Communication from the Commission to the European Parliament and the Council - Kosovo - Fulfilling its European Perspective
Date: 2009-10-14
Institutions: European Commission
Subjects: EU aid, European integration, Kosovo, UN Security Council, accession criteria, pre-accession strategy

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 14.10.2009 
COM(2009) 534 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 

Kosovo∗ - Fulfilling its European Perspective 

∗  

Under UNSCR 1244/1999 

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1. 

THE PURPOSE OF THIS COMMUNICATION 

In  its  2008  Enlargement  Strategy,  the  Commission  announced  its  intention  to  present  a 
feasibility  study  on  Kosovo1.  In  December  2008,  the  Council  welcomed  the  Commission's 
proposal to present a study examining means to further Kosovo's political and socio-economic 
development.  It  recalled  the  EU's  willingness  to  assist  the  economic  and  political 
development  of  Kosovo  through  a  clear  European  perspective,  in  line  with  the  European 
perspective of the region. 

The  Commission  issued  a  communication  on  Kosovo  in  April  20052.  The  Commission  has 
regularly  informed  EU  Member  States  of  developments  in  Kosovo.  The  purpose  of  this 
communication  is  to  take  stock  of  developments  since  then,  identify  the  challenges  on 
Kosovo's road to Europe, confirm the measures it should take to address these challenges, and 
propose  Community  instruments  to  help  Kosovo  further  its  political  and  socio-economic 
development.  As  Kosovo  shares  its  European  perspective  with  the  rest  of  the  Western 
Balkans,  the  regional  context  is  of  particular  importance.  Kosovo  needs  to  keep  pace  with 
developments in the region to promote economic growth and foster political stability. This is 
in the interest of Kosovo as well as the Western Balkans and the European Union as a whole.  

Kosovo  declared  independence  on  17  February  2008.  To  date,  Kosovo's  independence  has 
been recognised by 62 countries. Kosovo also adopted a constitution, which is based on the 
Comprehensive  Proposal  for  the  Kosovo  Status  Settlement.  The  International  Civilian 
Representative supervises the implementation of this proposal3.  

The  United  Nations  Mission  in  Kosovo  has  been  reconfigured;  United  Nations  Security 
Council Resolution 1244/99 continues to apply. UNMIK's functions include monitoring and 
reporting,  facilitating  Kosovo's  external  representation  and  the  Pristina-Belgrade  dialogue, 
and activities related to practical issues concerning Serb-majority areas in Kosovo4.  

At the request of the UN General Assembly, the International Court of Justice is preparing an 
advisory  opinion  on  whether  Kosovo's  declaration  of  independence  is  in  accordance  with 
international law. The Court's opinion is expected in 2010.  

2. 

THE EU'S COMMITMENT TO KOSOVO 

EU Member States decide on their relations with Kosovo in accordance with national practice 
and  international  law.  22  EU  Member  States  have  recognised  Kosovo's  independence.  The 
absence  of  an  agreed  position  on  Kosovo's  status  does  not  prevent  the  EU  from  substantial 
engagement with Kosovo.  

The EU has appointed an EU Special Representative5 to advise and support Kosovo's political 
process and ensure the consistency of EU action. The EU has also deployed its largest civilian 

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Under UNSCR 1244/1999. 
A European Future for Kosovo - COM(2005) 156, 20.4.2005. 
The ICR reports to the International Steering Group on Kosovo 
Report by the UN Secretary General on the United Nations Interim Administration Mission in Kosovo 
(UNMIK) for the information of the members of the Security Council of 12 June 2008. 
Council Joint Action 2008/123/CFSP of 4 February 2008. 

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ESDP mission to date in Kosovo6. EULEX monitors, mentors and advises Kosovo on the rule 
of law, notably on police, justice and customs, and retains certain executive responsibilities.  

Kosovo  participates  in  the  EU's  Stabilisation  and  Association  Process  for  the  Western 
Balkans.  In  March  2007,  enhanced  SAP  Tracking  Mechanism  structures  were  set  up.  They 
provide for regular dialogue on innovation, the internal market, good governance, agriculture, 
the  economy  and  infrastructure.  The  EU  has  set  out  reform  priorities  for  Kosovo  in  the 
European Partnership of 18 February 20087.  

In July 2008, the Commission organised a donors' conference for Kosovo, which resulted in 
€ 1.2 billion in pledges, including more than € 500 million from the Community budget. The 
EU  and  its  Member  States  pledged  almost  €  800  million.  Kosovo  continues  to  benefit  from 
EC  financial  assistance  under  the  Instrument  for  Pre-accession  Assistance,  CARDS8,  the 
Instrument  for  Stability  and  other  initiatives.  It  remains  eligible  for  macro-financial 
assistance.  

3. 

KOSOVO'S PROGRESS TOWARDS EUROPE 

In its 2005 Communication A European Future for Kosovo, the Commission concentrated on 
the economic aspects of Kosovo's development, institution-building and the regional context. 
Kosovo has made some progress in these areas since 2005, but important challenges remain.  

The Commission's Progress Reports since 2006 confirm that Kosovo has made progress in its 
approximation  to  European  standards.  The  presentation  of  a  Medium-Term  Expenditure 
Framework  in  2008  and  2009  marked  progress  towards  a  sustainable  fiscal  framework  for 
Kosovo. In June 2009, Kosovo became a member of the International Monetary Fund and the 
World  Bank.  The  establishment  of  the  Agency  for  Coordination  of  Development  and 
European  Integration  in  2008  is  an  important  step  towards  improving  Kosovo’s  donor 
coordination and its European approximation efforts. Kosovo has been involved in work on 
the  Stability  Pact  and  its  transition  to  the  Regional  Cooperation  Council.  It  participates  in 
numerous regional cooperation initiatives9. 

However,  in  its  approximation  process  to  the  EU,  Kosovo  needs  to  match  the  adoption  of 
legislation  with  adequate  implementation  and  enforcement.  Kosovo's  economy  has  a  large 
informal  sector,  and  its  economic  governance,  regulatory  framework  and  business 
environment  remain  areas  of  concern.  Its  businesses  lack  export  capacity.  Kosovo  needs  to 
improve the coverage and efficiency of its social protection system and move towards a more 
strategic  approach  to  employment.  Kosovo's  public  administration  continues  to  be  weak. 
Kosovo's  participation  in  regional  fora  has  become  increasingly  difficult.  The  Central 

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Council Joint Action 2008/124/CFSP of 4 February 2008. 
Council Decision 2008/213/EC. 
Community Assistance for Reconstruction, Development and Stabilisation 
Kosovo  participates  in  the  Energy  Treaty  Community  (ETC),  the  European  Common  Aviation  Area 
Agreement  (ECAA),  the  South-East  Europe  Transport  Observatory  (SEETO),  the  Central  European 
Free Trade Area Agreement (CEFTA) and the EU Charter for Small Enterprises. Kosovo has joined the 
Broadband Southeast Europe Initiative (bSEE), the Electronic Southeast Europe Initiative (eSEE), the 
Regional  School  for  Public  Administration  (ReSPA),  the  Southeast  European  Cooperative  Initiative 
(SECI),  two  regional  environmental  initiatives  (RENA  and  ECENA)  and  the  Investment  Compact 
initiative. This list is not exhaustive. 

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European  Free  Trade  Area  Agreement  has  not  been  able  to  solve  the  blockade  of  Kosovo 
exports to Serbia and transit trade to Bosnia and Herzegovina.  

4. 

DELIVERING ON KOSOVO'S EU PERSPECTIVE 

The  EU  has  repeatedly  confirmed  that  Kosovo  shares  its  European  perspective  with  the 
region.  In  December  2007,  the  European  Council  confirmed  that  the  EU  would  be  ready  to 
assist Kosovo's economic and political development through a clear European perspective, in 
line with the European perspective of the region. In February 2008, the Council reaffirmed its 
commitment  to  fully  and  effectively  support  the  European  perspective  for  the  Western 
Balkans and asked the Commission to use Community instruments to promote economic and 
political  development  and  to  propose  to  the  broader  region  concrete  measures  in  order  to 
advance in that direction. In December 2008, the EU again underlined 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. 

The region has made considerable progress in the area of European integration. All countries 
have  negotiated  Stabilisation  and  Association  Agreements  with  the  EU.  Croatia  and  the 
former Yugoslav Republic of Macedonia have candidate status. At the request of the Council, 
the  Commission  is  preparing  an  opinion  on  the  membership  application  received  from 
Montenegro. The Council has received an application for membership from Albania. Kosovo 
needs to keep pace with these developments in the interest of political stability and economic 
progress of the region.  

In  its  Communication  Western  Balkans:  Enhancing  the  European  Perspective10  of  March 
2008, the Commission identified the Community instruments to promote democratic reform, 
economic  progress  and  good  neighbourly  relations.  Kosovo  faces  a  number  of  important 
challenges, which Community instruments could help it meet. The benefits that Kosovo can 
draw from these instruments depend on its progress on reform. Kosovo needs to consolidate 
its  European  agenda,  ensure  sustained  socio-economic  development,  strengthen  sectoral 
approximation and constructively engage in regional cooperation. The EU can help Kosovo in 
these efforts. 

The  Commission  welcomes  the  fact  that,  notwithstanding  EU  Member  States'  differing 
positions  on  Kosovo's  status,  the  approach  of  diversity  on  recognition,  but  unity  in 
engagement provides a constructive basis for progress. In line with Council conclusions, the 
EU can agree on measures to support Kosovo's political and economic development without 
prejudice to EU Member States' positions on status.  

5. 

CONSOLIDATING KOSOVO'S EUROPEAN AGENDA 

Kosovo has repeatedly confirmed its determination to make progress on its European agenda. 
EU  approximation  continues  to  be  the  driving  force  for  reform  in  Kosovo.  In  April  2008, 
Kosovo adopted its Plan for European Integration. Kosovo updated its European Partnership 
Action Plan in August 2009. 

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Western Balkans: Enhancing the European Perspective - COM(2008) 127, 5.3.2008. 

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The  conclusions  of  the  2009  Progress  Report  for  Kosovo  confirm  that  Kosovo  faces  major 
challenges. Kosovo has to make further progress in establishing and consolidating the rule of 
law  and  needs  to  improve  the  functioning  and  independence  of  its  judiciary.  It  needs  to 
establish a track record in the fight against corruption, money laundering and organised crime, 
demonstrating  concrete  results.  Kosovo  also  needs  to  strengthen  the  capacity,  independence 
and  professionalism  of  its  public  administration  and  improve  its  business  environment, 
including  regulation,  supervision  and  corporate  governance.  Kosovo  has  to  ensure  full 
transparency in senior public appointments and make sure that public procurement complies 
with  criteria  of  independence,  objectivity  and  transparency.  Kosovo  needs  to  establish  a 
sustainable macro-economic and fiscal policy.  

Kosovo needs to ensure the local elections scheduled for November 2009 are conducted in a 
fair  and  transparent  manner.  Minority  communities  must  be  fully  associated  in  the 
decentralisation process. Kosovo needs to improve the protection of Serb and other minorities 
and enhance dialogue and reconciliation between the communities. Social cohesion must be 
strengthened. Kosovo needs to develop an efficient and effective public administration. When 
preparing legislation, Kosovo shall make full and timely use of the international expertise it 
has  at  its  disposal.  The  priority  must  be  to  ensure  proper  implementation  of  adopted 
legislation,  including  the  allocation  of  appropriate  staffing  and  equipment.  It  is  essential 
Kosovo take a constructive and pragmatic approach to regional cooperation. 

The  Commission  proposes  to  target  IPA  resources  to  support  the  rule  of  law,  public 
administration reform and efforts to improve Kosovo's business environment, notably through 
twinning. Support for infrastructure will also be considered. 

6. 

BRINGING KOSOVO CITIZENS CLOSER TO THE EU  

A number of countries in the region have made substantial progress in the area of freedom of 
movement. In return for agreements on re-admission, they have been able to benefit from visa 
facilitation  agreements  with  the  EU.  Visa  liberalisation  roadmaps  have  provided  crucial 
guidance  on  issues  such  as  the  security  of  documents,  the  fight  against  organised  crime, 
migration and border security. Progress has been monitored and evaluated through dialogue at 
senior official level. The prospect of visa-free travel has been a powerful incentive for these 
countries to carry out reforms. As a result, the Commission has proposed the relevant Council 
Regulation11  be  amended  to  make  citizens  of  the  former  Yugoslav  Republic  of  Macedonia, 
Montenegro and Serbia eligible for visa-free travel to the EU as from January 2010. Citizens 
from  Albania  and  Bosnia  and  Herzegovina  could  also  benefit  from  this  as  soon  as  these 
countries meet the remaining requirements. 

Kosovo  started  issuing  its  own  passports  in  July  2008.  The  process  for  individual  Kosovo 
citizens to apply for visas has been made easier. Most EU Member States use the flexibility 
offered by EU legislation to simplify procedures to issue short-stay visas to individual Kosovo 
residents.  

Kosovo  citizens  need  to  share  further  in  the  benefits  of  EU  approximation,  including  the 
possibility  to  travel  visa-free  in  the  EU.  This  is  only  possible  if  Kosovo  can  ensure  that 
relevant  reforms  are  implemented  and  rules  and  procedures  are  respected  so  as  to  minimise 

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Council Regulation (EC) No 539/2001. 

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the  associated  security  risks  for  EU  Member  States.  The  starting  point  for  these  reforms  is 
properly  functioning  readmission  arrangements.  Kosovo  needs  to  adapt  its  legislation, 
strengthen  its  administrative  capacity  to  process  readmission  requests  and  implement  an 
effective reintegration strategy. It also needs to enhance the security of its borders and secure 
the management of civil registries and the issuance of documents. 

The  Commission  proposes  to  move  forward  with  a  structured  approach  to  bring  Kosovo's 
citizens  closer  to  the  EU  through  a  visa  dialogue  with  the  perspective  of  eventual  visa 
liberalisation  when  the  necessary  reforms  will  have  been  undertaken.  Based  on  a  thorough 
assessment  the  Commission  proposes  to  draft  a  comprehensive  strategy  to  guide  Kosovo's 
efforts to meet the EU's requirements for visa liberalisation. This strategy will set benchmarks 
to measure Kosovo’s progress in the context of a visa dialogue and will be presented to the 
Council for information.  

The  Commission  will  regularly  assess  Kosovo's  progress  in  the  implementation  of  the 
strategy,  drawing  on  evaluation  missions  by  Member  State  and  Commission  experts.  The 
Commission will support Kosovo in the implementation of its strategy through technical and 
financial  assistance.  In  addition,  within  the  wider  framework  of  the  rule  of  law  and  as  a 
corollary  to  EULEX's  activities,  the  Commission  will  explore  the  possibility  of  involving 
Kosovo in judicial cooperation initiatives at the regional level. The arrangements for Kosovo 
to cooperate and be associated with the work of Europol, Eurojust and Frontex require further 
examination, including through the possible involvement of EULEX12. 

7. 

SUSTAINING KOSOVO'S SOCIO-ECONOMIC DEVELOPMENT  

Kosovo's  social  and  political  stability  depends  on  sustained  economic  development  and 
strengthened  social  cohesion.  Kosovo  has  been  relatively  little  affected  by  the  global 
economic crisis due to its limited integration into global markets. However, inflows of foreign 
direct  investment  and  remittances  are  expected to  decrease.  Levels  of  public  investment  are 
expected  to  drop  as  government  revenues  come  under  increasing  pressure.  Kosovo's  budget 
deficit is forecast to increase to 7% of GDP in 2009.  

Kosovo  faces  serious  economic  challenges.  According  to  the  International  Monetary  Fund, 
Kosovo's GDP per capita is €1,726, wh ich is 6.9% of the EU-27 average. Kosovo continues to 
face  a  considerable  deficit  in  trade  in  goods  and  services.  Kosovo's  overall  trade  deficit  is 
estimated at 43% of GDP in 2009. High external imbalances reveal underdeveloped domestic 
production capacity and points at significant vulnerabilities.  

In  addition  to  implementing  sustainable  macro-economic  policies,  Kosovo  needs  to  address 
supply-side constraints such as infrastructure weaknesses, energy shortages, high capital costs 
and  low  levels  of  skill.  It  is  essential  for  Kosovo  to  improve  the  competitiveness  of  its 
economy, increase productivity and strengthen its export sector. 

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Europol:  Article  42  of  the  Europol  Convention  and  the  Council  Act  of  3  November  1998;  Eurojust: 
Article 26a of Decision 2002/187/EC as amended; Frontex: Article 14 of Council Regulation (EC) No 
2007/2004 as amended by Regulation (EC) No 863/2007.  

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7.1. 

Trade 

Trade and the capacity to trade are essential to attract investment, stimulate growth and ensure 
socio-economic development. The EU is Kosovo's main trading partner. EC trade preferences 
have  been  granted  to  Kosovo  under  EC  autonomous  trade  measures13.  However,  these 
preferences  will  expire  at  the  end  of  2010.  Kosovo  does  not  currently  benefit  from  a 
Stabilisation and Association Agreement (SAA) or Interim Agreement (IA). The progressive 
entry  into  force  of  the  respective  SAAs/IAs14  for  the  rest  of  the  Western  Balkans  and  the 
expiry  of  the  current  preferential  regime  will  therefore  result  in  a  deterioration  of  Kosovo's 
trading position, in both absolute and relative terms. In addition, Kosovo cannot benefit from 
the diagonal cumulation of origin between the EU and most SAP countries, which limits the 
development  of  regional  trade  complementarities.  This  also  reduces  the  attractiveness  of 
Kosovo to foreign investors and limits the ability of Kosovo producers to export to the EU.  

For  Kosovo  to  continue  to  benefit  from  the  current  preferential  regime,  this  regime  would 
need  to  be  extended.  However,  the  validity  of  an  extension  would  only  be  temporary.  EU-
Kosovo  trade  relations  based  solely  on  autonomous  trade  preferences  do  not  offer  a 
substantive perspective for the sustainability of Kosovo’s long-term economic development. 
Such  a  perspective  can  only  be  provided  through  a  trade  agreement  between  the  European 
Community and Kosovo.  

A trade  agreement  offers important advantages  for  both  Kosovo  and  the  EU.  An  agreement 
provides a legal framework offering stability and predictability to investors. It is also wider in 
scope,  guaranteeing  market  access  in  parallel  with  progress  on  intellectual  property  rights, 
competition,  standards  compliance  and  administrative  cooperation.  The  prospect  of  an 
agreement will constitute an important incentive for Kosovo to advance with its reforms in all 
areas affecting the internal market, including administrative capacity. Equally, it will require 
Kosovo to conduct an effective trade policy and manage its borders. Finally, an agreement is a 
precondition for Kosovo to participate in the diagonal cumulation of origin between the EU 
and SAP countries.  

Kosovo  is  not  yet  ready  to  negotiate  and  implement  a  trade  agreement.  For  example,  the 
administrative capacity to ensure the effective implementation of antitrust policy and state aid 
regulation  needs  to  be  prepared.  As  regards  intellectual  property  rights,  key  elements  of 
industrial  property  rights  legislation  are  in  place,  but  Kosovo  still  needs  to  build  the  basic 
administrative capacity to ensure compliance. Kosovo also needs to make significant progress 
in legislative alignment in the area of copyright legislation and enforcement. It also needs to 
make  significant  progress  in  the  legislative  and  institutional  structures  affecting  trade  in 
goods,  including  sanitary  and  phyto-sanitary  matters.  The  institutional  framework  to  ensure 
adequate  accreditation,  certification,  standardisation  and  market  surveillance  needs  to  be 
applied effectively.  

The  Commission  will  assess  Kosovo's  progress  in  enhancing  its  capacity  and  undertaking 
reforms  in  areas  most  relevant  to  a  trade  agreement.  It  will  identify  the  measures  Kosovo 
needs  to  take.  Once  Kosovo  meets  the  relevant  requirements,  the  Commission  will  propose 

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Council Regulation (EC) No 2007/2000 as last amended by Commission Regulation (EC) No 407/2008 
of 7 May 2008. 
Former  Yugoslav  Republic  of  Macedonia  (SAA  —  April  2004),  Montenegro  (IA  —  January  2008), 
Bosnia and Herzegovina (IA — July 2008) and Albania (SAA — April 2009). The SAA with Serbia 
was signed in April 2008.  

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negotiating  directives  for  the  Community  to  start  negotiations  on  a  trade  agreement  in  due 
time.  To  maintain  current  trade  relations  pending  progress  towards  a  trade  agreement,  the 
Commission  will  prepare  the  extension  of  the  autonomous  trade  measures.  Kosovo,  as  a 
participant in the Stabilisation and Association Process, will be included in the extension of 
the  pan-euro-Mediterranean  cumulation  of  origin  to  the  Western  Balkans  through  the 
Convention on pan-euro-Mediterranean preferential rules of origin.  

7.2.  Macro-economic and fiscal sustainability  

A  sustainable  macro-economic  and  fiscal  framework  is  essential  for  Kosovo's  development. 
The EU and other donors have supported the establishment of a Medium-Term Expenditure 
Framework in support of this objective. The MTEF has become a key component of Kosovo's 
budget cycle.  

In 2008, Kosovo and the Commission initiated a consultative Fiscal Surveillance Mechanism, 
in  close  cooperation  with  the  IMF.  This  mechanism  helps  Kosovo  prepare  for  its  smooth 
integration  into  existing  EU  economic  and  fiscal  monitoring  frameworks.  Kosovo  needs  to 
develop  its  capacity  to  implement  a  coherent  and  co-ordinated  set  of  macro-economic  and 
fiscal policies. Subject to its progress in this regard, Kosovo will be invited to participate in 
the regular economic and fiscal reporting framework that has been established for the Western 
Balkans  and  submit  an  annual  medium-term  Economic  and  Fiscal  Programme.  The 
Commission will continue to support Kosovo's efforts to progress in this direction and hold a 
regular dialogue to monitor economic developments.  

7.3. 

Private sector development 

Small  and  medium-sized  enterprises  are  estimated  to  make  a  contribution  of  some  40%  to 
Kosovo's GDP and 60% of its employment and constitute 99% of its businesses. SMEs play a 
key role in enhancing productivity, innovation and job creation. Support for the sector needs 
to  be  improved  to  provide  incentives  for  entrepreneurship  and  transform  informal 
entrepreneurial activity into formal businesses.  

Kosovo would benefit from programmes aimed to raise the competitiveness of its economy, 
focusing on the adoption of new technology, increased productivity, reduced labour costs and 
the  generation  of  jobs.  Such  programmes  should  help  increase  the  transparency  of  business 
regulation,  including  licences,  permits  and  certification,  and  effective  and  independent 
supervision, and offer support for networking initiatives.  

Kosovo  needs  to  make  further  progress  with  privatisation.  Kosovo  would  benefit  from  the 
further development of micro-finance institutions to support small businesses in sectors with 
growth  potential,  including  agriculture,  rural  tourism,  small-scale  manufacturing  and  urban 
services.  

increased  European  Investment  Bank 

Kosovo  would  benefit  from  membership  of  the  European  Bank  for  Reconstruction  and 
Development  and 
lending.  Kosovo's  business 
environment  and  its  SMEs  in  particular  would  benefit  from  increased  participation  in  and 
closer association with relevant EU initiatives, the Small Business Act and the 7th Framework 
Programme  for  Research.  Provided  Kosovo  meets  the  relevant  conditions,  the  Commission 
proposes it participate in activities that take place within these frameworks, with the help of 
technical and financial assistance, where appropriate.  

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7.4. 

Employment and social policies 

Kosovo’s  very  high  unemployment  (estimated  at  around  40%  in  2008)  is  a  drain  on  its 
economy.  Youth  unemployment  is  a  particular  challenge  with  approximately  75%  of  young 
people out of work. Kosovo needs to tackle unemployment strategically by a combination of 
carefully  coordinated  measures.  The  capacity  of  job  centres  should  be  improved  and  links 
with universities and schools further developed so as to bridge the gap between education and 
the workplace. Kosovo would benefit from introducing work incentive schemes for recipients 
of social assistance who are able to work.  

The EU can help Kosovo by associating it with its efforts to promote access to employment 
for  all,  improve  dialogue  with  social  partners  and  civil  society  and  better  target  its 
employment  and  social  policies.  In  this  regard,  the  Commission  will  present  a  study  on 
“Social  Protection  and  Social  Inclusion  in  Kosovo”,  which  will  help  prepare  Kosovo  for 
enhanced  coordination  of  social  and  employment  policies.  The  Commission  proposes  to 
associate  Kosovo  with  the  Progress15  programme,  which  is  open  to  the  Western  Balkans.  It 
will support Kosovo's participation in regional cooperation efforts on employment and social 
policies  within  the  framework  of  the  South-East  Europe  Employment  and  Social  Policy 
Network  and  the  SEE  Health  Network.  The  Commission  proposes  to  engage  with  the 
secretariat  of  the  Roma  Decade  to  develop  Kosovo's  association  and  help  efforts  to  include 
minority communities in social protection and inclusion measures.  

7.5. 

Education, training and research  

Kosovo's population is young, with an average age of 26. Around one third of the population 
are  under  15  and  more  than  half  are  below  25.  In  the  next  five  years,  200 000  people  will 
reach  working  age  and  enter  the  labour  market.  Given  its  very  high  levels  of  youth 
unemployment, education is a key priority for Kosovo.  

Kosovo  needs  to  raise  education  standards,  reduce  school  drop-out  levels  and  make  its 
education  system  more  inclusive.  Particular  priority  should  be  given  to  improving  teachers' 
skills, upgrading existing educational establishments, and expanding the reach of schools and 
colleges  to  enrol  students  from  all  communities.  Secondary  vocational  training,  adult 
vocational  training  and  life-long  learning  would  benefit  from  increased  funding.  Curricula 
should focus on employability.  

The  Tempus  programme  will  continue  to  support  higher  education  reform  in  Kosovo.  In 
addition to the University of Pristina, the University of Mitrovica has also started to submit 
projects. Kosovo universities, students, teachers, young people and youth organisations need 
to take full advantage of the opportunities offered under the Erasmus Mundus and Youth in 
Action  programmes.  The  Commission  proposes  to  increase  funding  under  IPA  for  Tempus, 
Erasmus  Mundus  and  Youth  in  Action,  ring-fence  allocations,  where  appropriate,  and 
increase outreach to eligible actors.  

The  Commission  will  explore  with  Kosovo  opportunities  and  arrangements  to  associate 
Kosovo's  educational  institutions  with  some  Lifelong  Learning  Programme  activities.  The 
Commission  will  also  explore  with  the  European  Training  Foundation  ways  to  enhance  the 
Foundation's activities in Kosovo and increase awareness of EU education-related activities. 

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Community Programme for Employment and Social Solidarity. 

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Within the framework of quality assurance mechanisms, the Commission will start a dialogue 
with the Kosovo authorities to help increase the quality of curricula for all communities. The 
Commission will examine ways to support the establishment of an EU studies department at 
Pristina University.  

Research  is  important  for  Kosovo's  socio-economic  development  and  provides  for  the 
opportunity to intensify regional cooperation activities. The Western Balkans are associated to 
the  EU's  7th  Framework  Programme  for  Research.  Kosovo  is  entitled  to  participate  as  an 
international cooperation partner. It has nominated an FP7 contact point and is working on a 
national  action  plan  to  strengthen  its  research  capacity.  Kosovo's  involvement  in  the  EU's 
research activities needs to continue and increase16.  

7.6. 

Culture and Europe for Citizens 

Respect for cultural and religious heritage is an essential element of reconciliation, trust and 
stability.  It  can  also  make  an  important  contribution  to  Kosovo's  socio-economic 
development.  Kosovo  has  made  progress  in  the  protection  and  restoration  of  cultural  and 
religious  heritage. 
the  Reconstruction 
Implementation Commission and the Technical Forum on Cultural Heritage has been helpful 
and  needs  to  continue.  Kosovo  needs  to  build  on  its  investment  in  this  sector  as  part  of  a 
comprehensive  development  strategy.  This  strategy  needs  to  reflect  the  involvement  of  all 
stakeholders,  in  both  its  design  and  implementation.  It  needs  to  pay  particular  attention  to 
tackling unregulated activities on, or in the vicinity of heritage sites. 

the  Ljubljana  Process, 

Its  participation 

in 

Several countries  of  the  Western Balkans participate in the Culture and Europe for Citizens 
programmes.  Participation  in  these  programmes  is  based  on  a  framework  agreement  on  the 
general principles governing their participation in Community programmes. Kosovo does not 
currently  benefit  from  such  an  agreement.  However,  participation  in  these  programmes  will 
bring  people  in  Kosovo  closer  to  the  European  project.  Pending  a  framework  agreement, 
actions  strengthening  the  capacity  of  civil  society  organisations,  municipalities  and  cultural 
operators  and  facilitating  their  networking  with  EU  and  regional  counterparts  will  be 
supported  through  IPA.  The  Commission  will  explore  the  possibility  of  facilitating  cultural 
exchanges  and  scholarships  by  broadening  the  scope  of  the  Young  Cell  Scheme,  currently 
limited to law, to include the area of culture as well.  

8. 

TAKING SECTORAL APPROXIMATION A STEP FURTHER 

8.1. 

Energy 

Intermittent electricity supply is a major obstacle to economic growth and increasing foreign 
direct  investment  in  Kosovo.  Without  a  secure  and  sustainable  supply  of  energy,  Kosovo's 
economic development will be limited.  

Privatising parts of the power sector will remove a significant drain on the Kosovo budget and 
enable  investment  in  other  priority  areas.  It  will  also  lead  to  increases  in  efficiency  and 
effectiveness  of  power  supply.  Bill  collection  needs  to  improve  to  enable  the  power 
companies to ensure a more secure and reliable supply. However, privatisation is only part of 

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Kosovo is included in the list of International Cooperation Partner Countries (ICPCs) attached to the 7th 
RDT FP work programmes. 

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the  solution.  Kosovo  also  needs  to  increase  its  involvement  in  regional  arrangements  for 
energy  cooperation  and  production,  implement  measures  to  reduce  energy  demand,  and 
increase its use of renewables and alternative means of energy generation.  

Kosovo's continued participation in the Energy Community Treaty is essential. Kosovo needs 
to both intensify and widen the scope of its participation, including in the inter-transmission 
compensation  mechanism  and  the  capacity  allocation  mechanisms.  All  parties  in  the  region 
need  to  allow  Kosovo  to  benefit  as  an  equal  partner  in  these  mechanisms.  Kosovo's  energy 
suppliers,  regulatory  bodies  and  other  operators  need  to  take  full  advantage  of  existing 
regional cooperation arrangements. Kosovo needs to share in the benefits that derive from EU 
initiatives in the area of energy efficiency and renewables. This is also in the interest of the 
region at large.  

8.2. 

Transport 

Kosovo  urgently  needs  to  improve  its  transport  infrastructure.  Kosovo  has  initiated  a  major 
road-building  programme.  However,  the  programme  represents  a  significant  burden  on  the 
Kosovo budget. Alternative funding needs to be mobilised. This should be part of a balanced 
approach that also favours investment in railways and allows funding for road maintenance as 
well  as  new  construction.  Kosovo  needs  to  continue  its  efforts  to  implement  the  European 
Common Aviation Area Agreement, including the aviation acquis.  

The  Transport  Community  Treaty  aims  to  accompany  progressive  transposition  of  the 
transport acquis by signatories with gradual regional and EU market integration. The treaty is 
of key importance to Kosovo. All parties to the treaty need to ensure Kosovo's inclusion so 
that  it  can  participate  fully  in  related  initiatives.  Kosovo  needs  to  start  implementing  a 
calendar  to  apply  the  land  transport  acquis  and  benefit  from  regional  market  integration 
provisions.  

8.3. 

Environment 

Kosovo's environment has been damaged by years of pollution and neglect. Kosovo's power 
plants  are  estimated  to  generate  25  tons  of  ash  and  dust  per  hour,  or  74  times  the  level 
permitted by EU standards. Water is also an area of concern. Only 70% of the population are 
to  sewage 
connected 
systems. Improving  Kosovo's  environment  is  an  imperative  for  improving  the  health  of  its 
citizens. Kosovo continues to make good progress in the legal transposition of EU standards. 
However,  it  lacks  the  capacity  and  resources  to  ensure  adequate  implementation.  Less  than 
1% of the Kosovo budget goes to finance environmental activities.  

to  drinking  water  supplies  and  only  a 

is  connected 

third 

Kosovo benefits  from  EU  regional environmental  activities,  such  as  the  assistance  currently 
provided through the Regional Environment Centre in adopting, implementing and enforcing 
legislation.  It  also  participates  in  the  Regional  Environment  Network  for  Accession,  which 
will  help  Kosovo  through  exchanges  of  best  practice,  administrative  capacity-building and 
training. The  Commission  proposes 
through 
the Infrastructure Project Facility, to support the preparation of projects, which IFI funding in 
turn would help implement.  

to  complement 

these  efforts, 

including 

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9. 

EFFECTIVE AND INCLUSIVE REGIONAL COOPERATION  

Regional  cooperation is  an  essential  element of EU policy for South-East Europe. Kosovo's 
regional cooperation is key for its European approximation agenda. Its continued participation 
and  integration  in  regional  cooperation  initiatives  is  of  commercial,  economic  and  political 
importance.  

UNMIK has been the signatory to a number of regional cooperation arrangements on behalf 
of  Kosovo.  The  mandate  of  the  reconfigured  UNMIK  includes  the  ‘facilitation  of  Kosovo’s 
external representation’. However, UNMIK's capacity is limited. Kosovo would benefit from 
a constructive and pragmatic approach in its efforts to enhance cooperation with countries in 
the  neighbourhood.  Kosovo  needs  to  make  strategic  use  of  the  means  at  its  disposal.  The 
Kosovo government needs to issue a clear and comprehensive set of guidelines for all public 
institutions  to  apply  consistently  at  all  levels  of  regional  cooperation.  Kosovo  needs  to 
participate  fully  in  the  newly-established  Regional  School  for  Public  Administration.  All 
parties to the relevant agreement need to ensure Kosovo's inclusion.  

The  Commission  echoes  the  call  of  the  EU  delegation  at  the  Regional  Cooperation  Council 
meeting at Chisinau in June 2009 urging all parties concerned to adopt a constructive attitude 
in  finding  pragmatic  ways  of  ensuring  the  inclusive  character  of  regional  cooperation  in 
South-East  Europe.  The  Commission  strongly  encourages  all  parties  to  seek  practical  and 
pragmatic solutions and is ready to facilitate all efforts to this effect.  

10. 

MARKING A NEW STAGE IN THE EU-KOSOVO DIALOGUE 

Kosovo is part of the Stabilisation and Association Process. The first meetings were held in 
2003.  The  SAP's  enhanced  Tracking  Mechanism  was  established  in  2007.  To  mark  a  new 
stage  in  EU-Kosovo  relations,  the  STM  should  develop  into  an  enhanced  policy  dialogue 
focused on progress with reform and cooperation.  

The plenary  meeting should  be  the occasion to discuss the priorities  for Kosovo's European 
agenda.  Sectoral  meetings  will  be  modelled  on  the  political  dialogue  with  candidate  and 
potential candidates. They will centre on Kosovo's European agenda, institution-building and 
the  adoption,  implementation  and  enforcement  of  European  standards.  Cross-cutting  issues 
such as public administration reform and judiciary merit in-depth discussion.  

Meetings will be subject to a regular schedule allowing for effective preparation, coordination 
and monitoring of Kosovo's delivery on commitments. This is important to target assistance 
and reflect the outputs of peer assessment reviews. Sectoral meetings will be held in Pristina 
as well as in Brussels allowing increased participation by Commission services. To increase 
civil  society  involvement  in  the  approximation  process,  a  meeting  with  civil  society 
organisations will be held each year.  

The  Commission  proposes  to  rename  the  process  'Stabilisation  and  Association  Process 
Dialogue'. 

11. 

MAKING BETTER USE OF EC FINANCIAL ASSISTANCE  

Kosovo  has  benefited  from  substantial  EC  financial  assistance.  At  the  2008  donors' 
conference  for  Kosovo,  the  Commission  pledged  more  than  € 500  million.  Under  the  IPA 

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programme,  Kosovo  received  € 359  million  over  the  period  2007-2009.  The  current  Multi-
Annual  Indicative  Financial  Framework  2010-2012  allocates  another  € 206  million  to 
Kosovo.  Under  direct  management  of  the  Commission's  Liaison  Office  in  Pristina,  Kosovo 
has made good progress in IPA implementation. It needs to build on this.  

IPA assistance needs to be targeted on a limited number of key priorities, which need to be 
closely  aligned  with  Kosovo's  European  reform  agenda  and  reflect  costed  sector  strategies. 
Project  selection  should  reflect  improved  planning,  prioritisation  and  sequencing,  and  better 
coordination  with  other  donors.  The  possibility  to  associate  other  donors  with  IPA 
management in areas where these have a comparative advantage will be explored. Following 
the donors' conference, Kosovo's ownership of IPA projects should be strengthened. 

Cross-border  Cooperation  under  component  II  of  the  IPA  programme  can  make  a  valuable 
contribution to reconciliation and good neighbourly relations. In addition, CBC's 'learning-by-
doing'  approach  would  contribute  to  local capacity-building.  The  Commission  considers  the 
progressive mobilisation of IPA component II for Kosovo both timely and appropriate. 

12. 

CONCLUSIONS AND RECOMMENDATIONS 

The European Council has repeatedly confirmed that Kosovo shares the European perspective 
of  the  Western  Balkans.  This  communication  identifies  the  Community  instruments  the  EU 
can  mobilise  to  promote  Kosovo's  political  and  socio-economic  development.  Kosovo  has 
achieved a certain political stability, but the security situation remains fragile. Kosovo must 
not be left behind as the Western Balkans region progresses towards the EU.  

EU  Member  States  have  different  views  on  Kosovo's  status.  However,  this  should  be  no 
obstacle  to  substantive  progress  in  EU-Kosovo  relations.  The  approach  of  diversity  on 
recognition,  but  unity  in  engagement  is  working  and  should  be  strengthened.  Without 
prejudice  to  Kosovo's  status,  the  Commission  proposes  the  EU  take  a  number  of  practical 
steps  to  ensure  Kosovo's  continued  progress  towards  Europe.  As  Kosovo  progresses  in  the 
implementation of its European agenda, the Commission proposes to:  

•  Move  forward  with  a  structured  approach  to  bring  Kosovo's  citizens  closer  to  the  EU 
through  a  visa  dialogue  with  the  perspective  of  eventual  visa  liberalisation  when  the 
necessary reforms will have been undertaken and the conditions met; 

•  Extend  the  Autonomous  Trade  Measures  and,  once  Kosovo  meets  the  relevant 

requirements, propose negotiating directives for a trade agreement in due time;  

•  Facilitate  Kosovo's  participation  in  the  pan-euro-med  cumulation  of  origin,  once  a  trade 

agreement is in place;  

•  Progressively  integrate  Kosovo  into  the  economic  and  fiscal  surveillance  framework  that 

has been established with the Western Balkans;  

•  Examine the opportunity of a framework agreement with Kosovo on the general principles 
of  its  participation  in  Community  programmes,  and  on  this  basis  prepare  negotiating 
directives;  

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•  Strengthen and deepen Kosovo's participation in the Stabilisation and Association Process 

through establishing a regular 'SAP Dialogue'; 

•  Progressively  activate  the  IPA  cross-border  co-operation  component  (component  II)  for 

Kosovo.  

The Commission will support the above initiatives through financial and technical assistance.  

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