Commission staff working document - Kosovo (under UNSCR 1244/99) - 2008 progress report accompanying the Communication from the Commission to the European Parliament and the Council - Enlargement strategy and main challenges 2008-2009 {COM(2008) 674}
Date: 2008-11-05
Institutions: European Commission
Subjects: Kosovo, accession to the European Union, enlargement of the Union, pre-accession strategy, report

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 5.11.2008 
SEC(2008) 2697 

COMMISSION STAFF WORKING DOCUMENT 

KOSOVO (UNDER UNSCR 1244/99) 2008 PROGRESS REPORT 

accompanying the 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Enlargement Strategy and Main Challenges 2008-2009 

{COM(2008) 674} 

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

Introduction .................................................................................................................. 4 

Preface.......................................................................................................................... 4 

Context ......................................................................................................................... 4 

Relations between the EU and Kosovo (under UNSCR 1244).................................... 6 

Political criteria ............................................................................................................ 7 

Democracy and the rule of law .................................................................................... 8 

Human rights and the protection of minorities .......................................................... 16 

Regional issues and international obligations ............................................................ 26 

Economic criteria ....................................................................................................... 27 

The existence of a functioning market economy ....................................................... 27 

The capacity to cope with competitive pressure and market forces within the Union
.................................................................................................................................... 31 

4. 

European standards .................................................................................................... 33 

4.1. 

Internal market ........................................................................................................... 33 

4.1.1.  Free movement of goods............................................................................................ 34 

4.1.2.  Movement of persons, services and right of establishement...................................... 35 

4.1.3.  Free movement of capital........................................................................................... 35 

4.1.4.  Customs and taxation ................................................................................................. 35 

4.1.5.  Competition................................................................................................................ 37 

4.1.6.  Public procurement .................................................................................................... 37 

4.1.7. 

Intellectual property law ............................................................................................ 38 

4.1.8.  Employment and social policies................................................................................. 38 

4.1.9.  Education and research .............................................................................................. 40 

4.1.10.  WTO issues ................................................................................................................ 41 

4.2. 

Sectoral Policies ......................................................................................................... 41 

4.2.1. 

Industry and SMEs..................................................................................................... 41 

4.2.2.  Agriculture and fisheries ............................................................................................ 42 

4.2.3.  Environment............................................................................................................... 43 

4.2.4.  Transport policy ......................................................................................................... 44 

4.2.5.  Energy ........................................................................................................................ 46 

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4.2.6. 

Information society and media................................................................................... 48 

4.2.7.  Financial control......................................................................................................... 50 

4.2.8.  Statistics ..................................................................................................................... 50 

4.3. 

Justice, freedom and security ..................................................................................... 51 

4.3.1.  Visa, border, control, asylum and migration.............................................................. 51 

4.3.2.  Money laundering ...................................................................................................... 52 

4.3.3.  Drugs .......................................................................................................................... 52 

4.3.4.  Police.......................................................................................................................... 53 

4.3.5.  Fighting organised crime and terrorism ..................................................................... 53 

4.3.6.  Protection of personal data......................................................................................... 54 

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COMMISSION STAFF WORKING DOCUMENT 

Kosovo (under UNSCR 1244) 2008 Progress Report 

1. 

INTRODUCTION 

1.1. 

Preface 

Since March 2002, the Commission has reported regularly to the Council and the Parliament 
on progress made by the countries of the Western Balkans region. 

This report largely follows the same structure as in previous years. The report: 

–  briefly describes the relations between Kosovo1and the Union; 

–  analyses the political situation in Kosovo in terms of democracy, the rule of law, 

human rights, protection of minorities, and regional issues; 

–  analyses the economic situation in Kosovo; 

–  reviews Kosovo's capacity to implement European standards, that is, to gradually 
approximate its legislation and policies with those of the "acquis", in line with the 
European Partnership priorities. 

The  period  covered  by  this  report  is  1  October  2007  to  early  October  2008.  Progress  is 
measured on the basis of decisions taken, legislation adopted and measures implemented. As a 
rule, legislation or measures which are under preparation or awaiting Parliamentary approval 
have not been taken into account. This approach ensures equal treatment across all reports and 
permits an objective assessment. 

The  report  is  based  on  information  gathered  and  analysed  by  the  Commission.  Many  other 
sources  have  also  been  used,  including  contributions  from  the  Kosovo  authorities,  the 
Member States, European Parliament reports2 and information from various international and 
non-governmental organisations. 

The Commission draws detailed conclusions regarding Kosovo in its separate communication 
on enlargement3, based on the technical analysis contained in this report. 

1.2. 

Context 

United  Nations  Security  Council  Resolution  1244/99  (UNSCR  1244/99)  provides  the 
international legal framework for Kosovo. It provides for the deployment of international civil 
and military presences in Kosovo, under UN auspices. It authorises the Secretary General of 
the United Nations (UNSG) to establish an international civil presence to provide an interim 
administration for Kosovo. 

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Under UNSCR 1244/1999. 
The rapporteur for Kosovo is Mr Joost Lagendijk MEP. 
Enlargement Strategy and Main Challenges 2008-2009. 

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KFOR, the NATO-led international military presence in Kosovo, continues to be responsible 
for overall security. 

The legal system in Kosovo is a combination of legislation adopted by the Kosovo authorities, 
regulations  and  administrative  directions  of  the  United  Nations  Interim  Administration  in 
Kosovo (UNMIK), and Yugoslav laws in place before 22 March 1989. 

In  March  2007,  the  UNSG  forwarded  the  Comprehensive  Proposal  for  the  Kosovo  Status 
Settlement  (CSP)  prepared  by  his  special  envoy,  Martti  Ahtisaari,  to  the  United  Nations 
Security Council (UNSC). The CSP envisaged an international civilian representative (ICR) 
with  a  dual  mandate  as  EU  Special  Representative  and  an  ESDP  rule  of  law  mission.  The 
UNSG  fully  supported  Mr  Ahtisaari's  recommendation  for  the  supervised  independence  of 
Kosovo. 

In August 2007, and in the absence of UNSC agreement on the CSP, the UNSG endorsed a 
new  initiative  to  determine  Kosovo's  future  status.  He  proposed  direct  negotiations,  to  be 
mediated  by  an  EU-US-Russia  troika.  Direct  talks  between  Priština/Prishtinë  and  Belgrade 
started  in  New  York  in  September  2007.  On  10  December  2007,  the  UNSG  forwarded  the 
troika  report  to  the  UNSC,  confirming  that  the  two  parties  had  been  unable  to  reach  an 
agreement. It confirmed that the negotiating process had been exhausted. 

On  17  February  2008,  the  assembly  of  Kosovo  declared  Kosovo  an  independent  and 
sovereign  state.  To  date,  Kosovo's  independence  has  been  recognized  by  a  total  of  51 
countries,  of  which  22  are  EU  Member  States.  The  assembly  also  adopted  a  flag  and  an 
anthem.  Following  the  declaration,  the  security  situation  remained  relatively  calm,  with  the 
exception  of  two  serious  incidents  in  northern  Kosovo.  In  February,  two  border  posts  in 
northern Kosovo were destroyed, and the storming of the court house in Mitrovica/Mitrovicë 
in March resulted in the death of an UNMIK policeman and several serious injuries.  

On 9 April, the assembly adopted the Constitution of the Republic of Kosovo, which entered 
into force on 15 June 2008. The constitution is based on the CSP and envisages a significant 
role  of  the  European  Union  in  Kosovo.  It  also  provides  for  the  international  civilian 
representative as ultimate supervisory authority as set out in the CSP. 

In  his  June  report  to  the  UNSC,  the  UNSG  acknowledged  that  the  declaration  of 
independence and the entry into force of the constitution had created a new reality in Kosovo. 
This  reality  posed  significant  challenges  to  UNMIK's  ability  to  exercise  its  administrative 
authority  and  perform  the  majority  of  its  tasks,  and  necessitated  the  reconfiguration  of  the 
international  civil  presence  in  Kosovo.  In  July,  the  UNSG  instructed  UNMIK  to  cooperate 
with the EU in order for it to assume an enhanced operational role in Kosovo in the area of the 
rule of law under a 'UN umbrella'. 

On 8 October, the UN General Assembly passed a resolution requesting the advisory opinion 
of  the  International  Court  of  Justice  on  the  legality  of  the  declaration  of  independence  of 
Kosovo. 

The  process  of  dismantling  the  Kosovo  Protection  Corps  and  establishing  a  new  Kosovo 
Security  Force  (KSF)  provided  for  in  the  constitution  started  in  June.  The  KSF  should 
comprise some 2,500 lightly armed personnel, whose first tasks will include crisis response, 
explosives disposal and civil protection. The process takes place under NATO supervision in 
close coordination with other international stakeholders. 

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Parallel  structures  prevent  the  Kosovo  government  from  executing  parts  of  its  authority  in 
many Serb majority areas throughout Kosovo. UNMIK declared the local Serb elections held 
in Kosovo in May 2008 null and void. 

Kosovo  continues  to  be  open  to  the  discussion  of  issues  of  practical  interest  with  Serbia. 
Following  the  declaration  of  independence,  the  government  made  considerable  efforts  to 
reach  out  and  reassure  Kosovo  Serb  citizens.  Constructive  cooperation  with  Serbia  is  a  key 
priority in the European Partnership for Kosovo. 

1.3. 

Relations between the EU and Kosovo (under UNSCR 1244) 

Following the troika report to the UNSG, the European Council of December 2007 stressed 
the need to move forward towards a Kosovo settlement, underlining that resolving the status 
of Kosovo constituted a sui generis case that did not set a precedent. The Council confirmed 
that the EU stood ready to play a leading role in strengthening stability in the region and in 
implementing  a  settlement  defining  Kosovo's  future  status.  It  confirmed  that  the  EU  was 
ready to assist economic and political development through a clear European perspective, in 
line with the European perspective of the region. 

In  February  2008,  the  General  Affairs  and  External  Relations  Council  agreed  to  a  Joint 
Action4 to establish an ESDP rule of law mission, known as "EULEX", in Kosovo. The main 
task  of  the  mission  is  to  mentor,  monitor  and  advise.  EULEX  also  has  some  executive 
functions.  The  Council  also  agreed  to  a  Joint  Action5  appointing  an  EU  Special 
Representative (EUSR) in Kosovo. The EUSR advises and supports the political process and 
ensures the consistency of EU action in Kosovo. In his other role as ICR, he supervises the 
implementation of the CSP. The EUSR reports to the High Representative for CFSP. As ICR, 
he  reports  to  the  International  Steering  Group  (ISG)  on  Kosovo,  which  consists  of  25 
countries6 that have recognised its independence. 

In June 2008, the European Council reconfirmed that the EU remained committed to playing a 
leading  role  in  ensuring  the  stability  of  Kosovo,  including  through  EULEX  Kosovo,  EUSR 
and its contribution to an international civilian office as part of the international presence. It 
also  recalled  its  willingness  to  assist  the  economic  and  political  development  of  Kosovo 
through a clear European perspective, in line with the European perspective of the region. 

Kosovo has continued  to work with the  Council planning teams to prepare the EU mission, 
and  is  cooperating  fully  with  EULEX  and  the  EUSR/ICR.  The  deployment  of  EULEX  is 
ongoing. EULEX is to be operational throughout Kosovo. 

Kosovo  continues  to  participate  in  the  Stabilisation  and  Association  Process.  Plenary 
meetings of the Stabilisation and Association Process Tracking Mechanism (STM) were 
held  in  November  2007  and  May  2008.  In  the  framework  of  the  enhanced  STM  structures 
established  in  March  2007,  sectoral  STM  meetings  were  held  in  the  areas  of  Innovation, 
Internal Market, Good Governance, Economy and Infrastructure. 

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Council Joint Action 2008/124/CFSP of 4 February 2008 on the European Union Rule of Law Mission 
in Kosovo, EULEX KOSOVO. 
Council  Joint  Action  2008/123/CFSP  of  4  February  2008  appointing  a  European  Union  Special 
Representative in Kosovo. 
Austria,  Belgium,  Bulgaria,  Croatia,  Czech  Republic,  Denmark,  Estonia,  Finland,  France,  Germany, 
Hungary,  Ireland,  Italy,  Latvia,  Lithuania,  Luxemburg,  Netherlands,  Norway,  Poland,  Slovenia, 
Switzerland, Sweden, Turkey, United Kingdom, United States of America. 

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The EU sets out reform priorities for the authorities through the European Partnership. The 
Council  adopted  a  revised  European  Partnership  for  Kosovo  in  February  2008.  The 
government approved its European Partnership Action Plan (EPAP) in July 2008. 

In April 2008, the government adopted the Plan for European Integration 2008 – 2010, which 
aims  to  improve  inter-governmental  coordination  and  communication.  The  relevant 
institutional structures were set up in September. 

On  11  July,  the  European  Commission  organised  a  Donors'  Conference  for  Kosovo,  which 
was  held  in  Brussels.  Participants  pledged  a  total  of  €  1,236  million.  The  combined  pledge 
made by the Commission7and the EU Member States amounted to nearly € 800 million. 

Kosovo  continues  to  benefit  from  the  Instrument  for  Pre-accession  (IPA),  Macro-Financial 
Assistance (MFA), CARDS, the Instrument for Stability and others. Further to the decision to 
phase out the European Agency for Reconstruction (EAR) by the end of 2008, the European 
Commission's  Liaison  Office  (ECLO)  in  Kosovo  took  over  responsibility  for  projects 
financed  under  the  CARDS  programme  from  the  EAR  in  July.  Ongoing  EU  assistance  to 
Kosovo under the CARDS instrument amounts to some € 170 million and involves over 80 
projects. 

The  IPA  2008  Annual  Programme  for  Kosovo  focuses  on  the  objectives  identified  in  the 
Multi-Annual Planning Document (MIPD) 2008-2010. In 2008, EU IPA assistance to Kosovo 
amounts to € 122.7 million8, which is managed directly by the ECLO, plus a contribution of € 
2 million under the IPA Multi-Beneficiary Programme. Programming for IPA 2008 started in 
October 2007. All beneficiary institutions were closely involved in the programming process. 
Key  priorities  for  funding  include  the  strengthening  of  administrative  capacity  at  all  levels, 
enhancing  the  rule  of  law,  human  rights  and  good  governance,  improving  socio-economic 
conditions  for  all  communities,  and  developing  regional  co-operation.  Preparations  for  the 
IPA programme took place in close co-ordination with the Council's planning teams (EUPT 
and  EUSR/ICO)  to  ensure  complementarity  with  the  activities  of  the  ESDP  mission  in 
Kosovo  and  the  EUSR.  Member  States,  the  donor  community  and  representatives  of  civil 
society were also consulted. The Financing Agreement for the IPA 2008 Annual Programme 
for Kosovo was signed in October. 

The  ECLO  implements  IPA  programmes  in  Kosovo  under  deconcentrated  centralised 
management.  Some  projects  are  implemented  under  joint  management  with  international 
organisations  (such  as  the  Council  of  Europe).  Kosovo  has  to  establish  a  roadmap  for  the 
decentralisation of the management of EU funds without ex ante controls by the Commission. 
Kosovo is at a very early stage in this process. 

Kosovo has yet to appoint its National IPA Coordinator (NIPAC). 

2. 

POLITICAL CRITERIA 

This  section  examines  the  progress  made  by  Kosovo  towards  meeting  the  Copenhagen 
political  criteria,  which  require  stability  of  institutions  guaranteeing  democracy,  the  rule  of 
law, human rights and respect for and protection of minorities. It also monitors regional co-

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Part of the Commission's pledge is subject to approval by the Budgetary Authority. 
An additional allocation of € 60 million has been transferred from the MFA line to IPA in 2008. 

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operation,  good  neighbourly  relations  with  enlargement  countries  and  Member  States,  and 
respect for international obligations, such as co-operation with the UN International Criminal 
Tribunal for the former Yugoslavia. 

2.1. 

Democracy and the rule of law 

Constitution 

On 9 April, the assembly of Kosovo adopted the Constitution of the Republic of Kosovo. This 
followed  preparations  by  a  constitutional  working  group,  public  discussions,  certification  of 
the draft constitution by the ICR and approval by the president of Kosovo. The constitution 
entered into force on 15 June 2008. 

The  constitution  is  based  on  the  Comprehensive  Proposal  for  the  Kosovo  Status  Settlement 
(CSP)  prepared  by  UNSG  special  envoy,  Martti  Ahtisaari.  The  constitution  explicitly 
confirms  that  the  provisions  of  the  CSP  take  precedence  over  all  other  legal  provisions  in 
Kosovo. It also confirms the CSP as the key reference to verify compliance of the constitution 
itself  and  other  laws  and  legal  acts.  It  confirms  the  ICR  as  the  final  authority  in  Kosovo 
regarding  the  interpretation  of  the  civilian  aspects  of  the  CSP.  The  constitution  does  not 
include  references  to  the  UN  or  UNMIK  other  than  in  the  context  of  the  termination  of  its 
mission in Kosovo. 

The  constitution  provides  for  the  protection  of  human  rights  and  communities  according  to 
international  and  European  standards.  It  respects  democratic  principles  of  subsidiarity  and 
local  governance.  It  includes  basic  provisions  associated  with  statehood.  It  also  confirms 
fundamental  rights  and  freedoms,  and  the  rights  of  communities  and  their  members.  It 
provides for a detailed description of the State institutions, their respective competences and 
powers,  including  an  assembly,  a  president  and  the  government.  It  delineates  the  principles 
and  structure  of  the  justice  system,  including  the  role  of  a  constitutional  court.  The 
constitution includes detailed provisions for local government and the security sector. It also 
confirms  the  role  and  competences  of  independent  institutions,  including  an  ombudsperson, 
an  auditor  general,  a  central  election  commission,  a  central  bank  and  an  independent  media 
commission. 

The  transitional  provisions  of  the  constitution  confirm  the  arrangements  for  the  supervised 
independence of Kosovo envisaged by the CSP. 

The Kosovo Serb community did not formally participate in the constitutional process.. Other 
minority  communities,  such  as  Roma,  complained  they  were  not  or  insufficiently  involved 
and consulted.  

The  constitution  is  in  line  with  European  standards,  which  require  stability  of  institutions 
guaranteeing  democracy,  the  rule  of  law,  human  rights  and  respect  for  and  protection  of 
minorities.  Ensuring  the  full  respect  for  the  rule  of  law,  human  rights  and  the  protection  of 
minorities is a key priority in the European Partnership for Kosovo. 

Parliament 

The  assembly  was  reconstituted  following  the  general  elections  of  November  2007,  which 
were  held  in  a  fair  and  efficient  manner.  The  Democratic  Party  of  Kosovo  (PDK)  received 
34% of the vote, the Democratic League of Kosovo (LDK) 23%, the Kosovo New Alliance 
(AKR)  12%  and  the  Alliance  for  the  Future  of  Kosovo  (AAK),  the  Democratic  League  of 

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Dardania (LDD) each received 10%, the Reformist Party (ORA) 4% and the Party of Justice 
(PD) 2%. A total of thirteen minority parties received a total of 5% of the vote. 

The  Central  Election  Commission  (CEC) 
the  organisation  and 
implementation  of  elections  in  Kosovo.  The  chairmanship  of  the  CEC  has  been  transferred 
from the mission of the OSCE in Kosovo to the Kosovo authorities. 

is  responsible  for 

The assembly formally elected the President and Prime Minister, approved the declaration of 
independence  and  the  constitution  and  adopted  a  total  of  41  laws  directly  related  to 
independence and the constitution by an accelerated procedure. 

After a boycott following the declaration of independence, the Kosovo Serb members rejoined 
the assembly. 

In  March,  the  assembly  presidency  adopted  the  rules  of  procedure  on  the  work  of  the 
presidency and rules on its political staff. Three new committees were set up: the Committee 
on  European  Integration,  the  Committee  on  Human  Rights,  Gender  Issues,  Missing  Persons 
and Petitions, and the Committee on Mandates and Immunities. The committees organised a 
number of public hearings. 

The  assembly  carried  out  its  ex  ante  responsibilities  as  regards  the  budget.  It  intervened  to 
safeguard the funding allocated to the independent institutions, and reviewed reports on their 
expenditure  ex  post.  The  assembly  increased  its  role  in  providing  oversight  to  the  security 
sector.  Its  Committee  on  Internal  Affairs  and  Security  is  responsible  for  monitoring  the 
implementation of security-related legislation. 

request.  Assembly  committees  often 

However, there is little or no interaction between the government and the assembly once the 
former  has  forwarded  legislation  to  the  latter.  The  government  participates  in  assembly 
committee  deliberations  on 
their 
recommendations  on  draft  legislation  well  after  the  relevant  deadlines,  causing  delays  in  its 
adoption. The assembly does not conduct regular assessments of draft legislation for human 
rights  compliance.  It  does  not  always  assess  the  budgetary  impact  of  draft  legislation.  The 
assembly  lacks  sufficient  expertise  to  allow  effective  scrutiny,  and  lacks  the  capacity  to 
ensure  effective  monitoring  of  the  implementation  of  laws.  Assembly  members  have  weak 
links with their constituencies and there is a lack of effective civil society participation in the 
legislative process. 

submit 

The implementation of the assembly's  annual work  programme  for  2007 was interrupted by 
the electoral campaign. An annual work plan for 2008 has yet to be adopted. 

In September, the Assembly decided to postpone the appointment of the Ombudsperson for a 
third time. 

At  the  administrative  level,  there  is  a  lack  of  qualified  staff  and  a  shortage  of  minority 
community representatives. Persistent vacancies hamper the work of key administrative units, 
including the unit that is monitoring EU standardisation. The assembly still does not have an 
autonomous  IT  system.  Voting  records  of  only  one  plenary  session  have  been  published  on 
the  web  site.  The  Committee  for  European  Integration  lacks  administrative  support  and 
expertise in EU matters. 

The Central Election Commission further relies on OSCE support. 

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Overall,  the  assembly  made  some  progress  in  a  number  of  areas  and  partially  managed  to 
fulfil  its  role  over  the  reporting  period,  which  was  characterised  by  a  heavy  focus  on  the 
adoption  of  the  constitution  and  related  legislation.  However,  challenges  and  shortcomings 
remain to be addressed, notably a lack of capacity to scrutinise draft legislation and monitor 
its implementation after adoption. 

Government 

On 9 January 2008, a coalition government of PDK (Democratic Party of Kosovo) and LDK 
(Democratic  League  of  Kosovo)  under  Prime  Minister  Hashim  Thaçi  was  formed.  The 
government includes a Prime Minister, two Deputy Prime Ministers and 17 ministers.  

The new government focused on independence and the constitution. Political parties respected 
their  commitment  to  remain  united  throughout  the  period  between  the  declaration  of 
independence and the coming into force of the constitution. Their attention started to shift to 
other  areas  following  the  presentation  of  the  government's  strategy  for  2008-2011  in  April. 
Opposition parties have adopted a more critical attitude towards the government. 

The  government  set  up  a  Commission  on  the  Monitoring  of  the  Implementation  of  Laws, 
which is chaired by a Deputy Prime Minister.  

In  April,  the  Prime  Minister  presented  a  report  on  the  first  100  days  and  the  government's 
programme for 2008-2011 to the assembly. 

The government started issuing Kosovo passports in July. 

In  September,  the  President  and  the  Prime  Minister  agreed  on  the  appointment  of  Kosovo's 
first  ten  diplomatic  envoys  to  a  selected  number  of  countries  recognising  its  declaration  of 
independence.  

The  government  continued  to  build  its  capacity  to  address  EU  matters.  In  July,  it  approved 
new structures to better monitor EU integration matters within the framework of its European 
Partnership Action Plan. The government reports to the assembly's Committee for European 
Integration every three months. The Agency for European Integration (AEI) continues to be 
the central agency coordinating Kosovo's European approximation efforts. The AEI started to 
have  more  structured  contacts  with  the  assembly,  in  particular  as  regards  legislative 
compliance  verification,  and  attends  the  weekly  sessions  of  the  assembly's  Committee  on 
European  Integration.  In  October,  the  AEI  was  renamed  Centre  for  Coordination  of 
Development and European Integration (CCDEI) so as to reflect its restructuring and merging 
with the Donors Coordination Centre following the Donors' Conference. 

Local  government  has  been  strengthened.  New  legislation  on  administrative  municipal 
boundaries,  local  self-government,  and  local  government  finance  and  decentralisation  came 
into  force  in  June.  Advancing  the  reform  of  self-government  and  increasing  administrative 
capacity  to  facilitate  decentralisation  are  key  priorities  in  the  European  Partnership  for 
Kosovo. 

The  legal  acts  or  laws  passed  by  the  assembly  are  published  in  the  Official  Gazette.  The 
Gazette is published in the two official languages of Kosovo. It is also published in Bosnian, 
Turkish and English on the Gazette's own website. The Gazette is disseminated to ministries, 
municipalities, the courts and educational institutions. 

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However, the government's focus on independence-related issues has kept it from addressing 
other  matters.  The  government  has  encountered  some  difficulties  in  presenting  and 
coordinating its strategic priorities. The assembly, including members of the ruling coalition, 
contested  the  government's  programme  for  2008-2011.  The  government  sent  its  legislative 
strategy to the assembly without a timetable for the submission of draft legislation. 

The government did not manage to reach its targets for minority community representation. 
Further  progress  in  this  area  was  prevented  by  political  developments  following  the 
declaration of independence. 

In some Serb-majority areas the government has limited authority over the police, the courts, 
customs,  transport,  boundaries  and  Serbian  patrimony.  Parallel  administrative  structures  at 
local  level  have  consolidated  and  continue  to  operate  in  most  Serb  majority  municipalities, 
even  if  they  are  not  operational  in  some  areas  south  of  the  Ibar  river.  Municipalities  in 
northern  Kosovo  have  started  to  implement  Serbian  legislation  on  local  governance.  A 
number  of  Kosovo  citizens  continue  to  rely  on  these  services,  e.g.  for  travel  documents, 
education.  In  June,  the  government  decided  to  extend  the  mandates  of  the  mayors  in 
Leposaviq/Leposavić,  Zveçan/Zvečan,  Zubin  Potok  and  Štrpce/Shtërpcë,  confirming 
UNMIK's  earlier  decision  not  to  validate  the  results  of  the  Serbian  local  elections  of  May 
2008 in Kosovo. 

The gradual nature of UNMIK's reconfiguration has led to uncertainty in some areas as to the 
actual competences of the government (e.g. take-over of the Kosovo Trust Agency). 

The  rationalisation  of  working  methods  continues  to  be  a  challenge.  The  responsibilities  of 
the Office for Good Governance overlap with those of the Agency for Gender Equality and 
the  Anti-Corruption  Agency.  It  is  not  clear  how  the  Office  for  Communities  will  cooperate 
with  the  Ministry  for  Communities  and  Returns.  Communication  and  coordination  between 
the central and local administrations dealing with human and minority rights are not effective. 

The  effectiveness  of  the  government's  participation  in  regional  and  international  fora  is 
limited by the fact that its legitimacy is contested by non-recognising countries. 

Allegations  of  political  interference  in  the  selection  and  appointment  of  a  number  of  key 
positions  (e.g.  board  of  public-owned  enterprises)  have  affected  the  credibility  of  the 
government.  The  premature  announcement  of  a  population  census  and  the  untimely 
submission of the mid-year budget review to the assembly ran counter to the provisions of the 
constitution. 

High staff turnover at the Agency for European Integration and a lack of strategic guidance 
risk undermining its efficiency. The department responsible for verifying legal compliance in 
particular is understaffed.  

Overall,  some  progress  was  made  in  consolidating  government  in  a  volatile  and  uncertain 
environment. The basic working tools for an efficient government are in place, but they need 
to  be  enhanced  and  fully  and  properly  applied.  Ensuring  democratic  governance  is  a  key 
priority in the European Partnership for Kosovo. 

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Public Administration 

The inter-institutional working group and the sectoral working groups tasked with monitoring 
the implementation of the Public Administration Reform Strategy and Action Plan (covering 
the period 2006-2011) meet regularly. 

In February, the Independent Oversight Board (IOB), previously advising the SRSG on public 
administration  reform,  was  transformed  into  an  autonomous  body  reporting  directly  to  the 
assembly.  In  2007,  the  IOB  resolved  386  cases  of  grievance  by  employees  of  ministries, 
municipalities  and  executive  agencies.  The  IOB  also  monitored  37  selection  procedures  for 
civil servants in the ministries and municipalities, and dealt with 71 complaints. To date, the 
IOB resolved 222 appeals out of a total of 282 appeals received so far in 2008. 

The Ministry of Public Services (MPS) issued implementing laws relating to the civil service 
and  the  management  of  public  administration.  These  regulate  the  representative expenditure 
of the governmental institutions, define the salaries, rights and duties of political appointees, 
procedures for the Senior Public Appointments Committee, and the rules for communication 
with citizens. 

The government approved an administrative instruction to strengthen the existing legal offices 
in  line  ministries.  A  commission  to  monitor  the  implementation  of  laws  was  set  up  in 
February. A working group to rationalise and streamline legislation has also been set up. 

The functional review of the public administration started in April. The review aims to reduce 
overlapping competences between institutions and to increase the effectiveness of the public 
administration.  A  vertical  institutional  review  is  also  being  considered  for  the  purpose  of 
identifying tasks that can be delegated to the local level or entrusted to the private sector. An 
inter-ministerial  commission  and  technical  working  groups  were  established  to  steer  the 
process. Membership includes a Deputy Prime Minister, the Ministry of Justice, Ministry of 
Economy  and  Finance,  and  the  Ministry  of  Public  Services.  A  project  aimed  to  develop 
software  for  improved  information  and  human  resources  management  in  the  Kosovo  civil 
service has started9  

However,  the  Law  on  the  Civil  Service,  the  Law  on  the  Kosovo  Institute  for  Public 
Administration, and the Law on Public Administration have yet to be adopted. Civil servants 
continue to be vulnerable to political interference, corruption and nepotism. More than a year 
after their adoption, the results of the Public Administration Reform Strategy and Action Plan 
and  the  way  these  are  measured  are  still  unclear.  Since  mid-September,  four  out  of  seven 
positions on the Independent Oversight Board are vacant preventing it from making decisions. 
The Senior Public Appointments Committee is not fully functional and its secretariat should 
be further strengthened by additional staff and training. 

Some ministries and local authorities still refuse to provide information, respond to requests 
or follow up the recommendations by the office of the Ombudsperson. Staff numbers in the 
Ombudsperson’s office have been reduced from 56 to 45.  

Overall, despite some progress related to the adoption of an action plan and some legislation, 
public  administration  reform  still  needs  to  be  implemented.  The  most  important  legal  acts 

9 

It is expected that the project will be completed by the end of the year. 

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remain to be adopted. Public administration and the coordination capacity of public bodies in 
Kosovo continue to be weak. Ensuring the delivery of public services to all people in Kosovo 
and  establishing  a  professional,  accountable,  accessible  and 
representative  public 
administration is a key priority in the European Partnership for Kosovo. 

Judicial system 

The  Ministry  of  Justice  continues  to  reinforce  its  administrative  capacity.  It  has  drafted  a 
considerable  number  of  new  legislative  acts  in  line  with  its  legal  reform  programme.  The 
Coordination Council for Rule of Law established in October 2007 has started to operate. It 
brings together ministries and agencies from the area of freedom, security and justice. 

The  Judicial  Investigation  Unit  (JIU)  under  the  responsibility  of  UNMIK  continued  to 
examine  complaints  of  misconduct  by  Kosovo  judges  and  prosecutors.  A  total  of  164  cases 
were  received  in  2008,  leading  to  the  launch  of  73  new  investigations.  The  JIU  found 
misconduct in 87 cases and forwarded these to the Kosovo Judicial Council (KJC). 

In January 2008, the Statute of the Kosovo Judicial Institute (KJI) was approved. In March, 
the KJI adopted a three-year Strategic Plan.  

The  assembly  approved  the  following  laws  between  March  and  May  2008:  the  Law  on 
Jurisdiction,  Case  Selection  and  Case  Allocation  of  EULEX  Judges  and  Prosecutors  in 
Kosovo; the Law on Special Prosecution of Kosovo; the Law Supplementing and Amending 
the Provisional Criminal Code of Kosovo; the Law Amending and Supplementing the Law on 
Execution of Penal Sanctions; the Law Amending and Supplementing the Kosovo Provisional 
Code of Criminal Procedure and the Law on the Out Contentious Procedure. 

Kosovo  is  cooperating  well  within  the  framework  of  the  EULEX  Joint  Rule  of  Law 
Coordination Board and participates in its monthly meetings. 

However, the weakness of the judiciary persists. The Ministry of Justice still has very limited 
technical  and  human  resources.  There  is  a  low  level  of  trust  in  the  judiciary  among  the 
population. The absence of a constitutional court and inconsistent availability of the Official 
Gazette across the judicial system continue to hamper legal certainty in Kosovo. This problem 
is  exacerbated  by  the  continuing  existence  of  three  parallel  sources  of  legislation  (ex-
Yugoslav  law,  UNMIK  regulations  and  Kosovo  law  adopted  following  the  declaration  of 
independence). There is no compilation of judicial decisions and no judicial commentary in 
Kosovo. 

The  review  of  the  March  2004  riots  cases  revealed  continuing  shortcomings  involving 
prosecutors,  courts  and  witnesses.  The  justice  system  failed  to  send  a  clear  and  strong 
message that ethnic violence would not be tolerated in Kosovo. The vigorous prosecution of 
all inter-ethnic crime is a key priority in the European Partnership for Kosovo. 

Witness  protection  continues  to  be  weak,  if  not  absent,  especially  as  concerns  war  crimes. 
War crimes cases are handled exclusively by a declining number of international judges and 
prosecutors. Many war crimes-related cases have not been forwarded to the prosecution. One 
conviction  on  war  crimes  was  secured  in  May  2008.  Seven  war  crimes  trials  involving 
fourteen defendants are underway and 51 other cases are under preliminary investigation. Due 
to Kosovo’s size, close-knit social fabric and the limited possibilities for relocating witnesses 
outside Kosovo, few witnesses are willing to participate in sensitive cases, such as cases on 

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war  crimes.  There  is  still  no  specific  legislation  on  witness  protection  that  establishes 
procedures for witness relocation in the most serious criminal cases. 

The  Law  on  the  Kosovo  Judicial  Council  (KJC)  is  still  to  be  adopted.  Constitutional 
provisions entitling the assembly to appoint eight out of the thirteen members of the KJC are 
not fully in line with the European standards on the independence  of the  judiciary  from the 
legislative and executive powers. The KJC's disciplinary system is slow and decision-making 
does  not  always  stand  up  to  scrutiny.  To  date,  57  disciplinary  cases  are  waiting  to  be 
processed by the two KJC Disciplinary Committees. 

The  backlog  of  cases  continues  to  be  a  serious  problem,  especially  in  civil  proceedings. 
Available  data  do  not  provide  a  clear  picture  of  the  backlog.  There  is  confusion  between 
backlog  and  pending  cases.  At  the  beginning  of  October,  the  total  of  unsolved  civil  cases 
pending  before  the  municipal  courts  of  Kosovo  stood  at  160,477.  There  is  no  operational 
system  for  the  execution  of  civil  judgments.  Furthermore,  over  36,000  criminal  cases  are 
pending.  Alternative  dispute  resolution,  such  as  mediation,  has  not  yet  been  implemented. 
Municipal  courts,  along  with  the  police,  lack  the  capacity  to  address,  prevent  and  sanction 
illegal occupation, use and construction of property in an impartial manner. 

The  legislative  framework  is  still  incomplete.  There  are  no  laws  in  the  following  areas: 
notaries,  executive  procedure,  prosecution,  courts,  constitutional  court  and  Kosovo 
Prosecutorial  Council.  The  strategy  for  the  reform  of  the  judicial  system  does  not  include  a 
comprehensive  plan  to  streamline  the  three  sources  of  legislation  and  create  legal  certainty. 
Parallel courts applying Serbian law continue to operate. 

The  establishment  of  the  Magistrate's  School  and  the  vetting  process  in  the  judicial  system 
have  provided  an  opening  for  young  lawyers  to  become  judges  and  prosecutors.  However, 
new appointments in the judicial system remain limited. 

The  court  system  faces  serious  challenges  from  a  human  resources  and  organisational 
perspective. Transfer of judges from courts with a modest workload to those with an overload 
rarely takes place. The number of judges is still insufficient. The salaries in the judiciary have 
not  increased  since  2002.  Judges  are  not  covered  by  insurance  or  social  security  schemes. 
There is no legislation that specifies criteria for professional advancement. The average age of 
judges  is  high.  Since  2001,  almost  no  new  judges  or  prosecutors  have  been  recruited. 
Vacancies have only been filled through relocation. A system of appointment, dismissal and 
career  promotion  for  judges  and  prosecutors  in  line  with  European  standards  and  free  from 
political interference has yet to be introduced and implemented. 

Data  collection  in  courts  is  unreliable.  The  new  Case  Management  Information  System 
(CMIS)  needs  to  become  more  effective.  Courts  and  prosecution  offices  have  no  budgetary 
competence for the procurement of small office items, which hinders routine activities. There 
is  no  clear  division  between  judges  dealing  with  penal  or  civil  matters.  Judges  frequently 
switch  between  the  two.  There  is  no  specialised  administrative  justice.  The  criteria  for 
assignment of cases between the municipal and district level contribute to the overload of the 
district courts. Within the courts, case assignment does not follow objective and transparent 
criteria. Implementation of the Code of Ethics is weak. 

The  capacity  of  the  prosecution  to  lead  investigations  in  compliance  with  the  principles  of 
autonomy and impartiality is limited. Currently, only six out of the ten prosecutors due to be 
engaged in the Kosovo Special Prosecutors Office (KSPO) are working; this figure has been 

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unchanged  since  2007.  Prosecution  offices  are  understaffed  and  lack  interrogation  facilities. 
Detainees  have  to  wait  on  average  1-1.5  years  before  their  trial  starts  and  conditions  of 
detention  of  pre-trial  detainees  are  not  satisfactory.  The  absence  of  specialisation  among 
prosecutors  is  a  serious  obstacle  in  the  fight  against  organised  crime,  such  as  money 
laundering  or  the  trafficking  of  human  beings,  which  is  a  key  priority  in  the  European 
Partnership  for  Kosovo.  Cooperation  between  police  and  public  prosecution  is  poor  and 
inefficient. 

The  Supreme  Court  is  the  only  specialised  legal  institution  for  the  review  of  administrative 
acts. However, it has only two judges, and over 2,000 cases are pending. Concerns remain as 
to the possibility of calling for a judicial review of administrative acts.  

Overall, the judicial system remains weak at all levels. There has been little progress during 
the reporting period. 

Anti-corruption policy 

Corruption  is  still  widespread  and  remains  a  major  problem  in  Kosovo.  This  is  due  to 
insufficient  legislative  and  implementing  measures  and  a  lack  of  determination  and  the 
weakness  of  the  judicial  system.  An  anti-corruption  strategy  and  action  plan  remain  to  be 
adopted. The pursuit of a policy of zero tolerance against corruption is a key priority in the 
European Partnership for Kosovo. 

The Law on the Prevention of Conflict of Interests entered into force. The assembly approved 
the  Law  on  the  Declaration  and  Origin  of  the  Property  of  Public  Senior  Officials.  The 
assembly has yet to approve the final draft Law on the Declaration of Assets. 

In March 2008, the Kosovo Anti-Corruption Agency (KAA) submitted its first annual report 
to  the  assembly.  By  the  end  of  September,  the  KAA  had  submitted  35  cases  to  the 
prosecution, which initiated seven criminal proceedings. 

In  the  area  of  conflict  of  interests,  the  KAA  intervened  in  nine  cases  from  January  to  June 
2008, and in a further four from July to September. In April 2008, the agency published a list 
of  officials  who  had  not  declared  their  assets.  In  August,  the  agency  asked  the  institutions 
employing  17  officials  who  had  still  not  declared  their  assets  to  start  dismissal  procedures. 
KAA maintains confidentiality of denouncements.  

However,  corruption  is  still  widespread  and  undermines  the  proper  functioning  of  the 
institutions. A recent report from the office of the Auditor General (AG) showed unexplained 
losses to the Kosovo budget of €0.5-5 million per ministry per year. More attention needs to 
be  devoted  to  the  implementation  of  the  existing  legal  framework.  Officials  who  have  not 
declared their assets need to be sanctioned in accordance with the law. 

The institutional framework to tackle corruption is still unclear. The inter-ministerial Working 
Group on Anti-Corruption is not yet operational. The mandate of the Anti-Corruption Council 
and  its  role  vis-à-vis  the  KAA  remain  unclear,  and  its  composition  (nine  staff,  including  a 
representative  from  the  Prime  Minister's  office  and  a  representative  from  the  President's 
office) does not sufficiently guarantee its political impartiality. 

The  delineation  of  responsibilities  between  the  KAA  and  the  Office  of  Good  Governance, 
whose  head  is  deputy  head  of  the  Anti-Corruption  Council,  has  led  to  friction.  Cooperation 

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with  the  office  of  the  Ombudsperson  remains  weak.  The  training  provided  to  ministries' 
procurement offices is uneven. 

The legal framework needs to be further improved to remedy differences in the definition of 
corruption between the current anti-corruption law and the provisional penal code. There is no 
law on the management of sequestrated and confiscated assets. The implementation of the law 
on access to official documents needs to be improved. The development of a sectoral action 
plan to fight corruption and increase awareness of corruption within the public administration 
and in civil society is overdue.  

Overall, despite some progress, corruption remains widespread and constitutes a very serious 
problem. 

2.2. 

Human rights and the protection of minorities 

Observance of international human rights law 

The constitution of Kosovo guarantees human rights and fundamental freedoms and lists the 
main  international  agreements  and  instruments  directly  applicable  in  Kosovo.  In  case  of 
conflict, the latter take precedence over local laws. 

The assembly established a Committee on Human Rights, Gender Equality, Missing Persons 
and Petitions to review draft legislation and align it with EU and international legislation on 
human rights. 

Human  rights  units  have  been  established  in  the  municipalities  to  ensure  human  rights 
monitoring  and  compliance  at  local  level.  They  complement  the  human  rights  units  at 
ministerial  level.  However,  training  for  relevant  staff  has  to  be  intensified  to  improve 
coordination. Monitoring mechanisms are not effective yet. 

Some Kosovo judges have received training on the case law of the European Court for Human 
Rights and have started referring to it. 

The Human Rights Advisory Panel established to address the lacunae in the jurisdiction of the 
European Court of Human Rights (ECtHR) and examine claims of human rights violations by 
UNMIK held its inaugural session in November 2007. Its rules of procedure were adopted in 
February 2008. The panel is currently examining a number of cases, some of which have been 
referred  to  the  SRSG  in  accordance  with  the  provisions  of  Regulation  2006/12.  In  March 
2008, the panel launched a public information campaign to promote awareness of its mandate. 

However, pending Kosovo's CoE membership, citizens do not have the possibility to lodge a 
complaint to the ECtHR as a last resort.  

As  regards  promotion  and  enforcement  of  human  rights,  the  monitoring  capacities  in 
Parliament,  government  and  civil  society  are  very  limited,  particularly  as  regards  positive 
rights  such  as  education,  health  and  employment.  By  way  of  remedy,  Kosovo  citizens  refer 
matters  to  the  office  of  the  Ombudsperson.  However,  amendments  to  the  Law  on  the 
Ombudsperson aimed at strengthening his ability to monitor potential human rights' breaches 
of court decisions have not been approved yet. Most of the recommendations of the office of 
the Ombudsperson to the government are not taken into account. 

The government's Strategy and Action Plan on Human Rights have yet to be approved. 

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Overall, despite some institutional and legislative progress, there is still a lack of capacity to 
implement and upgrade human rights standards in Kosovo. 

Civil and political rights 

As regards the prevention of torture and ill treatment and the fight against impunity, the 
2007 report of the Council of Europe's Committee for the Prevention of Torture has not been 
made public. 

The 2007 Police Inspectorate report underlined the need to reform the legal framework for the 
use of force by the police and the shortcomings related to the follow-up of complaints against 
the police. The legal framework has been significantly improved through the adoption of the 
Law  on  the  Police  Inspectorate  of  Kosovo.  Professional  standards  units  examine  alleged 
procedural  and  minor  offences  by  Kosovo  Police  (KP)  headquarters  and  the  regional 
headquarters. In northern Kosovo this is done under the supervision of UNMIK. The police 
inspectorate,  which  is  independent  but  reports  to  the  Minister  of  Interior,  is  responsible  for 
complaints about major offences, including those occurring in police detention centres. Pre-
trial detention of juveniles can in practice take more than one year. The Ministry of Justice's 
human  resources  department  is  the  main  body  dealing  with  complaints  of  misconduct  in 
prisons and detention centres. 

The Commission on Missing Persons continued processing cases. Between October 2007 and 
September  2008,  46  exhumations  were  initiated  by  the  Office  on  Missing  Persons  (OMPF) 
and  62  remains  were  found  and  transferred  for  autopsy  and  identification.  Since  October 
2007, the Commission received 150 positive reports of DNA concerning 102 individuals and 
returned  the  remains  of  118  identified  persons  to  their  families.  The  Kosovo  delegation  on 
missing persons continued its regular coordinating activities with the Serbian delegation and 
the missing persons' relatives. Developments as regards missing persons are slow, due to both 
a  lack  of  transparency  from  the  authorities  regarding  the  burial  sites  and  difficulties  in  the 
identification of remains. The total number of missing persons stands at 1,940.  

The  Victim,  Advocacy  and  Assistance  Division  within  the  Ministry  of  Justice  provided 
assistance in 464 cases involving domestic violence and in 25 cases of trafficking of human 
beings.  On  the  basis  of  Regulation  2003/12  on  the  fight  against  domestic  violence,  30 
protection orders were issued. In May 2008, the Kosovo Special Prosecutor’s Office (KSPO) 
charged  five  defendants  with  trafficking  in  people,  money  laundering,  and  tax  evasion  and 
involvement  in  an  organised  group  involved  in  recruiting  and  sheltering  women  from 
Moldova by means of coercion, including fraud, deception and threat, in order to exploit them 
as sex workers. Four defendants were convicted and sentenced to between five and six years' 
imprisonment and the payment of fines. There are currently nine further trafficking cases at 
the pre-trial and preliminary investigation stages involving 31 defendants/suspects. 

Overall, the prevention of torture and ill-treatment and the fight against impunity have made 
limited progress. 

In the area of access to justice, the legal aid system is now operational; it comprises the Legal 
Aid  Commission,  which  has  been  fully  operational  since  September  2007,  the  Legal  Aid 
Coordination  Office  and  five  District  Legal  Aid  Offices  with  a  total  of  21  staff,  including 
thirteen lawyers and three staff from non-majority communities. 

Between January and June 2008, the District Legal Aid Commissions helped 534 people with 
legal  aid,  including  256  involving  administrative  law  cases,  214  civil  cases  and  64  criminal 

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cases.  9%  of  applications  were  received  from  members  of  minority  communities  and  37% 
from females. Applicants are either provided with in-house legal aid by legal officers from the 
district  offices  or  referred  to  solicitors  for  cases  requiring  court  representation  in  civil  and 
administrative  matters.  Responsibility  for  court  representation  of  applicants  in  criminal 
matters  remains  with  the  courts.  The  Bar  Association  has  established  a  training  programme 
for lawyers involved in legal aid. 

However, the offices are usually located far away from the courthouses and in remote areas of 
the relevant towns, which makes access to justice for all citizens difficult. Their existence is 
little known among the population and judges. 

Performance  of  lawyers  and  their  conduct  in  courts  do  not  always  meet  the  minimum 
standards.  The  Bar  Association  does  not  receive  sufficient  institutional  attention.  Lawyers 
frequently  decline  requests  for  legal  assistance,  thus  violating  their  own  Code  of  Ethics. 
Kosovo Serbs do not work in the Legal Aid Commission. The Ministry of Justice has yet to 
appoint  a  director  for  its  civil  rights  department.  The  handling  of  mutual  legal  assistance 
requests in criminal matters and in extradition requests do not meet international standards. 

Overall, some progress was achieved. The legal aid system is operational but requires further 
backing from all communities to improve access to justice for all. 

As  regards  the  prison  system,  the  Kosovo  Correctional  Service  (KCS)  is  operational,  with 
UNMIK retaining a right to intervene in the case of a major incident. 

The ratio between prisoners and prison staff is adequate. The living conditions for sentenced 
people, their health care and their treatment by the KCS are correct. 

However, security in some correctional and detention centres is weak. This is especially true 
of  the  high  security  prison  in  Dubrava.  Despite  the  issuing  of  a  report  on  the  escape  from 
Dubrava prison in August 2007, follow-up to address deficiencies has been limited. 

The  reintegration  needs  of  the  prison  population  are  not  taken  into  consideration.  There  are 
too  few  specialised  facilities  for  juveniles  or  for  mentally  disabled  prisoners.  Correctional 
facilities  for  juveniles  do  not  adequately  prioritise  education,  vocational  training  and  after-
care for released juveniles. 

There is no plan for international cooperation to facilitate the transfer of Kosovan detainees 
from EU countries. 

Minority  representation  in  the  KCS  staff  has  decreased  following  resignations  after  the 
declaration  of  independence.  All  Kosovo  Serb  convicts  are  serving  their  sentences  in  the 
Mitrovica/Mitrovicë detention centre, which is not suitable for long-term detention. 

Overall,  the  penitentiary  system  in  Kosovo  is  operational,  but  serious  challenges  remain  as 
regards strategic planning and security standards. 

In the area of freedom of expression, no hate speech was detected in the print and electronic 
media  during  the  reporting  period.  The  independent  Press  Council  for  print  media  is 
functioning properly. 

However, defamation remains a criminal offence under the Provisional Criminal Code, which 
is still valid.  

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There is political pressure on the media. Journalists from minority communities complain of 
difficult access to Kosovo institutions, which hampers their work. 

The  Independent  Media  Commission  (IMC)  for  television  and  radio  still  faces  severe 
budgetary  limits,  which  hinder  its  basic  functioning  and  efficiency  and  the  recruitment  of 
qualified staff. The IMC is not systematically consulted on issues relevant to its mandate. 

Overall,  freedom  of  expression  remains  fragile.  The  relevant  institutional  framework  is  not 
fully operational. The media continue to be vulnerable to political intimidation. 

The  Law  on  Freedom  of  Association  in  a  Non-Governmental  Organisation  has  not  been 
promulgated yet. The assembly has not reviewed the Law on Public Gatherings and the law 
has not been promulgated.  

The  freedom  of  association  and  gathering  is  guaranteed  under  the  constitution,  but  the 
relevant legal framework does not exist. 

More  than  4,600  civil  society  organisations  are  registered  with  the  Ministry  of  Public 
Services (MPS), the vast majority of which are local. 529 registered NGOs are active in the 
area  of  minority  rights  and  seventeen  of  these  have  multi-ethnic  staff.  The  MPS  NGO 
registration  and  liaison  unit  is  monitoring  280  civil  society  organisations  that  have  public 
benefit  status  and  are  entitled  to  financial  support  from  the  Kosovo  consolidated  budget. 
Some NGOs continue to be active in bridge building between communities. Significant efforts 
are  being  made  to  transfer  expertise  from  international  to  local  NGOs  by  means  of 
partnerships and direct support to the establishment and functioning of local NGOs. 

However, most civil society organisations are small and depend on short-term funding from 
mainly foreign single donors. This means that the civil society agenda is largely donor-driven. 
The  government  does  not  have  a  strategic  approach  for  its  interaction  with  civil  society 
organisations. 

Overall, civil society remains weak. 

The Office for Good Governance (OGG) and the human rights units within municipalities are 
mandated to monitor the implementation of the Law on Freedom of Religion, which is a key 
priority in the European Partnership for Kosovo. The OGG has prepared a manual on the law, 
which  was  published  in  five  languages  in  September  2008.  A  Roman  Catholic  cathedral  is 
being  built  in  the  centre  of  Priština/Prishtinë.  Police  HQ  drafted  an  operational  directive 
entitled  ‘The  Safety  of  the  Cultural  and  Religious  Heritage  Sites’.  The  majority  of  cases 
involving incidents with regard to cultural and religious heritage between November 2007 and 
March 2008 have been solved. 

However,  the  construction  and  use  of  places  of  worship  has  caused  tension.  The  Law  on 
Freedom  of  Religion  contradicts  some  provisions  of  the  Law  on  Education  and  has  led  to 
complaints  regarding  freedom  of  religion  in  schools.  Ecumenical  meetings  between  the 
religious  communities  in  Kosovo  have  not  been  held  during  the  past  two  years.  Some 
religious  leaders  openly  supported  extremist  parties  during  electoral  campaigns.  The 
prosecution of the destruction of religious sites in March 2004 has continued, but there have 
been delays, and sentencing did not always reflect ethnic motive as an aggravating factor. 

Overall,  the  freedom  of  religion  is  assured  in  Kosovo,  but  more  has  to  be  done  to  advance 
reconciliation. 

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Economic and social rights 

In  the  area  of  women's  rights,  the  government  approved  the  Framework  Programme  for 
Gender Equality 2008-2013, which identifies objectives, policies and institutions involved in 
implementing the Law for Gender Equality. In June, the government submitted a report on the 
Gender  Profile  of  Kosovo  to  the  Convention  on  Elimination  of  all  Forms  of  Discrimination 
against  Women  (UN  CEDAW)  covering  the  period  1999-2007.  The  Agency  for  Gender 
Equality (AGE) increased its capacity and its coordination work at the central level with the 
office of the Ombudsperson and the gender equality officers within ministries. 

However, violation of women's rights is frequent. Kosovo remains a source, transit point and 
destination  for  trafficking  in  human  beings.  It  is  also  affected  by  internal  trafficking.  There 
are  no  strategy  documents  or  legislative  mechanisms  to  address  domestic  violence.  Shelters 
lack resources and need to be made suitable for longer-term stays of victims. The overlapping 
mandates of AGE and the OGG prevent a clear delineation of responsibilities and the efficient 
use of scarce resources, and undermine the intended outcomes of gender policies. The chief 
executive  officer  of  AGE  has  yet  to  be  appointed.  AGE  has  neither  database  nor  resource 
centre.  The  gender  equality  officers  in  line  ministries  and  in  municipalities  are  not  always 
operative. There is no coordination of the bodies dealing with gender equality and no public 
promotion of gender equality. Equal representation remains a challenge at all levels; the target 
of a minimum of 40% of either gender set in the Law on Gender Equality has not been met.  

Overall,  the  implementation  of  the  Law  on  Gender  Equality  and  the  treatment  of  domestic 
violence require additional resources. 

In the field of children's rights, a National Plan on the Rights of the Child is being prepared. 
The  Ministry  of  Education,  Science  and  Technology  (MEST)  has  completed  the  Health 
Promoting  School  Strategy  for  2008-2017.  Three  hundred  Roma,  Ashkali  and  Egyptian 
children were  enrolled for the first time in ten pilot schools in seven municipalities through 
parental involvement and the implementation of municipal action plans for their integration in 
the local education system. A Mother and Child Health Office has been established as part of 
the Ministry of Health to improve access and quality of health care services for children. Peri-
natal  mortality  is  declining.  At  municipal  level,  children's  rights  coordinators  have  been 
appointed. In the justice sector, a Steering Committee on Juvenile Justice has been established 
and  the  guidelines  and  standards  for  juvenile  justice  were  developed  and  disseminated  to 
develop the skills of judges and prosecutors. 

However, child protection remains weak; budgetary allocations for education, protection and 
overall  development  of  children  are  low.  There  is  no  monitoring  of  the  special  protection 
measures in the Juvenile Justice Code, and the imprecise reporting mechanism on the respect 
of the Convention on the Rights of the Child undermines accountability. The inter-ministerial 
Committee  for  Children's  Rights  created  in  May  2007  has  not  met.  The  National  Plan  for 
Children's  Rights  has  not  been  finalized.  The  inclusion  of  the  most  marginalised  children, 
including children with disabilities, remains a considerable challenge for the local institutions. 
Significant  numbers  of  children  lack  birth  registration  documents,  especially  among  Roma, 
Ashkali  and  Egyptian  communities.  Child  trafficking  and  child  labour  persist.  Children's 
awareness  of  the  existing  social  services  is  low.  The  coordination  and  allocation  of 
responsibilities  for  social  services  between  the  municipalities  and  central  institutions  do  not 
allow for the adequate implementation of children's rights. The lack of investment into early 
childhood  development  results  in  one  of  the  lowest  rates  of  pre-school  attendance  in  the 

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region.  The  integration  of  children  with  special  needs  into  schools  is  insufficient. 
Uncontrolled urban development threatens children's safety. 

In  the  area  of  the  socially  vulnerable  and/or  persons  with  disabilities,  there  is  still  no 
strategy for persons with disabilities. Reliable statistical data on the mentally and physically 
disabled do not exist.  

The National Council for Persons with Disabilities is not operational. Consultations with the 
Organisation  of  People  with  Disabilities  in  Kosovo  have  been  partial  and  fragmented.  The 
two centres for physical rehabilitation are not managed by the Ministry of Health. People with 
disabilities have to pay for the rehabilitation services they receive. There is a lack of facilities 
for the mentally ill, drug addicts and alcoholics. There is a shortage of wheelchairs, crutches, 
sanitary devices and hearing aids. 

Overall, little progress has been made in this area. The integration and protection of socially 
vulnerable  groups  and  people  with  disabilities  is  not  ensured.  (See  also  Employment  and 
Social Policies) 

The  human  rights  units  in  the  line  ministries  received  further  training  and  they  organised 
information sessions on the Law on Anti-Discrimination. The creation of a society free from 
discrimination  is  a  key  priority  in  the  European  Partnership  for  Kosovo.  Confirming  the 
provisions  of  the  law,  the  constitution  and  also  the  anti-discrimination  law  protects  people 
from  discrimination  based  on  sexual  orientation.  Police  treatment  of  homophobic  motivated 
harassment  has  improved  after  the  training  of  municipal  police  officers  on  lesbian,  gay, 
bisexual  and  transgender  (LGBT)  issues.  There  is  no  inter-ethnic  tension  among  the  LGBT 
community.  

However, there is little progress to report on the implementation of the law. The capacity of 
human rights units at central and municipal level is low. Cooperation between the government 
and the office of the Ombudsperson has to be improved. Communication between central and 
local bodies is too rare to effectively follow up on possible breaches of the law. People living 
in  rural  areas  and  the  lesbian,  gay,  bisexual  and  transgender  community  are  not  informed 
about  the  law.  Homophobia  is  still  widespread  in  the  public  and  the  media.  The  sentences 
passed for homophobic harassment do not specify harassment as motive.  

Overall,  little  progress  can  be  reported  in  the  implementation  of  anti-discrimination 
legislation. 

As regards property rights, which are a key priority in the European Partnership for Kosovo, 
the assembly adopted the Law on the Treatment of Illegal Construction. The Kosovo Property 
Claims Commission started its work under the auspices of the Kosovo Property Agency. The 
Kosovo  Property  Agency  (KPA)  registered  39,683  claims.  In  May  2008,  UNMIK  issued  a 
directive  which  exempts  property  right  holders from  payment  of  utility  bills  accrued  during 
periods of illegal occupancy of properties under KPA administration or where a tenant under 
the  rental  scheme  failed  to  pay  such  bills.  The  scheme  for  rental  of  abandoned  property  in 
Kosovo  allows  the  property  rights  holder  to  receive  a  fixed  income  from  the  property  by 
authorizing the KPA to rent it out during a defined period. New members of the Supervisory 
Board  of  the  KPA  have  been  appointed.  The  board  needs  to  finalise  the  procedure  for  the 
calculation and provision of compensation for successful property claims. 

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In  June,  a  law  was  adopted  to  amend  a  regulation  on  property  claims,  transferring  the 
competence of UNMIK for the KPA to the Kosovo authorities and the International Civilian 
Representative.  

However,  many  displaced  persons  are  awaiting  the  restitution  of  residential,  agricultural  or 
commercial  property.  The  Law  on  Expropriation  and  the  Law  on  Arbitration  approved  in 
2007 have not been promulgated by the SRSG. The draft Law on Sales of Apartments Where 
Tenure  Rights  Exist  passed  its  first  reading  in  February  2008,  but  needs  to  be  amended  to 
prevent  unlawful  dispossession.  The  Supreme  Court  panel,  which  is  supposed  to  decide  on 
Kosovo  Property  Claims  Commission  (KPCC)-related  appeals,  has  yet  to  be  appointed. 
UNMIK's  directive  of  May  2008  does  not  affect  all  property  rights  holders.  Following  the 
adoption of the law in June, the government of Serbia decided to suspend the offices of the 
KPA  in  Belgrade,  Kragujevac  and  Niš.  This  puts  the  resolution  of  property  claims  filed  by 
Kosovo Serbs at risk. 

The  implementation  of  the  rental  scheme  is  still  unsatisfactory.  Out  of  4,338  properties 
managed by the KPA, more than 2,500 were included in the rental scheme. Rental agreements 
for more than 940 properties have so far been signed, but little rent is actually collected. There 
are  currently  706  cases  pending  eviction  for  rent-related  reasons,  and  approximately  40 
evictions are carried out each week. There is still confusion about the transfer of cases by the 
KPA to local courts. 

Widespread ignorance of building permits and urban planning systems also affects  property 
rights. Expropriation measures undertaken by municipalities to allow for the construction of 
public infrastructure rarely comply with the official procedures, and municipalities often fail 
to inform and compensate property owners. 

The municipal authorities in Mitrovica/Mitrovicë consider two former residential areas within 
the  ‘Roma  Mahala’  as  public  property,  which  is  delaying  the  regularisation  and  return 
process.  Cadastre  departments  of  Kosovo's  municipalities  lack  property  documentation,  and 
archives  have  not  been  harmonised,  which  results  in  complications  for  the  verification  of 
property rights of displaced people and Kosovo Albanians. NGOs working on return-related 
projects manage to obtain documents from Serbia and re-register the property in the cadastres 
in Kosovo, but this cannot be done by individuals without assistance. 

The  Action  Plan  on  Informal  Settlements  has  not  brought  substantive  results.Housing 
conditions remain critical and endanger life in some areas. 

Overall,  little  progress  has  been  achieved  in  the  area  of  property  rights.  Delays  in 
implementing legislation and obstruction have led to violations of rights and tension among 
communities. 

Minority rights, cultural rights and the protection of minorities 

The government continued to work on the legal and institutional framework for the protection 
of religious and cultural heritage. The assembly adopted the Law on Special Protective Zones 
to  protect  in  particular  the  Serbian  orthodox  sites  in  Kosovo.  Amendments  to  ensure 
compatibility of the Law on Spatial Planning with the law on Special Protective Zones were 
also  adopted.  Seven  implementing  regulations  allowing  for  the  effective  application  of  the 
Law  on  Cultural  Heritage  have  been  approved.  Close  to  3,000  sites  and  objects  have  been 
identified  for  possible  inclusion  on  the  cultural  heritage  list.  An  inter-ministerial  Working 
Group on Religious and Cultural Heritage (RCH) was formally set up. 

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After  repeated  attacks  against  religious  and  cultural  sites  –  in  particular  Serbian  Orthodox 
sites – earlier in the year, security of RCH sites is now generally assured. A private security 
company was contracted to protect the most vulnerable sites and complement the work done 
by the police. The Kosovo Police Operational Order for the protection of Serbian Orthodox 
sites  was  finalized.  It  now  needs  to  be  implemented.  Law  enforcement  improved.  The 
Peja/Pec district court convicted the person responsible for a rocket-propelled grenade attack 
against the Deçan/Dečani monastery in 2007. The trial has begun of the person suspected of 
stealing  construction  material  from  a  Serbian  Orthodox  Church  in  Prizren.  An  MoU  was 
signed  between  the  customs  service,  the  Ministry  of  Culture  and  the  border  and  boundary 
police to improve law enforcement and set up cooperation to control the borders and protect 
movable cultural heritage. 

Significant  reconstruction  work  was  carried  out  on  eleven  sites  through  the  Reconstruction 
Implementation Commission (RIC) for Serbian Orthodox religious sites damaged during the 
March 2004 events. Several of these sites, including the Episcopal residence in Prizren, were 
handed over to the Serbian Orthodox church. The church is planning to re-inhabit these sites. 

However,  the  adoption  of  legislation  now  needs  to  be  followed  by  implementation.  The 
Council for Cultural Heritage for which provision is made in the relevant law has yet to be set 
up. The inter-ministerial Working group on Religious and Cultural Heritage has not yet begun 
to  hold  regular  meetings.  The  three  laws  on  spatial  planning,  cultural  heritage  and  special 
protective zones are compatible but their harmonised implementation needs to be ensured. 

Construction  activities  in  the  direct  proximity  of  religious  and  cultural  sites  pose  the  main 
threat  to  the  historical  and  natural  environment  as  well  as  monastic  life.  Unregulated 
economic  development  presents  a  potential  risk  for  the  future  of  religious  and  cultural 
heritage. 

The decision of the municipality of Gjakovë/Ðakovica to build a park on a piece of land that 
is the property of the Serbian Orthodox church, and thereby cover the foundations of a chapel 
destroyed in March 2004, is a matter of concern. 

Kosovo's  cultural  heritage-related  bodies  still  require  institutional  reform  and  adequate 
resources.  Continued  awareness-raising  is  needed  to  ensure  a  growing  consciousness  of  the 
richness of cultural heritage in Kosovo. Communication between the Kosovo institutions and 
the Serbian Orthodox church needs to improve. 

Overall,  against  the  background  of  a  volatile  political  situation  and  difficult  challenges, 
progress has been made on the protection of cultural heritage in Kosovo. 

In the area of education, recent laws on education at municipal level and on decentralisation 
increase  the  role  of  municipalities,  including  the  possibility  to  choose  the  Serbian  language 
curriculum. Turkish and Bosniak children are integrated into the Kosovo education system at 
elementary and secondary level; lessons are held  in the Turkish and Bosnian languages and 
follow  the  Kosovo  curriculum.  Serbian  students  and  the  majority  of  Roma  and  Gorani 
students  follow  the  Serb  curriculum  in  schools  and  faculties  under  the  jurisdiction  of  the 
Serbian government. 

However,  the  absence  of  a  Kosovo  curriculum  in  Serbian  created  tensions  with  the  Gorani 
community,  the  majority  of  whom  opt  for  Serbian-language  education.  There  are  no  text 
books in Turkish and Bosnian for secondary school pupils. Radio Television Kosovo (RTK) 
broadcasts  in  the  Serbian,  Bosnian,  Turkish  and  Roma  languages,  in  line  with  legal 

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provisions. RTK covers 78% of Kosovo territory. The remaining territory is not covered by 
the RTK signal due to a poor distribution network and includes most Bosniaks, Turks, Gorani 
and Serbs living in Kosovo. This is an obstacle to minorities' rights to information. 

The implementation of the 2006 Law on the Use of Official Languages at central and local 
level  is  hampered  by  the  absence  of  municipal  regulations  and  appropriate  resources.  The 
Language Commission and focal points are not working effectively. The Ministry of Public 
Services  and  the  Ministry  for  Local  Government  have  not  carried  out  public  awareness 
activities.  Members  of  minority  communities  are not  informed  of  the  provisions  of  the  law, 
especially  in  rural  areas.  The  Roma  language  continues  to  be  ignored  in  educational 
establishments and in local administration. 

Overall, cultural rights legislation has been improved, but its implementation is poor. 

Efforts  have  been  made  to  upgrade  the  institutional  and  legislative  set-up  in  the  area  of 
protection of minorities. The Office for Communities within the Prime Minister's Office was 
set  up  in  September  2008.  The  constitution  stipulates  the  rights  of  the  communities,  the 
establishment  of  a  Consultative  Council  for  Communities,  and  their  representation  in  local 
government.  The  assembly  adopted  the  Law  on  the  Rights  of  Communities  and  their 
Members in March. In September, the President's Office established the Consultative Council 
for Communities by decree.  

Minority communities continue to show confidence in the institution of the Ombudsperson. In 
2007,  27%  of  the  requests  received  by  the  Ombudsperson  came  from  representatives  of 
minority  communities.  No  major  ethnically  motivated  incident  took  place  following  the 
declaration  of  independence.  Some  progress  can  be  reported  in  the  field  of  security  and 
freedom of movement for minority communities. 

However,  the  living  conditions  of  the  most  vulnerable  communities  have  not  improved.  At 
central  and  municipal 
institutional  framework  responsible  for  minority 
communities has difficulty coping with their spread and variety. The proper implementation 
of legislation and its monitoring are not ensured. There is no strategy for reconciliation and 
inter-community dialogue. 

levels, 

the 

Overall,  improvement  of  the  living  conditions  of  minority  communities  depends  on  the 
streamlining of the institutional framework and the dissemination of information. The lack of 
constructive cooperation between Priština/Prishtinë and Belgrade complicates this process. 

There are some 20,000 internally displaced persons (IDPs) in Kosovo, 206,000 inhabitants of 
Kosovo  displaced  in  Serbia,  and  some  16,000  in  Montenegro.  The  creation  of  a  climate 
conducive to the return of displaced persons is a key priority in the European Partnership for 
Kosovo.  In  May  2008,  a  network  of  IDP  associations  in  Serbia  signed  an  MoU  with  the 
Kosovo  Ministry  for  Communities  and  Returns  to  encourage  the  return  of  60  families  in 
Laplje Selo (a place different to their place of origin). 

The UNHCR and the Ministry for Communities and Returns signed an MoU to strengthen the 
capacity  of  central  and  local  institutions  involved  in  managing  returns.  The  majority  of 
municipalities have endorsed their municipal returns strategies. 

The  Sustainable  Partnerships  for  Assistance  to  Minority  Returns  to  Kosovo  (Spark 
Programme) implemented by the UNDP provides a framework for assisted voluntary returns. 
At  the  central  level,  the  Central  Review  Mechanism  (CRM)  is  to  ensure  consistency.  The 

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chair of the CRM, which reviews all voluntary return projects endorsed by municipal working 
groups, was transferred to the Ministry for Communities and Returns in 2007. 

The  government  approved  a  Reintegration  Strategy  for  Repatriated  Persons  to  Kosovo  in 
October 2007. The strategy seeks to ensure sustainable and lasting solutions for the needs of 
repatriated  persons  from  abroad  in  the  areas  of  health,  education,  employment,  legal 
reintegration, social welfare, housing and property related issues. It also addresses the needs 
of  vulnerable  sections  of  society  and  minority  communities.  An  action  plan  for  the 
implementation of the reintegration strategy was finalised in April 2008. 

Despite some incidents targeting returnees, the overall security situation in Kosovo during the 
reporting period remained relatively calm. 

However, the pace of the returns process is very low and slowed down further following the 
declaration of independence. Since October 2007, about 700 individuals returned voluntarily, 
and  about  2000  individuals  were  forcibly  repatriated  from  asylum  countries.  Additionally, 
since  January  2008,  host  countries  requested  Kosovo  to  readmit  2,900  persons.  The 
reintegration strategy for repatriated persons is yet to be implemented. 'Go and Inform' visits 
and 'Go and See' visits, which aim to establish links between majority communities in Kosovo 
and the displaced were temporarily suspended, and resumed following an agreement in April 
between  international  organisations  and  IDP  representatives.  Structures  created  in  2005  to 
encourage a direct dialogue between Priština/Prishtinë and Belgrade on the return process are 
no longer operational. The last technical group on returns was held in 2007. 

In some municipalities, IDPs stopped participating in the municipal working groups after the 
declaration  of  independence.  Kosovo  Serb  municipalities  generally  do  not  participate  in  the 
relevant institutional mechanisms. 

At  the  central  level,  administrative  capacity  and  budgetary  resources  are  insufficient,  even 
though the 2008 budget for return increased by 35% (€7.14 million) compared to 2007. The 
Ministry of Communities and Returns has been confronted by a wide range of irregularities 
and  management  problems  and  has  taken  some  measures  to  address  them.  Following  the 
resignation  of  the  incumbent  minister,  a  new  minister  was  appointed  in  September.  At  the 
local level, municipal teams are not properly equipped to implement return policies. 

The  Ministry  for  Communities  and  Returns  still  has  no  database  on  IDPs,  which  leads  to 
confusion and uncertainty. 

Overall,  the  return  process  has  slowed  down  during  the  reporting  period  and  remains  a  key 
challenge for Kosovo authorities. 

Members of the Roma, Ashkali and Egyptian communities remain marginalised. The strategy 
to improve the education of children in September 2007 is not influencing school attendance 
by  Roma,  Ashkali  and  Egyptian  children,  which  remains  very  low,  especially  for  girls.  The 
level of employment of these communities is still much lower than the average. The majority 
does not benefit from social welfare and has only limited access to health care. Up to 40% of 
the  estimated  34,000-strong  community  are  not  registered  as  residents  of  Kosovo,  which 
prevents  them  from  benefiting  from  administrative  and  social  services.  The  strategy  and 
action  plan  for  their  integration  have  not  been  adopted  yet.  Informal  settlements  remain  a 
problem and living conditions are extremely precarious. Inhabitants of some camps for Roma 
IDPs  suffer  significant  lead  contamination,  in  particular  in  northern  Kosovo  where  the 
relevant  authorities  failed  to  provide  treatment  and  relocate  the  endangered  population. 

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Security  remains  a  concern  and  incidents  continue  to  go  unreported.  The  conditions  set  to 
receive  Kosovo  citizenship  are  difficult  to  meet  for  members  of  the  Roma,  Ashkali  and 
Egyptian communities. 

Overall,  the  situation  of  Roma,  Ashkali  and  Egyptians  in  Kosovo  remains  worrying  and 
requires the full attention of the Kosovo authorities. 

2.3. 

Regional issues and international obligations 

Full  cooperation  with  the  International  Criminal  Tribunal  for  the  former  Yugoslavia 
(ICTY) is a key priority in the European Partnership for Kosovo. 

Co-operation between the government, UNMIK and the ICTY continued. In April 2008, the 
ICTY handed down its judgment in the case of Haradinaj et al. Prosecutors had been seeking 
a 25-year sentence for the accused. Ramush Haradinaj was acquitted on all counts. While a 
former  leader  of  the  "Black  Eagles"  (a  special  unit  of  the  KLA)  was  also  acquitted  on  all 
counts,  another  leader  was  found  guilty  on  two  counts  (cruel  treatment  and  torture)  and 
sentenced to 6 years' imprisonment 

In May 2008, the ICTY's prosecutor lodged an appeal to overturn the Court's verdict, arguing 
the  trial  had  not  been  fair  given  the  prevailing  circumstances  of  intimidation  and  fear.  The 
original judgement referred to the Trial Chamber having encountered significant difficulties in 
securing  testimony  from  a  large  number  of  witnesses.  It  also  specified  that  it  had  gained  a 
strong impression that the trial had been held in an atmosphere where witnesses felt unsafe. 

The  Kosovo  authorities  have  not  investigated  allegations  of  the  trafficking  of  organs  taken 
from  Serb  prisoners  after  the  war  of  the  late  1990s.  The  Parliamentary  Assembly  of  the 
Council of Europe (PACE) has started work on a report on the inhumane treatment of people 
and illicit trafficking in human organs in Kosovo. 

the  Kosovo  authorities  ensuring 

UNMIK has been the signatory on behalf of Kosovo enabling its participation in a number of 
international organisations and agreements (Energy Community, European Common Aviation 
Area  Agreement,  South  East  Europe  Transport  Observatory,  CEFTA).  The  constitution  of 
Kosovo  envisages 
international 
representation. However, the Kosovo authorities are not accepted as successor of UNMIK by 
some  parties  to  these  agreements.  The  ongoing  reconfiguration  of  UNMIK  foresees  it 
facilitating, where necessary and possible, arrangements for Kosovo's continued engagement 
in  international  agreements.  It  is  essential  that  Kosovo's  representation  and  participation  in 
multilateral  fora  be  ensured,  and  that  all  parties  demonstrate  a  constructive  attitude  towards 
this aim. 

its  regional  and 

Kosovo continues to participate in regional cooperation initiatives. It was involved in work on 
the Stability Pact and the process of its transition to a more regionally owned framework with 
the  South  East  European  Cooperation  Process  (SEECP)  and  the  Regional  Cooperation 
Council (RCC). The government has yet to nominate a representative to the RCC. 

UNMIK  regularly  attends  the  joint  committee  and  sub-committee  meetings  of  the  Central 
European  Free  Trade  Area  Agreement  (CEFTA).  The  government  has  yet  to  nominate  a 
representative to those meetings. 

UNMIK took over the Presidency of the Energy Community Treaty from 1 January until 30 
June 2008 on behalf of Kosovo. 

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Kosovo  continues  to  implement  the  provisions  of  the  European  Common  Aviation  Area 
(ECAA). All transposition instruments for ECAA Phase 1 are in the process of being finalised 
and adopted. 

Kosovo,  through  UNMIK,  continues  to  attend  meeting  of  the  EU  Charter  for  Small 
Enterprises.  However,  the  government  has  not  yet  appointed  the  focal  point  within  the 
Ministry of Trade and Industry. 

Kosovo  takes  part  in  the  South  East  Europe  Transport  Observatory  (SEETO).  In  December 
2007, UNMIK signed the Addendum on Railways to the SEETO MoU. 

Kosovo participates in the Investment Compact initiative designed to improve the investment 
climate and encourage private sector development in the region. 

Overall,  Kosovo's  participation  in  regional  initiatives10  needs  to  be  pro-active  and 
constructive. Continuity and sustainability should be ensured. 

As  regards  bilateral  relations  with  enlargement  countries  and  neighbouring  member  states, 
Albania,  Turkey,  Montenegro  and  the  former  Yugoslav  Republic  of  Macedonia  have 
recognized  Kosovo's  independence.  In  June  2008,  the  establishment  of  the  three-border 
junction point at Serupa marked the start of the process of demarcation of the border between 
Kosovo  and  the  former  Yugoslav  Republic  of  Macedonia.  Under  the  mediation  and 
chairmanship of the International Civilian Office (ICO), a working group was set up between 
Kosovo and the former Yugoslav Republic of Macedonia and its first technical meeting was 
held in April 2008. 

3. 

ECONOMIC CRITERIA 

In examining the economic developments in Kosovo, the Commission's approach was guided 
by the conclusions of the European Council in Copenhagen in June 1993, which stated that 
membership  of  the  Union  requires  the  existence  of  a  functioning  market  economy  and  the 
capacity to cope with competitive pressure and market forces within the Union. 

3.1. 

The existence of a functioning market economy 

Economic policy essentials 

The government of Kosovo presented an enhanced Medium Term Expenditure Framework for 
2009-2011  (MTEF)  which  sets  policy  priorities,  including  economic  growth  and  good 
governance11. However, the consistency and reliability of the policies remain fragile. This was 
illustrated  by  the  revised  budget  proposed  in  the  mid-year  budgetary  review  in  July  2008, 
which deviated substantially from the MTEF, revealing an ad-hoc approach to fiscal policy. 
In  addition,  persistent  lack  of  coordination  between  line  ministries,  failure  to  follow 
procedures established in relevant laws and weak governance of State enterprises continue to 
damage  the  overall  economic  environment.  The  economy  and  economic  policy  formulation 
were affected by the general elections in November 2007, by the declaration of independence 

10 

11 

Kosovo  also  participates  in  the  Broadband  Southeast  Europe  Initiative  bSEE,  Electronic  Southeast 
Europe  Initiative  eSEE,  Regional  School  for  Public  Administration,  and  the  Southeast  European 
Cooperative Initiative SECI. 
The MTEF served as guidance for the international donors' conference in Brussels on 11 July 2008. 

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in  February  2008  and  by  the  lack  of  clarity  about  the  magnitude  and  sequencing  of  the 
international  presence  during  the  transition.  On  10  July  2008,  Kosovo  formally  applied  for 
membership  of  the  International  Monetary  Fund  and,  subsequently,  of  the  World  Bank. 
Overall,  political  consensus  on  the  fundamentals  of  market-oriented  economic  policies  has 
been  maintained,  but  the  strategic  medium-term  approach  has  yet  to  be  incorporated  into 
government action. 

Macroeconomic stability 

Shortcomings  in  statistics  continue  to  hamper  comprehensive  assessment  of  the  economic 
situation in Kosovo. Real GDP grew by an estimated 4.4% in 2007 after an increase by 3.9% 
in  200612.  Consumption  by  private  households  increased  by  almost  10%  in  nominal  terms. 
Public  consumption  showed  a  different  picture,  as  government  wages  grew  by  2.5%  and 
public  consumption  of  goods  and  services  by  1.4%.  General  government  investment 
expenditure  fell  by  almost  10%  in  2007,  as  only  71%  of  budgeted  investment  was  actually 
spent13. Donor-financed investment shrank by 7.7%, taking its share of total investment down 
to 4% from 5.5% in 2006. Total investment itself stood at 27% of GDP in 2007, up from 23% 
in 2006. Economic activity is increasingly determined by domestic factors and private sector 
dynamism,  albeit  remaining  at  a  moderate  level. Together with  weak  implementation of the 
capital budget, the unreliable energy supplies continued to be a major drag on investment and 
growth. According to IMF estimates, GDP per capita in 2007 stood at roughly €1,600 which 
is around 5,5% of the EU-27 average14. Overall, growth is slowly picking up from a moderate 
level while the unreliable energy supply, with several and lengthy power cuts a day, remains 
the single most serious restraint on growth.  

The  coverage  ratio  of  exported  to  imported  goods  is  still  very  low,  reflecting  the  lack  of 
export  capacity  and  competitiveness,  despite  an  increase  in  the  12-month  moving  average 
from 8.5% in 2006 to 10.9% in July 2008. The trade deficit widened further to 41% of GDP in 
2007, compared with 37% in 2006. This trend continued into 2008, though at a slower pace. 
In  the  first  seven  months  of  2008,  exports  of  goods  increased  by  63%  and  imports  by  27% 
compared  to  the  same  period  a  year  earlier,  bringing  the  trade  deficit  (goods  only)  to  an 
estimated 42% of GDP. The current account deficit – including foreign assistance – increased 
from  12.2%  of  GDP  in  2006  to  17.4%  in  2007.  It  was  mainly  financed  by  foreign  direct 
investment (FDI) inflows. On the back of accelerated privatisation activity and investments in 
the  second  mobile  operator  (IPKO)  and  the  banking  sector  throughout  2007,  FDI  rose  to 
12.6%  of  GDP  after  8%  in  2006.  However,  a  significant  part  of  the  financing  remained 
unexplained15,  pointing  to  a  large  proportion  of  unrecorded  financial  flows.  Workers' 
remittances stood at 12.9% of GDP in 2007 after 11.6% in 2006. The fall of net foreign assets 
of the commercial  banking sector by 16% during  the first half of 2008 indicates  decreasing 
capital inflows to Kosovo. Overall, the external accounts of Kosovo remain precarious.  

The poor availability and reliability of official employment data make it difficult to analyse 
labour market developments. At the end of 2007, the number of registered unemployed had 
increased by 2.6% compared with 2006 and.. 60% of the unemployed are unskilled, 47% are 
female and the share of long-term unemployed remains extremely high (93%). After a slight 

12 
13 
14 
15 

May 2008 IMF estimates.  
These figures do not include capital subsidies to publicly owned enterprises. 
Based on market exchange rates, because data for a PPP-based comparison are not available. 
This is summarised in the net errors and omissions component in the balance of payments. 

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increase  during  the  first  months  of  2008,  the  officially  recorded  number  of  unemployed 
almost  returned  to  its  end-2007  level  over  the  summer  months.  In  July  it  stood  at  335,920 
persons, up 0.4% compared to December 2007 and 0.9% compared to July 2007. The results 
of  the  Labour  Force  Survey  2007  revealed  an  unemployment  rate  of  43.6%  (male  38.5%, 
female  55.2%),  an  activity  rate  of  46.5%  (male  65.2%,  female  28.3%)  and  an  employment 
rate  of  26.2%  (male  40.1%,  female  12.7%).  Some  30,000  young  people  enter  the  labour 
market every year. At current growth rates, the economy cannot absorb this additional young 
and growing labour force. Also, the fact that the economy is starting from a weak productive 
base,  the  ongoing  structural  changes,  partly  linked  to  the  privatisation  process,  and  poorly 
defined  and  administered  eligibility  criteria  for  social  transfers  conservational  contribute  to 
sustaining the existing level of unemployment. However, partly due to the significant size of 
the  informal  economy,  changes  in  registered  unemployment  may  not  correctly  reflect  the 
actual dynamics of the economy. Overall, registered unemployment remains very high. 

Average yearly consumer price inflation rose to 4.4% in 2007 after 0.6% in 2006 and rose to 
12.4%  in  the  first  eight  months  of  2008.  Inflation  picked  up  strongly  in  the  second  half  of 
2007, with year-on-year rates consistently above 10% since October 2007 and rising to 14% 
between  May  and  July  2008.  This  development  was  primarily  driven  by  food  prices,  which 
make up almost half of the consumer basket, and transport. Mostly due to a base effect, the 
annual inflation rate came down to 7.8% in August 2008. Inflationary pressures decreased due 
to the relaxation in international energy and food price developments. In 2007, broad money 
widened by 23.3% and the stock of outstanding loans to the private sector by 40%. To sum 
up,  after  years  of  low  inflation,  price  tensions  resurfaced,  triggered  by  commodity  price 
increases, even though they have eased recently. 

Kosovo has started to earmark funds for notional debt servicing and to set up a liquidity and 
stabilisation reserve in its medium-term budget planning. In 2007, budget volatility increased, 
with revenue strongly exceeding and capital spending falling short of budgeted figures. This 
resulted  in  accumulation  of  substantial  cash  reserves  and  an  unfavourable  policy  mix. 
Implementation of the 2007 budget produced (i) one-off revenue of €75 million from the sale 
of  a  mobile  telephone  licence;  (ii)  higher  than  planned  revenue  collection,  thanks  mostly  to 
buoyant  border  tax  receipts;  and  (iii)  low  capital  spending.  Together,  these  factors  led  to 
unintended  strong  fiscal  tightening  in  2007,  with  a  surplus  of  7.2%  of  GDP,  reflecting  the 
poor  quality  of  budget  planning  and  implementation.  The  2008  budget  is  expansionary  and 
diverges  from  the  fiscal  rule  that  real  current  primary  expenditure  should  rise  by  not  more 
than 0.5% year-on-year. Instead, it is set to rise by probably more than 10% over last year's 
outturn.  Budgeted  capital  expenditure  is  almost  triple  the  2007  outcome  and  the  trend  was 
accentuated  in  the  July  2008  mid-year  budgetary  review,  while  the  MTEF  already 
acknowledges  that  actual  outcome  will  probably  fall  short  of  this  figure  by  some  30%. 
Current  budget  execution  figures  suggest  an  even  higher  shortfall,  as  capital  expenditures 
continue to underperform, reaching only 20% of the annual plan in September, while revenues 
performed  roughly  as  expected.  Overall,  the  budget  is  not  an  efficient  instrument  of  fiscal 
policy and does not contribute to the predictability of economic developments. Instead, it just 
responds to ad-hoc spending pressures.  

Kosovo continues to rely on the euro as its currency in use. In the absence of an autonomous 
monetary policy, this leaves the budget as the core tool for macroeconomic policy in Kosovo. 
However,  due  to  the  poor  budgetary  planning  and  implementation,  as  displayed  by  the 
unintendedly strong fiscal consolidation in 2007, followed by an expansionary budget plan in 
2008, the overall policy mix remains inadequate and budget volatility has increased.  

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Interplay of market forces 

In 2007, the private sector's share of overall consumption, investment and imports increased 
further.  Private  investment  rose  by  an  estimated  37%  in  2007,  up  from  26%  in  2006. 
Privatisation  continued  at  a  brisk  pace  until  late  2007,  when  it  came  to  a  sudden  standstill 
after a ruling by the Special Chamber of the Kosovo Supreme Court called into question the 
method  of  privatisation.  These  concerns  have  been  partly  addressed  in  a  new  Law  on  the 
Privatisation Agency of Kosovo (PAK) and the privatisation process slowly resumed after the 
summer. However, further legal issues remain to be resolved and the agency has yet to come 
into operation. All publicly owned enterprises were incorporated by the end of 2007 and new 
legislation allows their privatisation16. Overall, the expansion of the private sector continued 
in 2007, but entered an uncertain phase in 2008, marked by the standstill in the privatisation 
process in the first half of the year. 

Market entry and exit 

The number of registered businesses in Kosovo stood at approximately 86,000 in June 2008. 
However,  a  substantial  share  of  these  are  not  active.  Improvements  have  been  made  in  the 
"one-stop shop" facilities for business registration, but fixed costs for doing business, such as 
work and construction permits, remain high. The unreliable energy supply, limited access to 
finance, corruption and poorly defined property rights hinder market entry and exit. With the 
aim  of  facilitating  exits,  the  Law  on  bankruptcy  has  been  approved.  Overall,  difficult  and 
costly  enforcement  of  contracts  aggravates  access  to  finance  and  is  continuing  seriously  to 
hamper the business environment.  

Legal system 

In June 2008, the Kosovo Property Agency (KPA) started to deliver the first decisions taken 
by  the  Kosovo  Property  Claims  Commission  (KPCC)  to  claimants.  The  KPCC  has 
adjudicated 8,329 out of 39,589 property claims submitted to the KPA. However, in June the 
government  of  Serbia  subsequently  decided  to  suspend  the  offices  of  the  KPA  in  Belgrade, 
Kragujevac  and  Niš,  stating  that  the  KPA  had  failed  to  protect  the  rights  of  Serb  citizens 
whose property in Kosovo had been illegally occupied by third parties. Corruption, criminal 
activities  and  uncertainty  over  property  rights  remain  major  impediments  to  economic 
development. In general, use of courts for enforcement of contracts remains underdeveloped, 
while at the same time courts continue to face a heavy backlog of pending cases.  

Financial Sector development 

The  financial  sector  in  Kosovo  is  continuing  to  grow.  Seven  commercial  banks,  nine 
insurance companies and two pension funds are operating in Kosovo. Four new banks entered 
the market in 2007 and 2008. So far, the international financial crisis has not had a material 
impact on the financial sector in Kosovo, as local banks have no direct exposure to sub-prime 
first-wave  effects  and  are  in  a  favourable  liquidity  position.  However,  currently  unwinding 
second-wave  effects  may  have  an  impact  via  the  mostly  foreign  mother  companies  of  local 
banks. In May 2008, the Central Bank of Kosovo signed Memoranda of Understanding with 

16 

This included clean opening balance sheets which in turn would facilitate eventual future privatisations. 

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the  Turkish  and  Croatian  financial  sector  supervisory  authorities,  adding  to  similar 
frameworks in place with the respective institutions of other countries from the region.  

The  banking  sector  holds  88%  of  financial  sector  assets  and  is  dominated  by  foreign  banks 
and remains highly concentrated, with the three largest banks holding 83% of the total assets. 
Its profits rose by 68% in 2007. The degree of financial intermediation in Kosovo increased 
further,  though  from  a  still  modest  level.  The  share  of  banking  sector  assets  in  GDP  grew 
from 37% in 2006 to 43% in 2007. The volume of loans increased from 21% of GDP in 2006 
to  27%  in  2007.  Loans  grew  by  40%  year-on-year,  mainly  financed  from  the  increase  in 
deposits. In the first half of 2008, the loans to deposit rate increased to 85%. This high rate 
signals rising liquidity problems in the economy. Additionally, loans are predominantly long-
term,  while  deposits  are  short-term,  revealing  a  maturity  mismatch.  The  quality  of  the  loan 
portfolio in Kosovo's banking sector is showing some signs of deterioration: non-performing 
loans  accounted  for  4.1%  of  the  total  loan  portfolio  (0.4  percentage  points  up  from  2006). 
However,  profitability  and  liquidity  indicators  for  the  first  half  of  2008  remain  favourable, 
even  though  they  are  slightly  deteriorating.  The  interest  rate  spread  between  deposits  and 
loans  is  very  wide  and  shows  only  a  slow  downward  trend  (decreasing  to  11.3  percentage 
points in 2007 from 11.8 in the previous year). Sectors do not enjoy equal access to finance: 
The vast majority of loans goes to trade (57.6% in the first half of 2008, down from 61% in 
the same period 2007), followed by services (17.6%, up from 14.9%) and industry and energy 
(13.4%,  up  from  11.8%).  The  ineffective  enforcement  of  creditor  rights  and  of  contracts  in 
Kosovo pushes up costs for financial institutions and undermines the value of collateral.  

The  insurance  market  is  also  dominated  by  foreign  companies  and  is  still  very  small  with 
assets  accounting  for  only  2%  of  GDP  in  2007.  A  set  of  risk-based  capital  and  reserves 
requirements  for  the  insurance  sector  was  devised  by  the  central  bank  to  strengthen  the 
capacity  of  the  industry.  Also,  a  legal  framework  has  been  established  for  life  insurance 
products and for liberalisation of tariffs. Overall, the financial sector remains profitable and 
financial intermediation has deepened further, though at a low level. Access to finance is still 
uneven and hindered by weak enforcement of contracts and high borrowing costs.  

3.2. 

The  capacity  to  cope  with  competitive  pressure  and  market  forces  within  the 
Union 

Existence of a functioning market economy 

In general, Kosovo has developed an appropriate legislative and institutional framework for a 
functioning  market  economy.  However,  implementation  and  enforcement  of  this  framework 
remain  weak.  One  prominent  issue  is  electricity,  where  theft  and  non-payment  of  bills 
continue to be tolerated and contribute to inefficient use of a scarce resource. Energy supplies 
also  suffer  from  a  poor  governance  structure  and  weak  management  of  the  energy  provider 
(KEK)  combined  with  underinvestment,  despite  constant  high  subsidies  from  the  budget, 
vested interests and weak political will to change the situation. Additional factors, such as the 
wide-spread tax evasion and corruption together with extensive use of undeclared labour, lead 
to a price system where several prices for the same goods or service co-exist, with negative 
consequences for overall market efficiency and transparency. Growth in 2007 is considered to 
be due entirely to the private sector's resilience in an environment of low public investment 
and further declining donor support. Overall, uncertain property rights and poor enforcement 
of contracts, corruption and insufficient energy supply as a result of weak governance of the 

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provider  KEK  and  infrastructure  continue  to  weigh  down  the  competitiveness  of  Kosovan 
businesses, the business climate and the reliability of market allocation mechanisms. 

Human and physical capital  

Kosovo  remains  affected  by  lack  of  adequate  education  facilities  and  poor-quality teaching. 
The overall enrolment rate in education has shown no significant increase in recent years. It is 
especially low in secondary and higher education, and drop-out levels are high. The share of 
education in overall  budget expenditure increased to 17.3% in the first half of 2008. Active 
labour market policies such as vocational training continue to face severe capacity constraints. 
For  lack  of  physical  facilities  and  trainers,  only  a  small  fraction  of  the  annual  age  cohort 
arriving  on  the  labour  market  benefit  from  such  measures.  To  address  these  constraints,  a 
regional centre for professional qualifications has been built in Priština/Prishtinë.  

The transport infrastructure (roads and railways) in Kosovo is limited in scope and condition. 
It  is  not  well  connected  with  regional  networks,  and  maintenance  expenditures  have  been 
inadequate  even  though  some  upgrading  of  the  road  infrastructure  has  started  in  the 
Priština/Prishtinë  area  and  concerning  the  regional  connections  to  Skopje  and  Peja.  Road 
density stands at only 3.3 km per 1,000 inhabitants and rail connections with Serbia have been 
difficult after Kosovo's declaration of independence.  

Mobile  telephone  penetration  has  increased  rapidly  and  had  reached  an  estimated  50%  by 
mid-2008.  Partly  due  to  the  entry  of  the  second  mobile  telephone  operator,  the  high-speed 
telecommunications infrastructure is improving, the range of products is widening and prices 
are falling. Overall, the weak technology base (combined with lack of price competitiveness), 
the weak state of physical infrastructure and the small pool of qualified human capital remain 
major impediments to a well-functioning and competitive market economy. 

Sectoral and enterprise structure 

Regulatory authorities have been set up for all major network and commodity industries, but 
their  capacity  remains  weak.  In  several  instances,  the  potential  positive  effects  of 
liberalisation have not been able to materialise due to weak corporate governance or, in the 
case of the mining sector, continued social unrest. Kosovo cannot yet trade energy on a level 
playing field with its neighbours due to  unfinished  integration into regional electricity trade 
agreements.  Generation  and  distribution  of  electricity  are  still  bundled  in  the  poorly 
performing  energy  provider  KEK.  There  have  been  few  changes  in  the  enterprise  structure, 
which remains dominated by micro-enterprises. However, development of the financial sector 
has  helped  to  increase  the  share  and  dynamism  of  the  services  sector.  Trade  data  for  2008 
point  to  some  structural  improvement  in  the  food  processing  sector,  in  terms  of  import 
substitution  of  processed  foodstuffs.  The  informal  sector  remains  large.  Overall,  there  has 
been little change in the sectoral structure of the economy. 

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State influence on competitiveness 

In 2007, cash subsidies to public entities remained  stable at the 2006level. But in  2008  this 
level had already been reached during the first six months17. Although the government did not 
intervene as bluntly as in 2007, inaction against wide-spread electricity theft remains a huge 
indirect subsidy in addition to subsidies paid from the budget, and it continues to undermine 
the credibility of the independent electricity regulator. The inaction of the authorities is also 
eroding competitiveness, especially of medium-sized to large producers. These cannot resort 
to the informal economy to the same extent as micro-enterprises and small businesses which 
mainly operate in the service and the trade sector. Consequently, the weak administration and 
rule of law are contributing to a rigid business structure which in turn makes it difficult for the 
private sector to achieve important economies of scope and/or scale. Overall, continued direct 
and  indirect  State  subsidies,  combined  with  a  poor  level  and  quality  of  public  services,  are 
hampering private-sector competitiveness. 

Economic integration and convergence with the EU  

The  openness  of  the  economy,  measured  by  the  value  of imports plus exports in goods  and 
services  as  a  percentage  of  GDP,  increased  to  62%  in  2007,  up  from  56%  in  200618.  Base 
metals and base metal products continued to account for almost half of goods exports in 2007 
and their share increased further to 66% in the first seven months of 2008. Exports of goods 
during this period were up 63% compared with the same period in 2007, with exports to the 
EU  almost  doubling.  Imports  of  goods  increased  by  21%  in  2007  and  by  27%  in  the  first 
seven months of 2008. Mineral products (mainly oil) remain the largest import category (21% 
of total imports during the first seven months of 2008).  

The CEFTA and EU Member States continue to be the two main trading partners for Kosovo 
with equal shares of 37.5% of total trade in the first half of 2008. The share of exports bound 
for the EU increased from 38% in 2006 to 42% in 2007 and further to 50% in the first seven 
months  of  2008.  The  EU's  share  of  total  imports  remained  at  around  35-36%.  The  real 
effective exchange rate based on the consumer price index started to increase steadily in mid-
2007,  after  a  modest  depreciation  in  2006  by  2.8%19.  Clearly,  the  recorded  export 
performance  was  not  spurred  by  increasing  price  competitiveness.  Overall,  economic 
integration with the EU has increased. 

4. 

EUROPEAN STANDARDS 

4.1. 

Internal market 

This section examines Kosovo’s capacity to gradually approximate its legislation and policies 
with those of the acquis related to the internal market, sectoral policies and justice, freedom 
and  security,  in  line  with  the  Stabilisation  and  Association  Process  and  the  European 
Partnership  priorities.  It  also  analyses  Kosovo’s  administrative  capacity.  In  each  sector,  the 

17 

18 
19 

Partly due to a strike at the Office of the Auditor-General in May and June 2008, the audit report on the 
2007 budget was not available at the time of drafting the progress report. The audit report is the most 
relevant source on subsidies to State-owned enterprises.  
These figures are significantly lower than in last year's report, due to an upward revision of GDP. 
IMF estimates. 

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Commission's  assessment  covers  progress  achieved  during  the  reporting  period,  and 
summarises Kosovo's overall level of preparation. 

4.1.1.  Free movement of goods 

There  has  been  some  progress  in  the  area  of  standardisation.  The  Kosovo  Standardisation 
Agency (KSA), which is responsible for both standardisation and accreditation, has increased 
its staff from five to eight employees. 

The KSA is not a member of any European and international standardisation organisation. In 
the  absence  of  membership,  the  KSA  is  able,  under  the  terms  of  a  Memorandum  of 
Understanding (MoU) with the Ministry for Economy, Trade and Energy of Albania, to adopt 
and  distribute  European  standards  within  Kosovo.  CEN  and  CENELEC  have  agreed  to  this 
MoU. In 2008, 665 European standards (ENs) were adopted as Kosovo standards. One new 
technical committee was established in the field of electrotechnical standards. 

Kosovo  adopted  legislation  on  machinery,  textiles/fibres  and  cableways  (ski  lifts),  aimed  to 
ensure alignment with European standards. The Professional Standardisation Council (PSC) and 
five technical committees on standards have been established in the areas of construction, oil and 
gas products, transport and postal services, quality, management, and electrotechnical devices. 

There  is  no  progress  to  report  on  conformity  assessment.  At  present  no  conformity 
assessment  bodies  have  been  accredited  or  designated  in  Kosovo.  Accreditation  is  not 
mandatory for designating conformity assessment bodies. 

Limited  progress  was  made  on  accreditation.  An  Accreditation  Board  has  been  established 
and  new  procedures  have  been  adopted  for  the  accreditation  of  both  testing  and  calibration 
laboratories,  and  inspection  bodies.  A  memorandum  of  understanding  on  accreditation  was 
signed with Albania.  

There has been some progress on metrology. The Law on Metrology strengthens the role of 
the metrology department as an executive agency within the Ministry of Trade and Industry 
(MTI), which has eleven staff. In addition, the MTI has set up a Council for Metrology. The 
members of the Council include representatives of the ministry, universities, national health 
institutions  and  private  business.  Its  task  is  to  make  recommendations  and  advise  on 
metrology-related issues. The assembly adopted three new pieces of implementing legislation 
on metrology, all in the area of precious metals. 

Market  surveillance  is  at  a  preliminary  stage  and  much  remains  to  be  done  to  ensure  a 
market surveillance system that is acquis compliant. 

No progress can be noted in the area of consumer protection. 

Overall, preparations to establish the necessary horizontal infrastructure needed for the acquis 
on free movement of goods are at an early stage. Considerable efforts are still needed in order 
to  develop  this  infrastructure  and  to  upgrade  the  relevant  administrative  capacity  to  ensure 
adequate alignment with European standards and implementation. Compliance with European 
standards  in  the  area  of  free  movement  of  goods  is  affected  by  a  lack  of  administrative 
capacity and financial resources. 

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4.1.2.  Movement of persons, services and right of establishment 

Limited  alignment  has  taken  place  on  the  free  movement  of  persons.  The  movement  of 
persons within Kosovo itself is hampered by the political situation, and by real and perceived 
security  threats,  in  particular  between  the  North  and  the  rest  of  Kosovo.  Overall  alignment 
remains very limited. 

Limited  progress  can  be  noted  with  regard  to  the  freedom  to  provide  services.  The  legal 
framework  for  the  freedom  to  provide  services  and  the  right  of  establishment  is  still  very 
fragmentary. Alignment with European standards is limited. 

There are no developments to report in the area of company law. 

Overall, little progress can be reported in this area. 

4.1.3.  Free movement of capital 

There has been some progress concerning free movement of capital. 

With  regard  to  capital  movements,  the  Central  Banking  Authority  of  Kosovo  (CBAK) 
adopted a more flexible policy on capital equivalence deposits, facilitating access by branches 
of foreign banks to their paid-in capital at the CBAK. Following the entry into force of the 
constitution,  the  CBAK  was  transformed  into  the  Central  Bank  of  Kosovo.  It  took  over  the 
authority to license, supervise and regulate financial institutions. 

The  regulation  and  supervision  of  banks  need  to  develop  significantly.  The  banking  sector 
should  be  able  to  effectively  support  the  economy  by  providing  modern  services  and  long 
term financing. 

No development can be reported on payment systems. 

No  progress  took  place  concerning  legislation  on  money  laundering.  Overall,  the  basic 
institutions  that  are  in  charge  of  money  laundering  co-operate  with  each  other.  The 
government launched an action plan on the fight against money laundering. However, the lack 
of  expertise  of  the  judiciary  and  law  enforcement  in  investigating  and  judging  complex 
economic crime remains problematic. The Kosovo Special Prosecution Office still lacks local 
and specialised prosecutors. The fight against money laundering remains a challenge.  

Overall, the legislation on circulation of capital movements is partially aligned with European 
standards,  and  there  has  been  some  progress  as  regards  administrative  capacity.  However, 
substantial efforts are still necessary, as regards both legislation and implementation capacity. 

4.1.4.  Customs and taxation 

There was some progress in the area of customs. 

The Customs Service received the new EU blueprints on customs, laying down clear criteria 
based on EU best practice against which to measure its own operational capacity and establish 
plans  for  future  customs  reform,  and  to  prepare  for  compliance  with  international  rules  and 
standards. 

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In  June  2008,  a  new  regulation  entered  into  force,  which  establishes  customs  procedures  to 
enable  customs  to  take  action  against  counterfeit  goods,  pirated  goods  and  goods  infringing 
certain intellectual property rights. 

Integrated  Tariff  of  Kosovo  (TARIK)  information  is  timely  and  fully  adapted  to  the  most 
recent updates of the Harmonised System (HS) and the (2008) Combined Nomenclature; also 
TARIK is operational in the two official languages of Kosovo, and in English.  

Since  the  destruction  of  the  two  border  posts  in  northern  Kosovo  in  February,  smuggling 
activities  have  increased.  Both  Kosovo  and  Serbia  continue  to  suffer  substantial  losses  in 
revenue. KFOR has been checking the papers of lorries passing through, but it does not carry 
out regular customs checks. Lorries are being directed to the Mitrovica/Mitrovicë terminal for 
customs clearance. Anti-smuggling units of the KCS have started patrols on all roads coming 
from  northern  Kosovo.  Following  the  declaration  of  independence,  most  Kosovo  Serb 
customs officials resigned. 

Almost 75% of all tax revenue is collected at the border. Despite the lack of regular customs 
checks at the two border points in northern Kosovo, overall revenue collected by the KCS for 
January  –  September  2008  was  12%  higher  than  revenue  collected  for  the  same  period  in 
2007. 

The  capacity  of  customs  has  increased,  in  particular  with  the  procurement  of  one  mobile 
scanner  for  goods  which  is  located  at  the  largest  crossing  point  with  the  former  Yugoslav 
Republic of Macedonia and of three scanners for baggage checks, one of which is assigned to 
the  anti-smuggling  unit.  Co-operation  with  neighbouring  countries  has 
improved. 
Administrative instructions on disciplinary procedures and the declaration of property are in 
place to complement the Code of Disciplinary Procedures and raise professional standards. 

However,  the  capacity  of  the  customs  service  to  enforce  customs  legislation  needs  to  be 
strengthened  further,  in  terms  of  training,  equipment  risk  analysis,  post-clearance  controls, 
and IT support. Substantial efforts are still needed to ensure the effective implementation of 
customs legislation, in particular as regards counterfeit goods. The issue of extending customs 
controls to northern Kosovo remains open.  

Overall, Kosovo's customs legislation  is in line with European  standards. Significant  efforts 
are needed to ensure the effective implementation of the legislation on the ground, given that 
customs provide a significant portion of overall public revenue. Particular efforts are needed 
to enforce legislation to combat counterfeit goods and smuggling. 

There has been no progress in the area of taxation.  

The Tax Administration of Kosovo (TAK) improved its performance. Overall TAK revenue 
was some 12% higher in the first seven months of 2008 compared to the same period in 2007, 
reversing  the  negative  trend  of  the  last  few  years.  The  review  of  Kosovo's  legislation  with 
regard to its compliance with the Code of Conduct on Business Taxation has just started. 

Tax compliance needs to be increased for both personal and corporate income tax, as well as 
VAT. 

The  capacity  of  the  TAK  remains  weak.  Its  Management  Information  System  is  not  yet 
operational.  Major  efforts  are  needed  to  improve  services  to  taxpayers.  Kosovo's  tax 
legislation is only partially aligned with European standards. Further alignment is needed, as 

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well  as  significant  efforts  to  ensure  its  effective  enforcement.  Tax  collection  remains 
extremely weak and the informal economy is widespread, as controls are limited. 

4.1.5.  Competition 

No progress can be reported. 

The  Competition  Commission  (CC)  is  not  yet  operational.  The  assembly  has  yet  to  appoint 
the candidates selected for this commission. Kosovo needs to finalise the establishment of the 
CC, including the allocation of the necessary resources. The law on State aid, the purpose of 
which is to establish an Office for State Aid within the Ministry of Economy and Finance, has 
not yet been adopted.  

Overall, the Kosovan provisions for competition are not yet in place. 

4.1.6.  Public procurement 

The Public Procurement Law (PPL, amended in 2007) is the central piece of legislation in this 
area.  It  is  broadly  in  line  with  European  standards,  although  a  number  of  provisions  of  the 
directives adopted in 2004 have not been implemented. The same applies to the more flexible 
regime devised for the utilities sector. Discrepancies between different language versions of 
the legislation have been reported, which must be corrected to ensure legal certainty. The PPL 
defines  the  procurement  procedures  in  detail  and  focuses  much  more  on  the  procedural 
requirements  than  is  common  in  most  EU  countries,  where  these  are  usually  included  in 
implementing legislation.  

The PPL provides the legal basis for the Public Procurement Regulatory Commission (PPRC), 
the Public Procurement  Review  Board (PPRB),  and  the  Public  Procurement  Agency  (PPA). 
The PPA currently has 13 employees. Its main function is central purchasing. It also performs 
some  technical  and  regulatory  functions  in  cases  where  procurement  procedures  are 
implemented  by  contracting  authorities  directly.  It  has  developed  a  database  to  record  and 
monitor  procurement.  This  tool  makes  a  significant  contribution  to  the  effectiveness  of 
statistics and management of public procurement. 

The PPRC is an agency responsible for the overall development, monitoring and review of the 
procurement system. It consists of five members nominated by the government and appointed 
by the assembly for five years. At least three members should have the same qualifications as 
those  required  for  judges.  The  PPRC  has  18  support  staff.  The  new  Procurement  Review 
Body  (PRB)  provided  for  in  the  amendment  of  the  PPL  was  set  up  in  July  and  is  a  quasi-
judicial  body.  Its  role  is  to  review  administrative  decisions  issued  by  central  procurement 
institutions and appeals and complaints from tenderers. The success of the new PRB depends 
on  the  allocation  of  sufficient  resources  and  its  building  on  an  authoritative  track  record  of 
review decisions. 

Training  and  certification  of  procurement  officers  in  contracting  authorities  has  been 
suspended  because  of  a  lack  of  cooperation  between  the  Kosovo  Institute  for  Public 
Administration and the PPRC. The certification of procurement officers is valid for one year 
only. 

Overall,  some  progress  can  be  reported  in  this  sector.  The  PPL  is  in  line  with  European 
standards,  including  the  review  procedures  but  the  implementing  provisions  are  still  not  in 

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place and the responsible administration is not yet sufficiently operational. Commitment from 
all stakeholders is needed so as to consolidate the progress made to date. 

4.1.7. 

Intellectual property law 

On the subject of intellectual property, there is only limited progress to report.  

No progress can be reported concerning copyright and related rights. 

Concerning  industrial  property,  the  assembly  adopted  the  Law  on  Customs  Measures  in 
Respect of Intellectual Property Rights (Regulation 2008/22). Implementation began in June 
2008.  The  law  enables  the  customs  to  take  action  against  piracy,  counterfeiting  and  other 
infringements of intellectual property rights.  

The  Office  of  Industrial  Property  (OIP)  is  an  independent  agency  responsible  for  the 
implementation of the laws on patents, trademarks and industrial design. It is fully operational 
and began receiving and registering applications in November 2007. It has four staff and has 
received  some  1,300  applications  to  date.  The  Ministry  for  Trade  and  Industry  (MTI) 
approved two administrative instructions: one concerns fees for registering industrial property 
rights,  the  other  concerns  the  revalidation  of  industrial  property  rights  originating  from  the 
Yugoslav era. 

Overall  enforcement  remains  very  weak.  High  levels  of  counterfeiting  and  piracy  persist. 
Kosovo is not yet able to implement and enforce its national legislation and its international 
obligations in this field. The administrative capacity to implement intellectual and industrial 
property rights is insufficient and implementing provisions are still needed. 

Overall, Kosovo's preparations in the field of intellectual and industrial property remain at a 
preliminary stage. Implementing capacity is limited. 

4.1.8.  Employment and social policies 

The  Ministry  of  Labour  presented  the  2007  Labour  and  Employment  Annual  Report  for 
Kosovo in April 2008. However, high costs associated with the Kosovo Employment Strategy 
(2008–2013) have prevented its adoption. 

Registered unemployment in Kosovo accounts for 43% of the economically active population. 
A  total  of  334,595  persons  (compared  to  327,262  persons  in  2006)  were  registered 
unemployed by the Kosovan public employment services by end 2007; 93% of all registered 
job seekers have been registered for more than 12 months. 

Among  the  long-term  unemployed,  the  most  disadvantaged  groups  are  women,  Roma, 
Ashkali, Egyptians and persons with disabilities. The current disability benefits system acts as 
a disincentive to persons with disabilities who wish to seek work; disability benefits are only 
available to those who do not work or participate in vocational training.  

An area of concern is female employment. Young women experience higher unemployment 
rates than men and are more often in low quality, part-time and fixed-term jobs. 

Youth unemployment is particularly high in Kosovo, at almost five times the EU average. The 
Kosovo Youth Employment Action Plan has yet to be implemented.  

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The  Ministry  of  Labour  and  Social  Welfare  has  little  administrative  capacity.  The  current 
ratio  of  Public  Employment  Service  officials  to  support  job  seekers  is  1:1,600.  As  a  result, 
there  are  no  clear  arrangements  or  procedures  to  develop,  manage,  monitor  and  evaluate 
policies and their implementation. Employment policies are also being developed without the 
involvement of the private sector, an aspect which undermines their effectiveness. 

Overall,  very  little  progress  can  be  reported  in  the  employment  sector.  The  absence  of  a 
strategic and legislative framework and a lack of administrative capacity are obstacles to the 
development of adequate employment policies in Kosovo. 

As concerns social policies, there are no specialised labour courts in Kosovo.  

Little  progress  can  be  noted  in  the  area  of  health  and  safety  at  work.  The  lack  of  adequate 
legislation  and  political  commitment  is  preventing  further  achievements  in  the  sector.  The 
Labour Inspectorate, which is responsible for the enforcement of employment legislation, and 
in  particular  the  provisions  of  the  Law  on  Occupational  Safety,  Health  and  the  Working 
Environment, lacks the capacity to carry out its tasks effectively. 

Very limited progress  can  be reported  in the  area  of social dialogue. There are currently 28 
sectoral trade unions registered in Kosovo. However, social partners are weak and their role in 
decision-making is marginal. The Tripartite Advisory Council is not operational. The National 
Collective  Agreement,  concluded  in  2004,  has  never  been  implemented  owing  to  financial 
constraints. Kosovo still lacks a trade union law and a law on strike action. 

In  the  area  of  social  inclusion,  home  care  services  for  mental  and  psychiatric  disorders  are 
provided.  Some  community  mental  health  centres  and  residential  housing  have  been 
established under the authority of the Ministry of Health.  

However, Kosovo has no action plan on disabilities. Kosovo lacks rehabilitation facilities for 
the  social  reintegration  of  disabled  people.  Rehabilitation  and  re-socialising  of  people  with 
physical disabilities is managed by non-governmental organisations only. Access to secondary 
schools of people with special needs is not ensured. 

In  the  area  of  anti-discrimination  policies,  the  government  declared  September  2008  "anti-
discrimination  month",  and  organised  several  public  events  and  training  sessions  to  provide 
civil servants and the general public with more information on Kosovo's anti-discrimination 
policies. 

Social protection covers four broad areas; (i) pension programmes to support the elderly and 
the  disabled;  (ii)  social  assistance  programmes  to  support  those  particularly  in  need;  (iii) 
veterans’  programmes  for  those  injured  during  the  war  and  for  families  of  those  killed  or 
missing, and (iv) assistance to find jobs so as to be able to support their families. The social 
protection  system  is  financially  unsustainable  and  not  organised  efficiently.  Some  325,000 
people  are  covered  by  a  social  scheme.  45%  of  the  Kosovo  population  live  in  poverty  and 
18% in extreme poverty. Tackling fraud in this area continues to be a challenge. The Ministry 
of  Labour  and  Social  Welfare  has  limited  capacity  in  this  regard.  There  is  no  adequate  IT 
mechanism  for  monitoring.  The  government  has  submitted  amendments  to  the  Social 
Assistance  Law  to  simplify  its  implementation  and  introduce  some  flexibility  as  regards 
eligibility.  In  the  area  of  social  services  and  institutional  care,  there  is  no  adequate  updated 
legislation.  The  social  services  system  remains  centrally  managed.  Decentralisation  is  being 
hampered  by  financial  constraints  and  limited  capacity  at  municipal  level.  There  are  no 
professional  social  workers  in  Kosovo  with  adequate  experience  and  competence.  The 

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pension scheme  has been changed to increase benefits to those who have contributed to the 
old  Yugoslav  pension  fund  for  more  than  15  years.  Some  132,421  people  are  currently 
receiving benefits under the basic pension scheme.  

The social security system remains cash-based. Kosovo does not have a health insurance fund. 

In  the  area  of  public  health  policy,  the  assembly  adopted  the  Law  on  Public  Health  in 
February  2008.  Reliable  health  statistics  are  not  available,  which  makes  an  analysis  of  this 
sector difficult. Infant and maternal mortality remain the highest in the region. The incidence 
of  communicable  diseases  is  alarming  and  on  the  increase.  Health-related  infrastructure, 
including medical equipment and hospital capacity, is under-developed. 

In general, the health sector is very poor and requires increased attention by the government. 

Overall, employment and social policies remain weak. 

4.1.9.  Education and research 

The  government  has  identified  education  as  a  priority  for  its  social  and  economic 
development.  It  is  committed  to  expand  inter-ministerial  cooperation  and  to  invest  more 
resources in this sector (some € 170 million for the period 2009-2011). The assembly adopted 
the  National  Qualifications  Framework  Law  in  May,  institutionalising  the  qualification  and 
certification procedures through the establishment of a National Qualifications Authority. 

The assembly adopted the Law on Education in the Municipalities, which was promulgated in 
June.  The  law  aims  to  regulate  the  organisation  of  public  educational  institutions  and  the 
provision of public education at the pre-primary, primary, lower secondary, upper secondary 
and  higher  education  levels  in  the  municipalities.  The  law  defines  the  competences  and 
responsibilities of central government and municipalities in the area of education. 

The Council of Vocational Education and Training became operational in 2008. 

A  feasibility  study  for  a  'Sector-Wide  Approach  in  Education'  was  carried  out  under  the 
auspices of the Ministry of Education, Science and Technology (MEST) with the participation 
of  a  broad  range  of  stakeholders,  including  civil  society.  It  identifies  ways  for  donors  to 
contribute more efficiently to education reform. As a follow-up, working groups and a donors' 
coordination unit have been established. 

The  MEST  stepped  up  its  efforts  to  improve the  quality  of  both  teaching  and  learning.  The 
government's ambitious school building programme  focuses on the densely-populated urban 
areas. The Head of the Kosovo Accreditation Agency was appointed in March. The ministry 
is developing higher education curricula that are complementary to labour demands. Kosovo 
has consolidated its participation in the European Tempus and Erasmus Mundus programmes. 
The Tempus structure has been strengthened and broadened to include the Serbian-speaking 
public  university.  Following  the  conclusions  of  a  Bologna-compatible  evaluation,  Kosovo 
suspended enrolment in all but one of the private higher education providers; the extension of 
their  licence  to  operate  is  subject  to  a  future  accreditation  process  run  by  the  Kosovo 
Accreditation Agency starting 1 October. The MEST is in the process of revising the curricula 
in Vocational and Educational Training (VET) for 51 profiles. 

However,  Kosovo's  education  system  continues  to  be  affected  by  resource  and  budgetary 
constraints, a lack of adequate facilities and poor quality of teaching. Teachers' motivation is 

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seriously  hampered  by  low  salaries  and  the  inadequate  career  system.  The  cooperation 
between the ministry, social partners and the private sector is underdeveloped, schools are still 
working  in  shifts  and  the  government  has  not  made  any  investment  in  early  childhood 
development.  In  addition,  not  all  children  received  free  textbooks  as  guaranteed  by  law. 
Participation in post-compulsory education and training is among the lowest in Europe. The 
Kosovo  Accreditation  Agency  is  not  yet  operational.  Quality  assurance  is  not  in  place  and 
there is no monitoring mechanism.  

In addition, parallel and ethnic-based structures using different curricula and textbooks are a 
source  of  segregation.  There  has  been  no  progress  as  regards  the  inclusion  of  the  Roma, 
Ashkali  and  Egyptian  communities  into  the  mainstream  education  system.  The  relevant 
legislation and strategy are poorly implemented and teachers with minority language skills are 
in short supply. VET is separate from general secondary education and not aligned with the 
emerging needs of a market economy. Kosovo has no alternative provision for post-secondary 
education and training. The lack of accreditation of VET providers undermines confidence in 
the  VET  certification  scheme.  Respective  co-ordination  with  the  Ministry  of  Labour  is  not 
efficient. 

As  far  as  research  is  concerned,  the  MEST  and  public  universities  have  demonstrated  an 
interest in research activities. Discussions were held to consider a more effective participation 
by Kosovo under the Seventh EC Framework Programme for Research. The ministry has set 
up  a  Department  of  Science  and  Technology  and  established  three  new  bodies  devoted  to 
research:  the  National  Council  for  Science,  the  Centre  for  Innovations  and  Transfer  of 
Technology, and the Centre for International Co-operation in the field of Higher Education, 
Science and Technology. 

However, the ministry has taken no steps to develop the research and development capacity of 
universities in partnership with industry. Initiatives by the higher education providers remain 
very limited. 

Overall,  the  efforts  observed  to  reform  the  education  system  deserve  sustained  support  in 
order  to  entrench  tangible  quality  improvement.  Some  progress  can  be  reported  in 
approximating to EU standards. 

As concerns research, some progress was made but no overall research policy was adopted or 
specific  measures  taken  to  improve  research  cooperation  and  integration  into  the  European 
Research Area.  

4.1.10.  WTO issues 

The  government  considers  WTO  accession  a  priority.  It  has  yet  to  submit  a  formal 
application. 

4.2. 

Sectoral Policies 

4.2.1. 

Industry and SMEs 

Limited progress has been made in the area of industry and SMEs. As regards the business 
environment,  one-stop  shop  facilities  have  been  improved,  thereby  reducing  the  number  of 
administrative  steps  required  to  start  and  run  a  business.  On-line  registration  with  the 
Business Registration Agency has been made available. 

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Kosovo  is  gradually  developing  a  more  comprehensive  set  of  business  support  services, 
including  business  parks  and  incubators.  Business  consultancy  services  are  supported  by 
several  donors.  There  have  also  been  positive  developments  as  regards  the  availability  of 
micro-credit and donor finance. However, proper coordination is lacking. 

The  Ministry  of  Trade  and  Industry's  SME  Support  Agency  is  responsible  for  facilitating 
SME  development.  Its  administrative  capacity  remains  insufficient;  on-line  applications  and 
tools  are  not  fully  operational.  Meetings  of  the  Consultative  Council  on  SMEs  representing 
governmental  and  non-governmental  institutions  have  been  suspended.  The  Investment 
Promotion  Agency,  which  offers  free  services  to  attract  foreign  investment,  continued  its 
activities. It still has only one office abroad, in Austria. 

There is no progress on the development of regulatory impact assessments (RIA). 

Kosovo has participated in the implementation of the European Charter for Small Enterprises 
and  remains  committed  to  it.  Kosovo  needs  to  appoint  a  new  co-ordinator  for  the  Charter 
process and to strengthen the SME Agency to enable it to take over from UNMIK technical 
assistance. 

Kosovo has adopted an entrepreneurship learning strategy, which introduces entrepreneurship 
in the secondary education curriculum. Implementation is pending. 

Overall, preparations in the field of industry and SME remain at an early stage. Obstacles to 
running  SMEs  remain  high  and  access  to  finance  is  difficult.  Improved  coordination  of 
numerous donors' support to SME should increase SME aid and policy effectiveness. 

4.2.2.  Agriculture and fisheries 

There are few developments to report as regards alignment with European standards. Laws on 
organic  agriculture  and  apiculture  were  promulgated  by  the  SRSG  in  January  2008.  The 
assembly  has  not  yet  adopted  the  food  law.  This  continues  to  delay  the  development  and 
enforcement of related implementing legislation and the establishment of a single Food Safety 
Agency. Adoption of the law is required to clarify the division of responsibilities in the area 
of food safety, in particular between the Ministry of Agriculture and the Ministry of Health. 

There  is  no  clear  separation  of  responsibilities  between  the  different  services  in  the 
agricultural sector (including the veterinary and phytosanitary administration) and definition 
of relations between central, local and municipal levels. 

Government  spending  on  the  agricultural  sector  in  the  2008  Kosovo  Consolidated  Budget 
(KCB)  increased  by  32%  compared  to  2007,  albeit  from  a  low  base.  There  is  increased 
funding,  both  from  the  KCB  and  donors,  including  for  substantial  projects  for  land 
consolidation  and  advisory  services.  The  agricultural  sector  in  Kosovo  is  facing  strong 
competition from imports and needs investment in order to modernise the sector. Farms are 
too small and lack  modern technologies to improve their ability to compete in the domestic 
and international market.  

The Vinery and Agricultural Institution was established in March 2007. Action to regulate the 
wine sector and implement the Law on Wine in accordance with the acquis is still pending. 

A start has been made on implementing aspects of the Agricultural and Rural Development 
Plan  (ARDP)  for  2007-2013,  which  was  adopted  in  2007,  in  particular  concerning  land 

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consolidation. An updated ARDP action plan is due to be approved later this year, which will 
include concrete and detailed measures for a number of agricultural sub-sectors. The updated 
plan needs to be brought gradually into line with the EU approach towards rural development 
in potential candidate countries. However, financial  resources for the implementation of the 
plan  are  limited.  The  legal  framework  for  the  implementation  of  the  ARDP  and  the 
establishment  of  the  implementing  institutions  of  the  ARDP  are  still  at  a  very  preliminary 
stage.  Without  the  legal  basis,  even  the  current  limited  financial  resources  cannot  be  spent. 
With  assistance  from  an  EU-funded  project  the  first  Local  Action  Groups  were  established 
and their Local Development Strategies based on the LEADER+ approach were developed for 
five  municipalities (Klina/Klinë, Štimlje/Shtime,  Suva Reka/Suharekë, Srbica/Skënderaj and 
Gnjilane/Gjilan). 

Some progress has been made in the development of a policy and a regulatory framework to 
support  viable 
land  against  unplanned  urban 
development.  However,  illegal  logging,  hunting  and  construction  on  agricultural  land  are 
continuing.  Despite  the  decentralisation  of  the  Kosovo  Forest  Agency  to  Regional  Forestry 
Directorates, there is no sustainable forest management system. 

land  reform  and  protect  agricultural 

In the veterinary and phytosanitary area, plans to upgrade agri-food establishments are only 
at  a  preparatory  stage.  The  Kosovo  Veterinary  and  Food  Agency  has  licensed  32 
slaughterhouses. There are no facilities for processing animal by-products in Kosovo. 

The  legislation  and  infrastructure  is  in  place  for  carrying  out  efficient  animal  identification, 
registration  and  movement  control  although  this  is  not  properly  enforced.  The  animal 
identification,  registration  and  movement  control  system  for  cattle  is  in  place  but  its  fully 
operational character is questionable and still needs to be confirmed. Veterinary legislation on 
the  control  of  animal  diseases  and  phytosanitary  matters,  aiming  to  comply  with  European 
standards, is being implemented. 

There have been no developments as regards fisheries. 

Overall,  there  has  been  some  legislative  progress  in  the  areas  of  agriculture,  veterinary  and 
phytosanitary  matters,  although  further  efforts  are  required  to  implement  and  enforce  this, 
particularly in veterinary and phytosanitary matters. 

4.2.3.  Environment 

The  Ministry  for  Environment  and  Spatial  Planning  (MESP)  has  taken  steps  towards 
legislation.  The  Kosovo 
developing  an 
Environmental Action Plan is connected to a total of 16 sectoral plans. However, only four of 
the  52  projects  envisaged  for  the  period  2007-2010  have  been  implemented  so  far.  Local 
environmental action plans for five municipalities have been signed. 

for  environmental 

framework 

integrated 

Some progress can be reported in the area of horizontal legislation. Following the adoption 
of provisions on Environmental Impact Assessment (EIA) through the Law on Environmental 
Protection,  implementation  is  beginning.  Some  efforts  have  been  made  to  increase  public 
awareness and civil society participation in environmental matters. 

There  are  no  developments  to  report  in  the  area  of  air  quality.  Relevant  legislation  is  still 
lacking, and Kosovo still has no air quality monitoring network. 

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Little progress has been made in the area of waste management. Three municipal dumpsites, 
in  Đakovica/Gjakovë,  Kačanik/  Kaçanik  and  Prizren,  have  been  rehabilitated.  The  Kosovo 
Trust Agency (KTA) has incorporated all 17 water, waste and irrigation enterprises. The low 
level of waste bill collection remains a problem for the waste utilities. 

There is little progress to report in the area of water quality. One water permit was issued. An 
administrative  instruction  on  criteria  for  defining  protected  drinking  water  zones  and  water 
resources  was  adopted.  The  Water  Law  provides  for  the  establishment  of  a  River  Basin 
Authority,  which  will  be  responsible  for  water  resource  management  in  the  territory  of  the 
river basins. The budgetary implications and the accountability of this institution still have to 
be addressed. The future responsibilities for the operation and maintenance of publicly owned 
enterprises and assets in the water sector, which will be transferred to the municipalities, need 
to be determined. The management responsibilities for urban wastewater treatment and flood 
control  will  also  need  to  be  defined.  Water  management  forms  a  key  element  in  the 
Environment Action Plan, given the growing scarcity of water in Kosovo and the region. The 
low level of collection of water rates remains a problem for water utilities.  

No progress has been made in the field of nature protection. Transposition of the Wild Birds 
Directive and the Habitats Directive is still pending. 

No progress has been made on industrial pollution control and risk management.  

There  has  been  little  progress  in  the  area  of  chemicals.  The  law  on  chemicals  has  been 
promulgated. 

There is no progress to report in the area of genetically modified organisms (GMOs). A law 
on the protection against noise entered into force in March 2008. 

As  regards  administrative  capacity,  the  Environmental  Protection  Agency  is  now  fully 
staffed and operational. However, the human and financial resources of the MESP and related 
institutions (both at national and at local level) are still far from sufficient to address Kosovo’s 
environmental  challenges.  The  Environmental  Protection  Advisory  Board  is  not  yet 
established.  Both  vertical  and  horizontal  coordination  between  all  institutions  involved  in 
environmental  issues  need  to  be  significantly  improved.  Investments  in  environmental 
infrastructure  will  need  to  be  substantially  increased,  in  particular  through  support  from 
international donors. The responsibility of the municipalities is currently limited due to lack 
of capacity in both personnel and funding. 

Overall, there is limited progress to report in the field of environment, in particular as regards 
horizontal  legislation.  Further  efforts  are  still  required  in  most  sectors  for  the  transposition, 
implementation  and  enforcement  of  legislation.  The  lack  of  human  and  financial  resources, 
both  at  national  and  at  municipal  level,  remains  a  problem;  the  same  applies  to  a  lack  of 
appropriate  coordination  mechanisms  between  all  institutions  dealing  with  environmental 
protection. 

4.2.4.  Transport policy 

There has been some progress in the area of trans-European transport networks. Kosovo 
continues  to  participate  actively  in  the  Core  Regional  Transport  Network  and  in  the  South-
East  European  Transport  Observatory  (SEETO).  It  is  updating  and  implementing  the  multi-
annual  plan  2008-2012.  Continued  cooperation  within  SEETO  is  required.  Both  projects  - 
Route  7,  linking  Nis  to  Priština/Prishtinë  and  Albania,  and  Route  6  linking  Montenegro  to 

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Priština/Prishtinë  and  Skopje  -  are  included  in  the  multi-annual  plan  2008-2012  as 
government  priorities  in  the  Medium  Term  Expenditure  Framework.  The  contract  for 
constructing a section of the R7 (around 20 km from the border with Albania) is currently in 
the  bidding  process.  A  Transport  Planning  Unit  within  the  Ministry  of  Transport  and 
Telecommunications (MTT) has been established; it lacks the resources and political support 
to carry out its mandate. However, transport infrastructures remain poor and under-developed 
in Kosovo. Institutional and administrative capacity needs to be significantly strengthened, as 
well as the legal framework for Public-Private Partnerships (PPPs). 

In  the  area  of  road  transport,  some  progress  can  be  reported.  The  Law  on  Road  Safety 
entered  into  force  and  eight  administrative  instructions  on  the  creation  of  a  Road  Safety 
Council  in  co-operation  with  other  relevant  line  ministries  have  been  adopted.  A  roads 
database  is  now  operational.  A  substantial  allocation  of  funds  under  the  KCB  (€93  million 
overall) has now been devoted to ensuring adequate and higher quality road maintenance and 
road  rehabilitation.  Several  administrative  instructions  on  driving  licences  and  technical 
inspection of vehicles have been issued. The criteria for licensing public transport operators 
need strengthening to improve the regulation of Kosovo’s public transport. 

Very  little  progress  can  be  reported  in  the  rail  transport  sector.  The  Law  on  Kosovo 
Railways  entered  into  force  in  June  2008  and  provides  the  legal  basis  for  the  future 
establishment  of  a  Railway  Regulatory  Authority,  (RAA)  independent  from  the  MTT.  The 
RAA  has  not  yet  been  established,  pending  the  nomination  of  its  board  members.  UNMIK 
signed  the  "Addendum  to  the  Memorandum  of  Understanding  on  the  Development  of  the 
South  East  Europe  Core  Regional  Transport  Network  for  a  South  East  European  Railway 
Transport  Area"  in  December  2007.  Kosovo  is  a  member  of  the  Rail  Working  Group 
established under the SEETO framework. 

Railway transport is not a government priority. Railways infrastructure and rolling stock, as 
well  as  the  level  of  railway  services,  remain  at  a  very  low  level.  Compensation  offered  to 
railways for the provision of public passenger service does not cover costs. 

No progress can be reported in the area of combined transport. Kosovo still needs to adopt a 
multi-modal transport strategy and implement it. 

In  the  area  of  air  transport,  there  has  been  some  progress.  The  Law  on  Civil  Aviation 
entered  into  force  in  June  2008,  superseding  previous  UNMIK  regulations  on  CARO  (the 
Civil Aviation Regulatory Authority). In September 2008, the Director of the Civil Aviation 
Authority  (CAA)  to  succeed  CARO  was  appointed,  but  the  government  still  has  not 
nominated the CAA Board Members. Kosovo continues to implement the provisions relating 
to  the  European  Common  Aviation  Agreement.  All  transposition  instruments  for  ECAA 
Phase 1, including some legal provisions from ECAA Phase 2, have been drafted but not yet 
adopted.  Alignment  of  standards  should  be  accelerated.  A  number  of  investments  in 
Priština/Prishtinë  Airport  have  been  made  as  part  of  the  preparations  for  ICAA  Standard 
Aerodrome Certification. 

Overall, some progress can be reported in the field of transport, particularly in aviation. There 
have  been  few  developments  in  the  railway  and  combined  transport  sectors.  Kosovo  has 
increased  investments  in  the  transport  infrastructure  in  2008,  especially  road  building  and 

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45 

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maintenance.  However,  implementation  capacity  remains  weak,  especially  in  the  railway 
sector.20 

4.2.5.  Energy 

The  energy  sector  continues  to  face  severe  problems.  The  electricity  utility’s  financial 
situation is extremely precarious, mainly due to the extremely low level of power billing and 
collection.  As  a  result,  electricity  supply  remains  uncertain  and  unreliable  in  Kosovo, 
especially in remote areas. Power cuts are still frequent. 

The government's programme for 2008-2011 identifies the development of the energy sector 
as  one  of  its  main  priorities.  The  programme  puts  particular  emphasis  on  the  continued 
restructuring  and  liberalisation  of  the  sector  and  the  use  of  Kosovo's  lignite  reserves  for 
electricity production and export. In September, the government adopted a formal decision to 
privatise KEK. The government also is planning a major increase in public investment to the 
sector, mainly to strengthen the transmission and distribution network and to continue work 
on the new mine at Sibovc. 

There has been no progress as regards oil stocks and nuclear safety/radiation protection. In 
the  area  of  nuclear  safety/radiation  protection,  basic  rules  need  to  be  implemented  and  an 
appropriate and operational regulatory body needs to be set up. Important radiological issues 
include  the  management  of  sealed  radioactive  sources,  environmental  monitoring  and 
radiation protection in the context of medical and industrial applications. Attention needs to 
be  paid  to  preventing  and  combating  illicit  trafficking  of  nuclear  and  other  radioactive 
materials within Kosovo. 

As  far  as  the  internal  energy  market  and  the  implementation  of  the  Energy  Community 
Treaty  (ECT)  are  concerned,  results  have  been  mixed.  The  Ministry  of  Energy  and  Mining 
(MEM) adopted rules on energy efficiency. The network distribution code was approved by 
the  Energy  Regulatory  Office  (ERO)  as  required  by  the  ECT.  This  sets  out  the  terms  and 
conditions for connection to low/medium voltage networks and for use of the network system. 
The ERO also approved the metering code and the methodology for transmission connection 
charges.  The  government  did  not  meet  the  ECT  requirement  to  introduce  unbundled 
accounting  between  the  coal  mines  division,  power  generation,  network  distribution  and 
supply  by  mid-2008.  The  aim  of  this  requirement  is  to  create  conditions  for  the  future 
privatisation  of  assets  of  the  Kosovo  Electricity  Corporation  (KEK).  Due  to  disagreements 
between  the  government  and  the  regulator,  the  requirement  to  adopt  the  authorisation 
procedure  for  new  generation  capacities  was  not  met.  There  has  been  limited  progress  as 
regards  the  unbundling  of  KEK  distribution  and  supply  functions.  The  same  applies  to  the 
establishment  of  a  Distribution  System  Operator  (DSO)  as  prescribed  by  the  ECT.  Kosovo 
needs to make further progress in establishing and implementing the legal framework of the 
ECT. The institutional and legislative capacity of both the MEM and the ERO needs further 
strengthening. Attracting qualified staff remains a problem. 

KEK's  revenue  billing  and  collection  remains  poor.  Non-payment  of  electricity  consumed  -
whether through lack of billing, non-payment of bills, or electricity theft - represents a major 
challenge  for  KEK  and  is  the  main  reason  for  its  insolvency  and  the  ongoing  unsustainable 
inflation  of  demand  for  power.  Despite  a  slight  improvement  during  2007  (which  has 

20 

DG TREN made extensive comments to the conclusions of the energy and transport chapters, with few 
suggestions for the body of the text. 

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46 

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continued during 2008), technical and financial losses in the electricity sector continue to be 
high.  In  2007,  technical  losses  accounted  for  16.2%  of  demand;  theft  22.4%;  and  other 
commercial losses 21.4%. In short, fully 60% of demand is not paid for and KEK lost some 
€99  million  last  year.  Vigorous  and  increased  efforts  (involving  police  and  judiciary)  are 
needed to increase electricity billing and collection rates. 

Kosovo's  electricity  transmission  system  operator  (KOSST)  is  a  member  of  the  South  East 
Europe  Transmission  Systems  Operators  (SETSO).  However,  it  continues  to  encounter 
difficulties  at  the  level  of  SETSO's  technical  working  groups  on  inter-transmission 
compensation and cross-border trade mechanisms. KOSST is not remunerated by the Serbian 
transmission system operator for the electricity transiting through its grid. 

tariffs 

increases, 

through  annual 

Progress has  been achieved  in  the gradual introduction  of electricity prices that reflect cost. 
The Energy Regulatory Office (ERO) tariff methodology provides for a gradual introduction 
of  cost-reflecting 
the  bills  becoming 
disproportionately  high  for  vulnerable  social  groups.  At  the  same  time  it  provides  a  lifeline 
tariff for low-income costumers. ERO launched the second electricity price review in October 
2007. The ERO published a consultation paper in March 2008 with its comments and views 
on the 2008 transmission and retail tariffs. The new tariffs are on average 5% higher than in 
2007. The ERO board approved these tariffs once its new members were appointed, and the 
tariffs became effective on 1 July. According to the social scheme of the Ministry of Labour 
and  Social  Welfare,  some  40,000  customers  receive  electricity  (500  kWh)  paid  for  by  the 
Kosovo budget (€4.5 million). 

to  avoid 

Preparations  for  the  development  of  the  new  Kosovo  C  power  plant  (Lignite  Power 
Development Project) slowed down in 2008, as the government decided to review the entire 
project. The project envisages constructing up to 2,000 MW of new capacity, supported by the 
expansion  of  lignite-mining  operations  at  the  Sibovc  field  with  major  assets  to  be  given  in 
concession to private investors (including elements of the Kosovo A and B power plants). An 
international transaction advisor had reviewed and approved the pre-qualification and started 
a structured dialogue with the four short-listed bidders to develop the bidding package. In the 
autumn, the transaction advisor intends to finalise the request for proposals to be issued to the 
short-listed bidders. Final bids are expected by the end of May 2009. According to the most 
optimistic  timetable,  and  subject  to  legal  matters  being  resolved,  financial  closure  should 
follow within a year, i.e. by end 2009. 

However,  the  timing  of  the  Kosovo  C  package  does  not  tie  in  well  with  the  need  to  begin 
developing  the  new  Sibovc  SW  Mine.  Existing  lignite  sources  at  Bardh  and  Mirash  are 
expected to run out by 2010, whereas Sibovc is unlikely to begin yielding lignite before 2012, 
having  experienced  from  delays  in  the  process  for  the  procurement  of  overburden  removal 
systems such as excavators, conveyors and spreaders. The government has provided funds for 
opening an additional mine (Sitnica mine) adjacent to Mirash, which will partially cover the 
coal  demand  until  2012.  To  bridge  the  gap,  KEK  intends  to  use  some  existing  equipment 
without refurbishment to start digging overburden in Sibovc SW. All these efforts are aimed 
at reducing the risk of having to purchase costly power imports at continuously rising market 
prices. 

The  financial  viability  of  the  Kosovo  C  project  in  the  longer  term  and  its  impact  on  the 
environment continue to give a cause for concern. Kosovo will have to comply fully with the 
provisions of the ECT as regards the EU acquis for new power generation projects (i.e. in the 
areas of energy, environment and competition). In addition, full compliance (according to the 

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47 

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ECT)  with  the  Large  Combustion  Plant  Directive  by  2017  will  result  in  the  closure  of  the 
remaining operational units of Kosovo A. 

In addition, the government is committed to making substantial efforts to address commercial 
losses and electricity theft, including through improved cooperation with the judiciary and the 
police.  It  also  places  a  stronger  emphasis  on  the  promotion  of  renewable  energy  sources, 
including  hydro  power  plants,  and  on  energy  efficiency  measures,  although  government 
funding  for  both  is  limited.  An  EU  funded  pre-feasibility  study  to  assess  the  potential  of 
renewable  energy  sources  (excluding  hydro  potential,  which  was  assessed  in  a  separate 
study), which was completed in early July, found that there is considerable potential for solar 
and  biomass,  whereas  wind  and  geothermal  potential  is  very  low.  The  study  recommends 
demonstration  projects  to  install  water-heating  solar  panels  in  individual  and  collective 
dwellings, given that about 20% of electricity consumption is used for heating tap water. 

Overall,  there  has  been  some  progress  in  the  area  of  energy,  particularly  in  building  up  the 
institutional capacity of the Ministry, Regulator and Transmission System Operator (KOSTT). 
The  Kosovo  C  thermal  power  plant  project  is  progressing  well.  However,  there  are  major 
problems to be solved, which include improving the financial viability of the power utility (by 
reducing commercial and non-technical losses), increasing the stability of supply and halting 
the  unsustainable  inflation  of  demand,  upgrading  infrastructure  and  resolving  Kosovo’s 
impending  lignite  shortfall.  There  is  no  progress  to  report  with  regard  to  nuclear  safety  and 
radiation protection. 

4.2.6. 

Information society and media 

Some  progress  can  be  reported  as  regards  electronic  communications.  In  the  mobile 
telephony sector, the second mobile operator has become active on the market. After adopting 
the  regulatory  framework  for  introducing  mobile  virtual  network  operators  (MVNOs)  in 
Kosovo  -  enabling  further  liberalisation  and  competition  between  mobile  services  -  the 
Telecommunications Regulatory authority (TRA) issued two MVNO licences in 2008. 

In  June,  the  assembly  adopted  amendments  to  the  telecommunications  law,  aimed  at 
strengthening  the  independence  of  the  TRA.  It  also  transferred  all  functions  in  respect  of 
spectrum  allocation  and  management  to  the  TRA.  The  Telecommunications  Regulatory 
Authority (TRA) and the Independent Media Commission (IMC) cooperate on the review of 
frequency management plans. 

The TRA adopted a Regulation on ways of resolving conflicts between telecommunications 
service providers in November 2007. 

The  implementation  of  the  sector  policy  (adopted  in  May  2008)  has  been  delayed,  due  to  a 
lack of cooperation between the relevant authorities. There is no progress to report as regards 
increasing  competition  in  the  fixed  telephony  market.  Kosovo  is  at  an  early  stage  of 
liberalisation;  none  of  the  competitive  safeguards,  such  as  carrier  selection,  carrier  pre-
selection, number portability and local loop unbundling, have been decided on. Kosovo still 
does not have its own international phone code. 

Administrative capacity in the Ministry of Transport and Telecommunications (MTT) and in 
the  TRA  is  insufficient.  The  levels  of  human  resources  and  expertise  do  not  enable  it  to 
function adequately. According to the Telecommunications Law, the TRA should be funded 
through licence fees. 

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48 

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There are no developments to report as regards information society services. 

Regarding  audiovisual  policy,  the  work  of  the  Independent  Media  Commission  (IMC)  is 
affected by the lack of sufficient human and financial resources. Re-licensing broadcasters in 
Kosovo requires substantial technical and legal assistance, which is beyond the IMC’s current 
capacity. 

With  22  staff,  the  IMC  lacks  human  resources  and  continues  to  be  confronted  by  financial 
constraints.  It  employs  two  minority  staff  members.  The  assembly  appointed  the  last  two 
members of the IMC Council in March. 

The  IMC  Council  issues  licences,  decides  on  their  renewal,  and  grants  rights  of  broadcast 
frequency  usage  to  authorised  entities.  The  IMC  is  not  systematically  consulted  by  other 
institutions.  Attributing  responsibilities  for  frequency  spectrum  allocation  to  the  TRA  has 
deprived the IMC of revenue. 

The Minority Media Fund, which awards grants to media for minorities, multi-ethnic groups 
and  the  disadvantaged,  has  effectively  been  suspended.  It  distributed  no  grants  in  2007, 
despite  RTK  transferring  €176,000  to  the  Fund.  The  draft  Law  on  the  Management  of  the 
Minority Fund has not been finalised. 

Out of a total of 113 licensed broadcasters in Kosovo, 43 are from minority communities. 

The programme scheme of the State broadcaster (RTK) is in line with Article 6 of the Law on 
RTK. Some 16% of its programming is in minority languages. 

Kosovo’s Press Council and the Kosovo Media Institute are functioning properly. However, 
there remains a legal inconsistency between the Law on Defamation and Insult and the penal 
code. Although the Law on Defamation and Insult decriminalised defamation in 2007, under 
the existing UNMIK penal code defamation remains a criminal offence. 

The  Kosovo  Media  Institute  (KMI)  is  a  non-profit  organisation,  with  a  managing  board 
comprising  ten  members  who  represent  different  Kosovo  media.  The  KMI  started  in 
December 2006, with the primary aim of becoming a training and capacity building centre for 
local journalists. It serves the electronic press, and national, local and minority media. 

The  Law  on  Access  to  Information  provides  for  the  appointment  of  an  Information 
Commissioner, which is still pending. The Law on Copyright still has to be implemented. 

The  funding  of  the  RTK  continues  to  be  problematic.  The  RTK  law  allows  the  IMC  to  set 
advertising thresholds (of up to 20%) year on year. Setting thresholds annually, which usually 
match  the  variations  in  licence  fees,  hampers  the  RTK’s  capacity  to  plan  for  investment  or 
expansion. Ministry of Finance treasury guidelines for the RTK law are too stringent. 

There  are  no  developments  to  report  as  regards  the  adoption  of  relevant  legislation 
implementing the Law on Advertising Thresholds. 

Little  progress  was  made  in  the  area  of  freedom  of  expression  and  media  regulation.  The 
Press  Council  and  the  Media  Institution  are  functioning  properly,  in  spite  of  difficulties  in 
attracting  and  retaining  qualified  staff.  Market  liberalisation  progressed  slightly  as  a  second 
mobile telephony operator started to offer its services. However, the various regulatory bodies 
face budgetary restrictions and outside pressure  

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4.2.7.  Financial control 

The  assembly  adopted  a  new  Law  on  Public  Financial  Management  and  Accountability 
(LPFMA). The LPFMA provides for the establishment of a central unit for the harmonisation 
of financial control, whose role is to develop financial control rules for the public sector and 
to regulate the financial management and accounting system. 

The  government  is  reviewing  the  Internal  Audit  Law.  The  operational  independence  of 
internal audit and the harmonisation with EU standards are due to receive particular attention. 
In November 2007, the central harmonisation unit for internal audit became operational. This 
unit  develops  standards,  trains  internal  auditors,  monitors  internal  audit  developments,  and 
provides quality assurance on internal audit work. 

Most organisations with budgetary responsibilities, including municipalities, have acquired a 
minimum  level  of  audit  capacity.  However,  overall  audit  capacity  needs  to  be  reinforced. 
Managerial accountability, in particular, needs to be strengthened further. 

As regards external audit, the assembly adopted a new Law on the Auditor General (OAG). 
The  law  regulates  the  transfer  of  external  audit  competences  from  UNMIK  to  the  Kosovo 
authorities. The OAG is to remain an independent institution, reporting to the assembly.  

Overall, there has been some progress in the field of financial control. 

4.2.8. 

Statistics 

There has been only limited progress in the area of statistics. 

The statistical infrastructure is weak. The lack of independence of the Statistical Office of 
Kosovo (SOK) is an area of concern. The resources for the work of the Statistical Office are 
inadequate  and  the  coordination  of  the  statistical  system  has  been  weak.  Several  ministries 
have been collecting statistics, which fall within the remit of SOK. 

In the area of classifications and registers, there is no progress to report. Compliance with EU 
and  international  classifications  was  very  limited.  The  area  needs  substantial  further 
development. 

As regards sectoral statistics, there has been minor progress in the area of economic, business 
and  agriculture  statistics.  Pilot  surveys  have  been  conducted  for  producer  price  indices  and 
business  statistics.  The  findings  were  used  as  sources  for  the  national  accounts.  Initiatives 
were  taken  to  develop  tourism  statistics.  In  the  area  of  macro-economic  statistics,  the 
development  of  national  accounts  continues.  In  March  2008,  the  SOK  adopted  a  new 
methodology to estimate household consumption. 

The preparations for the population and housing census have been the main issue as regards 
demographic and social statistics. Preparatory technical work has been carried out and will be 
tested by means of a small-scale pilot census. 

Overall, limited progress can be reported in the field of statistics. SOK is not an independent 
producer  of  official  statistics.  The  SOK  has  insufficient  administrative  and  coordination 
capacity. Progress made is generally confined to the areas where assistance has been given. 

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4.3. 

Justice, freedom and security 

4.3.1.  Visa, border, control, asylum and migration 

Kosovo has no visa regime. The Kosovo Police (KP) has only a limited degree of control on 
the movement of persons into and out of Kosovo. 

The Law on Foreigners was adopted in February and promulgated in June. It includes detailed 
provisions for the naturalisation of foreigners in Kosovo. 

In February 2008, a Law on Travel Documents was adopted. In May 2008, the Ministry of the 
Interior (MoI) started to produce Kosovo passports. The distribution of these passports started 
in  July.  The  passports  are  machine  readable,  but  do  not  carry  biometric  features.  Their 
security features include UV-print, fingerprint imagery and black and white silhouette. 

As regards border and boundary issues, the assembly adopted the Law on Integrated Border 
Management  and  Border  Security  in  May.  The  government  approved  its  Integrated  Border 
Management Strategy in November 2007, but has yet to issue the corresponding action plan. 
The  Border  and  Boundary  Police  (BBP)  services  of  Kosovo  have  started  to  cooperate  with 
their counterparts in Albania, the former Yugoslav Republic of Macedonia and Montenegro. 

The structural set-up of the Ministry of Interior allows for overlap and does not lay down a 
clear distribution of tasks. The capacity of the Directorate for borders, asylum and migration 
within  the  Ministry  of  Interior  remains  insufficient.  The  range  and  combination  of  its 
responsibilities  are  a  cause  for  concern.  The  number  of  representatives  of  the  Kosovo  Serb 
community in the BBP has decreased substantially following the declaration of independence. 
The BBP has no control over some crossing points. Responsibility for the control of the green 
border remains with UNMIK. The BBP carries out some joint patrols with KFOR. 

The  demarcation  process  for  the  border  with  the  former  Yugoslav  Republic  of  Macedonia 
started  in  June.  Sixty-nine  out  of  the  70  planned  main  border  pillars  have  been  placed.  The 
boundary  with  Serbia  is  not  demarcated.  The  border  with  Montenegro  is  not  demarcated 
either, and the border with Albania is only partly marked. There are a number of unofficial or 
seasonal  border  crossings  that  are  not  controlled  or  controlled  only  in  part  by  the  Kosovo 
authorities.  There  are  still  no  formal  integrated  border  management  (IBM)  agreements  with 
neighbouring countries. 

The BBP has neither appropriate communication systems to collect and exchange data on exit 
and entry, nor access to criminal records of people wanting to enter or exit Kosovo. The IT 
system used at the three main border crossings is not compatible with equipment used in the 
EU. There is no exchange of intelligence with other parts of the Kosovo police. 

Cooperation between the different Kosovo agencies involved in IBM is improving. However, 
there are no formal agreements on operational cooperation between the various actors. Further 
efforts are needed with regard to staffing levels and training for the officers involved in border 
management. 

The assembly adopted a Law on  Asylum in  May. The MoI department for  borders, asylum 
and migration has continued to build up its management capacity. However, the department 
has limited capacity to handle asylum cases. There is no reception centre for asylum seekers 
or involuntary returnees. Kosovo receives very few applications for asylum. 

EN 

51 

   EN 

There  has  been  little  progress  on  migration.  In  January  2008,  the  directorate  for  borders, 
asylum  and  migration  took  over  responsibility  for  the  handling  of  returnees  from  third 
countries. There is still no Law on Migration. 

Overall,  there  is  little  progress  to  report  in  the  field  of  border  control  and  asylum.  The 
capacity  of  the  Border  and  Boundary  Police  to  carry  out  effective  border  and  boundary 
control, in particular in northern Kosovo and on the green borders, remains to be significantly 
improved. 

4.3.2.  Money laundering 

The fight against financial crime is a key priority in the European Partnership for Kosovo. 

An action plan on money laundering was adopted in August. 

The Financial Intelligence Centre (FIC) is the supervising entity for non-financial institutions. 
The  Central  Banking  Authority  of  Kosovo  (CBAK)  supervises  the  financial  institutions. 
There  is  good  cooperation  between  the  FIC,  the  CBAK  and  customs.  Cooperation  with  the 
judiciary  and  law  enforcement  bodies  has  improved,  as  recent  high-profile  cases  have 
demonstrated.  Training  courses  have  been  organised  by  the  Kosovo  Police  (KP)  to  enhance 
the financial investigation capacity within the organised crime directorate.  

However,  the  lack  of  expertise  of  the  judiciary  and  law  enforcement  in  investigating  and 
judging  complex  economic  crime  remains  problematic.  The  Kosovo  Special  Prosecution 
Office  has  a  shortage  of  local  and  specialised  prosecutors.  There  are  no  facilities  for  the 
proper  storage  of  evidence.  Communication  between  the  Kosovo  Police  (KP)  economic 
crimes and corruption investigation section and the regional units dealing with financial crime 
remains poor, and there is still no common database. Observance of reporting obligations by 
non-banking  institutions  is  insufficient.  Cooperation  with  the  Kosovo  tax  administration  is 
lacking. The Law against Money Laundering is not adequate and there is insufficient follow-
up  of  reports  of  suspicious  transactions.  There  is  virtually  no  oversight  of  the  real  estate 
sector. Combating money laundering is characterised by a division of competences between 
various local and international bodies.  

Overall,  progress  in  combating  money  laundering  has  been  insufficient.  Money  laundering 
continues to be a very serious problem. 

4.3.3.  Drugs 

Kosovo is located on the Southern Balkans' heroin trafficking route. Heroin shipments from 
Turkey  enter  via  the  border  between  the  former  Yugoslav  Republic  of  Macedonia  and 
Kosovo,  which  is  difficult  to  control.  Shipments  continue  towards  Serbia  and  Hungary  or 
towards Albania. The Kosovo Police (KP) carried out some investigations and confiscations 
during the reporting period. 

The  absence  of  reliable  relevant  statistics  and  a  lack  of  intelligence  have  prevented  the 
drafting  of  an  action  plan  or  a  strategy  to  combat  drugs.  The  KP  lacks  the  skills  and 
equipment  (e.g.  phone  tapping,  sniffer  dogs)  to  effectively  tackle  drug  trafficking.  There  is 
insufficient inter-agency and international cooperation in the fight against drug trafficking. 

Domestic  drug  consumption  is  not  yet  acknowledged  as  a  major  concern  in  Kosovo. 
However, drug abuse has increased. Cases of death through overdose have been reported. 

EN 

52 

   EN 

Overall,  there  has  been  no  progress  to  report.  Drug  trafficking  continues  to  be  a  serious 
problem in Kosovo. 

4.3.4.  Police 

The performance of the Kosovo Police (KP) as regards the maintenance of public order and 
combating minor crime in the majority-populated areas is satisfactory. Laws on the Police and 
on  the  Police  Inspectorate  were  adopted  in  February  2008.  The  Kosovo  Centre  for  Public 
Security, Education and Development was converted into an executive agency of the Ministry 
of Interior in March 2008. 

Following  the  declaration  of  independence,  many  police  officers  from  the  Kosovo  Serb 
community  left  the  service.  In  some  non-majority  areas,  the  functioning  of  the  multi-ethnic 
police force is not fully effective. 

There  has  been  no  improvement  in  the  exchange  of  intelligence  between  different  KP 
structures. Relations with the public prosecution service continue to be difficult. There are no 
obvious  signs  of  either  a  significant  improvement  of  the  investigative  capacities  or  the 
strategic  use  of  intelligence  for  police  purposes.  Salary  levels  for  the  police  are  low.  Police 
detention  facilities  still  do  not  meet  international  standards.  KP's  investigative  and  internal 
control capacities need to be further strengthened. A crime reduction strategy has not yet been 
implemented. There is no strategy for the collection of weapons. Legislation on small arms is 
incomplete and its enforcement is ineffective. There is still no law on forensics and autopsy. 
The KP makes insufficient use of crime statistics as a management tool. 

The  number  and  availability  of  small  arms,  light  weapons  and  explosives,  as  well  as  the 
continuing  presence  of  unexploded  ammunition  circulating  in  Kosovo,  constitute  a  very 
serious  problem.  The  absence  of  a  proper  legislative  framework  leads  to  unregulated  arms 
circulation, which is affecting crime rates and public security in Kosovo. 

Overall,  some  progress  can  be  reported  in  the  field  of  policing,  but  high-level  crime  and 
strategic deficiencies remain serious concerns. 

4.3.5.  Fighting organised crime and terrorism 

There is neither a strategy nor an action plan to combat organised crime. There is no legal 
basis  for  the  management  of  confiscated  assets,  which  results  in  significant  losses  to  the 
Kosovo budget. The absence of a reliable land register is a serious obstacle to the confiscation 
of real estate assets. Combating organised crime is a key priority in the European Partnership 
for Kosovo. 

The determination and capacity required to effectively tackle organised crime is lacking. The 
police tend to focus on maintaining order rather than on organised crime. 

The judiciary lacks the capacity to tackle organised crime seriously. The motivation of public 
prosecutors  and  judges  to  tackle  organised  crime  is  further  undermined  by  the  lack  of 
adequate working conditions, salaries and social protection. 

Kosovo remains an area of origin, transit and destination of victims of trafficking in human 
beings (THB). Victims of trafficking (almost exclusively for sexual exploitation) are mainly 
from Moldova, Russia and Ukraine. A growing number of Kosovo Albanian minors are being 
recruited from among the most vulnerable and disadvantaged families. 

EN 

53 

   EN 

The legislation on THB and organised crime is generally in line with international standards. 

The Deputy Minister of Interior was nominated National Coordinator for Anti-Trafficking. A 
strategy and an action plan for combating THB were adopted in July.  

However,  prosecutors  and  judges  are  poorly  prepared  for  dealing  with  victims  of  THB. 
Prosecutors  are  not  pro-active  and  rely  mostly  on  victims'  declarations.  Some  provisions  of 
the criminal procedural code on THB are not adequate. The lack of a visa regime facilitates 
trafficking  to  and  via  Kosovo.  THB  victims  who  make  victims'  declarations  expose 
themselves to charges of illegal immigration and other offences. 

Cooperation among the central and the regional KP units dealing with THB continues to give 
cause  for  concern.  The  regional  units  lack  support  from  the  central  level,  especially  on 
logistics. The absence of a central database hampers the use of intelligence for targeted action 
against  this  type  of  crime.  Regional  THB  units  do  not  have  unmarked  vehicles  and  lack 
technical equipment. The social reintegration of victims of THB remains problematic. There 
are  few  safe  houses.  A  multi-agency  approach,  based  on  joint  training  and  cooperation  of 
different  state  actors  in  the  fight  against  THB,  is  necessary.  Implementation  of  the  strategy 
and an action plan for combating THB is inadequate. 

As regards the fight against terrorism, the counter terrorism unit continued its activity with 
staff from the KP Crime Directorate, but it is still under the direct responsibility of UNMIK. 
Some specific training activities took place and a plan for further staffing is being developed. 
The preparations in this field are still in their initial stage. 

Overall, very little progress has been made in the area of fighting organised crime. Organised 
crime  continues  to  be  a  serious  problem.  Very  limited  progress  has  been  made  in  the  fight 
against trafficking in human beings. 

4.3.6.  Protection of personal data 

There are no developments to report. There is still no general legislation in place transposing 
the  Data  Protection  Directive  and  no  independent  data  protection  supervisory  authority  has 
been set up. This remains a matter of concern. 

EN 

54 

   EN 

STATISTICAL ANNEX 

STATISTICAL DATA (as of 29 September 2008) 
Kosovo under United Nations Security Council Resolution 1244/99 

Basic data 
Population (thousand) 
Total area of the country (km²) 

National accounts 
Gross domestic product (GDP) (million national currency) 
GDP (million euro) 
GDP (euro per capita) 
GDP (in Purchasing Power Standards (PPS) per capita) 
SI: GDP (in PPS per capita, EU-25=100) 
SI: Growth rate of GDP (national currency, at constant prices, % change on previous year) 
SI: Employment growth (national accounts, % change on previous year) 
Labour productivity growth: GDP growth per person employed (% change on previous year) 
SI: Unit labour cost growth (national accounts, % change on previous year) 
SI: Labour productivity (GDP in PPS per person employed, EU-25=100) 
Gross value added by main sectors (%) 

Agriculture 
Industry 
Construction 
Services 

Final consumption expenditure, as a share of GDP (%) 
Households and NPISH, as a share of GDP (%) 
General government, as a share of GDP (%) 
Gross fixed capital formation, as a share of GDP (%) 
Changes in inventories, as a share of GDP (%) 
Exports of goods and services, relative to GDP (%) 
Imports of goods and services, relative to GDP (%) 

Industry 
Industrial production volume index (2000=100) 

Inflation rate 
SI: Consumer price index (CPI), (total, % change on previous year) 

Balance of payments 
Balance of payments: current account total (million euro) 
Balance of payments current account: trade balance (million euro) 

Note 
1) 

Note 

2) 3) 

4) 
5) 

Note 

Note 

Note 

1998 
: 
10 887 

1999 
: 
10 887 

2000 
: 
10 887 

2001 
: 
10 887 

2002 
1 985 
10 887 

2003 
2 016 
10 887 

2004 
2 041 
10 887 

2005 
2 070 
10 887 

2006 
2 100 
10 887 

2007 
2 127 
: 

1998 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

1999 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

2000 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

1998 
: 

1998 
: 

1998 
: 
: 

1999 
: 

1999 
: 

1999 
: 
: 

2000 
: 

2000 
: 

2000 
: 
: 

2001 
: 
1 624 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
163.1 
101.3 
61.8 
40.7 
: 
16.6 
120.4 

2001 
: 

2001 
: 

2001 
-140 
-962 

2002 
: 
1 735p 
: 
: 
: 
1.2p 
: 
: 
: 
: 

2003 
: 
1 797p 
905p 
: 
: 
3.1p 
: 
: 
: 
: 

: 
: 
: 
: 
151.6 
96.9p 
54.6p 
34.5 
: 
12.5p 
98.6p 

2002 
: 

2002 
-1.0 

2002 
-201 
-871 

: 
: 
: 
: 
147.5 
96.2p 
51.4p 
29.3 
: 
10.4p 
87.1p 

2003 
: 

2003 
0.3 

2003 
-284 
-856 

2004 
: 
3 007p b 
1 473p b 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
109.7p b 
85.3p b 
24.5p b 
19.4p b 
3.9 b 
7.1p b 
40.1p b 

2004 
: 

2004 
-0.8 

2004 
-317 
-971 

2005 
: 
3 068p 
1 482p 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
111.9p 
89.0p 
23.0p 
19.3p 
4.2 
7.0p 
42.5p 

2005 
: 

2005 
-2.1 

2006 
: 
3 192p 
1 520p 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
111.5p 
90.6p 
21.0p 
20.6p 
4.4 
8.9p 
45.5p 

2006 
: 

2006 
-1.5 

2007 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

2007 
: 

2007 
2.8 

2005 
-380 
-1 044 

2006 
-389 
-1 141 

2007 
-536 
-1 360 

EN 

55 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance of payments current account: exports of goods (million euro) 
Balance of payments current account: imports of goods (million euro) 
Balance of payments current account: net services (million euro) 
Balance of payments current account: net income (million euro) 
Balance of payments current account: net current transfers (million euro) 

of which government transfers (million euro) 

Foreign Direct Investment (FDI) in the reporting economy (million euro) 

Public finance 
General government deficit/surplus, relative to GDP (%) 
SI: General government debt, relative to GDP (%) 

Financial indicators 
Gross foreign debt of the whole economy, relative to GDP (%) 
Gross foreign debt of the whole economy, relative to total exports (%) 
Money supply: M1 (banknotes, coins, overnight deposits, million euro) 
Money supply: M2 (M1 plus deposits with maturity up to two years, million euro) 
Money supply: M3 (M2 plus marketable instruments, million euro) 
Total credit by monetary financial institutions to residents (consolidated) (million euro) 
Interest rates: day-to-day money rate, per annum (%) 
Lending interest rate (one year), per annum (%) 
Deposit interest rate (one year), per annum (%) 
euro exchange rates: average of period - 1 euro = … national currency 
Effective exchange rate index (2000=100) 
Value of reserve assets (including gold) (million euro) 

External trade 
Trade balance: all goods, all partners (million euro) 
Value of exports: all goods, all partners (million euro) 
Value of imports: all goods, all partners (million euro) 
Terms of trade (export price index / import price index) 
Share of exports to EU-27 countries in value of total exports (%) 
Share of imports from EU-27 countries in value of total imports (%) 

Demography 
Natural growth rate: natural change (births minus deaths) (per 1000 inhabitants) 
Net migration rate: immigrants minus emigrants (per 1000 inhabitants) 
Infant mortality rate: deaths of children under one year of age per 1000 live births 
Life expectancy at birth: male (years) 
Life expectancy at birth: female (years) 

EN 

Note 

Note 

3) 

Note 

Note 
1) 

56 

: 
: 
: 
: 
: 
: 
: 

1998 
: 
: 

1998 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

1998 
: 
: 
: 
: 
: 
: 

1998 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 

1999 
: 
: 

1999 
: 
: 
: 
: 
: 
: 
: 
: 
: 
1.000 
: 
: 

1999 
: 
: 
: 
: 
: 
: 

1999 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 

2000 
: 
: 

2000 
: 
: 
761 
761 
: 
3 
: 
: 
: 
1.000 
: 
25 

2000 
: 
: 
: 
: 
: 
: 

2000 
: 
: 
: 
: 
: 

269 
1 231 
-725 
185 
1 361 
1 144 
: 

2001 
: 
: 

2001 
: 
: 
971 
1 096 
: 
26 
: 
: 
: 
1.000 
: 
200 

2001 
: 
: 
: 
: 
: 
: 

2001 
: 
: 
: 
: 
: 

217 
1 088 
-622 
149 
1 143 
902 
: 

2002 
8.4 
: 

2002 
: 
: 
998 
1 126 
: 
87 
: 
: 
: 
1.000 
: 
58 

2002 
: 
: 
: 
: 
: 
: 

2002 
: 
: 
11.2 
: 
: 

186 
1 042 
-523 
123 
973 
732 
: 

2003 
2.2 
: 

2003 
: 
: 
891 
1 111 
: 
233 
: 
: 
: 
1.000 
: 
77 

2003 
: 
: 
: 
: 
: 
: 

2003 
12.8 
: 
15.1 
67.0 
71.0 

57 
1 028 
-9 
17 
646 
432 
19 

2004 
2.7 
: 

2004 
: 
: 
713 
1 128 
: 
374 
: 
: 
: 
1.000 
: 
79 

2004 
-1 007 
57 
1 063 
: 
29.4 
39.5 

2004 
14.1 
: 
11.8 
: 
: 

56 
1 100 
-36 
24 
675 
395 
80 

2005 
: 
: 

2005 
: 
: 
572 
1 092 
: 
514 
: 
: 
: 
1.000 
: 
107 

2005 
-1 101 
56 
1 157 
: 
38.4 
37.3 

2005 
14.6 
: 
9.6 
: 
: 

111 
1 252 
-15 
29 
738 
389 
250 

2006 
: 
: 

2006 
: 
: 
: 
: 
: 
637 
: 
: 
: 
1.000 
: 
102 

2006 
-1 195 
111 
1 306 
: 
38.0 
34.4 

2006 
12.8 
: 
12.0 
: 
: 

147 
1 506 
-18 
50 
792 
389 
422 

2007 
: 
: 

2007 
: 
: 
: 
: 
: 
891 
: 
: 
: 
: 
: 
167 

2007 
-1 411 
165 
1 576 
: 
42.0 
36.3 

2007 
12.4 
: 
11.1 
: 
: 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Labour market 
Economic activity rate (15-64): share of population aged 15-64 that is economically active (%) 
SI: Employment rate (15-64): share of population aged 15-64 that is in employment (%) 

Note 

Share of male population aged 15-64 that is in employment (%) 
Share of female population aged 15-64 that is in employment (%) 

SI: Employment rate of older workers (55-64): share of population aged 55-64 that is in 
employment (%) 
Employment by main sectors (%) 

1998 
: 
: 
: 
: 

1999 
: 
: 
: 
: 

2000 
: 
: 
: 
: 

2001 
45.6 
19.6 
31.1 
8.1 

2002 
52.8 
23.8 
39.4 
8.8 

2003 
50.3 
25.3 
42.8 
8.3 

2004 
46.2 
27.7 
46.4 
9.9 

2005 
49.2 
28.5 
45.8 
11.7 

2006 
52.3 
28.7 
46.1 
11.8 

2007 
46.8 
26.2 
40.1 
12.7 

16.7 

18.4 

20.1 

23.9 

25.2 

26.3 

24.6 

Agriculture 
Industry 
Construction 
Services 

SI: Unemployment rate: share of labour force that is unemployed (%) 

Share of male labour force that is unemployed (%) 
Share of female labour force that is unemployed (%) 

Unemployment rate of persons < 25 years: share of labour force aged <25 that is unemployed 
(%) 
SI: Long-term unemployment rate: share of labour force that is long-term unemployed (%) 

Social cohesion 
Average nominal monthly wages and salaries (national currency) 
Index of real wages and salaries (index of nominal wages and salaries divided by the CPI) 
(2000=100) 
SI: Early school-leavers: share of population aged 18-24 having not completed upper 
secondary education and not currently in education or training (%) 

Standard of living 
Number of passenger cars per 1000 population 
Number of subscriptions to cellular mobile telephone services per 1000 population 

Infrastructure 
Density of railway network (lines in operation, per 1000 km²) 
Length of motorways (thousand km) 

Innovation and research 
SI: Spending on human resources (public expenditure on education) relative to GDP (%) 
SI: Gross domestic expenditure on research & development, relative to GDP (%) 
SI: Percentage of households who have Internet access at home (%) 

Environment 
SI: Total greenhouse gases emissions, CO2 equivalent (tons, 1990=100) 
SI: Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP) 
SI: Share of renewable energy in electricity consumption (%) 
SI: Road freight transport as a share of total inland freight transport (modal split of freight 
transport) (%) 

EN 

: 

: 
: 
: 
: 
: 
: 
: 

: 
: 

: 

: 
: 
: 
: 
: 
: 
: 

: 
: 

: 

: 
: 
: 
: 
: 
: 
: 

: 
: 

6.2 
16.9 
8.6 
68.3 
57.1 
51.8 
69.9 

80.0 
47.6 

10.3 
17.2 
11.2 
61.3 
55.0 
45.2 
74.5 

77.7 
47.3 

Note 

1998 
: 
: 

1999 
: 
: 

2000 
: 
: 

2001 
: 
: 

2002 
: 
: 

17.3 
15.4 
11.3 
56.0 
49.7 
40.3 
71.9 

74.9 
42.7 

2003 
: 
: 

24.7 
14.0 
8.0 
53.4 
39.7 
31.5 
60.7 

66.5 
34.9 

2004 
: 
: 

18.8 
14.4 
7.9 
58.9 
41.4 
32.9 
60.5 

70.5 
34.7 

21.4 
12.4 
8.1 
58.2 
44.9 
34.6 
61.6 

75.5 
41.1 

16.9 
14.1 
10.4 
58.3 
43.6 
38.5 
55.2 

70.0 
37.1 

2005 
: 
: 

2006 
: 
: 

2007 
: 
: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

1998 
: 
: 

1998 
: 
: 

1998 
: 
: 
: 

1998 
: 
: 
: 

1999 
: 
: 

1999 
: 
: 

1999 
: 
: 
: 

1999 
: 
: 
: 

2000 
: 
: 

2000 
: 
: 

2000 
: 
: 
: 

2000 
: 
: 
: 

2001 
: 
: 

2001 
: 
: 

2001 
: 
: 
: 

2001 
: 
: 
: 

2002 
: 
: 

2002 
: 
: 

2002 
: 
: 
: 

2002 
: 
: 
: 

2003 
: 
156.3 

2004 
: 
167.4 

2003 
: 
: 

2003 
: 
: 
: 

2003 
: 
: 
: 

2004 
39.5 
: 

2004 
: 
: 
: 

2004 
: 
: 
: 

2005 
49.4 
: 

2005 
: 
0.0 

2005 
: 
: 
: 

2005 
: 
: 
: 

2006 
69.9 
: 

2006 
: 
0.0 

2006 
: 
: 
: 

2006 
: 
: 
: 

2007 
68.7 
: 

2007 
: 
0.0 

2007 
: 
: 
: 

2007 
: 
: 
: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

Note 

Note 

Note 

Note 

57 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Energy 
Primary production of all energy products (thousand TOE) 
Primary production of crude oil (thousand TOE) 
Primary production of hard coal and lignite (thousand TOE) 
Primary production of natural gas (thousand TOE) 

Net imports of all energy products (thousand TOE) 
Gross inland energy consumption (thousand TOE) 
Electricity generation (thousand GWh) 

Agriculture 
Agricultural production volume index of goods and services (producer prices, previous 
year=100) 
Total utilised agricultural area (thousand hectare) 
Livestock: cattle (thousand heads, end of period) 
Livestock: pigs (thousand heads, end of period) 
Livestock: sheep and goats (thousand heads, end of period) 
Production and utilisation of milk on the farm (total whole milk, thousand tonnes) 
Crop production: cereals (including rice) (thousand tonnes, harvested production) 
Crop production: sugar beet (thousand tonnes, harvested production) 
Crop production: vegetables (thousand tonnes, harvested production) 
SI: Structural Indicator  
e: estimate  
f: forecast  
p: provisional  
b: break in series  
1. 
2. 
3. 
4. 
5. 
6. 

Source: Eurostat. 
Source: SOK provisional data for 2004-2006 (at current prices). 
No official national currency exists. Euro is the currency in use. 
Including donor sector. Donor sector includes UNMIK, donor grants (DDGs). 
Investment: including donor sector, general government, private investment (Housing and Other). 
Production of coal in 1 000 tones; data collected from the Kosovo (under UNSCR 1244) Energy Corporation (KEK). 

Note 

6) 

1998 
: 
: 
: 
: 
: 
: 
: 

1999 
: 
: 
: 
: 
: 
: 
: 

2000 
: 
: 
: 
: 
: 
: 
: 

2001 
: 
: 
: 
: 
: 
: 
: 

2002 
: 
: 
5 528 
: 
: 
: 
3.2 

2003 
: 
: 
6 466 
: 
: 
: 
3.2 

2004 
: 
: 
5 658 
: 
: 
: 
3.5 

2005 
: 
: 
6 391 
: 
: 
: 
4.0 

2006 
: 
: 
6 532 
: 
: 
: 
4.0 

2007 
: 
: 
6 715 
: 
: 
: 
4.3 

Note 

1998 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

: 

: 
: 
: 
: 
: 
: 
: 
: 

: 

: 
: 
: 
: 
: 
: 
: 
: 

: 

: 
289 
59 
193 
: 
: 
: 
: 

: 

539 
347 
75 
230 
: 
459 
: 
169 

: 

: 
319 
110 
116 
: 
396 
: 
135 

: 

: 
: 
: 
: 
: 
: 
: 
: 

: 

: 
335 
55 
106 
: 
408 
: 
150 

: 

: 
352 
47 
152 
: 
441 
: 
289 

: 

: 
392 
68 
113 
: 
392 
: 
172 

: 

: 
: 
: 
: 
: 
: 
: 
: 

EN 

58 

EN