities, which are reluctant to cooperate  with the central authorities. The Ombudsman 
office has only limited oversight as regards Serb ian parallel structures. The human rights units 
 
EN 12   EN at the central level (e.g. Ministry  of Justice, Ministry of Pub lic Administration) mandated to 
implement the Ombudsman’s recommendations are not yet fully operational.  
Overall , there has been some progress in this ar ea, notably the adoption of the human rights 
strategy and action plan. However, the inst itutional framework for the observance of 
international human rights norms in Kosovo need s to be significantly strengthened. Ensuring 
full respect for human rights is a key European Partnership priority. 
Civil and political rights  
As regards the prevention of  torture and ill-treatment and the  fight against impunity , 
Kosovo’s response to the 2007 report of the European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment was made public in January. 
The recommendations of this report were taken in to consideration by the Ministry of Internal 
Affairs and by the Kosovo Police. 
Investigations of serious violations, including  in police detention cen tres, continue to be 
carried out by the Police Inspectorate of Kos ovo. The Police Inspectorate is independent and 
reports to the Minister of Internal Affairs. Inve stigations of minor offe nces are carried out by 
the Professional Standards Unit of the police. 
The Ministry of Justice is ta king steps to address complain ts of misconduct in prisons and 
detention centres. The victim, advocacy and assi stance division within the Ministry continues 
to provide assistance to victim s of domestic violence and tr afficking. Impunity remains an 
issue of concern. For many offences, the authorities  still need to identify the perpetrators and 
bring them to justice as well as to  protect and compensate victims. 
Overall , there has been some progress in addre ssing torture and ill-treatment. The fight 
against impunity remains an issue of importance for reconciliation between communities. 
The Office for Missing Persons and Forensics continued to develop its capacity with the 
support of EULEX. During the reporting peri od, it performed 41 field operations (26 
exhumations resulting in the excavation of 23 bodies and the assessment of 15 additional potential sites). The Office has intensified its work sending about two hundreds new bone 
samples for DNA analysis. The remains of more th an 40 victims have been returned to their 
families. The Working Group on Missing Persons, comprised of Belgrade and Pristina delegations and chaired by the In ternational Committee of the Red Cross, continues to meet 
regularly. The Committee has consulted twenty c ountries whose contingents were deployed in 
Kosovo in 1999 in order to collect documentati on on outstanding cases. At the beginning of 
2009, the government's Commission on Missing Pe rsons set up a secret ariat, which is 
gradually becoming operational.  
Overall, progress on missing persons remains slow  ten years after most  disappearances: less 
than 40 cases have been closed since the Eur opean Commission's last progress report, leaving 
the total number of missing pe rsons at over 1,800. Th e lack of informa tion on non-identified 
burial sites is hindering further progress. There is no law on fo rensics and no department of 
forensic medicine. There is no law on missing persons. The issue of compensation for the 
families of missing persons needs to be resolved. 
In the area of access to justice , the Office of the Legal Aid C oordinator increased its outreach 
activities by setting up a webs ite and a database. Between October an d July, over 1,400 
 
EN 13   EN persons benefited from free legal aid. The Office signed a memorandum of understanding 
with the Chamber of Advocates to streamline free legal representation and further improve 
outreach to citizens.  
However, the resources of the Office of the Legal Aid Coordinator are limited and staffing 
levels are low. The biggest number of comp laints to the Ombudsman between July 2008 and 
June 2009 relate to access to courts (civil proceed ings). Access to justice in areas inhabited by 
non-majority communities and especially in nor thern Kosovo is not guaranteed. The absence 
of a functioning judiciary in the north seriously limits access to justice for all communities. There is no Kosovo Serb representative in the district legal ai d office based in 
Mitrovicë/Mitrovica south.  
Overall , the Office of the Legal Aid Coordinator has improved its outreach activities and its 
cooperation with the Chamber of Advocates, but  further progress is needed in order to 
improve access to justice in Kosovo. 
As regards the prison system , the Kosovo correctional service unde r the Ministry of Justice is 
operational, with EULEX retaining certain co mpetences. Security measures have been 
upgraded in the high-security f acilities and technical equipmen t improved, including vehicles 
for prison escorts. 
However, the Law on Execution of Penal Sanc tions needs to be amended in line with 
European standards. There are still no adequate f acilities for detention of mentally-ill criminal 
offenders and criminal offenders with diminished  mental capacity. There is no separate space 
in the Lipjan/Lipljan correctional facility allocat ed to juvenile female detainees. Reintegration 
of juveniles after release is a matter of concern. Facilitating th e transfer of Kosovo detainees 
from other countries needs to be improved. Ko sovo needs to take steps to accommodate an 
anticipated increase in the num ber of returned  prisoners.  
Most Kosovo Serb detainees are in the Mitrovicë/Mitrovica detention centre, which is not 
equipped for long-term detention. Support from Pr ishtinë/Priština is limited. Most of the 
detainees are pre-trial detainees. Other Kosovo Serbs are detained in the Gjilan/Gnjilane and 
Prishtinë/Priština detention centres. 
The role of the probat ion service is still poor ly understood. The law in  place provides that 
prosecutors can send juvenile o ffenders directly to the proba tion service (bypassing courts).  
The mechanism of using alternat ive sentences is weakened by the general lack of support and 
awareness within the judiciary system. If pr operly established, it w ould reduce the current 
backlog. The interaction of the probation serv ice with the police and other stakeholders 
involved in this sector needs to be better st ructured. There is a need for more concrete 
initiatives to promote social/ economic re-integration of proba tion services’ beneficiaries.  
Overall , some progress has been achieved with rega rd to correctional facilities, but serious 
challenges remain. 
As regards  freedom of expression , the independence and impartia lity of the publicly-owned 
Radio and Television of Kosovo (R TK) are not fully ensured. Thr ee years after its  entry into 
force, the Law establishing RTK is still not being adequately implemented. A member of the government takes part in the Assembly com mittee responsible for selecting RTK's board, 
which is yet to be appointed. This is not in lin e with the Assembly's rules of procedure. There 
have been a series of public debates with th e participation of the Press Council and the 
 
EN 14   EN Association of Professional Journalists of Kos ovo on cases of political interference in the 
work of the media. The Law on Access to Offi cial Documents is not fully implemented.  
Overall, freedom of expression is not fully guaranteed. The rele vant institutional framework is 
not operational. Cases of political intimidation call for more robust measures by the Kosovo authorities. 
The freedom of association  and assembly is guaranteed under the Constitution. The Law on 
Freedom of Association  in Non-Governmental Organisation s was adopted in February. The 
Law on Public Gatherings was adopted in December 2008. Civil society continues to depend 
mostly on international funding, leading to project-based and donor-d riven agendas with 
limited sustainability and long-term strategi c positioning. The monitoring capacity of NGOs 
is limited, their participation in  the legislation process poor. 
Overall , civil society has deve loped further but the environment,  in which it operates needs to 
be significantly improved.  
In relation to freedom of religion , the Law on Holidays rec ognises Orthodox, Islamic and 
Catholic holidays. The ongoing reconstructi on and hand-over of orthodox sites under the 
auspices of the Reconstruction Implementation Commission is a positive development. However, there is only limited dialogue betwee n different religious communities. Security 
concerns mean that pilgrims often ask to be escorted by security forces to cemeteries or 
religious sites in minority areas. This legal framew ork for religious activities is inadequate as 
religious communities are required to regi ster as NGOs to acqui re legal identity. 
Overall , there is some progress as regards the r econstruction of religious sites, but more 
remains to be done to reconcile and integrate the religious communities. Ensuring the full respect of religious fr eedom is a key European Partnership priority. 
Economic and social rights  
In the area of women’s rights , the Agency for Gender Equality continues to monitor and 
facilitate the implementation of the Framew ork Programme for Gender Equality 2008-2013 in 
accordance with the Law on Gender Equality. Th e Agency has increased its capacity. The 
percentage of women occupying decision-making positions in public administration bodies has 
slightly increased to over 20%. Ministries ha ve set indicators to measure performance of 
gender equality policies and programmes.  
However, gender equality officers have not be en appointed in all ministries and gender 
equality committees have only been established in  two out of 30 m unicipalities. Equal 
representation remains a challenge at all levels, particularly in minority  communities. None of 
the non-Albanian senior positions is held by a woman. 
The establishment of domestic vi olence units and training of o fficers on assisting victims is a 
positive step in the police's efforts to address domestic violence. However, high levels of 
domestic violence persisted. Ma ny cases are not reported. Few reported cases of violence are 
prosecuted in court. The majority of traffick ing victims are women. Th e six shelter facilities 
are inadequate and do not provide a sufficient le vel of security. Delays  in issuing protection 
orders remain an issue of concern.  
 
EN 15   EN Overall , the institutional framework for the protection of women' s rights has been 
strengthened, but domestic violence remains widespread and is a serious concern. The 
protection of women against a ll forms of violence needs to be considerably strengthened. 
Children’s rights are included in the Strategy on Human Rights 2009-2011. The Children's 
Rights Strategy and the related action plan were  adopted in June by the inter-ministerial 
Committee for Children’s Rights chaired by the Prime Minister. The Office for Good 
Governance appointed a children’s rights officer. The Action Plan for People with Disabilities 
2009-2011 incorporates the rights of children with  disabilities in the sections on education, 
child protection and health. The Ministry of Justice has made the reform of the juvenile 
system a priority. 
However, there is still no legal protection for ch ildren with disabilities. Only 10% of children 
with special needs atte nd compulsory education. More gene rally, school drop-out rates remain 
high particularly at upper sec ondary level (17% for boys and 9%  for girls). Ch ild trafficking 
and child labour remain a concern. Efforts to ad dress these phenomena need  to be stepped up, 
in cooperation with relevant organisations and in  coordination with efforts in other areas, such 
as education and social welfare. Children’s access to justice is yet to be ensured. The lack of 
coordination between local and central structures  hampers the implementation of the Juvenile 
Justice Code.  
Overall , child protection remains weak. Further e fforts are needed to guarantee children's 
rights.  
In the area of the socially vulnerable and persons with disabilities , the Action Plan for 
People with Disabilities 2009-2011 wa s adopted in April. It is th e result of a consultative and 
inclusive process with the participation of civil society organisations. In December, the 
government approved the decision on reactivati ng and reorganising the Council for Persons 
with Disabilities. 
However, statistical data on disabilities is not  available. Access to education facilities for 
people with physical disabilities remains difficu lt. The lack of mental health legislation is 
detrimental to the treatment of patients. The lack of adequate health and rehabilitation services remains to be addressed. Illiter acy among people with disabilities remains high. 
Overall , the integration and protection of socially  vulnerable groups, in particular abandoned 
children, returnees and people with di sabilities needs to be enhanced.  
In the area of labour rights and trade unions , the Ministry of Labour and Social Welfare has 
started a constructive cooperatio n with international partners  to address the numerous 
challenges existing in the sector. It takes pa rt in the Sustainable Employment Development 
Policy Programme and benefits from expertise pr ovided via EU technical assistance projects.  
Overall , labour legislation is poorly  implemented and remains wea k, and trade unions are not 
sufficiently active in the social dialogue. 
Anti-discrimination  provisions have been included in the Strategy and Action Plan for 
Human Rights in Kosovo 2009-2011. Equal acce ss to housing, education, employment and 
social security is not always respected. Awa reness of lesbian, gay, bisexual and transgender 
issues is very low and cases of violence of ten go unreported. More government awareness 
 
EN 16   EN campaigns to counter discrimination are needed . More efforts are needed for the effective 
implementation and monitoring of the Anti-Discrimination Law. 
Overall , discrimination remains an issue of concern. Creating a society free from 
discrimination of any kind and promoting the in tegration of disadvantaged groups is a key 
European Partnership priority. 
As regards property rights , the Law on Expropriation of  Immovable Property was 
promulgated in April. The law regulates rules and conditions of expropr iation at central and 
local levels. The draft Law on Sales of Apar tments where Tenure Rights exist has been 
amended to regulate the privatisatio n of socially-owned apartments.  
In July, the Kosovo Property Agency signed a memorandum of understanding with the 
Kosovo Cadastral Agency for access to the latte r's database. In August, the Kosovo Property 
Agency signed a memorandum of understand ing with the UNHCR allo wing the resuming of 
activities in Serbia. More th an 40,000 claims have been r ecorded; over half have been 
adjudicated by the Kosovo Pr operty Claims Commission.  As of September 2009, 6,700 
decisions have been implemented. Of thos e, 770 have led to physical repossessions. 
Three international members of  the Supervisory Board of th e Kosovo Property Agency have 
been appointed. Two local members are yet to be named. Two international judges have been 
appointed to the Supreme Court panel for app eals against contested decisions by the Agency. 
Local judges are yet to be appointed and this paralyses the work of the panel. The Agency 
finalised the compensation scheme for socially-owned apartments, which needs to be approved by the Supervisory Board.  
Over 900 properties are currently  the subject of an eviction order. The implementation of 
evictions orders needs to be significantly improved. The implementation of the rental scheme, notably as regards rent collection by the Agenc y, remains an issue of concern. There is a need 
for more efficient cooperation with the police to ensure the enforcement of relevant legal 
provisions.  
Not all of the municipalities have digital immo vable property rights re gisters linked with the 
Kosovo Land Registry. Some land registry books remain in Serbia. The legal status of informal settlement has not yet been resolved ; ineffective communication between municipal 
and central authorities fuels this problem. 
Overall , the institutional and legal framework ha s been strengthened but has led to limited 
progress in practice in the area of property ri ghts, which is a key European Partnership 
priority. 
Minority rights, cultural right s and protection of minorities 
The Kosovo authorities continued their effort  to improve the protection, integration and 
representation of minority communities . The planned census need s to be organised and 
conducted in a way enabling the widest possible pa rticipation to ensure it reflects accurately 
the situation of all communities in Kosovo. Th e Community Consultative Council has been 
inaugurated and meets regularly. The Serb community is repres ented by five members, the 
Turkish and the Bosnian communities by three members each, the Roma, Ashkali, Egyptian 
and Gorani communities by two members each  and the Montenegrin community by one 
member. 
 
EN 17   EN The Ministry of Culture has established a forum for technical information exchange on 
cultural heritage  in Kosovo, improving the coordination of activities in this field. The 
reconstruction of orthodox site s through the Reconstruction Implementation Commission is 
progressing; tendering rehabilitation works rest arted in May. The new Customs Code adopted 
in November 2008 provides for the economic ac tivities of the Serb Orthodox Church to be 
exempted from customs duties and excise tax. 
Security of religious and cultu ral heritage sites is generally assured by the Kosovo Police 
supported by KFOR. The police operational order of February for the protection of Serbian 
cultural and religious sites continues to be implemented.  
However, there is still no integrated cultural and religious heritage conservation strategy. 
Unregulated economic development presents a poten tial risk for the future of religious and 
cultural heritage. The Law on Special Protective Zones is not fully implemented. The list of protected cultural heritage sites has yet to be adopted. Further cl arifications are needed on the 
institutions' role, including the Cultural Her itage Council. Disputes over land between some 
municipalities and the Serb Orthodox Church remain unresolved.  
The majority of cultural and re ligious heritage sites in Kos ovo are not regulated in spatial 
plans. Only seven municipalities  have spatial plans approved by the Ministry of Environment 
and Spatial Planning. The protectio n of sites from unregulated c onstruction in proximity is not 
ensured. The Law on Spatial Planning is not fully implemented. 
Overall , the protection of cultural heritage has progressed but further efforts are needed. 
Ensuring the protection of cultural and religiou s heritage, including measures to prevent and 
prosecute attacks on sites, is a ke y European Partnership priority. 
The constitution and the legislation in for ce continue to provide  a highly protective 
environment for minority cultural rights in th e field of education, language and media.  
The right to public education  at all levels for non-majority communities in the language of 
their choice is guaranteed by law. The Kosovo curriculum is taught in three languages: 
Albanian, Bosnian and Turkish. At the level of primary education, textbooks are available in 
these three languages. In April, the Mini stry of Education, Science and Technology 
established the Independent Commission for Reviewing the Serb Curricula.  
The Ministry for Public Services monitors language  compliance at the central level. Most 
documents issued by municipalities are not tran slated into official languages in accordance 
with the Law on the Use of Languages.  
The law also gives guarantees for public media  to broadcast in minority languages, which led 
the Independent Media Commissi on to re-launch the licensing pr ocess. The Prime Minister’s 
office adopted a decision in December establ ishing the Media Minority Fund, receiving fees 
collected by RTK.  
However, implementation and monitoring remain insufficient for all laws pertaining to the 
protection of minorities’ cultural rights. Serbia n-speaking pupils of minority communities are 
often schooled by a parallel educ ational system. This does not facilitate reconciliation and 
multi-ethnicity. Kosovo Albanian pupils follo w the Kosovo curriculum according to Kosovo 
law. Kosovo Serb pupils follow the Serbian curr iculum according to Serbian law. The absence 
of a Kosovo curriculum in the Serbian language represents a stumbling block for resolving the 
 
EN 18   EN dispute regarding access to education of children from the Gorani minority in the 
Dragash/Dragaš municipality.  
Textbooks in Bosnian and Turkish languages are not yet available for secondary schools. The 
Kosovan educational system does not offe r tailored programmes for Roma, Ashkali, 
Egyptian, Gorani, Croat and Montenegrin minor ities. The lack of provision by municipal 
authorities of free transportation for pupils from  minority communities remains an obstacle to 
integration. Kosovo diplomas are not recognise d by Serbian authorities. This discourages 
Serbian-speaking students to attend the al ready limited range of programmes taught in 
Serbian/Bosnian language at Prishtinë/Priština University.  
Most municipalities have not yet issued a regulati on on the use of languages . Language 
courses among civil servants are not suffici ent to enhance bi- lingualism within the 
administration. The Central Language Commissi on is poorly organised, lacks resources to 
exercise its mandate and lacks visibi lity among non-majority communities.  
RTK does not meet its obligation to broadc ast 15% of its programmes in non-Albanian 
languages. RTK’s territorial coverage of minority  areas is lower than required by law (90%). 
Since Kosovo is not a member of the Internatio nal Telecommunication Union, there is still no 
international frequency plan allowing Serbia n-language TV stations to broadcast throughout 
Kosovo.  
Overall , the promotion of cultural rights of Ko sovo’s minority communities needs to be 
strengthened.  
Electricity supply in Serb-majority areas is not fully ensured. The majority of villages, 
populated mostly by Kosovo Serbs, have signe d collective agreements  with the Kosovo 
Energy Corporation. The agreements stipulate paym ent of electricity on a regular basis as per 
consumption. Accumulated debts to the Kos ovo Energy Corporation have been frozen. 
The situation of minority communities continues to raise concerns. There is little progress 
towards reconciliation between communities. The institutional set-up at central level is in 
need of further improvement. The Ministry fo r Communities and Returns and the Office of 
Community Affairs remain to agree on their respective areas of responsibility. Many people 
from minority communities continue to benefit fr om the services of parallel structures for 
education, social protection and health care. The lack of civil status registration is a further 
obstacle as regards access to services. 
There have been a number of incidents of inte r-ethnic violence, notab ly in northern Kosovo. 
A number of orthodox graveyards throughout Ko sovo have also been vandalised. Kosovo 
Serb police do not systematically report cases and incidents of inter-ethnic violence. The 
perception of freedom of movement by some minorities remains negative. 
Overall , there has been limited progress in th e integration of minority communities. 
About 850 displaced persons returned  voluntarily to Kosovo minority areas, fewer than 
during the previous reporting period. Over 200,000 people from Kosovo remain displaced in 
Serbia and 16,000 in Montenegro. Overall, 20,000 persons are displaced within Kosovo.  
The Ministry for Communities and Returns has in stalled a database for the registration of 
displaced people within and out side Kosovo. Several municipali ties have adopted municipal 
return strategies.  
 
EN 19   EN However, the pace of voluntary returns is s till very low. The lack of employment 
opportunities, the lack of  confidence in the enforcement of property rights a nd the continuous 
perception of security threats are cited as being the main reasons for this. The plans for return 
of some Kosovo Albanians to northern Mitrovicë/Mitrovica has resulted in clashes between 
Kosovo Serbs and police forces, NATO's KFOR and EULEX.  
Municipal return strategies, if adopted, are not fully implemented. Gu idance and support from 
central authorities remain insufficient and a lack of financial resources persists. There is no synergy between the frameworks put in place for voluntary returns and forced returns. 
Repatriated persons do not have access to te mporary accommodation. Persons in need of 
medical treatment are not always treated. Ther e is no reintegration monitoring mechanism. 
Difficulties with civil registration are a concer n for returnees to Kosovo. There is no law on 
civil status. Kosovo is not part y to the 1954 Convention relating to the Status of Stateless 
Persons, nor to the 1961 Conven tion on the Reduction of Statel essness. There is no legal 
definition of statelessness in Kosovo.  
Overall , the voluntary return process is still limited and remains a challenge for Kosovo 
authorities. The government is not implementing the Reintegrat ion Strategy for Repatriated 
Persons in a satisfactory manner. Creating a c limate of reconciliation, inter-ethnic tolerance 
and sustainable multi-ethnicity is a key European Partnership priority.  
In December the government adopted the Strategy for Integration of Roma, Ashkali and 
Egyptian  (RAE) Communities 2009-2015. In May, the Prime Minister appointed two 
coordinators to address the issue of the lead -contaminated living areas. A Steering Committee 
was also set up. The Mitrovicë/Mitrovica municipal ity has allocated land for the building of 
houses for the affected families.  
However, RAE communities remain vulnerable.  Civil status regist ration and possession of 
identity documentation remain an outstanding i ssue. RAE access to esse ntial public services 
(education, social protection, heal th care) is still limited. Sc hool enrolment of RAE children 
continues to be a major problem together with  the high drop-out rate . High illiteracy rates 
persist. There are not en ough Roma-trained teachers. 
The living conditions in some RAE settlements are a serious concern, particularly the lead-
contaminated camps of Çesmin Llugë/ Česmin Lug and Osterode. Together with the camp in 
Leposaviq/Leposavi ć they pose serious health risks. This  is a fundamental violation of basic 
human rights. Urgent steps are needed to ad dress this situation and follow up on concerns 
raised by a number of European and internat ional institutions, such as the European 
Parliament, the Council of Europe and the World Health Organisation.  
Overall , the Kosovo authorities need to take urgent steps to a ddress the situ ation of RAE 
communities. 
2.3. Regional issues and international obligations 
Full cooperation with the International Criminal Tribunal for the Former Yugoslavia 
(ICTY)  is a key European Partnership priority. 
Cooperation between Kosovo and ICTY continue d during the reporting period. Discussions 
between ICTY, UNMIK and EULEX on future c ooperation arrangements are in progress to 
account for UNMIK’s reconfiguration.  
 
EN 20   EN Overall, Kosovo’s external representation remain s a challenge. Kosovo's authorities need to 
take a more consistent and constructive appr oach. UNMIK is the si gnatory on behalf of 
Kosovo of a number of international agreements  as well as regional initiatives  (Energy 
Community Treaty, European Common Aviati on Area Agreement, South East Europe 
Transport Observatory, Central European  Free Trade Agreement — CEFTA, Regional 
Cooperation Council). Under the constitution,  the Kosovo authorities ensure Kosovo’s 
regional and international representation. The Ko sovo authorities, howev er, are not accepted 
as a successor to UNMIK by some parties to these agreements.  
UNMIK has facilitated, where necessary and possible, arrangements to enable Kosovo’s 
involvement in regional fora. Kosovo’s approach to UNMIK’s role has not been consistent. 
This has led to ad hoc arrangements on a nu mber of occasions. The government needs to 
develop a comprehensive strategy for external representation and for joining international 
bodies and organisations.  
Kosovan delegates have not been able to partic ipate in all even ts hosted by countries that do 
not recognise Kosovo, due to difficulties in re lation to the use of Kosovo passports. Such 
occurrences have become increasingly frequent  and hinder the development of effective 
regional cooperation. The EU has stressed that regional cooperati on must be inclusive in order 
to be successful and regret s that disagreements regard ing the manner of Kosovo's 
participation in regional fora have resulted in Kosovo's absence from key regional events. It is 
therefore essential that Kosovo’s involvement in multilateral fora be ensured, and that all 
parties concerned demonstrate a constructive and flexible attitude in this regard. 
Kosovo representatives were not able to participate in the Annual Meeting of the Regional 
Cooperation Council, and the Summit of the South East European Cooperation Process 
(SEECP), held in Chisinau in June 2009, because  the Moldovan authorities did not issue visas 
to them.  
In December 2008, Kosovo appointed its repres entative in the Steering Committee of the 
Regional School of Public Administration (ReSPA). However, Kosovo’s continuous 
participation in ReSPA is at risk as Kosovo has not yet signed the ReSPA Agreement. Kosovo 
has not systematically participated in the CEFTA joint committee and subcommittee 
meetings. No solution has been agreed on how  Kosovo should be represented at these 
meetings.  
Kosovo has adopted new customs stamps. The Sp ecial Representative of the UN Secretary 
General has notified them to the European Co mmission and to CEFTA partners. Serbia does 
not recognise the validity of these stamps and questions their compliance with UNSCR 
1244/99 despite assurances received from the UN SRSG confirming compliance. 
There have been incidents where access to Kosovo has been denied for high-ranking Serbian 
officials. Kosovo's authorities have insisted that such visits be notified to them via appropriate 
diplomatic channels. Cooperating constructivel y on matters relating to Serbia is a key 
European Partnership priority. 
In February and March 2009, Kosovo adopted legi slation which is not compatible with its 
obligations under the European Common Av iation Area Agreement (ECAAA). Until this 
legislation is withdrawn, the implementation of  the first transitional phase of the ECAA 
Agreement remains in question. 
 
EN 21   EN Kosovo participates in the South East Europe  Transport Observatory (SEETO). In December 
2008, Kosovo participated in the 4th Annual Meeti ng of Ministers on the Development of the 
South-East Europe Core Regi onal Transport Network in Mont enegro, which launched the 
negotiations for a treaty establishing a Trans port Community with the Western Balkans.  
Kosovo continued to participate as an observer in the Investment Compact for South Eastern 
Europe (SEE), designed to improve the invest ment climate and encourage private-sector 
development in the region. 
There has been some progress on demarcation with the former Yugoslav Republic of 
Macedonia ; this process needs to be fully comple ted. There are no talks on demarcation with 
other neighbours.  
Overall , Kosovo’s involvement in regional coope ration initiatives n eeds to be more 
constructive and pragmatic. It is important that Kosovo participates in regional fora to keep 
pace with progress in key areas across the region. 
3. ECONOMIC CRITERIA  
In examining the economic developments in  Kosovo, the Commission’s approach was 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 The government of Kosovo has adopted its f ourth Medium-Term Expenditure Framework 
(MTEF), covering the years 2010 -2012. However, this document  has not been used as a 
medium-term policy planning tool. The path documented in the MTEF for Kosovo’s fiscal and external balances appears difficult to sustai n and the White Paper on social policies is not 
included, despite commitments made by the au thorities at the 2008 International Donor 
Conference. In general, new pieces  of legislation continued to be submitted to the government 
with no link to the MTEF or any other medium -term policy framework. The weak rule of law 
continued to be a major obstacle to socio-economic development. 
In March 2009, the first meeting in the framewor k of the fiscal surveillance mechanism with 
the European Commission took place in Pristina.  On 29 June 2009, Kosovo became a member 
of the International Monetary Fund and of the World Bank.  Overall , political consensus on 
the fundamentals of market-oriented economic policies has been maintained. However, the 
legal framework and the practices of a modern  public financial management are sill lacking. 
The public administration has insufficient capacity. 
Macroeconomic stability 
Real GDP growth in 2008 was 5.4%, up from 5.0% in 2007. Contrary to 2007, a year in 
which private sector dynamism was the main source of economic growth, economic activity 
in 2008 and in the first half of 2009 was incr easingly driven by the acceleration of public 
capital spending. Annual growth in private consumption st ood at 11.3%, public consumption 
grew by 3%, and while public investment in creased by 194%, private sector investment 
 
EN 22   EN declined by 10.2%. The latter resulted partly from  the decline in foreign direct investment and 
the stagnation of the privatisation process. As  a consequence of the global economic crisis, 
since late 2008 exports have been decreasing. However, Kosovo’s limited integration into the 
global economy and a stable fina ncial sector pursuing conservative strategies have so far 
delayed a stronger impact of the crisis. In a ddition, the persisting weak ness of the statistical 
system does not allow for a comprehensive as sessment of the economic situation in Kosovo.6 
According to IMF estimates, GDP per capita7 in 2008 reached €1,726, which corresponded to 
6.9% of the EU-27 average co mpared with 6.5% in 2007. Overall , the unfolding of the crisis 
affected Kosovo’s economy to a limited extent so far. However, the lack of data does not 
allow a robust assessment for th e previous or current year.  
In 2008 exports of goods increased by 20.2%, reaching 5.3% as a share of GDP. As in 
previous years, they were driven by base meta ls and base metal products, accounting for more 
than 60% of overall exports in 2008 a nd increasing 67% over 2007. The second most 
important export category, mineral products, sh owed a decrease of about 32% in 2008 vis-à-
vis 2007, as international demand fe ll due to the crisis. In the first half of 2009 exports fell 
substantially by 39.9%, with  the base metals category shrink ing by close to 60%. Imports of 
goods increased by 22.1% in 2008, reaching 50.2% of GDP, up from 44.2% of GDP in 2007. 
Mineral products (mainly oil), prepared foodstu ffs, base metals and machinery remained the 
largest import categori es. Total imports decreased by 1.6% but  more than two thirds of the 
commodity groups still registered positive growth rates. 
The coverage ratio of exported to imported goods , traditionally low, decreased to 6% in 
November 2008 (from 17% in July 2007), as e xports contracted with the coming of the 
international crisis. Exports have  further decreased since then. Consequently, the trade deficit 
widened to 46% of GDP in the first half  of 2009, from 43% in 2008 and 39% in 2007. 
The current account deficit — in cluding official grants — in creased from 10.2% of GDP in 
2007 to 16.3% in 2008. Remittances and foreign assistance amounted to 12.1% of GDP (12.5% in 2007) and 7.7% of GDP respectively. Foreign direct investment (FDI) was 13.1% 
in 2008, compared to 16.7% in  2007. In 2007, about half of FDI was linked to the 
privatisation process and the licensing of th e second mobile telephony operator, while in 2008 
the privatisation process stagna ted. As in previous years, th e net balance on the capital and 
financial account was lower than the current a ccount deficit, leaving a significant portion of 
the financing unexplained. Overall , an adjustment of the large trade deficit in the first half of 
2009 did not take place as the large public works triggered substantial imports of machinery 
and transport equipment, whereas exports fell sharply.  
The poor availability and reliabil ity of labour market data conti nued to hamper the analysis of 
labour market developments. The registered une mployment rate in th e first half of 2009 
remains very high, estimated at 40%, unchang ed compared to 2008. More than 90% of 
registered persons fall into the category of  long-term unemployment. The Labour Force 
Survey also confirms that the unemployment rate is very high and around 40%. Uncertainties 
on the accuracy of these figures  exist. They are ba sed on the fact that little is known about 
how many of those who are re gistered unemployed are actually economically inactive and 
actively looking for employment. Some 30,000 young people enter the labour market every 
                                                
 
6 The Statistical Office of Kosovo (SOK) has published nominal GDP figures for the years 2004-2007, 
stressing at the same time that the number and the quality of existing statistical surveys are insufficient 
for successful implementation of national acc ounts according to ESA 95 standards. 
7 A measure using PPP is not available for Kosovo. 
 
EN 23   EN year and many of them continue to leave Ko sovo to find work abroad. Labour is in fact 
Kosovo’s biggest (non-recorded) export item an d the labour force working abroad continues 
to generate a steady stream of income in the form of remittances which finances a large share of consumption in Kosovo. Howe ver, there are no official st atistics on labour migration.  
Overall , the level of economic activ ity does not allow the young a nd growing labour force to 
be absorbed. For many, emigrating and working abroad remains the only viable option to 
support their families in Kosovo. 
Average yearly consumer price inflation in creased to 9.4% in 2008 from 4.3% in 2007. 
Monthly inflation rates on an annual basis tu rned negative in 2009, reaching -3.0% in August. 
Kosovo was strongly affected by higher f ood and energy prices between mid-2007 and mid-
2008, partly due to the large share of food items in the CPI, but also due to low levels of 
competition in the economy. Main drivers behind recent negative inflation rate are the adjustment of food prices and lower costs for tr ansportation. On the other hand, the prices of 
housing-related cost items, incl uding energy and some servic es that are predominantly 
publicly provided, have been still rising. Overall , price developments reflect the falling 
international prices. Prices of domestic servi ces have continued risi ng, partly due to weak 
competitive pressure in the economy.  
The Central Bank of Kosovo (CBK) increased its scope of financial sector supervision and 
played a positive role in the management of risks related to the international financial crisis. It 
has also introduced high freque ncy monitoring of commercial banks. Whereas the CBK is the 
main institution for financial market regulatio n and supervision in Kosovo, due to Kosovo’s 
use of the euro as official currency, the CBK has only lim ited policy instruments at its 
disposal, such as reserve and liquidity requirements. In the absence of autonomous monetary 
policy and given the fully eurois ed economy, real interest rate and real (effective) exchange 
rate movements remain difficult to predict. Unce rtainties regarding prop erty rights and weak 
rule of law continued to be the main factor s for the high risk premiums demanded by the 
commercial banks. Overall , the stability of the financial sector benefited from improved 
supervision.  
After the 2007 budget execution had led to a s ubstantial increase in the government cash 
reserves, the 2008 fiscal year ended with a broadly balanced budget and government’s cash 
reserve at close to EUR 470 million. Total reve nues decreased from 25.9% of GDP in 2007 to 
25.3% of GDP in 2008. Revenue collected by the customs services accounted for 64.1% of 
total government revenues, up from 58.9% in 2007. Total expenditure increased by 44.0% in 
2008, reaching 25.3% of GDP, after 18.9% of GDP in 2007. Wages and salaries increased by 
9.3%, subsidies and transfers by 32.6%, and capita l outlays almost tripled (194.4%) compared 
to 2007. Thus, public investment reached 7.7 % of GDP, up from 2.8% in 2007. Expenditures 
showed a highly volatile profile. In the first ha lf of 2009 government expe nditure continued to 
rise – wages and salaries were up by 17.0%, s ubsidies and transfers rose by 25.4% from an 
already high base in 2008, capital outlays were  34.8% higher than during the first half of 
2008. In the first half of 2009 public revenues were not substantially affected by the crisis and 
they increased by 2.9% compared to the same period in 2008. Overall , the 2008 budget was 
marked by strongly increased spending on capital investment and subsidies and transfers. In 
view of the challenging economic environment,  revenue collection in the first half of 2009 
held up well.  
With regards to fiscal planning, the Minist ry of Economy and Finance (MEF) continued to 
receive incomplete information from line ministries on important strategic developments with fiscal implications. An important example was the limited involvement of the Ministry in the 
 
EN 24   EN transformation of the state-owne d energy sector, in sp ite of its high and increasing needs for 
transfers and subsidies from  the budget. The 2009 budget was influenced by the electoral 
agenda8 and contained large increases in public wa ges, which lead as a consequence to a 
continued breach of the fiscal rule as spelled out in the previous MTEF.9 The government also 
continued to initiate legisla tion without linking it to the M TEF or any other medium-term 
policy planning document that could ensure some  consistency of policies over time. Neither 
the budget, nor the MTEF have developed into efficient policy instruments. Instead, they 
continued to respond to ad  hoc spending pressures. 
Overall , given the absence of autonomous mone tary policy, the burden of macroeconomic 
adjustment remained with fiscal policy; how ever, the low quality of budgetary planning and 
execution show that it has to yet fully assume  its responsibility for macro-economic stability. 
Interplay of market forces 
The Competition Council started implementing an titrust policy. The Privatisation Agency of 
Kosovo (PAK) replaced the Kosovo Trust Agency in June 2008. The PAK resumed the process of privatising so cially-owned enterprises in the seco nd half of 2008, albeit at a modest 
pace and equally modest volumes, processing marginal assets, therefore without a clear 
impact on overall economic activity. Since Apri l 2009, there has been a s light acceleration of 
the privatisation process. The government’s privatisation agenda concerning public-owned 
enterprises continued to accumulate delays. Overall , delays in privatisation contributed to a 
rigid business structure.  
Market entry and exit 
By the end of 2008 there were  67,950 active companies, 83% of them operating in the 
services sector. Improvements have been made in  the ‘one-stop shop’ facilities for business 
registration, but fixed costs for doing business, such as work and construction permits, remain 
high. Overall , weak administration and rule of law,  unreliable energy supply, limited access to 
finance, corruption and poorly defined property ri ghts, the tackling of which is mentioned as a 
key priority in the 2008 European Part nership, hinder market entry and exit. 
Legal system 
The need to strengthen the legal framewor k is a key priority in the 2008 European 
partnership. Kosovo’s legal system is a comple x mix of different legal acts produced by the 
Yugoslav administration before 1999, and successively by UNMIK and the Kosovan 
Government since then, which le ads to uncertainty. As a genera l rule, legislation after 1999 
has been supportive of a free-market economy. The legal system continued to exhibit poor 
accessibility and efficiency, and some areas are not covered by relevant courts. As a consequence, informal methods of  contract enforcement continue to be widespread. The large 
informal sector is fuelled by weaknesses in tax and expenditure policies, as well as in law enforcement, including the fight against corrupti on and organised crime. The informal sector 
remains an important challenge, as it reduces the tax base and the efficiency of economic 
policies. Overall , the weak rule of law and uncertainty  over property right s remained major 
impediments to sustainable economic development. The difficult and costly legal enforcement 
                                                
 
8 At the time the 2009 budget was prepared, the wo rking assumption based on the Ahtisaari package was 
to hold general elections in 2009. 
9 The rule limited the growth of primary current spending to 0.5% in real terms. 
 
EN 25   EN of contracts hindered access to finance and continued to hamper seriously the business 
environment. 
Financial sector development 
The financial sector in Kosovo continued its expansion, albeit at a sharply reduced pace 
compared to previous years. Eight commer cial banks, ten insurance companies and two 
pension funds are operating in Kosovo so far. As a response to the international financial 
crisis, the Central Bank of Kosovo establis hed a Crisis Preparedness Committee (CPC) and 
signed a Memorandum of Understanding on safeguard ing financial stabilit y with the Ministry 
of Economy and Finance. The newly created pr ocedures have yet to be tested. Reporting 
requirements for banks have been tightened a nd banks have been requested to gradually 
reduce their net exposure to thei r parent banks to the level pres cribed by the CBK’s rule (20% 
of Tier I capital). There has been increased ex change of information with foreign central 
banks and other supervisory authorities, as we ll as with the boards of key players in the 
banking sector. The quality of th e loan portfolio in Kosovo’s banking sector remained solid, 
with the average share of non-performing lo ans in 2008 reaching only 3.3% from 4.4% in 
2007. Overall , prudential indicators of profitability and liquidity remained favourable in 2008 
and no specific crisis-related interventions have been needed so far.  However, there are also 
indications on poor access to finance and high perceived risk of doing business. 
The banking sector continues to dominate  the financial sector and remains highly 
concentrated, with the three largest banks, fore ign-owned, holding almost 90% of total assets. 
Profits rose by 8.7% in 2008, sharply down fr om growth of 68% in 2007. The degree of 
financial intermediation increased further, thou gh from a still modest level. The share of 
banking sector assets in GDP grew from  41.4% in 2007 to 48.6% in 2008. The volume of 
loans increased from 25.8% of GDP in 2007 to 31.8% in 2008. In May 2009, annual credit 
growth was 20.4%, whereas deposit growth stood at 21.4%, and the loans to deposit rate stood 
at 84.5%. While there is no legally binding rest riction, there is an informal agreement 
according to which the ratio of loans to depo sits should not exceed 80%. Since February 
2008, the ratio has been constantly above this le vel, as credit growth has become strictly 
bound by the rate of deposit growth. The interest  rate spread betwee n deposits and loans 
remained very high and showed only a sl ow downward trend. By end of May 2009, the 
spread’s 12 month average for all types of lo ans stood at 10.1 percenta ge points, slightly 
down from 11.3 percentage points in 2007. The spr ead is lower for loans to households (9.2) 
than for loans to (non-financial) corpora tions (11.2). Loans dist ribution across sectors 
remained highly uneven. By the end of May 2009, agriculture continue d to account for only 
4% of outstanding business  loans, the secondary sect or (manufacturing, energy and 
construction) taking up close to 21%, while 75% of all business loans financed activities in 
the service sector. While there wa s no change in the sectoral st ructure of the loan portfolio, 
there was some improvement in the maturity  structure. By the end of May 2009, 62% of 
business loans had a maturity of 2 years or more, up from 57% at the end of 2007. Overall , 
the number of loans has increased but high r eal interest rates remain one of the major 
obstacles to doing business in Kosovo. Ineffective enforcement of creditor rights and of 
contracts continues to maintain high costs and risks for financial institutions, as reflected in 
high interest spreads, and underm ines the value of collateral. 
3.2. The capacity to cope with competitiv e pressure and market forces within the 
Union 
Existence of a functioning market economy 
 
EN 26   EN Since 1999, newly adopted legislation supports  a free-market economy. However, there was 
very little progress in strengthening the ove rall framework for a functioning market economy. 
The regulatory framework is incomplete in  many areas relevant for the economy, the 
implementation and enforcement of existing rule s remain weak, and ther e is a lack of good 
governance. In addition, provisions implementi ng key pieces of legislation are missing, or 
contradictory. Private sector companies are confronted with procurement and tendering 
procedures that lack transparency, a stable set of administrative rules and financial controls, as 
well as economic impact assessments. Neither the relevant procurement agencies, nor the 
courts have so far been able to deal successfu lly with the arbitrary a pplication of selection 
criteria. The stability of the energy supply was improved, however at the cost of ever higher 
subsidies from the budget. Overall , an incomplete legal framew ork, corruption, weak rule of 
law, high level of informal activities and a highly subsidised energy supply continued to 
impair the efficiency of market mechanisms. 
Human and physical capital  
Some progress took place in the education sector, in particul ar concerning accreditation and 
qualifications, and in the consolidation of the university. Despite this, the education system 
continued to suffer from lack  of resources and unreliable or missing qualification and 
certification schemes. The overall enrolment rate in education ha s shown no significant 
increase in recent years. It is  especially low in secondary and higher education, and drop-out 
levels are high . Overall , little progress was made toward s better developing the economic 
potential of Kosovo’s young population. 
No comprehensive information on investment deve lopments is available. Kosovo has initiated 
major public works to upgrade its road networ k, absorbing an increasing share of budgetary 
resources. However, poor procurement procedures  and weak financial controls cast doubts on 
the quality and the capacity to  respond to actual needs of th e ongoing works, as well as the 
quality of the actual works. Mobile telephone  penetration continues to increase and is 
estimated at more than 50% by mid-2009. Overall , the technology base and the state of 
physical infrastructure remain weak and the pool of qualified human capital  small. As a result, 
Kosovo companies are too rarely competitive even in sectors where competitive potential 
exists.  
Sectoral and enterprise structure 
Regulatory authorities have been  set up for all major network and commodity industries, but 
they remained weak. Their inde pendence was undermined by poli ticisation of a ppointments in 
their boards. In several instances, the potential positive effects of mark et liberalisation cannot 
materialise due to weak corporate governance  and the absence of consumer protection. 
Kosovo cannot yet benefit from regional energy tr ading with its neighbo urs on a level playing 
field due to unfinished integration into regi onal electricity trade ag reements. Electricity 
supplies continue to be intermittent due to the outdated system and strains caused by an unsustainable increase in demand. Whilst power bill collection has increased slightly, some 
50% of power produced is  still unpaid for. El ectricity demand continue s to increase faster 
than economic growth. A new power plant will only come on stream in five years at the 
earliest. Further unbundling and privatisation of the generation and distribution companies is 
planned in the next year. The enterprise structure is unchange d, dominated by micro-
enterprises. Measures have been adopted to start reducing the large informal economy, such 
as overhauling the tax system, and m easures taken to address evasion. Overall , there have 
 
EN 27   EN been few changes in the enterprise structure,  which remains dominated by micro-enterprises, 
and the large informal economy remains a challenge. 
State influence on competitiveness 
According to budget figures, subsidies and transfers increased by 32.6% in 2008 and by 
another 25.4% in the first half of 2009. A larg e share of these goes to  the loss-making public 
electricity company KEK. Wide spread electricity theft and tolerance towards unpaid power 
bills has undermined the viability of the power  utility, and continued to trigger additional 
energy imports paid from the government budget. Overall , ongoing direct and indirect state 
subsidies, combined with a poor level and qua lity of public services, continued to hamper 
private-sector competitiveness.  
Economic integration with the EU  
The openness of the economy, measured by the va lue of imports plus exports in goods and 
services as a percentage of  GDP, increased to 71.1% in 2008, up from 64.5% in 2007. EU 
Member States and CEFTA continued to be the two main trading partners for Kosovo, 
accounting for 40% of total trade each, the latter despite Serb ia’s blocking the exports and 
Bosnia and Herzegovina’s refusi ng preferential treatment. The share of exports bound for the 
EU increased from 42% in 2007 to 47.8% in 2008. The EU’s share of total imports remained 
at around 36%. Overall , economic integration with the EU has increased. 
4. EUROPEAN 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 
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 . The Professional Standards 
Council is operational. Nine technical committees (in which companies participate actively) have been established in the areas of construction, petroleum/gas, quality management systems, transport and postal services, electro-techno logy, metrology, health care, energy and wood 
processing.  
To date, around 1200 EN- and ISO/IEC-based st andards have been adopted as Kosovo 
standards, out of which around a quarter are ha rmonised European standards in the area of 
construction products. The Kosovo Standardisation Agency within the Ministry of Trade and 
Industry is responsible for standardisation. It is  not a member of Eur opean or international 
standardisation organisations.  
Progress remains very limited on conformity assessment . A functioning conformity 
assessment system is not yet in place.  
 
EN 28   EN Some progress has been made on accreditation . The Law on Accreditation was adopted in 
December 2008; implementing provisions have b een approved. Four conformity assessment 
bodies (one inspection body and th ree testing laboratories) have been accredited in Kosovo so 
far. An accreditation directorate has been es tablished within the Ministry of Trade and 
Industry. One technical committee for testing and calibration laborator ies has been set up. A 
memorandum of understanding with the former  Yugoslav Republic of Macedonia was signed 
in May.  
There has been limited progress on metrology . Metrological activitie s are performed by the 
Department of Metrology and its Institute of  Legal Metrology and Inspection, which has two 
offices. The one in Pristina deals with mechani cal and electrical measurements. The one in 
Prizren covers mechanical measurements and co ntrols of precious me tal articles. A metrology 
council steers the overall development of metrology. However, the Kosovo Central 
Laboratory for Metrology has not  been set up yet. The stra tegy for the development of 
metrology infrastructure for the period 2009-2013 has not been adopted. 
Market surveillance  has not progressed. Preparations in this area are at a very early stage 
and Kosovo’s market surveillance system is  far from European practices. The Market 
Inspectorate employs a staff of 12. Lack of legal infrastructure, strategic approach and 
capacity hamper further development in the sector.  
Kosovo has adopted legislation on low vo ltage equipment, machinery, cableways 
installations, safety of toys, c onstruction products and textiles. 
There has been some pr ogress in the area of consumer protection . The Law on Consumer 
Protection was amended in April. The seven me mbers of the Council for Consumer Protection 
(including five NGO representatives, notably  the two active consumer NGOs) have been 
appointed. However, administrative capacity re mains inadequate. The Consumer Protection 
Office within the Ministry of Trade and Industr y employs only one member of staff. There is 
no strategy on consumer protection.  
Overall , approximation with European standards and legislation in the area of free movement 
of goods is limited. The administrative capac ity to implement them is inadequate. 
Considerable efforts are still needed in this respect.  
4.1.2.  Movement of persons, services  and right of establishment 
Limited progress can be re ported in the area of free movement of persons . Alignment with 
European standards remains at an early stage. The free movement of persons throughout Kosovo is not fully ensured. As regards  coordination of social security , work has started but 
allocation of resources for that purpose needs to be significantly increased. No progress can be noted with regard to the freedom to provide services , and adoption of European standards 
is at a very early stage. The legal framework as regards the freedom to  provide services and 
the right of establishment  remains uneven. Alignment with European standards is limited. 
There has been no progress in the area of company law. Overall , there is no alignment with 
company law legislation.  
4.1.3.  Free movement of capital 
There has been limited progress in the area of free movement of capital . Legislation on 
foreign exchange consists in a rule of the Ce ntral Bank defining the limits of the amount of 
 
EN 29   EN foreign currencies that a bank can possess as a pe rcentage of their tier I capital. Kosovo has a 
very liberal regime concerning capital moveme nts: foreign banks benefit from full national 
treatment and manage around 90% of the assets in  the banking sector. Th e same rules apply to 
domestic and foreign companies investing in Kosovo. There are no restrictions on foreigners 
acquiring real estate. Kosovo uses Basel I principles on capital requirements for banks and is 
gradually moving towards implementing the more comprehensive Basel II gui delines.  
Efforts are needed to align financ ial regulations with best internat ional standards, as well as to 
implement and enforce them. As regards the regulation and supervis ion of banks, Kosovo 
currently uses the CAMEL model and is gr adually moving to risk-based supervision. 
Supervisory authorities need to sign memora nda of understanding with the supervisors of 
foreign banks. In response to the financial crisis, the Central Bank increased the scope of its supervision on the financial sector and played  a positive role in the management of risks 
associated to the crisis. Supervisory capacity ne eds to be strengthened to enforce regulation in 
the financial sector. 
In late 2008 and early 2009, the Central Bank adopted several measures to develop the 
payment system . A direct debit scheme was set up. It incorporates operational agreements 
and procedures with the Kosovo Electricity Co rporation and the region al water company of 
Pristina. Infrastructure of the electronic in ter-banking clearing system was upgraded, enabling 
web-based application, unification of certain da ta fields and further automation of reporting 
processes.  
Overall , the regime for capital movements is very liberal, but substantial efforts are necessary 
as regards free movement of capital to esta blish a legal framework compatible with EU 
standards.  
4.1.4.  Customs and taxation 
There has been some progress in the area of customs . The Customs and Excise Code was 
adopted in November, its customs part is larg ely in line with European standards. Kosovo 
Customs was set up within the Ministry of  the Economy and Financ e in December 2008. 
Anti-smuggling units have started to patrol on  all roads, with th e exception of northern 
Kosovo and this has reduced smuggling. However, trains coming from Serbia into Kosovo are 
not subject to customs or other controls. Over  65% of Kosovo's tax revenues is collected at 
the border. EULEX started registering the goo ds entering at gates 1 and 31 in northern 
Kosovo, and the actual clearing is done at Mitr ovicë/Mitrovica terminal. Customs information 
exchange between Kosovo Customs and Serbia with support of EULEX resulted in a number 
of criminal investigations on both sides. Revenue collected by the customs for January-
September 2009 was around 380 million, i.e. 4.5% hi gher than revenue collected for the same 
period in 2008.  
Kosovo Customs completed an as sessment of its opera tional capacity in August, measuring it 
against EU standards. The human resources  and general management, infrastructure, 
equipment and post-clearance controls were evalua ted as effective. Further attention needs to 
be focused on the export of ag ricultural products, the enforcement of intellectual property 
rights and the security of the supply chain. The IT system needs to be replaced by a more 
flexible and integrated one. The present sy stem does not fully support the use of the 
Integrated Tariff of Kosovo, in particular the registration of transit goods and the integration 
of tariff data for other countri es. In February 2009, an intelle ctual property rights unit was 
created to implement the regulation establis hing the customs procedure for action against 
 
EN 30   EN counterfeit goods, pirated goods a nd goods infringing certain intell ectual property rights. The 
August assessment concluded to the need to improve its capacity. The Internal Inspection Sector was set up to fight corruption, which is a concern in the area of customs, in cooperation 
with the Kosovo Anti-Corruption Agency. Kosovo Cu stoms is part of the task force including 
the Kosovo Police, the Prosecutor’s Office, the Tax Administration and th e Ministry of Trade 
and Industry. Kosovo Customs participates in a regional project on exchange of pre-arrival 
customs information with neighbouring countries, which facilitates trade and the enforcement 
of customs legislation. 
The manpower and administrative capacity of Kosovo Customs to enforce customs legislation 
need to be strengthened further. Specific areas  of attention are the fi ght against smuggling and 
counterfeiting, improving the Customs IT system and its capacity to support the use of the 
Integrated Tariff of Kosovo. Controls and su pervision need to be  extended to northern 
Kosovo.  
Overall , the legal provisions for cu stoms are compatible with European standards. However, 
the administrative capacity needs to be subs tantially reinforced, and the fight against 
corruption needs to  be intensified. 
There has been some progress in the area of taxation . In January, a tax reform entered into 
force and new tax rates are now applied. Person al income tax rates were lowered from 0%, 
5%, 10% and 20% respectively to  0%, 4%, 8% and 10%. Cor porate income tax decreased 
from 20% to 10%. VAT was raised from 15% to 16%, and excise duties on tobacco rose from 
€ 17 to € 21 per kilo. The Law on Tax Admini stration and Procedures was adopted in 
February. It introduces several new elements in the tax system, such as the possibility for the 
Tax Administration of Kosovo to issue tax numbers and establish electronic cash registers. It 
also grants the tax administration additional authority to seize goods that cannot be accounted for through registered transactions and co rresponding payments from firms subject to 
corporate income tax. The fiscal identifica tion numbers are attributed, and any business 
established after August must possess one. 
No legislative progress can be reported in the VAT area. The VAT registration threshold 
remains high (€ 50,000 turnover) which makes many companies not liable to VAT. In August, 
a general assessment of the tax administra tion’s own operational capacity, measuring it 
against EU blueprints on taxa tion, concluded that it needs a new organisational structure to 
avoid the risk of duplication and that its i nvestigation capacity concerning tax fraud and 
avoidance needs to be strength ened. Other findings relate to  the need to develop an anti-
corruption strategy and to increase  information services to tax pa yers. The Standard Integrated 
Government Tax Administration System is being upgraded until a new IT system is 
operational.  
Tax revenue was lower in the first seven mont hs of 2009 compared to the same period in 
2008. This is mainly due to the reduction in the corporate income tax rate and because, unlike 
in 2008, no surcharge was levied on PTK profits . The Tax Administration of Kosovo signed 
memoranda of understanding with Kosovo Custom s, the Police and the Ministry of Labour 
and Social Welfare to improve tax collecti on. However, the IT infrastructure remains 
ineffective, and lacks the capacity to enfo rce tax payment and to reduce the informal 
economy.  
Overall , there has been some legislative progress in the area of taxation. However, legislation 
needs to be accompanied by detailed administrativ e instructions and further efforts to ensure 
 
EN 31   EN effective implementation. Kosovo needs to enhance the efforts to enforce tax payments and to 
reduce the informal economy.  
4.1.5.  Competition 
There has been some progress in the area of competition . The Independent Kosovo 
Competition Commission was established in Nove mber 2008 and the Assembly appointed its 
five members. The Commission is  an independent body that reports  directly to the Assembly. 
It has been operational since March and has performed a review of existing competition regulations, concluding that a ne w law is required to further a lign competition practices in 
Kosovo with European standards. However, the Commission is hampered by a lack of 
resources, especially with regard  to attracting qualified staff.  
As regards antitrust policy, the Commission signed a memo randum of understanding with 
the chamber of commerce, the ministries of tr ade and industry and finance, and the customs 
office. The Commission has invest igated several suspected breach es of competition rules. It 
intervened to overturn an agreement betw een bakeries over the price of bread. The 
Commission has become full member of the International Competition Network. There has 
been no progress concerning state aid, and there is no law on state aid . 
Despite some progress in implementing an ti-trust policy, overall implementation of 
competition policy in Kosovo is at an early st age. The administrative capacity needs to be 
strengthened. There is a need for awareness-ra ising to familiarise the private sector with 
competition rules. Alignment on state aids needs to start. 
4.1.6.  Public procurement 
The situation concerning procurement has worsen ed compared to the previous year, despite 
some improvements in the legal framework. Th e implementing legislat ion for the Law on 
Public Procurement  was completed in January. However, the law on public procurement is 
not aligned with European procurement sta ndards. A number of provisions of the EC 
Directives remain unimplemented, not least the mo re flexible regime in the utilities sector. 
The implementation of the law in practi ce gives rise to serious concerns.  
The main focus of the Public Procurement Re gulatory Commission is monitoring, supervision 
and legal interpretation. However, monitoring is  done mainly on cases where contracts have 
already been signed and it does not encompass th eir implementation phase. So far, hardly any 
guidance was provided to contracting author ities. The Commission needs to strengthen its 
guidance and advisory support ro le. To this end, it establishe d a help desk function in 
September.  
As of May 2009, the Procurement Review Body re viewed 290 complaints. However, there is 
no systematic publication of its decisions and th ese often lack legal arguments. The Public 
Procurement Agency is the executing and main c ontracting authority, but its role as central 
purchasing body is weakened by a discontinuation of the use of central procurement, 
including framework agreements. Administrati ve capacity is weaken ed by high turnover 
among procurement officers at both central and local level. Procurement officers in Kosovo 
remain vulnerable to interferen ce and intimidation. This has a negative impact on the quality 
of public procurement.  
 
EN 32   EN The training and certification of procurement o fficers is insufficient a nd was delayed in 2009. 
The law requires every procurement officer to u ndergo at least ten days  of mandatory training 
every year. The existing certifica tion system only requires a one -off training course, which is 
not in accordance with the current law.  
The value of contracts awarded through public  procurement has increased, representing 
almost 22% of Kosovo’s GDP. However, the hi gh proportion of tenders cancelled on grounds 
of non-compliance with administ rative requirements and the choice of procurement methods 
give rise to concerns. Open procedures acco unted for 77% of the total value of signed 
contracts, and negotiated procedur es for a further 20%, with othe r procedures being used very 
marginally. The use of single source tendering rose from €50 to €164 million. 
The government has adopted a comprehensive le gal anti-corruption package. However, there 
has been a limited number of investigations on cases of alleged corruption, and the results of 
those actually performed show the need for more sophisticated investigation tools and 
methods. A stronger emphasis needs to be placed on monitoring the implementation of procurement contracts. Administrative capacity  and coordination mechanisms of the main 
stakeholders in the public procurement system still need further strengthening, in particular to reduce the scope for corruption. 
Overall , despite some results achieved in terms of  adopting legislation and establishing the 
Procurement Review Body, there are a number of worrying developments as regards the 
implementation of public procurement in Kosovo.  
4.1.7.  Intellectual property law 
There has been limited progress in the area of intellectual property rights . 
Some progress can be reported concerning administrative capaci ty in the area of industrial 
property rights . The Central Intellectual Property Right s Unit was created as part of Kosovo 
Customs in February. This unit is tasked with ensuring coordi nation between customs 
authorities, the market inspec torate, police and prosecution offices to implement the 2008 
regulation establishing customs procedures fo r action against counter feit goods, pirated goods 
and goods infringing intellectua l property rights. The Industr ial Property Office is an 
independent institution responsible for the implementation of the laws on patents, trademarks and industrial designs. The Office has recei ved 18,000 applications since September 2008, 
mostly on trademarks.  
There has been no progress concerning copyrights and related rights . The Office for 
Intellectual Property has not been set up. Legi slation implementing the Law on Copyright and 
Related Rights has not been adopted yet. The ca pacity of the coordinating office, namely the 
Office for European Integration of the Ministry of Culture, Youth and Sport, is very limited.  
Enforcement of intellectual property  rights remains very weak. High levels of 
counterfeiting and piracy persist. The admini strative capacity to implement intellectual and 
industrial property rights remains insufficient and implementing provisions are still needed. 
The responsibilities of the various  bodies dealing with enforcemen t, as well as the division of 
responsibilities between them, ar e not clearly defined. There ha s been no progress as regards 
copyright and related rights. The intellectual property rights strategy 2008-2013 has not been 
adopted. The current draft includes mainly indus trial property elements, with very little 
reference to copyright.  
 
EN 33   EN Overall , key elements of industrial property rights legisl ation are in place and some progress 
has been achieved as regards administrative ca pacity. However, signifi cant efforts are still 
needed in this respect. Kosovo’ s preparations in the field of intellectual property rights remain 
at an early stage. Legal provisi ons for copyrights and related ri ghts are not yet in force and 
implementing capacity remains limited. An overarc hing strategy in this area is still lacking.  
4.1.8.  Employment and social policies 
In Kosovo, there is no labour law  and no specialised labour courts . Legislation in the area of 
health and safety at work  is inadequate. The capac ity of the Labour Insp ectorate to implement 
the Law on Occupational Safety, Health and the Working Environment is limited. The 
Inspectorate maintains no databases on health  checks on employees or on the number of 
employees in the private sector. There are no statistics on the number of fines issued by the 
Inspectorate; fines are often not paid. Lack of technical equipment hampers the Inspectorate's 
work.  
There has been minimal pr ogress in the area of social dialogue . 35 sectoral trade unions and 
five trade union associations are registered in Kosovo. The Tripartite Advisory Council has 
been renamed the Socio-Economic Council and met in July. The role of social partners in 
decision making remains limited. The collectiv e agreement signed in 2004 on the minimum 
wage is not implemented. The trade union la w was adopted in August; there is no law on 
strike action. Health workers, judicial wo rkers and employees of  the Kosovo Energy 
Company went on strike during the reporting period. A general strike organised by the Union 
of Independent Trade Unions of Kosovo also took place.  
In the area of social inclusion , Kosovo adopted an action plan on disabled people in April. 
Home care services were provided for persons af fected by mental and psychiatric disorders by 
the Ministry of Health and the Ministry of  Labour and Social Welf are. Nine community 
mental health centres and seven residential hous ing units were set up un der the authority of 
the Ministry of Health. Kosovo has started in September a promotion campaign for the 
inclusion  of persons with disabilities. However, rehabilitation of people with physical 
disabilities continues to be managed by NGOs only. There is a lack of re habilitation facilities. 
The inaccessibility of build ings and public services for people with disabilities is an issue of 
concern.  
In the area of anti-discrimination , the adoption of th e strategy and action plan on human 
rights 2009-2011 reinforced the legal framework (See also section 2.2  — Human rights and 
the protection of minorities) . However, the government has not taken concerted action to 
promote respect for the LGBT community. 
As regards social protection , the social assistance scheme is currently under review by the 
Ministry of Labour and Social  Welfare and the Ministry of  Economy and Finance. Some 
325,000 people (almost 15% of Kosovo estimated population) receive social or pension 
benefits, the impact of which on pove rty reduction is poorly monitored.  Lack of reliable 
statistical data on employment prevents effective action to fight fraud. Le gislation in the area 
of social services and institutional care re quires the adoption of by laws to enforce the 
decentralisation of social services to muni cipalities. Kosovo has neither a law on health 
insurance nor a hea lth insurance fund. 
The sustainable employment  development programme has been approved by local and 
international partners in July.  It envisages direct budget support for the next three years 
 
EN 34   EN against an agreed set of policy milestones, including the macroeconomic environment, the 
investment climate, labour market policies, tr aining and social protec tion policies. An inter-
ministerial committee on employment chaired by the deputy prime minister has been set up to 
ensure coordination among relevant agencies. The Law on Professional Training, Retraining 
and Employment of People with Disabi lities was adopted in December 2008.  
However, the authorities are yet to adopt an  employment strategy. Re gistered unemployment 
estimates account for 43% of the economica lly active population. Ov er 338,000 persons were 
registered as unemployed at the end of June 2009. Over 90% of a ll registered job seekers have 
been on the unemployment register for more than 12 months.  
Disabled people remain among th e most disadvantaged groups, along with Roma, Ashkali and 
Egyptians. Female employment remains very  low (55%), and youth unemployment 
particularly high. The implementa tion of the action plan on youth employment is hampered by 
the lack of inter-ministerial coordination. The administrative capacity of the Ministry of 
Labour and Social Welfare remains poor.  
In the area of public health policy , the Law on Health was amended in December 
decentralising some medical services. However, the ministry is yet to finalise the health sector 
strategy 2009-2014. Mental health needs strengthening with a special focus on children and 
young people. Maternal and prenatal  mortality rates remain high compared to the rest of the 
region, but are slightly declining. The infant morta lity rate is considered to be the highest in 
Europe. Chronic malnutrition is a concern. To date, 563 private health facilities have been 
licensed. Health infrastructure, including me dical equipment, drugs supply and hospital 
capacities, remains poor. Hospitals and primary car e facilities remain outdated. Overall, the 
health sector remains poor and requires urgent and increased attention by the authorities.  
Overall , limited progress can be reported in the employment and public health sector. The 
absence of an adequate legisl ative framework and the poor admi nistrative capacity presents 
serious obstacles to the deve lopment of effective employment policies. The administrative 
and institutional capacity needs strengthening in th e public health sector. 
4.1.9.  Education and research 
Education is a priority sector in the medium-ter m expenditure framework Essential text 
books for primary school pupils are distributed fr ee of charge. 45 new schools have been built 
during the reporting period. Schools will be operating in a ma ximum of two shifts from 
September. The Council for Teacher Licensing has been established.  The teachers’ wages 
fund was increased in 2009 by an additional € 4.5 million. Kosovo consolidated its participation in the EU Tempus and Erasmus Mundus programmes. Following the establishment of a Tempus office at th e Serb-speaking University in northern 
Mitrovicë/Mitrovica, that university was able to apply for a Tempus grant. Kosovo's Council 
for Curricula is operational. 
The Kosovo Accreditation Agency and its board are operational. The accreditation process for 
public and private higher educ ation providers was completed in May with the support of 
European experts. It confirmed the institutiona l accreditation of the Univ ersity of Pristina and 
some private colleges. The former elected its new rector in July. University of 
Mitrovicë/Mitrovica elected it s rector for a second term in May. The Higher Education 
Council was set up. The Law on Higher Education is being reviewed with the Commission 
and Council of Europe support. The national qualif ications authority is being established to 
 
EN 35   EN oversee national qualifications alongside the Accreditation Agency and other relevant 
partners. It will, in particular, have re sponsibility for vocational qualifications.  
The Vocational and Educational Training (VET) school reform started, including the revision 
of curricula and the establishm ent of centres of competences. Some progress can be reported 
in inter-ministerial cooperation between the Ministry of Education, Science and Technology, 
the Ministry of Trade and Industry and the Mini stry of Labour and Social Welfare. A more 
labour-oriented approach to VET schooling is  noted, cooperation between VET schools and 
the private sector has strengthened.  
However, the legislation on accreditation requir es amendments. The respective roles of the 
Accreditation Agency and the Ministry of Education, Science and Technology need to be 
adapted to ensure the independence of th e higher education providers' accreditation.  
Criticism has been expressed publicly against th e Ministry because of the alleged lack of 
transparency in the accreditation process of  higher education providers. The lack of 
accreditation of VET providers undermines conf idence in the VET certification scheme.  
Kosovo’s education system continues to be a ffected by resource constraints, the lack of 
adequate facilities (including the basic sanita ry services and non-access to drinkable water), 
poor quality of teaching and low enrolment (l ower than the average in the region). The 
implementation of the Law on Education is hamper ed at local level by the lack of adequate 
financial and administrative capacities in the municipal education dire ctorates. Drop-out rates 
higher than in the region and teacher absentee ism remain an issue. Participation in non 
compulsory early childhood deve lopment and higher education and training is among the 
lowest in Europe. A quality of teaching monitoring mechanism is still lacking.  
The Ministry of Education, Science and Tec hnology is yet to develop curricula for Roma, 
Ashkali, Egyptian and Gorani communities. The ministry has set aside minimal funds for 
capital investment projects be nefiting the Serb community.  
Research  is now a priority sector. In April, the Ministry appointed a coordinator for the 7th 
Framework Programme. The Council for Science developed an action plan for 2009, but its 
implementation is hampered by resource constr aints. Research and development capacities 
within the University of Pristina have been strengthened. 
Overall , progress can be reported in the educa tion and research. However, the pace of 
institutional and legal reforms has to be ste pped up, better coordinated, and translated into 
practice. Central and local capac ities to teach and manage edu cation need to be significantly 
enhanced. Significant efforts are needed to incr ease participation in education. A system to 
monitor the quality of education needs to be set up. Additional resources continue to be 
required for research purposes. 
4.1.10.  WTO issues 
Kosovo is not a member of the WTO and has not  undertaken any formal steps to join the 
WTO. 
 
EN 36   EN 4.2. Sectoral Policies 
4.2.1.  Industry and SMEs 
Limited progress has been made in the area of industry and SMEs . In April, the Assembly 
adopted the Law on Economic Zones, which aims  to stimulate private sector development 
with a particular emphasis on SMEs. It govern s the establishment, operation and supervision 
of economic zones. 
As regards the business environment, one-sto p-shop and on-line regi stration and licensing 
facilities provided by the Business Registrati on Agency are not yet fully operational. 25 
companies, including four international ones,  have signed up for premises in the Drenas 
business park. Works on the infrastructure  of the park are almost completed.  
In accordance with the European Charter for Small Enterprises, Kosovo started implementing 
the entrepreneurship learni ng strategy. Elements already under implementation involve 
teacher training and curriculum reform. More needs to be done to create structured cooperation and engagement of lo cal businesses with schools.  
There is no strategic framework for SME  development in Kosovo to guide the activities of the 
Ministry of Trade and Industry’s SME Support Agency. The administrative capacity of the 
agency remains limited. Online applications are not fully operational. The Consultative 
Council on SMEs, representing governmental and non-governmental institutions, has started 
functioning again, after a suspension in 2008.  
The Kosovo Business Registration Agency, offi cially opened in 2002, continued to register 
businesses. The business regist er includes 93,000 companies; how ever, only 10% of these are 
active. Fees to start and close a business are th e lowest in the region (€5-20). Information on 
registered companies becomes automatically available online. There is no law on e-signature. This impedes progress in electr onic registration of companies. 
Overall , the institutional a nd legal framework for SMEs a nd industry policy needs to be 
further developed. Currently, Kosovo relies larg ely on ad hoc measures and pilot projects.  
4.2.2.  Agriculture and fisheries 
The Law on Agriculture and Rural Development  was adopted in July. It provides a 
framework for agricultural and rural developm ent practices in Kosovo and establishes the 
legal basis for updating the agricultural and rural development plan for the period 2009–2013 
and the accompanying action plan. The Minist ry of Agriculture, Forestry and Rural 
Development has stepped up its reform efforts in areas such as consolidating and rehabilitating agricultural land, improving natu ral resources management in rural areas, 
increasing competitiveness and farm divers ification, and enhancing food quality. These 
efforts are supported by a 40% in crease in government spending in  the agricultura l sector in 
2009 compared to 2008. A grant system is also pl anned, mainly to support structural reform 
measures rather than offering direct payments for production.  
The Law on Organic Farming needs to be amen ded in accordance with the changes made in 
EU Regulations on organic farming. There is no certification body or in spectorate for organic 
farming. Implementing legislation pursuant to the Law on Wine has not been adopted. This 
has led to delays in reform in important areas such as quality control and labelling requirements.  
 
EN 37   EN The Law on Forestry needs revision  in order to strengthen pr otective measures against 
damage and illegal logging and the violation of logging permits. Responsibilities for forestry 
management will be transferred to the m unicipal level as foreseen in Kosovo’s 
decentralisation plans. The main challenge in  preserving Kosovo’s forests, which cover 42% 
of its surface area, is the limited capacity of the authorities to implement the law. Better 
coordination between the relevant institutions is needed. 
Kosovo’s agriculture con tinues to suffer from fragmented la nd tenure, lax control of the use 
of arable land for construction,  non-transparent valuat ion and pricing of ag ricultural land (for 
both sale and lease), difficulties for farmers to access credit, and an outdated and inadequate land registration system.  
In March, the Assembly adopted the Law on Food providing for the establishment of the 
Kosovo Veterinary and Food Agency. The agen cy is operating under the authority of the 
Prime Minister’s Office and has the task of coordinating activities in the area of food safety . 
The law establishes a clearer separation of responsibilities between the different services in the agricultural sector. It tran sfers responsibilities from the m unicipal to the central level.  
In the veterinary and phytosanitary area, the new Food Law provides a basis for adopting 
implementing legislation. Very limited progress can be reported in this respect. Plans to 
evaluate and upgrade agri-food es tablishments remain at a preparatory stage. Three new 
slaughterhouses were licensed during the reporting period. There are no facilities for 
processing animal by-products in Kosovo. Although the necessary legislative framework is in 
place, Kosovo’s animal identification, registra tion and movement control system is not 
operational.  
In April, an administrative instru ction was adopted on the designation of fishery  regions in 
Kosovo. It allows sport/recrea tional fishing and economic fish ery. Most of the European 
standards as regards fisher ies do not apply for Kosovo, which has no deep-sea fishing. 
Overall , the agriculture, veterinary and phytosan itary legislative framework has been 
developed. The lack of administrative capacity  remains a concern, leading to delays in 
reforming the agricultural sector. There has b een limited progress as regards alignment with 
European standards.  
4.2.3.  Environment 
There has been some progress in the area of horizontal legislation . The Law on 
Environmental Impact Assessment and the Law on Strategic Impact Assessment were adopted 
in March, but both need to be re vised to be brought in conform ity with European standards. A 
limited number of projects envisaged in th e environmental action plan have been 
implemented.  
The Ministry of the Environment and Spatial Planning has procured equipment for mobile air 
quality  monitoring control stations. However, there is  still no air quality strategy and no clear 
division of responsibilities as regards manage ment of the air quality monitoring network. No 
progress can be reported in the waste management  sector. Under the Community Energy 
Treaty, Kosovo needs to implement the Direc tive on Large Combustion Plants, but has made 
no effort to transpose its provisions. Bill collection rates by water and waste companies remain low.  
 
EN 38   EN There has been limited progress in the area of water quality . The Law on Publicly Owned 
Enterprises defines responsibilities for the operation and maintena nce of publicly owned 
enterprises and assets in the water sector. Howe ver, there are no water treatment plants. Only 
70% of the population are connected  to drinking water networks a nd only a third is connected 
to sewage systems. The establishment of river basin authorities, envisaged by the Water Law, has not progressed. Their structur e is still not defined and they  have not been provided with 
financial or human resources. Th eir functions are carried out by the Ministry’s River Basin 
Coordination Unit. The issue of ownership of assets remains unclear. Responsibilities for the 
management of dams are not clearly allocated. The safety of large infrastructures, such as 
dams, dykes and water intakes, requires a ppropriate management and monitoring.  
There has been no progress with  the adoption of European standards in the area of nature 
protection . Transposition of the Birds and Habitat Dire ctives has been held  back by delays in 
adopting the Nature Protection Law. 
Some progress can be noted in the area of industrial pollution control , with the adoption in 
March of the Law on Integrated Pollution Prev ention and Control. There is no progress as 
regards chemicals  or genetically modified organisms . In the area of noise pollution, some 
administrative instructions to implement th e Law on Protection agai nst Noise have been 
adopted. Some efforts have been made in rais ing public awareness of environmental issues. 
This needs be reinforced. Cooperation between  environmental NGOs and the Ministry needs 
to be strengthened. 
Kosovo has made efforts to improve coordination between bodies, in part icular as regards the 
position of Kosovo's Environmenta l Protection Agency. However, cooperation between this 
Agency and the Hydro-Meteorological Institute needs to be improved. The administrative 
structures responsible for the en vironment continue to suffer from a lack of resources: the 
budget of the Ministry is the lowest of any ministry in Kosovo. Staff shortages make it 
difficult for these bodies to carry out their responsibilities. While  some of their duties have 
been transferred to the munici pal level, municipalities often lack environmental officers or 
inspectors.  
Overall , Kosovo is at an early stage in alignmen t with European environmental standards. 
There is some progress to report in the envi ronmental field, particularly as regards the 
adoption of legislation. Further efforts are needed  to establish an effective administrative and 
institutional infrastructure in this field. The capacity of the Ministry of the Environment and 
Spatial Planning and related in stitutions remains limited.  
4.2.4.  Transport policy 
There has been some progress in the area of trans-European transport networks . Kosovo 
continued to participate act ively in the implementation of the 2004 memorandum of 
understanding on the developmen t of the South East Europe  Core Regional Transport 
Network, and in the South East Europe Tran sport Observatory (SEETO) particularly by 
updating and implementing the Multi-annual Plan 2009-2013. The Law on Expropriation of 
Immovable Property, adopted in Ap ril, provides the legal basis fo r the Ministry of Transport, 
Post and Telecommunica tions to carry out land expropriati on activities along th e newly financed 
transport infrastructure projects. 
In the area of road transport , there has been some progress in building the capacity of the 
Transport Planning Unit within th e Ministry. However, the Ministry is too heavily involved in 
 
EN 39   EN the daily aspects of road management instead of focusing on developing strategies and policy. 
The reorganisation of the Department of Road Infr astructure needs to be addressed in order to 
ensure a clear distinction between maintenance and supe rvision and road network 
development. The capacity of the Department of Road Infrastructure within the Ministry is 
limited. Only five municipalities have road departments. 
The Road Safety Council (chaired by the Mini ster of Transport and Telecommunications) was 
established in October 2008 and its Secret ariat became operati onal in January. An 
administrative instruction on the technical inspec tion of vehicles was issued in December as 
part of implementing the Law on Road Safety. A multi-annual action plan for road safety is still pending. The capacity of the Transport Inspectorate needs to be strengthened. 
Very limited progress can be reported in the rail transport  sector. The Law on Kosovo 
Railways provides the legal basis for establishi ng a railway regulatory authority independent 
from the Ministry. The agency, which is an e ssential institution as regards third party access 
to railway infrastructure, has still not b een established. The Law on Kosovo Railways 
envisages the separation of infr astructure management and train operations. This has not been 
achieved. Compensation offered to railways for th e provision of public passenger services is 
granted, but does not cover costs. Rail trans port is not a government priority. Limited 
resources have been allocated to  this sector. The condition of Kosovo’s railway infrastructure 
and rolling stock and the level of railway serv ices remain poor. By contrast, Kosovo’s Multi-
Modal Transport Strategy identifies investment needs over € 500 million for Kosovo’s railway infrastructure, and a further €230 million in rolling stock, for the next 20 years.  
There is nothing to report on maritime transport  and inland waterways . The multi-modal  
strategy and action plan has not been adopted ye t. Insufficient progress can be noted in the 
area of air transport . The Civil Aviation Authority took over from the previous aviation 
regulator in January 2009. Its bo ard members were appointed only in July and the board is not 
yet operational. Pristina International Airport was issued with the Standard Aerodrome Certification of the Icela ndic Civil Aviation Authority in December 2008. The government 
has hired a transaction adviser to prepare the award of Pristina Airport’s concession.  
A substantial amount of legislation under the European Common Aviation Area (ECAA) 
Agreement had already been transposed. Howe ver, the 2009 Regulation on Charter Flight 
Authorisation, the government d ecision on the categorisation of the airport, and the slot 
allocation practice are incompatible with Eur opean standards and with Kosovo’s obligations 
under the ECAA agreement. This risks dela ying the successful completion of the first 
transitional phase of the ECAA. Licences to fly to and from Pristin a are granted in a non-
transparent way and with unjusti fiable delays. In the area of air traffic management, Kosovo 
needs to ensure that it licences air traffic c ontrollers according to the Community Single Sky 
rules and procedures. 
Overall , there has been some progress in the field of  road transport. However, there have been 
some worrying developments in the area of av iation. Transport infrastructure remains poor 
and underdeveloped in Kosovo. Capacities in this ar ea need to be strengthened, as well as the 
legal framework for public-private partnerships. 
4.2.5.  Energy 
With regard to 
security of energy supply , there is still no oil stock  strategy. In July (later 
than foreseen originally) the government decided to offer to investors a package of the New 
 
EN 40   EN Kosovo power plant and a new mine. The plant n eeds to respect European standards for new 
generation projects. 2 of the 4 shortlisted prosp ective investors have ceased their interest. The 
remaining operational units of Kosovo A will n eed to be decommissioned by 2017, to comply 
with the Large Combustion Plan t Directive. With existing li gnite sources running out, the 
delays in developing the New Kosovo power plant project and in refurbishing mining 
machinery at the existing mine could lead to  an increasing ‘lignite gap in the coming two 
years, forcing Kosovo to rely on expensive power imports.  
Results have been mixed with respect to the internal energy market and implementation of 
the Energy Community Treaty. The Law on Centra l Heating, adopted in November 2008, sets 
conditions for developing a sustainable and comp etitive market for district heating, based on 
free market principles.  
The Energy Community Treaty requirement s to unbundle accounts between mining, power 
generation, network distribution and supply and to prepare for future privatisation of the 
assets of the Kosovo Electricity Corporation have been met. In July the transaction advisor for 
privatising the corporation’s distribution and supply components was selected, but the 
contract has not been signed. Kosovo expects actual privatisation by mid-2010. In November 
2008, the Energy Regulatory Office adopted the au thorisation procedure for new generating 
capacities as required by the Treat y. Further progress will be necessary to implement its legal. 
The institutional and legislative capacity of Mi nistry and Regulator continue to be weak. 
Attracting and maintaining qualif ied staff remains a problem. 
The government adopted the energy strategy 2009-2018 in the summer. It needs to be 
formally adopted by the Assembly. Its main p illars concern sector fi nancing, the new Kosovo 
power plant and energy supply by the Kosovo En ergy Corporation. The strategy also covers 
good governance, social and environmental safe guards, energy efficiency/renewable energy 
and natural gas. 
Billing and collection has improved in the past 12 months, but is still poor. Non-payment for 
electricity represents a major challenge for the company. Technical and financial losses 
continue to be high: of the energy that the Corporation can sell, over 20% was stolen and 
commercial losses constituted a further 20%. Only some 60% of the energy available for sale is paid for. The Corporation lost some €90 m illion last year. Vigorous and increased efforts 
are needed to increase electricity billing a nd collection rates. The police and the judiciary 
have an important role to play. As a cons equence of endemic bill non-payment, power 
consumption continues to increase at an unsustain able rate (some 8% in 2008), far higher than 
the Corporation can keep up with. 
The Regulator approved new electricity transmissi on and retail tariffs in April. They are on 
average 2.5% higher than in 2008, according to an annual increase driven by the tariff methodology of the Energy Regulatory Office, wh ich gradually introduc es cost-reflective 
tariffs. Low income customers benefit from a lower tariff. Kosovo’s electricity transmission 
system operator (KOSTT) continues to encounter difficulties to participate as an equal partner 
in the regional commercial mechanisms: th e inter-transmission comp ensation mechanism and 
the capacity allocation mechanisms. Serbia’s ope rator (rather than KOSTT) is compensated for 
electricity transit through the Kosovo transmis sion grid and it continues to allocate the 
interconnection transmission capacities of KOSTT.  Losses incurred as a result are passed on to 
consumers.  
 
EN 41   EN Kosovo’s energy efficiency  plan, adopted in February 2 009, sets ambitious targets for 
increasing efficiency by 3%  in 2011 and 9% by 2016 compared  to 2008 consumption levels 
for households, services, transport, industry and agriculture. It will re quire additional legal 
and administrative measures to meet these ta rgets, particularly as  regards the household 
sector, where 34% of all ener gy is consumed. As regards renewable energy , the Regulator 
received seven applications to build wind tu rbines. The government identified 16 sites that 
could qualify for new hydro energy generation capacity forecast to generate up to 60 
megawatts. The Regulator approved competitive feed-in tariffs for power generated from renewable sources, with a view to at tracting investments in this sector. 
There is minimal progress in the area of nuclear safety  and radiation protection . Initial 
assessments are being carried to implement the rules on management and monitoring of 
sealed radioactive sources and medical and industrial radioactive waste. There is no legal framework in this area and no nuclear safety au thority. No progress has been made in 
preventing and combating illicit trafficking of  nuclear and other radioactive materials. 
Overall , there has been limited progress in the area of energy, alt hough legal alignment 
suffered delays. However, there are major problems to be addr essed, which include improving 
the financial viability of the power utility (by reducing commercial and non-technical losses), 
managing demand, upgrading the infrastructure  and resolving Kosovo’s impending lignite 
shortfall. 
4.2.6.  Information society and media 
There has been some progress in the area of electronic communications . The 
Telecommunications Regulatory Agency ha s obtained spectrum-monitoring equipment 
enabling it to identify illegal activity in northern Kosovo and in the areas bordering neighbouring countries. Mobile te lephony market penetration is at  60%; internet penetration 
is 5.4%. A third fixed telephony license was issu ed in January 2009 but has not yet become 
operational. Two mobile virtual ne twork operators have been licensed; one is already active in 
the market. The implementation of the sector  policy adopted in 2007 is suffering delays. 
Also in September, the assembly approved the new board of the Telecommunications 
Regulatory Agency, 9 months after the previous  board’s mandate expired. As the Agency has 
legislative powers, the new board needs to m ove swiftly with the adoption of implementing 
legislation crucial for the prope r functioning of the market and ensure its enforcement. 
Capacity at both the Ministry of Transport and Communications and the Regulator is too 
limited for the effective performance of their task s in this area. The operational, political and 
financial independence of the Agency needs to  be strengthened. Ko sovo does not possess an 
international dialling code and t op level internet domain name. This also delays implementing 
some competitive safeguards, such as number portability. 
There has been limited progress in the area of information society services . The 2005 Law 
on Information Society Services transposes most  provisions of the Directives on e-Commerce, 
e-Signatures, and Data Protection and e-Priv acy, but implementation has been limited. A law 
on cybercrime has not yet been adopted. Overall , information society services need to be 
further developed. The relevant strategies and action plans are yet to be fully implemented. 
There has been some progress in the field of audiovisual policy and media . The laws that 
cover the media industry — the Law on the Independent Media Commission and the Law on 
the Public Broadcaster — are up for amendment.  Re-licensing of broadcasters has begun: at 
 
EN 42   EN the end of August, a first batch of 12 l ong-term licenses were approved for existing 
broadcasters. The Independent Media Commissi on is now assessing applications for new 
frequencies. Cable operators in the no rth are not licensed by the Commission.  
The Commission’s independence, in  particular as rega rds its staff and resources, needs to be 
guaranteed in the context of possible legisl ative amendments. The appointment of the 
Commission's council member by the Assembly a nd the RTK board is yet to be completed.  
In May, the regulation for broadcasters regard ing the protection of ch ildren and minors from 
harmful programme content entered into force, but there are no mechanisms to implement and 
enforce it. No progress can be reported on  the switchover from analogue to digital 
broadcasting. Kosovo is not a member of the International Telecommunication Union and has 
only one frequency allotment. This does not pr ovide enough space for digital frequencies to 
ensure an adequate terrestr ial television signal after 2015.  
The sustainability of financing of the pubic broa dcasted is not ensured. The contract by which 
the licence fee was collected via energy bills  will expire in November. The RTK law 
envisages annual tenders to purchase audiovisu al works from independent producers, which 
should account for 20% of the programmes produ ced. This has not been fully implemented. 
Legal inconsistencies between the Law on Defamation and Insults and the Criminal Code 
have still not been resolved. According to European standa rds defamation should not be a 
criminal offence. Kosovo does not apply the penal provisions on defamation, but since they 
remain on the statute book, legal uncertainty persists.  
After a two year absence, the Minority Media Fund has started to function again in January. 
14 media have received grants this year. Th ere are 110 licensed broad casters; 41 represent 
minority media (32 Serbian, 3 Turkish, 3 Bosn ian, 2 Gorani and 1 Roma). There is no 
independent minority channel with Kosovo- wide coverage. An IMC Regulation on 
Audiovisual Communication was adopted at the e nd of August. This will have a particular 
impact on RTK by imposing limits on advertising thresholds.  
Positive developments can be reported as re gards cooperation between the Association of 
Independent Broadcast Media of Kosovo and minority media from the north. The Law on 
Access to Information is not fully implemented, which hampers the work of journalists. The 
Press Council is a self-regulatory body which depends on donations for its finances. Its 
enforcement capacity is weak.  
Overall , whilst there has been some progress in th e area of the information society and media. 
However, more needs to be done. The implemen tation of the RTK law a nd the appointment of 
new RTK board remain the most serious issues of  concern, as is the need to strengthen the 
administrative capacity, financial and political in dependence of both regulatory authorities, as 
well as the human capacity of th e Independent Media Commission 
4.2.7.  Financial control 
There has been limited progress on Public Internal Financial Control (PIFC) . Efforts have 
focused mainly on the development of inte rnal audit capacities and less on financial 
management and control systems. The Central Harmonisation Unit for these systems is operational since September. The Law on Internal  Audit was adopted in September. An audit 
manual has been developed and training of audito rs has continued. Intern al audit concentrates 
 
EN 43   EN mainly on compliance testing but is not yet seen as a managerial tool. The government 
approved the development strategy for internal audit 2010-2012.  
As regards external audit , the Office of the Auditor General prepared several internal 
documents in the early months of 2009, in cluding an external audit manual, a new 
performance audit guideline,  a quality framework, an am ended code of conduct and a 
standard reporting format. Key international st andards have been translated (such as the 
INTOSAI Guidance on Internal Control and a Code of Ethics). The first two annual 
performance reports of the Auditor General were sent to the Assembly in 2008 and 2009 
respectively. An adequate follow-up system on ex ternal audit reports and recommendations is 
lacking. The financial independence of  the office is not sufficient.  
Overall , there has been modest progre ss in this area. Developments in public internal financial 
control and external audit are at an early stage.  Continued efforts are needed in particular to 
improve the financial management and control environment. 
4.2.8.  Statistics 
There has been some pr ogress in the area of statistics . In August, the St atistical Office of 
Kosovo adopted a strategic development plan  2009-2013. The main priority areas include 
statistical infrastructure, survey data quality, IT  development and training  of staff. The main 
focus is still on social and demographic statisti cs rather than on economic statistics. The IT 
system has been improved and memoranda of un derstandings have been  signed with suppliers 
of data, which improved the co-ordination of the statistical system, but there is still room for 
improvement as regards cooperation between the different compilers of statistical data. The 
law on official statistics has not yet been adopted.  
Kosovo’s statistical infrastructure  remains weak. The weak capacity and inadequate 
independence of the statistical office are a concer n. Several ministries collect statistics which 
fall within the statistical office's remit. 
There has been limited progress in the area of classifications and registers . Classification of 
institutional units and of economic transacti ons has improved. However, compliance with EU 
and international classifications is limite d and the area needs further development.  The 
Statistical Office of Kosovo has not yet introduced NACE Re v. 2 and is still using NACE 
Rev. 1 standards. The business register is opera tional but the coverage and its links and update 
procedures are not adequate for reliable economic statistics.  
As regards sector statistics , there has been some progress in the area of economic, business 
and agriculture statistics. Pilot surveys have  been conducted for producer price indexes, 
business statistics and social statistics. The findings were used in  compiling the national 
accounts. However, the national accounts remain insufficient and need further development. 
A pilot population and housing census  was carried out in six Kosovo municipalities in 
October and November 2008. This demonstrated an improvement in the capacity of the Statistical Office of Kosovo to conduct a popula tion census. However, the recommendations 
of the International Monitoring Operation were  not fully implemented. In particular the 
boycott by the Kosovo Serb community was not pr operly analysed. The statistical office has 
no strategy for addressing this  issue. In July, the government announced its intention to 
organise a full population census in 2011. 
 
EN 44   EN Overall , some progress can be reported in the field of  sector statistics. However, the Statistical 
Office of Kosovo is still unable to produce su fficient statistics on economy to underpin 
effective policy-making. The office has insuffici ent administrative and coordination capacity 
to conduct major surveys.  
4.3. Justice, freedom and security 
4.3.1.  Visa, border management, asylum and migration 
Travel document security has improved with th e introduction of the ne w Kosovo passports in 
2008. All countries that recognise these passports issue visas  in them. The great majority of 
UNMIK travel documents will expire by Augus t 2010. The Law on Foreigners was adopted in 
December 2008. Related by-laws are not yet a dopted. A range of secondary legislation 
completing legal framework in relation to issu ance of ID cards, passports citizenship have 
been adopted. 
The proliferation of travel documents is still an issue, which complicates control over 
migration and the fight against crime. The security and control over the issuance of 
documents are a concern, as well as the security  of related registries and databases. Serb 
parallel structures in Ko sovo pose a particular cha llenge in this regard.  
Limited progress has been  achieved as  regards border and boundary issues. A revised 
integrated border management strategy and an  action plan were adopted in April 2009 to 
coordinate the activities of agencies involved in border control and management. The 
executive board for integrated border mana gement was set up in May 2009, comprising the 
integrated border management coordinator an d representatives of other relevant bodies. 
EULEX deployment at the two crossing points (g ates 1 and 31) between Kosovo and Serbia 
has had a positive impact. The Kosovo Police has launched a restructuring process including 
the relevant border departments.  
However, Kosovo borders are porous and sti ll not fully secured. The north represents a 
particular challenge. The lack of full customs operations in that area prevents the efficient 
fight against organised crime. The coope ration between bodies involved in border 
management is insufficient. Kosovo needs to ensu re that the IT system for border control and 
monitoring is in line with EU standards.  
Overall , Kosovo has only started to addr ess its priorities as regard s visa policy and border and 
boundary management. Kosovo needs to start devel oping a coherent visa police in line with 
European standards. 
There has been limited progress in the area of asylum . Kosovo has adopted some 
implementing legislation on the handling of asyl um seekers. In June 2009, a database on of 
asylum seekers was put in operation. However, a number of challenges n eed to be addressed. 
The capacity of the Department for Citizenshi p, Asylum and Migration as well as of the 
police to deal with asylum seekers and their applications remains w eak. There is no appeal 
body established for asylum cases. A reception cen tre to accommodate asylum seekers is yet 
to be built and Kosovo also la cks holding detention centres for foreign migrants. Overall, 
preparations in the area of asylum are at an early stage.  
In the field of migration , there has been partial progress. Th e Ministry of Internal Affairs is 
responsible for processing read mission requests from third c ountries. Countries which have 
 
EN 45   EN not recognised Kosovo continue to send th eir requests to UNMIK. The Department for 
Citizenship, Asylum and Migration received 2,87 8 requests for repatriations between October 
and July; 2,577 persons were repatriated to  Kosovo by third states. Cooperation among the 
relevant bodies within the Kosovo administration w ith a role in this process is satisfactory. In 
July, Kosovo adopted a law on granting work and employment permits for foreigners as well 
as implementing legislation regarding the issuance of identity cards for foreigners. In September, Kosovo adopted a strategy and an action plan on migration.  
However, the strategy and action plan does not sufficiently address important issues such as 
exit controls, checks of forged documents, et c. Although the Law on Foreigners was adopted, 
related secondary legislation re mains to be enacted. Implementing provisions to this law have 
not been issued except for an administrative instruction on ID cards for foreigners, which 
needs to be improved. Returns remain unsustainable as the reintegration strategy for repatriated persons is not properly implemente d. The Inter-ministeria l Coordination Board 
envisaged by the strategy for reintegration of repatriated persons has met only once. There is 
no body supervising the implementation of Kos ovo’s reintegration policy. Reintegration of 
returned persons remains a major deficien cy. Furthermore, the management of the 
readmission process and the process of verifying the identity of persons originating from 
Kosovo needs to be improved, particularly in terms of personnel, technical capacity, 
documentation support and statistics . There is no law on readmission. 
Overall , Kosovo has started to address its prio rities on migration. However, legislative 
framework needs to be completed and quality of  adopted documents ensured. The capacity to 
reintegrate returnees is a major obstacle to the full implementation of policies in this area. 
4.3.2.  Money laundering 
Tackling financial crime is a key European Pa rtnership priority. Ho wever, Kosovo took only 
few steps to address this phenomenon effec tively. An UNMIK regulation continues to 
regulate the activity of governmental and other ag encies with responsibilities in this area. 
Banks, customs, exchange offices and other fi nancial intermediaries are required to report 
cash or electronic transfers to the Financial Intelligence Centre currently managed by EULEX. This Centre acts as the national fina ncial intelligence unit. It has started to 
implement a new system of reporting, which is expected to provide significant improvements. The Centre also established relations with simila r institutions in Albania, the former Yugoslav 
Republic of Macedonia and Montenegro a nd with some Egmont group members.  
The Law on Management of Sequestered and C onfiscated Criminal Assets was adopted in 
July. However, the legislative framework needs to be strengthened in order to ensure that 
money laundering is defined as a crime, that the future Kosovo financ ial intelligence unit is 
independent from undue political and other influence, and that the relevant legal acts are line 
with EU standards. 
Oversight of the private sector and particularly the real estate sector needs to be urgently 
addressed. Cooperation between the Centre a nd the tax authority remains insufficient. 
Reporting by non-banking institutions to the Cent re continues to be inadequate. The capacity 
of judicial and law enforcement authorities to  deal with money laundering has not progressed. 
Law enforcement and supervisory authorities ha ve difficulties to detect, in a timely manner, 
violations in these sectors. The Agency for the Management of Seque stered and Confiscated 
Assets, the only mechanism to manage these assets, is not yet operational.  
 
EN 46   EN Overall , money laundering remains an issue of serious concern. Kosovo lacks adequate 
legislative provisions and operational stru ctures to cope with this phenomenon. 
4.3.3.  Drugs 
There has been some progress in  the fight against drug traffi cking. Kosovo is located on the 
Southern Balkans drugs traffi cking route. The Kosovo Police have conducted a number of 
effective operations in the fight against the ab use and trafficking of drugs. The quantities of 
narcotics seized and the numbers of cases inve stigated and persons a rrested and prosecuted 
have increased. In June Kosovo adopted a strate gy and an action plan ag ainst narcotics aimed 
at reducing supply and de mand along with a correspondi ng action plan. The police 
international cooperation unit lia ised with police in countries  such as Switzerland, Germany 
and Italy.  
However, pending its restructuri ng, police lacks an adequate budget and an effective entity to 
fight illicit drugs. Kosovo also lacks suffi cient number of trained police dogs for drug 
detection and canine unit. Central Narcotics Inve stigation Section of the police needs further 
support. Cooperation between law enforcement agen cies is still very weak and the flow of 
information is not integrated. The proper storag e of seized drugs is not adequately ensured 
across Kosovo.  
Overall , Kosovo's fight against drug trafficking is at an early stage. Several considerable 
weaknesses persist such as capacity  of the police to tackle drug trafficking effectively and the 
inadequate level of cooperation and informa tion exchange between relevant institutions. 
4.3.4.  Police 
Kosovo has made partial progress  as regards policing. The basic legislative framework is in 
place. Kosovo Police has managed well its public  order functions. The police continued in 
implementing its strategic plan 2008-2010. The po lice have also upgraded its communication 
infrastructure. The Ministry of Internal Affa irs established municipa l councils on community 
security to reinforce relations between police,  municipal authorities and local communities. 
Most police officers from the Kosovo Serb comm unity south of Ibar river, who left the 
service following the declarati on of independence, have retu rned to their stations. In 
September, Kosovo adopted the Law on Weapons. The law is in line with relevant EU 
legislation and includes adequate  penalty provisions. In January  2009, the Ministry of Internal 
Affairs adopted a series of administ rative instructions on small weapons.  
However, a number of violent incidents, includi ng targeted damage of  EULEX property, have 
occurred across Kosovo. The wide possession of  weapons by the civilian population remains 
a serious concern. There is no strategy for the collection of such weapons. The Law on 
Explosives needs to be updated and relevant implementing legislation adopted. Kosovo has no 
Laws on Forensics and on Autopsy. Cooperation between the police and the Prosecutor’s 
Office needs to be improved. The police still lack capacity to develop strategic planning and 
fully implement an intelligence-led policing system. The police have not yet drafted full job descriptions for its senior management, includ ing its two Deputy Genera l Directors. The chief 
executive officer of the police inspectorate needs to be appointed and professional and 
independent execution functions of the inspectora te ensured. The reorganisation of the police 
force has not been completed yet and requires adequate preparation. 
 
EN 47   EN Facilities for storing evidence  are not fully protected. In Ap ril, a considerable amount of 
heroin was stolen from an evidence room. Po lice communication networks are still not fully 
integrated and secure. Communication channels with other law enforcement agencies are not 
operational yet. Not all local police stations ar e linked with the main information system of 
the police. Reports sent by local police statio ns via intranet are not always secure. The 
information system of the police needs an upgrad e in order to avoid duplication of registered 
crimes and persons. Crime statistics are not based on standard operating procedures for 
statistics and records. Available data is not al ways used effectively in guiding targeted police 
work. Kosovo's efforts in linking law enforcement databases need to take  account of relevant 
European standards, particularly as regards da ta protection. The Ministry of Internal Affairs 
needs to further its efforts in granting EULEX a ccess to key databases in order to enable the 
effective conduct of investigatio ns under the mission's executive  mandate. International police 
cooperation is limited. EULEX needs to play an  important role in facilitating this.  
In January, the police created a mixed unit in northern Mitrovicë/Mitrov ica, consisting of 25 
police officers (Kosovo Serbs, Kosovo Albanians and Kosovo Bosnians). The unit has both a 
patrolling and an investigation mandate. The activ ities of this unit have led to a reduction of 
crimes in the areas covered. In northern Mi trovicë/Mitrovica, four police stations do not 
report directly to Pristina, which limits the effectiveness of fighting organised crime and 
conducting undercover operations in this area. This  is, however, being addressed and with the 
appointment of senior Kosovo Serb police offi cers to the regional command structures in 
Mitrovicë/Mitrovica cooperation is improving. In  June, most police officers from the Kosovo 
Serb community south of Ibar river, who had left the service following the declaration of 
independence, returned to their stations and work under the usual chain of command.  
Overall , Kosovo has initiated processes to address pr iorities in this area . However, urgently 
number of severe deficiencies need to be  addressed. The job descriptions for senior 
management need to be urgently finalised and appropriate staff r ecruited. Investigative 
capacities need to be enhanc ed and intelligence-led policing fully introduced and 
implemented; security of evid ence addressed. EULEX needs to be granted access to all 
relevant databases. 
4.3.5.  Fighting organised crime and terrorism 
There has been limited progress in tackling organised crime , which remains an issue of 
serious concern, particularly in the north of  Kosovo and on the border/boundary line between 
Kosovo and Serbia. In July, Kosovo adopted st rategy and relevant ac tion plan on tackling 
organised crime. The Law on Preservation of  Public Peace and Order was adopted in 
September. In June the Kosovo Prosecutor’s Office signed a memorandum of understanding 
with the Italian National Anti-mafia Directorate for the exchange of information in fighting 
organised crime, but this still needs to be formally adopted. 
However, Kosovo does not have a crime reducti on strategy. Kosovo lacks adequate resources 
and criminal intelligence system  to tackle this phenomenon. Th e lack of a witness protection 
law and programme still inhibits efforts in this area. EULEX plays a major role by 
investigating serious criminal offences a nd providing witness security and protection.  
Overall , Kosovo needs to considerab ly step up its efforts. Ko sovo remains a source and a 
place of transit for organised cr ime activities. The lack of cooperation between Pristina and 
Belgrade, as well as between the central Kos ovo authorities and structures in the north, 
 
EN 48   EN seriously undermine efforts in the fight against organised crim e, which is a key European 
Partnership priority. 
Kosovo has achieved limited progress in tackling the trafficking of human beings . The 
standard operating procedures were revised in November 2008 to encompass all victims of 
trafficking and to consolidate the system of victim identification and protection. Their full 
implementation is expected to be achieved shortly.  
The number of identified trafficking victims re mains low. The victim advocacy and assistance 
division continues to operate within the Minist ry of Justice, also providing assistance to 
victims of trafficking. The Deputy Minister of In ternal Affairs is the national anti-trafficking 
coordinator. Kosovo continues to be a source, a destination and a transit route for trafficked 
persons. Most victims are internally traffick ed (about 60%). Victims also originate from 
Moldova (20%) and Western Balk an countries (20%). Child tr afficking for the purpose of 
forced begging is an increasing problem. Over all, Kosovo efforts in the fight against 
trafficking of human beings are not very advanced. Trafficking related corruption needs to be 
tackled. Investigation and pros ecution of trafficking crimes by Kosovo authorities remain a 
concern.  
Some progress has been made in the fight against terrorism . A strategy and an action plan 
for the fight against terrorism were adopted in June. However, Kosovo has no law against 
terrorism.  
Overall , Kosovo is at an early st age of tackling terrorism. 
4.3.6.  Protection of personal data 
Kosovo still needs to align its legislati on with EU standards on data protection,  in particular 
Directive 95/46/EC. A general law for the protection of personal data is yet to be adopted and 
an independent data protection supervis ory authority remains to be set up.  
Individuals in Kosovo are not informed about th eir rights regarding th e protection of personal 
data. The setting up of security, intelligence and law enforcement bodies and their databases has not been accompanied with parallel personal data protection measures.  
Overall , Kosovo still needs to undertake and conclude  comprehensive efforts in this area. The 
current deficiency is a matter of concern. 
 
EN 49   EN STATISTICAL ANNEX  
STATISTICAL DATA (as of 14 September 2009)            
Kosovo under UNSCR 1244/99            
            
Basic data Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Population (thousand)  : : : : 1 985 2 016 2 041 2 100 2 127 2 153 
Total area (km²)  10 887 10 887 10 887 10 887 10 887 10 887 10 887 10 887 10 887 10 887 
            
National accounts Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Gross domestic product (GDP) (million national currency)  : : : : : : : : : : 
GDP (million euro) 1) : : 1 624 1 735p 1 797p 3 007p 3 068p 3 192p 3 434p : 
GDP (euro per capita) 1) 2) : : : : 905p 1 473p 1 482p 1 520p 1 612p : 
GDP (in Purchasing Power Standards (PPS)  per capita)  : : : : : : : : : : 
SI: GDP (in PPS per capita, EU-27=100)  : : : : : : : : : : 
SI: Growth rate of GDP (national currency, at constant prices, % change on previous year)  : : : 1.2p 3.1p : : : : : 
SI: Employment growth (national accounts, % change on previous year)  : : : : : : : : : : 
Labour productivity growth: GDP growth per person employ ed (% change on previous year)  : : : : : : : : : : 
SI: Unit labour cost growth (national accounts, % change on previous year)  : : : : : : : : : : 
SI: Labour productivity (GDP in PPS per person employed, EU-27=100)  : : : : : : : : : : 
Gross value added by main sectors (%)                      
Agriculture  : : : : : : : : : : 
Industry  : : : : : : : : : : 
Construction  : : : : : : : : : : 
Services  : : : : : : : : : : 
Final consumption expenditure, as  a share of GDP (%)  : : 163.1 151.6 147.5 109.7p 111.9p 111.5p 114.0p : 
Gross fixed capital formation, as a share of GDP (%) 3) : : 40.7 34.5 29.3 19.4p 19.3p 20.6p 21.7p : 
Changes in inventories, as a share of GDP (%)  : : : : : 3.9 4.2 4.4 4.3p : 
Exports of goods and services, relative to GDP (%)  : : 16.6 12.5p 10.4p 7.1p 7.0p 8.9p 10.4p : 
Imports of goods and services, relative to GDP (%)  : : 120.4 98.6p 87.1p 40.1p 42.5p 45.5p 50.3p : 
            
Industry Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Industrial production volume index (2000=100)  : : : : : : : : : : 
            
Inflation rate Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
SI: Consumer price index (CPI), (tot al, % change on previous year)  : : : -1.0 0.3 -0.8 -2.1 -1.5 2.8 12.4 
            
Balance of payments Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Balance of payments: current account total (million euro)  : : 228e  -104e  -204e -297 -301 -330 -428 -744 
Balance of payments current account: trade balance (million euro)  : : -646 -890 -941 -973 -1 044 -1 141 -1 338 -1 639 
 
EN 50   EN Balance of payments current account: net services (million euro)  : : 10e -23e -14e -21 -44 -22 -33 -19 
Balance of payments current account: net income (million euro)  : : 141e 154e 152e 140 147 155 184 143 
Balance of payments current account: net current  transfers (million euro)  : : 723e 655e 599e 555 640 678 759 771 
of which government transfers (million euro)  : : 809e 661e 490e 336 366 318 323 289 
Net foreign direct investment (FDI) (million euro)  : : : : : 19 80 244 414 340 
Foreign direct investment (FDI) abroad (million euro)  : : : : : 0 0 -4 -7 -19 
of which FDI of the reporting economy in EU- 27 countries (million euro)  : : : : : : : : : : 
Foreign direct investment (FDI) in the reporting economy (million euro)  : : : : : 19 80 249 421 360 
of which FDI of EU-27 countries in the reporting economy (million euro)  : : : : : : : : : : 
            
Public finance Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
General government deficit/surplus, relative  to GDP (%)  : : : 8.4 2.2 2.7 : : : : 
SI: General government debt, relative to GDP (%)  : : : : : : : : : : 
            
Financial indicators Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
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 deposits, million euro)  : 761 971 998 891 713 572 : : : 
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro)  : 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 resi dents (consolidated) (million euro)  : 3 26 87 233 374 514 637 892 1 183  
Interest rates: day-to-day money rate, per annum (%)  : : : : : : : : : : 
Lending interest rate (one year), per annum (%)  : : : : : 14.7 14.4 14.5 14.6 14.8 
Deposit interest rate (one year), per annum (%)  : : : : : 2.8 2.9 3.0 3.3 4.2 
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 
            
External trade Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Value of imports: all goods, all partners (million euro)  : : : : : 1 063 1 157 1 306 1 576 1 928 
Value of exports: all goods, all partners (million euro)  : : : : : 57 56 111 165 198 
Trade balance: all goods, all partners (million euro)  : : : : : -1 007 -1 101 -1 195 -1 411 -1 730 
Terms of trade (export price index / import pr ice index, 1998 =100)  : : : : : : : : : : 
Share of exports to EU-27 countries in value of total exports (%)  : : : : : 29.4 38.4 38.0 42.0 47.4 
Share of imports from EU-27 countries in value of total imports (%)  : : : : : 39.5 37.3 34.4 36.3 36.4 
            
Demography Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Natural growth rate: natural change (births minus deaths ) (per 1000 inhabitants)  : : : : 12.8 14.1 14.6 12.7 12.4 : 
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 9.7 
 
EN 51   EN Life expectancy at birth: male (years)  : : : : 67.0 : : : : : 
Life expectancy at birth: female (years)  : : : : 71.0 : : : : : 
            
Labour market Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
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 : 
SI: 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 :  
Share of male population aged 15-64 that is in employment (%)  : : 31.1 39.4 42.8 46.4 45.8 46.1 40.1 : 
Share of female population aged 15-64 that is in employment (%)  : : 8.1 8.8 8.3 9.9 11.7 11.8 12.7 : 
SI: 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 : 
Employment by main sectors (%)                      
Agriculture  : : : : : : : : : : 
Industry  : : : : : : : : : : 
Construction  : : : : : : : : : : 
Services  : : : : : : : : : : 
SI: Unemployment rate: share of labour force that is unemployed (%)  : : 57.1 55.0 49.7 39.7 41.4 44.9 43.6 : 
Share of male labour force that is unemployed (%)  : : 51.8 45.2 40.3 31.5 32.9 34.6 38.5 : 
Share of female labour force that is unemployed (%)  : : 69.9 74.5 71.9 60.7 60.5 61.6 55.2 : 
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 : 
SI: Long-term unemployment rate: share of labour force that is  long-term unemployed (%)  : : 47.6 47.3 42.7 34.9 34.7 41.1 37.1  : 
            
Social cohesion Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
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)  : : : : : : : : : : 
SI: Early school-leavers: share of population aged 18-24 having not completed upper secondary education 
and not currently in education or training (%)  : : : : : : : : : : 
            
Standard of living Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
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 
            
Infrastructure Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
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 
            
Innovation and research Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
SI: Spending on human resources (public expenditure on education) relative to GDP (%)  : : : : : : : : : : 
SI: Gross domestic expenditure on research & development, relative to GDP (%)  : : : : : : : : : : 
SI: Percentage of households who have Internet access at home (%)  : : : : : : : : : : 
            
Environment Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
SI: Total greenhouse gases emissions, CO2 equi valent (tons, 1990=100)  : : : : : : : : : : 
 
EN 52   EN  
SI = Structural indicators 
: = not available p = provisional value e = estimated value 
1) No official national currency exis ts. Euro is the currency in use. 
2) Source: Statistical Office of Kosovo prov isional data for 2004-2006 (at current prices). 
3) Investment: including donor sector, general government, and private investment (housing and other). 
4) Data collected from the Koso vo Energy Corporation (KEK). SI: Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP 2004)  : : : : : : : : : : 
SI: Share of renewable energy in electric ity consumption (%)  : : : : : : : : : : 
SI: Road freight transport as a share of total inland freight tr ansport (modal split of freight transport) (%)  : : : : : : : :  : : 
            
Energy Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
Primary production of all energy products (thousand TOE)  : : : : : : : : : : 
Primary production of crude oil (thousand TOE)  : : : : : : : : : : 
Primary production of hard coal and lignite (thousand TOE) 4) : : : 3 853 4 507 3 944 4 455 4 553 4 681 5 466 
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 : 
            
Agriculture Note 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 
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 : 
Livestock: pigs (thousand heads, end of period)  : 59 75 110 : 55 47 68 40 : 
Livestock: sheep and goats (thousand heads, end of period)  : 193 230 116 : 106 152 113 152 : 
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 : 
Crop production: sugar beet (thousand tonnes, har vested production)  : : : : : : : : : : 
Crop production: vegetables (thou sand tonnes, harvested production)  : : 169 135 : 150 289 172 117 :