EUROPEAN COMMISSION Brussels, 9.11.2016 SWD(2016) 363 final COMMISSION STAFF WORKING DOCUMENT Kosovo* 2016 Report

Accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions 2016 Communication on EU Enlargement Policy {COM(2016) 715 final}



*This designation is without prejudice to positions on status, and is in line with UNSCR 1244/1999 and the ICJ Opinion on the Kosovo declaration of independence. Table of Contents 1.INTRODUCTION 1.1.Context 1.2.Summary of the report 2. POLITICAL CRITERIA 2.1.Democracy 2.2.Public administration reform

2.3.Rule of law 2.4.Human rights and the protection of minorities 2.5.Regional issues and international obligations 3. NORMALISATION OF RELATIONS BETWEEN KOSOVO AND SERBIA 4. ECONOMIC CRITERIA 4.1.The existence of a functioning market economy 4.2.The capacity to cope with competitive pressure and market forces within the

Union 5. EUROPEAN STANDARDS 5.1. Internal Market 5.1.1. Free movement of goods 5.1.2. Movement of persons, services and right of establishment 5.1.3. Free movement of capital 5.1.4. Customs and taxation 5.1.5. Competition 5.1.6. Public procurement 5.1.7. Intellectual property law 5.1.8. Employment and social policies, public health policy 5.1.9. Education and research 5.1.10.World Trade Organisation issues 5.2. Sectoral policies

5.2.1. Industry and SMEs 5.2.2. Agriculture and fisheries 5.2.3. Environment and climate change 5.2.4. Transport policy 5.2.5. Energy 5.2.6. Information society and media 5.2.7. Financial control 5.2.8. Statistics 5.3. Justice, freedom and security 5.3.1. Visa, border management, asylum and migration 5.3.2. Money laundering 5.3.3. Drugs 5.3.4. Police 5.3.5. Fight against organised crime 5.3.6. Fight against terrorism 5.3.7. Judicial cooperation in civil and criminal matters Annex I – Relations between the EU and Kosovo Annex II – Statistical Annex

1.INTRODUCTION 1.1.Context On 1 April 2016, the EU-Kosovo Stabilisation and Association Agreement (SAA) entered into force. This is the first contractual relationship between the EU and Kosovo, a comprehensive framework for closer political dialogue and economic relations. Kosovo has faced serious domestic challenges, which have hampered EU-related reforms in some areas. It should now focus on implementing the SAA, guided by the European Reform Agenda, to further strengthen its rule of law and reform its economy. Kosovo has delivered on wide-ranging rule of law reforms, allowing the Commission to issue a formal proposal in May 2016 to transfer Kosovo to the Schengen visa-free list. This is now in the hands of the European Parliament and Council, pending Kosovo's fulfilment of the remaining two requirements. Kosovo remains committed to the normalisation of its relations with Serbia. It has met its remaining obligations on the establishment of the Specialist Chambers and has extended the mandate of the European Union Rule of Law Mission (EULEX). 1.2.Summary of the report As concerns the political criteria, the polarisation between government and opposition continued. Normal parliamentary functioning was prevented for parts of the reporting period, including through the use of violent means by opposition members. All political parties should show responsibility and re-engage in a constructive dialogue, with parliament as the key forum for political debate. The recent return of opposition members to parliamentary activities is a welcome step. Kosovo institutions fulfilled the remaining obligations on the establishment of the Specialist Chambers and Specialist Prosecution Office to investigate allegations of international crimes committed during and after the 1999 conflict. The procedures on the bilateral agreement with the host country of the Specialist Chambers (the Netherlands) were finalised. The mandate of EULEX was extended until June 2018. The assembly completed most of the outstanding appointments to independent institutions and agencies. However, appointments were often subject to political influence. This undermines the independent functioning and effective management of these bodies. Greater efforts are needed to ensure that appointments are based on merit. There is some level of preparation in the area of public administration reform. Good progress included the adoption of a comprehensive public financial management strategy and of the law on general administrative procedures. The continued politicisation of the public administration, however, remains a serious concern. The organisation of the state administration is fragmented and does not ensure effective lines of accountability, and the overlap of responsibilities of government agencies needs to be addressed. Parliamentary oversight of government activities should increase. The recommendations of oversight institutions should be followed, to ensure improved governance and accountability. Kosovo's judicial system is at an early stage. Important positive steps have been taken during the reporting period with the adoption of amendments to the constitution and most secondary legislation necessary to implement the 2015 justice package laws. Kosovo has also appointed most members of key institutions and continued to increase its clearance rate of cases. However, administration of justice is slow and inefficient, and there is insufficient accountability of judicial officials. The judiciary is still vulnerable to undue political influence and rule of law institutions suffer from lack of funding and human resources. Kosovo is at an early stage/has some level of preparation in the fight against corruption. Kosovo has strengthened its institutional capacities to fight corruption and organised crime, with the establishment of multi-disciplinary investigative teams, the set-up of a tracking mechanism for high level corruption and organised crime cases, as well as the fostering of serious crime department of basic courts. This has led to an increased number of high-level cases being investigated and prosecuted. However, corruption remains prevalent in many areas and continues to be a very serious problem. A stronger political will to tackle this in a comprehensive manner is necessary. Kosovo is at an early stage in the fight against organised crime. The number of investigations and final convictions remains low. Gaps in the legislation remain and enforcement needs to be improved in particular for money laundering, confiscation and seizure of assets, and financial investigation. Undue influence over investigations and the lack of strategic political commitment hamper the fight against organised crime. Kosovo continued its efforts to fight terrorism, but still faces challenges in this area.

Some progress was made in the area of human rights, with steps taken to implement the 2015 package of human rights laws and declarations of support for the rights of LGBTI persons. However, implementation continues to be hindered by a lack of resources and political commitment, in particular at local level. More needs to be done to effectively guarantee property rights and address the issues of return and reintegration of displaced persons, protection of cultural heritage and against gender-based violence. The protection of the rights of persons belonging to minorities and persons with disabilities need to be significantly strengthened. Kosovo has some level of preparation in the area of freedom of expression. There have been worrying developments during the reporting period, including a number of threats against journalists. The assembly shows limited commitment to finding a solution for sustainable funding of the public broadcaster, leaving it vulnerable to political pressure. There were no legislative developments on the regulation of media ownership and transparency. Regarding the normalisation of relations with Serbia, Kosovo remained committed to the implementation of the agreements reached in the EU-facilitated dialogue. Progress was limited, also due to the electoral process in Serbia and the domestic situation in Kosovo. However, momentum was regained in August 2016 with the start of the work on the Mitrovica/Mitrovicë bridge and freedom of movement. Continued efforts are needed to implement the agreements already reached. The steps taken should have a positive and concrete impact on the everyday life of citizens in both Kosovo and Serbia. As regards the economic criteria, Kosovo is at an early stage in developing a functioning market economy. Some progress was made, particularly on supporting export-oriented businesses, improving contract enforcement, especially within the financial sector, and access to finance. However, the fiscally unsustainable decisions related to war-veterans' benefits may have a negative effect on the macroeconomic stability of Kosovo and its relations with international financial institutions. The persistent trade deficit reflects a weak production base and poor international competitiveness. Reliance on remittances and the widespread informal economy additionally decrease employment incentives, resulting in low labour force participation, especially among women, and high unemployment rates, in particular among young and unskilled workers. Kosovo is at an early stage in building the capacity to cope with competitive pressures and market forces within the Union. No progress was made on improving the quality of education, which is a key driver for improving long-term growth and competitiveness. Kosovo is at an early stage of alignment with European standards. Legislative alignment has continued in some areas but implementation is weak. Some progress was made in the area of public procurement and competition. Good progress was made in the area of customs, especially in fighting corruption, collecting revenue and reducing the administrative costs of exports, but Kosovo should step up the fight against the informal economy and tax evasion. The energy sector continues to face problems, with no progress having been made on decommissioning the Kosovo A power plant or refurbishing Kosovo B, and very little progress made on renewable energy. 2. POLITICAL CRITERIA 2.1.Democracy Since 2008, Kosovo has consolidated the functioning of its democratic institutions. However, the past year brought serious challenges due to the ongoing deep polarisation between the government and the opposition. Divisions over issues such as the border demarcation agreement with Montenegro and the Dialogue with Serbia, dominated Kosovo's political agenda, leading to a protracted political stalemate. Greater efforts by all actors are needed to build consensus across the political spectrum to advance Kosovo on key EU-related issues. Despite the difficult circumstances, EU-Kosovo relations have strengthened. The Stabilisation and Association Agreement entered into force on 1 April 2016, establishing a first contractual relationship between the EU and Kosovo. Kosovo has delivered on wide-ranging rule of law reforms, allowing the Commission to issue a formal proposal in May 2016 to transfer Kosovo to the Schengen visa-free list. The situation in the north of Kosovo has remained largely calm and communication between mayors in the north and central institutions improved. Construction work on the Mitrovica bridge, a highly symbolic issue, started in the summer with the aim of opening the bridge for all traffic in January 2017. Kosovo met the remaining obligations in relation to the establishment of the Specialist Chambers and Specialist Prosecution Office to investigate allegations of international crimes committed during and after the 1999 conflict. The mandate of EULEX was extended until June 2018. Elections Kosovo's electoral framework is mostly in line with international standards, however electoral reform, guided by advice from the Venice Commission, remains necessary. Independent audits of political party financing and party electoral campaigns, as provided for in the law on financing of political parties, have not been conducted for the last three years. This should be done, by the latest, in advance of the next elections. The assembly needs to start an institutional debate, involving all political parties, with a view to ensuring transparency and accountability of political parties’ finances and campaign contributions. Parliament The assembly must play a key role in guaranteeing proper checks and balances necessary in a parliamentary democracy. It is the responsibility of all parliamentarians to ensure that the assembly can fulfil this role. Boycotts and continuous violent obstructions of parliamentary work have adversely affected parliamentary activities during parts of the reporting period. Breaches of parliamentary procedures continue to be a concern. Normal parliamentary functioning was prevented for parts of the reporting period by violent means, including teargas, by some opposition members. This has led to tensions and the arrest of a number of opposition parliamentarians at the assembly’s premises. All political parties should show responsibility and re-engage in a constructive dialogue, with the assembly as the key forum for political debate. The recent return of opposition members to parliamentary activities is a welcome step.

Despite the serious political polarisation, the European agenda remained a unifying element across the political spectrum. In November, the assembly ratified the Stabilisation and Association Agreement (SAA) with the EU. In May 2016, the first meeting of the EU-Kosovo Stabilisation Association parliamentary committee took place, in which members of the opposition took part. The assembly elected two Constitutional Court judges in November 2015 and appointed the Auditor General in March 2016. During the reporting period, the assembly completed most of the outstanding appointments to independent institutions and agencies. However, appointments were often subject to political influence. Appointments should be made on the basis of merit-based and more transparent selection procedures to ensure the independent functioning and effective management of these bodies. The assembly failed to properly supervise independent institutions, regulatory authorities and agencies, whose reports were often adopted without, or without fully considering the results of, debates. The absence of clear mandates, suitable reporting and accountability mechanisms, as well as institutional fragmentation, continue to present a problem for oversight and effective reform. Several important laws were enacted using the fast-track procedure. Breaches of the rules of procedure occurred frequently. The absence of parliamentarians often led to the lack of a quorum and irregular plenary and committee sessions. The sessions that were held had very heavy agendas. Such practices are not conducive to comprehensive parliamentary debate and risk diminishing the assembly’s oversight role. The regulatory framework for the assembly should be improved. Parliamentary checks and balances and budgetary control need to be strengthened and there is still no mechanism to ensure that recommendations by the public finance oversight committee are implemented. The assembly needs to strengthen consultations with civil society, especially on important laws. The assembly should take a stronger role in ensuring that reports and recommendations of the Office of the Auditor General and Ombudsman are followed up by the government. Assembly committees continued their work on monitoring the implementation of laws and held regular public hearings with ministers. The capacity of the EU Integration Committee should be increased to reflect its key role in advancing EU-related reforms. Better screening of draft legislation is needed to ensure alignment with the acquis. In March 2016, the assembly presidency adopted a strategic plan 2016-2020 that contains concrete objectives to boost the assembly’s ability to fulfil its constitutional role. Governance The ongoing political polarisation between the government and the opposition strained governance in Kosovo. There were also increased tensions in the governing coalition. Challenges in strategic planning at the centre of government hindered delivery on EU-related reforms and key areas of governance. Greater prioritisation, particularly in the context of implementing the SAA, should help focus reform efforts. Polarisation across the political spectrum in Kosovo has presented serious challenges to governance. Following the election of Hashim Thaçi as President on 26 February, there was a change in the government with the appointment of a new Deputy Prime Minister and Foreign and Justice Ministers. In December 2015, the government adopted an ambitious legislative agenda and an annual work plan for 2016. It also produced both a National Development Strategy 2016-2021 and an Economic Reform Programme. In December 2015, the government adopted a National Programme for the Implementation of the Stabilisation and Association Agreement, outlining short and medium-term priorities. The adoption of these documents is a welcome step and they should guide Kosovo in its socioeconomic structural reforms. However, weak political focus and lack of cooperation between ruling parties remain obstacles to making progress on much-needed reforms. The government continues to face difficulties meeting deadlines set out in its strategies and work plans. Ad hoc decisions with significant budgetary impact have undermined financial sustainability and reduced the government’s ability to focus on real priorities. A strong focus on key priorities, especially on the European Reform Agenda, and strong inter-ministerial coordination are crucial in this regard. The pre-selection of candidates for appointments to various boards made by the government, and nominations to independent agencies, are often based on political affiliation and not sufficiently on professional criteria. Selection and appointment procedures need to be clearly regulated and made more transparent. The recent allegations of political interference in recruitment to and decision-making processes in public bodies, based on leaked telephone intercepts, raise concern and should be fully investigated. Ministers’ non-attendance at plenary sessions and failure to answer parliamentary questions undermines transparency, accountability and communication with the assembly, in particular with the opposition. The government should consistently follow up on recommendations contained in assembly reports. Care should be taken to ensure that laws are in line with European standards and meet SAA obligations. Ministers need to follow up on each piece of legislation until it is adopted and should provide timely explanations to the assembly. The legislative agenda remains subject to frequent changes. The practice of repeated amendment of the laws undermines the stability of the legislation and reveals shortcomings in planning and coordination at the heart of government which weaken parliamentary oversight. Progress has been made on local government, particularly on relations between central and local government, including northern Serb-majority municipalities. There has been further improvement in municipal compliance with the law on local self-government. The Ministry of Local Self-Governance has spearheaded the drafting and implementation of municipal plans concerning EU-related obligations for the 38 municipalities. Adoption of the law on the census for northern Serb-majority municipalities has been postponed due to lack of support at the central and local levels. Municipalities’ legislative and executive bodies need to continue to increase their transparency and their public accountability, and the municipal assemblies need to strengthen their oversight role. With 38 municipalities, a large number given the size of Kosovo, steps should be taken to rationalise local governance, with the aim of encouraging efficient and democratic service delivery and strengthening responsible governance. During 2015, six municipalities, including the four northern municipalities, failed to approve their 2016 budgets within the ceilings set by the Ministry of Finance. Instead, the municipalities in the north adopted their budgets in line with the legal framework only in February 2016, once they received assurances for an increase during the mid-year budget review 2016. The Ombudsman began implementing the 2015 law on the Ombudsman, with increased and improved reporting, thereby strengthening the institution. Secondary legislation still needs to be adopted. In 2015, the Ombudsman received 1 995 cases, 10 % less than in 2014. While follow-up to the Ombudsman’s recommendations has increased, central and local level institutions need to do so more consistently. The government provided adequate premises for the Ombudsman Institution in August 2016. The assembly and government need to ensure the financial, functional and organisational independence of the Ombudsman Institution, in line with international standards on national human rights institutions. The Ombudsman still needs to appoint deputies. Civil society Some progress was made in improving cooperation between government and civil society. Minimum standards for public consultations were adopted and now need to be implemented across all levels of government. Lack of political will means the participation of civil society in policy-making remains uneven. The lack of transparency in public funding for civil society remains a concern. An empowered civil society is a crucial component of any democratic system and should be recognised and treated as such by institutions in Kosovo. Civil society needs to continue to play a crucial role in the democratic debate and in participating in the design and implementation of public policy. Under the current legal framework, the possibility of unwarranted interference in the internal governance and activities of NGOs, including suspensions, remains an issue. Care should be taken to ensure that decisions on suspension by an administrative body can be appealed in a court of law in a timely and transparent manner. The government and assembly did not adequately consult civil society with a view to ensuring that restrictive provisions affecting money laundering and anti-terrorism legislation do not unduly inhibit NGOs’ effective ability to operate.

Progress has been made with the adoption in April of minimum standards for public consultations, which were designed in an inclusive and transparent manner. The lack of engagement by many ministries and insufficient capacity and budgetary resources undercut efforts to implement the strategy on cooperation with civil society and continues to cast doubt on the underlying political will. The capacity of civil society in Kosovo to effectively engage remains uneven. A regulated model to ensure transparent mechanisms for distribution for public funding for civil society organisations has been identified. Information on all public funds disbursed to civil society organisations should be made easily accessible to the public. Legislation and administrative instructions covering all relevant levels of government should be adopted. The legal framework on tax deductions for donations remains ambiguous. Civilian oversight of the security forces Due to the political impasse and the boycotts in parliament, there has been limited progress in the work of the parliamentary committee on internal affairs, security and supervision of both the Kosovo Security Forces and the oversight committee for Kosovo’s Intelligence Agency. The parliamentary committee organised hearings on the laws pertaining to police and civil registry but did not exercise any oversight on expenditure, including expenditure by the Kosovo Security Forces. Close ties between individual parliamentarians of the relevant committees and the leadership of the Kosovo Security Forces continue to hinder independent oversight. The vetting process continued to improve, but is still carried out by the Intelligence Agency rather than a separate body. In June 2016, the Security Forces published integrity plans. The Kosovo Security Council met with increased regularity; its secretariat coordinates the implementation of Kosovo’s strategy on the prevention of violent extremism and radicalisation leading to terrorism for 2015-2020. 2.2.Public administration reform Kosovo has some level of preparation in the reform of its public administration. Some progress was made with the adoption of a comprehensive public financial management strategy and of the law on general administrative procedures. However, Kosovo did not address the Commission’s recommendations in the area of accountability. Non-merit-based recruitment continues to adversely affect effectiveness, efficiency and professional independence of public administration. The first monitoring reports on implementation of the public administration reform package indicate considerable delays. There are also serious concerns about the financial sustainability of the reforms. Given Kosovo’s ambitious reform agenda, continued strong political commitment is essential to ensure its implementation. In the coming year, Kosovo should in particular: review all independent bodies and start implementation of the recommendations of the review in order to enhance accountability, eliminate overlapping competencies and ensure a more streamlined public administration; ensure that the planned legislative package covering civil service, salaries and organisation of state administration is prepared in a coordinated way in an inclusive and evidence-based process on the basis of concept notes agreed at the government level; address the issue of the growing backlog of administrative cases in the Basic Court of Pristina, by ensuring funding to increase the number of judges and by improving the working conditions of the Court (e.g. facilitating implementation of the electronic case management system). Policy development and coordination The legal basis and institutional structures for coherent and coordinated policy-making system, including for European integration, are largely in place. Kosovo has adopted a National Development Strategy and National Programme for the Implementation of the SAA, but the latter is only partially aligned with the government’s annual work plan. Policy planning is inconsistent and is not given priority at central level. Sector strategies lack quality control, are rarely aligned with the mid-term expenditure framework and are thus financially unsustainable. Although all strategies and policies should contain budget impact analyses, they are not always carried out. Their scope is limited to assessing whether expenditure is within budget, not whether proposals are cost-effective. Some aspects of inclusive and evidence-based policy and legislative development are in place. Regulatory and budget impact assessments differ in quality and are not yet used consistently. Internal and external consultations are regulated, and progress was made with the adoption in April 2016 of minimum standards for public consultations. Effective and systematic implementation is needed, especially because short timelines for public consultations hinder effective civil society input. Limited consultations on laws and strategies of specific political or economic interest remains a concern (see civil society). A lack of detailed reporting on the implementation of the government’s annual work plan and sector strategies hinders effective public scrutiny of government work. Parliamentary scrutiny of the government is also insufficient. Public financial management In June 2016, Kosovo adopted a 2016-2020 public financial management (PFM) reform strategy. It is one of four strategies that form a ‘strategic package’ for public administration reform. It is also complemented by the public internal financial control and public procurement strategies. The PFM system supports aggregate fiscal discipline, but macroeconomic and revenue forecasting has to be improved. Public debt is comparatively low, although domestic and international borrowing has been increasing and budget commitments need to be controlled to limit arrears. One of the main challenges for PFM reform will be merging the tax and customs administrations. Improvements to the quality of medium-term budgeting, budget preparation and capital investment information are being given priority to boost the credibility of the budget (see financial control). Budget transparency is limited but improving. Budget information (the budget document, monthly statements, quarterly reports, the mid-year report and the annual financial report) is available to the public on the Ministry of Finance website. The 2015 budget document was difficult to understand for the general public. Budget information needs to be more accessible and comprehensive to strengthen accountability. Budget documents are often not comparable, as budget itemisation is not consistent. Scrutiny of public finances is the responsibility of the Office of the Auditor General. Its reports are published regularly and there is a mechanism for assuring implementation of audit recommendations, but it does not work properly. A key weakness in transparency is that there are frequent changes to the budget during the calendar year without transparent disclosure or explanation of these variations. Public service and human resource management The law on the civil service establishes a single, unitary system of public service at central government and municipal levels. The current law formally provides for merit-based recruitment, promotions and dismissals based on objective criteria but loopholes in the law allow contradictory practices, notably on the conversion of temporary staff into permanent civil servants without public competition. The Ministry of Public Administration does not have sufficient capacity to actively supervise recruitment procedures, which are done on a decentralised basis. Political influence over appointments and dismissals continues to be a serious concern, especially on the selection of senior management. Non-majority communities are still not adequately represented in central public institutions. The Independent Oversight Board is not sufficiently used to monitor implementation of the civil service law, and does not have sufficient capacity. Around 75 % of its recommendations and rulings are implemented. Administrative judges are overburdened, which often leads to delays in decisions.

The Ministry of Public Administration is responsible for central coordination of human resources management, but its resources are very limited. A job classification system is being rolled out since January 2016 and is expected to lead to a more uniform application of legislation and principles. Progress has been made in extending the human resource management information system to all institutions, but the system is not up-to-date and does not perform all the mandatory tasks set out in the legislation. There is generally a lack of professional human resource management due to politicisation and limited capacity. The remuneration system does not ensure equal pay for equal work. Different salary coefficients are applied to similar positions. This undermines parity and does not provide incentives for retaining and recruiting professional staff. However, the suspension in 2016 of the salary top-ups system is a step towards fair and transparent remuneration. Professional development of public servants has progressed, but training does not reach all of them. Performance appraisals are still not systematically implemented, and they have little impact on career development. Kosovo has adopted measures and mechanisms to prevent corruption and promote integrity in the public service. Little progress was made in setting up an information system on disciplinary measures and in monitoring implementation of the code of ethics. Accountability of the administration The state administration is organised in a fragmented way which does not ensure effective lines of accountability. The law on state administration has allowed 46 government agencies to be set up, some of which have overlapping responsibilities. Furthermore, over 30 nonconstitutional institutions report directly to the assembly, which lacks the powers and capacity to effectively supervise them. Many of these institutions and government agencies do not comply with the civil service law, therefore contributing to further fragmentation of the administration. Lines of accountability within many institutions are weak and there is no clear delegation of responsibilities to middle management (see financial control). The government has committed itself to developing the law on organisation of state administration in conjunction with the law on civil service and the law on salaries, in order to ensure a more accountable and depoliticised public administration. Citizens’ right to good administration is being addressed by oversight institutions such as the Auditor General and the Ombudsman. Their recommendations are not systematically implemented by all institutions, although there has been some improvement during the reporting period. The right to access public information is regulated in the law on access to public documents. Over the past two years the number of requests unanswered or refused was low. The new law on general administrative procedures, adopted in May 2016, aims to improve the right to administrative justice, together with the planned new law on administrative disputes. The increasing backlog in resolving administrative disputes is damaging public confidence in the court system. The backlog stood at 5 380 unresolved cases at the end of 2015, an increase of 1 341 from 2014. The right to seek compensation is not yet secure because the legislation is fragmented and there is no specific law on public liability. Service delivery to citizens and businesses The government is committed to user-oriented administration. However, coherent policymaking is often undermined by a lack of coordination and common vision between the ministries responsible. The development of e-services is slow for want of an appropriate interoperability framework. Legislation on equal access to services exists, but applying it is a challenge, particularly for persons with disabilities. Good progress has been achieved with the simplification of administrative procedures thanks to the adoption of the new law on general administrative procedures. However, implementing the law requires a parallel inventory of special administrative procedures, which need to be either abolished or brought into line with the law. Strategic framework for public administration reform The public administration reform strategy framework, under the umbrella of the National Development Strategy 2015-2020, consists of strategies on better regulation, policy planning and coordination, modernisation of administration and public financial management. The 2015 annual monitoring reports on the first three strategies indicate either over-ambitious targets or lack of appropriate indicators, which explain delays in implementation. The government has agreed to address these shortcomings by the end of 2016. Political support for public administration reform and effective steering by the Ministerial Council continues to be necessary to ensure an effective implementation. Financial sustainability of the reforms needs to be ensured in the 2017 budget and in the medium-term expenditure framework. 2.3.Rule of law Functioning of the judiciary Kosovo is at an early stage in developing a well-functioning judicial system. Good progress has been achieved over the past year by adopting amendments to the constitution and most secondary legislation necessary to implement the 2015 justice package laws. Kosovo has also appointed most members of key institutions and continued to increase its clearance rate of cases, thus partly meeting two of the 2015 recommendations. However, administration of justice is slow and inefficient, and there is insufficient accountability of judicial officials. The judiciary is still vulnerable to undue political influence and rule of law institutions suffer from lack of funding and human resources. In addressing the shortcomings outlined below, Kosovo should therefore in the coming year: continue to implement the justice package, including adoption of the remaining secondary legislation; strengthen financial resources for the judicial sector and continue to strengthen the capacity of judges, prosecutors and support staff, to ensure proper functioning of the judicial system and the administration of courts; replace current provisions included in the laws on the Judicial and Prosecutorial Councils by adopting the law on the Office of the Disciplinary Counsel to strengthen accountability; step up efforts to reduce the backlog of cases, including by using alternative dispute resolution tools. Strategic documents The implementation of the 2014-2019 strategic plan for Kosovo’s judiciary, the 2014-2019 communication strategy and the strategy for reducing the backlog of cases continues, with the aim of improving the overall functioning of the judiciary. The strategic plan of the Kosovo Prosecutorial Council for 2016-2018 was adopted in February 2016. Management bodies

Under the constitution, the Kosovo Judicial Council (KJC) and the Kosovo Prosecutorial Council (KPC) are responsible for ensuring the independence and impartiality of the judiciary. In February, following Venice Commission and European Commission recommendations, the assembly adopted a constitutional amendment on the composition of the Kosovo Judicial Council, whereby the majority of its members are to be elected by their peers – 7 out of 13 members now being appointed by judges, and the other 6 by the assembly. The amendment strengthens judicial independence from political influence, a welcome step. Out of the 6 members appointed by the assembly, 2 shall be from the Kosovo/Serbian community and 2 from the other minority communities. One of the 6 nonjudicial members is still to be appointed. Following amendments to the law on the Kosovo Prosecutorial Council in December 2015, 10 out of 13 members of the Prosecutorial Council were appointed by prosecutors, while the other 3 still remain to be elected by the assembly. As of January, the Prosecutorial Council controls its own budgetary resources. The Judicial Council submits its budget directly to the assembly. Meetings of both Councils continue to be open to both the media and the public. Both Councils draw up and approve annual reports and publish them online, but their reporting mechanisms still need to be improved. The KJC issued its report with a significant delay, while the KPC report has yet to be presented. In line with the agreement between Belgrade and Pristina, the KJC and KPC published a second vacancy notice in March 2016, and are recruiting 14 Kosovo Serb judges, 115 support staff, 6 prosecutors, and 34 prosecution support staff. This is a major step forward. The Judicial and Prosecutorial Councils continue to approve strategic documents, regulations, decisions and other acts, with significant delays. They still need to approve 9 out of 35 regulations and instructions, required under the July 2015 justice package laws. The Councils still lack capacity to draft regulations and take decisions in compliance with the hierarchy of normative acts. They also lack capacity to monitor the implementation of their decisions. The mandate of the current international judges of the Constitutional Court remains unchanged within the framework of EULEX mandate. Independence and impartiality Legal safeguards on the independence and impartiality of judges and prosecutors are enshrined in the constitution, the law on courts and the legislation governing the Judicial and Prosecutorial Councils. Strong concerns remain with regard to public comments by highlevel officials on ongoing court proceedings that are tantamount to interference with the judiciary. There are many corruption-related offences involving members of the judiciary and prosecution service. Court Presidents are responsible for the management and operation of their courts. Under the March 2016 amendments to the law on the Kosovo Judicial Council judges can be transferred to other courts by the KJC with the approval of the Court President, for a reasonable period of time, in order to ensure the efficient functioning of the courts and in other extraordinary circumstances. They may appeal a transfer before the Supreme Court. This allowed the understaffed serious crime departments in the Basic Courts to be reinforced. The transferred judges received a pay rise. A sustainable solution, by allocating the appropriate numbers of judges to each Court, needs to be found. Case allocation is managed by drawing lots. Urgent cases are allocated by the Courts' Presidents. Sensitive cases are allocated, but not always dealt with. The KJC and KPC are responsible for taking action if judges or prosecutors are threatened. They should continue to raise awareness of existing protection mechanisms and procedures, in close cooperation with the police. Accountability Implementation of codes of ethics for judges, prosecutors and attorneys is weak. Disciplinary procedures are in place. The Judicial and Prosecutorial Councils are responsible for these procedures, while the Office of the Disciplinary Counsel (ODC) conducts preliminary disciplinary proceedings and submits appropriate motions to the Councils. Certain procedural aspects of the status and operations of the Office of the Disciplinary Counsel still need to be clarified. Procedures for appointing and dismissing judges and prosecutors comply with international standards. Judges and prosecutors may be dismissed by the President on a proposal by the KJC/KPC for a number of criminal and disciplinary offences, and they are entitled to appeal. The law on the Office of the Disciplinary Counsel, replacing current provisions included in laws on the Judicial and Prosecutorial Councils, is yet to be adopted. The performance of the ODC needs to improve. From September 2015 to April 2016, it managed to process and submit only 5 cases against judges and 10 cases against prosecutors to the relevant Disciplinary Committees of the Judicial and Prosecutorial Councils. So far, out of these cases, none of the judges and prosecutors or their judicial officers has been dismissed. No judges and 2 out of 4 prosecutors were suspended by the Councils following allegations of bribery. The overall number of judges and prosecutors under investigation by the ODC in 2015 was high, exceeding 250. The Prosecutorial Council has terminated 7 cases and the Judicial Council terminated 6 cases on the basis of expiration of statutory limitations. Judges and prosecutors are obliged by law to declare their assets and gifts received, as well as report any possible conflict of interest to the Anti-Corruption Agency. In 2015, all Kosovo judges and prosecutors timely submitted their assets declarations. Professionalism and competence The President of Kosovo appoints judges and prosecutors for an initial three-year term, following a proposal from the KJC or the KPC respectively. The recruitment process and entry exams for judges and prosecutors are organised by the Judicial and the Prosecutorial Councils respectively and are merit-based. The authority taking decisions on the selection of judges should be independent of the executive and the legislative powers. The Prosecutorial Council is required to carry out performance evaluations for prosecutors with a permanent mandate every third year, but this has again experienced significant delays. The Judicial Council failed to adopt the regulation on performance evaluation of judges. Judges continue to be evaluated by the Judges’ Performance Assessment Committee. To date, most judges and prosecutors have passed the evaluation; only one judge was not proposed for permanent appointment. Merit-based performance criteria and an evaluation system within the initial term of appointment, including at the end of the initial training, are in place since 2015 to ensure professionalism. The level of professionalism and competence, especially of prosecutors, is still a matter of concern; some are inadequately trained and some are unwilling to apply the training received and to take full responsibility for their cases. Training needs should be assessed as part of an in-depth annual evaluation of judges and prosecutors. Quality of justice The Kosovo Judicial Institute (KJI) is responsible for delivering initial and continuous training for judges and prosecutors based on the annual training curricula jointly prepared by the KJC, KPC and KJI following a comprehensive needs assessment. Trainings are funded from Judicial Institute's own budget and by international donors. The new justice package laws provide for an obligatory initial 12-month training period for both judges and prosecutors after they have been appointed. Both Councils have yet to conduct such training. The curricula, which are divided into training modules according to the responsibilities of the departments of courts and prosecutors’ offices, specify the areas to be covered by training, including training on EU law. If relevant, the KJI includes staff from other ministries and agencies in specific training courses (e.g. Ministry of Interior and Customs Service on issues concerning money laundering). The KJI also prepared an orientation training programme for the judges and prosecutors from the Serbian community. To further strengthen the capacity of judges, as well as prosecutors and support staff, training is needed, in particular in specialised areas such as economic crimes and public procurement. Kosovo currently has 19.5 judges per 100 000 inhabitants. In total, there are 350 local judges and 39 EULEX judges.

The budget for Kosovo’s prosecution service and court system for 2016 is around EUR 30 million, excluding some other services such as mediation and legal aid. Compared to 2015, the total budget allocated to the justice system has increased to 2.38 % of the overall national budget. A comprehensive overview of public finances allocated to the judicial system was made publically available in December. A centralised criminal records registry, which is crucial for the quality of justice, is not in place. There is no official court monitoring system in place. E-justice tools remain underdeveloped. However, the Judicial Institute set up an online database of legislation with jurisprudence and legal commentaries to assist judges and prosecutors in their everyday work. This is particularly relevant for the publication of Supreme Court decisions. The database needs continuous updating and promotion among legal practitioners. A mediation system has been operational since 2008, with 7 regional mediation centres and 163 active mediators licensed by the Ministry of Justice. In April 2016, 21 candidates for mediator positions (17 from the Kosovo Serb community) passed the necessary training and are awaiting certification. Public awareness and familiarity with alternative dispute resolution tools remains low, but the number of cases are continuously increasing: between 2012 and July 2015, 2 598 cases were dealt with through mediation. While notaries deal with more cases, their professional skills need to be improved. Both the mediation and notary systems require further strengthening. Efficiency Kosovo still needs to improve its efficiency in dealing with the backlog of cases. According to the Judicial Council’s Department of Statistics, at the beginning of 2016, the number of pending cases at court level was 440 627, the number of cases received was 400 982 and cases solved was 397 059. The clearance rate is increasing and Kosovo courts now have a clearance rate of 99.02 % of cases received and resolved within a year. There are no figures on the disposition time (i.e. the average time taken from filing indictment to a judgment) in Kosovo’s courts. The time prescribed by law to investigate cases of organised crime and corruption is too short, resulting in courts not having sufficient information to come to an informed decision. There is no working electronic case management system. A positive exception is the tracking mechanism for high-level corruption and organised crime cases set up recently (see fight against corruption). The efficiency of the judiciary is seriously hampered by the shortcomings of criminal legislation; many provisions in the Criminal Procedure Code are too cumbersome and formalistic to permit robust and successful investigation and prosecution. Due to insufficient capacity and staffing and limited financial resources, as well as a heavy backlog of cases, the judicial system is slow in delivering justice. Kosovo's size and social structure makes the efficiency of the judiciary vulnerable to influence. Fight against corruption Kosovo is at an early stage/has some level of preparation in the fight against corruption. Good progress has been achieved over the past year. With the establishment of a multidisciplinary investigative team, headed by the Special Prosecution Office and the introduction of a tracking mechanism for high-profile corruption and organised crime cases, Kosovo has fulfilled two of last year's recommendations. This has led to an increased number of high-level cases being investigated and prosecuted. However, Kosovo must continue to strengthen its track record in the fight against corruption and organised crime. Corruption remains prevalent in many areas and continues to be a very serious problem. The political will to tackle this in a comprehensive and strategic manner needs to be improved. The efficiency of investigations continues to be hampered by political influence. In the coming year, Kosovo should in particular: amend the legal framework on conflict of interest bringing it in line with European standards, including clear definitions of categories of officials and regulating compatibilities of functions during and after office; review and adopt legislation governing public officials charged or convicted for serious or corruption-related crimes; carry out independent audits of political party finances for 2013-2016 and ensure the financial reports of political parties are published as required by law; increase the number of prosecutors in the Special Prosecution Office investigating and prosecuting high-level corruption cases, and provide training to strengthen their capacity to conduct financial investigation, confiscate assets and effectively protect witnesses, with a view to delivering results on the track record. Track record In December 2015, Kosovo established an advanced IT tracking mechanism of all stages of the criminal proceedings for high-level corruption cases and high-profile serious organised crime, including asset seizure and confiscation cases. A multidisciplinary team was established to effectively coordinate efforts to deal with these cases. Out of the 33 highlevel cases currently in the system, there have been 21 indictments (17 for corruption and 4 for organised crime) involving 150 defendants (including a number of political and senior public officials).There have been convictions in three cases for corruption-related offenses, including a case against a prosecutor. The Anti-Corruption Agency (ACA) continued to be active in conducting administrative investigations, checking asset declarations, monitoring conflicts of interest and public procurement activities and improving awareness. Since it was established the Agency has sent 677 cases to the prosecution. The prosecution offices have filed indictments on 87 cases, based on the ACA referrals. The quality of the reports that the ACA submits to the prosecution needs to be improved, as does the prosecutors' capacity and willingness to pursue cases. The ACA lacks tools to check assets declarations. These checks would require closer cooperation with the police, the tax administration, the Financial Intelligence Unit, the land registry and municipal authorities. Undue influence and limited capacity still hamper the conduct of effective financial investigations. Financial investigations are not yet systematically launched in cases of corruption and organised crime. There are too few specialised prosecutors, especially in the Special Prosecution Office, with the required level of training and competence to deal with financial cases, including procurement cases. Asset freezing and seizures have increased but final confiscations remain low. In 2015, the estimated total value of frozen, sequestrated and confiscated assets was EUR 20.6 million. The value of permanent confiscations increased from EUR 130 000 in 2014 to EUR 450 000 in 2015. From January to June 2016 the total estimated value of temporary sequestered assets was EUR 1 million, whereas the total value of permanent confiscations was EUR 236 000 (totalling EUR 1.2 million). There were also pending requests for final court confiscation in the amount of EUR 25 744. Kosovo law does not lay down any mechanism for automatic suspension or removal from office of officials charged with and convicted of corruption, with the exception of a newly amended law on public procurement and the law on the civil service. Lack of trust hampers effective implementation of witness protection mechanisms, in addition regional and international cooperation needs to be improved. The current law on informants is not in line with international standards as it does not meet minimum whistleblowing mechanisms or protection requirements. Independent audits of political parties finances have not been carried out since 2013. In 2016, the assembly failed again to conduct an audit of the financing of political parties and most political parties do not publish their financial reports as required by law. The Central Election Commission also did not ensure that reports on political party finances were published on time. Transparency and accountability of funding for political parties and campaign financing remains to be ensured. Kosovo should also consider measures allowing effective investigation of inexplicable wealth, i.e. by allowing the burden of proof to be reversed for asset confiscation, separating the money laundering offence from the predicate offence, prohibiting the transfer of criminal assets to third persons, and providing the Anti-Corruption Agency with more effective inspection powers to audit asset declarations.

Officials from the north of Kosovo do not meet their obligations regarding the submission of asset declarations to the ACA. Corruption in the north of Kosovo is not being tackled properly by law enforcement agencies. In 2015, out of 4 200 officials obliged to submit annual assets declarations, 57 failed to do so, which represents only 1.4 %. Twenty-six cases against 184 persons were sent for prosecution by the Anti-Corruption Agency. Most concerned non-reporting or false reporting of assets, abuse of official position or authority, or accepting bribes. In 2015, the Agency handled 306 cases of conflicts of interest, of which 4 were submitted for the minor offences procedure and 3 were sent to the prosecution service for criminal investigation. In 160 cases, the conflict of interest was prevented and in 49 cases the Agency gave an opinion to the institutions responsible. Most cases dealt with local governmental officials. The AntiCorruption Agency found 1 552 officials holding two or more positions, thus creating the situation of a potential conflict of interest. In 2015, the Agency handled 112 cases on prevention of corruption in public procurement and issued 81 opinions, of which only 7 were not considered. Institutional framework Anti-corruption work is fragmented in Kosovo and the main anti-corruption bodies are not well integrated, their remits overlap and the division of tasks is unclear. Kosovo needs to strengthen inter-institutional coordination mechanism and bodies. On the preventive side, the main body remains the independent and specialised AntiCorruption Agency. Other bodies with controlling and auditing powers are: the Auditor General, who carries out financial audits of all public institutions at central and local level; the tax authorities, which gather and check financial information from individuals and various collective bodies; and the customs authorities, which check on customs procedures. The Financial Intelligence Unit in the Ministry of Finance gathers and analyses information on and flags up suspicious financial transactions carried out for the purpose of money laundering or terrorism financing. All these bodies appear to lack a proactive role in the fight against corruption. Access to public information is guaranteed by the law on access to public documents adopted in 2010. Corruption risk assessments in the health, education, judiciary, energy, and mining sectors were published in 2015. These areas remain particularly prone to corruption and conducting risk assessments in a more systematic manner is a first positive step that should lead to further measures to effectively address corruption. There is no particular public policy to prevent corruption in the private sector. In case of alleged corruption instances, citizens in general report to police as most perceive this institution as the first responder. In law enforcement, there are bodies specialised in fighting corruption: the anticorruption coordinator nominated by the Chief State Prosecutor, and the Police Directorate for the Investigation of Economic Crimes and Corruption, which maintains anticorruption units at both police stations and at headquarters. These units conduct preliminary investigations and cooperate on a daily basis with the prosecutors. Each basic prosecution office has an anti-corruption prosecutor and two prosecutors are appointed by the Special Prosecutor to handle high-level corruption cases. Considering the continuous increase in workload and EULEX’s downsizing, the number of prosecutors in Special Prosecution Office dealing with corruption needs to be increased. High-level corruption cases are dealt with by the serious crimes departments of the Kosovo Basic Courts, which have recently been allocated more judges and support staff. The appointment of a National Coordinator against Economic Crime in November 2015 helped improve coordination and cooperation between law enforcement agencies. Legal framework Criminal law provisions on corruption, mainly in the criminal code and criminal procedure code, are generally in line with relevant European standards. However, there are areas that require urgent rectification such as the confiscation provisions, which are too cumbersome and complex to use, and the unreasonably short deadlines for investigations. The legal framework has been further aligned with the acquis with amendments to the law on the declaration, origin and control of the property of senior public officials and the declaration, origin and control of gifts for all official persons. Regulation of political party and campaign finances is hampered by the lack of effective regulatory oversight and the lack of political will to enforce the legal framework. Reviewing the legislation could help to increase transparency, accountability and effective auditing of political party and campaign finances control. The law on conflict of interest needs to be amended to bring it in line with European standards. Categories of public officials covered by the law are currently not clearly defined, neither measures nor procedures to prevent and sanction situations of conflict of interest. Compatibilities and incompatibilities of functions during and after office are not regulated. Suspension and removal of public officials indicted and convicted for serious or corruptionrelated crimes is not foreseen. The law on public procurement was amended in March 2016, further aligning it with the EU acquis (see 5.1.6 – public procurement). Strategic framework Kosovo is implementing its 2013-2017 anti-corruption strategy and action plan, monitored by the Anti-Corruption Agency. Most of the expected results have not been achieved. A revised anti-corruption action plan for the prosecution service and its role in combating corruption was adopted in December 2015. Inadequate financing and a lack of any measurable impact indicators are seriously undermining prospects of achieving the expected results. Implementation of the 2014-2018 strategy and action plan for preventing and combating the informal economy, money laundering, terrorist financing and other financial crimes has begun smoothly. Action plans are in place to fight corruption in vulnerable sectors such as customs, the police, and the tax administration. Civil society is being involved in drafting anticorruption policies. Regular and transparent consultations should be held to monitor implementation. Fight against organised crime Kosovo is at an early stage in the fight against organised crime. Good progress has been made in the past year, notably with strengthening institutional specialisation and cases tracking mechanism (cf. same as under box fight against corruption) and due to improved coordination. This has led to an increased number of high-level cases being investigated and prosecuted. The number of final convictions, financial investigations and final asset confiscations remains low, while asset freezing and seizures have increased. Organised crime goes unpunished in the north of Kosovo. Overall, there has been little progress in the fulfilment of the recommendations identified last year. Kosovo has stepped up its efforts to fight terrorism, including measures to tackle radicalisation and prevent Kosovo terrorist fighters joining conflicts abroad. In the coming year, Kosovo should in particular: revise the Criminal Procedure Code and the law on extended powers for confiscation of proceeds of crime with a view to making them effective tools to combat organised crime;

increase the number of prosecutors in the Special Prosecution Office investigating and prosecuting high-profile organised crime cases, and provide them with robust training to strengthen their capacity to conduct financial investigations, confiscate assets and effectively protect witnesses, with a view to delivering results on the track record; develop an intelligence-led policing approach and strengthen capacity to collect harmonise, analyse and use relevant criminal statistics, including through better inter-agency cooperation. Track record Organised crime in Kosovo is mainly human and drug trafficking, financial crime and money laundering, and terrorism-related activities. The main factors facilitating organised crime are primarily Kosovo's geographic location on the ‘Balkan route’, high unemployment and other economic factors, and specific social and family structures. The IT tracking mechanism for high-profile cases, including organised crime is operational (see fight against corruption). However, a tracking mechanism for all criminal cases still needs to be developed in order to increase inter-institutional cooperation and information exchange between all rule of law actors in Kosovo. The success rate for investigations, prosecution and final convictions in organised crime cases including human trafficking, drug trafficking, terrorism, money laundering and other forms of financial crime remains very low. Financial investigations are not effective. While, overall, the estimated value of frozen and temporarily confiscated assets has increased, the rates of confiscation and final sequestration of criminal assets remain low. Large-scale usurpation of socially-owned properties is endemic in Kosovo, providing a huge source of illegal wealth. In April 2016, a Kosovo Police operation, assisted by EULEX, was launched, during which 47 premises were searched and 8 suspects were arrested in relation to organised crime usurpation scheme, including an assembly member. The witness protection system, while having appropriate capacity, does not have currently any witnesses under protection, due to lack of trust in the system. Implementation and international cooperation needs to be strengthened. The involvement of armed groups in organised criminal activities, such as arms smuggling, and the apparent impunity with which they are able to operate across borders is of serious concern. The Kosovo police have been involved in several cross-border operations supported by Europol at the request of Member States leading investigations into such groups. The government, law enforcement agencies and the judicial system need to take swift action to dismantle these groups. Since September 2015, there been no new reported cases of Kosovars joining the war in Syria. Over the past year, the police have arrested an increasing number of people joining terrorist groups in conflicts abroad or intending do so. Institutional framework The main institutions involved in the fight against organised crime in Kosovo are the national coordinator, the Ministry of Internal Affairs, the Ministry of Finance (customs, the Financial Intelligence Unit, the tax administration), the Ministry of Justice, the Kosovo police, the prosecution service, and the courts. The National Coordinator on Organised Crime monitors the implementation of the strategy and action plan against organised crime. An organised crime directorate in the police headquarters is complemented by specialised units to combat drugs and human trafficking at regional level, assisted by forensic units. In the prosecution service, the main role in fighting organised crime lies with the Special Prosecution Office, which is staffed with prosecutors specialised in investigating and prosecuting this type of criminality. It needs both training and staff reinforcements. The customs, the Financial Intelligence Unit (FIU) and the tax administration are responsible for monitoring and controlling the internal and cross-border flow of goods, materials and capital aimed at activities related to all forms of organised crime. The FIU specifically assists with analysing and disseminating information on money laundering and terrorism financing, exchanging information with all law enforcement institutions. It also has the capacity to freeze suspicious financial transactions. Cooperation and coordination among all these institutions in day-to-day handling of corruption and organised crime cases depends more on the individual capacity and commitment of the officials responsible than the system as such, with the prosecution service being the weakest link. Intelligence-led policing remains weakly implemented. The new analytical tool assisting in exposing and investigating organised crime, the Kosovo Police Information System, is not yet fully utilised. Kosovo regularly exchanges information with Europol and Interpol via EULEX or UNMIK. Kosovo applied to join Interpol in April 2016. The Kosovo Forensics Agency and its laboratories have technical equipment capable of conducting the relevant forensic analyses. The Agency’s staff requires in-service training and assistance from EULEX. Its ability to ensure adequate forensic pathology remains very weak. Continuous funding of the Agency must be secured. Legal framework Criminal code and criminal procedure code provisions for combating organised crime are mostly in line with European standards. Nonetheless, some need to be revised, such as the provisions on confiscation and on investigation deadlines, the provisions responsible for the imbalance between the defence and prosecution at trial, the provision for a multitude of appeal possibilities, the unclear provisions on admissibility of evidence, and the search and seizure provisions. The newly amended law on money laundering and terrorism financing is not fully in line with EU and international standards. The main flaws are the unclear system of FIU and central bank supervision of the financial sector; extensive reporting requirements for NGOs; the lack of provision allowing the prosecutor or court to continue freezing of a suspicious transaction in line with FIU orders; and the narrower scope of the definitions compared with those required by Financial Action Task Force recommendations. Strategic framework The 2012-2017 national strategy and action plan against organised crime is the main strategic document in place. Additional strategies and action plans are in place on prevention and combating of the informal economy, money laundering, terrorism, radicalisation and extremism, terrorism financing, human trafficking, cybersecurity and narcotics trafficking.

Fight against terrorism Kosovo authorities stepped up efforts to counter violent extremism and radicalisation, by implementing the law on foreign terrorist fighters, and the strategy and action plan on prevention of violent extremism and radicalisation. The number of Kosovo citizens engaged in the Syria/Iraq conflict is decreasing. Nonetheless, challenges remain with the lack of programmes for de-radicalisation and reintegration, considering the high number of Kosovo citizens returned from the conflict zones. The phenomenon of foreign terrorist fighters needs a dedicated approach by the intelligence and law enforcement community and a coherent judicial policy on offenders together with social, community-based responses aimed in particular at marginalised young people. Improved cooperation among intelligence services, especially between countries in the Western Balkans, could also help to counter the threat of extremism and radicalisation. Specialised training on investigation techniques for prosecutors and police is needed. Kosovo law enforcement agencies also lack expertise and equipment to investigate complex terrorism cases. 2.4.Human rights and the protection of minorities The legal framework broadly guarantees the protection of human and fundamental rights in line with European standards. Some progress was made in this area, for instance on data protection and high-level political support for the rights of LGBTI persons. However, the limited progress on the effective guarantee of property rights and the return and reintegration of displaced persons remain a concern, as is the protection of cultural heritage. Implementation of human rights continues to be hindered by a lack of resources and political commitment, including at local level. Some steps are being taken to implement the package of human rights laws adopted last year but important challenges remain. Shortcomings particularly affect the following areas: Gender-based violence and women’s limited access to property ownership significantly hamper women’s full enjoyment of their rights. Similarly, the rights of persons with disabilities continue to be hindered by inadequate support and health services, and poor access to existing services. Strategies and legislation on the rights of persons belonging to minorities and their protection throughout Kosovo are not sufficiently implemented. The protection of cultural heritage, including cooperation between the Serbian Orthodox Church and Kosovo authorities, remains a challenge. Legislation to address illegal construction needs to be fully implemented and enforced. International human rights instruments form an integral part of Kosovo’s legal framework and are directly applicable, as provided for in the constitution. Kosovo continued to align legislation with these instruments and maintained its practice of ad hoc reporting. On promotion and enforcement of human rights, progress needs to be made on effective implementation of human rights legislation. Further efforts are needed in particular on establishing a track record of taking discrimination cases to court. The Advisory Office for Good Governance, under the Prime Minister’s Office, lacks the necessary human resources and capacity to manage its workload effectively. It needs to focus on coordination and monitoring of policy commitments; line ministries should assume responsibility for implementation. The establishment of the Inter-Ministerial Coordination Group for Human Rights in May 2016 is a first step in establishing high-level coordination to devise an overarching human rights strategy and to steer its implementation effectively. The Ombudsman should play an important role in designing, monitoring and advising on this work. Strong political leadership is required to ensure that the Group delivers on its mandate. Increased financial commitment to human rights protection at all levels is needed, while donor dependency should be reduced. As regards prevention of torture and ill treatment, there were no reports of violations of internationally recognised human rights standards. In January 2016, in compliance with the Optional Protocol to the Convention against Torture, a National Preventive Mechanism against Torture was established. This is a separate body within the Ombudsman Institution responsible for inspecting all places in which persons are deprived of their full liberty. In the prison system, compliance with the UN Standard Minimum Rules for the Treatment of Prisoners and European Prison Rules has continued. There is an urgent need to provide inmates with meaningful activities and work opportunities. The issue of housing detainees awaiting trial and those convicted of minor offences together with long-term prisoners is a concern. There is a need to establish separate accommodation serving the north of Kosovo to ensure a long-term solution. No progress has been made concerning setting up a prison complex in North Mitrovica. Recommendations stemming from the inspections of Kosovo Correctional Service facilities by the Internal Inspectorate of the Ministry of Justice are not systematically addressed. Serious concerns remain over privileges for certain high-profile detainees In August, all cases of suspensions of sentence on medical grounds were revoked resulting in all 8 prisoners, including 3 high-profile, returning to the prison. Inadequate staffing levels, in particular at recently constructed facilities, remain a concern. The authorities will need to address the forthcoming recommendations of the European Committee for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment. Some progress has been made on data protection. Public awareness of the right to the protection of personal data has improved, resulting in an increase in the number of complaints received by the National Agency for the Protection of Personal Data. Additionally, the Agency has performed more inspections. The Agency needs to prepare for challenges in implementing and enforcing the data protection rules as a result of the Stabilisation and Association Agreement. It needs more financial resources and strengthened human capacity, including the re-appointment of its supervisor, to deal with the increasing number of complaints. Amendments to the laws on data protection and access to information are necessary and the institutional framework is not yet clarified. Legal provisions on freedom of thought, conscience and religion are in place and interaction among religious leaders of all faiths continues. However, the draft law on freedom of religion needs to be adopted and include the Venice Commission’s recommendations. The Orthodox seminary in Prizren continues to function well. The Ministry of Culture is engaging with the Serbian Orthodox Church on ways to support the reconstruction of its sites left unfinished by the Reconstruction Implementation Commission. However, modalities need to be clarified to ensure the Serbian Orthodox Church can exercise full discretion in the management of its properties, while following legal procedures. Kosovo should demonstrate that it respects this right in practice. In May 2016 the Constitutional Court issued a final judgement on the land dispute case involving the Visoki Dečani monastery in Deçan / Dečane municipality confirming legal ownership of the land by the monastery. While the judgement brings closure to this long-standing case, its implementation remains a challenge and local resistance, including overt defiance by municipal officials, raises concerns. There were no reports of serious incidents linked to the protection of historical and religious sites under the responsibility of the Kosovo Police. Continuing incidents of petty theft and vandalism at religious heritage sites need to be followed up effectively, including swift investigations into the incident involving the placement of explosive materials at the mosque in Drenas/Glogovac and the burning of a mausoleum in Pejë/Peć. Municipal authorities in Pristina should demonstrate full respect for the rights of religious communities as stipulated by law, and need to allocate land for a graveyard for members of the Protestant community. Freedom of expression Kosovo has some level of preparation in the area of freedom of expression. There has been no progress in this area. Threats and attacks against journalists have increased. The assembly shows limited commitment to finding a solution for sustainable funding of the public broadcaster, leaving it vulnerable to political pressure and influence. There were no legislative developments on the regulation of media ownership and transparency. Implementation of legislation remains a challenge, in particular with regard to the law on the public broadcaster. The majority of last year’s recommendations have not been addressed. In the coming year, Kosovo should, in particular: continue to ensure that cases of physical attacks against journalists and other forms of pressure are promptly investigated and adjudicated; ensure a sustainable financial solution for the public broadcaster;

implement measures to provide for transparent information on media ownership. Intimidation of journalists During the reporting period, 12 incidents were reported to the police. Incidents involved a physical attack on a journalist from South Mitrovicë / Mitrovica, the police deleting recordings of journalistic material without a judge’s decision and journalists being expelled from court hearings, involving high-profile cases. In August 2016, a bomb exploded near the public broadcaster Radio Television of Kosovo (RTK) premises and another one at the house of the RTK Director General. Both attacks were condemned by the government and all political parties. Investigations into these cases are slow and there were very few final convictions. A more systematic response, including prompt investigation and timely adjudication is needed to strengthen the protection of journalists. Legislative environment Freedom of expression and the media are constitutionally guaranteed, and legislation on libel, hate speech and defamation is in line with the European Court of Human Rights case-law. The legislative and institutional framework in this area remains fragmented and ineffective. Journalists’ right to conscientious objection and the public’s right to reply and correction remain unregulated. Police, prosecutors and judges need proper training on the standards established by the Council of Europe and the European Court of Human Rights for dealing with sources and journalistic materials. The right of access to public information is undermined by the authorities’ fragmented and unclear approach. Implementation of legislation/institutions Effective implementation of legislation and ethical standards remains a challenge, with the law on the public broadcaster presenting the biggest challenge. The Independent Media Commission failed to make preparations for the digital switchover. It systematically monitors the content of audiovisual media but lags behind in initiating cases and implementing fines for legal breaches. As a result of budget cuts, it is facing difficulties in meeting its financial obligations, including capital investment. Freedom of expression online is not monitored by either the Independent Media Commission or the Press Council of Kosovo. Although this creates an unhindered environment for online media, it also undermines the privacy of individuals, leading to many cases of alleged hate speech, libel and defamation. Such cases need to be thoroughly followed up (see 5.2.6 – information society and media). Public service broadcaster RTK is directly state funded, which undermines its independence, weakens its long-term sustainability and leaves it prone to political influence. The assembly has yet to find a sustainable financing solution for the RTK, with the legal deadline having expired in April 2015. The tendency of the assembly to make state funding a permanent solution contrary to the law is a concern. A solution for the premises of the public broadcaster is yet to be found. In May, the Privatisation Agency requested the RTK to pay for the public premises it is using or face eviction. No such requests have been made to other media that use public premises under similar conditions. The RTK Board is complete but its performance needs to be improved, as pointed out in last year's performance audit of the public broadcaster, carried out by the Office of the Auditor General at the assembly’s request. The appointment of a new director of the Serbian language RTK channel in May 2016 was later annulled because it breached relevant legal provisions. Economic factors The media are generally not economically sustainable. Information on media ownership structures, in particular for online media, remains unclear and often fictitious, as most media do not provide information on their finances or real ownership. The lack of a strong private advertising industry makes private broadcasters dependent on other sources of funding and few are able to operate without strong links to political and business interest groups. Professional organisations/professional conditions There are several associations and unions for journalists, divided along ethnic lines. They generally do not enjoy wide support across the journalistic spectrum. Journalists often work without contracts and they are vulnerable to corruption as well as prone to self-censorship. Protection of professional standards in journalism is governed by codes of ethics but implementation is weak. Neither the Independent Media Commission nor the Press Council has brought any cases against the media for breach of the codes of ethics. Freedom of assembly and association is guaranteed by the constitution and citizens have been making ample use of their right, including by staging demonstrations and protests against various levels of government. The law enforcement authorities have handled violent protests professionally. Responsibility for overall coordination of property rights lies with the Ministry of Justice. A strategy for property rights is being developed. The law on the establishment of the Kosovo Property Comparison and Verification Agency, the successor to the Kosovo Property Agency, adopted in June, is now being challenged before the Constitutional Court. Lack of funds continues to hinder the implementation of the Property Agency’s decision to demolish illegal private property constructions. There are currently 29 cases pending and the total cost involved is around EUR 50 000. This also seriously affects the rights of displaced persons. Following the identification of over 350 000 constructions built without permit, the Government is revising its policy and the law on treatment of constructions without permit. Illegal re-occupation of properties, on which the Property Agency has already ruled, continues to be a concern. The strategy on legalising informal settlements has not yet been adopted. The government has not allocated the funds to set up a compensation scheme related to socially owned residential property. There has been limited progress in the adoption of a three-year social housing plan by municipal authorities which in turn prevents central authorities from concluding a Kosovo-wide strategy on social housing. As regards non-discrimination, legislation to implement the law on protection from Discrimination has not been adopted. In the reporting period, the Ombudsman Institution received complaints in similar numbers to previous years and more than doubled the number of ex officio investigations on discrimination grounds. The Kosovo Prosecutorial Council’s tracking mechanism still needs to be extended to cover cases of all kinds of discrimination, not only those based on ethnicity. The performance of institutions in processing and investigating discrimination cases remains poor. Following the example of the Police Academy, which already has a specific anti-discrimination module in its training for newly recruited police officers, the government should take forward the Training of Trainers programme and involve licensed anti-discrimination trainers from key institutions such as the judiciary, the prosecution service, the police, the public administration and the education ministry.

Kosovo’s legal framework for equality between women and men is broadly in line with international standards. Efforts to align existing legislation by drafting a unified civil code are an opportunity to bring it fully into line with European standards. Implementation of the law on gender equality is slow and secondary legislation has yet to be adopted. The fact that the vacancy for the Head of the Agency of Gender Equality has not been filled has hampered implementation of the action plan to implement UN Security Council Resolution 1325 on women, peace and security, and the Agency’s role in policy-making needs to be further strengthened. Gender-based violence, including domestic violence, is a challenge with severe limitations in protection systems for victims of domestic violence highlighted by the tragic death of a woman in Suharekë/Suvareka in October 2015. A positive development is the antitrafficking and domestic-violence helpline which is now also providing assistance to Serbian speakers in the north. The new Strategy and Action plan 2016-2020 on Protection from Domestic Violence needs to be adopted. The lack of a system of regular data collection across institutions undermines the ability to cross-track and monitor cases in investigation and judiciary proceedings. Units for gender-based violence need to be set up in the northern municipalities. Authorities need to improve reintegration programmes for survivors of domestic violence. The Commission dealing with survivors of sexual violence during the war needs to start verifying the status of survivors to enable and ensure access to individual benefits. In March 2016, measures were adopted to regulate the registration of joint immovable property in the name of both spouses, thereby strengthening legal protection of women’s right to inheritance. In practice, implementation remains limited, which directly undermines women’s economic empowerment. On the rights of the child, Kosovo’s legal framework is largely in line with international requirements but implementation remains a challenge. Authorities must ensure an adequate budget for the new draft law on child protection to be effective, once adopted. Data and monitoring mechanisms to assess progress in implementing child rights need to be improved. While Child Rights Officers have been appointed in most municipalities, their impact is limited. The Ministry of Labour and Social Welfare must ensure adequate financing for shelters housing children who are victims of violence and trafficking. The Ombudsman Institution should further engage in promoting the rights of children. The Juvenile Justice Code is guided by the principle of the ‘best interests of the child’ enshrined in the UN Convention on the Rights of Child. The foundations of a justice system for children are in place and juvenile departments have been set up in all Basic Courts and prosecutor offices. As regards children’s access to justice, little progress has been achieved in legal and capacity development for proper implementation of child-friendly proceedings in civil and administrative cases. Good progress has been made through a referral protocol to ensure free legal and professional services for child victims and witnesses. While current provisions in the Juvenile Justice Code are not in line with the UN Committee on the Rights of the Child concerning pre-trial detention (12 months instead of 6), in practice in the last 2 years no juvenile has been detained for more than 6 months. As a result, deprivation of full liberty has become a measure of last resort and is used for the shortest appropriate time. On the rights of persons with disabilities, implementation of the strategy for 2013-2023 remains limited and the government now needs to draft a new action plan for 2017-2019. The Ministry of Labour and Social Welfare still needs to find a solution to address the situation of the more than 1 000 members of the deaf community who were removed from the disability pension scheme in 2013. The law on paraplegic and tetraplegic persons was adopted in May 2016. The National Disability Council appointed the President of the Kosovo Disability Forum as its Co-chair, making the Council more inclusive and transparent. It should meet regularly and take a more proactive role to improve the wellbeing and promote the rights of persons with disabilities. The authorities need to improve the inclusion of children with disabilities in the education system by increasing the number of professional staff and personal assistants. Access to public buildings and public transport remains problematic. There has been some progress on the rights of lesbian, gay, bisexual, transgender and intersex (LGBTI) persons. On 17 May, for the third year in a row, a peaceful march was organised in Pristina to mark the international day against homophobia, transphobia and biphobia with senior politicians in attendance, including the President. Cases of verbal and physical assaults against members of the LGBTI community should be properly investigated. The advisory and coordinating group for the rights of LGBTI persons needs to take a more proactive role by providing concrete advice and recommendations to relevant institutions. Issues of labour and trade union rights are covered in section 4.1.8. Regarding procedural rights, persons suspected or accused or victims of crime have the right to solid protection under the Criminal Procedure Code, the law on police, the law on the Kosovo Police Inspectorate, the law on crime victim compensation and the law on free legal aid. They have the right to interpretation and translation, the right to information about their rights, the right to legal advice before and during trials and to legal aid, and the right to communicate with family members, employers and consular authorities. There is strong political will to apply these rules, but financial resources and more training is needed. In April, the Kosovo police, the Judicial and Prosecutorial Councils and the Kosovo Bar Association signed a memorandum of understanding to create a coordination mechanism for providing criminal defence free of charge. Implementation of the legal framework on minorities continued to be challenging. The institutional set-up and mechanisms for protecting minority communities are in place at central and local level. In the north, Municipal Offices for Communities and Return and Community Committees have been established and have started to work. Municipal Safety Councils, introduced in 2009 to improve community safety and stability, also need to be established in the north to further strengthen the protection of minority communities. Kosovo institutions must assume ownership and focus more on implementation by increasing interaction between the Kosovo central and local institutions and minority communities. The Office of Community Affairs needs to be fully involved in developing and taking forward policy-making on the protection of national minorities. In May 2016, a technical working group published a report on the implementation of recommendations of the Council of Europe’s Advisory Committee on the Framework Convention for the Protection of National Minorities. The report is incomplete, data is limited, and indicators for monitoring progress are lacking. In March 2016 the second round of an internship programme for minority communities in public institutions was implemented. However, the employment of members of minority communities in the civil service and public enterprises remains very challenging. Progress was made with a regulation enabling graduates of the University of Mitrovicë/Mitrovica to have their diplomas certified for the purposes of employment, professional licensing and admission to professional exams in Kosovo institutions. As a result of affirmative measures and quotas, more students from minority communities were able to enrol in public universities. This represents a positive step towards effective inclusion of minority communities in Kosovo. Stronger commitment and support by government institutions in mainstreaming language policies is needed. Implementation of the law on official languages remains low. Kosovo/Serbian language interpretation and translation, including translation of laws, is often substandard. The Office of the Language Commissioner continues to work in a satisfactory manner and is now also starting to work in the northern municipalities. However, it needs political and financial support. The Consultative Council for Communities has further strengthened its role and has seen increased interest in participation from the Serbian community. To put this body on a firm footing, increased budget is needed and its recommendations need to be taken into account by ministries. The overall security situation for minority communities remains relatively stable and largely unchanged. However, there are recurring incidents of property theft, damage and related crimes targeting Kosovo Serb returnees and other members of minority communities. Such incidents increase the feeling of insecurity, negatively impact on their livelihood and society as a whole, and deter other potential returnees. Law enforcement and judicial authorities should make every effort to bring the perpetrators to justice and counter a perception of impunity in order to restore confidence among victims and in society as a whole. Hate crimes targeting minority communities need to be more resolutely dealt with. Further work is required to take account of Article 147 and 74 § 2.12 of the Criminal Code. Additional recruitment of police officers from minority communities in affected areas, in particular in the west of Kosovo, is needed. The situation of the Roma, Ashkali and Egyptian communities remains challenging. Following up on the 2009-2015 strategy, the government aims at finalising the new policy commitments, focused on the inclusion of these communities in society, before the end of 2016. While the consultation process was inclusive, only some recommendations by civil society and international organisations were taken on board. Municipalities are encouraged to renew, approve and implement Local Action Plans. Recommendations from the November seminar on Roma, Ashkali and Egyptian Communities need to be implemented. Learning centres continue to play an important role in reducing the significantly high number of school dropouts and in allowing for the Roma, Ashkali and Egyptian communities’ further integration in the education system. The government continues to provide free textbooks in the Romani language. The Roma, Ashkali and Egyptian communities continue to enjoy the same access to healthcare services as other citizens. Budget for housing needs to be allocated. Some municipalities have continued to allocate land to these communities. Kosovo has continued to take affirmative measures with Montenegro and with the former Yugoslav Republic of Macedonia to ensure access to civil registration for displaced Roma, Ashkali and Egyptian communities. Active measures to include these communities are needed to combat exclusion in the labour market. Child marriages and child labour continue to be prevalent. Kosovo should take full ownership of the measures needed to support the Roma, Ashkali and Egyptians communities with a view to reducing donor dependency. The pace of the return and reintegration of refugees and internally displaced persons (IDPs) is slow and returns are decreasing year on year. Return figures for this year are the lowest figures to date. Sustained efforts are needed to collect and maintain data on numbers and locations of IDPs and returnees. Usurpation of properties belonging to displaced populations, coupled with illegal construction on their land and the non-execution of the Constitutional Court decision from April 2014 related to these matters, is hindering the return process. In the absence of an effective response by municipal authorities on this issue, stronger central level supervision and inter-ministerial cooperation is required. On cultural rights, relations between Kosovo authorities and the Serbian Orthodox Church were strained during the reporting period, notably due to Kosovo’s failed bid for UNESCO membership. The church withdrew from regular cooperation with the Implementation and Monitoring Council (IMC). On several occasions the authorities called for cooperation to recommence and, following a 10-month period of inactivity, a meeting was held in April. It is important that the IMC is used to resolve difficulties in co-operation between the Ministry of Culture and the Serbian Orthodox Church. The government should increase its efforts to ensure the sustainable functioning of the IMC's secretariat. The Religious and Cultural Heritage Unit of the Kosovo police fulfils its mandate in four regions, to protect Serbian religious and cultural heritage sites with 205 officers. Improving communication with the resident Serbian Orthodox clergy remains a challenge. Kosovo authorities have begun to take steps to adopt legislation to reinstate all the substantive provisions included in Annex V of the Comprehensive Status Settlement Proposal (CSP), regarding the management and protection of Serbian religious and cultural heritage in Kosovo. The government proactively liaised with the EU in drafting the National Cultural Heritage Strategy and the same is expected for the drafting of the law on amending and supplementing the law on cultural heritage, which should take place without delay and accurately reflect all of Kosovo's commitments under Annex V of the CSP. The Village Council of Velika Hoča / Hoçë e Madhe is functioning in accordance with the law. The Cultural Heritage Council in Prizren has been integrated into municipal structures and is functioning in accordance with the law on the historic centre of Prizren. The government increased its cooperation with civil society on the management of cultural heritage. In June 2016 Prizren municipality assigned two additional inspectors for the Historic Centre of Prizren. Incidents of illegal demolition of cultural heritage have continued and sanctions against perpetrators have not been enforced. The systematic degradation of heritage, particularly in Prizren, is of great concern and poses an