Commission staff working document - Kosovo under UNSCR 1244/99 2009 progress report accompanying the Communication from the Commission to the European Parliament and the Council Enlargement Strategy and Main Challenges 2009-2010 {COM(2009) 533 final}
Date: 2009-10-14
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, 14.10.2009 
SEC(2009) 1340 

COMMISSION STAFF WORKING DOCUMENT 

KOSOVO UNDER UNSCR 1244/99 2009 PROGRESS REPORT 

accompanying the 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Enlargement Strategy and Main Challenges 2009-2010 

{COM(2009) 533 final} 

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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 ......................................................................................................................... 5 

Relations between the EU and Kosovo........................................................................ 5 

Political criteria ............................................................................................................ 6 

Democracy and the rule of law .................................................................................... 6 

Human rights and the protection of minorities .......................................................... 11 

Regional issues and international obligations ............................................................ 19 

Economic criteria ....................................................................................................... 21 

The existence of a functioning market economy ....................................................... 21 

The capacity to cope with competitive pressure and market forces within the Union
.................................................................................................................................... 25 

4. 

European standards .................................................................................................... 27 

4.1. 

Internal market ........................................................................................................... 27 

4.1.1.  Free movement of goods............................................................................................ 27 

4.1.2.  Movement of persons, services and right of establishment ....................................... 28 

4.1.3.  Free movement of capital........................................................................................... 28 

4.1.4.  Customs and taxation ................................................................................................. 29 

4.1.5.  Competition................................................................................................................ 31 

4.1.6.  Public procurement .................................................................................................... 31 

4.1.7. 

Intellectual property law ............................................................................................ 32 

4.1.8.  Employment and social policies................................................................................. 33 

4.1.9.  Education and research .............................................................................................. 34 

4.1.10.  WTO issues ................................................................................................................ 35 

4.2. 

Sectoral Policies ......................................................................................................... 36 

4.2.1. 

Industry and SMEs..................................................................................................... 36 

4.2.2.  Agriculture and fisheries ............................................................................................ 36 

4.2.3.  Environment............................................................................................................... 37 

4.2.4.  Transport policy ......................................................................................................... 38 

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4.2.5.  Energy ........................................................................................................................ 39 

4.2.6. 

Information society and media................................................................................... 41 

4.2.7.  Financial control......................................................................................................... 42 

4.2.8.  Statistics ..................................................................................................................... 43 

4.3. 

Justice, freedom and security ..................................................................................... 44 

4.3.1.  Visa, border management, asylum and migration...................................................... 44 

4.3.2.  Money laundering ...................................................................................................... 45 

4.3.3.  Drugs .......................................................................................................................... 46 

4.3.4.  Police.......................................................................................................................... 46 

4.3.5.  Fighting organised crime and terrorism ..................................................................... 47 

4.3.6.  Protection of personal data......................................................................................... 48 

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COMMISSION STAFF WORKING DOCUMENT 

KOSOVO UNDER UNSCR 12/4499 2009 PROGRESS REPORT 

1. 

INTRODUCTION 

1.1. 

Preface 

Since March 2002, the Commission has reported regularly to the Council and 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 Kosovo1 and 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  from  early  October  2008  to  mid-September  2009. 
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  EU 
Member  States,  the  EU  Special  Representative  in  Kosovo,  the  EU  rule  of  law  mission 
(EULEX), 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. 

In parallel to this report, the Commission has adopted a Communication "Kosovo* – Fulfilling 
its European Perspective" to the European Parliament and the Council.  

1 
2 

3 
* 

Under UNSCR 1244/1999. 
Until  September,  the  rapporteur  for  Kosovo  was  Mr.  Joost  Lagendijk.  Since  September,  the  new 
rapporteur is Ms Ulrike Lunacek. 
Enlargement Strategy and Main Challenges 2009-2010 (COM(2009) 533 of 14.10.2009). 
Under UNSCR 1244/1999. 

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1.2. 

Context 

During  the  reporting  period,  the  UN  Secretary  General  (UNSG)  issued  three  reports  on 
Kosovo. The November 2008 report led to the full deployment of EULEX under the umbrella 
of UN authority. In March 2009, the UNSG noted the accelerated process of reconfiguring the 
UN  mission  in  Kosovo  (UNMIK)  with  a  view  to  adapting  its  functions  to  the  changed 
circumstances on the ground. The June 2009 report indicated that the remaining functions of 
UNMIK,  reduced  to  about  10%  of  its  strength  compared  to  last  year,  would  include 
monitoring,  reporting  and  facilitating,  where  necessary  and  possible,  arrangements  for 
Kosovo's international engagement. 

KFOR, the NATO-led international military presence in Kosovo, continues to be responsible 
for overall security. In recognition of the evolving situation in Kosovo, KFOR has initiated a 
gradual reduction of its presence in theatre. 

In  April,  the  International  Court  of  Justice  received  36  written  submissions  presenting 
arguments  on  whether  Kosovo's  declaration  of  independence  is  in  accordance  with 
international law. 

In June, Kosovo became a member of the International Monetary Fund and the World Bank. 

To  date,  Kosovo  has  been  recognised  by  62  UN  Member  States,  including  22  EU  Member 
States. 

1.3. 

Relations between the EU and Kosovo 

Kosovo  is  participating  in  the  Stabilisation  and  Association  Process.  Plenary  meetings  of 
the Stabilisation and Association Process Tracking Mechanism (STM) were held in December 
2008 and June 2009. Six sectoral STM meetings were held in the areas of innovation, internal 
market,  good  governance,  economy,  infrastructure  and  agriculture  during  the  first  half  of 
2009. 

In  December  2008,  EULEX  was  deployed  throughout  the  territory  of  Kosovo,  assuming 
responsibilities  in  the  areas  of  police,  customs  and  the  judiciary.  The  mission  reached  full 
operational  capacity  in  April.  Recent  incidents  resulted  in  damage  to  EULEX  property; 
Kosovo needs to ensure continuing support for EULEX's work 

In February, the European Parliament adopted a resolution underlining the European Union’s 
commitment  to  playing  a  leading  role  in  ensuring  the  stability  of  Kosovo  and  the  Western 
Balkans  as  a  whole  and  reiterated  its  willingness  to  assist  the  economic  and  political 
development  of  Kosovo  by  offering  clear  prospects  for  EU  membership.  The  second 
European  Parliament-Kosovo  inter-parliamentary  meeting  took  place  in  April.  A  joint 
statement was issued, expressing satisfaction with the overall stability of the political situation 
in Kosovo.  

In  February,  the  Council  renewed  for  12  months  the  mandate  of  the  EU  Special 
Representative in Kosovo, enabling him to continue with his close working relationship with 
the  Kosovo  authorities.  The  EU  Special  Representative  is  also  the  International  Civilian 
Representative for Kosovo. 

In March, the authorities organised a High-Level Forum for Donor Coordination as a follow-
up to the Donor Conference for Kosovo organised by the European Commission in July 2008. 

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Kosovo's  authorities  gave  an  account  of  achievements  and  challenges  in  key  sectors  of 
reform. Donors expressed their continuing support for Kosovo's European agenda. 

Kosovo continues to benefit from the Instrument for Pre-accession Assistance (IPA), macro-
for  Reconstruction,  Development  and 
financial  assistance,  Community  Assistance 
Stabilisation  (CARDS),  the  Instrument  for  Stability  (IfS)  and  other  sources  of  funding. 
Almost € 500 million has been committed for Kosovo through IPA over the years. The latest 
Multi-annual Indicative Planning Document 2009-2011, which identifies the main areas and 
priorities of IPA assistance, was adopted in July. Over € 103 million has been allocated in the 
IPA Annual Programme for 2009. The EC continues to support the strengthening of the rule 
of law, public administration reform, communities, culture and youth, wider socio-economic 
issues including trade and regional development, education and employment, and agriculture. 
In April, the government appointed the chief executive of the Agency for the Coordination of 
Development and European Integration as Kosovo's IPA coordinator. 

For  the  improvement  of  civil  society  participation  in  policy  dialogue  and  formulation  €1.7 
million is set aside under IPA 2008. Areas, such as environment and equal opportunities (anti-
discrimination measures and social inclusion of vulnerable groups) receive special attention. 
A further €3 million are foreseen under IPA 2009 for the benefit of civil society, including the 
protection  of  minority  rights  and  empowerment  of  disadvantaged  groups.  The  European 
Instrument for Democratisation and Human Rights also supports these issues.  

In response to the economic crisis, an IPA crisis package has been created, comprising €200 
million for the Western Balkan region which are expected to leverage investments of at least 
€1 billion, co-financed by the partner financial institutions. Kosovo will benefit from a share 
of  multi-beneficiary  funds  for  competitiveness, SMEs, energy efficiency and banking sector 
regulation.  Kosovo  benefits  from  a  share  of  the  €85  million  of  multi-beneficiary  funds 
programmed  to  boost  competitiveness,  support  SMEs,  energy  efficiency  and  banking  sector 
regulation in the Western Balkans. In addition, annual IPA funds were programmed to boost 
the  infrastructure  investments.  A  total  of  €25  million  were  committed  to  the  Infrastructure 
Project  Facility  for  two  projects  on  water/sewage  networks  and  the  improvement  of  district 
heating. 

2. 

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 
cooperation, good neighbourly relations with enlargement countries and Member States, and 
respect  for  international  obligations,  such  as  cooperation  with  the  International  Criminal 
Tribunal for the former Yugoslavia (ICTY). 

2.1. 

Democracy and the rule of law 

Constitution 

The  Constitution  of  Kosovo  is  in  line  with  European  standards,  which  require  stability  of 
institutions  guaranteeing  democracy,  the  rule  of  law,  human  rights  and  respect  for  and 

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protection  of  minorities.  Ensuring  full  respect  for  the  rule  of  law,  human  rights  and  the 
protection of minorities is a key priority in the European Partnership of 18 February 2008.4 

Parliament  

The  assembly  annual  work  plan  for  2009  has  been  adopted  and  is  in  line  with  the 
government’s legislative strategy. During the reporting period the assembly carried out its ex 
ante responsibilities as regards the budget. It intervened to safeguard the funding allocated to 
institutions, and reviewed reports on their expenditure ex post.  

The interaction between the assembly and civil society has improved. The assembly appointed 
the Ombudsman in June 2009. However, dialogue between the assembly and civil society is 
not sufficiently developed.  

The  assembly  adopted  a  resolution  on  Kosovo's  priorities  and  strategies  for  EU  integration. 
The assembly action plan was adopted in February. It provides guidance and allocates tasks to 
all  assembly  committees  for  overseeing  the  government’s  implementation  of  the  European 
Partnership  priorities.  The  assembly  committee  for  European  integration  is  tasked  with 
monitoring  the  effective  implementation  of  the  action  plan.  The  committee's  financial  and 
administrative  capacity  needs  strengthening.  Cooperation  between  this  committee  and  the 
Agency  for  Coordination  of  Development  and  European  Integration  needs  to  be  developed 
further.  Assembly  committees  need  to  improve  their  administrative  capacity  and  technical 
skills to scrutinise legislation. Parliamentary oversight of the executive branch needs further 
improvement.  

The  2009  work  plan  for  the  Central  Election  Commission  has  been  adopted.  The  chief 
executive  of  the  Commission's  Secretariat  was  appointed  in  May.  The  Political  Parties 
Registration  Office  has  been  established  but  is  not  yet  fully  operational.  The  Commission 
continues to rely heavily on OSCE support. Its capacity is weak and staff turnover is high. 

Overall,  the  assembly  has  made  some  progress  in  a  number  of  areas,  notably  as  regards 
streamlining its working procedures. The capacity to scrutinise draft legislation and monitor 
its implementation after adoption is in need of further improvement. Parliamentary oversight 
of government needs to be enhanced.  

Government  

The main structures of government have been put in place and function in line with relevant 
constitutional provisions. Most senior positions have now been filled with the appointment of 
the Deputy Ministers for Trade, Foreign Affairs and the Kosovo Security Force.  

Political stability has been maintained. The government consolidated further its capacities by 
establishing the Ministry for the Kosovo Security Force, the Kosovo Security Council and the 
Kosovo Intelligence Agency. However, democratic oversight of Kosovo security sector needs 
to be strengthened. 

In  January,  the  government  presented  its  2008  annual  report  to  the  assembly.  The  Law  on 
Foreign Service and the Law on Consular Services of Diplomatic and Consular Missions have 
been  adopted.  In  March,  the  government  organised  a  high  level  forum  taking  stock  of 

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progress made since the Donors’ Conference for Kosovo of July 2008 and updating donors on 
the implementation of reforms. 

The government continued to build its capacity for EU approximation and to strengthen the 
Agency  for  Coordination  of  Development  and  European  Integration.  A  revised  European 
Partnership Action Plan was adopted in August. This is an important step forward, but further 
prioritisation  is  needed.  The  government  now  needs  to  focus  on  its  implementation.  The 
Agency is acquiring a growing role in this respect. A new director has been appointed and the 
Agency's  working  structures  have  been  approved.  The  January  strike  by  its  employees  was 
resolved. However, the Agency needs more consistent political guidance from the ministerial 
council for European integration. The government's delivery on EU integration commitments 
needs  to  be  significantly  improved.  The  Agency  for  Coordination  of  Development  and 
European Integration needs to assume a central role in this regard, with increased high-level 
political support to carry out its mandate. 

There  has  been  some  progress  in  the  area  of  local  government  administration  reform  and 
decentralisation,  which  is  a  key  European  Partnership  priority.  Working  groups  have  been 
formed  on 
legislative  reform,  establishment  of  new  municipalities,  devolution  of 
competencies  and  resources,  information  campaigns,  donor  coordination  and  capacity 
building.  The  Ministry  of  Local  Government  Administration  adopted  the  medium-term 
strategy 2009-2012. Local elections have been announced for 15 November. Kosovo needs to 
ensure that they are conducted in line with international standards. A particular challenge will 
be to ensure that all communities take part in the elections. 

However,  inter-ministerial  cooperation  and  coordination  remain  weak.  The  Law  on 
Government has not been adopted. The central policy guiding role of ministerial councils is 
not fully implemented. The capacity of local government is still weak. The Law on the City of 
Pristina has not yet been adopted. An effective mechanism to monitor and assess the quality 
of service delivery by municipalities is still lacking.  

The security situation remains of concern in the north. The government needs to strengthen its 
efforts in this respect. Further efforts are needed to address the reluctance of Kosovo Serbs to 
take active part in Kosovo's institutions, including in the forthcoming local elections. 

There have been cases of political interference in appointments to key civil service positions 
(including  senior  civilian  positions  within  ministries,  boards  of  publicly-owned  enterprises, 
Ombudsman's  office,  Constitutional  Court).  This  has  affected  the  credibility  of  Kosovo’s 
institutions to manage appointment processes in a fair and transparent manner.  

Overall,  the  recently  established  government  structures  function  and  political  stability  has 
been  maintained.  Some  progress  has  been  made  as  regards  the  adoption  of  legislation  and 
capacity  building.  There  has  been  certain  progress  in  local  government  reform.  Effective 
implementation  of  decentralisation  to  the  benefit  of  all  communities  remains  a  major 
challenge. Inter-ministerial coordination needs further strengthening. Political interference in 
high level appointments is an issue of concern.  

Public administration  

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The  review  of  tasks  and  responsibilities  within  the  public  administration  (the  functional 
review) has been completed and the majority of its recommendations implemented. Separate 
reviews  have  been  completed  for  the  Ministry  of  Public  Services,5  the  Ministry  of  Local 
Government Administration, the Ministry of Internal Affairs and the Kosovo Land Registry. 
Six  working  groups  have  been  set  up  to  oversee  the  public  administration  reform  process. 
They report to the inter-ministerial committee chaired by the Deputy Prime Minister.  

During the reporting period, the Independent Oversight Board resolved 166 appeals by public 
administration  employees.  The  Board  is  an  autonomous  body  reporting  directly  to  the 
assembly  of  Kosovo.  The  last  two  of  two  of  overall  eight  members  were  appointed  by  the 
assembly in July. 

However, important legislation relating to public administration reform is yet to be adopted, 
notably laws on the civil service, on salaries and on the organisation of public administration 
institutions.  These  laws  are  essential  in  ensuring  the  independence  of  the  civil  service.  A 
clearer  distinction  is  needed  between  civil  servants  and  political  appointments.  The  Senior 
Public  Appointments  Committee  is  not  fully  functional.  This  has  hampered  the  recruitment 
process  for  senior  positions  in  ministries.  The  administrative  capacity  of  the  Committee's 
Secretariat remains limited. The office of the Ombudsman needs to be strengthened further. 

Training and certification of civil servants continues to be provided by the Kosovo Institute of 
Public  Administration.  However,  the  Institute  has  limited  capacity  and  resources,  which 
affects  the  quality  and  amount  of  training  provided.  It  needs  to  be  better  integrated  in  the 
activities  of  the  Regional  School  for  Public  Administration.  Further  efforts  are  needed  to 
reinforce the capacity of  institutions in  charge of  public  administration  reform  as  well  as  to 
allow the transfer of knowledge and best practices across the region. 

Overall,  there  has  been  some  progress  as  regards  public  administration  reform  with  the 
completion and the continuing implementation of the functional review. Key legal acts need 
to  be  adopted.  Ensuring  the  delivery  of  public  services  to  all  people  in  Kosovo  and 
establishing a professional, accountable, accessible, representative public administration free 
from  political  interference  is  a  key  European  Partnership  priority.  This  has  not  been  fully 
guaranteed. The capacity of Kosovo's public administration remains weak. Substantial efforts 
are needed to ensure the transparency of public appointments.  

Judicial system 

The  Law  on  the  Constitutional  Court  has  been  adopted.  The  six  Kosovan  judges,  including 
two representatives of minority communities, were nominated by the Assembly in May and 
appointed by the President in June. The International Civilian Representative also appointed 
the three international judges in June. However, Kosovo has still to adopt a package of four 
reform  laws:  on  Courts,  on  Kosovo  Judicial  Council,  on  Prosecution  and  on  Prosecutorial 
Council.  

The Ministry of Justice gained new responsibilities in the field of  international  cooperation. 
As  of  March,  its  department  for  legal  affairs  handles  requests  from  other  countries,  such  as 
extraditions,  executing  court  sentences,  transferring  criminal  records,  etc.  UNMIK  remains 
responsible  for  international  judicial  cooperation  with  countries  that  have  not  recognised 

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Kosovo,  including  for  requests  coming  from  Serbia.  It  continues  to  be  the  point  of  contact 
with Interpol. A clear procedure for international legal cooperation needs to be adopted and 
consistently followed by courts and prosecutors. The administrative capacity of the ministry 
remains weak. Its legal department needs strengthening. 

During the reporting period, Kosovo adopted a number of other important laws related to the 
judiciary: the Law on Notaries, the Law on Contested Procedure (Civil Procedure Law), the 
Law  on  the  Bar,  the  Law  on  Mediation,  the  Law  on  Supplementing  and  Amending  the 
Kosovo Criminal Code, and the Law on Supplementing and Amending the Kosovo Code of 
Criminal Procedure. The Law on the Temporary Composition of the Kosovo Judicial Council 
was  adopted  in  December.  The  Council  members  were  appointed  in  July;  the  Council  is 
already  operational.  However,  the  law  contains  provisions  which  are  not  in  line  with 
European  standards. Its delayed implementation disrupted the activities of the Council, thus 
impacting  on  the  continuity  of  court  management  and  the  conduct  of  disciplinary 
investigations for sitting judges.  

Allegations  of  corruption  and  misconduct  in  the  judiciary  have  not  been  adequately 
investigated. The Office of the Disciplinary Counsel responsible for this activity is not fully 
functional. The Judicial Audit Unit has issued recommendations regarding the functioning of 
the courts that have not been properly taken into account by the Kosovo Judicial Council. The 
process of vetting and re-appointing judges and prosecutors in Kosovo has started under the 
supervision  of  the  Independent  Judicial  and  Prosecutorial  Commission.  However,  the 
reluctance of judges and prosecutors from the Kosovo Serb community to be involved in this 
process  remains  an  issue  of  concern.  The  Committee  for  bar  examination  is  not  functional, 
which has narrowed the participation in the process. 

Courts across Kosovo  have  been  equipped with new computers, allowing the installation of 
the  court  management  information  system  software  and  the  registration  in  the  system  of  all 
case  data  from  the  old  registry  books.  The  system  is  operational  in  most  Kosovo  courts; 
training on how to use it continues.  

EULEX judges and prosecutors have been deployed. The Law on Jurisdiction, Case Selection 
and  Case  Allocation  of  EULEX  Judges  and  Prosecutors  in  Kosovo  was  adopted.  EULEX 
made  100  judicial  decisions  and  pronounced  27  verdicts,  mostly  in  criminal  cases.  The 
mission has also initiated an investigation into allegations of organ trafficking. 

There have been several strikes in the judicial sector. This has resulted in further undue delays 
in a number of trials. There has been no significant improvement in reducing the backlog of 
civil  and  criminal  cases,  including  by  the  Supreme  Court.  The  Special  Chamber  of  the 
Supreme  Court  responsible  for  cases  related  to  privatisation  is  paralysed,  due  to  the  lack  of 
local judges. This is a matter of serious concern. Cooperation between the prosecutor's office 
and the police is limited.  

There  has  been  no  progress  in  dealing  with  cases  related  to  the  March  2004  events.  The 
handling of criminal cases in this context continues to be complicated by a number of issues, 
such as the disappearance of evidence and witnesses’ statements, the displacement of people, 
the  refusal  of  some  Kosovo  Police  officers  to  cooperate  and  the  intimidation  of  witnesses, 
judges  and  prosecutors.  The  court  in  northern  Mitrovicë/Mitrovica  is  composed  of  EULEX 
judges and prosecutors only and works with limited capacity. Rule of law in northern Kosovo 
is not guaranteed. Both Kosovo and Serb authorities need to make efforts in this respect.  

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Overall, Kosovo is at an early stage in addressing priorities in the area of justice. The justice 
system  remains  weak,  vulnerable  to  political  interference  and  inefficient.  There  is  a 
considerable backlog of cases. The structural problems of Kosovo's prosecution service need 
to be addressed. Kosovo's Judicial Council does not function effectively. Kosovo's judiciary is 
still  in  need  of  a  major  reform  and  the  government  needs  to  ensure  the  participation  of  the 
Kosovo  Serb  community  in  the  process.  The  Kosovo  Serbs  also  need  to  take  proactive  and 
constructive steps in this regard. Ensuring full respect for the rule of law is a key European 
partnership priority. 

Anti-corruption policy  

Kosovo  has  made  limited  progress  in  tackling  corruption.  The  Kosovo  Anti-Corruption 
Agency  is  now  fully  operational  and  staffed.  The  Agency  signed  a  series  of  memoranda  of 
understanding  with  other  relevant  institutions,  such  as  the  Independent  Judicial  and 
Prosecutorial  Commission  (to  allow  exchange  of  information  on  corruption  cases  in  the 
judiciary system), the Financial Intelligence Centre, the Head of EULEX Prosecutors and the 
Ombudsperson. 

However, the legal framework for tackling corruption needs to be urgently improved. Kosovo 
still needs to adopt the Law on the Declaration and Control of Assets and amendments to the 
Law on Anti-Corruption and to the Law on Conflicts of Interest. The anti-corruption strategy 
and  action  plan  are  yet  to  be  adopted.  To  date,  there  is  no  law  on  the  financing  of  political 
parties.  The  strength  of  the  supervisory  mechanisms  and  the  lack  of  transparency  regarding 
the funding of political parties remain issues of serious concern. The institutional framework 
remains  fragmented.  There  is  a  lack  of  cooperation  among  relevant  actors,  notably  between 
the Agency and the prosecutor's office. The inter-ministerial working group on anti-corruption 
has also failed to deliver tangible results.  

Overall,  there  has  been  limited  progress  in  the  fight  against  corruption,  which  is  a  key 
European  partnership  priority.  Corruption  remains  prevalent  in  many  areas  in  Kosovo  and 
continues to be a very serious concern. The legislative and institutional framework needs to be 
strengthened.  Cooperation  between  the  Agency  and  the  prosecutor's  office  needs  to  be 
improved. Kosovo needs to develop a track record of investigations, indictments, prosecutions 
and convictions in anti-corruption cases. 

2.2. 

Human rights and the protection of minorities 

Observance of international human rights law  

Kosovo’s cooperation with human rights bodies is limited since Kosovo is not a member of 
the  UN  nor  of  the  Council  of  Europe.  Consequently,  Kosovo's  citizens  do  not  have  the 
possibility to lodge a complaint with the European Court of Human Rights against Kosovo's 
authorities.  As regards the promotion and enforcement  of human  rights,  in December  2008, 
the  government  approved  the  strategy  and  the  action  plan  on  human  rights  for  the  period 
2009-2011.  

However,  the  mechanisms  to  ensure  their  implementation  are  not  yet  in  place.  Some 
municipal  human  rights  units  are  not  operational,  in  particular  in  Kosovo  Serb  majority 
municipalities, which are reluctant to cooperate with the central authorities. The Ombudsman 
office has only limited oversight as regards Serbian parallel structures. The human rights units 

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at the central level (e.g. Ministry of Justice, Ministry of Public Administration) mandated to 
implement the Ombudsman’s recommendations are not yet fully operational.  

Overall, there has been some progress in this area, notably the adoption of the human rights 
strategy  and  action  plan.  However,  the  institutional  framework  for  the  observance  of 
international human rights norms in Kosovo needs to be significantly strengthened. Ensuring 
full respect for human rights is a key European Partnership priority. 

Civil and political rights 

As  regards  the  prevention  of  torture  and  ill-treatment  and  the  fight  against  impunity, 
Kosovo’s  response  to  the  2007  report  of  the  European  Committee  for  the  Prevention  of 
Torture  and  Inhuman  or  Degrading  Treatment  or  Punishment  was  made  public  in  January. 
The recommendations of this report were taken into consideration by the Ministry of Internal 
Affairs and by the Kosovo Police. 

Investigations  of  serious  violations,  including  in  police  detention  centres,  continue  to  be 
carried out by the Police Inspectorate of Kosovo. The Police Inspectorate is independent and 
reports to the Minister of Internal Affairs. Investigations of minor offences are carried out by 
the Professional Standards Unit of the police. 

The  Ministry  of  Justice  is  taking  steps  to  address  complaints  of  misconduct  in  prisons  and 
detention centres. The victim, advocacy and assistance division within the Ministry continues 
to  provide  assistance  to  victims  of  domestic  violence  and  trafficking.  Impunity  remains  an 
issue of concern. For many offences, the authorities still need to identify the perpetrators and 
bring them to justice as well as to protect and compensate victims. 

Overall,  there  has  been  some  progress  in  addressing  torture  and  ill-treatment.  The  fight 
against impunity remains an issue of importance for reconciliation between communities. 

The  Office  for  Missing  Persons  and  Forensics  continued  to  develop  its  capacity  with  the 
support  of  EULEX.  During  the  reporting  period,  it  performed  41  field  operations  (26 
exhumations  resulting  in  the  excavation  of  23  bodies  and  the  assessment  of  15  additional 
potential  sites).  The  Office  has  intensified  its  work  sending  about  two  hundreds  new  bone 
samples for DNA analysis. The remains of more than 40 victims have been returned to their 
families.  The  Working  Group  on  Missing  Persons,  comprised  of  Belgrade  and  Pristina 
delegations and chaired by the International Committee of the Red Cross, continues to meet 
regularly. The Committee has consulted twenty countries whose contingents were deployed in 
Kosovo in 1999 in order to collect documentation on outstanding cases. At the beginning of 
2009,  the  government's  Commission  on  Missing  Persons  set  up  a  secretariat,  which  is 
gradually becoming operational.  

Overall, progress on missing persons remains slow ten years after most disappearances: less 
than 40 cases have been closed since the European Commission's last progress report, leaving 
the total number of missing persons at over 1,800. The lack of information on non-identified 
burial sites is hindering further progress. There is no law on forensics and no department of 
forensic  medicine.  There  is  no  law  on  missing  persons.  The  issue  of  compensation  for  the 
families of missing persons needs to be resolved. 

In the area of access to justice, the Office of the Legal Aid Coordinator increased its outreach 
activities  by  setting  up  a  website  and  a  database.  Between  October  and  July,  over  1,400 

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persons  benefited  from  free  legal  aid.  The  Office  signed  a  memorandum  of  understanding 
with  the  Chamber  of  Advocates  to  streamline  free  legal  representation  and  further  improve 
outreach to citizens.  

However,  the  resources  of  the  Office  of  the  Legal  Aid  Coordinator  are  limited  and  staffing 
levels are low. The biggest number of complaints to the Ombudsman between July 2008 and 
June 2009 relate to access to courts (civil proceedings). Access to justice in areas inhabited by 
non-majority communities and especially in northern Kosovo is not guaranteed. The absence 
of a functioning judiciary in the north seriously limits access to justice for all communities. 
There  is  no  Kosovo  Serb  representative  in  the  district  legal  aid  office  based  in 
Mitrovicë/Mitrovica south.  

Overall, the Office of the Legal Aid Coordinator has improved its outreach activities and its 
cooperation  with  the  Chamber  of  Advocates,  but  further  progress  is  needed  in  order  to 
improve access to justice in Kosovo. 

As regards the prison system, the Kosovo correctional service under the Ministry of Justice is 
operational,  with  EULEX  retaining  certain  competences.  Security  measures  have  been 
upgraded in the high-security facilities and technical equipment improved, including vehicles 
for prison escorts. 

However,  the  Law  on  Execution  of  Penal  Sanctions  needs  to  be  amended  in  line  with 
European standards. There are still no adequate facilities for detention of mentally-ill criminal 
offenders and criminal offenders with diminished mental capacity. There is no separate space 
in the Lipjan/Lipljan correctional facility allocated to juvenile female detainees. Reintegration 
of juveniles after release is a matter of concern. Facilitating the transfer of Kosovo detainees 
from  other  countries  needs  to  be  improved.  Kosovo  needs  to  take  steps  to  accommodate  an 
anticipated increase in the number of returned prisoners.  

Most  Kosovo  Serb  detainees  are  in  the  Mitrovicë/Mitrovica  detention  centre,  which  is  not 
equipped  for  long-term  detention.  Support  from  Prishtinë/Priština  is  limited.  Most  of  the 
detainees are pre-trial detainees. Other Kosovo Serbs are detained in the Gjilan/Gnjilane and 
Prishtinë/Priština detention centres. 

The  role  of  the  probation  service  is  still  poorly  understood.  The  law  in  place  provides  that 
prosecutors  can  send  juvenile  offenders  directly  to  the  probation  service  (bypassing  courts). 
The mechanism of using alternative sentences is weakened by the general lack of support and 
awareness  within  the  judiciary  system.  If  properly  established,  it  would  reduce  the  current 
backlog.  The  interaction  of  the  probation  service  with  the  police  and  other  stakeholders 
involved  in  this  sector  needs  to  be  better  structured.  There  is  a  need  for  more  concrete 
initiatives to promote social/economic re-integration of probation services’ beneficiaries.  

Overall,  some  progress  has  been  achieved  with  regard  to  correctional  facilities,  but  serious 
challenges remain. 

As regards freedom of expression, the independence and impartiality of the publicly-owned 
Radio and Television of Kosovo (RTK) are not fully ensured. Three years after its entry into 
force, the Law establishing RTK is still not being adequately implemented. A member of the 
government  takes  part  in  the  Assembly  committee  responsible  for  selecting  RTK's  board, 
which is yet to be appointed. This is not in line with the Assembly's rules of procedure. There 
have  been  a  series  of  public  debates  with  the  participation  of  the  Press  Council  and  the 

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Association  of  Professional  Journalists  of  Kosovo  on  cases  of  political  interference  in  the 
work of the media. The Law on Access to Official Documents is not fully implemented.  

Overall, freedom of expression is not fully guaranteed. The relevant institutional framework is 
not operational. Cases of political intimidation call for more robust measures by the Kosovo 
authorities. 

The freedom of association and assembly is guaranteed under the Constitution. The Law on 
Freedom  of  Association  in  Non-Governmental  Organisations  was  adopted  in  February.  The 
Law on Public Gatherings was adopted in December 2008. Civil society continues to depend 
mostly  on  international  funding,  leading  to  project-based  and  donor-driven  agendas  with 
limited sustainability and long-term strategic positioning. The monitoring capacity of NGOs 
is limited, their participation in the legislation process poor. 

Overall, civil society has developed further but the environment, in which it operates needs to 
be significantly improved. 

In  relation  to  freedom  of  religion,  the  Law  on  Holidays  recognises  Orthodox,  Islamic  and 
Catholic  holidays.  The  ongoing  reconstruction  and  hand-over  of  orthodox  sites  under  the 
auspices  of  the  Reconstruction  Implementation  Commission  is  a  positive  development. 
However,  there  is  only  limited  dialogue  between  different  religious  communities.  Security 
concerns  mean  that  pilgrims  often  ask  to  be  escorted  by  security  forces  to  cemeteries  or 
religious sites in minority areas. This legal framework for religious activities is inadequate as 
religious communities are required to register as NGOs to acquire legal identity. 

Overall,  there  is  some  progress  as  regards  the  reconstruction  of  religious  sites,  but  more 
remains  to  be  done  to  reconcile  and  integrate  the  religious  communities.  Ensuring  the  full 
respect of religious freedom is a key European Partnership priority. 

Economic and social rights 

In  the  area  of  women’s  rights,  the  Agency  for  Gender  Equality  continues  to  monitor  and 
facilitate the implementation of the Framework Programme for Gender Equality 2008-2013 in 
accordance  with  the  Law  on  Gender  Equality.  The  Agency  has  increased  its  capacity.  The 
percentage of women occupying decision-making positions in public administration bodies has 
slightly  increased  to  over  20%.  Ministries  have  set  indicators  to  measure  performance  of 
gender equality policies and programmes.  

However,  gender  equality  officers  have  not  been  appointed  in  all  ministries  and  gender 
equality  committees  have  only  been  established  in  two  out  of  30  municipalities.  Equal 
representation remains a challenge at all levels, particularly in minority communities. None of 
the non-Albanian senior positions is held by a woman. 

The establishment of domestic violence units and training of officers on assisting victims is a 
positive  step  in  the  police's  efforts  to  address  domestic  violence.  However,  high  levels  of 
domestic violence persisted. Many cases are not reported. Few reported cases of violence are 
prosecuted in court. The majority of trafficking victims are women. The six shelter facilities 
are inadequate and do not provide a sufficient level of security. Delays in issuing protection 
orders remain an issue of concern.  

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Overall,  the  institutional  framework  for  the  protection  of  women's  rights  has  been 
strengthened,  but  domestic  violence  remains  widespread  and  is  a  serious  concern.  The 
protection of women against all forms of violence needs to be considerably strengthened. 

Children’s rights are included in the Strategy on Human Rights 2009-2011. The Children's 
Rights  Strategy  and  the  related  action  plan  were  adopted  in  June  by  the  inter-ministerial 
Committee  for  Children’s  Rights  chaired  by  the  Prime  Minister.  The  Office  for  Good 
Governance appointed a children’s rights officer. The Action Plan for People with Disabilities 
2009-2011  incorporates  the  rights  of  children  with  disabilities  in  the  sections  on  education, 
child  protection  and  health.  The  Ministry  of  Justice  has  made  the  reform  of  the  juvenile 
system a priority. 

However, there is still no legal protection for children with disabilities. Only 10% of children 
with special needs attend compulsory education. More generally, school drop-out rates remain 
high particularly at upper secondary level (17% for boys and 9% for girls). Child trafficking 
and child labour remain a concern. Efforts to address these phenomena need to be stepped up, 
in cooperation with relevant organisations and in coordination with efforts in other areas, such 
as education and social welfare. Children’s access to justice is yet to be ensured. The lack of 
coordination between local and central structures hampers the implementation of the Juvenile 
Justice Code.  

Overall,  child  protection  remains  weak.  Further  efforts  are  needed  to  guarantee  children's 
rights.  

In  the  area  of  the  socially  vulnerable  and  persons  with  disabilities,  the  Action  Plan  for 
People with Disabilities 2009-2011 was adopted in April. It is the result of a consultative and 
inclusive  process  with  the  participation  of  civil  society  organisations.  In  December,  the 
government  approved  the  decision  on  reactivating  and  reorganising  the  Council  for  Persons 
with Disabilities. 

However,  statistical  data  on  disabilities  is  not  available.  Access  to  education  facilities  for 
people  with  physical  disabilities  remains  difficult.  The  lack  of  mental  health  legislation  is 
detrimental  to  the  treatment  of  patients.  The  lack  of  adequate  health  and  rehabilitation 
services remains to be addressed. Illiteracy among people with disabilities remains high. 

Overall, the integration and protection of socially vulnerable groups, in particular abandoned 
children, returnees and people with disabilities needs to be enhanced.  

In the area of labour rights and trade unions, the Ministry of Labour and Social Welfare has 
started  a  constructive  cooperation  with  international  partners  to  address  the  numerous 
challenges  existing  in  the  sector.  It  takes  part  in  the  Sustainable  Employment  Development 
Policy Programme and benefits from expertise provided via EU technical assistance projects.  

Overall, labour legislation is poorly implemented and remains weak, and trade unions are not 
sufficiently active in the social dialogue. 

Anti-discrimination  provisions  have  been  included  in  the  Strategy  and  Action  Plan  for 
Human  Rights  in  Kosovo  2009-2011.  Equal  access  to  housing,  education,  employment  and 
social security is not always respected. Awareness of lesbian, gay, bisexual and transgender 
issues  is  very  low  and  cases  of  violence  often  go  unreported.  More  government  awareness 

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campaigns  to  counter  discrimination  are  needed.  More  efforts  are  needed  for  the  effective 
implementation and monitoring of the Anti-Discrimination Law. 

Overall,  discrimination  remains  an  issue  of  concern.  Creating  a  society  free  from 
discrimination  of  any  kind  and  promoting  the  integration  of  disadvantaged  groups  is  a  key 
European Partnership priority. 

As  regards  property  rights,  the  Law  on  Expropriation  of  Immovable  Property  was 
promulgated in April. The law regulates rules and conditions of expropriation at central and 
local  levels.  The  draft  Law  on  Sales  of  Apartments  where  Tenure  Rights  exist  has  been 
amended to regulate the privatisation of socially-owned apartments.  

In  July,  the  Kosovo  Property  Agency  signed  a  memorandum  of  understanding  with  the 
Kosovo Cadastral Agency for access to the latter's database. In August, the Kosovo Property 
Agency signed a memorandum of understanding with the UNHCR allowing the resuming of 
activities  in  Serbia.  More  than  40,000  claims  have  been  recorded;  over  half  have  been 
adjudicated  by  the  Kosovo  Property  Claims  Commission.  As  of  September  2009,  6,700 
decisions have been implemented. Of those, 770 have led to physical repossessions. 

Three international members of the Supervisory Board of the Kosovo Property Agency have 
been appointed. Two local members are yet to be named. Two international judges have been 
appointed to the Supreme Court panel for appeals against contested decisions by the Agency. 
Local  judges  are  yet  to  be  appointed  and  this  paralyses  the  work  of  the  panel.  The  Agency 
finalised  the  compensation  scheme  for  socially-owned  apartments,  which  needs  to  be 
approved by the Supervisory Board.  

Over  900  properties  are  currently  the  subject  of  an  eviction  order.  The  implementation  of 
evictions orders needs to be significantly improved. The implementation of the rental scheme, 
notably as regards rent collection by the Agency, remains an issue of concern. There is a need 
for  more  efficient  cooperation  with  the  police  to  ensure  the  enforcement  of  relevant  legal 
provisions.  

Not all of the municipalities have digital immovable property rights registers linked with the 
Kosovo  Land  Registry.  Some  land  registry  books  remain  in  Serbia.  The  legal  status  of 
informal settlement has not yet been resolved; ineffective communication between municipal 
and central authorities fuels this problem. 

Overall,  the  institutional  and  legal  framework  has  been  strengthened  but  has  led  to  limited 
progress  in  practice  in  the  area  of  property  rights,  which  is  a  key  European  Partnership 
priority. 

Minority rights, cultural rights and protection of minorities 

The  Kosovo  authorities  continued  their  effort  to  improve  the  protection,  integration  and 
representation  of  minority  communities.  The  planned  census  needs  to  be  organised  and 
conducted in a way enabling the widest possible participation to ensure it reflects accurately 
the situation of all communities in Kosovo. The Community Consultative  Council has been 
inaugurated  and  meets  regularly.  The  Serb  community  is  represented  by  five  members,  the 
Turkish and the Bosnian communities by three members each, the Roma, Ashkali, Egyptian 
and  Gorani  communities  by  two  members  each  and  the  Montenegrin  community  by  one 
member. 

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The  Ministry  of  Culture  has  established  a  forum  for  technical  information  exchange  on 
cultural  heritage  in  Kosovo,  improving  the  coordination  of  activities  in  this  field.  The 
reconstruction  of  orthodox  sites  through  the  Reconstruction  Implementation  Commission  is 
progressing; tendering rehabilitation works restarted in May. The new Customs Code adopted 
in  November  2008  provides  for  the  economic  activities  of  the  Serb  Orthodox  Church  to  be 
exempted from customs duties and excise tax. 

Security  of  religious  and  cultural  heritage  sites  is  generally  assured  by  the  Kosovo  Police 
supported  by  KFOR. The police operational order of February for the protection of Serbian 
cultural and religious sites continues to be implemented.  

However,  there  is  still  no  integrated  cultural  and  religious  heritage  conservation  strategy. 
Unregulated  economic  development  presents  a  potential  risk  for  the  future  of  religious  and 
cultural heritage. The Law on Special Protective Zones is not fully implemented. The list of 
protected cultural heritage sites has yet to be adopted. Further clarifications are needed on the 
institutions' role, including the Cultural Heritage Council. Disputes over land between some 
municipalities and the Serb Orthodox Church remain unresolved.  

The  majority  of  cultural  and  religious  heritage  sites  in  Kosovo  are  not  regulated  in  spatial 
plans. Only seven municipalities have spatial plans approved by the Ministry of Environment 
and Spatial Planning. The protection of sites from unregulated construction in proximity is not 
ensured. The Law on Spatial Planning is not fully implemented. 

Overall,  the  protection  of  cultural  heritage  has  progressed  but  further  efforts  are  needed. 
Ensuring the protection of cultural and religious heritage, including measures to prevent and 
prosecute attacks on sites, is a key European Partnership priority. 

The  constitution  and  the  legislation  in  force  continue  to  provide  a  highly  protective 
environment for minority cultural rights in the field of education, language and media.  

The right to public education at all levels for non-majority communities in the language of 
their  choice  is  guaranteed  by  law.  The  Kosovo  curriculum  is  taught  in  three  languages: 
Albanian, Bosnian and Turkish. At the level of primary education, textbooks are available in 
these  three  languages.  In  April,  the  Ministry  of  Education,  Science  and  Technology 
established the Independent Commission for Reviewing the Serb Curricula.  

The  Ministry  for  Public  Services  monitors  language  compliance  at  the  central  level.  Most 
documents  issued  by  municipalities  are  not  translated  into  official  languages  in  accordance 
with the Law on the Use of Languages.  

The law also gives guarantees for public media to broadcast in minority languages, which led 
the Independent Media Commission to re-launch the licensing process. The Prime Minister’s 
office adopted a decision in December establishing the Media Minority Fund, receiving fees 
collected by RTK.  

However,  implementation  and  monitoring  remain  insufficient  for  all  laws  pertaining  to  the 
protection of minorities’ cultural rights. Serbian-speaking pupils of minority communities are 
often  schooled  by  a  parallel  educational  system.  This  does  not  facilitate  reconciliation  and 
multi-ethnicity. Kosovo Albanian pupils follow the Kosovo curriculum according to Kosovo 
law. Kosovo Serb pupils follow the Serbian curriculum according to Serbian law. The absence 
of a Kosovo curriculum in the Serbian language represents a stumbling block for resolving the 

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dispute  regarding  access  to  education  of  children  from  the  Gorani  minority  in  the 
Dragash/Dragaš municipality.  

Textbooks in Bosnian and Turkish languages are not yet available for secondary schools. The 
Kosovan  educational  system  does  not  offer  tailored  programmes  for  Roma,  Ashkali, 
Egyptian,  Gorani,  Croat  and  Montenegrin  minorities.  The  lack  of  provision  by  municipal 
authorities of free transportation for pupils from minority communities remains an obstacle to 
integration.  Kosovo  diplomas  are  not  recognised  by  Serbian  authorities.  This  discourages 
Serbian-speaking  students  to  attend  the  already  limited  range  of  programmes  taught  in 
Serbian/Bosnian language at Prishtinë/Priština University.  

Most  municipalities  have  not  yet  issued  a  regulation  on  the  use  of  languages.  Language 
courses  among  civil  servants  are  not  sufficient  to  enhance  bi-lingualism  within  the 
administration.  The  Central  Language  Commission  is  poorly  organised,  lacks  resources  to 
exercise its mandate and lacks visibility among non-majority communities.  

RTK  does  not  meet  its  obligation  to  broadcast  15%  of  its  programmes  in  non-Albanian 
languages. RTK’s territorial coverage of minority areas is lower than required by law (90%). 
Since Kosovo is not a member of the International Telecommunication Union, there is still no 
international frequency plan allowing Serbian-language TV stations to broadcast throughout 
Kosovo.  

Overall,  the  promotion  of  cultural  rights  of  Kosovo’s  minority  communities  needs  to  be 
strengthened.  

Electricity  supply  in  Serb-majority  areas  is  not  fully  ensured.  The  majority  of  villages, 
populated  mostly  by  Kosovo  Serbs,  have  signed  collective  agreements  with  the  Kosovo 
Energy Corporation. The agreements stipulate payment of electricity on a regular basis as per 
consumption. Accumulated debts to the Kosovo Energy Corporation have been frozen. 

The  situation  of  minority  communities  continues  to  raise  concerns.  There  is  little  progress 
towards  reconciliation  between  communities.  The  institutional  set-up  at  central  level  is  in 
need  of  further  improvement.  The  Ministry  for  Communities  and  Returns  and  the  Office  of 
Community Affairs remain to agree on their respective areas of responsibility. Many people 
from  minority  communities  continue  to  benefit  from  the  services  of  parallel  structures  for 
education,  social  protection  and  health  care.  The  lack  of  civil  status  registration  is  a  further 
obstacle as regards access to services. 

There have been a number of incidents of inter-ethnic violence, notably in northern Kosovo. 
A  number  of  orthodox  graveyards  throughout  Kosovo  have  also  been  vandalised.  Kosovo 
Serb  police  do  not  systematically  report  cases  and  incidents  of  inter-ethnic  violence.  The 
perception of freedom of movement by some minorities remains negative. 

Overall, there has been limited progress in the integration of minority communities. 

About  850  displaced  persons  returned  voluntarily  to  Kosovo  minority  areas,  fewer  than 
during the previous reporting period. Over 200,000 people from Kosovo remain displaced in 
Serbia and 16,000 in Montenegro. Overall, 20,000 persons are displaced within Kosovo.  

The  Ministry  for  Communities  and  Returns  has  installed  a  database  for  the  registration  of 
displaced people within and outside Kosovo. Several municipalities have adopted municipal 
return strategies.  

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However,  the  pace  of  voluntary  returns  is  still  very  low.  The  lack  of  employment 
opportunities, the lack of confidence in the enforcement of property rights and the continuous 
perception of security threats are cited as being the main reasons for this. The plans for return 
of  some  Kosovo  Albanians  to  northern  Mitrovicë/Mitrovica has  resulted in clashes between 
Kosovo Serbs and police forces, NATO's KFOR and EULEX.  

Municipal return strategies, if adopted, are not fully implemented. Guidance and support from 
central  authorities  remain  insufficient  and  a  lack  of  financial  resources  persists.  There  is  no 
synergy  between  the  frameworks  put  in  place  for  voluntary  returns  and  forced  returns. 
Repatriated  persons  do  not  have  access  to  temporary  accommodation.  Persons  in  need  of 
medical treatment are not always treated. There is no reintegration monitoring mechanism. 

Difficulties with civil registration are a concern for returnees to Kosovo. There is no law on 
civil  status.  Kosovo  is  not  party  to  the  1954  Convention  relating  to  the  Status  of  Stateless 
Persons,  nor  to  the  1961  Convention  on  the  Reduction  of  Statelessness.  There  is  no  legal 
definition of statelessness in Kosovo.  

Overall,  the  voluntary  return  process  is  still  limited  and  remains  a  challenge  for  Kosovo 
authorities.  The  government  is  not  implementing  the  Reintegration  Strategy  for  Repatriated 
Persons  in  a  satisfactory  manner.  Creating  a  climate  of  reconciliation,  inter-ethnic  tolerance 
and sustainable multi-ethnicity is a key European Partnership priority. 

In  December  the  government  adopted  the  Strategy  for  Integration  of  Roma,  Ashkali  and 
Egyptian  (RAE)  Communities  2009-2015.  In  May,  the  Prime  Minister  appointed  two 
coordinators to address the issue of the lead-contaminated living areas. A Steering Committee 
was also set up. The Mitrovicë/Mitrovica municipality has allocated land for the building of 
houses for the affected families.  

However,  RAE  communities  remain  vulnerable.  Civil  status  registration  and  possession  of 
identity documentation remain an outstanding issue. RAE access to essential public services 
(education, social protection, health care) is still limited. School enrolment of RAE children 
continues  to  be  a  major  problem  together  with  the  high  drop-out  rate.  High  illiteracy  rates 
persist. There are not enough Roma-trained teachers. 

The  living  conditions  in  some  RAE  settlements are  a  serious  concern,  particularly  the  lead-
contaminated camps of Çesmin Llugë/Česmin Lug and Osterode. Together with the camp in 
Leposaviq/Leposavić they pose serious health risks. This is a fundamental violation of basic 
human  rights.  Urgent  steps  are  needed  to  address  this  situation  and  follow  up  on  concerns 
raised  by  a  number  of  European  and  international  institutions,  such  as  the  European 
Parliament, the Council of Europe and the World Health Organisation.  

Overall,  the  Kosovo  authorities  need  to  take  urgent  steps  to  address  the  situation  of  RAE 
communities. 

2.3. 

Regional issues and international obligations 

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

Cooperation  between  Kosovo  and  ICTY  continued  during  the  reporting  period.  Discussions 
between ICTY, UNMIK and EULEX on future cooperation arrangements are in progress to 
account for UNMIK’s reconfiguration.  

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Overall,  Kosovo’s  external  representation  remains  a  challenge.  Kosovo's  authorities  need  to 
take  a  more  consistent  and  constructive  approach.  UNMIK  is  the  signatory  on  behalf  of 
Kosovo  of  a  number  of  international  agreements  as  well  as  regional  initiatives  (Energy 
Community  Treaty,  European  Common  Aviation  Area  Agreement,  South  East  Europe 
Transport  Observatory,  Central  European  Free  Trade  Agreement  —  CEFTA,  Regional 
Cooperation  Council).  Under  the  constitution,  the  Kosovo  authorities  ensure  Kosovo’s 
regional and international representation. The Kosovo authorities, however, are not accepted 
as a successor to UNMIK by some parties to these agreements.  

UNMIK  has  facilitated,  where  necessary  and  possible,  arrangements  to  enable  Kosovo’s 
involvement in regional fora. Kosovo’s approach to  UNMIK’s  role  has not  been  consistent. 
This  has  led  to  ad  hoc  arrangements  on  a  number  of  occasions.  The  government  needs  to 
develop  a  comprehensive  strategy  for  external  representation  and  for  joining  international 
bodies and organisations.  

Kosovan delegates have not been able to participate in all events hosted by countries that do 
not  recognise  Kosovo,  due  to  difficulties  in  relation  to  the  use  of  Kosovo  passports.  Such 
occurrences  have  become  increasingly  frequent  and  hinder  the  development  of  effective 
regional cooperation. The EU has stressed that regional cooperation must be inclusive in order 
to  be  successful  and  regrets  that  disagreements  regarding  the  manner  of  Kosovo's 
participation in regional fora have resulted in Kosovo's absence from key regional events. It is 
therefore  essential  that  Kosovo’s  involvement  in  multilateral  fora  be  ensured,  and  that  all 
parties concerned demonstrate a constructive and flexible attitude in this regard. 

Kosovo  representatives  were  not  able  to  participate  in  the  Annual  Meeting  of  the  Regional 
Cooperation  Council,  and  the  Summit  of  the  South  East  European  Cooperation  Process 
(SEECP), held in Chisinau in June 2009, because the Moldovan authorities did not issue visas 
to them.  

In  December  2008,  Kosovo  appointed  its  representative  in  the  Steering  Committee  of  the 
Regional  School  of  Public  Administration  (ReSPA).  However,  Kosovo’s  continuous 
participation in ReSPA is at risk as Kosovo has not yet signed the ReSPA Agreement. Kosovo 
has  not  systematically  participated  in  the  CEFTA  joint  committee  and  subcommittee 
meetings.  No  solution  has  been  agreed  on  how  Kosovo  should  be  represented  at  these 
meetings.  

Kosovo  has  adopted  new  customs  stamps.  The  Special  Representative  of  the  UN  Secretary 
General has notified them to the European Commission and to CEFTA partners. Serbia does 
not  recognise  the  validity  of  these  stamps  and  questions  their  compliance  with  UNSCR 
1244/99 despite assurances received from the UN SRSG confirming compliance. 

There have been incidents where access to Kosovo has been denied for high-ranking Serbian 
officials. Kosovo's authorities have insisted that such visits be notified to them via appropriate 
diplomatic  channels.  Cooperating  constructively  on  matters  relating  to  Serbia  is  a  key 
European Partnership priority. 

In  February  and  March  2009,  Kosovo  adopted  legislation  which  is  not  compatible  with  its 
obligations  under  the  European  Common  Aviation  Area  Agreement  (ECAAA).  Until  this 
legislation  is  withdrawn,  the  implementation  of  the  first  transitional  phase  of  the  ECAA 
Agreement remains in question. 

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Kosovo participates in the South East Europe Transport Observatory (SEETO). In December 
2008, Kosovo participated in the 4th Annual Meeting of Ministers on the Development of the 
South-East  Europe  Core  Regional  Transport  Network  in  Montenegro,  which  launched  the 
negotiations for a treaty establishing a Transport Community with the Western Balkans.  

Kosovo continued to participate as an observer in the Investment Compact for South Eastern 
Europe  (SEE),  designed  to  improve  the  investment  climate  and  encourage  private-sector 
development in the region. 

There  has  been  some  progress  on  demarcation  with  the  former  Yugoslav  Republic  of 
Macedonia; this process needs to be fully completed. There are no talks on demarcation with 
other neighbours.  

Overall,  Kosovo’s  involvement  in  regional  cooperation  initiatives  needs  to  be  more 
constructive and pragmatic. It is important that Kosovo participates in regional fora to keep 
pace with progress in key areas across the region. 

3. 

ECONOMIC CRITERIA 

In examining the economic developments in Kosovo, the Commission’s approach was guided 
by the conclusions of the 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  has  adopted  its  fourth  Medium-Term  Expenditure  Framework 
(MTEF),  covering  the  years  2010-2012.  However,  this  document  has  not  been  used  as  a 
medium-term  policy  planning  tool.  The  path  documented  in  the  MTEF  for  Kosovo’s  fiscal 
and external balances appears difficult to sustain and the White Paper on social policies is not 
included,  despite  commitments  made  by  the  authorities  at  the  2008  International  Donor 
Conference. In general, new pieces of legislation continued to be submitted to the government 
with no link to the MTEF or any other medium-term policy framework. The weak rule of law 
continued to be a major obstacle to socio-economic development. 

In March 2009, the first meeting in the framework of the fiscal surveillance mechanism with 
the European Commission took place in Pristina. On 29 June 2009, Kosovo became a member 
of  the  International  Monetary  Fund  and  of  the  World  Bank.  Overall,  political  consensus  on 
the  fundamentals  of  market-oriented  economic  policies  has  been  maintained.  However,  the 
legal framework and the practices of a modern public financial management are sill lacking. 
The public administration has insufficient capacity. 

Macroeconomic stability 

Real  GDP  growth  in  2008  was  5.4%,  up  from  5.0%  in  2007.  Contrary  to  2007,  a  year  in 
which private sector dynamism was the main source of economic growth, economic activity 
in  2008  and  in  the  first  half  of  2009  was  increasingly  driven  by  the  acceleration  of  public 
capital spending. Annual growth in private consumption stood at 11.3%, public consumption 
grew  by  3%,  and  while  public  investment  increased  by  194%,  private  sector  investment 

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declined by 10.2%. The latter resulted partly from the decline in foreign direct investment and 
the  stagnation  of  the  privatisation  process.  As  a  consequence  of  the  global  economic  crisis, 
since late 2008 exports have been decreasing. However, Kosovo’s limited integration into the 
global  economy  and  a  stable  financial  sector  pursuing  conservative  strategies  have  so  far 
delayed a stronger impact of the crisis. In addition, the persisting weakness of the statistical 
system does not allow for a comprehensive assessment of the economic situation in Kosovo.6 
According to IMF estimates, GDP per capita7 in 2008 reached €1,726, which corresponded to 
6.9% of the EU-27 average compared with 6.5% in 2007. Overall, the unfolding of the crisis 
affected  Kosovo’s  economy  to  a  limited  extent  so  far.  However,  the  lack  of  data  does  not 
allow a robust assessment for the previous or current year. 

In  2008  exports  of  goods  increased  by  20.2%,  reaching  5.3%  as  a  share  of  GDP.  As  in 
previous years, they were driven by base metals and base metal products, accounting for more 
than  60%  of  overall  exports  in  2008  and  increasing  67%  over  2007.  The  second  most 
important export category, mineral products, showed a decrease of about 32% in 2008 vis-à-
vis 2007, as international demand fell due to the crisis. In the first half of 2009 exports fell 
substantially by 39.9%, with the base metals category shrinking by close to 60%. Imports of 
goods increased by 22.1% in 2008, reaching 50.2% of GDP, up from 44.2% of GDP in 2007. 
Mineral products (mainly oil), prepared foodstuffs, base metals and machinery remained the 
largest  import  categories.  Total  imports  decreased  by  1.6%  but  more  than  two  thirds  of  the 
commodity groups still registered positive growth rates. 

The  coverage  ratio  of  exported  to  imported  goods,  traditionally  low,  decreased  to  6%  in 
November  2008  (from  17%  in  July  2007),  as  exports  contracted  with  the  coming  of  the 
international crisis. Exports have further decreased since then. Consequently, the trade deficit 
widened to 46% of GDP in the first half of 2009, from 43% in 2008 and 39% in 2007. 

The current account deficit — including official grants — increased from 10.2% of GDP in 
2007  to  16.3%  in  2008.  Remittances  and  foreign  assistance  amounted  to  12.1%  of  GDP 
(12.5% in 2007) and 7.7% of GDP respectively. Foreign direct investment (FDI) was 13.1% 
in  2008,  compared  to  16.7%  in  2007.  In  2007,  about  half  of  FDI  was  linked  to  the 
privatisation process and the licensing of the second mobile telephony operator, while in 2008 
the  privatisation  process  stagnated.  As  in  previous  years,  the  net  balance  on  the  capital  and 
financial account was lower than the current account deficit, leaving a significant portion of 
the financing unexplained. Overall, an adjustment of the large trade deficit in the first half of 
2009 did not take place as the large public works triggered substantial imports of machinery 
and transport equipment, whereas exports fell sharply. 

The poor availability and reliability of labour market data continued to hamper the analysis of 
labour  market  developments.  The  registered  unemployment  rate  in  the  first  half  of  2009 
remains  very  high,  estimated  at  40%,  unchanged  compared  to  2008.  More  than  90%  of 
registered  persons  fall  into  the  category  of  long-term  unemployment.  The  Labour  Force 
Survey also confirms that the unemployment rate is very high and around 40%. Uncertainties 
on  the  accuracy  of  these  figures  exist.  They  are  based  on  the  fact  that little  is  known  about 
how  many  of  those  who  are  registered  unemployed  are  actually  economically  inactive  and 
actively looking for employment.  Some 30,000 young people enter the  labour market every 

6 

7 

The Statistical Office of Kosovo (SOK) has published nominal GDP figures for the years 2004-2007, 
stressing at the same time that the number and the quality of existing statistical surveys are insufficient 
for successful implementation of national accounts according to ESA 95 standards. 
A measure using PPP is not available for Kosovo. 

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year  and  many  of  them  continue  to  leave  Kosovo  to  find  work  abroad.  Labour  is  in  fact 
Kosovo’s biggest (non-recorded) export item and the labour force working abroad continues 
to generate a steady stream of income in the form of remittances which finances a large share 
of  consumption  in  Kosovo.  However,  there  are  no  official  statistics  on  labour  migration. 
Overall, the level of economic activity does not allow the young and growing labour force to 
be  absorbed.  For  many,  emigrating  and  working  abroad  remains  the  only  viable  option  to 
support their families in Kosovo. 

Average  yearly  consumer  price  inflation  increased  to  9.4%  in  2008  from  4.3%  in  2007. 
Monthly inflation rates on an annual basis turned negative in 2009, reaching -3.0% in August. 
Kosovo was strongly affected by higher food and energy prices between mid-2007 and mid-
2008,  partly  due  to  the  large  share  of  food  items  in  the  CPI,  but  also  due  to  low  levels  of 
competition  in  the  economy.  Main  drivers  behind  recent  negative  inflation  rate  are  the 
adjustment of food prices and lower costs for transportation. On the other hand, the prices of 
housing-related  cost  items,  including  energy  and  some  services  that  are  predominantly 
publicly  provided,  have  been  still  rising.  Overall,  price  developments  reflect  the  falling 
international  prices.  Prices  of  domestic  services  have  continued  rising,  partly  due  to  weak 
competitive pressure in the economy.  

The  Central  Bank  of  Kosovo  (CBK)  increased  its  scope  of  financial  sector  supervision  and 
played a positive role in the management of risks related to the international financial crisis. It 
has also introduced high frequency monitoring of commercial banks. Whereas the CBK is the 
main institution for financial market regulation and supervision in Kosovo, due to Kosovo’s 
use  of  the  euro  as  official  currency,  the  CBK  has  only  limited  policy  instruments  at  its 
disposal, such as reserve and liquidity requirements. In the absence of autonomous monetary 
policy and given the fully euroised economy, real interest rate and real (effective) exchange 
rate movements remain difficult to predict. Uncertainties regarding property rights and weak 
rule  of  law  continued  to  be  the  main  factors  for  the  high  risk  premiums  demanded  by  the 
commercial  banks.  Overall,  the  stability  of  the  financial  sector  benefited  from  improved 
supervision. 

After  the  2007  budget  execution  had  led  to  a  substantial  increase  in  the  government  cash 
reserves, the 2008 fiscal year ended with a  broadly balanced budget and government’s cash 
reserve at close to EUR 470 million. Total revenues decreased from 25.9% of GDP in 2007 to 
25.3% of GDP in 2008. Revenue collected by the customs services accounted for 64.1% of 
total government revenues, up from 58.9% in 2007. Total expenditure increased by 44.0% in 
2008, reaching 25.3% of GDP, after 18.9% of GDP in 2007. Wages and salaries increased by 
9.3%, subsidies and transfers by 32.6%, and capital outlays almost tripled (194.4%) compared 
to 2007. Thus, public investment reached 7.7% of GDP, up from 2.8% in 2007. Expenditures 
showed a highly volatile profile. In the first half of 2009 government expenditure continued to 
rise – wages and salaries were up by 17.0%, subsidies and transfers rose by 25.4% from an 
already  high  base  in  2008,  capital  outlays  were  34.8%  higher  than  during  the  first  half  of 
2008. In the first half of 2009 public revenues were not substantially affected by the crisis and 
they increased by 2.9% compared to the same period in 2008. Overall, the 2008 budget was 
marked by strongly increased spending on capital investment and subsidies and transfers. In 
view  of  the  challenging  economic  environment,  revenue  collection  in  the  first  half  of  2009 
held up well. 

With  regards  to  fiscal  planning,  the  Ministry  of  Economy  and  Finance  (MEF)  continued  to 
receive incomplete information from line ministries on important strategic developments with 
fiscal implications. An important example was the limited involvement of the Ministry in the 

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transformation of the state-owned energy sector, in spite of its high and increasing needs for 
transfers  and  subsidies  from  the  budget.  The  2009  budget  was  influenced  by  the  electoral 
agenda8  and  contained  large  increases  in  public  wages,  which  lead  as  a  consequence  to  a 
continued breach of the fiscal rule as spelled out in the previous MTEF.9 The government also 
continued  to  initiate  legislation  without  linking  it  to  the  MTEF  or  any  other  medium-term 
policy planning document that could ensure some consistency of policies over time. Neither 
the  budget,  nor  the  MTEF  have  developed  into  efficient  policy  instruments.  Instead,  they 
continued to respond to ad hoc spending pressures. 

Overall,  given  the  absence  of  autonomous  monetary  policy,  the  burden  of  macroeconomic 
adjustment remained with fiscal policy; however, the low quality of budgetary planning and 
execution show that it has to yet fully assume its responsibility for macro-economic stability. 

Interplay of market forces 

The Competition Council started implementing antitrust policy. The Privatisation Agency of 
Kosovo  (PAK)  replaced  the  Kosovo  Trust  Agency  in  June  2008.  The  PAK  resumed  the 
process of privatising socially-owned enterprises in the second half of 2008, albeit at a modest 
pace  and  equally  modest  volumes,  processing  marginal  assets,  therefore  without  a  clear 
impact on overall economic activity. Since April 2009, there has been a slight acceleration of 
the  privatisation  process.  The  government’s  privatisation  agenda  concerning  public-owned 
enterprises  continued  to  accumulate  delays.  Overall,  delays  in  privatisation  contributed  to  a 
rigid business structure. 

Market entry and exit 

By  the  end  of  2008  there  were  67,950  active  companies,  83%  of  them  operating  in  the 
services  sector.  Improvements  have  been  made  in  the  ‘one-stop  shop’  facilities  for  business 
registration, but fixed costs for doing business, such as work and construction permits, remain 
high. Overall, weak administration and rule of law, unreliable energy supply, limited access to 
finance, corruption and poorly defined property rights, the tackling of which is mentioned as a 
key priority in the 2008 European Partnership, hinder market entry and exit. 

Legal system 

The  need  to  strengthen  the  legal  framework  is  a  key  priority  in  the  2008  European 
partnership. Kosovo’s legal system is a complex mix of different legal acts produced by the 
Yugoslav  administration  before  1999,  and  successively  by  UNMIK  and  the  Kosovan 
Government since then, which leads to uncertainty. As a general rule, legislation after 1999 
has  been  supportive  of  a  free-market  economy.  The  legal  system  continued  to  exhibit  poor 
accessibility  and  efficiency,  and  some  areas  are  not  covered  by  relevant  courts.  As  a 
consequence, informal methods of contract enforcement continue to be widespread. The large 
informal  sector  is  fuelled  by  weaknesses  in  tax  and  expenditure  policies,  as  well  as  in  law 
enforcement, including the fight against corruption and organised crime. The informal sector 
remains  an  important  challenge,  as  it  reduces  the  tax  base  and  the  efficiency  of  economic 
policies. Overall, the weak rule of law and uncertainty over property rights  remained  major 
impediments to sustainable economic development. The difficult and costly legal enforcement 

8 

9 

At the time the 2009 budget was prepared, the working assumption based on the Ahtisaari package was 
to hold general elections in 2009. 
The rule limited the growth of primary current spending to 0.5% in real terms. 

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of  contracts  hindered  access  to  finance  and  continued  to  hamper  seriously  the  business 
environment. 

Financial sector development 

The  financial  sector  in  Kosovo  continued  its  expansion,  albeit  at  a  sharply  reduced  pace 
compared  to  previous  years.  Eight  commercial  banks,  ten  insurance  companies  and  two 
pension  funds  are  operating  in  Kosovo  so  far.  As  a  response  to  the  international  financial 
crisis,  the  Central  Bank  of  Kosovo  established  a  Crisis  Preparedness  Committee  (CPC)  and 
signed a Memorandum of Understanding on safeguarding financial stability with the Ministry 
of  Economy  and  Finance.  The  newly  created  procedures  have  yet  to  be  tested.  Reporting 
requirements  for  banks  have  been  tightened  and  banks  have  been  requested  to  gradually 
reduce their net exposure to their parent banks to the level prescribed by the CBK’s rule (20% 
of  Tier  I  capital).  There  has  been  increased  exchange  of  information  with  foreign  central 
banks  and  other  supervisory  authorities,  as  well  as  with  the  boards  of  key  players  in  the 
banking sector. The quality of the loan portfolio in Kosovo’s banking sector remained solid, 
with  the  average  share  of  non-performing  loans  in  2008  reaching  only  3.3%  from  4.4%  in 
2007. Overall, prudential indicators of profitability and liquidity remained favourable in 2008 
and no specific crisis-related interventions have been needed so far. However, there are also 
indications on poor access to finance and high perceived risk of doing business. 

The  banking  sector  continues  to  dominate  the  financial  sector  and  remains  highly 
concentrated, with the three largest banks, foreign-owned, holding almost 90% of total assets. 
Profits  rose  by  8.7%  in  2008,  sharply  down  from  growth  of  68%  in  2007.  The  degree  of 
financial  intermediation  increased  further,  though  from  a  still  modest  level.  The  share  of 
banking  sector  assets  in  GDP  grew  from  41.4%  in  2007  to  48.6%  in  2008.  The  volume  of 
loans increased from 25.8% of GDP in 2007 to 31.8% in 2008. In May 2009, annual credit 
growth was 20.4%, whereas deposit growth stood at 21.4%, and the loans to deposit rate stood 
at  84.5%.  While  there  is  no  legally  binding  restriction,  there  is  an  informal  agreement 
according  to  which  the  ratio  of  loans  to  deposits  should  not  exceed  80%.  Since  February 
2008,  the  ratio  has  been  constantly  above  this  level,  as  credit  growth  has  become  strictly 
bound  by  the  rate  of  deposit  growth.  The  interest  rate  spread  between  deposits  and  loans 
remained  very  high  and  showed  only  a  slow  downward  trend.  By  end  of  May  2009,  the 
spread’s  12  month  average  for  all  types  of  loans  stood  at  10.1  percentage  points,  slightly 
down from 11.3 percentage points in 2007. The spread is lower for loans to households (9.2) 
than  for  loans  to  (non-financial)  corporations  (11.2).  Loans  distribution  across  sectors 
remained highly uneven. By the end of May 2009, agriculture continued to account for only 
4%  of  outstanding  business  loans,  the  secondary  sector  (manufacturing,  energy  and 
construction) taking up close to 21%, while  75% of all business loans financed activities in 
the service sector. While there was no change in the sectoral structure of the loan portfolio, 
there  was  some  improvement  in  the  maturity  structure.  By  the  end  of  May  2009,  62%  of 
business loans had a maturity of 2 years or more, up from 57% at the end of 2007. Overall, 
the  number  of  loans  has  increased  but  high  real  interest  rates  remain  one  of  the  major 
obstacles  to  doing  business  in  Kosovo.  Ineffective  enforcement  of  creditor  rights  and  of 
contracts continues to maintain high costs and risks for financial institutions, as reflected in 
high interest spreads, and undermines the value of collateral. 

3.2. 

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

Existence of a functioning market economy 

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Since 1999, newly adopted legislation supports a free-market economy. However, there was 
very little progress in strengthening the overall framework for a functioning market economy. 
The  regulatory  framework  is  incomplete  in  many  areas  relevant  for  the  economy,  the 
implementation  and  enforcement  of  existing  rules  remain  weak,  and  there  is  a  lack  of  good 
governance.  In  addition,  provisions  implementing  key  pieces  of  legislation  are  missing,  or 
contradictory.  Private  sector  companies  are  confronted  with  procurement  and  tendering 
procedures that lack transparency, a stable set of administrative rules and financial controls, as 
well  as  economic  impact  assessments.  Neither  the  relevant  procurement  agencies,  nor  the 
courts  have  so  far  been  able  to  deal  successfully  with  the  arbitrary  application  of  selection 
criteria. The stability of the energy supply was improved, however at the cost of ever higher 
subsidies from the budget. Overall, an incomplete legal framework, corruption, weak rule of 
law,  high  level  of  informal  activities  and  a  highly  subsidised  energy  supply  continued  to 
impair the efficiency of market mechanisms. 

Human and physical capital  

Some progress took place in the education sector, in particular concerning accreditation and 
qualifications,  and  in  the  consolidation  of  the  university.  Despite  this,  the  education  system 
continued  to  suffer  from  lack  of  resources  and  unreliable  or  missing  qualification  and 
certification  schemes.  The  overall  enrolment  rate  in  education  has  shown  no  significant 
increase in recent years. It is especially low in secondary and higher education, and drop-out 
levels  are  high.  Overall,  little  progress  was  made  towards  better  developing  the  economic 
potential of Kosovo’s young population. 

No comprehensive information on investment developments is available. Kosovo has initiated 
major public works to upgrade its road network, absorbing an increasing share of budgetary 
resources. However, poor procurement procedures and weak financial controls cast doubts on 
the quality and the capacity to respond to actual needs of the ongoing works, as well as the 
quality  of  the  actual  works.  Mobile  telephone  penetration  continues  to  increase  and  is 
estimated  at  more  than  50%  by  mid-2009.  Overall,  the  technology  base  and  the  state  of 
physical infrastructure remain weak and the pool of qualified human capital small. As a result, 
Kosovo  companies  are  too  rarely  competitive  even  in  sectors  where  competitive  potential 
exists. 

Sectoral and enterprise structure 

Regulatory authorities have been set up for all major network and commodity industries, but 
they remained weak. Their independence was undermined by politicisation of appointments in 
their boards. In several instances, the potential positive effects of market liberalisation cannot 
materialise  due  to  weak  corporate  governance  and  the  absence  of  consumer  protection. 
Kosovo cannot yet benefit from regional energy trading with its neighbours on a level playing 
field  due  to  unfinished  integration  into  regional  electricity  trade  agreements.  Electricity 
supplies  continue  to  be  intermittent  due  to  the  outdated  system  and  strains  caused  by  an 
unsustainable  increase  in  demand.  Whilst  power  bill  collection  has  increased  slightly,  some 
50%  of  power  produced  is  still  unpaid  for.  Electricity  demand  continues  to  increase  faster 
than  economic  growth.  A  new  power  plant  will  only  come  on  stream  in  five  years  at  the 
earliest. Further unbundling and privatisation of the generation and distribution companies is 
planned  in  the  next  year.  The  enterprise  structure  is  unchanged,  dominated  by  micro-
enterprises. Measures have been adopted to start reducing the large informal economy, such 
as  overhauling  the  tax  system,  and  measures  taken  to  address  evasion.  Overall,  there  have 

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been few changes in the enterprise structure, which remains dominated by micro-enterprises, 
and the large informal economy remains a challenge. 

State influence on competitiveness 

According  to  budget  figures,  subsidies  and  transfers  increased  by  32.6%  in  2008  and  by 
another 25.4% in the first half of 2009. A large share of these goes to the loss-making public 
electricity  company  KEK.  Widespread  electricity  theft  and  tolerance  towards  unpaid  power 
bills  has  undermined  the  viability  of  the  power  utility,  and  continued  to  trigger  additional 
energy imports  paid  from  the  government budget. Overall, ongoing direct and indirect state 
subsidies,  combined  with  a  poor  level  and  quality  of  public  services,  continued  to  hamper 
private-sector competitiveness. 

Economic integration 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  71.1%  in  2008,  up  from  64.5%  in  2007.  EU 
Member  States  and  CEFTA  continued  to  be  the  two  main  trading  partners  for  Kosovo, 
accounting  for  40%  of  total  trade  each,  the  latter  despite  Serbia’s  blocking  the  exports  and 
Bosnia and Herzegovina’s refusing preferential treatment. The share of exports bound for the 
EU increased from 42% in 2007 to 47.8% in 2008. The EU’s share of total imports remained 
at around 36%. Overall, economic integration with the EU has increased. 

4. 

EUROPEAN STANDARDS 

This section examines Kosovo’s capacity to 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 
Commission's  assessment  covers  progress  achieved  during  the  reporting  period,  and 
summarises Kosovo's overall level of preparation.  

4.1. 

Internal market 

4.1.1.  Free movement of goods 

There  has  been  some  progress  in  the  area  of  standardisation.  The  Professional  Standards 
Council is operational. Nine technical committees (in which companies participate actively) have 
been  established  in  the  areas  of  construction,  petroleum/gas,  quality  management  systems, 
transport  and  postal  services,  electro-technology,  metrology,  healthcare,  energy  and  wood 
processing.  

To  date,  around  1200  EN-  and  ISO/IEC-based  standards  have  been  adopted  as  Kosovo 
standards,  out  of  which  around  a  quarter  are  harmonised  European  standards  in  the  area  of 
construction products. The Kosovo Standardisation Agency within the Ministry of Trade and 
Industry  is  responsible  for  standardisation.  It  is  not  a  member  of  European  or  international 
standardisation organisations.  

Progress  remains  very  limited  on  conformity  assessment.  A  functioning  conformity 
assessment system is not yet in place. 

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Some  progress  has  been  made  on  accreditation.  The  Law  on  Accreditation  was  adopted  in 
December  2008;  implementing  provisions  have  been  approved.  Four  conformity  assessment 
bodies (one inspection body and three testing laboratories) have been accredited in Kosovo so 
far.  An  accreditation  directorate  has  been  established  within  the  Ministry  of  Trade  and 
Industry. One technical committee for testing and calibration laboratories has been set up. A 
memorandum of understanding with the former Yugoslav Republic of Macedonia was signed 
in May.  

There has been limited progress on metrology. Metrological activities are performed by the 
Department of Metrology and its Institute of Legal Metrology and Inspection, which has two 
offices.  The  one  in  Pristina  deals  with  mechanical  and  electrical  measurements.  The  one  in 
Prizren covers mechanical measurements and controls of precious metal articles. A metrology 
council  steers  the  overall  development  of  metrology.  However,  the  Kosovo  Central 
Laboratory  for  Metrology  has  not  been  set  up  yet.  The  strategy  for  the  development  of 
metrology infrastructure for the period 2009-2013 has not been adopted. 

Market  surveillance  has  not  progressed.  Preparations  in  this  area  are  at  a  very  early  stage 
and  Kosovo’s  market  surveillance  system  is  far  from  European  practices.  The  Market 
Inspectorate  employs  a  staff  of  12.  Lack  of  legal  infrastructure,  strategic  approach  and 
capacity hamper further development in the sector.  

Kosovo  has  adopted 
installations, safety of toys, construction products and textiles. 

legislation  on 

low  voltage  equipment,  machinery,  cableways 

There  has  been  some  progress  in  the  area  of  consumer  protection.  The  Law  on  Consumer 
Protection was amended in April. The seven members of the Council for Consumer Protection 
(including  five  NGO  representatives,  notably  the  two  active  consumer  NGOs)  have  been 
appointed.  However,  administrative  capacity  remains  inadequate.  The  Consumer  Protection 
Office within the Ministry of Trade and Industry employs only one member of staff. There is 
no strategy on consumer protection.  

Overall, approximation with European standards and legislation in the area of free movement 
of  goods  is  limited.  The  administrative  capacity  to  implement  them  is  inadequate. 
Considerable efforts are still needed in this respect.  

4.1.2.  Movement of persons, services and right of establishment 

Limited progress can be reported in the area of free movement of persons. Alignment with 
European  standards  remains  at  an  early  stage.  The  free  movement  of  persons  throughout 
Kosovo is not fully ensured. As regards coordination of social security, work has started but 
allocation of resources for that purpose needs to be significantly increased. No progress can 
be noted with regard to the freedom to provide services, and adoption of European standards 
is at a very early stage. The legal framework as regards the freedom to provide services and 
the  right  of  establishment  remains  uneven.  Alignment  with  European  standards  is  limited. 
There has been no progress in the area of company law. Overall, there is no alignment with 
company law legislation.  

4.1.3.  Free movement of capital 

There  has  been  limited  progress  in  the  area  of  free  movement  of  capital.  Legislation  on 
foreign exchange consists in a rule of the Central Bank defining the limits of the amount of 

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foreign currencies that a bank can possess as a percentage of their tier I capital. Kosovo has a 
very  liberal  regime  concerning  capital  movements:  foreign  banks  benefit  from  full  national 
treatment and manage around 90% of the assets in the banking sector. The same rules apply to 
domestic and foreign companies investing in Kosovo. There are no restrictions on foreigners 
acquiring real estate. Kosovo uses Basel I principles on capital requirements for banks and is 
gradually moving towards implementing the more comprehensive Basel II guidelines.  

Efforts are needed to align financial regulations with best international standards, as well as to 
implement  and  enforce  them.  As  regards  the  regulation  and  supervision  of  banks,  Kosovo 
currently  uses  the  CAMEL  model  and  is  gradually  moving  to  risk-based  supervision. 
Supervisory  authorities  need  to  sign  memoranda  of  understanding  with  the  supervisors  of 
foreign banks. In response to the financial crisis, the Central Bank increased the scope of its 
supervision  on  the  financial  sector  and  played  a  positive  role  in  the  management  of  risks 
associated to the crisis. Supervisory capacity needs to be strengthened to enforce regulation in 
the financial sector. 

In  late  2008  and  early  2009,  the  Central  Bank  adopted  several  measures  to  develop  the 
payment  system.  A  direct  debit  scheme  was  set  up.  It  incorporates  operational  agreements 
and procedures with the Kosovo Electricity Corporation and the regional water company of 
Pristina. Infrastructure of the electronic inter-banking clearing system was upgraded, enabling 
web-based  application,  unification  of  certain  data  fields  and  further  automation  of  reporting 
processes.  

Overall, the regime for capital movements is very liberal, but substantial efforts are necessary 
as  regards  free  movement  of  capital  to  establish  a  legal  framework  compatible  with  EU 
standards.  

4.1.4.  Customs and taxation 

There  has  been  some  progress  in  the  area  of  customs.  The  Customs  and  Excise  Code  was 
adopted  in  November,  its  customs  part  is  largely  in  line  with  European  standards.  Kosovo 
Customs  was  set  up  within  the  Ministry  of  the  Economy  and  Finance  in  December  2008. 
Anti-smuggling  units  have  started  to  patrol  on  all  roads,  with  the  exception  of  northern 
Kosovo and this has reduced smuggling. However, trains coming from Serbia into Kosovo are 
not subject to customs or other controls. Over 65% of Kosovo's tax revenues is collected at 
the  border.  EULEX  started  registering  the  goods  entering  at  gates  1  and  31  in  northern 
Kosovo, and the actual clearing is done at Mitrovicë/Mitrovica terminal. Customs information 
exchange between Kosovo Customs and Serbia with support of EULEX resulted in a number 
of  criminal  investigations  on  both  sides.  Revenue  collected  by  the  customs  for  January-
September 2009 was around 380 million, i.e. 4.5% higher than revenue collected for the same 
period in 2008.  

Kosovo Customs completed an assessment of its operational capacity in August, measuring it 
against  EU  standards.  The  human  resources  and  general  management,  infrastructure, 
equipment and post-clearance controls were evaluated as effective. Further attention needs to 
be  focused  on  the  export  of  agricultural  products,  the  enforcement  of  intellectual  property 
rights  and  the  security  of  the  supply  chain.  The  IT  system  needs  to  be  replaced  by  a  more 
flexible  and  integrated  one.  The  present  system  does  not  fully  support  the  use  of  the 
Integrated Tariff of Kosovo, in particular the registration of transit goods and the integration 
of  tariff  data  for  other  countries.  In  February  2009,  an  intellectual  property  rights  unit  was 
created  to  implement  the  regulation  establishing  the  customs  procedure  for  action  against 

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counterfeit goods, pirated goods and goods infringing certain intellectual property rights. The 
August  assessment  concluded  to  the  need  to  improve  its  capacity.  The  Internal  Inspection 
Sector was set up to fight corruption, which is a concern in the area of customs, in cooperation 
with the Kosovo Anti-Corruption Agency. Kosovo Customs is part of the task force including 
the Kosovo Police, the Prosecutor’s Office, the Tax Administration and the Ministry of Trade 
and  Industry.  Kosovo  Customs  participates  in  a  regional  project  on  exchange  of  pre-arrival 
customs information with neighbouring countries, which facilitates trade and the enforcement 
of customs legislation. 

The manpower and administrative capacity of Kosovo Customs to enforce customs legislation 
need to be strengthened further. Specific areas of attention are the fight against smuggling and 
counterfeiting,  improving  the  Customs  IT  system  and  its  capacity  to  support  the  use  of  the 
Integrated  Tariff  of  Kosovo.  Controls  and  supervision  need  to  be  extended  to  northern 
Kosovo.  

Overall, the legal provisions for customs are compatible with European standards. However, 
the  administrative  capacity  needs  to  be  substantially  reinforced,  and  the  fight  against 
corruption needs to be intensified. 

There has been some progress in the area of taxation. In January, a tax reform entered into 
force and new tax rates are now applied. Personal income tax rates were lowered from 0%, 
5%,  10%  and  20%  respectively  to  0%,  4%,  8%  and  10%.  Corporate  income  tax  decreased 
from 20% to 10%. VAT was raised from 15% to 16%, and excise duties on tobacco rose from 
€  17  to  €  21  per  kilo.  The  Law  on  Tax  Administration  and  Procedures  was  adopted  in 
February. It introduces several new elements in the tax system, such as the possibility for the 
Tax Administration of Kosovo to issue tax numbers and establish electronic cash registers. It 
also grants the tax administration additional authority to seize goods that cannot be accounted 
for  through  registered  transactions  and  corresponding  payments  from  firms  subject  to 
corporate  income  tax.  The  fiscal  identification  numbers  are  attributed,  and  any  business 
established after August must possess one. 

No  legislative  progress  can  be  reported  in  the  VAT  area.  The  VAT  registration  threshold 
remains high (€ 50,000 turnover) which makes many companies not liable to VAT. In August, 
a  general  assessment  of  the  tax  administration’s  own  operational  capacity,  measuring  it 
against  EU  blueprints  on  taxation,  concluded  that  it  needs  a  new  organisational  structure  to 
avoid  the  risk  of  duplication  and  that  its  investigation  capacity  concerning  tax  fraud  and 
avoidance  needs  to  be  strengthened.  Other  findings  relate  to  the  need  to  develop  an  anti-
corruption strategy and to increase information services to tax payers. The Standard Integrated 
Government  Tax  Administration  System  is  being  upgraded  until  a  new  IT  system  is 
operational.  

Tax  revenue  was  lower  in  the  first  seven  months  of  2009  compared  to  the  same  period  in 
2008. This is mainly due to the reduction in the corporate income tax rate and because, unlike 
in 2008, no surcharge was levied on PTK profits. The Tax Administration of Kosovo signed 
memoranda  of  understanding  with  Kosovo  Customs,  the  Police  and  the  Ministry  of  Labour 
and  Social  Welfare  to  improve  tax  collection.  However,  the  IT  infrastructure  remains 
ineffective,  and  lacks  the  capacity  to  enforce  tax  payment  and  to  reduce  the  informal 
economy.  

Overall, there has been some legislative progress in the area of taxation. However, legislation 
needs to be accompanied by detailed administrative instructions and further efforts to ensure 

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effective implementation. Kosovo needs to enhance the efforts to enforce tax payments and to 
reduce the informal economy.  

4.1.5.  Competition 

There  has  been  some  progress  in  the  area  of  competition.  The  Independent  Kosovo 
Competition Commission was established in November 2008 and the Assembly appointed its 
five members. The Commission is an independent body that reports directly to the Assembly. 
It  has  been  operational  since  March  and  has  performed  a  review  of  existing  competition 
regulations,  concluding  that  a  new  law  is  required  to  further  align  competition  practices  in 
Kosovo  with  European  standards.  However,  the  Commission  is  hampered  by  a  lack  of 
resources, especially with regard to attracting qualified staff.  

As  regards  antitrust  policy,  the  Commission  signed  a  memorandum  of  understanding  with 
the chamber of commerce, the ministries of trade and industry and finance, and the customs 
office. The Commission has investigated several suspected breaches of competition rules. It 
intervened  to  overturn  an  agreement  between  bakeries  over  the  price  of  bread.  The 
Commission  has  become  full  member  of  the  International  Competition  Network.  There  has 
been no progress concerning state aid, and there is no law on state aid. 

Despite  some  progress  in  implementing  anti-trust  policy,  overall  implementation  of 
competition  policy  in  Kosovo  is  at  an  early  stage.  The  administrative  capacity  needs  to  be 
strengthened.  There  is  a  need  for  awareness-raising  to  familiarise  the  private  sector  with 
competition rules. Alignment on state aids needs to start. 

4.1.6.  Public procurement 

The  situation  concerning  procurement  has  worsened  compared  to  the  previous  year,  despite 
some  improvements  in  the  legal  framework.  The  implementing  legislation  for  the  Law  on 
Public Procurement was completed in January. However, the law on public procurement is 
not  aligned  with  European  procurement  standards.  A  number  of  provisions  of  the  EC 
Directives  remain  unimplemented,  not  least  the  more  flexible  regime  in  the  utilities  sector. 
The implementation of the law in practice gives rise to serious concerns.  

The main focus of the Public Procurement Regulatory Commission is monitoring, supervision 
and legal interpretation. However, monitoring is done mainly on cases where contracts have 
already been signed and it does not encompass their implementation phase. So far, hardly any 
guidance  was  provided  to  contracting  authorities.  The  Commission  needs  to  strengthen  its 
guidance  and  advisory  support  role.  To  this  end,  it  established  a  help  desk  function  in 
September.  

As of May 2009, the Procurement Review Body reviewed 290 complaints. However, there is 
no  systematic  publication  of  its  decisions  and  these  often  lack  legal  arguments.  The  Public 
Procurement  Agency  is  the  executing  and  main  contracting  authority,  but  its  role  as  central 
purchasing  body  is  weakened  by  a  discontinuation  of  the  use  of  central  procurement, 
including  framework  agreements.  Administrative  capacity  is  weakened  by  high  turnover 
among procurement officers at both central and local level. Procurement officers in Kosovo 
remain vulnerable to interference and intimidation. This has a negative impact on the quality 
of public procurement.  

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The training and certification of procurement officers is insufficient and was delayed in 2009. 
The law requires every procurement officer to undergo at least ten days of mandatory training 
every year. The existing certification system only requires a one-off training course, which is 
not in accordance with the current law.  

The  value  of contracts  awarded  through  public  procurement  has  increased,  representing 
almost 22% of Kosovo’s GDP. However, the high proportion of tenders cancelled on grounds 
of non-compliance with administrative requirements and the choice of procurement methods 
give  rise  to  concerns.  Open  procedures  accounted  for  77%  of  the  total  value  of  signed 
contracts, and negotiated procedures for a further 20%, with other procedures being used very 
marginally. The use of single source tendering rose from €50 to €164 million. 

The government has adopted a comprehensive legal anti-corruption package. However, there 
has been a limited number of investigations on cases of alleged corruption, and the results of 
those  actually  performed  show  the  need  for  more  sophisticated  investigation  tools  and 
methods.  A  stronger  emphasis  needs  to  be  placed  on  monitoring  the  implementation  of 
procurement  contracts.  Administrative  capacity  and  coordination  mechanisms  of  the  main 
stakeholders in the public procurement system still need further strengthening, in particular to 
reduce the scope for corruption. 

Overall,  despite  some  results  achieved  in  terms  of  adopting  legislation  and  establishing  the 
Procurement  Review  Body,  there  are  a  number  of  worrying  developments  as  regards  the 
implementation of public procurement in Kosovo.  

4.1.7. 

Intellectual property law 

There has been limited progress in the area of intellectual property rights. 

Some  progress  can  be  reported  concerning  administrative  capacity  in  the  area  of  industrial 
property rights. The Central Intellectual Property Rights Unit was created as part of Kosovo 
Customs  in  February.  This  unit  is  tasked  with  ensuring  coordination  between  customs 
authorities,  the  market  inspectorate,  police  and  prosecution  offices  to  implement  the  2008 
regulation establishing customs procedures for action against counterfeit goods, pirated goods 
and  goods  infringing  intellectual  property  rights.  The  Industrial  Property  Office  is  an 
independent institution responsible for the implementation of the laws on patents, trademarks 
and  industrial  designs.  The  Office  has  received  18,000  applications  since  September  2008, 
mostly on trademarks.  

There  has  been  no  progress  concerning  copyrights  and  related  rights.  The  Office  for 
Intellectual Property has not been set up. Legislation implementing the Law on Copyright and 
Related Rights has not been adopted yet. The capacity of the coordinating office, namely the 
Office for European Integration of the Ministry of Culture, Youth and Sport, is very limited.  

intellectual  property  rights  remains  very  weak.  High 

levels  of 
Enforcement  of 
counterfeiting  and  piracy  persist.  The  administrative  capacity  to  implement  intellectual  and 
industrial  property  rights  remains  insufficient  and  implementing  provisions  are  still  needed. 
The responsibilities of the various bodies dealing with enforcement, as well as the division of 
responsibilities between them, are not clearly defined. There has been no progress as regards 
copyright and related rights. The intellectual property rights strategy 2008-2013 has not been 
adopted.  The  current  draft  includes  mainly  industrial  property  elements,  with  very  little 
reference to copyright.  

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Overall, key elements of industrial property rights legislation are in place and some progress 
has  been  achieved  as  regards  administrative  capacity.  However,  significant  efforts  are  still 
needed in this respect. Kosovo’s preparations in the field of intellectual property rights remain 
at an early stage. Legal provisions for copyrights and related rights are not yet in force and 
implementing capacity remains limited. An overarching strategy in this area is still lacking.  

4.1.8.  Employment and social policies 

In Kosovo, there is no labour law and no specialised labour courts. Legislation in the area of 
health and safety at work is inadequate. The capacity of the Labour Inspectorate to implement 
the  Law  on  Occupational  Safety,  Health  and  the  Working  Environment  is  limited.  The 
Inspectorate  maintains  no  databases  on  health  checks  on  employees  or  on  the  number  of 
employees in the private sector. There are no statistics on the number of fines issued by the 
Inspectorate; fines are often not paid. Lack of technical equipment hampers the Inspectorate's 
work.  

There has been minimal progress in the area of social dialogue. 35 sectoral trade unions and 
five  trade  union  associations  are  registered  in  Kosovo.  The  Tripartite  Advisory  Council  has 
been  renamed  the  Socio-Economic  Council  and  met  in  July.  The  role  of  social  partners  in 
decision  making  remains  limited.  The  collective  agreement  signed  in  2004  on  the  minimum 
wage  is  not  implemented.  The  trade  union  law  was  adopted  in  August;  there  is  no  law  on 
strike  action.  Health  workers,  judicial  workers  and  employees  of  the  Kosovo  Energy 
Company went on strike during the reporting period. A general strike organised by the Union 
of Independent Trade Unions of Kosovo also took place.  

In  the  area  of  social  inclusion,  Kosovo  adopted  an  action  plan  on  disabled  people  in  April. 
Home care services were provided for persons affected by mental and psychiatric disorders by 
the  Ministry  of  Health  and  the  Ministry  of  Labour  and  Social  Welfare.  Nine  community 
mental health centres and seven residential housing units were set up under the authority of 
the  Ministry  of  Health.  Kosovo  has  started  in  September  a  promotion  campaign  for  the 
inclusion  of  persons  with  disabilities.  However,  rehabilitation of  people  with  physical 
disabilities continues to be managed by NGOs only. There is a lack of rehabilitation facilities. 
The inaccessibility of buildings and public services for people with disabilities is an issue of 
concern.  

In  the  area  of  anti-discrimination,  the  adoption  of  the  strategy  and  action  plan  on  human 
rights 2009-2011 reinforced the legal framework (See also section 2.2 — Human rights and 
the  protection  of  minorities).  However,  the  government  has  not  taken  concerted  action  to 
promote respect for the LGBT community. 

As  regards  social  protection,  the  social  assistance  scheme  is  currently  under  review  by  the 
Ministry  of  Labour  and  Social  Welfare  and  the  Ministry  of  Economy  and  Finance.  Some 
325,000  people  (almost  15%  of  Kosovo  estimated  population)  receive  social  or  pension 
benefits,  the  impact  of  which  on  poverty  reduction  is  poorly  monitored.  Lack  of  reliable 
statistical data on employment prevents effective action to fight fraud. Legislation in the area 
of  social  services  and  institutional  care  requires  the  adoption  of  bylaws  to  enforce  the 
decentralisation  of  social  services  to  municipalities.  Kosovo  has  neither  a  law  on  health 
insurance nor a health insurance fund. 

The  sustainable  employment  development  programme  has  been  approved  by  local  and 
international  partners  in  July.  It  envisages  direct  budget  support  for  the  next  three  years 

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against  an  agreed  set  of  policy  milestones,  including  the  macroeconomic  environment,  the 
investment climate, labour market policies, training  and  social protection policies. An inter-
ministerial committee on employment chaired by the deputy prime minister has been set up to 
ensure coordination among relevant agencies. The Law on Professional Training, Retraining 
and Employment of People with Disabilities was adopted in December 2008.  

However, the authorities are yet to adopt an employment strategy. Registered unemployment 
estimates account for 43% of the economically active population. Over 338,000 persons were 
registered as unemployed at the end of June 2009. Over 90% of all registered job seekers have 
been on the unemployment register for more than 12 months.  

Disabled people remain among the most disadvantaged groups, along with Roma, Ashkali and 
Egyptians.  Female  employment  remains  very  low  (55%),  and  youth  unemployment 
particularly high. The implementation of the action plan on youth employment is hampered by 
the  lack  of  inter-ministerial  coordination.  The  administrative  capacity  of  the  Ministry  of 
Labour and Social Welfare remains poor.  

In  the  area  of  public  health  policy,  the  Law  on  Health  was  amended  in  December 
decentralising some medical services. However, the ministry is yet to finalise the health sector 
strategy  2009-2014. Mental health needs strengthening  with  a  special  focus  on  children and 
young people. Maternal and prenatal mortality rates remain high compared to the rest of the 
region, but are slightly declining. The infant mortality rate is considered to be the highest in 
Europe.  Chronic  malnutrition  is  a  concern.  To  date,  563  private  health  facilities  have  been 
licensed.  Health  infrastructure,  including  medical  equipment,  drugs  supply  and  hospital 
capacities,  remains  poor.  Hospitals  and  primary  care  facilities  remain  outdated.  Overall,  the 
health sector remains poor and requires urgent and increased attention by the authorities.  

Overall,  limited  progress  can  be  reported  in  the  employment  and  public  health  sector.  The 
absence  of  an  adequate  legislative  framework  and  the  poor  administrative  capacity  presents 
serious  obstacles  to  the  development  of  effective  employment  policies.  The  administrative 
and institutional capacity needs strengthening in the public health sector. 

4.1.9.  Education and research 

Education  is  a  priority  sector  in  the  medium-term  expenditure  framework  Essential  text 
books for primary school pupils are distributed free of charge. 45 new schools have been built 
during  the  reporting  period.  Schools  will  be  operating  in  a  maximum  of  two  shifts  from 
September.  The  Council  for  Teacher  Licensing  has  been  established.  The  teachers’  wages 
fund  was  increased  in  2009  by  an  additional  € 4.5  million.  Kosovo  consolidated  its 
participation  in  the  EU  Tempus  and  Erasmus  Mundus  programmes.  Following  the 
establishment  of  a  Tempus  office  at 
in  northern 
Mitrovicë/Mitrovica, that university was able to apply for a Tempus grant. Kosovo's Council 
for Curricula is operational. 

the  Serb-speaking  University 

The Kosovo Accreditation Agency and its board are operational. The accreditation process for 
public  and  private  higher  education  providers  was  completed  in  May  with  the  support  of 
European experts. It confirmed the institutional accreditation of the University of Pristina and 
some  private  colleges.  The  former  elected  its  new  rector  in  July.  University  of 
Mitrovicë/Mitrovica  elected  its  rector  for  a  second  term  in  May.  The  Higher  Education 
Council  was  set  up.  The  Law  on  Higher  Education  is  being  reviewed  with  the  Commission 
and  Council  of  Europe  support.  The  national  qualifications  authority  is  being  established  to 

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oversee  national  qualifications  alongside  the  Accreditation  Agency  and  other  relevant 
partners. It will, in particular, have responsibility for vocational qualifications.  

The Vocational and Educational Training (VET) school reform started, including the revision 
of curricula and the establishment of centres of competences. Some progress can be reported 
in inter-ministerial cooperation between the Ministry of Education, Science and Technology, 
the Ministry of Trade and Industry and the Ministry of Labour and Social Welfare. A more 
labour-oriented approach to VET schooling is noted, cooperation between VET schools and 
the private sector has strengthened.  

However,  the  legislation  on  accreditation  requires  amendments.  The  respective  roles  of  the 
Accreditation  Agency  and  the  Ministry  of  Education,  Science  and  Technology  need  to  be 
adapted  to  ensure  the  independence  of  the  higher  education  providers'  accreditation.  
Criticism  has  been  expressed  publicly  against  the  Ministry  because  of  the  alleged  lack  of 
transparency  in  the  accreditation  process  of  higher  education  providers.  The  lack  of 
accreditation of VET providers undermines confidence in the VET certification scheme.  

Kosovo’s  education  system  continues  to  be  affected  by  resource  constraints,  the  lack  of 
adequate facilities  (including the basic sanitary services and non-access  to  drinkable water), 
poor  quality  of  teaching  and  low  enrolment  (lower  than  the  average  in  the  region).  The 
implementation of the Law on Education is hampered at local level by the lack of adequate 
financial and administrative capacities in the municipal education directorates. Drop-out rates 
higher  than  in  the  region  and  teacher  absenteeism  remain  an  issue.  Participation  in  non 
compulsory  early  childhood  development  and  higher  education  and  training  is  among  the 
lowest in Europe. A quality of teaching monitoring mechanism is still lacking.  

The  Ministry  of  Education,  Science  and  Technology  is  yet  to  develop  curricula  for  Roma, 
Ashkali,  Egyptian  and  Gorani  communities.  The  ministry  has  set  aside  minimal  funds  for 
capital investment projects benefiting the Serb community.  

Research is now a priority sector. In April, the Ministry appointed a coordinator for the 7th 
Framework Programme. The Council for Science developed an action plan for 2009, but its 
implementation  is  hampered  by  resource  constraints.  Research  and  development  capacities 
within the University of Pristina have been strengthened. 

Overall,  progress  can  be  reported  in  the  education  and  research.  However,  the  pace  of 
institutional  and  legal  reforms  has  to  be  stepped  up,  better  coordinated,  and  translated  into 
practice. Central and local capacities to teach and manage education need to be significantly 
enhanced.  Significant  efforts  are  needed  to  increase  participation  in  education.  A  system  to 
monitor  the  quality  of  education  needs  to  be  set  up.  Additional  resources  continue  to  be 
required for research purposes. 

4.1.10.  WTO issues 

Kosovo  is  not  a  member  of  the  WTO  and  has  not  undertaken  any  formal  steps  to  join  the 
WTO. 

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4.2. 

Sectoral Policies 

4.2.1. 

Industry and SMEs 

Limited progress has been made in the area of industry and SMEs. In April, the Assembly 
adopted  the  Law  on  Economic  Zones,  which  aims  to  stimulate  private  sector  development 
with a particular emphasis on SMEs. It governs the establishment, operation and supervision 
of economic zones. 

As  regards  the  business  environment,  one-stop-shop  and  on-line  registration  and  licensing 
facilities  provided  by  the  Business  Registration  Agency  are  not  yet  fully  operational.  25 
companies,  including  four  international  ones,  have  signed  up  for  premises  in  the  Drenas 
business park. Works on the infrastructure of the park are almost completed.  

In accordance with the European Charter for Small Enterprises, Kosovo started implementing 
the  entrepreneurship  learning  strategy.  Elements  already  under  implementation  involve 
teacher  training  and  curriculum  reform.  More  needs  to  be  done  to  create  structured 
cooperation and engagement of local businesses with schools.  

There is no strategic framework for SME development in Kosovo to guide the activities of the 
Ministry  of  Trade  and  Industry’s  SME  Support  Agency.  The  administrative  capacity  of  the 
agency  remains  limited.  Online  applications  are  not  fully  operational.  The  Consultative 
Council on SMEs, representing governmental and non-governmental institutions, has started 
functioning again, after a suspension in 2008.  

The  Kosovo  Business  Registration  Agency,  officially  opened  in  2002,  continued  to  register 
businesses. The business register includes 93,000 companies; however, only 10% of these are 
active. Fees to start and close a business are the lowest in the region (€5-20). Information on 
registered companies becomes automatically available online. There is no law on e-signature. 
This impedes progress in electronic registration of companies. 

Overall,  the  institutional  and  legal  framework  for  SMEs  and  industry  policy  needs  to  be 
further developed. Currently, Kosovo relies largely on ad hoc measures and pilot projects.  

4.2.2.  Agriculture and fisheries 

The  Law  on  Agriculture  and  Rural  Development  was  adopted  in  July.  It  provides  a 
framework  for  agricultural  and  rural  development  practices  in  Kosovo  and  establishes  the 
legal basis for updating the agricultural and rural development plan for the period 2009–2013 
and  the  accompanying  action  plan.  The  Ministry  of  Agriculture,  Forestry  and  Rural 
Development  has  stepped  up  its  reform  efforts  in  areas  such  as  consolidating  and 
rehabilitating  agricultural  land,  improving  natural  resources  management  in  rural  areas, 
increasing  competitiveness  and  farm  diversification,  and  enhancing  food  quality.  These 
efforts are supported by a 40% increase in government spending in the agricultural sector in 
2009 compared to 2008. A grant system is also planned, mainly to support structural reform 
measures rather than offering direct payments for production.  

The Law on Organic Farming needs to be amended in accordance with the changes made in 
EU Regulations on organic farming. There is no certification body or inspectorate for organic 
farming. Implementing legislation pursuant to the Law on Wine has not been adopted. This 
has  led  to  delays  in  reform  in  important  areas  such  as  quality  control  and  labelling 
requirements.  

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The  Law  on  Forestry  needs  revision  in  order  to  strengthen  protective  measures  against 
damage and illegal logging and the violation of logging permits. Responsibilities for forestry 
management  will  be 
in  Kosovo’s 
decentralisation plans. The main challenge in preserving Kosovo’s forests, which cover 42% 
of  its  surface  area,  is  the  limited  capacity  of  the  authorities  to  implement  the  law.  Better 
coordination between the relevant institutions is needed. 

level  as  foreseen 

the  municipal 

transferred 

to 

Kosovo’s agriculture continues to suffer from fragmented land tenure, lax control of the use 
of arable land for construction, non-transparent valuation and pricing of agricultural land (for 
both sale and lease), difficulties for farmers to access credit, and an outdated and inadequate 
land registration system.  

In  March,  the  Assembly  adopted  the  Law  on  Food  providing  for  the  establishment  of  the 
Kosovo  Veterinary  and  Food  Agency.  The  agency  is  operating  under  the  authority  of  the 
Prime Minister’s Office and has the task of coordinating activities in the area of food safety. 
The  law  establishes  a  clearer  separation  of  responsibilities  between  the  different  services  in 
the agricultural sector. It transfers responsibilities from the municipal to the central level.  

In the veterinary and phytosanitary area, the new Food Law provides a basis for adopting 
implementing  legislation.  Very  limited  progress  can  be  reported  in  this  respect.  Plans  to 
evaluate  and  upgrade  agri-food  establishments  remain  at  a  preparatory  stage.  Three  new 
slaughterhouses  were  licensed  during  the  reporting  period.  There  are  no  facilities  for 
processing animal by-products in Kosovo. Although the necessary legislative framework is in 
place,  Kosovo’s  animal  identification,  registration  and  movement  control  system  is  not 
operational.  

In  April,  an  administrative  instruction  was  adopted  on  the  designation  of  fishery  regions  in 
Kosovo.  It  allows  sport/recreational  fishing  and  economic  fishery.  Most  of  the  European 
standards as regards fisheries do not apply for Kosovo, which has no deep-sea fishing. 

Overall,  the  agriculture,  veterinary  and  phytosanitary  legislative  framework  has  been 
developed.  The  lack  of  administrative  capacity  remains  a  concern,  leading  to  delays  in 
reforming the agricultural sector. There has been limited progress as regards alignment with 
European standards.  

4.2.3.  Environment 

There  has  been  some  progress  in  the  area  of  horizontal  legislation.  The  Law  on 
Environmental Impact Assessment and the Law on Strategic Impact Assessment were adopted 
in March, but both need to be revised to be brought in conformity with European standards. A 
limited  number  of  projects  envisaged  in  the  environmental  action  plan  have  been 
implemented.  

The Ministry of the Environment and Spatial Planning has procured equipment for mobile air 
quality monitoring control stations. However, there is still no air quality strategy and no clear 
division of responsibilities as regards management of the air quality monitoring network. No 
progress  can  be  reported  in  the  waste  management  sector.  Under  the  Community  Energy 
Treaty, Kosovo needs to implement the Directive on Large Combustion Plants, but has made 
no  effort  to  transpose  its  provisions.  Bill  collection  rates  by  water  and  waste  companies 
remain low.  

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There has been limited progress in the area of water quality.  The  Law  on  Publicly  Owned 
Enterprises  defines  responsibilities  for  the  operation  and  maintenance  of  publicly  owned 
enterprises and assets in the water sector. However, there are no water treatment plants. Only 
70% of the population are connected to drinking water networks and only a third is connected 
to sewage systems. The establishment of river basin authorities, envisaged by the Water Law, 
has not progressed. Their structure is still not defined and they have not been provided with 
financial  or  human  resources.  Their  functions  are  carried  out  by  the  Ministry’s  River  Basin 
Coordination Unit. The issue of ownership of assets remains unclear. Responsibilities for the 
management  of  dams  are  not  clearly  allocated.  The  safety  of  large  infrastructures,  such  as 
dams, dykes and water intakes, requires appropriate management and monitoring.  

There  has  been  no  progress  with  the  adoption  of  European  standards  in  the  area  of  nature 
protection. Transposition of the Birds and Habitat Directives has been held back by delays in 
adopting the Nature Protection Law. 

Some progress can be noted in the area of industrial pollution control, with the adoption in 
March  of  the  Law  on  Integrated  Pollution  Prevention  and  Control.  There  is  no  progress  as 
regards chemicals or genetically modified organisms. In  the area of noise pollution, some 
administrative  instructions  to  implement  the  Law  on  Protection  against  Noise  have  been 
adopted. Some  efforts have been made in raising public  awareness  of environmental issues. 
This needs be reinforced. Cooperation between environmental NGOs and the Ministry needs 
to be strengthened. 

Kosovo has made efforts to improve coordination between bodies, in particular as regards the 
position  of  Kosovo's  Environmental  Protection  Agency.  However,  cooperation  between  this 
Agency  and  the  Hydro-Meteorological  Institute  needs  to  be  improved.  The  administrative 
structures  responsible  for  the  environment  continue  to  suffer  from  a  lack  of  resources:  the 
budget  of  the  Ministry  is  the  lowest  of  any  ministry  in  Kosovo.  Staff  shortages  make  it 
difficult  for  these  bodies  to  carry  out  their  responsibilities.  While  some  of  their  duties  have 
been  transferred  to  the  municipal  level,  municipalities  often  lack  environmental  officers  or 
inspectors.  

Overall,  Kosovo  is  at  an  early  stage  in  alignment  with  European  environmental  standards. 
There  is  some  progress  to  report  in  the  environmental  field,  particularly  as  regards  the 
adoption of legislation. Further efforts are needed to establish an effective administrative and 
institutional infrastructure in this field. The capacity of the Ministry of the Environment and 
Spatial Planning and related institutions remains limited.  

4.2.4.  Transport policy 

There  has  been  some  progress  in  the  area  of  trans-European  transport  networks.  Kosovo 
continued  to  participate  actively  in  the  implementation  of  the  2004  memorandum  of 
understanding  on  the  development  of  the  South  East  Europe  Core  Regional  Transport 
Network,  and  in  the  South  East  Europe  Transport  Observatory  (SEETO)  particularly  by 
updating  and  implementing  the  Multi-annual  Plan  2009-2013.  The  Law  on  Expropriation  of 
Immovable  Property,  adopted  in  April,  provides  the  legal  basis  for  the  Ministry  of  Transport, 
Post and Telecommunications to carry out land expropriation activities along the newly financed 
transport infrastructure projects. 

In the area of road transport, there has been some progress in building the capacity of the 
Transport Planning Unit within the Ministry. However, the Ministry is too heavily involved in 

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the daily aspects of road management instead of focusing on developing strategies and policy. 
The reorganisation of the Department of Road Infrastructure needs to be addressed in order to 
ensure  a  clear  distinction  between  maintenance  and  supervision  and  road  network 
development.  The  capacity  of  the  Department  of  Road  Infrastructure  within  the  Ministry  is 
limited. Only five municipalities have road departments. 

The Road Safety Council (chaired by the Minister of Transport and Telecommunications) was 
established  in  October  2008  and  its  Secretariat  became  operational  in  January.  An 
administrative instruction on the technical inspection of vehicles was issued in December as 
part of implementing the Law on Road Safety. A multi-annual action plan for road safety is 
still pending. The capacity of the Transport Inspectorate needs to be strengthened. 

Very  limited  progress  can  be  reported  in  the  rail  transport  sector.  The  Law  on  Kosovo 
Railways provides the legal basis for establishing a railway regulatory authority independent 
from the Ministry. The agency, which is an essential institution as regards third party access 
to  railway  infrastructure,  has  still  not  been  established.  The  Law  on  Kosovo  Railways 
envisages the separation of infrastructure management and train operations. This has not been 
achieved. Compensation offered to railways for the provision of public passenger services is 
granted,  but  does  not  cover  costs.  Rail  transport  is  not  a  government  priority.  Limited 
resources have been allocated to this sector. The condition of Kosovo’s railway infrastructure 
and rolling stock and the level of railway services remain poor. By contrast, Kosovo’s Multi-
Modal  Transport  Strategy  identifies  investment  needs  over  €  500  million  for  Kosovo’s 
railway infrastructure, and a further €230 million in rolling stock, for the next 20 years.  

There is nothing to report on maritime transport and inland waterways. The multi-modal 
strategy  and  action  plan  has  not  been  adopted  yet.  Insufficient  progress  can  be  noted  in  the 
area  of  air  transport.  The  Civil  Aviation  Authority  took  over  from  the  previous  aviation 
regulator in January 2009. Its board members were appointed only in July and the board is not 
yet  operational.  Pristina  International  Airport  was  issued  with  the  Standard  Aerodrome 
Certification  of  the  Icelandic  Civil  Aviation  Authority  in  December  2008.  The  government 
has hired a transaction adviser to prepare the award of Pristina Airport’s concession. 

A  substantial  amount  of  legislation  under  the  European  Common  Aviation  Area  (ECAA) 
Agreement  had  already  been  transposed.  However,  the  2009  Regulation  on  Charter  Flight 
Authorisation,  the  government  decision  on  the  categorisation  of  the  airport,  and  the  slot 
allocation practice are incompatible with European standards and with Kosovo’s obligations 
under  the  ECAA  agreement.  This  risks  delaying  the  successful  completion  of  the  first 
transitional  phase  of  the  ECAA.  Licences  to  fly  to  and  from  Pristina  are  granted  in  a  non-
transparent way and with unjustifiable delays. In the area of air traffic management, Kosovo 
needs to ensure that it licences air traffic controllers according to the Community Single Sky 
rules and procedures. 

Overall, there has been some progress in the field of road transport. However, there have been 
some  worrying  developments  in  the  area  of  aviation.  Transport  infrastructure  remains  poor 
and underdeveloped in Kosovo. Capacities in this area need to be strengthened, as well as the 
legal framework for public-private partnerships. 

4.2.5.  Energy 

With  regard  to  security  of  energy  supply,  there  is  still  no  oil  stock  strategy.  In  July  (later 
than foreseen originally) the government decided to offer to investors a package of the New 

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Kosovo power plant and a new mine. The plant needs to respect European standards for new 
generation projects. 2 of the 4 shortlisted prospective investors have ceased their interest. The 
remaining operational units of Kosovo A will need to be decommissioned by 2017, to comply 
with  the  Large  Combustion  Plant  Directive.  With  existing  lignite  sources  running  out,  the 
delays  in  developing  the  New  Kosovo  power  plant  project  and  in  refurbishing  mining 
machinery  at  the  existing  mine  could  lead  to  an  increasing  ‘lignite  gap  in  the  coming  two 
years, forcing Kosovo to rely on expensive power imports.  

Results have been mixed with respect to the internal energy market and implementation of 
the Energy Community Treaty. The Law on Central Heating, adopted in November 2008, sets 
conditions for developing a sustainable and competitive market for district heating, based on 
free market principles.  

The  Energy  Community  Treaty  requirements  to  unbundle  accounts  between  mining,  power 
generation,  network  distribution  and  supply  and  to  prepare  for  future  privatisation  of  the 
assets of the Kosovo Electricity Corporation have been met. In July the transaction advisor for 
privatising  the  corporation’s  distribution  and  supply  components  was  selected,  but  the 
contract has not been signed. Kosovo expects actual privatisation by mid-2010. In November 
2008, the Energy Regulatory Office adopted the authorisation procedure for new generating 
capacities as required by the Treaty. Further progress will be necessary to implement its legal. 
The  institutional  and  legislative  capacity  of  Ministry  and  Regulator  continue  to  be  weak. 
Attracting and maintaining qualified staff remains a problem. 

The  government  adopted  the  energy  strategy  2009-2018  in  the  summer.  It  needs  to  be 
formally adopted by the Assembly. Its main pillars concern sector financing, the new Kosovo 
power plant and energy supply by the Kosovo Energy Corporation. The strategy also covers 
good  governance,  social  and  environmental  safeguards,  energy  efficiency/renewable  energy 
and natural gas. 

Billing and collection has improved in the past 12 months, but is still poor. Non-payment for 
electricity  represents  a  major  challenge  for  the  company.  Technical  and  financial  losses 
continue  to  be  high:  of  the  energy  that  the  Corporation  can  sell,  over  20%  was  stolen  and 
commercial losses constituted a further 20%. Only some 60% of the energy available for sale 
is paid for. The Corporation lost some €90 million last year. Vigorous and increased efforts 
are  needed  to  increase  electricity  billing  and  collection  rates.  The  police  and  the  judiciary 
have  an  important  role  to  play.  As  a  consequence  of  endemic  bill  non-payment,  power 
consumption continues to increase at an unsustainable rate (some 8% in 2008), far higher than 
the Corporation can keep up with. 

The Regulator  approved new electricity transmission and retail tariffs in April. They are on 
average  2.5%  higher  than  in  2008,  according  to  an  annual  increase  driven  by  the  tariff 
methodology  of  the  Energy  Regulatory  Office,  which  gradually  introduces  cost-reflective 
tariffs. Low income customers benefit from a lower tariff. Kosovo’s electricity transmission 
system operator (KOSTT) continues to encounter difficulties to participate as an equal partner 
in the regional commercial mechanisms: the inter-transmission compensation mechanism and 
the capacity allocation mechanisms. Serbia’s operator (rather than KOSTT) is compensated for 
electricity  transit  through  the  Kosovo  transmission  grid  and  it  continues  to  allocate  the 
interconnection transmission capacities of KOSTT. Losses incurred as a result are passed on to 
consumers.  

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Kosovo’s  energy  efficiency  plan,  adopted  in  February  2009,  sets  ambitious  targets  for 
increasing efficiency by 3% in 2011 and 9% by 2016 compared to 2008 consumption levels 
for  households,  services,  transport,  industry  and  agriculture.  It  will  require  additional  legal 
and  administrative  measures  to  meet  these  targets,  particularly  as  regards  the  household 
sector,  where  34%  of  all  energy  is  consumed.  As  regards  renewable  energy,  the  Regulator 
received  seven  applications  to  build  wind  turbines.  The  government  identified  16  sites  that 
could  qualify  for  new  hydro  energy  generation  capacity  forecast  to  generate  up  to  60 
megawatts.  The  Regulator  approved  competitive  feed-in  tariffs  for  power  generated  from 
renewable sources, with a view to attracting investments in this sector. 

There  is  minimal  progress  in  the  area  of  nuclear  safety  and  radiation  protection.  Initial 
assessments  are  being  carried  to  implement  the  rules  on  management  and  monitoring  of 
sealed  radioactive  sources  and  medical  and  industrial  radioactive  waste.  There  is  no  legal 
framework  in  this  area  and  no  nuclear  safety  authority.  No  progress  has  been  made  in 
preventing and combating illicit trafficking of nuclear and other radioactive materials. 

Overall,  there  has  been  limited  progress  in  the  area  of  energy,  although  legal  alignment 
suffered delays. However, there are major problems to be addressed, which include improving 
the financial viability of the power utility (by reducing commercial and non-technical losses), 
managing  demand,  upgrading  the  infrastructure  and  resolving  Kosovo’s  impending  lignite 
shortfall. 

4.2.6. 

Information society and media 

in 

There  has  been  some  progress 
the  area  of  electronic  communications.  The 
Telecommunications  Regulatory  Agency  has  obtained  spectrum-monitoring  equipment 
enabling  it  to  identify  illegal  activity  in  northern  Kosovo  and  in  the  areas  bordering 
neighbouring countries. Mobile telephony market penetration is at 60%; internet penetration 
is 5.4%. A third fixed telephony license was issued in January 2009 but has not yet become 
operational. Two mobile virtual network operators have been licensed; one is already active in 
the market. The implementation of the sector policy adopted in 2007 is suffering delays. 

Also  in  September,  the  assembly  approved  the  new  board  of  the  Telecommunications 
Regulatory Agency, 9 months after the previous board’s mandate expired. As the Agency has 
legislative powers, the new board needs to move swiftly with the adoption of implementing 
legislation  crucial  for  the  proper  functioning  of  the  market  and  ensure  its  enforcement. 
Capacity  at  both  the  Ministry  of  Transport  and  Communications  and  the  Regulator  is  too 
limited for the effective performance of their tasks in this area. The operational, political and 
financial independence of the Agency needs to be strengthened. Kosovo does not possess an 
international dialling code and top level internet domain name. This also delays implementing 
some competitive safeguards, such as number portability. 

There has been limited progress in the area of information society services. The 2005 Law 
on Information Society Services transposes most provisions of the Directives on e-Commerce, 
e-Signatures, and Data Protection and e-Privacy, but implementation has been limited. A law 
on  cybercrime  has  not  yet  been  adopted.  Overall,  information  society  services  need  to  be 
further developed. The relevant strategies and action plans are yet to be fully implemented. 

There has been  some  progress  in  the field of audiovisual policy and media. The  laws  that 
cover the media industry — the Law on the Independent Media Commission and the Law on 
the Public Broadcaster — are up for amendment. Re-licensing of broadcasters has begun: at 

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the  end  of  August,  a  first  batch  of  12  long-term  licenses  were  approved  for  existing 
broadcasters.  The  Independent  Media  Commission  is  now  assessing  applications  for  new 
frequencies. Cable operators in the north are not licensed by the Commission.  

The Commission’s independence, in particular as regards its staff and resources, needs to be 
guaranteed  in  the  context  of  possible  legislative  amendments.  The  appointment  of  the 
Commission's council member by the Assembly and the RTK board is yet to be completed.  

In May, the regulation for broadcasters regarding the protection of children and minors from 
harmful programme content entered into force, but there are no mechanisms to implement and 
enforce  it.  No  progress  can  be  reported  on  the  switchover  from  analogue  to  digital 
broadcasting. Kosovo is not a member of the International Telecommunication Union and has 
only one frequency allotment. This does not provide enough space for digital frequencies to 
ensure an adequate terrestrial television signal after 2015.  

The sustainability of financing of the pubic broadcasted is not ensured. The contract by which 
the  licence  fee  was  collected  via  energy  bills  will  expire  in  November.  The  RTK  law 
envisages annual tenders to purchase audiovisual works from independent producers,  which 
should account for 20% of the programmes produced. This has not been fully implemented. 
Legal  inconsistencies  between  the  Law  on  Defamation  and  Insults  and  the  Criminal  Code 
have  still  not  been  resolved.  According  to  European  standards  defamation  should  not  be  a 
criminal offence. Kosovo does not apply the penal provisions on defamation, but since they 
remain on the statute book, legal uncertainty persists.  

After a two year absence, the Minority Media Fund has started to function again in January. 
14  media  have  received  grants  this  year.  There  are  110  licensed  broadcasters;  41  represent 
minority  media  (32  Serbian,  3  Turkish,  3  Bosnian,  2  Gorani  and  1  Roma).  There  is  no 
independent  minority  channel  with  Kosovo-wide  coverage.  An  IMC  Regulation  on 
Audiovisual  Communication  was  adopted  at  the  end  of  August.  This  will  have  a  particular 
impact on RTK by imposing limits on advertising thresholds.  

Positive  developments  can  be  reported  as  regards  cooperation  between  the  Association  of 
Independent  Broadcast  Media  of  Kosovo  and  minority  media  from  the  north.  The  Law  on 
Access to Information is not fully implemented, which hampers the work of journalists. The 
Press  Council  is  a  self-regulatory  body  which  depends  on  donations  for  its  finances.  Its 
enforcement capacity is weak.  

Overall, whilst there has been some progress in the area of the information society and media. 
However, more needs to be done. The implementation of the RTK law and the appointment of 
new  RTK  board  remain  the  most  serious  issues  of  concern,  as  is  the  need  to  strengthen  the 
administrative capacity, financial and political independence of both regulatory authorities, as 
well as the human capacity of the Independent Media Commission 

4.2.7.  Financial control 

There has been limited progress on Public Internal Financial Control (PIFC). Efforts have 
focused  mainly  on  the  development  of  internal  audit  capacities  and  less  on  financial 
management  and  control  systems.  The  Central  Harmonisation  Unit  for  these  systems  is 
operational since September. The Law on Internal Audit was adopted in September. An audit 
manual has been developed and training of auditors has continued. Internal audit concentrates 

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42 

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mainly  on  compliance  testing  but  is  not  yet  seen  as  a  managerial  tool.  The  government 
approved the development strategy for internal audit 2010-2012.  

As  regards  external  audit,  the  Office  of  the  Auditor  General  prepared  several  internal 
documents  in  the  early  months  of  2009,  including  an  external  audit  manual,  a  new 
performance  audit  guideline,  a  quality  framework,  an  amended  code  of  conduct  and  a 
standard  reporting  format.  Key  international  standards  have  been  translated  (such  as  the 
INTOSAI  Guidance  on  Internal  Control  and  a  Code  of  Ethics).  The  first  two  annual 
performance  reports  of  the  Auditor  General  were  sent  to  the  Assembly  in  2008  and  2009 
respectively. An adequate follow-up system on external audit reports and recommendations is 
lacking. The financial independence of the office is not sufficient.  

Overall, there has been modest progress in this area. Developments in public internal financial 
control and external audit are at an early stage. Continued efforts are needed in particular to 
improve the financial management and control environment. 

4.2.8. 

Statistics 

There  has  been  some  progress  in  the  area  of  statistics.  In  August,  the  Statistical  Office  of 
Kosovo  adopted  a  strategic  development  plan  2009-2013.  The  main  priority  areas  include 
statistical infrastructure, survey data quality, IT development and training of staff. The main 
focus is still  on social and demographic statistics rather than on economic statistics. The IT 
system has been improved and memoranda of understandings have been signed with suppliers 
of data, which improved the co-ordination of the statistical system, but there is still room for 
improvement  as  regards  cooperation  between  the  different  compilers  of  statistical  data.  The 
law on official statistics has not yet been adopted.  

Kosovo’s  statistical  infrastructure  remains  weak.  The  weak  capacity  and  inadequate 
independence of the statistical office are a concern. Several ministries collect statistics which 
fall within the statistical office's remit. 

There has been limited progress in the area of classifications and registers. Classification of 
institutional units and of economic transactions has improved. However, compliance with EU 
and  international  classifications  is  limited  and  the  area  needs  further  development.  The 
Statistical  Office  of  Kosovo  has  not  yet  introduced  NACE  Rev.  2  and  is  still  using  NACE 
Rev. 1 standards. The business register is operational but the coverage and its links and update 
procedures are not adequate for reliable economic statistics.  

As regards sector statistics, there has been some progress in the area of economic, business 
and  agriculture  statistics.  Pilot  surveys  have  been  conducted  for  producer  price  indexes, 
business  statistics  and  social  statistics.  The  findings  were  used  in  compiling  the  national 
accounts. However, the national accounts remain insufficient and need further development. 

A  pilot  population  and  housing  census  was  carried  out  in  six  Kosovo  municipalities  in 
October  and  November  2008.  This  demonstrated  an  improvement  in  the  capacity  of  the 
Statistical Office of Kosovo to conduct a population census. However, the recommendations 
of  the  International  Monitoring  Operation  were  not  fully  implemented.  In  particular  the 
boycott by the Kosovo Serb community was not properly analysed. The statistical office has 
no  strategy  for  addressing  this  issue.  In  July,  the  government  announced  its  intention  to 
organise a full population census in 2011. 

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Overall, some progress can be reported in the field of sector statistics. However, the Statistical 
Office  of  Kosovo  is  still  unable  to  produce  sufficient  statistics  on  economy  to  underpin 
effective policy-making. The office has insufficient administrative and coordination capacity 
to conduct major surveys.  

4.3. 

Justice, freedom and security 

4.3.1.  Visa, border management, asylum and migration 

Travel document security has improved with the introduction of the new Kosovo passports in 
2008. All countries that recognise these passports issue visas in them. The great majority of 
UNMIK travel documents will expire by August 2010. The Law on Foreigners was adopted in 
December  2008.  Related  by-laws  are  not  yet  adopted.  A  range  of  secondary  legislation 
completing  legal  framework  in  relation  to  issuance  of  ID  cards,  passports  citizenship  have 
been adopted. 

The  proliferation  of  travel  documents  is  still  an  issue,  which  complicates  control  over 
migration  and  the  fight  against  crime.  The  security  and  control  over  the  issuance  of 
documents  are  a  concern,  as  well  as  the  security  of  related  registries  and  databases.  Serb 
parallel structures in Kosovo pose a particular challenge in this regard.  

Limited  progress  has  been  achieved  as  regards  border  and  boundary  issues.  A  revised 
integrated  border  management  strategy  and  an  action  plan  were  adopted  in  April  2009  to 
coordinate  the  activities  of  agencies  involved  in  border  control  and  management.  The 
executive  board  for integrated  border management  was set  up in  May  2009,  comprising the 
integrated  border  management  coordinator  and  representatives  of  other  relevant  bodies. 
EULEX deployment at the two crossing points (gates 1 and 31) between Kosovo and Serbia 
has had a positive impact. The Kosovo Police has launched a restructuring process including 
the relevant border departments.  

However,  Kosovo  borders  are  porous  and  still  not  fully  secured.  The  north  represents  a 
particular  challenge.  The  lack  of  full  customs  operations  in  that  area  prevents  the  efficient 
fight  against  organised  crime.  The  cooperation  between  bodies  involved  in  border 
management is insufficient. Kosovo needs to ensure that the IT system for border control and 
monitoring is in line with EU standards.  

Overall, Kosovo has only started to address its priorities as regards visa policy and border and 
boundary management. Kosovo needs to start developing a coherent visa police in line with 
European standards. 

There  has  been  limited  progress  in  the  area  of  asylum.  Kosovo  has  adopted  some 
implementing legislation on the handling of asylum seekers. In June 2009, a database on of 
asylum seekers was put in operation. However, a number of challenges need to be addressed. 
The  capacity  of  the  Department  for  Citizenship,  Asylum  and  Migration  as  well  as  of  the 
police  to  deal  with  asylum  seekers  and  their  applications  remains  weak.  There  is  no  appeal 
body established for asylum cases. A reception centre to accommodate asylum seekers is yet 
to  be  built  and  Kosovo  also  lacks  holding  detention  centres  for  foreign  migrants.  Overall, 
preparations in the area of asylum are at an early stage.  

In the field of migration, there has been partial progress. The Ministry of Internal Affairs is 
responsible  for  processing  readmission  requests  from  third  countries.  Countries  which  have 

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44 

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not  recognised  Kosovo  continue  to  send  their  requests  to  UNMIK.  The  Department  for 
Citizenship, Asylum and Migration received 2,878 requests for repatriations between October 
and  July;  2,577  persons  were  repatriated  to  Kosovo  by  third  states.  Cooperation  among  the 
relevant bodies within the Kosovo administration with a role in this process is satisfactory. In 
July, Kosovo adopted a law on granting work and employment permits for foreigners as well 
as  implementing  legislation  regarding  the  issuance  of  identity  cards  for  foreigners.  In 
September, Kosovo adopted a strategy and an action plan on migration.  

However, the strategy and action plan does not sufficiently address important issues such as 
exit controls, checks of forged documents, etc. Although the Law on Foreigners was adopted, 
related secondary legislation remains to be enacted. Implementing provisions to this law have 
not  been  issued  except  for  an  administrative  instruction  on  ID  cards  for  foreigners,  which 
needs  to  be  improved.  Returns  remain  unsustainable  as  the  reintegration  strategy  for 
repatriated  persons  is  not  properly  implemented.  The  Inter-ministerial  Coordination  Board 
envisaged by the strategy for reintegration of repatriated persons has met only once. There is 
no  body  supervising  the  implementation  of  Kosovo’s  reintegration  policy.  Reintegration  of 
returned  persons  remains  a  major  deficiency.  Furthermore,  the  management  of  the 
readmission  process  and  the  process  of  verifying  the  identity  of  persons  originating  from 
Kosovo  needs  to  be  improved,  particularly  in  terms  of  personnel,  technical  capacity, 
documentation support and statistics. There is no law on readmission. 

Overall,  Kosovo  has  started  to  address  its  priorities  on  migration.  However,  legislative 
framework needs to be completed and quality of adopted documents ensured. The capacity to 
reintegrate returnees is a major obstacle to the full implementation of policies in this area. 

4.3.2.  Money laundering 

Tackling financial crime is a key European Partnership priority. However, Kosovo took only 
few  steps  to  address  this  phenomenon  effectively.  An  UNMIK  regulation  continues  to 
regulate  the  activity  of  governmental  and  other  agencies  with  responsibilities  in  this  area. 
Banks,  customs,  exchange  offices  and  other  financial  intermediaries  are  required  to  report 
cash  or  electronic  transfers  to  the  Financial  Intelligence  Centre  currently  managed  by 
EULEX.  This  Centre  acts  as  the  national  financial  intelligence  unit.  It  has  started  to 
implement a new system of reporting, which is expected to provide significant improvements. 
The Centre also established relations with similar institutions in Albania, the former Yugoslav 
Republic of Macedonia and Montenegro and with some Egmont group members.  

The  Law  on  Management  of  Sequestered  and  Confiscated  Criminal  Assets  was  adopted  in 
July.  However,  the  legislative  framework  needs  to  be  strengthened  in  order  to  ensure  that 
money laundering is defined as a crime, that the future Kosovo financial intelligence unit is 
independent from undue political and other influence, and that the relevant legal acts are line 
with EU standards. 

Oversight  of  the  private  sector  and  particularly  the  real  estate  sector  needs  to  be  urgently 
addressed.  Cooperation  between  the  Centre  and  the  tax  authority  remains  insufficient. 
Reporting by non-banking institutions to the Centre continues to be inadequate. The capacity 
of judicial and law enforcement authorities to deal with money laundering has not progressed. 
Law enforcement and supervisory authorities have difficulties to detect, in a timely manner, 
violations in these sectors. The Agency for the Management of Sequestered and Confiscated 
Assets, the only mechanism to manage these assets, is not yet operational.  

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45 

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Overall,  money  laundering  remains  an  issue  of  serious  concern.  Kosovo  lacks  adequate 
legislative provisions and operational structures to cope with this phenomenon. 

4.3.3.  Drugs 

There has been some progress in the fight against drug trafficking. Kosovo is located on the 
Southern  Balkans  drugs  trafficking  route.  The  Kosovo  Police  have  conducted  a  number  of 
effective operations in the fight against the abuse and trafficking of drugs. The quantities of 
narcotics  seized  and  the  numbers  of  cases  investigated  and  persons  arrested  and  prosecuted 
have increased. In June Kosovo adopted a strategy and an action plan against narcotics aimed 
at  reducing  supply  and  demand  along  with  a  corresponding  action  plan.  The  police 
international cooperation unit liaised with police in countries such as Switzerland, Germany 
and Italy.  

However, pending its restructuring, police lacks an adequate budget and an effective entity to 
fight  illicit  drugs.  Kosovo  also  lacks  sufficient  number  of  trained  police  dogs  for  drug 
detection and canine unit. Central Narcotics Investigation Section of the police needs further 
support.  Cooperation  between  law  enforcement  agencies  is  still  very  weak  and  the  flow  of 
information  is  not  integrated.  The  proper  storage  of  seized  drugs  is  not  adequately  ensured 
across Kosovo.  

Overall,  Kosovo's  fight  against  drug  trafficking  is  at  an  early  stage.  Several  considerable 
weaknesses persist such as capacity of the police to tackle drug trafficking effectively and the 
inadequate level of cooperation and information exchange between relevant institutions. 

4.3.4.  Police 

Kosovo has made partial progress as regards policing. The basic legislative framework is in 
place.  Kosovo  Police  has  managed  well  its  public  order  functions.  The  police  continued  in 
implementing its strategic plan 2008-2010. The police have also upgraded its communication 
infrastructure. The Ministry of Internal Affairs established municipal councils on community 
security  to  reinforce  relations  between  police,  municipal  authorities  and  local  communities. 
Most  police  officers  from  the  Kosovo  Serb  community  south  of  Ibar  river,  who  left  the 
service  following  the  declaration  of  independence,  have  returned  to  their  stations.  In 
September,  Kosovo  adopted  the  Law  on  Weapons.  The  law  is  in  line  with  relevant  EU 
legislation and includes adequate penalty provisions. In January 2009, the Ministry of Internal 
Affairs adopted a series of administrative instructions on small weapons.  

However, a number of violent incidents, including targeted damage of EULEX property, have 
occurred across Kosovo. The wide possession of weapons by the civilian population remains 
a  serious  concern.  There  is  no  strategy  for  the  collection  of  such  weapons.  The  Law  on 
Explosives needs to be updated and relevant implementing legislation adopted. Kosovo has no 
Laws  on  Forensics  and  on  Autopsy.  Cooperation  between  the  police  and  the  Prosecutor’s 
Office needs to be improved. The police still lack capacity to develop strategic planning and 
fully implement an intelligence-led policing system. The police have not yet drafted full job 
descriptions for its senior management, including its two Deputy General Directors. The chief 
executive  officer  of  the  police  inspectorate  needs  to  be  appointed  and  professional  and 
independent execution functions of the inspectorate ensured. The reorganisation of the police 
force has not been completed yet and requires adequate preparation. 

EN 

46 

   EN 

 
Facilities  for  storing  evidence  are  not  fully  protected.  In  April,  a  considerable  amount  of 
heroin was stolen from an evidence room. Police communication networks are still not fully 
integrated and secure. Communication channels with other law enforcement agencies are not 
operational yet. Not all local police stations are linked with the main information system of 
the  police.  Reports  sent  by  local  police  stations  via  intranet  are  not  always  secure.  The 
information system of the police needs an upgrade in order to avoid duplication of registered 
crimes  and  persons.  Crime  statistics  are  not  based  on  standard  operating  procedures  for 
statistics and records. Available data is not always used effectively in guiding targeted police 
work. Kosovo's efforts in linking law enforcement databases need to take account of relevant 
European standards, particularly as regards data protection. The Ministry of Internal Affairs 
needs to further its efforts in granting EULEX access to key databases in order to enable the 
effective conduct of investigations under the mission's executive mandate. International police 
cooperation is limited. EULEX needs to play an important role in facilitating this.  

In January, the police created a mixed unit in northern Mitrovicë/Mitrovica, consisting of 25 
police officers (Kosovo Serbs, Kosovo Albanians and Kosovo Bosnians). The unit has both a 
patrolling and an investigation mandate. The activities of this unit have led to a reduction of 
crimes  in  the  areas  covered.  In  northern  Mitrovicë/Mitrovica,  four  police  stations  do  not 
report  directly  to  Pristina,  which  limits  the  effectiveness  of  fighting  organised  crime  and 
conducting undercover operations in this area. This is, however, being addressed and with the 
appointment  of  senior  Kosovo  Serb  police  officers  to  the  regional  command  structures  in 
Mitrovicë/Mitrovica cooperation is improving. In June, most police officers from the Kosovo 
Serb  community  south  of  Ibar  river,  who  had  left  the  service  following  the  declaration  of 
independence, returned to their stations and work under the usual chain of command. 

Overall, Kosovo has initiated processes to address priorities in this area. However, urgently 
number  of  severe  deficiencies  need  to  be  addressed.  The  job  descriptions  for  senior 
management  need  to  be  urgently  finalised  and  appropriate  staff  recruited.  Investigative 
capacities  need  to  be  enhanced  and  intelligence-led  policing  fully  introduced  and 
implemented;  security  of  evidence  addressed.  EULEX  needs  to  be  granted  access  to  all 
relevant databases. 

4.3.5.  Fighting organised crime and terrorism 

There  has  been  limited  progress  in  tackling  organised  crime,  which  remains  an  issue  of 
serious concern, particularly in the north of Kosovo and on the border/boundary line between 
Kosovo  and  Serbia.  In  July,  Kosovo  adopted  strategy  and  relevant  action  plan  on  tackling 
organised  crime.  The  Law  on  Preservation  of  Public  Peace  and  Order  was  adopted  in 
September. In June the Kosovo Prosecutor’s Office signed a memorandum of understanding 
with  the  Italian  National  Anti-mafia  Directorate for  the  exchange  of  information  in  fighting 
organised crime, but this still needs to be formally adopted. 

However, Kosovo does not have a crime reduction strategy. Kosovo lacks adequate resources 
and criminal intelligence system to tackle this phenomenon. The lack of a witness protection 
law  and  programme  still  inhibits  efforts  in  this  area.  EULEX  plays  a  major  role  by 
investigating serious criminal offences and providing witness security and protection.  

Overall,  Kosovo  needs  to  considerably  step  up  its  efforts.  Kosovo  remains  a  source  and  a 
place of transit  for  organised  crime  activities.  The  lack  of  cooperation  between  Pristina  and 
Belgrade,  as  well  as  between  the  central  Kosovo  authorities  and  structures  in  the  north, 

EN 

47 

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seriously  undermine  efforts  in  the  fight  against  organised  crime,  which  is  a  key  European 
Partnership priority. 

Kosovo  has  achieved  limited  progress  in  tackling  the  trafficking  of  human  beings.  The 
standard  operating  procedures  were  revised  in  November  2008  to  encompass  all  victims  of 
trafficking  and  to  consolidate  the  system  of  victim  identification  and  protection.  Their  full 
implementation is expected to be achieved shortly.  

The number of identified trafficking victims remains low. The victim advocacy and assistance 
division  continues  to  operate  within  the  Ministry  of  Justice,  also  providing  assistance  to 
victims of trafficking. The Deputy Minister of Internal Affairs is the national anti-trafficking 
coordinator. Kosovo continues to be a source, a destination and a transit route for trafficked 
persons.  Most  victims  are  internally  trafficked  (about  60%).  Victims  also  originate  from 
Moldova  (20%)  and  Western  Balkan  countries  (20%).  Child  trafficking  for  the  purpose  of 
forced  begging  is  an  increasing  problem.  Overall,  Kosovo  efforts  in  the  fight  against 
trafficking of human beings are not very advanced. Trafficking related corruption needs to be 
tackled.  Investigation  and  prosecution  of  trafficking  crimes  by  Kosovo  authorities  remain  a 
concern.  

Some progress has been made in the fight against terrorism. A strategy and an action plan 
for  the  fight  against  terrorism  were  adopted  in  June.  However,  Kosovo  has  no  law  against 
terrorism.  

Overall, Kosovo is at an early stage of tackling terrorism. 

4.3.6.  Protection of personal data 

Kosovo still needs to align its legislation with EU standards on data protection, in particular 
Directive 95/46/EC. A general law for the protection of personal data is yet to be adopted and 
an independent data protection supervisory authority remains to be set up.  

Individuals in Kosovo are not informed about their rights regarding the protection of personal 
data. The setting up of security, intelligence and law enforcement bodies and their databases 
has not been accompanied with parallel personal data protection measures.  

Overall, Kosovo still needs to undertake and conclude comprehensive efforts in this area. The 
current deficiency is a matter of concern. 

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STATISTICAL ANNEX 

STATISTICAL DATA (as of 14 September 2009) 
Kosovo under UNSCR 1244/99 

Basic data 
Population (thousand) 
Total area (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-27=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-27=100) 
Gross value added by main sectors (%) 

Agriculture 
Industry 
Construction 
Services 

Final consumption expenditure, 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) 

Note  1999 

2003 
2008 
1 985  2 016  2 041  2 100  2 127  2 153 
10 887 10 887 10 887 10 887 10 887 10 887 10 887 10 887 10 887  10 887 

2002 
: 

2000 
: 

2001 
: 

2004 

2006 

2005 

2007 

: 

Note  1999 

1) 
1) 2) 

3) 

: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 

2000 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 

2007 
: 

2005 
: 

2001 
: 

2006 
: 

2003 
: 

2002 
: 

2004 
: 
1 624  1 735p 1 797p 3 007p 3 068p 3 192p 3 434p 
905p  1 473p 1 482p 1 520p 1 612p 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
1.2p 
: 
: 
: 
: 

: 
: 
3.1p 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 

: 
: 
: 
: 

: 
: 
: 
: 

: 
: 
: 
: 

: 
: 
: 
: 
163.1  151.6  147.5  109.7p 111.9p 111.5p 114.0p 
19.4p  19.3p  20.6p  21.7p 
40.7 
4.3p 
3.9 
: 
16.6 
10.4p 
7.1p 
120.4  98.6p  87.1p  40.1p  42.5p  45.5p  50.3p 

12.5p  10.4p 

34.5 
: 

29.3 
: 

4.4 
8.9p 

4.2 
7.0p 

: 
: 
: 
: 

: 
: 
: 
: 

2008 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 

Note  1999 

: 

2000 
: 

2001 
: 

2002 
: 

2003 
: 

2004 
: 

2005 
: 

2006 
: 

2007 
: 

2008 
: 

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

Note  1999 

: 

2000 
: 

2001 
: 

2002 
-1.0 

2003 
0.3 

2004 
-0.8 

2005 
-2.1 

2006 
-1.5 

2007 
2.8 

2008 
12.4 

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

Note  1999 

: 
: 

2000 
: 
: 

2001 
228e 
-646 

2003 
2002 
 -104e  -204e
-941 
-890 

2004 
-297 
-973 

2007 
2006 
2005 
-301 
-428 
-330 
-1 044 -1 141 -1 338 

2008 
-744 
-1 639 

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49 

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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) 
Net foreign direct investment (FDI) (million euro) 
Foreign direct investment (FDI) abroad (million euro) 

of which FDI of the reporting economy in EU-27 countries (million euro) 

Foreign direct investment (FDI) in the reporting economy (million euro) 

of which FDI of EU-27 countries 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 
Value of imports: all goods, all partners (million euro) 
Value of exports: all goods, all partners (million euro) 
Trade balance: all goods, all partners (million euro) 
Terms of trade (export price index / import price index, 1998 =100) 
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) 
Infant mortality rate: deaths of children under one year of age per 1000 live births 

: 
: 
: 
: 
: 
: 
: 
: 
: 

Note  1999 

: 
: 

Note  1999 

: 
: 
: 
: 
: 
: 
: 
: 
: 
1.000
: 
: 

1) 

Note  1999 

: 
: 
: 
: 
: 
: 

Note  1999 

: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 

2000 
: 
: 

2000 
: 
: 
761 
761 
: 
3 
: 
: 
: 
1.000
: 
62 

2000 
: 
: 
: 
: 
: 
: 

2000 
: 
: 

10e 
141e 
723e 
809e 
: 
: 
: 
: 
: 

2001 
: 
: 

2001 
: 
: 
971 
1 096
: 
26 
: 
: 
: 
1.000
: 
296 

2001 
: 
: 
: 
: 
: 
: 

2001 
: 
: 

-23e 
154e 
655e 
661e 
: 
: 
: 
: 
: 

2002 
8.4 
: 

2002 
: 
: 
998 
1 126
: 
87 
: 
: 
: 
1.000
: 
337 

2002 
: 
: 
: 
: 
: 
: 

2002 
: 
11.2 

-14e 
152e 
599e 
490e 
: 
: 
: 
: 
: 

2003 
2.2 
: 

2003 
: 
: 
891 
1 111
: 
233 
: 
: 
: 
1.000
: 
423 

2003 
: 
: 
: 
: 
: 
: 

2003 
12.8 
15.1 

-21 
140 
555 
336 
19 
0 
: 
19 
: 

2004 
2.7 
: 

2004 
: 
: 
713 
1 128 
: 
374 
: 
14.7 
2.8 
1.000 
: 
311 

-44 
147 
640 
366 
80 
0 
: 
80 
: 

2005 
: 
: 

2005 
: 
: 
572 
1 092 
: 
514 
: 
14.4 
2.9 
1.000 
: 
278 

-22 
155 
678 
318 
244 
-4 
: 
249 
: 

2006 
: 
: 

2006 
: 
: 
: 
: 
: 
637 
: 
14.5 
3.0 
1.000 
: 
356 

-33 
184 
759 
323 
414 
-7 
: 
421 
: 

2007 
: 
: 

2007 
: 
: 
: 
: 
: 
892 
: 
14.6 
3.3 
1.000 
: 
647 

-19 
143 
771 
289 
340 
-19 
: 
360 
: 

2008 
: 
: 

2008 
: 
: 
: 
: 
: 
1 183 
: 
14.8 
4.2 
1.000 
: 
670 

2004 
1 063 
57 
-1 007 
: 
29.4 
39.5 

2005 
1 157 
56 
-1 101 
: 
38.4 
37.3 

2006 
1 306 
111 
-1 195 
: 
38.0 
34.4 

2007 
1 576 
165 
-1 411 
: 
42.0 
36.3 

2008 
1 928 
198 
-1 730 
: 
47.4 
36.4 

2004 
14.1 
11.8 

2005 
14.6 
9.6 

2006 
12.7 
12.7 

2007 
12.4 
11.1 

2008 
: 
9.7 

EN 

50 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Life expectancy at birth: male (years) 
Life expectancy at birth: female (years) 

: 
: 

: 
: 

: 
: 

: 
: 

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 (%) 

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 (%) 

Note 

1999 
: 
: 
: 
: 
: 

2000 
: 
: 
: 
: 
: 

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 (%) 

: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 

2001 
45.6 
19.6 
31.1 
8.1 
16.7 

: 
: 
: 
: 
57.1 
51.8 
69.9 
80.0 
47.6 

2002 
52.8 
23.8 
39.4 
8.8 
18.4 

: 
: 
: 
: 
55.0 
45.2 
74.5 
77.7 
47.3 

67.0 
71.0 

2003 
50.3 
25.3 
42.8 
8.3 
20.1 

: 
: 
: 
: 
49.7 
40.3 
71.9 
74.9 
42.7 

: 
: 

: 
: 

: 
: 

: 
: 

: 
: 

2004 
46.2 
27.7 
46.4 
9.9 
23.9 

: 
: 
: 
: 
39.7 
31.5 
60.7 
66.5 
34.9 

2005 
49.2 
28.5 
45.8 
11.7 
25.2 

: 
: 
: 
: 
41.4 
32.9 
60.5 
70.5 
34.7 

2006 
52.3 
28.7 
46.1 
11.8 
26.3 

: 
: 
: 
: 
44.9 
34.6 
61.6 
75.5 
41.1 

2007 
46.8 
26.2 
40.1 
12.7 
24.6 

: 
: 
: 
: 
43.6 
38.5 
55.2 
70.0 
37.1 

2008 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 

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 (%) 

Note 

1999 
: 
: 

2000 
: 
: 

2001 
: 
: 

2002 
: 
: 

2003 
: 
: 

2004 
: 
: 

2005 
: 
: 

2006 
: 
: 

2007 
: 
: 

2008 
: 
: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

: 

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 (%) 

Note 

Note 

Note 

1999 
: 
: 

1999 
: 
: 

1999 
: 
: 
: 

2000 
: 
: 

2000 
: 
: 

2000 
: 
: 
: 

2001 
: 
: 

2001 
: 
: 

2001 
: 
: 
: 

2002 
: 
: 

2002 
: 
: 

2002 
: 
: 
: 

2003 
: 
158.7 

2004 
: 
169.5 

2003 
: 
: 

2003 
: 
: 
: 

2004 
39.5 
: 

2004 
: 
: 
: 

2005 
50.2 
: 

2005 
: 
0.0 

2005 
: 
: 
: 

2006 
69.9 
: 

2006 
: 
0.0 

2006 
: 
: 
: 

2007 
68.7 
: 

2007 
: 
0.0 

2007 
: 
: 
: 

2008 
74.1 
376.2 

2008 
: 
0.0 

2008 
: 
: 
: 

Environment 
SI: Total greenhouse gases emissions, CO2 equivalent (tons, 1990=100) 

Note 

1999 
: 

2000 
: 

2001 
: 

2002 
: 

2003 
: 

2004 
: 

2005 
: 

2006 
: 

2007 
: 

2008 
: 

EN 

51 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SI: Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP 2004) 
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) (%) 

: 
: 
: 

: 
: 
: 

: 
: 
: 

: 
: 
: 

: 
: 
: 

: 
: 
: 

: 
: 
: 

: 
: 
: 

: 
: 
: 

: 
: 
: 

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 indicators 
: = not available 
p = provisional value 
e = estimated value 
1) 
2) 
3) 
4) 

No official national currency exists. Euro is the currency in use. 
Source: Statistical Office of Kosovo provisional data for 2004-2006 (at current prices). 
Investment: including donor sector, general government, and private investment (housing and other). 
Data collected from the Kosovo Energy Corporation (KEK). 

Note  1999  2000  2001 

4) 

: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 

Note  1999  2000  2001 

: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
289 
59 
193 
: 
: 
: 
: 

: 
539 
347 
75 
230 
: 
459 
: 
169 

2002 
: 
: 
3 853 
: 
: 
: 
3.2 

2002 
: 
: 
319 
110 
116 
: 
396 
: 
135 

2003 
: 
: 
4 507 
: 
: 
: 
3.2 

2003 
: 
: 
: 
: 
: 
: 
: 
: 
: 

2004 
: 
: 
3 944 
: 
: 
: 
3.5 

2004 
: 
: 
335 
55 
106 
: 
408 
: 
150 

2005 
: 
: 
4 455 
: 
: 
: 
4.0 

2005 
: 
: 
352 
47 
152 
: 
441 
: 
289 

2006 
: 
: 
4 553 
: 
: 
: 
4.0 

2006 
: 
: 
382 
68 
113 
: 
392 
: 
172 

2007 
: 
: 
4 681 
: 
: 
: 
4.3 

2007 
: 
: 
322 
40 
152 
: 
295 
: 
117 

2008 
: 
: 
5 466 
: 
: 
: 
: 

2008 
: 
: 
: 
: 
: 
: 
: 
: 
: 

EN 

52 

EN