COMMISSION STAFF WORKING DOCUMENT KOSOVO( 2010 Progress Report    accompanying the  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL  Enlargement Strategy and Main Challenges 2010-2011
Date: 2010-11-09
Institutions: European Commission
Subjects: North Macedonia, accession to the European Union, enlargement of the Union, pre-accession strategy, report

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EUROPEAN COMMISSION 

Brussels, 9.11.2010 
SEC(2010) 1329 final 

COMMISSION STAFF WORKING DOCUMENT 

KOSOVO∗ 2010 PROGRESS REPORT 

accompanying the 

COMMUNICATION FROM THE COMMISSION 
TO THE EUROPEAN PARLIAMENT AND THE COUNCIL 

Enlargement Strategy and Main Challenges 2010-2011 

{COM(2010) 660 final} 

∗ 

Under UNSCR 1244/1999 

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

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

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

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

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

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

Democracy and the rule of law .................................................................................... 7 

Human rights and the protection of minorities .......................................................... 13 

Regional issues and international obligations ............................................................ 21 

Economic criteria ....................................................................................................... 22 

The existence of a functioning market economy ....................................................... 22 

The capacity to cope with competitive pressure and market forces within the Union
.................................................................................................................................... 28 

4. 

European standards .................................................................................................... 29 

4.1. 

Internal market ........................................................................................................... 30 

4.1.1.  Free movement of goods............................................................................................ 30 

4.1.2.  Movement of persons, services and right of establishement...................................... 31 

4.1.3.  Free movement of capital........................................................................................... 32 

4.1.4.  Customs and taxation ................................................................................................. 32 

4.1.5.  Competition................................................................................................................ 34 

4.1.6.  Public procurement .................................................................................................... 34 

4.1.7. 

Intellectual property law ............................................................................................ 35 

4.1.8.  Employment and social policies, public health policy............................................... 36 

4.1.9.  Education and research .............................................................................................. 38 

4.1.10.  WTO issues ................................................................................................................ 39 

4.2. 

Sectoral Policies ......................................................................................................... 39 

4.2.1. 

Industry and SMEs..................................................................................................... 39 

4.2.2.  Agriculture and fisheries ............................................................................................ 40 

4.2.3.  Environment............................................................................................................... 41 

4.2.4.  Transport policy ......................................................................................................... 43 

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4.2.5.  Energy ........................................................................................................................ 45 

4.2.6. 

Information society and media................................................................................... 46 

4.2.7.  Financial control......................................................................................................... 48 

4.2.8.  Statistics ..................................................................................................................... 49 

4.3. 

Justice, freedom and security ..................................................................................... 49 

4.3.1.  Visa, border management, asylum and migration...................................................... 49 

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

4.3.3.  Drugs .......................................................................................................................... 53 

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

4.3.5.  Fighting organised crime and terrorism ..................................................................... 55 

4.3.6.  Protection of personal data......................................................................................... 56 

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COMMISSION STAFF WORKING DOCUMENT 

2010 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  to  mid-September  2009  to  early  October  2010. 
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 enlargement, based on the technical analysis contained in this report. 

1.2. 

Context 

In July, the International Court of Justice (ICJ) issued an advisory opinion, which concluded 
that  Kosovo's  declaration  of  independence  did  not  violate  general  international  law  or 
Security Council resolution 1244 (1999). The UN General Assembly adopted on 9 September 
a joint resolution tabled by Serbia and co-sponsored by EU Member States as a follow up to 

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Under UNSCR 1244/1999 
The EP rapporteur on Kosovo is Ms Ulrike Lunacek. 

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the  ICJ  opinion.  The  resolution  aims  at  opening  the  way  for  a  process  of  dialogue  between 
Pristina and Belgrade to promote cooperation, achieve progress on the path to the European 
Union and improve the lives of the people.  

To  date,  Kosovo  has  been  recognised  by  71  UN  Member  States,  including  22  EU  Member 
States. 

During  the  reporting  period,  the  UN  Secretary-General  issued  four  reports  on  Kosovo  ─  in 
September  2009,  in  January,  April  and  June  2010.  The  Secretary-General  noted  that  the 
changing  circumstances  on  the  ground  have  led  to  gradual  adjustment  of  the  functions  and 
priorities of the UN mission in Kosovo. The strategic goal of mission is to promote security, 
stability and respect for human rights.  

KFOR,  the  NATO-led  military  presence,  continues  to  provide  security  throughout  Kosovo. 
During  the  reporting  period,  its  presence  has  been  gradually  reduced.  In  this  context,  the 
Kosovo Police has taken over responsibility for the protection of certain cultural and religious 
sites.  

The situation in northern Kosovo remained tense, but stable. The Kosovo authorities opened 
an office providing services to citizens. The enthronement of the Serbian Orthodox patriarch 
was organised as per the tradition in the patriarchate premises in Kosovo. The enthronement 
ceremony  proceeded  in  a  peaceful  atmosphere  under  the  supervision  of  the  Kosovo  Police. 
The lack of dialogue between Belgrade and Pristina has prevented progress in improving the 
lives of local communities. 

In July, Kosovo signed a stand-by agreement with the IMF. 

In  September,  the  Constitutional  Court  ruled  that  it  is  unconstitutional  to  hold  at  the  same 
time  the  office  of  President  of  Kosovo  and  of  Chairman/President  of  a  political  party. 
Following  the  ruling,  the  President  of  Kosovo  resigned.  The  LDK  then  withdrew  from  the 
governing coalition. Elections have been called for 12 December. 

1.3. 

Relations between the EU and Kosovo 

Kosovo is part of the Stabilisation and Association Process. The stablisation and association 
process dialogue (SAPD) was launched in January. The first cycle of meetings was completed 
in  July.  The  sectors  covered  include  "justice,  freedom,  security";  "innovation,  information 
society,  social  policy";  "the  internal  market,  competition,  consumer/health  protection"; 
"economic  and  fiscal  matters";  "transport,  enegry,  environment,  regional  development"  and 
"agriculture,  fisheries,  forestry,  food  safety".  In  July,  Kosovo  hosted  the  plenary  SAPD 
meeting  and  the  first  SAPD  civil  society  dialogue  meeting,  which  was  co-chaired  by  the 
European  Economic  and  Social  Committee.  To  promote  economic  dialogue,  the  fiscal 
surveillance mechanism with the European Commission continued with meetings being held 
on a bi-annual basis. 

In November 2009, in the context of the municipal elections, a delegation of Members of the 
European Parliament visited  Kosovo.  In July, the European Parliament adopted a resolution 
on  Kosovo.  It  encouraged  EU  Member  States  to  step  up  their  common  approach  towards 
Kosovo.  The  European  Parliament  underlined  that  the  prospect  of  accession  to  the  EU  is  a 
powerful incentive for the necessary reforms in Kosovo and called for practical steps to make 
this prospect more tangible both to the government and to citizens. 

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The  EU  rule  of  law  mission  (EULEX)  continues  to  operate  in  Kosovo  and  to  fulfil  its 
mandate. The situation in northern Kosovo has had an impact on EULEX activities, such as 
the  continuous  presence  of  customs  officials  at  gates  1  and  31  and  the  staffing  of 
Mitrovicë/Mitrovica  court.  EULEX  has  also  made  a  number  of  arrests  in  the  north.  There 
have been a number of threats and attacks against EULEX personnel. The situation needs to 
normalise. The EU has re-confirmed its commitment to Kosovo by opening an EU House in 
northern  Mitrovicë/Mitrovica.  The  Italian  Ambassador  to  Kosovo  has  been  nominated  as 
facilitator for the north. The Head of the Greek liaison office in Pristina has been nominated 
as facilitator for the protection of religious and cultural heritage in Kosovo. They have made 
an  important  contribution  in  their  respective  areas.  This  has  increased  the  EU  visibility  and 
influence. The authorities need to ensure full and unconditional cooperation with, and support 
for, EULEX. 

In  February,  the  EU  Council  renewed  the  mandate  of  the  EU  Special  Representative  in 
Kosovo for six months. The mandate was extended in August for a further six months. The 
EU Special Representative is also the international civilian representative for Kosovo.  

In April, Kosovo hosted the second high-level forum for donor coordination. The government 
reported to donors on the progress made as regards donor coordination. This forum has now 
been  established  as  a  mechanism  to  review  and  assess  progress  with  socio-economic 
development and the effectiveness of assistance delivered in Kosovo.  

Kosovo continues to benefit from the Instrument for Pre-accession Assistance (IPA), macro-
financial  assistance,  the  Instrument  for  Stability  (IfS)  and  other  sources  of  funding.  Kosovo 
participates  in  the  IPA  multi-beneficiary  programmes  including  in  an  IPA  crisis  response 
package developed in 2008. The package is fully operational in 2010. A total of €508 million 
of EU assistance has been committed to Kosovo for the period 2008–2011. In September, the 
Commission transferred the first tranche of macro-financial assistance to Kosovo.  

The  multi-annual  indicative  planning  document  for  2011-2013  is  being  prepared.  It  will 
identify the main areas and priorities for IPA assistance. 

During  2010,  a  total  of  €67.3  million  granted  in  the  IPA  annual  programme  for  2010  was 
allocated  in  close  coordination  with  the  Ministry  for  European  Integration  and  government 
institutions.  The  EC  programmes  are  continuing  to  support  the  rule  of  law,  public 
administration  reform,  communities,  culture,  youth  and  wider  socio-economic  issues, 
including trade, regional development, education, employment and agriculture.  

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

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 

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

2.1. 

Democracy and the rule of law 

Parliament 

The Assembly adopted revised rules of procedure, aligning them with the Constitution. The 
2010 budget has allowed the Assembly administration to employ additional thematic experts 
to  support  the  work  of  committees.  The  Assembly's  secretariat  has  extended  the  range  of 
services offered to committees by strengthening its research capacity. Interaction between the 
Assembly and civil society has improved. Public hearings have been organised in a number of 
areas of legislation.  

In February, the Assembly adopted the 2010 Action plan on European Integration. The first 
report on its implementation was adopted in September. In June, the Assembly adopted laws 
on  the  rights  and  responsibilities  of  Assembly  members,  on  parliamentary investigation and 
on the Official Gazette. 

Cooperation  has  improved  between  the  Committee  for  European  Integration  and  the  other 
Assembly  committees  as  well  as  with  the  new  Ministry  for  European  Integration.  The 
Committee still needs to increase substantially its financial and administrative capacity.  

Parliamentary  oversight  of  the  executive  branch  is  exercised  by  means  of  regular 
parliamentary questions and plenary sessions  attended by members of the government.  This 
mechanism needs to be made more effective, including by the request and provision of written 
reports. 

Concerns remain as regards the management of human resources by the Assembly secretariat. 
It needs to set up a transparent and merit-based recruitment process. Committees have under-
spent their budget allocations for 2009 and for the first quarter of 2010. The high turnover of 
qualified staff has impeded capacity building efforts. The Assembly's capability to effectively 
scrutinise  legislation  for  compliance  with  EU  norms  needs  to  be  improved.  Kosovo's 
legislative strategy for 2009 and for 2010 has only been partially implemented.  

In  November  2009,  Kosovo  organised  local  elections.  These  were  the  first  elections  run  by 
Kosovo's  Central  Election  Commission,  with  the  support  of  the  OSCE.  The  elections  were 
conducted  in  an  orderly  manner  and  with  participation  of  all  communities  in  Kosovo.  The 
Political Parties Registration Office is now fully operational 

Voter turnout was very low in northern Kosovo. In May, Serbia organised parallel local by-
elections in northern Mitrovicë/Mitrovica.  

The local elections have revealed some systemic shortcomings in Kosovo's electoral system, 
such  as  the  complaints  and  appeals  process  and  the  provisions  on  election  observation.  The 
electoral  system  is  not  in  line  with  international  standards.  The  capacity  of  the  Central 
Election Commission's secretariat remains limited. 

In  November,  following  the  no-confidence  vote  to  the  government,  the  Assembly  was 
dissolved. General elections have been scheduled for 12 December. 

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Overall, the Assembly has made some progress on institution-building and incorporating the 
agenda  for  European  integration  in  its  work.  The  legislative  framework  has  been  further 
strengthened.  A  public  accounts  committee  was  established.  However,  the  Assembly's 
capacity remains weak. Effective management of human resources is essential in this regard. 
The process of executive oversight needs to be improved. The shortcomings of the electoral 
system need to be addressed and the Assembly's role in revising legislation to ensure quality 
needs to be strengthened. 

Government 

The main structures of government are complete. Six ministers were replaced in April, during 
the first major ministerial reshuffle since the last general elections.  

A new Ministry for European Integration was created and a Minister appointed. The Ministry 
incorporated the former Agency for coordination for Development and European Integration. 
The Ministry coordinated successfully the first SAPD cycle, in close cooperation with other 
government departments. It needs to consolidate this central role in order to ensure effective 
follow-up on SAPD conclusions and realistic prioritisation of Kosovo's legislative agenda. 

There has been some progress in the reform of local government administration. Kosovo has 
achieved significant progress as  regards decentralisation. In April, the government extended 
the decentralisation action plan for two more years. 

The  Ministry  of  Local  Government  Administration  conducted  a  capacity  assessment  of 
municipalities, covering a full range of public services. Its findings need to be addressed and a 
mechanism put in place for regular updates. 

In January, the authorities endorsed a comprehensive approach to northern Kosovo with the 
aim  of  completing  decentralisation  and  local  government  reform  and  improving  socio-
economic  conditions.  A  coordinator  to  oversee  its  implementation  has  been  appointed.  The 
Ministry of Local Government Administration has appointed a municipal preparation team for 
northern Mitrovicë/Mitrovica.  

However, the capacity of the Ministry to supervise local authorities should be strengthened, in 
accordance  with  the  principles  of  the  European  Charter  of  Local  Self-Government. 
Contrasting  interpretations  of  legislation  on  self-government  often  blocks  cooperation 
between central and  local  authorities.  This needs to  be resolved by addressing the matter to 
the competent courts. 

Following  the  withdrawal  of  LDK  from  the  governing  coalition,  the  government  received  a 
no-confidence vote by the Assembly. 

Overall, the government has strengthened its capacity to implement the European integration 
agenda. There has been progress on local government reform. However, important challenges 
remain in implementing legislation and improving the quality of municipal services.  

Public administration  

There  has  been  progress  as  regards  public  administration  reform.  In  May,  Kosovo  adopted 
two  key  laws  in  this  area:  on  civil  service  and  on  the  salaries  of  civil  servants.  The 
Independent  Oversight  Board  law  was  adopted  in  July.  In  September,  the  laws  on 
administrative  disputes  and  on  state  administration  were  adopted.  The  Ministry  of  Public 

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Administration set up a department for public administration reform and European integration 
in  October  2009.  The  inter-ministerial  committee  on  public  administration  reform  met  at 
regular intervals. It provides high-level political guidance in this area. Strategic development 
plans have been adopted by two Ministries. 

Kosovo's  public  administration  institute  conducted  a  training  needs  assessment  and,  on  that 
basis,  has  designed  new  training  curricula.  The  strategic  development  plan  for  the  institute 
was adopted in September. 

However,  the  legal  framework  remains  to  be  fully  implemented.  In  order  to  allow  timely 
implementation  of  the  civil  service  legislation,  the  necessary  implementing  rules  that  have 
been  put  in  place  need  to  be  implemented  as  a  matter  of  priority.  The  2006  law  on 
administrative  procedures  is  still  poorly  disseminated  and  implemented.  Ensuring  sufficient 
representation of minority communities in the public service remains a concern. 

Less  than  one  third  of  the  public  administration  reform  strategy  has  been  implemented.  In 
September, the government adopted a revised strategy reflecting achievements and challenges 
to date.  

In  July,  Kosovo  adopted  a  new  law  on  the  ombudsperson.  However,  the  recruitment  of 
deputies  is  delayed.  The  persisting  weakness  of  the  ombudsperson  institution  should  be 
addressed.  The  authorities  should  ensure  prompt  responses 
to  all  enquiries  and 
recommendations from the ombudsperson. 

The  decisions  of  the  inter-ministerial  committee  need  to  be  formalised  and  widely 
disseminated.  Reforms  must  be  properly  budgeted  for,  in  continuous  consultation  with  the 
Ministry  of  Economy  and  Finance.  The  strategic  development  plans  need  to  be  properly 
implemented  across  Kosovo’s  administration.  The  capacity  of  the  department  for  public 
administration  reform  and  of  the  department  for  civil  service  administration  needs  to  be 
strengthened. 

Overall,  public  administration  reform  in  Kosovo  remains  a  major  challenge.  Establishing  a 
professional,  accountable,  accessible,  representative  public  administration  and  ensuring 
delivery of public services to all in Kosovo needs to be addressed as a matter of high political 
urgency.  This  is  a  key  European  Partnership  priority.  The  capacity  of  Kosovo’s  public 
administration remains weak.  

Civilian oversight of the security forces 

During the reporting period, Kosovo has adopted its National Security Strategy and legislation 
on classification of information and security clearances. Two security oversight bodies were 
established ─ the Committee for the Kosovo Intelligence Agency and the Committee for the 
Kosovo  Security  Forces.  However,  democratic  oversight  over  the  security  sector  is  still 
developing and needs to be strengthened.  

Judicial system 

There has been progress in the judicial sector. By adopting laws on courts, Kosovo Judicial 
Council,  Kosovo  Prosecutorial  Council  and  prosecution,  Kosovo  has  launched  a  major 
judicial  reform.  Furthermore,  law  on  courts  introduces  a  new  salary  system,  which  will 
significantly improve the situation of judges. However, plans need to be made and resources 
allocated  to  prepare  for  implementation  of  these  major  reforms.  The  Ministry  of  Justice 

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demonstrated  limited  capacity  to  prepare,  implement  and  evaluate  policies  on  justice. 
Implementation of the Law on mediation also requires further efforts. A law on mutual legal 
assistance in criminal matters, extradition and transfer of sentenced persons and a law on child 
abduction are still missing. 

The Ministry of Justice assumed further responsibilities for international legal cooperation – 
dealing  with  requests  to  and  from  all  countries.  The  capacity  and  security  of  the  unit 
responsible need to be enhanced. UNMIK remains the formal point of contact with Interpol 
and  the  ICTY.  Kosovo  has  signed  a  bilateral  agreement  with  Belgium  on  transfers  of 
sentenced  persons  and  other  ad  hoc  agreements.  It  also  continued  cooperating  with  some 
countries  on  the  basis  of  reciprocity.  There  is  no  legal  cooperation  between  Kosovo  and 
Serbia.  This  has  had  a  particularly  negative  impact  on  civil,  criminal  and  property-related 
cases. EULEX can facilitate such cooperation. 

The  Committee  for  Bar  Examinations  has  been  appointed  and  the  first  examinations  have 
been organised. The first prospective judges and prosecutors have graduated from the Kosovo 
Judicial Institute in December 2009. 

The  vetting  process  of  judges  and  prosecutors  has  been  successfully  completed.  In  all  three 
phases  including  the  Supreme  Court,  District  Courts,  Municipal  Courts,  associated 
Prosecutors  Offices,  Commercial  Courts  and  Special  Chamber,  the  President  has  appointed 
over 340 candidates. In October 2010 the Independent Judicial and Prosecutorial Commission 
organised an ethics exam in order to identify additional suitable candidates for the remaining 
positions. Judicial Council needs to build on the guidelines and procedures established by the 
Commission  once  it  assumes  full  responsibility  for  recruitment,  vetting  and  selection  of  the 
candidates. 

Political  interference  in  the  re-appointment  process  and  proposals  made  by  the  Kosovo 
Judicial Council is an issue of serious concern. The number of applications for reappointment 
from  members  of  minorities  has  been  lower  than  needed  to  fill  all  the  positions.  Cases  of 
intimidation  of  members  of  Serb  community  have  been  reported.  Serbia  has  not  been 
constructive  in  creating  right  political  climate  in  this  process.  As  a  result,  the  Inter-ethnic 
balance of judiciary is not ensured. 

The eight members of the Kosovo Judicial Council have appointed their President, who has 
started  to  address  critical  strategic  and  logistic  issues.  The  Council  has  started  adjudicating 
disciplinary  cases,  but  its  capacity  in  this  area  is  limited.  A  court  management  manual  has 
been  approved.  Cooperation  with  EULEX  will  be  essential  to  ensure  its  implementation. 
Higher salaries within judiciary have also been approved. 

However, managing appointments, resignations and transfers has remained a major challenge 
in  the  transitional  environment  caused  by  the reappointment  process.  The  Council  has  been 
unable to ensure the independence and impartiality of the judicial system. It needs to be more 
proactive  to  voice  the  concerns  and  act  decisively  in  disciplinary  cases.  It  also  needs  to 
develop  its  capacity  to  deal  with  a  number  of  strategic  issues  such  as  reform,  of  judiciary, 
budget, staffing and training. All the recommendations of the Judicial Audit Unit still need to 
be implemented. A procedure to select a new director of the Council's secretariat needs to be 
launched. 

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The Constitutional Court started operating, dealt with a number of complaints and issued its 
first  judgments  upholding  core  principles  of  human  rights  and  fundamental  freedoms. 
However, the court needs to be further strengthened. Its secretariat is not fully staffed yet.  

In September, the Court ruled that it is unconstitutional to hold at the same time the office of 
President  of  Kosovo  and  of  Chairman/President  of  a  political  party.  Subsequently,  the 
President of Kosovo resigned.  

The  overall  performance  of  the  Kosovo  justice  system  remains  weak.  There  is  still  
a significant backlog of court cases and the overall efficiency is very low. Along challenges 
such as corruption and nepotism, the continued political interference at different levels and in 
different forms in a number of cases, including in the work of the Kosovo Judicial Council, is 
of  serious  concern.  In  several  instances,  judges  and  prosecutors  have  refused  to  deal  with 
sensitive  cases.  There  have  been  reports  of  threats  and  intimidation  against  them.  Some 
municipalities  have  continuously  refused  to  comply  with  court  decisions.  The  low  level  of 
enforcement of court decisions is a major impediment to creating confidence in judiciary. The 
Special Chamber of the Supreme Court still needs to be made fully operational and all local 
judges  need  to  be  appointed.  Current  situation  undermines  interethnic  relationships  and 
exercising  of  property  rights.  Implementation  of  the  Case  Management  Information  System 
was hindered by the lack of network connection in a number of district, municipal and minor 
offence courts. Some judges are still reluctant to use it. More intensive training at the court 
level in the regions is needed. 

The Mitrovicë/Mitrovica court still consists solely of EULEX judges and prosecutors and is 
operating with limited capacity. The rule of law in northern Kosovo is not fully guaranteed. 
EULEX task force for north is focusing on crimes affecting daily lives of people in Kosovo 
and has made first arrests. Cases related to the events of March 2004 are still pending. Kosovo 
institutions  also  fail  to  attach  sufficient  importance  to  support  investigations  and  judicial 
follow-up of war crimes. 

Improvements in cooperation between police and prosecution have been noted. However, the 
overall coordination between law enforcement and judiciary and within judiciary needs to be 
further enhanced in order to tackle crime proactively. Poor management and lack of support 
staff  has  further  undermined  prosecution  efforts.  Supervision  of  the  regional  prosecution 
offices by the Office of the State Prosecutor has not been adequate. The Office of the State 
Prosecutor and the Ministry of Justice has also shown limited cooperation. 

Following the promulgation of the law on pardon, sixty-two prisoners have been pardoned by 
the President of Kosovo. This has included some serving sentences for serious crimes and a 
majority  of  prisoners  who  had  been  refused  conditional  release.  The  assessment  process  of 
cases prepared for pardon needs to be improved. 

Overall, Kosovo has made progress in this sector. Major reform process of judiciary has been 
launched  by  the  adoption  of  the  law  on  courts,  which  should  also  improve  the  situation  of 
judges. Vetting process has also been largely completed. However, Kosovo is still at an early 
stage of addressing priorities in the area of justice. Political and other interference is an issue 
of  serious  concern.  The  large  backlog  of  court  cases  and  the  lack  of  effectiveness  of  the 
judicial  system  continue  to  impede  rule  of  law  in  Kosovo.  This  needs  to  be  addressed  by 
increasing  efficiency  of  the  system  rather  than  by  increasing  the  staff  numbers.  Further 
improvement  in  the  cooperation  among  all  relevant  agencies  is  also  urgently  needed  to 
address the existing challenges. 

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Anti-corruption policy 

Kosovo  has  made  some  progress  on  tackling  corruption.  The  legal  framework  on  anti-
corruption has improved. The law on financing of political parties has been adopted, but is not 
fully in line with European standards. One of the key weaknesses of the law is that it neither 
prohibits nor strictly regulates donations from legal entities which provide goods or services 
to public administration. The following three laws have also been adopted: the Law amending 
and supplementing the Law on preventing conflicts of interest in exercising public functions, 
the  Law  on  the  Anti-Corruption  Agency  and  the  Law  on  declaration  of  the  origin  of  the 
property  and  gifts  of  senior  public  officials.  As  a  result  of  the  adoption  of  this  law, 
declarations of assets have been published online. However, the declaration of assets of some 
senior  officials  has  not  been  published.  This  is  a  matter  of  serious  concern.  Available 
information  revealed  discrepancies  between  the  income  and  properties  of  senior  Kosovo 
officials. This indicates widespread corruption at high levels in Kosovo persist. This fact has 
not  been  followed-up  by  public  debate  or  investigations  of  the  relevant  bodies,  showing  a 
distinct lack of political will in fighting corruption. 

The  Assembly  has  adopted  the  anti-corruption  strategy  and  action  plan  for  2009-2011.  The 
conditions  for  the  work  of  the  Anti-Corruption  Agency  have  improved.  The  Agency  has 
revised the action plan. It has also started monitoring implementation of the action plan and 
has  received  reports  from  about  40  agencies  involved.  However,  they  demonstrate  limited 
ownership and commitment to implement it. While the relation between the Anti-Corruption 
Agency  and  the  prosecution  has  improved,  it  still  needs  to  be  intensified.  There  has  been  a 
raise  in  the  number  of  cases  related  to  mismanagement  of  public  funds  which  have  been 
reported to the Anti-Corruption Agency. Public awareness has increased. During the reporting 
period,  the  chief  executive  officers  of  five  independent  agencies  have  been  dismissed  or 
demoted on grounds of weak performance and alleged corruption. Concerns persist as regards 
sufficient justification substantiating such action. 

Kosovo Police has established its Directorate against economic crime and corruption, which 
however needs to operate in a professional manner free of political interference. The Kosovo 
Customs Service, the correctional service and the police have conducted a number of internal 
investigations leading to a range of sanctions, including suspensions. Additional prosecutors 
have been appointed to the Special Prosecution Office. Within the Special Prosecution Office, 
an anti-corruption task force has been created. However, EULEX has continued in exercising 
its executive mandate in cases related to high profile corruption cases. The Kosovo authorities 
and EULEX have initiated a number of investigations, notably the central bank governor, the 
minister  of  transport  and  others.  Senior  officials  of  the  government  have  shown  restraint  in 
this regard. 

The delivery of results in the fight against corruption on the part of Kosovo authorities needs 
to be improved considerably. The major concerns still revolve around the work of the public 
sector, procurement, the judiciary and law enforcement, with the number of final convictions 
in  corruption  cases  remaining  very  low.  There  is  no  mechanism  for  tracking  investigations, 
indictments,  prosecutions  and  convictions  that  would  ensure  transparency  on  the  status  of 
corruption  cases.  The  inter-agency  cooperation  on  corruption  is  insufficient  and  results  in 
inconsistent implementation of legislation, strategies and action plans as well as information 
to  public.  The  inter-ministerial  working  group  on  anti-corruption  measures  has  failed  to 
deliver tangible results. The Directorate against economic crime and corruption in the Kosovo 
Police  lacks  proper  equipment  and  needs  strengthening.  Law  enforcement  agencies  need  to 
step up considerably their efforts to fight internal corruption, free of political interference.  

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The legal framework is still incomplete and does not fully comply with European standards. 
Further  provisions  need  to  be  adopted  to  protect  whistleblowers  along  with  legislation  on 
liability of legal persons. The Law on conflicts of interest lacks relevant reporting obligations. 
Conflicts of interest cases continue to be largely under-reported and not adjudicated. Lack of 
political will and appropriate commitment of authorities involved in legal drafting resulted in 
unclear legal provisions. The provisions regulating the system of sanctions in this law and in 
the  law  on  declaration  and  origin  of  the  property  and  gifts  of  senior  public  officials  are  not 
clear  enough.  Furthermore,  the  procedure  before  courts  provided  for  in  this  law  is 
cumbersome.  Political  interference  and  nepotism  in  reappointments,  reassignments  and 
dismissals need to be avoided. The appeal procedure before courts provided for in the Law on 
declaration of property and gifts is cumbersome. A track record on implementation is missing. 

In  the  main,  limited  progress  has  been  made  by  key  institutions  on  implementation  of  the 
sector-specific strategic objectives. Focused reporting by key agencies needs to be improved. 
Most of the corruption cases reported are related to courts. This is a matter of serious concern. 
Low-level corruption in health or education institutions is another concern and impedes equal 
access to services by all citizens. 

In order to step up the efforts in the fight against corruption, the Kosovo authorities need to 
dedicate their  efforts  to  establishing  a  functioning  system  of  checks  and  balances.  This 
includes a modern financial control system, transparent accountability mechanisms, vigorous 
methods 
in 
inappropriate  political 
appointments, reassignments and dismissals, particularly in rule of law institutions.  

interference  and  nepotism 

to address  and  avoid 

Overall, some progress has been achieved in the fight against corruption. However, corruption 
remains  prevalent  in  many  areas  and  still  constitutes  a  very  serious  concern.  Following  the 
partial  revision  of  the  legislative  and  institutional  framework,  Kosovo  still  needs  to 
demonstrate  results  in  investigations,  indictments,  prosecutions  and  convictions  in  anti-
corruption cases.  

2.2. 

Human rights and the protection of minorities 

Observance of international human rights law 

As regard the ratification of human rights instruments, as Kosovo is not a member of the 
UN  nor  the  Council  of  Europe,  it  is  not  subject  to  the  frameworks  with  these  international 
bodies for regular reporting and cooperation on human rights (including the European Court 
of Human Rights).  

However, Kosovo should continue to cooperate according to ad hoc arrangements and report 
on human rights to UN treaty bodies and Council of Europe mechanisms. Recommendations 
from these bodies should be implemented. 

Limited progress has been made with regard to the promotion and enforcement of human 
rights.  Constitutional  Court  started  to  play  its  role  in  terms  of  protecting  human  rights  and 
fundamental  freedoms.  Kosovo  continued  to  implement  the  strategy  and  action  plan  for 
human rights for 2009-2011.  

However,  human  rights  mechanisms  are  not  efficiently  coordinated  both  at  central  and 
municipal levels. It is not allowing for effective reporting on human rights enforcement. The 
central  human  rights  units  remain  constrained  by  lack  of  funding  and  training.  Their  poor 

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the  ministries'  administration  and  poor  communication  with 

inter-action  with 
the 
ombudsperson do not contribute to enhancing awareness on human rights. At municipal level, 
the human rights units have not reached a satisfactory level of performance. Most of them are 
marginalised within the municipal structure and thus largely ineffective.  

Overall, there has been limited progress in this area. Both the institutional framework and the 
financial  commitment  of  Kosovo  are  inappropriate  for  implementation  of  the  human  rights 
legislation. Ensuring full respect for human rights is a key European Partnership priority. 

Civil and political rights 

The  government  needs  to  do  more  as  regards  the  prevention  of  torture,  allegations  of  ill-
treatment and excessive use of force by police and prison staff. Strong efforts are need in the 
fight against impunity. Some positive trends can already be observed. 

In the area of access to justice, there has been limited progress. The Legal Aid Commission is 
continuing to cooperate with the Chamber of Advocates and NGOs to ensure access to justice 
for  all.  A  Law  on  legal  aid  has  been  adopted.  Additional  publicity  campaigns  have  been 
mounted  to  improve  implementation  of  the  programme  on  free  legal  aid.  Five  more  offices 
have been opened in addition to the five already existing. A legal aid office has been opened 
in north Mitrovicë/Mitrovica with three Kosovo Serb employees.  

However,  the  growing  backlog  of  cases,  lengthy  procedures,  perception  of  widespread 
corruption  within  the  judiciary,  limited  capacity  of  legal  aid  offices  to  assist  victims  in 
criminal  proceedings,  non-implementation  of  the  Law  on  mediation,  insufficient  number  of 
judges  in  the  reappointment  process,  improper  conduct  of  contested  civil  proceedings  and 
unexecuted  verdicts  have  dented  public  confidence  in  the  capacity,  professionalism  and 
fairness of the judiciary, thereby limiting effective access to justice. 

The  Ministry  of  Justice  facilitates  access  to  justice  for  victims  (of  trafficking,  domestic 
violence, etc.) and minorities via a network of court liaison offices which, however, are not 
fully  functional.  There  are  some  overlaps  with  the  Legal  Aid  Commission.  In  the  north  of 
Kosovo, access to justice is still impaired by the lack of Kosovo Albanian and Kosovo Serb 
judges and prosecutors. EULEX has had to deal with the most serious cases, especially when 
suspects have been in pre-trial detention for long periods. This leaves a large backlog of cases 
that  need  to  be  tackled  by  local  authorities.  In  other  areas  inhabited  by  non-majority 
communities, numerous obstacles stand in the way of access to justice. The backlog of civil 
cases includes a large number with an inter-ethnic dimension. The failure to resolve them is 
also  eroding  confidence  in  the  judiciary.  Finally,  the  lack  of  legal  cooperation  with  Serbia 
leads to denial of justice in some cases.  

Access to justice for victims of trafficking, both children and women, needs to be improved. 
Various  agencies  protecting  victims  and  investigating  traffickers  need  to  build  up  their 
capacity. There is a lack of forensic units specialising in cases of rape, trafficking of human 
beings and domestic violence.  

Overall,  Kosovo  has  achieved  limited  progress  in  this  area.  A  number  of  obstacles  are  still 
limiting access to justice in Kosovo. Kosovo is at an early stage in ensuring access to justice. 

As  regards  the  prison  system,  a  number  of  security  concerns  have  been  addressed  and 
material  conditions  improved  in  correctional  and  detention  centres.  Allegations  of  ill-

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treatment and/or excessive use of force by police and prison staff have decreased. There were 
a  limited  number  of  reports  of  ill-treatment  in  the  Dubrava  detention  centre.  EULEX  has 
started to train the units working there. The Law on execution of criminal sanctions has been 
adopted. A separate space for juvenile female detainees has been allocated. The decision has 
been taken to build the Kosovo Forensic Psychiatric Institute to address the lack of adequate 
detention  facilities  for  offenders  with  diminished  mental  capacity.  Some  progress  has  been 
made on dealing with prisoners with special needs. The Ministry of Justice has continued to 
supervise sentences and community service work imposed by the court for juvenile offenders. 
The number of reports of ill-treatment and excessive use of force has decreased.  

However,  overall  conditions  in  prisons  and  detention  facilities  continue  to  be  an  issue  of 
concern. The cell size mentioned in the Law on execution of penal sanctions does not meet 
EU standards. The Prisoner Escort Unit still cannot perform its task adequately, due to lack of 
equipment and low security standards. There are no plans for management of the increasing 
number  of  drug  addicts  in  the  prison  population.  Efforts  have  been  renewed  to  address 
disciplinary issues. However, there have been reports of unchallenged misconduct, nepotism, 
corruption and political interference amongst the staff. Oversight is inadequate and does not 
allow  systematic  investigation  of  claims  or  protection  of  whistle-blowers.  Alternatives  to 
detention  need  to  be  used  more  frequently.  The  range  of  community-based  programmes  for 
juvenile offenders continues to be limited and facilities to imprison juveniles are lacking. The 
Service has no adequate information system that can record and provide reliable information 
on the prison population. This impedes the production of statistics, on recidivism for instance, 
and the definition of working social reintegration programmes. 

Most Kosovo Serb detainees remain in the Mitrovicë/Mitrovica detention centre. Only a few 
are  in  the  Gjilan/Gnjilane  and  Prishtinë/Priština  detention  centres.  These  centres  are  not 
equipped for long-term correctional detention. Cooperation between the Service headquarters 
and the Mitrovicë/Mitrovica detention centre needs to be improved. 

Overall, some progress has been achieved with regard to correctional facilities. Kosovo starts 
to address its objectives in this area. 

As regards freedom of expression, limited progress can be reported. The Law on access to 
public documents has been adopted. Its implementation will be crucial. Journalists continue to 
receive  pressure,  including  from  elected  officials,  in  reaction  to  their  reporting.  The  media 
structure  remains  conducive  to  the  strong  influence  by  partisan  and  ownership  interests  on 
journalists.  The  Kosovo  authorities  remain  one  of  the  biggest  advertisers  in  the  print  media 
generating a dominant position over the media. The journalists face difficulties in accessing 
official  documents.  Professional  education  and  training  for  journalists  is  improving. 
Investigative  journalism  needs  to  be  strengthened.  Inconsistencies  between  the  Law  on 
defamation  and  insults  and  the  Criminal  Code  have  not  been  resolved.  This  creates  legal 
uncertainty on the defamation provisions. 

The  board  of  the  public  broadcaster  RTK  has  been  appointed  and  is  operational.  All 
management positions have been filled. However, a long-term financing model for RTK has 
yet  to  be  found.  RTK  was  on  the  brink  of  bankruptcy  and  had  to  be  rescued  by  emergency 
funding from the Kosovo budget. The independence and impartiality of RTK are still not fully 
ensured. RTK and the Independent Media Commission remain in dispute about whether RTK 
is  fulfilling  its  commitments  on  minority  broadcasting  in  terms  of  hours  provided  on 
television and signal coverage for radio.  

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Overall, limited progress can be reported on freedom of expression. It is not fully guaranteed 
in practice and the media structure is conducive to strong political interference.  

Freedom  of  association  and  assembly  has  not  improved.  NGOs  participate  on  an  ad  hoc 
basis in the legislative process as well as in the work of central administrations. Government 
plans  to  amend  the  Law  on  freedom  of  association  in  non-governmental  organisations  have 
raised concerns within civil society. Public understanding of the role of civil society remains 
low. The latter continues to depend mostly on international funding preventing any long-term 
strategy. The monitoring capacity of NGOs is increasing, but remains limited.  

Overall,  no  progress  can  be  reported  in  this  area.  The  environment  in  which  NGOs  operate 
needs  to  be  significantly  improved.  The  government  does  not  make  sufficient  use  of  civil 
society expertise. 

In  relation  to  freedom  of  religion,  there  has  been  some  progress.  The  transfer  of 
responsibility  for  the  guarding  of  historical  and  religious  sites,  including  Serbian  Orthodox 
ones,  from  KFOR  to  the  Kosovo  Police  reflects  a  safer  environment.  The  Reconstruction 
Implementation  Commission,  chaired  by  the  Council  of  Europe,  is  progressing  on  the 
implementation of its mandate to restore 34 orthodox sites damaged in March 2004. A third of 
the  works  remains  to  be  carried  out.  The  Catholic  cathedral  construction  was  completed  in 
Pristina.  

However,  a  small  number  of  religious  heritage  sites,  including  Serbian  Orthodox  churches, 
Orthodox  and  Muslim  cemeteries  have  been  vandalised.  The  legal  framework  allowing  for 
religious freedom and activities should be adapted. Religious communities are still required to 
register as NGOs. Some small denominations claim that they are being discriminated against 
by the authorities, including by being prevented to open a cemetery.  

Overall,  there  has  been  some  progress  on  freedom  of  religion.  Reconstruction  of  religious 
sites continues but more needs to be done to reconcile the various religious communities. This 
is a key priority of the European Partnership. 

Economic and social rights 

In  the  area  of  women’s  rights,  limited  progress  can  be  reported.  The  Law  for  protection 
against domestic violence was adopted. The Agency for Gender Equality (AGE) continued to 
facilitate, promote and monitor the implementation of the Gender Equality Programme (2008-
2013) eventually approved by the Assembly.  

However,  the  lack  of  access  to  justice  for  victims  of  domestic  violence  remains  a  problem. 
While  criminal  law  says  that  crimes  of  bodily  harm  committed  in  a  domestic  relationship 
must  be  prosecuted  ex  officio,  courts  often  fail  to  prosecute  them.  Undue  termination  of 
prosecution  was  frequent.  Incomplete  investigations,  poor  cooperation  between  police  and 
prosecutors  and  failure  to  arrest  offenders  all  increased  victims’  vulnerability  to  recidivism, 
while  allowing  perpetrators  to  go  unpunished.  Staff  in  institutions  assisting  victims  of 
domestic  violence  needs  training.  Their  limited  knowledge  of  the  legal  framework  does  not 
allow for appropriate level of legal representation.  

Overall, limited progress can be reported with regard to women's rights. The legal framework 
has been strengthened but the overall enforcement of the relevant legislation remains uneven 
and therefore has a limited impact on women's lives.  

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Protection of children’s rights has improved slightly. Progress has been made in the area of 
juvenile justice by adoption of a revised and improved juvenile justice code. This brings better 
standards for implementation by the court and prosecution and probation system concerning 
juveniles and children. Kosovo issued its first report on the implementation of the convention 
on the rights of the child. 

However, implementation of the child rights strategy and action plan needs more political and 
financial  commitment.  Children  from  minorities  currently  face  an  even  higher  risk,  with  an 
estimated poverty rate of 60%. The social assistance scheme is not adapted to reducing child 
poverty: the vast majority of poor children live in households that receive no social assistance. 
School drop-out rates, access to justice for children and child forced begging and trafficking 
remain  of  concern.  Awareness  on  these  problems  is  low  among  the  public  and  authorities. 
Efforts  to  identify  and  prosecute  perpetrators  need  to  be  stepped  up.  Facilities  need  to  be 
adapted to the needs of juvenile offenders. 

Overall, child protection remains weak. Tangible efforts are needed to guarantee and enforce 
children’s rights. 

Limited  progress  can  be  reported  on  socially  vulnerable  groups  and  persons  with 
disabilities. The implementation of the Action Plan for People with Disabilities (2009-2011) 
continued, including monitoring activities. The government promoted the inclusion of persons 
with  disabilities  by  supporting  some  projects  and  at  various  instances  such  as  the  Equal 
Professional  Opportunities  Days,  the  International  Day  of  Persons  with  Disabilities  and  the 
International White Cane Day. The government decided to formalise the sign language. The 
Ministry  for  Education,  Science  and  Technology  has  launched  the  implementation  of  the 
strategic plan for organising inclusive education for children with special educational needs in 
pre-university education in Kosovo, 2010-2015.  

Overall,  limited  progress  can  be  reported  in  this  area.  The  needs  of  the  socially  vulnerable 
groups and persons with disabilities require more commitments.  

In the area of labour and trade unions rights, the Law on strikes has been adopted.  

Trade  unions  representing  public  services  organised  protests  during  the  reporting  period, 
affecting the health and education sectors, public administration, justice, correctional services, 
mining,  fire  services,  the  police  and  energy  utilities.  All  the  protests  resulted  in  salary 
increases  and,  in  some  cases,  improvements  in working conditions. There is still no Labour 
law.  Labour  inspectorates'  resources  remain  poor  and  do  not  allow  for  effective  monitoring 
across Kosovo.  

Overall, the labour and social legislation remains inadequate. The adoption of the Labour law 
and the Law on the economic and social council remains urgent. Other challenges are linked 
to the low capacities in this sector. The dialogue between the trade unions and the government 
needs to be enhanced (see also 4.1 Internal Market).  

The government continued to implement the anti-discrimination Law. It carried out an anti-
discrimination  campaign  with  special  emphasis  on  discrimination  on  grounds  of  sexual 
orientation  or  age.  It  combined  broadcasts  on  public  television  with  a  series  of  brochures, 
published in all official languages, each highlighting common examples of one particular type 
of prohibited discrimination.  

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However, implementation and monitoring of anti-discrimination legislation need to be further 
ensured.  Awareness  on  lesbian,  gay,  bisexual  and  transgender  (LGBT)  issues  remains  low. 
Debates on homosexuality are exceptional in the public and private spheres. The high level of 
formal  protection  provided  by  law  has  to  be  effectively  implemented.  (please  see  on  the 
Ombudsperson Law under public administration) 

As  regards  property  rights,  the  actual  access  to  and  enjoyment  of  property  is  not  fully 
ensured.  

Two  local  members  of  the  Supervisory  Board  of  the  Kosovo  Property  Agency  (KPA)  have 
been appointed as well as the Agency's deputy director. 40,855 claims have been recorded, of 
which 26,468 have been adjudicated by the Kosovo Property Claims Commission. All but a 
hundred  adjudicated  claims  are  pending  re-notification.  Implementation  of  eviction  orders 
improved  following  the  signature  by  the  KPA  and  Kosovo  Police  of  a  memorandum  of 
understanding  for  this  purpose.  UNHCR  offices  in  Serbia  were  allowed  by  the  Serbian 
government to deliver to the displaced owners the pending decisions affecting their properties 
located in Kosovo.  

However, actual repossession remains a long and difficult process. 414 decisions have been 
implemented, of  which 102 have led  to physical repossessions, while  312  have  been  placed 
under  the  administration  of  the  KPA.  The  work  of  the  Supreme  Court  panel  for  appeals 
against contested KPA decisions is stopped until the appointment of a local judge. Property 
cases  continue  to  be  the  bulk  of  the  civil  cases  backlog  before  the  courts,  including 
approximately 21,000 compensation claims. Trials in property cases are often repeated due to 
irregularities, either in the judgment or in the proceedings. Inter-ethnic property disputes are 
unduly  prolonged  before  the  local  courts.  KPA's  compensation  scheme  for  socially-owned 
apartments has yet to be accompanied by appropriate legislation. There is still no law on sales 
of  apartments  where  tenure  rights  exist.  Some  land  registry  books  remain  in  Serbia.  Only  a 
few  municipalities  have  property  rights  registers  connected  to  the  central  land  registry. 
Expropriation procedures are sometimes misused for corruption purposes leading to the lack 
of compensation for the owners. 

Overall, there has been limited progress in the area of property rights. The weak enforcement 
of the property-related legislation is the major obstacle to protect and enforce property rights, 
which is a key European Partnership priority. 

Respect for and protection of minorities, cultural rights 

There  has  been  limited  progress  in  this  area.  The  increased  capacities  of  the  Ministry  for 
Communities  and  Return  (MCR)  and  the  decentralisation  process  are  providing  a  good 
framework for future  improvement (see also  2.1).  Many  people  from  minority  communities 
continue to utilize parallel services for education, social protection and health care. 

As regard the enforcement of cultural rights, the Ministry for Culture, Youth and Sports has 
formally established the department for cultural heritage. Its mandate entails overseeing seven 
regional  centres  for  cultural  heritage.  The  ministry  has  chaired  a  meeting  of  the  forum  for 
exchanging  technical  information  on  cultural  heritage,  raising  public  awareness  on  the 
subject. The Council for Cultural Heritage has been established. The Ministry of Environment 
and  Spatial  Planning  has  continued  chairing  the  inter-ministerial  working  group  on 
implementation of protective zones. 

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However,  cultural  heritage  sites  are  affected  by  damages,  demolition  and  inappropriate  or 
illegal constructions in their vicinity. The department for cultural heritage requires enhanced 
capacities. The integrated conservation strategy has not been adopted yet. The Law on cultural 
heritage,  which  gives  the  mandate  to  Kosovo  to  oversee  protection,  preservation  and 
promotion of cultural heritage, is not fully implemented. The list of protected cultural heritage 
sites  has  not  yet  been  approved.  The  laws  to  protect  Velika  Hoča/Hoçë  e  Madhe  and  the 
historic centre of Prizren have not yet been adopted. Laws regarding cultural heritage are not 
harmonised with the Law on spatial planning. Only a few municipalities have finalised their 
municipal  development  plans  addressing  heritage  sites.  Some  construction  activities  carried 
out  by  the  Serbian  Orthodox  Church  itself  go  unregulated  by  local  and  international 
institutions.  The  inadequate  communication  between  the  Serbian  Orthodox  Church  and 
Kosovo  institutions  contributes  to  the  vulnerability  of  many  religious  and  cultural  heritage 
sites.  The  Head  of  the  Greek  liaison  office  in  Pristina, in his capacity as  EU facilitator,  has 
undertaken  constructive  efforts  to  address  this  issue.  Cooperation  among  the  relevant 
ministries needs to be enhanced.  

Overall, there has been limited progress in the heritage area. Many sites remain at risk and the 
legal  framework  is  weakly  implemented  and  remains  incomplete.  (see  also  Freedom  of 
religion) 

Access  to  education  for  minority  communities  has  been  enhanced.  The  Ministry  for 
education,  science  and  technology  organised  broad  consultations  on  the  curriculum 
framework in order to inter alia provide mother tongue education as a subject for Albanian, 
Bosnian,  Serbian  and  Turkish  communities  as  guaranteed  by  law.  The  review  by  the 
independent  commission  of  the  existing  curriculum  teaching  materials  in  Serbian  paves  the 
way  for  the  development  of  a  revised  curriculum.  The  curriculum  on  Romani  language  and 
culture  has  been  adopted.  The  Gorani  community  families  have  accepted  a  compromise 
responding to their needs as regard the curricula in use.  

However,  learning  Albanian  or  Serbian  language  is  not  compulsory  for  the  Serbian  and 
Albanian communities, respectively. Trainings are urgently needed to ensure the use of new 
language curricula, which is key to develop interactions between communities. 

The  Law  on  the  use  of  languages  is  increasingly  implemented  in  the  judiciary.  A  large 
majority of municipalities have adopted the regulations according to the Law.  

However,  the  decreasing  knowledge  of  the  second  official  language  by  civil  servants  and 
employees  of  public  companies  raises  legitimate  concerns.  Municipalities  and  public 
institutions’  websites  are  not  systematically  providing  information  in  all  official  languages. 
Municipal capacities and resources dedicated to implement the law are scarce. The Language 
commission  produced  its  first  report  on  implementation  of  the  law;  it  covers  only  some 
administrations.  The  commission's  status  and  resources  are  inadequate  to  meet  all  its  legal 
obligations, in particular to raise awareness on its existence and mandate. 

The minority media fund and its distribution are not assessed by any transparent process. The 
situation  of  minority  media  has  not  improved.  Following  disconnection  of  26  uncertified 
antennae  of  Telecom  Serbia,  six  attacks  were  carried  out  on  legally  operating  antennae  in 
northern  Kosovo.  Five  transmitters  were  destroyed.  Telecom  Serbia  antennae  in  the  north 
continued  to  operate  as  previously.  Following  a  system  overload,  the  Kosovo  energy 
corporation  disconnected  power  supplies  to  the  North.  A  Serbian  company  established  an 
alternative  supply  source  to  this  part  of  Kosovo.  However,  the  Serbian  utility  has  been 

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unsuccessful  in  its  subsequent  billing  and  collection  efforts:  despite  concerted  campaigns, 
these remain at less than 20%.  

There has been little progress towards deeper reconciliation between communities. The status 
of the minority communities remains protected and guaranteed by law. In general, inter-ethnic 
incidents  have  been  decreasing  and  limited  to  sensitive  areas.  The  institutions  mandated  to 
address communities' concerns are numerous. The Ministry for Communities and Return has 
developed its capacities and engaged in a constructive collaboration with municipalities. The 
Community  Consultative  Council  meets  regularly  and  is  increasingly  consulted  by  relevant 
executive bodies. 

However, inter-community tensions continue to hamper a sound reconciliation and integration 
process.  The  relevant  institutions  are  not  properly  coordinated  and  streamlined  to  address 
minority  concerns.  The  communities'  position  share  in  the  public  administrations  and 
companies  is  low.  Employment  opportunities  for  minority  communities  are  particularly 
scarce. Integrating communities requires more focus and more political commitment. 

In  the  area  of  refugees  and  internally  displaced  persons,  some  progress  can  be  reported. 
Since January 2010, more than 1600 members of minorities returned voluntarily to Kosovo. 
This  is  a  sharp  increase  in  a  difficult  regional  context.  The  Ministry  for  Communities  and 
Returns strategy was adopted on 12 February 2010. The municipal return officers have been 
given  a  stable  legal  status  as  part  of  the  municipal  communities'  offices.  The  government 
allocated some financial resources to facilitate the return process. The government promoted a 
safe  and  dignified  return  of  refugees  and  internally  displaced  persons.  Some  pieces  of  land 
were allocated for long-term use (99 years) for landless returnee families in order to guarantee 
the sustainability of the return process. The government is continuing to run humanitarian bus 
lines which are used by many members of minority communities in isolated areas to commute 
to urban areas for basic services and shopping. 

However,  some  incidents  have  occurred.  Municipal  return  strategies  are  yet  to  be  fully 
implemented. A higher level of synergy is necessary between the frameworks put in place for 
voluntary returns and forced returns. Employment opportunities in places of return are scarce. 

Overall, the returns process remains a challenge for Kosovo’s institutions. Limited access to 
property, delayed property restitution proceedings and the scarcity of economic opportunities 
continue  to  be  the  main  obstacles  to  sustainable  returns.  Many  displaced  persons  are  still 
living in difficult conditions. 

As regard the Roma, Ashkali and Egyptian communities, limited progress can be reported. 
Their situation remains a very serious concern.  

The Office for Good Governance has set up a mechanism to monitor the implementation of 
the strategy for integration of the Roma, Ashkali and Egyptian communities. The government 
adopted  the  operational  plan  for  the  resettlement  of  families  living  in  Cesmin  Llug/Česmin 
Lug and Osterode lead-contaminated camps. The Ministry for Communities and Return and 
the  families.  The 
Mitrovicë/Mitrovica  municipality  are  constructive 
government  promoted  the  civil  registration  of  Roma,  Ashkali  and  Egyptian  communities, 
including by offering to register free of charge. Upon its request, Kosovo participated in the 
Roma  Decade  steering  committee  as  an  observer  allowing  it  to  engage  with  key  actors  on 
regional Roma issues.  

to  resettlement 

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However,  enhanced  political  willingness  is  needed.  The  living  conditions  of  these 
communities  and  their  access  to  education,  health  care  and  social  protections  remain  very 
serious  concerns.  There  is  still  no  comprehensive  plan  to  regulate  the  informal  settlements. 
The weak communication between the municipal and central authorities prevents them from 
solving the legal status of informal settlements. The lack of civil status registration is a further 
obstacle  to  access  to  services.  Reintegration  of  forced  returnees  from  Roma,  Ashkali  and 
Egyptian communities is of particular concern (see also migration policies).  

The authorities need to increase their commitment to address urgent issues affecting the lives 
of the Roma, Ashkali and Egyptian communities.  

Overall, there has been limited progress on integration of minority communities. It is a key 
European Partnership priority. 

2.3. 

Regional issues and international obligations 

Cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY) 
has continued. The Court has initiated a partial re-trial in the case against Ramush Haradinaj. 

The  Working  Group  on  Missing  Persons,  bringing  together  delegations  from  Belgrade  and 
Pristina  and  chaired  by  the  International  Committee  of  the  Red  Cross  (ICRC),  continued  to 
meet  regularly.  Excavation  and  de-mining  works  have  started  on  the  Belaćevac  and  Košare 
sites  respectively,  where  human  remains  of  Kosovo  Serbs  are  allegedly  buried.  The 
Government allocated some funds and the support of the Kosovo Security Forces to carry out 
these  excavations.  The  Law  on  the  establishment  of  the  department  of  forensic  medicine 
(previously the office for missing persons and forensics) reorganises the latter and paves the 
way  for  developing  local  forensics  capacities.  Its  mandate  in  the  field  of  forensic  medicine 
and missing persons operations remains identical.  

However,  in  August  2010,  a  total  of  14,631  persons  were  still  missing  as  a  result  of  the 
conflicts  in  the  region.  Of  these,  10,402  were  related  to  the  conflict  in  Bosnia  and 
Herzegovina;  2,392  cases  to  the  conflict  in  Croatia  and  1,837  to  the  conflict  in  Kosovo 
according  to  figures  provided  by  the  International  Committee  of  the  Red  Cross.  During  the 
reporting  period,  only  48  cases  were  solved.  Progress  was  slow  and  mainly  based  on 
information  made  available  from  international  archives  and  Serbian  police  and  army 
documents.  Kosovo  is  yet  to  respond  to  requests  on  gravesite  locations.  Research  has  not 
started in Livoq Lake. The Commission on missing persons is performing poorly even after 
additional  human  resources  have  been  allocated  to  its  secretariat.  Furthermore,  the 
Commission remains exclusively composed of Kosovo Albanians. The issue of compensation 
for  the  families  of  missing  persons  was  not  addressed.  The  legal  framework  remains 
inadequate; it neither gives a legal personality to missing persons nor recognises the right-to-
know of the missing persons' families. 

Overall,  limited  progress  can  be  reported;  serious  challenges  still  remain.  It  is  a  complex 
process  requiring  an  enhanced  political  commitment,  supported  by  financial  and  technical 
resources.  Unless  they  are  addressed,  the  issue  of  missing  persons  will  continue  fuelling 
resentment, hindering the reconciliation process and adversely affecting the overall political 
climate in Kosovo. 

External representation of Kosovo remains a challenge. UNMIK is the signatory, on behalf of 
Kosovo, for a number of international agreements and regional initiatives. Some of the parties 

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to these agreements insist that Kosovo be represented by UNMIK. Kosovo stresses the need 
to respect the Constitution, which stipulates that responsibility for international representation 
lies with the Pristina authorities. The authorities have stated they are not willing to accept to 
take part in regional cooperation structures under UNMIK. 

Kosovo has participated regularly in meetings of the Regional Cooperation Council (RCC). It 
also  took  part  in  the  EU-Western  Balkans  High-Level  Meeting  held  in  Sarajevo  in  June. 
However,  Kosovo  did  not  attend  the  latest  RCC  Board  meeting  in  September.  The  Kosovo 
authorities  did  not  organise  a  meeting  of  the  Central  European  Free  Trade  Agreement 
(CEFTA)  sub-committee  on  customs  and  rules  of  origin,  which  Kosovo  chaired  during  the 
reporting period.  

Kosovo needs to ensure its effective participation in cooperation initiatives, such as the RCC 
and  CEFTA  to  keep  pace  with  regional  developments.  In  particular,  concerning  CEFTA, 
Kosovo needs be constructive in order to ensure the agreement's implementation.  

Kosovo  continues  to  participate  in  the  Energy  Community  Treaty,  the  European  Common 
Aviation  Area  Agreement  and  the  South-East  Europe  Transport  Observatory  without 
obstacles.  Kosovo  participated  in  the  technical  negotiations  for  the  Transport  Community 
Treaty, the signing of which has been delayed. 

Kosovo  continued  to  participate  as  an  observer  in  the  Investment  Compact  for  South-East 
Europe,  which  is  designed  to  improve  the  investment  climate  and  encourage  private-sector 
development in the region. 

The  demarcation  between  the  territories  of  Kosovo  and  the  former  Yugoslav  Republic  of 
Macedonia  as  well  as  Kosovo  and  Albania  has  been  completed.  Efforts  are  underway  to 
complete the demarcation with Montenegro.  

Overall,  regional  cooperation  remains  a  matter  of  serious  concern.  An  acceptable  and 
sustainable solution for the participation of both Kosovo and Serbia in key regional fora needs 
to  be  agreed  as  soon  as  possible.  This  is  essential  for  inclusive  and  functioning  regional 
cooperation.  

3. 

ECONOMIC CRITERIA 

In  examining  the  economic  developments  in  Kosovo,  the  Commission’s  approach  is  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 

In  April,  the  government  of  Kosovo  adopted  its  medium-term  expenditure  framework 
(MTEF), covering the years 2011-2013. In July, an agreement was reached with the IMF on 
an  18-month  programme  supported  by  a  €109  million  Stand-By  Arrangement  (SBA). 
Subsequently,  the  MTEF’s  fiscal  scenario  was  updated  and  brought  into  line  with  the  IMF 
agreement.  The  fiscal  deficit  targets  for  2010  and  2011  did  not  change  substantially  but 
revenue  and  expenditure  estimates  were  adjusted  and  made  more  realistic.  Some  new 

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legislation is submitted to the government with no link to the MTEF. The fiscal surveillance 
mechanism  with  the  European  Commission  continued  with  meetings  being  held  on  a  bi-
annual  basis.  Overall,  political  consensus  on  the  fundamentals  of  market-oriented  economic 
policies  has  been  maintained.  However,  the  consistency  of  policy  formulation  and 
implementation  needs  to  be  reinforced  and  the  link  between  policy  priorities,  structural 
reforms and public expenditure remained weak. 

Macroeconomic stability 

The international economic and financial crisis had a limited impact on Kosovo’s economy. 
The main effect has been a drop of remittances, and reduced external demand and prices for 
Kosovo’s main exports. Real GDP growth decelerated from 5.4% in 2008 to 4.0% in 2009. In 
2008,  growth  was  driven  by  government  investment  and  private  consumption.  However,  in 
2009 and the first half of 2010 growth was almost entirely driven by government consumption 
and  investment.  Private  consumption  growth  was  subdued  at  2.1%  in  2009,  whereas 
government consumption grew by 16.4%. Nevertheless, their shares in GDP remained almost 
unchanged,  at  close  to  95%  and  18%,  respectively.  After  more  than  doubling  in  2008, 
government  investment  continued  to  grow  robustly  by  over  30%,  reaching  about  10%  of 
GDP, while private investment recovered from a slump in the previous year and expanded by 
a  real  5.0%  in  2009.  The  donor  sector  continued  to  wind  down  its  share  in  the  economy. 
Imports  of  goods  and  services  grew  by  a  real 3.5%  and  declined  in  nominal  terms  due  to  a 
strong  price  effect.  Exports  decreased  by  1.8%,  mainly  because  of  reduced  foreign  demand 
and  lower  international  prices  for  base  metals  and  articles  made  from  base  metals.  Though 
their availability improved somewhat over the year, economic statistics still remain weak and 
do  not  allow  a  comprehensive  assessment  of  the  economic  situation  in  Kosovo.  GDP  per 
capita3 reached €1,790 in 2009, equal to 7.6% of the EU-27 average compared with 7.1% in 
2008.  Overall,  Kosovo’s  economic  growth  was  mainly  driven  by  increased  government 
expenditure. There are growing risks to the sustainability of this growth profile. 

Exports of goods started to recover in the final months of 2009 thanks to the reopening of the 
second  production  line  of  Ferronikeli,  the  lead  and  zinc  mining  and  processing  company, 
which  is  Kosovo’s  biggest  exporter.  For  the  whole  year  exports  reached  4.2%  of  GDP  but 
were  still  below  the  5.1%  recorded  in  2008.  In  the  first  seven  months  of  2010  exports  of 
goods  increased  by  a  nominal  107%  over  the  same  period  last  year.  Imports  of  goods  fell 
marginally to 49.6% of GDP in 2009, down from 50.2% in 2008. Their structure has changed, 
shifting  from  consumption  goods  to  machinery  and  transport  equipment,  largely  linked  to 
accelerated public infrastructure spending. By the end of July 2010, imports of goods posted a 
12.3%  nominal  increase  with  more  than  three  quarters  of  commodity  groups  registering 
positive growth rates. 

The coverage ratio of exports of goods as a percentage of imports (12-month moving average) 
has  increased  since  it  bottomed  out  at  7.8%  in  September  2009  and  stood  at  12.1%  in  July 
2010, still extremely low. Compared to a deficit of 43.4% of GDP in 2008, the trade balance 
improved slightly in 2009, posting a deficit of 43.3% of GDP. From January to July 2010, the 
trade  deficit  increased  to  EUR  992  million  compared  to  EUR  949  million  in  the 
corresponding period of the previous year, as gains on the exports side were more than offset 
by increased imports. 

3 

A measure using PPP is not available for Kosovo. 

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In  2009,  the  current  account  deficit  (including  official  transfers)  widened  to  16.4%  of  GDP 
from 15.7% in 2008. The increase in the deficit was driven by a lax fiscal policy, poor exports 
of  goods  performance  and  by  a  severe  reduction  in  the  income  account,  which  dropped  by 
more than half – from 4.0% of GDP in 2008 to 1.8% in 2009. The main factor contributing to 
the  worsening  of  the  income  account  was  the  drop  in  net  investment  income.  Workers’ 
remittances and official transfers totalled 12.9% and 6.4% of GDP respectively. The surplus 
on  the  capital  and  financial  account  (12.7%  of  GDP)  was  not  enough  to  cover  the  current 
account deficit in 2009 and, as a result, reserve assets declined by €154.0 million. The capital 
account posted a surplus of 2.6% of GDP – a tenfold increase over the previous year, mainly 
because  of  repayment  of  World  Bank  debt  with  the  help  of  substantial  donor  support.  Net 
foreign direct investment dropped by 19% to 7.1% of GDP. Portfolio investments (-1.5% of 
GDP)  and  loans  (-1.9%  of  GDP)  turned  negative.  Net  errors  and  omissions  remained 
significant at 2.9% of GDP, illustrating that the balance of payments statistics do not capture 
properly  all  inflows  and  outflows  from  the  country.  Overall,  external  imbalances  remained 
significant and their financing led to a reduction in reserves as net capital inflows declined. 

Unemployment in 2009 remained very high and stood at 45% according to the Labour Force 
Survey.  In  the  first  half  of  2010,  the  number  of  registered  unemployed  shrank  by  0.2% 
compared with the first half of 2009. This drop was driven by the decrease in semi-skilled and 
skilled  unemployment,  whereas  unskilled  unemployment  increased  on  average  by  0.3%.  By 
the end of June 2010, unskilled unemployed accounted for 60% of total registered job seekers. 
An  estimated  30,000  young  people,  mostly  low-skilled,  enter  the  labour  market  every  year 
without  many  employment  opportunities  and  chances  of  professional  development.  Labour 
continues  to  be  Kosovo's  most  important  export  item  which  generates  an  inflow  of 
remittances  financing  a  large  share  of  domestic  consumption.  Information  about  the  labour 
market remained scarce and doubts about its accuracy persist. Moreover, official data do not 
provide a sound picture of the labour market given the high share of informal employment. 
The  time  lag  between  publication  of  labour  force  survey  data  and  the  reporting  period  has 
been shortened and the latest survey, covering 2009, was published in July 2010. There have 
been  some  positive  developments,  like  increased  participation  and  employment  rates. 
However,  the  employment  rate  was  only  26%,  and  youth  and  long-term  unemployment 
remained particularly high, at 73% and 82% of all unemployed. The structure of employment 
shows  that  labour  has  shifted  mainly  towards  non-tradable  sectors  –  some  17%  were 
employed  in  trade,  13%  in  education,  10%  in  administration,  8%  in  construction  and  only 
10%  in  manufacturing.  Overall,  in  spite  of  positive  growth,  the  economy  is  not  creating 
enough  jobs  to  absorb  the  young  new  entrants  and  reduce  pressures  on  the  labour  market. 
Unemployment remains very high. 

Annual inflation in 2009 was negative at -2.4%. Monthly inflation rates became positive by 
the end of 2009 and since then accelerated to reach 5.9% (year-on-year) in August 2010 when 
there  was  a  pronounced  spike  due  to  surging  bread  prices.  Bread  and  cereals  prices  alone 
contributed 2.3 percentage points to the headline inflation. By the end of August, the goods 
and services with positive contribution to inflation had a total weight of close to 75% in the 
whole  CPI  basket.  The  surge  in  this  indicator  over  the  summer  months  thus  reflected  more 
broad-based inflationary pressures. Consumption patterns were focused on tradable goods and 
services, which make up about three quarters of the CPI basket. Overall, inflation remained 
volatile, mainly because food and fuel prices weigh heavily in the calculation. 

Kosovo is using the euro as official currency and the Central Bank of Kosovo (CBK) has only 
limited policy instruments. The growth in broad money decelerated from 23.6% in December 
2008  to  11.2%  in  December  2009  and  even  turned  negative  after  May  2010,  following  a 

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substantial  reduction  in  public  non-financial  corporations'  deposits.  The  monetisation  of  the 
economy,  measured  by  the  ratio  of  average  broad  money  to  GDP,  increased  from  32.4%  in 
2008 to 38.0% in 2009. The central bank’s efforts were directed mainly towards improving its 
supervision  of  the  financial  sector.  In  June,  the  Law  on  the  Central  Bank  was  revised  to 
strengthen  CBK’s  independence  and  accountability  and  open  up  the  possibility  of  limited 
emergency liquidity assistance. Overall, the monetary framework continued to function well 
and financial stability was preserved. 

The  budget  deficit  increased  from  0.2%  of  GDP  in  2008  to  0.8%  in  2009.  The  underlying 
deficit  was,  however,  much  higher,  rising  to  about  6.0%  of  GDP  in  2009,  if  a  one-off 
€200 million  dividend  payment  received  from  Post  and  Telecommunications  of  Kosovo 
(PTK)  is  taken  into  account.  Total  revenue  (excluding  the  PTK  dividend)  remained 
unchanged from 2008 at 24.5% of GDP. Total expenditure increased by a nominal 24.1% to 
30.5% of GDP in 2009. Spending on wages and salaries was up from 5.9% of GDP to 6.8%, 
driven  by  salary  rises  for  public  employees.  As  a  result  of  a  better  execution  rate  for 
investments and an additional loan to support the Kosovo Energy Corporation (KEK), capital 
expenditure  and  net  lending  rose  from  7.6%  of  GDP  to  11.7%.  Government  deposits  at  the 
central  bank  dropped  from  €414 million  (10.8%  of  GDP)  in  2008  to  €342  million  (8.8%  of 
GDP)  at  the  end  of  2009.  In  December  2009,  the  Assembly  adopted  a  law  on  public  debt, 
which  placed  limits  on  state  and  municipal  borrowing.  In  no  event  shall  the  total  debt 
(guarantees included) exceed 40% of GDP. In 2009, Kosovo assumed obligations towards the 
World Bank, which stood at 6.4% of GDP at the end of December. Total government debt, 
including recognised international debt and borrowing from the IMF, stood at 6.8% of GDP at 
the end of August 2010. A debt management unit has come into operation within the Treasury 
of the Ministry of Economy and Finance. 

In 2010, a dividend payment was received from PTK, of €80 million, after the one of 2009. 
By the end of August, the underlying revenue growth, net of dividends, was a nominal 13.4%. 
It  was  underpinned  by  a  strong  performance  of  border  and  domestic  taxes  collection.  The 
expenditure  growth  pattern  remained  unchanged  and  capital  outlays  along  with  expenditure 
on wages and salaries kept growing at double-digit rates. The average monthly public-sector 
net  wage  increased  by  16.4%  in  the  first  quarter  of  2010  compared  with  the  corresponding 
period  of  2009.  Mainly  as  a  result  of  the  one-off  dividend  payment  from  PTK,  the  budget 
accumulated a surplus of €85 million by the end of August. Overall, the budget faces growing 
risks, as expenditure is growing much faster than tax revenue, and is increasingly financed by 
one-off revenue and reduction of accumulated deposits. 

initiatives  already 
Fiscal  planning  remained  ad  hoc,  with  government  expenditure 
substantially departing from budget plans and the medium-term expenditure framework by the 
beginning  of  2010.  In  March,  the  government  awarded  a  contract  for  the  building  of  the 
Vermica-Merdare  motorway.  This  infrastructure  priority  had  not  been  included  in  the  2010 
budget or the MTEF. The project is estimated at about €1 billion (about 25% of GDP) and is 
expected  to  be  completed  in  four  to  five  years.  In  May,  in  an  attempt  to  limit  fiscal  risks  – 
notably  those  stemming  from  the  motorway  project  –  and  revert  to  fiscal  sustainability,  a 
staff-level agreement was reached with the IMF on an 18-month programme, supported by a 
€109  million  Stand-By  Arrangement.  It  was  approved  by  the  IMF  Executive  Board  in  the 
second  half  of  July.  The  fiscal  framework  was  updated  in  order  to  incorporate  formally  the 
measures  agreed  under  the  IMF  programme  and  reflect  fully  the  estimated  cost  of  the 
motorway construction. To limit the deterioration of the budget deficit, selected excise rates 
were  increased  with  effect  from  the  beginning  of  July.  The  Law  on  public  financial 
management  and  accountability  was  amended  to  ensure  that  any  spending  initiative 

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introduced  in  mid-year  budgetary  reviews  in  2011  and  subsequent  years  will  be  fully 
compensated by credible new revenue measures or offset by expenditure cuts. As a result of 
the  agreement  with  the  IMF,  the  2010  deficit  target  remained  almost  unchanged  at  3.4%  of 
GDP  but  revenue  and  expenditure  estimates  have  been  adjusted  and  made  more  realistic. 
Overall, policy predictability, consistency and transparency remained a challenge. 

Due  to  Kosovo’s  relatively  low  level  of  integration  into  the  global  economy  and  lax  fiscal 
policy,  its  economy  was  largely  shielded  from  the  global  economic  crisis  and  continued 
growing  in  2009.  Economic  growth  was  increasingly  driven  by  government  expenditure, 
while  external  imbalances  remained  significant.  The  importance  of  fiscal  policy  for 
maintaining economic stability increased. The pressure on the labour market did not abate and 
the economy still faces daunting structural problems. Overall, the macroeconomic policy mix 
has been effective in sustaining economic stability but is increasingly vulnerable as a result of 
strong government expenditure growth. 

Interplay of market forces 

The Privatisation Agency of Kosovo continued the privatisation of socially owned enterprises, 
albeit  mainly  small  businesses,  with  limited  macroeconomic  impact.  At  the  beginning  of 
2010,  the  agency  started  liquidation  of  socially  owned  enterprises  for  which  there  is  no 
investor interest in privatisation. Some progress was made with the privatisation of publicly 
(State) owned enterprises. The government hired a transaction advisor for privatisation of the 
Post and Telecommunications of Kosovo. The government also hired a transaction advisor for 
privatisation  of  the  distribution  and  supply  functions  of  the  public  electricity  company 
(Kosovo Energy Corporation). This privatisation  and the transaction for the development of 
the new Kosovo power plant have suffered some delays, partly related to the energy market 
model  to  be  used.  Provisions  on  concessions,  under  the  public  procurement  law,  have  not 
been  adopted,  which  affected  the  legal  environment  for  these  companies. Overall,  there  has 
been  some  progress  with  the  privatisation  process,  especially  concerning  publicly  owned 
enterprises. 

Market entry and exit 

Online registration of businesses started in June. The Kosovo Business Registration Agency’s 
register  now  includes  about  45,000  active  companies  (the  respective  number  at  the  end  of 
2008  was  67,950)  out  of  a  total  of  around  97,000.  Information  on  registered  companies  is 
available  online.  In  2009,  the  number  of  new  and  re-registered  enterprises  was  about  7,500 
and remained almost unchanged over the previous year. A new project to establish one-stop-
shop  facilities  (22  in  total)  where  companies  can  obtain  various  licences  at  the  same  time 
started  in  eight  municipalities.  Fees  for  starting  and  closing  a  business  are  low,  but  the 
relatively large number of inactive firms in the business register suggests that the market exit 
improved  further.  Overall,  weak 
thereof  could  be 
regulations  and 
administration  and  the  rule  of  law,  unreliable  energy  supply,  limited  access  to  finance, 
corruption and poorly defined property rights hinder market entry and exit.  

implementation 

Legal system 

The  legal  system  continued  to  exhibit  poor  accessibility  and  efficiency,  and  some  areas  are 
not  covered  by  relevant  courts.  There  have  been  some  improvements  in  enforceability  of 
contracts, although informal methods of enforcement continue to be widespread. The situation 
regarding property rights remains a cause for concern. Only a few municipalities have digital 

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immovable property rights registers. These are not linked to the central land registry and there 
is  a  lack  of  communication  between  municipal  and  central  authorities.  Some  land  registry 
books  remain  in  Serbia.  In  general,  the  inability  of  authorities  to  implement  legislation 
comprehensively remains a major obstacle to protecting property rights. In cooperation with 
EULEX,  the  Kosovo  courts  are  in  the  process  of  investigating  several  high-level  corruption 
cases. Overall, the existing legal framework remains underdeveloped and its implementation 
remains poor. The difficult and costly legal enforcement of contracts and prevalent corruption 
continued to hamper the business environment. 

Financial sector development 

The  financial  sector  expanded  by  24.2%  in  2009,  taking  the  total  value  of  assets  to 
€2.8 billion or about 72% of GDP. The banking sector is still predominant and accounted for 
78.6%  of  assets,  followed  by  pension  funds  (13.6%),  microfinance  institutions  (4.7%), 
insurance companies (2.9%) and financial intermediaries (0.2%). The number of commercial 
banks (eight) and pension funds (two) remained the same, whereas another three microfinance 
institutions  (taking  their  number  to  19)  and  one  new  insurance  company  (making  them  11) 
started  up  activities  during  2009.  The  degree  of  concentration  of  the  banking  system  has 
declined but remains high, with 81% of the assets managed by three banks. More than 90% of 
the assets in the sector are handled by banks under foreign ownership. The net profit of the 
banking sector decreased by 30.5% in 2009, leading to a lower return on average assets (1.4% 
compared  with  2.4%  in  2008)  and  on  average  equity  (13%  compared  with  24.7%  in  2008). 
Non-performing  loans  increased  from  3.3%  of  total  loans  in  2008  to  4.3%  in  2009  but  the 
banking  system’s  capital  adequacy  ratio  remained  at  a  comfortable  18%.  Banks  have 
remained  profitable  in  2010  as  well.  Their  interest  income  remained  buoyant  and  retained 
profits increased by about 50% by the end of July. Overall, financial intermediation deepened 
at a much slower pace while the banking sector remained stable and profitable. 

Credit  activity  continued  growing  in  2009,  albeit  more  slowly  in  comparison  to  previous 
years. Banking sector loans grew by a nominal 8.9% to reach one-third of GDP in 2009 and 
expanded  by  11.3%  (year-on-year)  by  end-August.  In  2009,  credit  to  non-financial 
corporations grew by 4.6% and credit to households by 22.3%. By end-August, the growth of 
credit  to  non-financial  corporations  decelerated  to  4.1%,  while  credit  to  households 
accelerated to 28.5%. As a result, the structure of credit has changed and the share of credit to 
households increased at the expense of other non-financial corporations, whose share declined 
by  more  than  3  percentage  points  to  below  70%.  The  low  level  of  production  and  the  high 
dependence of the Kosovo economy on imports were reflected in the sectoral distribution of 
loans to private enterprises. The services sector continued to attract most of the credit but its 
share fell by 7 percentage points in 2009 to 70.7% of the credit to non-financial corporations 
by the end of the year and continued to fall in 2010. Credit to industry, the energy sector and 
construction has been steadily expanding (47% annual growth in 2009) and reached a quarter 
of all credit to non-financial corporations. This trend continued in 2010 and by end-August its 
share  was  already  28%  of  all  non-financial  corporations'  credit.  The  maturity  structure  of 
loans improved somewhat and loans with maturity longer than two years increased to 70% of 
the total loan portfolio in 2009 (up from 62% in 2008). 

After increasing by 20.8% in 2009, growth in deposits decelerated to 11.1% (year-on-year) by 
end-August. Households deposits grew by about 25% and, with a share of 67%, made up the 
majority of total deposits. By the end of 2009, total deposits increased to 45.1% of GDP from 
37.5%  in  2008.  The  loans-to-deposits  ratio  decreased  over  the  year  to  74%,  well  below  the 
informal benchmark that loans-to-deposits should not exceed 80%, but then rose again to 78% 

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in August. The annual average interest rate spread between loans and deposits dropped from 
10.6% in 2008 to 10.1% in 2009, still very high. This decrease was predominantly driven by a 
reduction of 0.4 percentage points in the interest rate on loans, as there was only a small 0.1 
percentage  point  increase  in  the  annual  average  interest  on  deposits.  Nevertheless,  average 
lending rates remained high at about 14.4%. The 12-month moving average spread started to 
increase  again  in  2010,  on  the  back  of  falling  deposit  interest  rates,  and  stood  at  10.4 
percentage  points  in  August.  As  in  the  previous  year,  the  spread  is  narrower  for  loans  to 
households  than  for  loans  to  non-financial  corporations.  Overall,  commercial  banks  have 
become  slightly  more  cautious  in  their  credit  expansion  and  lending  conditions  remained 
tight. 

3.2. 

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

Existence of a functioning market economy 

Macroeconomic stability has been preserved but fiscal and external vulnerabilities have been 
increasing.  The  policy  mix  is  increasingly  vulnerable  as  a  result  of  strong  government 
expenditure growth. Unemployment remains very high, revealing deep structural problems in 
the economy. Inflation remains volatile, with food and fuel prices making a big contribution. 
Poor  governance  and  ad-hoc  policy-making  have  contributed  to  a  high  level  of  economic 
uncertainty.  Overall,  macroeconomic  vulnerabilities  have  increased  and  deep  structural 
problems  continue  to  hamper  the  economy.  The  weak  rule  of  law,  corruption,  high  level  of 
informal  activities,  poor  infrastructure,  and  a  subsidised  and  unreliable  electricity  supply, 
impair the efficiency of market mechanisms.  

Human and physical capital 

Some progress was made in the education sector with certification of teachers and vocational 
training.  A  new  teacher  licensing  system  is  being  set  up,  along  with  a  Board  on  vocational 
education and training to ensure effective modernisation of vocational training institutions in 
Kosovo.  However,  education  is  still  hampered  by  financing  constraints,  lack  of  adequate 
facilities and poor-quality teaching. The Ministry of Education is developing higher education 
curricula  to  address  demand  and  skills  mismatches  on  the  labour  market.  Some  schools 
continue  to  operate  on  multiple  shifts.  Their  physical  condition  remains  poor  as  they  lack 
appropriate buildings, teaching material and equipment. The research capacity of universities 
and  research  institutes  is  still  very  weak.  Overall,  little  progress  has  been  made  towards 
improving the quality of education and there are low incentives for lifelong learning. 

Total investment equalled around 26.3% of GDP in 2009, an increase over the previous year 
24.4%.  Private  investment,  although  increasing  in  real  terms,  decreased  in  absolute  and 
relative terms and its share in total investment dropped by about 10 percentage points to about 
60%.  The  largest  share  of  public  investment  was  channelled  into  improving  the  road 
infrastructure.  The  sudden  decision  to  start  a  large  motorway  project  led  the  government  to 
reconsider  its  investment  priorities.  In  May,  an  international  consortium  was  selected  to 
develop the Pristina International Airport under a public-private partnership with a concession 
for  twenty  years.  Mobile  telephony  penetration  increased  to  71%  and  four  mobile  operators 
(two  mobile  network  operators  and  two  mobile  virtual  network  operators)  are  active  on  the 
market. Broadband penetration stands at 6.4%. Overall, there were marginal improvements in 
the  physical  capital  but  the  decrease  in  private  investment  to  a  five-year  low  as  a  share  of 
GDP could hamper improvement on the supply side. 

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Sectoral and enterprise structure 

Kosovo’s  enterprise  sector  remains  dominated  by  micro-enterprises.  More  than  90%  of  the 
enterprises  employ  less  than  four  people.  The  economic  structure  is  highly  concentrated  on 
the retail sector, with about half of all enterprises operating in this field. A Law on Economic 
Zones  has  been  adopted  and  the  procedure  to  establish  six  zones,  one  at  central  and  five  at 
municipal level, has started. The informal sector remains large. This is due to weaknesses in 
tax  and  expenditure  policies,  as  well  as  in  law  enforcement.  It  reduces  the  tax  base  and  the 
efficiency  of  economic  policies.  As  a  measure  to  combat  the  informal  economy,  the  tax 
administration started to issue fiscal numbers and install fiscal cashiers. Providing a reliable 
electricity  supply  remains  a  challenge  for  private  sector  development.  Despite  some 
improvements in billing and collection in 2009, about 42% of the energy entering the KEK 
network was not paid for. Overall, there has been almost no change in the enterprise structure 
and large informalities in the economy persist. The large informal sector remains an important 
challenge. 

State influence on competitiveness 

Regulatory authorities remain weak. The new law on mines and minerals as adopted in July 
seriously  undermines  the  independence  of  the  Independent  Commission  on  Mines  and 
Minerals  by  handing  over  responsibility  for  licensing  and  the  appointment  of  the  chief 
inspector of the Mining Inspectorate to the Government. The government has proposed to the 
Telecommunications Regulatory Authority to place a five year moratorium on the issuance of 
any further mobile telephony licences, which, if approved, would hurt consumer interests and 
reduce  competition  in  the  sector.  Budget  transfers  and  subsidies  remained  unchanged  from 
2008 at 3.5% of GDP. The public electricity company KEK continues to receive substantial 
subsidies from the state budget for electricity imports and loans for financing its investment 
programme. The government took some first steps to address a number of weaknesses in the 
public procurement system. Overall, the role of the state in the economy has been on the rise. 

Economic integration with the EU 

The  openness  of  the  economy,  measured  by  the  value  of  imports  and  exports  of  goods  and 
services  as  a  ratio  to  GDP,  increased  to  70.9%  from  68.9%  in  2008.  Exports  to  the  EU 
Member States showed a steep decline of 24.7%, down from 48% in 2008 to 41.5% of total 
exports  in  2009.  This  was  mainly  due  to  lower  external  demand  and  prices  for  Kosovo's 
export  of  nickel.  Exports  to  CEFTA  countries  declined  by  15.3%  but  their  share  of  total 
exports  remained  almost  unchanged  at  32.0%  in  2009.  The  EU  and  CEFTA  countries 
remained  the  main  origin  for  Kosovo’s  imports,  with  shares  of  38.7%  (36.4%  in  2008)  and 
36.1%  (37.2%  in  2008)  respectively.  Difficulties  related  to  the  recognition  of  the  customs 
stamps  hamper  trade  with  some  CEFTA  countries.  With  almost  three  quarters  of  the  new 
foreign investment inflows in 2009, the EU countries remain the biggest investors in Kosovo. 
Overall, economic integration with the EU remained low. 

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 

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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. A new Law on standardisation 
was  adopted  in  October  2009,  accompanied  by  a  by-law  on  the  functioning  of  the  Kosovo 
Standardisation  Agency  (KSA)  within  the  Ministry  of  Trade  and  Industry.  New  technical 
committees (in which companies participate actively) have been established in five product areas, 
bringing the total number up to fourteen. 

The  Kosovo  Standardisation  Agency  is  not  a  member  of  any  European  or  international 
standardisation  organisation.  Meanwhile,  under  a  memorandum  of  understanding  with  the 
Ministry of Economy, Trade and Energy of Albania, the KSA is able to adopt and distribute 
European  standards  (ENs)  within  Kosovo.  To  date,  around  2,180  EN-  and  ISO/IEC-based 
standards have been adopted as Kosovo standards, out of which around a third are harmonised 
European standards. The KSA is considered understaffed.  

There has been some progress on conformity assessment. In the reporting period eleven new 
conformity assessment bodies were accredited set up, bringing the total to fifteen. The Law on 
technical requirements for products and conformity assessment still has to be revised in order 
to take on board the 2008 horizontal acquis on marketing of products. 

Some  progress  has  been  made  on  accreditation.  In  addition  to  the  existing  technical 
committee for testing and calibration laboratories, a new technical committee for certification 
and inspection bodies has been set up. A memorandum of understanding on accreditation was 
signed with Turkey in November 2009. In November 2009, the Directorate for Accreditation 
in  the  Ministry  of  Trade  and  Industry  signed  a  contract  with  the  European  co-operation  for 
Accreditation (EA). This is a first step towards becoming a member of EA. 

There  has  been  some  progress  on  metrology.  New  administrative  instructions  cover  the 
conversion of measuring groups, authorisation of entities responsible for the technical control 
of  vehicles  and  authorisation  of  institutions  responsible  for  verification,  conformity 
assessment  and  official  measuring  of  liquids.  A  strategy  for  development  of  Kosovo’s 
metrology  infrastructure  for  2010-2014  was  adopted  in  June.  The  new  Kosovo  Central 
Laboratory  for  Metrology  started  its  operations  in  March  2010.  In  addition,  a  separate 
laboratory for the quality control of precious metals was established. 

There has been little progress on market surveillance. A new Law on market inspection was 
adopted in July, streamlining procedures and responsibilities for market surveillance based on 
the horizontal acquis from 2008.  

A new General Product Safety Unit was established in the Market Inspectorate of the Ministry 
of Trade and Industry, for the time being dealing with the market surveillance of construction 
products, machinery, toys and low-voltage electrical equipment. The total staff of the Market 
Inspectorate increased and the number of annual inspection cases went up, albeit from a low 
base.  

There  has  been  some  progress  in  the  area  of  consumer  protection.  In  December  2009,  the 
Consumer  Protection  Programme  for  2010-2014  was  adopted  and  implementation  started. 

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This  programme  aims  to  strengthen  the  legitimacy  of  the  Council  for  Consumer  Protection 
and  its  supervisory  activities,  along  with  the  transparency  and  accountability  of  institutions 
responsive  to  consumers.  A  Centre  for  Consumer  Protection  was  established  in  Pristina, 
where consumers can obtain free advice on consumer products and services. Administrative 
capacity remains low. The Consumer Protection Office in the Ministry of Trade and Industry 
employs only one member of staff.  

Overall, there has been some progress on the legal framework. However, approximation with 
the acquis in the area of free movement of goods is limited and the administrative capacity of 
transposition and implementation is insufficient. Considerable efforts are still needed in this 
respect. 

4.1.2.  Movement of persons, services and right of establishment 

Limited progress has been made in the area of free movement of persons.  

Little progress has been made in reforming the coordination of social security systems. Work 
has started on a strategy framework, but expertise and resources in this area are lacking.  

Little  progress  was  achieved  in  the  provision  of  services.  A  working  body  for  the 
coordination  of  legislative  harmonization  has  been  established  within  the  Ministry  of  Trade 
and Services. The legal framework is not compatible with the acquis. Statistics on services are 
incomplete,  making  it  difficult  to  develop  policies  in  this  area.  The  administrative  set-up  to 
achieve gradual alignment with European Standards is insufficient. 

Some  progress  has  been  made  on  postal  services.  The  Assembly  of  Kosovo  approved  the 
Law on Postal Services, which replaces the law on Postal Services of 2003. This is intended 
to provide for the establishment of a regulatory authority responsible for postal services. 

There  has  been  limited  progress  in  financial  services.  The  Law  on  the  Central  Bank  was 
amended in July. It strengthens its independence and accountability, modernise its corporate 
governance  and  provides  a  basis  for  limited  emergency  liquidity  assistance.  The  Law  on 
Deposit Guarantee Schemes adopted early October, provides for a coverage level of €2,000, 
which takes into consideration the level of Kosovo's economic development. Staff turnover in 
the  supervision  of  banks  has  been  stabilized  and  staff  trainings  have  been  carried  out. 
Supervision  is  migrating  from  a  rules  based  CAMEL  approach  (Capital  adequacy,  Asset 
quality,  Management,  Earnings,  and  Liquidity)  to  a  more  forward  looking  risk-based 
approach. Two Internal Committees were established to assess the existing situation on Basel 
I  and  Solvency  I  implementation  and  develop  a  roadmap  for  future  Basel  and  Solvency  II 
Implementation.  Consolidate  supervision  has  been  implemented  in  practice,  but  the  fully 
fledged formal legal base is still missing.  

There  have  been  no  particular  developments  to  report  as  concerns  non-banking  fields,  the 
securities markets and investment funds. 

There  was  no  progress  on  right  of  establishment.  Alignment  with  EU  standards  on  the 
recognition of professional qualifications is limited.  

Limited progress has been made in the area of company law. A project to establish one-stop-
shops  to  set  up  companies  continued  to  be  implemented.  No  progress  has  been  made  on 
auditing. 

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Overall, preparations in the area of movement of persons, services and right of establishment 
as well as company law are at an early stage.  

4.1.3.  Free movement of capital 

Kosovo  already  has  a  very  liberal  regime  concerning  capital  movements.  As  regards  free 
movement of capital, no restrictions exist on foreign ownership or investment in the financial 
sector or in other assets. In 2010, foreign direct investment increased compared to its level in 
2009 that was a year affected by the global economic crisis. Foreign banks manage over 80% 
of  the  assets  in  the  banking  sector.  Kosovo  does  not  have  a  stock  exchange  or  a  financial 
market. 

Some  progress  has  been  made  on  payment  systems.  The  Central  Bank  Board  adopted  a 
National  Payments  Strategy  that  was  developed  in  cooperation  with  the  Government  in 
September  2009.  The  strategy  focuses  on  the  introduction  of  a  real-time  gross  settlement 
system  and,  as  a  part  of  this,  the  possible  replacement  of  the  current  electronic  interbank 
clearing  system  by  integrated  retail  payment  system.  As  concerns  international  payments, 
Kosovo is in the process of negotiating an interim SWIFT code (an ISO 3166-1 user assigned 
code) in the absence of UN membership. 

Overall, the system for capital movements is very liberal, but continued efforts are necessary 
to gradually introduce Basel II risk and capital management requirements, and to establish a 
legal framework compatible with EU standards on the free movement of capital. 

4.1.4.  Customs and taxation 

There  has  been  some  progress  in  the  area  of  customs.  At  the  end  of  2009,  administrative 
instructions were adopted on implementation of the Customs and Excise Code and on internal 
inspection.  The  Customs  Service  updated  the  strategic  operating  framework  for  the  period 
2010-2012.  This  is  a  key  document  for  the  mid-term  expenditure  framework  of  the 
government, given that over 65% of Kosovo’s public revenue continues to be collected at the 
border.  In  this  light,  the  Customs  Service’s  operational  independence,  free  from  political 
interference,  remains  essential.  Cooperation  agreements  were  signed  with  France,  Finland, 
Turkey,  Albania  and  Montenegro.  These  aim  to  counter  incorrect  declarations  of  Kosovo’s 
imports and to lead to harmonisation of trade statistics with the countries concerned. 

The overall staffing level of the Customs Service is progressively increasing until the end of 
2010.  The  International  Unit  in  the  Customs  Service  has  been  made  responsible  for 
monitoring the progress towards closing the gap vis-à-vis EU standards, as identified by last 
year’s  blueprint  exercise.  The  Customs  Service  stepped  up  its  efforts  to  counter  corruption. 
The number of staff working on internal audit increased. Memoranda of understanding on a 
coordinated approach against corruption were signed with the police, the Tax Administration 
and  the  Anti-Corruption  Agency.  In  January,  a  joint  customs-taxation  action  plan  against 
corruption was adopted. In addition, the Customs Service and the Police are stepping up their 
cooperation on integrated border management in order to increase supply chain security. This 
included  conversion  of  the  24-hour  customs  control  room  into  a  national  centre  for  border 
control where the two institutions work together.  

Units  of  the  Customs  Service  continued  to  patrol  on  all  roads,  except  in  northern  Kosovo. 
This has reduced smuggling. Starting in March, EULEX tightened up its checks at gates 1 and 
31  in  northern  Kosovo,  using  additional  cameras  and  a  new  network  server.  The  actual 

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clearance  is  done  at  Mitrovicë/Mitrovica  terminal.  The  data  are  shared  with  the  Kosovo 
Customs Service  and  the  Serbian  Customs  Administration, contributing  to ongoing  criminal 
investigations  on  both  sides.  Overall  revenue  collected  by  the  Customs  Service  for  the  first 
seven months of 2010 was around €445 million, i.e. 11% higher than for the same period in 
2009.  

The present IT system is being replaced by the Asycuda World system (Automated SYstem 
for  CUstoms  DAta,  provided  by  UNCTAD)  that  will  support  amongst  others  use  of  the 
integrated  tariff  of  Kosovo.  Further  work  is  necessary  to  ensure  compliance  with  EU  IT 
systems. 

All members of the Independent Review Board have been appointed. The Board needs to take 
immediate  steps  to  deals  with  appeals  by  businesses  and  taxpayers  against  decisions  of  the 
Customs Service and the Tax Administration. Since 2008, a backlog of over 1,000 cases has 
built up. 

Serbia  and  Bosnia-Herzegovina  do  not  recognise  Kosovo’s  customs  stamps,  despite 
assurances  received  from  the  UN  SRSG  confirming  their  compliance  with  UNSC  1244/99. 
The  Serbian  Tax  Administration  operating  in  the  north  of  Kosovo  has  been  issuing 
documentation to Serbian firms in Kosovo which enables them to sell products to Serbia. This 
parallel documentation conflicts with the concept of Kosovo as a single customs area in which 
only the appropriate Kosovo institutions are empowered to issue such documentation. 

Overall, Kosovo's customs legislation remains largely in line with the EU standards. Specific 
areas  requiring  attention  are  the  fight  against  smuggling  and  counterfeiting,  where 
enforcement  capacity  needs  to  be  enhanced,  as  well  as  further  extending  checks  and 
supervision  to  northern  Kosovo.  The  Independent  Review  Board  urgently  needs  to  become 
fully operational and the backlog of cases needs to be reduced. 

There  has  been  some  progress  in  the  area  of  taxation.  In  January  2010,  amendments  were 
adopted  to  the  Laws  on  personal  and  corporate  income  tax,  clarifying  taxation  of  resident 
versus  non-resident  persons  and  firms,  avoiding  double  taxation  and  specifying  tax 
declaration procedures. A new Law on VAT entered into force on 1 January 2010, ensuring a 
high  degree  of  alignment  with  the  EU  acquis.  The  VAT  registration  threshold  was  left  at 
€50,000,  which  makes  many  companies  not  liable  to  VAT.  In  addition,  administrative 
instructions  were  adopted  in  December  2009  on  implementation  of  the  amendments  to  the 
Law  on  tax  administration  and  procedures  and  on  integrity  standards  for  the  Tax 
Administration  of  Kosovo  that  entered  into  force  in  2009.  In  May  2010  a  tax  compliance 
strategy  was  adopted  aiming  in  particular  to  reduce  the  opportunities  for  evasion  and 
avoidance, increase early and effective collection and improve taxpayer education.  

In  the  third  quarter  of  2009,  the  Tax  Administration  started  issuing  fiscal  numbers  to 
businesses.  So  far,  44,000  numbers  have  been  issued.  In  this  process,  more  than  31,000 
inactive businesses have been deleted from the Tax Administration database. In March 2010, 
installation  of fiscal  cashiers at businesses started. In preparation  for  the new IT system, an 
upgrade  of  the  current  SIGTAS  (integrated  system  for  tax  management)  system  was 
completed  in  July  2010.  Electronic  declaration  forms  for  all  types  of  tax  are  now  available 
from the website of Tax Administration. Also, the Tax Administration e-filing system is now 
operational. 

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In February 2010, an Office for Strategic Planning and Modernisation was established in the 
Tax Administration to develop strategic projects, such as introduction of a new IT system and 
of fiscal cashiers, and action to follow up last year’s EU blueprint exercise. In the same month 
a  new  Tax  Investigation  Unit  was  set  up.  In  order  to  raise  the  level  of  tax  collection, 
automated exchanges of information were established in July 2010 with the Treasury and the 
Customs Service, along with a debt management tool that will facilitate a centralised review 
of debtors. 

The tax revenue was €131 million in the first seven months of 2010, 13% higher than in the 
same period in 2009. 

Overall,  there  has  been  some  progress  in  the  area  of  taxation,  in  particular  as  regards 
legislative  alignment.  However,  further  efforts  are  still  needed  to  ensure  effective 
implementation of the legislation, to enforce tax payments and to reduce the sizeable informal 
economy. 

4.1.5.  Competition 

There  has  been  some  progress  in  the  area  of  competition.  The  Law  on  Protection  of 
Competition  was  adopted  early  October.  The  purpose  of  the  law  is  to  align  Kosovo's 
competition  rules  with  the  European  Union  acquis,  in  particular  by  clarifying  dominance 
abuse rules and introducing merger rules, and it strengthens enforcement procedures. 

Concerning  administrative  capacity,  the  Independent  Kosovo  Competition  Commission 
continued  its  activities  and  investigated  several  suspected  breaches  of  competition  rules.  Its 
capacity was enhanced by the addition of support staff to the five Commission members. The 
Competition  Commission  signed  a  memorandum  of  understanding  with  the  competition 
authorities of Albania and the former Yugoslav Republic of Macedonia. 

No progress took place concerning state aids. The draft Law on state aid is pending before 
the Assembly, which provides, amongst others, for establishment of an independent state aid 
commission for approval of aid. 

Limited progress has been made in the legislative framework. Some progress has been done 
concerning the administrative capacity, and overall, on the capacity to implement anti-trust 
policy. However, overall, the implementation of competition and state aid policy in Kosovo is 
at  an  early  stage.  Experienced  and  specialised  staff  are  lacking.  Procedures  for  cooperation 
with  other  entities  involved  in  competition  issues,  such  as  economic  regulators,  need  to  be 
strengthened.  There  is  a  need  for  awareness-raising  to  familiarise  the  private  sector  with 
competition  rules.  The  Competition  Commission  needs  to  be  more  involved  in  the 
competition  aspects  of  privatisation  of  large  publicly  owned  enterprises  (eg,  PTK  -Post  and 
Telecom of Kosovo). 

4.1.6.  Public procurement 

Limited  progress  can  be  reported  in  the  area  of  public  procurement.  The  Government 
presented  the  draft  of  a  new  public  procurement law  to  the  Assembly.  The  law  is  yet  to  be 
adopted. Provisions on concessions in the current legal framework diverge significantly form 
the acquis. 

As  regards  administrative  capacity,  the  performance  of  the  Procurement  Review  Body  has 
been improved by a more systematic publication of decisions as well as in terms of the legal 

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argumentation  of  decisions.  The  credibility  of  this  institution  rests  on  it  building  an 
authoritative track record of review decisions in both official languages as well as of avoiding 
conflicts of interest resulting from interaction with policy-makers. Credibility also depends on 
the transparency of the work of the Procurement Review Body, including how decisions are 
reached.  

A  new  plan  for  the  certification  of  procurement  officers  has  been  prepared;  permanent 
certificates will be offered to persons who have undergone training in three consecutive years. 
However,  procurement  officers  remain  in  a  weak  position  and  subject  to  intimidation, 
coordination mechanisms of the main stakeholders in the public procurement system still need 
further strengthening, in particular to reduce the scope for corruption. 

Therefore,  accountability  for  procurement  processes  needs  to  be  broadened  to  include  not 
only  procurement  officers,  but  also  their  superiors,  both  at  administrative  and  at  political 
levels. Also, training and certification of persons active in the field of procurement therefore 
need to be improved, particularly given the small number of licensed procurement officers in 
Kosovo compared with the overall budget spent on procurement.  

Other challenges include the high turnover of procurement officers at both local and central 
levels and monitoring implementation of procurement contracts.  

Many  public  bodies  under  the  government  budget  still  carry  out  their  own  procurement 
processes and do not make use of the Public Procurement Agency as the main executing and 
contracting authority, despite the fact that the necessary administrative instruction was issued 
in  June.  In  the  cases  of  basic  goods  and  services,  if  this  agency  were  to  implement  more 
framework  agreements  and  organise  procurement  government-wide,  budget  resources  could 
be  used  more  efficiently  than  when  each  organisation  carries  out  its  own  individual 
procurement. 

The  value  of  public  procurement  contracts  awarded  remained  at  the  same  level  in  2009  on 
around  20%  of  Kosovo’s  GDP.  Open  procedures  increased  to  account  for  85%  of  the  total 
value  of  signed  contracts  in  2009  and  negotiated  procedures  decreased  to  11%,  with  other 
procedures being used very marginally.  

The  Auditor  General  recommended  strengthening  the  monitoring  and  follow-up  of 
procurement activities, including actions aimed at helping to ensure that oversight agencies’ 
recommendations are implemented and that officials are held accountable for their actions. 

Overall,  Kosovo  needs  to  improve  the  legal  framework  in  the  field  of  concessions,  to 
strengthen  the  position  of  public  procurement  officers  vis-à-vis  their  hierarchy  further,  to 
increase  training  in  order  to  have  independent  procurement  experts  in  key  positions  and  to 
reinforce regulation of the contract implementation phase of the public procurement process. 
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. 

4.1.7. 

Intellectual property law 

There has been limited progress in the area of intellectual property rights. The IPR Strategy 
and Action Plan 2010-2013 was approved in June.  

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There  has  been  some  progress  concerning  copyrights  and  related  rights.  A  Law  on  the 
protection  of  topographies  and  integrated  circuits  was  approved  in  June.  The  Office  for 
Copyrights was set up in June  2010 but is not fully operational yet. The existing Copyright 
Law needs to be amended to further align it with EU standards. 

There has been limited progress in the area of industrial property rights. Three draft laws 
are  pending  before  the  Assembly,  concerning  Patents,  Trademarks  and  Industrial  Design. 
aimed at ensuring a higher degree of compliance with the acquis, the TRIPS Agreement and 
other international standards. An electronic trademark, design and patent registration database 
was established replacing the paper-based system. 

The  capacity  to  implement  patent,  trademark  and  industrial  design  legislation  remains  low, 
despite  an  increase  in  the  staff  of  the  Office  for  Industrial  Property.  Registration  of  trade 
marks, patents and industrial designs increased, but not enough to cope with the high number 
of requests. 

Some progress took place concerning enforcement of intellectual property rights. In January 
2010,  the  Law  on  customs  measures  for  the  protection  of  intellectual  property  rights  was 
adopted,  followed  by  an  administrative  instruction  to  implement  it.  The  staff  working  on 
intellectual  property  rights  in  the  Customs  Service  increased  substantially,  ensuring  a 
presence  of  intellectual  property  rights  officers  at  every  customs  point.  High  levels  of 
counterfeiting  and  piracy  persist.  However,  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,  along 
with  the  division  of  responsibilities  between  them,  are  not  clearly  defined.  Awareness  of 
issues  relating  to  intellectual  property  rights  needs  to  be  raised  both  inside  the  government 
and among the population at large. 

Overall, the framework of industrial property rights legislation has yet to be finalised. Some 
progress  has  been  made  concerning  legislation  and  administrative  capacity.  However, 
enforcement  remains  very  weak.  significant  efforts  are  needed  on  enforcement  and  public 
awareness-raising. Kosovo’s intellectual property rights system remains at an early stage. 

4.1.8.  Employment and social policies, public health policy 

Kosovo  has  made  limited  progress  towards  the  alignment  with  European  standards  in  this 
sector.  

Kosovo has adopted a sustainable employment development programme aiming at the quick 
creation  of  employment  through  a  public  works  programme.  It  adopted  its  employment 
strategy  2010-2012  including  an  operational  plan  and  a  Youth  Action  Plan.  The  Law  on 
vocational training, re-training and employment of people with disabilities was adopted. The 
registration  of  unemployed  people  was  improved,  including  among  women,  Roma,  Ashkali 
and Egyptians and persons with disabilities. The Ministry of Labour and Social Welfare has 
mediated  in  the  employment  of  524  jobseekers  from  all  minority  communities  including 
Roma,  Ashkali  and  Egyptian  communities  as  a  measure  to  positively  impact  the  labour 
market. 

However,  employment  policies  require  more  commitment  from  the  government.  The  public 
employment  service  has  low  capacities.  The  capacity-building  plan  for  the  ministry  and  the 
public employment service still needs to be adopted. The social partners are poorly involved 

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in employment policies and measures. The labour market is underdeveloped with a substantial 
low. 
informal  segment.  Participation  and  employment 
Unemployment  remains  persistently  high  especially  for  women  and  young  people. 
Unemployment duration is extreme and the bulk of unemployed are fully disconnected from 
the  open  labour  market.  There  are  limited  incentives  for  jobseekers  and  employers. 
Disadvantaged groups deserve more attention. 

remain  dramatically 

rates 

Limited  progress  can  be  reported  as  regards  social  policies.  The  White  Paper  on  social 
policies has not been adopted leaving Kosovo without strategic priorities in this area.  

The  legal  framework  remains  weak  and  inadequate  to  face  the  practical  challenges.  In 
particular, the Labour Law still needs to be adopted. 

There  has  been  limited  progress  in  the  alignment  with  European  standards  in  the  area  of 
health and safety at work. The labour inspectorate needs to improve its capacity for effective 
monitoring of implementation of relevant legislation. The new municipalities are not covered 
by labour inspectors.  

The social dialogue was improved with the adoption of the Law on strike. However little has 
been done in the area of social dialogue. Due to the lack of Labour Law as an essential legal 
act, the adoption of other fundamental pieces of legislation, such as the trade union Law and 
the Law on the socio-economic council have been postponed. Clear criteria for participation 
in  the  latter  have  not  been  established  yet.  Trade  unions  of  the  public  services  organised 
protests during the reporting period. 

In the area of equal opportunities some instruments to promote women's rights are in place, 
but  progress  in  actual  achievement  of  gender  equality  and  law  enforcement  needs  to  be 
furthered.  Women's  participation  in  the  labour  market  remains  extremely  low  and 
representation of women in decision-making remains a challenge.  

There has been limited progress in the area of social inclusion including anti-discrimination 
(see also 2.2.). The decentralisation of home care services has continued to show no progress. 
The legal framework necessary to regulate effective provision of these services is still at the 
drafting  stage.  The  services  are  still  mainly  provided  by  civil  society  organisations.  The 
Council for Social and Family Services, the entity responsible for licensing providers of social 
services,  is  not  fully  functional  –  its  financial  and  operational  structure  are  not  regulated 
properly  and  the  necessary  legal  framework  is  not  available.  A  first  seminar  on  social 
protection  and  social  inclusion  between  the  Commission,  the  authorities  and  civil  society 
representatives took place in September 2010. Lack of employment opportunities is an overall 
challenge  that  impacts  negatively  on  social  inclusion.  Adequate  actions  to  address  social 
inclusion of specific groups including Roma returnees are still lacking. 

As regards social protection, the non-existence of a health insurance law and, hence, health 
insurance  system  puts  additional  constraints  on  average  Kosovo  families.  Many  health  care 
services need to be financed directly by the citizens instead of being covered by an insurance 
scheme.  

However,  it  seems  that  the  main  financial  mechanisms  under  this  law  are  based  on  the 
contributions from formal employment, which is fairly low in Kosovo.  

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There has been limited progress in the area of public health. The Ministry of Health endorsed 
the new health strategy (2010-2014) in 2009, focusing on reducing morbidity and mortality by 
improving  the  quality  of  health  services.  The  poor  quality  of  health  data  at  central  and 
municipal  levels  and  the  parallel  Kosovo-Serb  systems  remain  obstacles  to  policy 
development. The Ministry of Health needs to clearly specify budget allocations for mother 
and  child  health  care.  Under  the  mid-term  expenditure  framework  for  2011-2013,  financial 
resources will be focused on infrastructure and reconstruction, while very little is budgeted for 
primary  health  care  and  prevention.  Maternal  and  child  health  in  Kosovo  is  considered  the 
poorest  in  Europe  and  neighbouring  countries.  The  infant  mortality  rate  is  considered  to  be 
between 35 to 49 per 1,000 live births. In the north, lead contamination is still threatening the 
health of all citizens living close to the contaminated areas. Overall, the health sector remains 
very poor and strongly needs greater attention from the authorities. 

Overall, little progress can be reported in the employment,  social policies and public  health 
sectors.  Poor  administrative  capacity  and  the  lack  of  an  adequate  legal  framework  remain 
serious obstacles to enhancing these sectors. 

4.1.9.  Education and research 

Some  progress  can  be  reported  in  the  field  of  education  concerning  the  alignment  with 
European standards. Extensive consultations have taken place with a view to modernise both 
the  Law  on  pre-university  education  and  the  Law  on  higher  education.  The  Ministry  for 
Education,  Science  and  Technology  has  led  the  process  to  design  the  new  curriculum 
framework. The government adopted a strategy for health promotion in schools. 

The National Qualifications Authority  (NQA) has  been  established.  The  acting director was 
appointed  as  well  as  four  staff  and  its  board.  The  Council  for  Vocational  Education  and 
Training  (CVET)  has  become  operational.  Kosovo  has  further  addressed  the  multiple-shift 
issue, which requires continued attention and resources to build additional school facilities. 

However,  resources  at  municipal  level  remain  poor  hindering  the  enforcement  of  key  legal 
provisions  under  municipalities'  responsibility.  Pre-service  training  is  currently  limited  to  a 
faculty that requires modernisation. Teacher licensing and the new curriculum framework will 
call  for  significant  investment  in  institutional  development  of  pre-  and  in-service  teacher 
training.  

CVET experiences limitations in its capacity and functionality. It needs to step up efforts to 
effectively  modernise  vocational  training  institutions,  in  particular  to  train  students  in  line 
with  labour  market  demands,  European  standards  and  Kosovo  qualifications  framework. 
Qualifications requirements in the VET sector are not sufficiently linked with those of general 
and higher education. 

Kosovo  has  developed  and  adopted  its  first  subject  curriculum  for  the  Romani  language, 
history and culture for primary schools. A series of public debates have been held to promote 
and raise awareness about it. Teaching material is in use for the Romani, Bosniac and Turkish 
subject curricula.  

However,  the  textbooks  in  Romani  are  not  available  yet.  Minority  communities  are  often 
negatively portrayed in history textbooks. (See also under political criteria, cultural rights) 

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Research has been made a priority. The research council has developed the National Strategy 
for  Science  for  the  coming  five  years  aiming  at gradually  increasing  investment  in  research 
and stimulating cooperation with industry and EU and international partners. As international 
cooperation partner, research entities have the possibility to apply for research projects under 
the  Seventh  research  framework  programme.  Kosovo  has  organised  some  information 
sessions  on  FP7  and  nominated  FP7  contact  points.  The  ministry  has  established  a  fund  for 
scientific research allocating 1 million euros to key areas for the economic development. 

Overall, some progress can be reported concerning the alignment with European standards on 
education  and  research.  However,  all  efforts  need  to  be  affordable  and  coordinated. 
Management  capacity  is  weak,  the  ability  to  steer  the  education  process  at  local  level  too. 
Quality  control,  minority  inclusion  and  teaching  curricula  are  all  issues  that  need  to  be 
addressed. Efforts to strengthen the research capacity are necessary to ensure implementation 
of the national strategy. 

4.1.10.  WTO issues 

Kosovo is not a member of the WTO and has taken no formal steps to join it. 

4.2. 

Sectoral Policies 

4.2.1. 

Industry and SMEs 

Some progress has been made in the area of industry and SMEs. 

The business register now includes some 45,000 active companies. Information on registered 
companies  is  automatically  made  available  online.  From  June,  online  registration  of 
businesses became possible. A one-stop shop pilot project started in eight municipalities and 
is being progressively extended. 

Kosovo  is  committed  to  implement  the  Small  Business  Act  for  Europe  and  identified  as 
priorities: the promoting entrepreneurship, improving online access for SMEs and benefiting 
more  from  the  single  market.  In  the  absence  of  a  clear  strategy  framework  for  the 
development  of  SMEs,  the  activities  of  the  Ministry  of  Trade  and  Industry’s  SME  Support 
Agency  are  guided  by  the  Small  Business  Act.  The  administrative  capacity  of  the  agency 
remains limited. 

In  December  2009,  the  Ministry  of  Trade  and  Industry  produced  the  industrial  strategy  for 
Kosovo  for  2010–2013.  The  main  purpose  was  to  provide  a  basis  for  raising  the  quality  of 
industrial policy. The document provides an analysis of Kosovo’s industrial sectors together 
with  ideas  to  improve  their  competitiveness  and  employment  opportunities.  The  strategy 
envisages  a  greater  role  for  industry  in  contributing  to  GDP,  exports  and  investments. 
However,  this  strategy  was  not  adopted  by  the  government  and  therefore  contains  no 
implementation plan or policy measures. 

Administrative  instructions  have  been  drafted  to  help  with  implementation  of  the  Law  on 
economic  zones.  The  number  of  companies  active  in  the  Drenas  and  Mitrovicë/Mitrovica 
business parks increased. 

In  the  beginning  of  2010,  investment  protection  agreements  were  signed  with  Austria, 
Belgium and Luxembourg.  

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The main barriers encountered by businesses in Kosovo remain the lack of a reliable supply of 
electricity, limited access to finance and insufficient rule of law. 

Overall, the administrative capacity and strategy framework for SME development need to be 
strengthened  further.  Adequate  coordination  between  strategies  and  plans  that  affect 
development of this sector is advisable. The newly drafted industrial strategy of Kosovo needs 
to be developed and turned into effective policy measures. 

4.2.2.  Agriculture and fisheries 

Continuous legislative activity in the areas covered by the Ministry of Agriculture,  Forestry 
and  Rural  Development  has  led  to  few  texts  being  adopted  by  the  Assembly.  In  February, 
amendments to the Law on forests were adopted, reflecting the transfer of responsibilities for 
forestry  management  to  municipal  level.  The  draft  Law  on  genetically  modified  organisms 
has been withdrawn. Planned amendments to the Law on organic farming, to take account of 
the  most  recent  EU  legislation,  have  still  not  been  adopted.  These  amendments  are  also 
intended  to  establish  Kosovo’s  national  inspection  and  certification  bodies  for  organic 
farming. Certification is currently performed by two foreign accredited companies. The Law 
on irrigation of agricultural lands was amended in July. 

A  vineyard  register  has  been  established.  The  farm  accountancy  data  network  (FADN)  was 
further  developed.  However,  the  data  are  not  used  in  policy-making.  Collection  and 
processing of agricultural trade statistics need further improvement. 

The Ministry has started to implement the National Agricultural and Rural Development Plan 
for  2009-2013.  It  introduced  a  scheme  consisting  of  coupled  payments  to  farmers,  in  the 
sectors  of  cereals  and  livestock,  plus  assistance for the dairy, fruit and vegetables sectors at 
farm  level.  To  this  end,  a  Payment  Unit  was  established  in  the  Ministry,  responsible  for 
receiving and assessing applications for national assistance, actual payment and checks on the 
spot, although selection of the beneficiaries requires further improvement and is hampered by 
the lack of a farm register and unclear property titles.  

In February 2010, the government adopted the forestry development strategy for 2010-2020 
and  the  accompanying  action  plan.  Priority  areas  for  this  strategy  include  management  and 
protection of forest resources and developing the forest industry. Further efforts are needed to 
enhance coordination and transparency between institutions on issues such as stone and gravel 
extraction  from  forest  land.  Memoranda  of  understanding  on  forestry  matters  have  been 
signed  by  37  municipalities,  who  will  need  to  develop  the  capacity  to  manage  the  powers 
devolved to them in this area. The new law increased penalties for illegal logging, but this still 
remains a source of concern and application of these penalties depends on the capacity of the 
police and courts to prosecute cases. 

In September, the Government approved the regulation on the organisation and competences 
of the Monitoring Board and the Regulation on the establishment of the scientific board of the 
Kosovo Food and Veterinary Agency (KFVA); the members of both are still to be appointed. 
Also  in  September,  the  Government  adopted  an  Administrative  Instruction  on  the  new 
organisational structure and the functioning of the Agency. A memorandum of understanding 
has been signed between the relevant institutions and the Food and Veterinary Agency for the 
transfer of several existing control bodies to the Agency. However, the transfer of inspection 

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40 

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powers from municipalities to the Agency, as provided for by the Food Law, has not yet been 
completed.  

Some  progress  has  been  made  on  setting  up  the  IT  infrastructure  for  Kosovo’s  animal 
identification, registration and movement control system. This system is not fully operational. 
Data entry has begun for certain species, but this is still not systematic and some animal births 
and movements are not reported. Controls at livestock markets are insufficient and the overall 
picture  is  blurred  by  illegal  slaughtering  and  animal  smuggling.  No  facilities  for  processing 
animal  by-products  exist.  A  pre-feasibility  study  for  establishing  a  rendering  plant  was 
completed. In the meantime, these animal by-products will have to be dumped in landfill sites. 

Regulations  to  transpose  the  EU  hygiene  package  have  still  not  been  adopted.  The  planned 
upgrading of agrifood establishments remains at an early stage, although progress was made 
on  assessing  and  categorising  dairy  plants,  slaughterhouses  and  meat  processing 
establishments.  A  group  of  experts  has  been  set  up  to  assess  the  existing  agrifood 
establishments  in  the  light  of  EU  practices  on  hygiene,  production  and  food  handling.  This 
assessment  is  expected  to  result  in  a  strategy  to  upgrade  Kosovo’s  agrifood  establishments. 
The  infrastructure  and  equipment  of  the  pre-selected  veterinary  border  inspection  points 
remains poor. 

The Law on plant protection and production needs to be further aligned to EU standards. The 
equipment and staffing at the KVFA laboratory are insufficient for the agency to carry out its 
role. 

Most  of  the  European  standards  on  fisheries  do  not  apply  to  Kosovo,  which  has  no  marine 
fishing. 

Overall,  Kosovo  has  made  limited  legislative  progress  in  the  area  of  agriculture  and  food 
safety. Whilst the legal framework needs to be updated, the main challenges facing Kosovo 
lie  in  implementation  of  laws  and  strategies,  as  the  administrative  capacity  in  various 
institutions  remains  weak,  and  human  resources  are  not  used  in  most  efficient  way.  Efforts 
should  be  stepped  up  to  strengthen  and  ensure  more  systematic  animal  registration  and 
upgrade agrifood establishments. 

4.2.3.  Environment 

There  has  been  substantial  progress  in  the  area  of  horizontal  legislation,  with  Laws  on 
environmental  impact  assessment  and  on  Strategic  Environmental  Assessment  adopted  in 
September,  as  well  as  implementing  rules  on  public  participation  in  environmental  impact 
assessments.  Cooperation  between  environmental  NGOs  and  the  ministry  continued  and 
around 20% of the projects envisaged in the environmental action plan have been completed. 

In  the  field  of  air  quality,  some  progress  can  be  reported,  with  the  adoption  of  a  Law  on 
protection  from  air  pollution  and  of  implementing  measures  to  monitor  discharges  from 
mobile sources. The air quality strategy remains to be adopted. One of four planned air quality 
monitoring stations came into operation. The air polluters’ inventory remains to be compiled. 
No progress has been made on defining institutional roles and responsibilities in this field.  

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There has been limited progress in the area of waste management. The new Law on waste 
providing  for  decentralisation  of  powers  in  this  area  and  for  further  alignment  with  EU 
standards  remains  to  be  adopted.  Additional  implementing  legislation  has  been  adopted. 
Establishment of an integrated waste management system has not begun. The ‘polluter pays 
principle’  is  still  insufficiently  applied  and  the  bill  collection  rate  by  waste  utilities  remains 
low.  

With  regard  to  water  quality,  little  progress  can  be  reported.  A  new  Law  on  water  which 
should regulate the ownership of water resources and the responsibilities of municipalities for 
water management and establish river basins and a Kosovo water institute has still not been 
adopted. A feasibility report on the quality of drinking water was completed, recommending 
establishing  a  drinking  water  quality  department  within  the  National  Institute  for  Publish 
Health.  There  is  a  clear  lack  of  human  resources  in  this  field  and  insufficient  investment  in 
infrastructure:  there  is  only  one  waste  water  treatment  plant  in  Kosovo.  Only  70%  of  the 
population  are  connected  to  drinking  water  mains  and  only  a  third  to  sewage  systems.  Bill 
collection  rates  for  the  water  utilities  decreased.  The  institutional  responsibilities  for  dam 
management are not clearly allocated. The safety of large infrastructure, such as dams, dykes 
and  water  intakes,  requires  appropriate  management  and  monitoring  that  is  not  properly 
ensured at the moment. 

Further efforts are needed to enhance coordination and transparency between institutions on 
the licensing and control of stone and gravel extraction from river beds (following damaging 
extraction  from  the  River  Drini  i  Bardhe)  and  from  forest  land  (at  Novo  Brdo,  a  UNESCO 
protected site).  

In  the  field  of  nature  protection,  a  Law  on  nature  protection  was  adopted  in  September. 
Some activities have been carried out to identify important bird areas.  

Some progress was made in the area of industrial pollution control and risk management 
with  the  adoption  of  a  Law  on  integrated  pollution  prevention  and  control.  Implementing 
legislation remains to be adopted. 

No  progress  can  be  reported  in  the  areas  of  chemicals  and  civil  protection.  In  the  area  of 
noise,  some  administrative  instructions  were  adopted  to  implement  the  Law  on  noise 
protection. 

In the area of climate change, Kosovo is not a party to either the UN Framework convention 
on climate change or to the Kyoto Protocol. Kosovo has no climate change strategy and has 
not established a greenhouse gas inventory. It continues to have a lack of resources and staff 
shortages. Implementation of climate change legislation remains problematic. 

As  regards administrative  capacity,  some  efforts  have  been  made  to  improve  coordination 
between  ministries  and  bodies  with  environmental  responsibilities.  The  administrative 
instruction bringing the Hydro-Meteorological Institute under the remit of the Environmental 
Protection  Agency  has  not  been  signed.  The  administrative  departments  responsible  for  the 
environment continue to experience an acute lack of resources. The budget of the ministry is 
the  lowest  of  any  ministry  in  Kosovo  and  decreased  compared  with  2009  (as  a  result  of 
funding  cuts  to  secure  financing  for  the  route  7  road  building  programme).  Staff  shortages 

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make  it  difficult  for  the  Ministry  and  the  Agency  to  carry  out  their  responsibilities.  Some 
duties  have  been  transferred  to  the  municipal  level,  but  municipalities  often  lack  staff  and 
expertise. The authorities have made a commitment to involve civil society in the process of 
harmonising legislation with acquis, however this is not fully ensured.  

Overall,  alignment  with  EU  environmental  standards  is  still  at  an  early  stage  although 
progress  can  be  observed  in  adopting  legislation.  In  addition,  implementation  and 
enforcement  of  environmental  legislation  remain  problematic.  Further  efforts  are  needed  to 
establish effective administrative and institutional infrastructure and to improve channels for 
coordination  between  institutions  with  environmental  responsibilities  at  all  levels  and  with 
civil  society.  Billing  and  collection  rates  for  water  and  waste  utilities  need  to  improve. 
Investment  in  the  field  of  the  environment,  in  particular  in  environmental  infrastructure, 
remain to be considerably increased.  

4.2.4.  Transport policy 

There has been some progress on trans-European transport networks. Kosovo continued to 
participate actively in implementing the 2004 memorandum of understanding on development 
of  the  South-East  Europe  Core  Regional  Transport  Network  and  in  the  South-East  Europe 
Transport  Observatory.  Work  has  started  on  Kosovo’s  main  road  infrastructure  project, 
construction  of  the  highway  from  the  Albanian  border  to  Pristina.  However,  the  size  and 
scope  of  the  project  is  not  proportional  to  the  forecasted  traffic  flows,  and  the  cost  of  this 
project has led to budget cuts in other ministries and insufficient resources have been set aside 
for routine road maintenance. 

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  continues  to  be  heavily 
involved  in  the  practical  aspects  of  road  management  rather  than  focusing  on  developing 
strategies and policy. The Department of Road Infrastructure is being reorganised to draw a 
clearer  distinction  between  maintenance  and  supervision  and  road  network  development.  In 
the run-up to the Transport Community Treaty, bilateral agreements on access to the transport 
markets  of  Albania,  Bulgaria  and  Turkey  have  been  signed.  A  multi-annual  action  plan  for 
road  safety  was  adopted  in  May;  an  action  plan  will  need  to  be  prepared  to  implement  the 
strategy.  The  Road  Transport  Inspectorate  needs  to  be  strengthened.  Due  to  a  number  of 
constraints linked to status (and not being able to join the AETR), Kosovo has not been able 
to implement the digital tachograph. 

Some progress can be reported in rail transport. A consolidated law covering all aspects of 
the  rail  sector  is  being  drafted,  with  a  view  to  attracting  investment  in  the  railways  and 
opening the rail market. The railways regulatory body is not yet operational. The president of 
its board has been appointed, but the Director-General has still not been selected. The legal 
act  separating  the  infrastructure  and  operations  sides  of  Kosovo  Railways  (KR)  has  been 
signed. The legal documents for unbundling Kosovo Railways into a railway undertaking and 
an  infrastructure  manager  is  underway  is  under  preparation.  In  parallel,  the  2012  network 
statement is being prepared. 

The agreement with the former Yugoslav Republic of Macedonia on railway border crossings, 
based on the harmonised regional model prepared by the SEETO, is in the final stages of the 
procedures in the two foreign ministries. The passenger transport fleet has been modernised. 

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Rail  freight  transport  increased  by  11%  in  2009,  mainly  thanks  to  increased  trade  from 
Kosovo’s  biggest  exporter,  the  nickel  producer  Feronikeli.  KR  posted  positive  financial 
results  thanks  to  strict  cost  management  and  the  improvement  in  freight  traffic  (and  despite 
rail transport not being a government priority). However, the railway sector suffers from the 
lack of qualified personnel and managerial independence. 

As  a  land-locked  country  without  a  fleet,  most  of  the  maritime  transport  acquis  will  not 
apply to Kosovo. An update of the multi-modal strategy was adopted in December. This will 
be followed by separate sectoral strategies. There has been no progress as regards combined 
transport. 

There  has  been  significant  progress  on  air  transport.  Substantial  legislation  under  the 
European Common Aviation Area (ECAA) Agreement has already been transposed and full 
implementation  of  the  first  transitional  phase  of  the  Agreement  might  be  possible  by  the 
beginning  of  2011,  provided  efforts  continue  in  all  areas,  including  state  aid  and  working 
time.  The  national  aviation  security  and  quality  control  programmes  were  adopted  in 
December  2009.  Progress  continued  in  the  air  traffic  management  field  where  the  single 
European sky legislation has been transposed to a high degree. Further efforts are needed to 
complete regulatory alignment with the single European sky within the ISIS Programme. The 
government needs to strengthen capacity and attract professionals on air transport regulation 
and on implementation of aviation standards to meet ECAA requirements. 

In  May,  an  international  consortium  was  selected  to  develop  Pristina  international  airport 
under  a  public-private  partnership  with  a  twenty-year  concession.  An  Aircraft  Accident 
Investigation  Commission  has  been  established  in  the  Office  of  the  Prime  Minister.  In 
December,  the  Ministry  of  the  Interior  adopted  a  National  Civil  Aviation  Security 
Programme,  establishing  practices,  procedures  and  regulations  to  protect  the  safety  of 
passengers, crew and ground personnel in Kosovo. 

Overall,  there  has  been  some  progress  on  investments  in  existing  and  new  roads.  However, 
the transport infrastructure remains underdeveloped. The contract to build route 7, signed this 
year, is so big that it is crowding out investment elsewhere. Developments in aviation have 
been positive. The Ministry of Transport and Communications does not have the capacities to 
deal with all matters in the transport sector, and the slow establishment of regulatory agencies 
is  hampering  Kosovo’s  implementation  of  EU  standards.  Extra  efforts  need  to  be  made  to 
increase road safety and development of the railway sector need to be given higher priority. 

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4.2.5.  Energy 

The energy sector continues to face serious problems. The low level of electricity billing and 
collection  continues  to  put  a  strain  on  the  electricity  utility’s  finances.  Electricity  supply 
therefore remains uncertain in Kosovo, with power cuts still occurring frequently. 

The  government’s  energy  strategy  for  2009-2018  was  adopted  in  April.  The  main  pillars  of 
the  strategy  consist  of  security  of  supply,  restructuring  the  sector,  developing  and 
rehabilitating  generation  capacity,  developing  transmission  and  distribution,  promoting 
foreign  investment,  promoting  energy  efficiency  and  renewable  energy  use  and  developing 
gas infrastructure. 

There has been no development in the past year regarding security of supply. There is no oil 
stocks law or strategy; the level of Kosovo’s oil stocks is unknown. As a result of obstruction 
from Serbia, Kosovo’s electricity transmission system operator (KOSTT) continues to find it 
difficult  to  participate  as  an  equal  partner  in  regional  commercial  mechanisms.  Losses 
incurred as a result are passed on to consumers. KOSTT has filed a complaint against EMS 
(the  Serbian  Transmission  System  Operator)  with  the  Energy  Community  Secretariat.  The 
Energy Community Secretariat; in its preliminary view, considers that EMS ‘failed to fulfil its 
obligations under the Energy Community Treaty. With the support of EU and other donors, 
the  operator  has  made  good  progress  on  increasing  the  transmission  network  capacity  and 
network security. However, pending resolution of its dispute with Serbia, the operator cannot 
participate in the regional mechanisms. 

Progress was made regarding the internal energy market and implementation of the Energy 
Community  Treaty  (ECT).  Plans  for  development  of  the  new  Kosovo  power  plant  (lignite 
power development project) have been reconfigured. The initial installed capacity will be two 
units  of  200-300  MW,  the  Sibovc  lignite  field  will  be  developed  immediately  and 
participation  in  the  Kosovo  B  power  plant  will  be  included  in  the  package  to  be  offered  to 
investors  with a view to refurbishment. The legal unbundling  of  the distribution and supply 
functions of the Kosovo Energy Corporation (KEK) is due at the end of 2010 with a view to 
privatisation.  Until  completion  of  the  new  Kosovo  power  plant  project,  the  other  functions 
will remain integrated in KEK. KEK’s billing and collection rate remains very poor. As well 
as very high technical and commercial losses, in 2009 KEK collected the payments for only 
65% of the energy which it supplied, resulting in a loss of some €36 million. The volume of 
cash  collected  has  increased.  However,  this  is  partly  offset  by  an  increase  in  electricity 
supplied.  Low  levels  of  bill  collection  (and  non-cost-recovery  tariffs)  continue  to  fuel  an 
unsustainable growth in power demand. 

A study and action plan for the decommissioning of the operational unit of Kosovo A were 
finalised in March 2010. Kosovo has established a number of working groups to prepare this 
closure, which the Prime Minister has committed to achieve by 2015 in order to comply with 
the Large Combustion Directive. 

A package of three laws (on energy, on electricity, on the energy regulator) was adopted in 
October. The package was preceeded up by extensive discussions with Kosovo’s partners on 
the market model to attract private-sector involvement in generation, distribution and supply. 
The  new  laws  also  aim  to  align  Kosovo’s  legislation  with  the  EU's  second internal  energy 
market  package  although  that  alignment  will  require  implementing  legislation  and 

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strengthening the role of the regulator. The new market model foresees private ownership in 
generation and supply with the aim to allow more players on the Kosovan electricity markets. 
A new Framework Law on natural gas was adopted in November. Although Kosovo does not 
have  a  gas  market,  government  policy  is  to  promote  participation  in  regional  gas  supply 
projects with a view to bringing pipeline gas to Kosovo.  

A significant drop in import prices and ongoing government subsidies to KEK led the Energy 
Regulatory  Office  (ERO)  to  maintain  existing  electricity  transmission  and  retail  tariffs. 
However,  a  gradual  increase  in  tariffs  is  required  to  reflect  actual  cost  levels  and  to  attract 
private investment in the distribution and supply functions. A gradual decrease in government 
subsidies  would  facilitate  this  process.  The  institutional  and  legislative  capacity  of  both  the 
ministry  and  the  regulator  need  further  strengthening.  Attracting  and  maintaining  qualified 
staff remains a problem. 

In  the  area  of  energy  efficiency  and  renewable  energy, the  energy  efficiency  law  has  still 
not been adopted. As well as aligning with the acquis on energy labelling, ecodesign, energy 
performance  of  buildings  and  energy  end-use  efficiency,  the  law  is  intended  to  provide  the 
legal  basis  for  establishing  an  energy  efficiency  agency  and  to  lay  down  the  procedures  for 
setting up an energy efficiency fund to promote projects on energy efficiency and renewable 
energy sources. The ministry has prepared a draft national energy efficiency plan covering the 
period 2010-2018, aiming to increase efficiency by 9% by 2018.  

As  regards  renewable  energy,  preparations  are  under  way  to  put  out  to  tender  the  Zhur 
hydropower plants. The first three wind turbines in Kosovo, with a total capacity of 1.35 MW, 
have been authorised by the regulator, which also received seven applications to build wind 
turbines  in  Kosovo.  The  regulator  has  adopted  competitive  feed-in  tariffs  for  small 
hydropower and new wind energy. However, further efforts need to be made towards creating 
a regulatory environment favourable for the use of renewable energy sources in all the sectors 
required by the EU renewable energy acquis. Regulatory measures and support actions need 
to aim at promoting the use of renewables for all energy purposes. 

In  the  area  of  nuclear  safety  and  radiation  protection,  the  Law  on  protection  from  non-
ionising radiation, ionising radiation and nuclear security was adopted in February. It provides 
for establishment of a radiation protection agency by the Ministry of Environment and Spatial 
Planning.  This  has  not  yet  happened.  In  addition,  the  law  is  of  a  very  general  nature: 
transposition of the EU nuclear safety and radiation protection acquis into national legislation 
and regulations in the nuclear field has therefore not yet started.  

Overall, Kosovo has finally made some progress on legal alignment, and has tried to reconcile 
the  need  to  meet  Energy  Community  Treaty  obligations  with  attracting  private  investors. 
Major  challenges  remain  to  be  addressed  in  connection  with  implementing  energy  laws  and 
policies  include  enforcing  electricity  payments,  managing  demand  while  aligning  tariffs  to 
costs,  and  creating  conditions  for  foreign  investment  in  Kosovo’s  energy  industry  as  a 
foundation for economic growth. 

4.2.6. 

Information society and media 

There  has  been  little  progress  as  regards  electronic  communications  and  information 
technologies.  The  Telecommunications  Regulatory  Authority  (TRA)  adopted  its  2010  work 

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plan in January. The Ministry of Transport and Telecommunications has developed a strategy 
and action plan to create an internet exchange point. Kosovo has neither an internet country 
code top-level domain name nor an international dialling code. 

The regulator adopted a Regulation on carrier selection and carrier pre-selection and also the 
Regulation  on  radio  stations  for  which  a  frequency  spectrum  licence  is  not  required.  Fixed 
telephony  penetration,  with  two  licensed  operators,  is  still  low  at  5%.  Mobile  telephony 
penetration  was  71%  (at  the  end  of  2009)  with  four  mobile  operators  (two  mobile  network 
operators  and  two  mobile  virtual  network  operators)  active  in  the  market.  Broadband 
penetration  is  6.4%.  Eleven  licensed  operators  provide  internet  services,  of  which  four  are 
national operators and the others provide locally. 

In  terms  of  market  regulation,  there  has  been  little  activity.  The  Telecommunications 
Regulatory Authority faces substantial constraints in preparing and implementing legislation 
in  the  form  of  lack  of  human  resources,  expertise,  and  constraints  on  its  financial 
independence. As a consequence the TRA does not have the necessary capacity and authority 
to conduct its tasks of an independent regulatory authority to the fullest. 

The  process  for  privatising  PTK  (Post  and  Telecom  of  Kosovo)  has  been  launched  and  is 
expected  to  be  finalised  by  the  end  of  2010.  This  privatisation  is  part  of  the  agreement 
between Kosovo and the IMF. 

There  has  been  limited  progress  in  the  area  of  information  society  services.  The  Law  on 
personal  data  protection  has  been  adopted.  The  Law  on  preventing  and  fighting  cybercrime 
has  been  adopted  in  June.  The  2005  Law  on  information  society  services  is  not  being  fully 
implemented and e-government services have yet to be developed. 

There has been substantial progress on audiovisual policy and media, notably improvements 
in the funding and administrative capacity of the Independent Media Commission (IMC). The 
number  of  employees  increased  from  21  to  28.  The  Council  issued  a  Regulation  on 
audiovisual  commercial  communications  aiming  to  align  Kosovo’s  legislation  with  the 
Audiovisual Media Services Directive on advertising. The Council completed the process of 
relicensing broadcasters. Nevertheless, the Assembly has still not completed the appointment 
of IMC members. The government has begun amending the IMC law. The current draft fails 
to preserve the Council’s independence in line with European standards on media regulation. 
Kosovo  has  not  made  any  progress  towards  reaching  the  target  objectives  of  digitalisation, 
meaning for this process to be finalised by 2015, in line with the regional approach towards 
completing  the  digitalisation  by  2015).  Kosovo  is  not  a  member  of  the  International 
Telecommunication Union and has an insufficient frequency allocation for this purpose. 

In  February,  Serbian  television  producers  launched  the  TV  Mreza  network  linking  four 
Serbian-language  television  stations  from  around  Kosovo  and  covering  80%  of  Kosovo’s 
Serbian minority. 

The independence of the public service broadcaster (RTK) and its financial sustainability are 
not  fully  ensured,  making  it  vulnerable  to  political  interference.  The  six-month  emergency 
funding provided by the Assembly was meant to be a temporary solution to save RTK from 
bankruptcy whilst long-term solutions were found. This emergency funding has been renewed 

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for a further six months and the Assembly has made little progress towards finding solutions. 
As public fee collection for RTK was suspended, the broadcaster could not allocate 5% of this 
fee to the fund to support minority, multiethnic and other special media, as required by law. 
Disbursement of the fund, which restarted last year, was therefore halted again. 

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. This will be resolved under the process of revising 
Kosovo’s criminal code. 

The  Association  of  Independent  Broadcast  Media  of  Kosovo,  which  includes  all  electronic 
media, both Kosovo Albanian and Kosovo Serb broadcasters, is an example of constructive 
cooperation between communities. 

Overall,  limited  progress  has  been  made  in  the  area  of  information  society  and  media.  The 
level  of  competition  is  still  low,  and  the  independence  of  Telecommunications  Regulatory 
Authority needs to be strengthened. The regulator’s efforts in the area of audiovisual policy 
and media contrasts with the inability of policy-makers to find a solution on the sustainable 
financing  of  the  public  broadcaster,  which  is  now  having  an  impact  on  media  pluralism  in 
Kosovo. It is important to preserve and reinforce the independence of the Independent Media 
Commission in the process of amending the IMC Law. 

4.2.7.  Financial control 

There has been some progress on public internal financial control (PIFC). Work is ongoing 
to  update  the  existing  PIFC  policy  paper.  Administrative  instructions  have  been  adopted  to 
support  implementation  of  the  Internal  Audit  Law.  They  cover  the  temporary  licensing  of 
auditors  and  the  functioning  of  audit  units  and  internal  audit  committees.  Internal  audit  is 
slowly moving from mere compliance testing to being used as a managerial tool. A Treasury 
Rule  on  the  principles  of  financial  management  and  control  systems  has  been  adopted. 
Treasury rule number one on public internal financial control has been rewritten to strengthen 
financial  management  and  control  practice  and  the  related  functions  of  the  Central 
Harmonisation  Unit.  The  Central  Harmonisation  Unit  for  financial  management  and  control 
has been reinforced and pilot activities have been carried out involving budget users at central 
and local levels. Training of auditors continued, resulting in more auditors being certified. 

As regards external audit, the Office of the Auditor-General adopted new operational tools, 
including a new regularity audit manual, performance audit guidelines, a quality framework 
and  interim  audits,  all  aiming  at  better  dialogue  with  the  audited  bodies.  In  June  2010, 
external audits for 33 municipalities were completed. In the 2009/2010 audit year, audits by 
the Office of the Auditor-General more than doubled. The follow-up of external audit reports 
and recommendations by budget organisations improved, partly thanks to better cooperation 
with  the  Parliamentary  Committee  on  oversight  of  public  finance  management  and  its  co-
operation  with  the  Office  of  the  Auditor  General.  The  financial  independence  of  the  office 
needs to be strengthened. The government still can influence its budget and expenditure. 

Overall,  there  has  been  some  progress  in  this  area,  even  if  Kosovo  still  remains  at  an  early 
stage of introducing international standards and good practices. Kosovo needs to increasingly 

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focus on developing financial management and control systems, raising awareness of its PIFC 
policies and starting using internal audit as an advisory and consulting tool for management. 
The development of external audit is on track. The financial independence of the Office of the 
Auditor-General remains a source of concern. 

4.2.8. 

Statistics 

There  has  been  some  progress  in  the  area  of  statistical  infrastructure.  Cooperation  with 
certain producers and users of statistics has improved. A memorandum of understanding was 
signed with the Ministry of Agriculture. However, the Statistical Office of Kosovo still lacks 
human and financial resources. Office space remains insufficient, and the staff situation in the 
IT department is particularly weak. 

There  has  been  limited  progress  on  classifications  and  registers.  Introduction  of  the  NACE 
Rev. 2 classification of economic activities into the business register has started. The business 
register is operational, but is not updated regularly. The necessary administrative data are not 
provided by the Tax Administration. The Law on tax procedures needs still to be amended in 
order to allow transmission of individual data to the Statistical Office of Kosovo. 

There has been progress in the area of sectoral statistics. The Census Law has been adopted 
early  October.  The  preparations  for  the  April  2011  population  and  housing  census  have 
continued. However, financing of the census still needs to be secured and the communication 
campaign needs to be intensified. With regard to other areas of social statistics, preparations 
for introducing the quarterly labour force survey have been completed and the timeliness of 
the household budget survey has improved. 

There  has  been  some  progress  in  macroeconomic  statistics.  Timeliness  of  national  accounts 
according to the expenditure approach has improved significantly. An action plan for further 
development of national accounts  was  produced in February 2010, but the Statistical Office 
does  not  yet  produce  quarterly  national  accounts.  The  Central  Bank  started  publishing  the 
balance of payments on a quarterly basis. The basket for the consumer price index has been 
updated.  

Progress  has  been  made  in  the  area  of  agricultural  statistics.  The  agricultural  price  indices 
have  been  updated  with  2005  as  new  the  base  year  and  the  quality  of  the  agricultural 
household survey has increased further. Municipal waste statistics has been published for the 
first time. Major improvements in business statistics are required. The quality of the external 
trade data from the customs authorities needs to be considerably improved. Preparations in the 
area of sector statistics are moderately advanced. 

Overall,  there  has  been  some  progress  in  sector  statistics,  but  further  significant  efforts  are 
needed  to  improve  in  particular  business  and  macro-economic  statistics.  The  resources 
situation remains weak. Preparatory work for the 2011 census needs to be reinforced. 

4.3. 

Justice, freedom and security 

4.3.1.  Visa, border management, asylum and migration 

Kosovo  has  no  visa  policy.  The  law  on  foreigners  regulating  the  entry  and  residence  of 
foreigners in Kosovo is not fully implemented. Administrative instructions implementing the 
law  have  been  signed  by  the  Minister  of  Internal  Affairs.  Most  of  the  UNMIK  travel 
documents expired in August 2010. Old Yugoslav passports have remained valid during the 

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reporting period, but the number of holders of these passports has decreased. Amendments to 
the  law  on  travel  documents  have  been  adopted  to  prepare  for  issuing  biometric  passports. 
Kosovo passports, identification cards and civil status documents have high technical security 
standards.  Progress  has  been  achieved  in  digitalisation  of  civil  status  registers  and  in 
connecting civil status offices to internet. However, the law on civil status needs to be adopted 
and  administrative  instructions  further  implementing  the  law  need  to  be  put  in  place.  The 
quality  of  civil  status  data,  security  and  control  over  the  collection  of  civil  status  data  and 
issuance  of  civil  status  documents  are  an  important  concern.  These  deficiencies  need  to  be 
addressed before biometric passports are issued. Furthermore, a Kosovo-wide address system 
needs  to  be  put  in  place  and  made  functional  to  obtain  reliable  data  for  civil  registration 
purposes. 

As regards border management, Kosovo has made some progress. Further steps have been 
taken  on  implementing  the  integrated  border  management  strategy.  Its  implementation 
however needs to be speeded up. A joint operational centre between police and customs has 
been established. Kosovo food and veterinary services have been granted access to this centre, 
which  however  needs  to  be  used  by  these  services  in  practice.  A  one-stop  joint  facility 
(Police,  Customs  Service  and  Food  and  Veterinary  Agency)  has  been  inaugurated  at  the 
Glloboqica/Globocica border crossing point. This brings the number of crossing points with a 
one-stop facility to two. 

A  roadmap  has  been  designed  for  the  transfer  of  responsibility  for  green  border/boundary 
surveillance.  Kosovo  Police  took  over  responsibility  from  KFOR  for  surveillance  at  the 
border  with  Albania.  Staff  from  Kosovo  Police  have  been  successfully  redeployed  to  take 
over  these  new  tasks.  The  Kosovo  Customs  Service  signed  bilateral  agreements  on 
cooperation  and  mutual  assistance  in  customs  matters  with  Albania,  Finland,  France, 
Montenegro and Turkey. Kosovo Police and EULEX visited Frontex. 

However, full implementation of the integrated border management strategy requires further 
efforts and equal participation and responsibility of all agencies involved. The relevant law is 
not  fully  implemented.  Not  all  administrative  instructions  related  to  the  law  have  been 
adopted. Border checks are not carried out in line with EU standards. Kosovo authorities lack 
planning  capability  and  ownership  when  it  comes  to  identifying  IT  border  management 
solutions.  Kosovo  needs  to  ensure  EU-compliant  border  management  system  is  made 
operational  as  soon  as  possible.  Kosovo  failed  to  demonstrate  political  will  to  ensure 
implementation of this EU financed project. The border with Montenegro is not demarcated. 
There have been incidents at the border between the former Yugoslav Republic of Macedonia 
and  Kosovo,  which  have  illustrated  the  limits  of  police  cooperation  between  the  two.  The 
enforcement capacity of the Kosovo Customs Service and border police need to be improved 
and  the  fight  against  cross-border  crime  intensified.  Kosovo  borders/boundary  are  still  not 
fully secured, including the challenges in detecting and handling cases of forged documents. 

The  north  remains  a  particular  challenge.  EULEX  has  intensified  its  patrolling,  registering 
and  checking  operations  at  gates  1  and  31  and  along  the  border/boundary  with  Serbia.  The 
data  collected  at  the  two  gates  are  shared  with  the  Kosovo  Customs  Service  and  Serbian 
customs. However, full customs controls at gates 1 and 31 were not restored, due to political 
circumstances. 

Overall,  Kosovo  is  at  an  early  stage  of  addressing  the  challenges  of  integrated  border 
management. Progress on visa policy needs to be developed in line with EU standards. 

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In the area of asylum, limited progress has been achieved. Some administrative instructions to 
implement the Law on asylum have been adopted. The number of asylum requests is still low, 
but  it  has  considerably  increased  (from  31  in  2009  to  131  in  January  –  September  2010) 
causing  challenges  for  Kosovo  authorities.  A  temporary  shelter  accommodating  20  to  30 
asylum-seekers has been opened. This is insufficient. Some decisions on asylum status have 
been  issued  with  help  of  EULEX.  The  acting  head  of  the  division  for  asylum  within  the 
Department for Citizenship, Asylum and Migration has been appointed. All members of the 
administrative appellate body have also been appointed and held a first meeting in July. Many 
of the asylum-seekers who have arrived in Kosovo during the reporting period have left for 
other destinations without adequate control by Kosovo authorities. Cases have been reported 
in which the refugee status determination have not been achieved within reasonable time. 

An  explanatory  guide  about  the  rights  and  obligation  of  asylum-seekers  needs  to  be 
developed.  The  capacity  of  the  Department  for  Citizenship,  Asylum  and  Migration  in  the 
Ministry of the Interior and of the police to deal with asylum-seekers and their applications 
remains weak. Training needs to be enhanced. Kosovo is still to develop a reliable database 
for  asylum  seekers.  No  identification  document  has  been  issued  to  asylum  applicants  by 
Kosovo authorities, as provided for in the Law on asylum. In 2009, Kosovo was fifth in the 
list of countries of origin of asylum applicants in EU Member States. 

Overall, preparations in the area of asylum are still at an early stage. 

Kosovo has achieved progress in the field of migration. An office for issuing temporary and 
permanent residence permits for foreigners has been opened in July. A number of agreements 
have  been  signed  on  readmitting  persons  to  Kosovo.  In  June,  a  law  on  readmission  was 
adopted. The law broadly meets EU requirements. The Department for Citizenship, Asylum 
and Migration has continued to deal with readmission requests from European countries in an 
efficient  way  and  needs  to  continue  to  do  so.  Assistance  offered  to  forced  returnees  covers 
only  seven  days  after  their  arrival  in  Kosovo.  The  revised  strategy  for  reintegration  of 
repatriated persons and an action plan have been adopted during the reporting period based on 
a thorough assessment of gaps. The action plan provides a good basis for improvement in this 
area. An executive board on reintegration and related working groups have been put in place 
to strengthen coordination of reintegration efforts. Regulation, which clarifies the role of the 
municipal return officers in the reintegration process has also been adopted. A fund has been 
created and €500,000 allocated for reintegration of repatriated persons. Sustainable funding of 
reintegration needs to continue in the future. 

However,  reintegration  remains  a  challenge  and  further  efforts  by  Kosovo  authorities  are 
necessary.  Capacity  to  handle  reintegration  of  forced  returnees  needs  to  be  strengthened. 
Communication  between  central  and  municipal  levels  on  readmission  is  insufficient.  The 
municipalities  do  not  have  adequate  human  and  financial  capacity  for  providing  sufficient 
assistance to repatriated persons. The Division for Foreigners, Visas and Residence Permits in 
the  Department  for  Citizenship,  Asylum  and  Migration  is  still  understaffed.  The  process  of 
handing over administrative tasks such as issuing residence permits from the border police to 
the  Department  is  ongoing.  Furthermore,  promoting  legal  migration  and  fighting  against 
irregular migration remain major challenges, despite some arrests of irregular migrants. There 
are  no  proper  detention  facilities  for  irregular  migrants  or  asylum  seekers  pending  their 
expulsion. 

Overall, Kosovo has started to tackle some of the migration challenges, but is still at an early 
stage of the process. Readmission requests from European countries continued to be handled 

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in  an  efficient  way  by  Kosovo  authorities.  Efforts  and  capacities  of  Kosovo  to  reintegrate 
repatriated persons need to be further enhanced. Fight against irregular migration and dealing 
with foreigners remain major challenges for relevant agencies. 

4.3.2.  Money laundering 

Limited  progress  has  been  made  on  addressing  economic/financial  crime  and  money-
laundering, which is a key European Partnership priority. The Law against money-laundering 
and financing of terrorism has been adopted in September. In June, the Ministry of Economic 
and Financial Affairs has signed a technical arrangement on the transfer of the responsibilities 
of  the  Financial  Intelligence  Centre  from  EULEX  to  the  Financial  Intelligence  Unit  in  the 
Ministry  within  six  months  of  the  entry  into  force  of  this  law.  Kosovo  needs  to  be  ready 
before the transfer can take place. 

Cooperation  between  the  Customs  Service  and  the  Financial  Intelligence  Centre  has 
improved. The Centre has also improved its cooperation with banks. The Directorate against 
Economic  Crime  and  Corruption  in  the  Kosovo  Police  has  been  established.  Investigators 
from this Directorate have been seconded to the special task force under the authority of the 
Special Prosecution Office. In cooperation with EULEX, an operation has been launched with 
the aim of identifying illegal activity in relation to the import and export of large amounts of 
cash at Kosovo’s airport. 

In  practice,  however,  the  capacity  of  Kosovo  to  investigate  and  prosecute  economic  crimes 
remains limited. Large amounts continue to be invested in real estate, restaurants and casinos 
have  continued  without  adequate  supervision.  Business-related  financial  transactions  on 
private accounts and large numbers of entities doing business without being registered have 
been widespread. Very few  investigations and no judicial follow-up have been delivered  by 
Kosovo authorities related to money-laundering and related crimes. 

The relevant department within the Kosovo Police is not fully staffed and regional units lack 
the  expertise  and  equipment.  The  police  need  to  significantly  step  up  its  efforts  to  tackle 
money-laundering. Prosecutors and judges lack the relevant financial expertise and resolve to 
tackle  the  problem.  Insufficient  resources  within  the  Special  Prosecution  Office  have  been 
dedicated to financial matters.  

Given the heterogeneous status of the NGOs in Kosovo, the lack of systematic reporting by 
the  office  for  registration  of  NGOs  within  the  Ministry  of  Public  Administration  to  the 
Financial Intelligence Centre is a concern. Business organisations do not systematically report 
cash-based  transactions  higher  than  €10,000  to  the  Centre.  There  is  a  lack  of  transparency 
regarding  the  output  of  the  Centre.  Adequate  preparations  need  to  be  made  by  the  Kosovo 
authorities  to  ensure  effective  functioning  of  the  Centre  under  Kosovo  authority.  Kosovo 
needs to make the agency to manage confiscated assets fully operational.  

Overall,  money-laundering  remains  an  issue  of  serious  concern  and  Kosovo  is  at  an  early 
stage in this area. Kosovo continues to lack adequate technical and human resources able to 
face this complex crime. In these circumstances, Kosovo needs to make considerable efforts 
to be able to cope with the transfer of responsibilities from EULEX, which needs to happen 
only once Kosovo is ready. 

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52 

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4.3.3.  Drugs 

Kosovo has made a limited progress in the fight against drug trafficking. Flows include heroin 
and  synthetic  drugs  coming  from  the  Middle  East  through  Greece  and  the  former  Yugoslav 
Republic of Macedonia along one of  the main Balkan routes to  European markets. There is 
also  a  growing  domestic  market  for  marijuana  and  other  drugs.  Kosovo  is  also  growing 
producer of drugs. Organised crime groups operating from Kosovo are involved in smuggling 
cocaine from South America to Europe. 

The security of the storage room from which drugs were stolen last year has been upgraded. 
Kosovo Police have conducted a number of operations during the reporting period. All police 
regional  narcotic  investigation  units  have  been  centralised  to  the  Directorate  against  Drug 
Trafficking. This has brought positive results in terms of information flow. Authorities have 
carried out a number of training sessions for law enforcement bodies and public awareness-
raising events about the dangers of the drug abuse. 

However, seizures, arrests and successful court verdicts remain at a low level in comparison 
to the challenge Kosovo is facing. Weaknesses in border management, corruption within law 
enforcement  agencies  and  a  lack  of  equipment  hamper  the  fight  against  drug  trafficking. 
Proper  customs  control  equipment  allowing  trucks  to  be  scanned  exists  at  only  one  border 
crossing  point.  Despite  the  increase  of  capacity,  canine  units  are  not  used  at  border  points. 
After the break-in at the storage room last year, the case remains pending and the perpetrators 
have  not  been  found.  Policy  guidelines  for  undercover  investigations  related  to  drugs  are 
missing. The activities stemming from the anti-narcotics action plan are still at an early stage 
of implementation. Statistics on seizures, arrests and prosecutions are unreliable. Data-sharing 
with most of the neighbouring countries is poor. There are not enough Kosovo Serb officers 
in  the  police  narcotic  investigations  force.  Capacities  to  investigate  drug  trafficking  in  the 
north  remain  limited.  There  are  no  comprehensive  plans  for  management  of  the  increasing 
number of drug addicts within the prison population. 

The cooperation with the European Monitoring Centre for Drugs and Drug Addiction started 
in 2010. Kosovo is committed to develop cooperation with the Centre. The work plan for joint 
activities has been prepared and the first joint Needs Assessment Report has been produced in 
July 2010. 

Overall, Kosovo’s fight against drug trafficking  is  still at an early  stage. Serious efforts are 
needed to address this issue. 

4.3.4.  Police 

Kosovo has made some progress as regards policing. A number of administrative instructions 
related  to  the  law  on  police  have  been  adopted  (e.g.  on  the  use  of  force,  use  of  firearms  or 
promotion procedures). Police have adopted its 2010-2015 strategic development plan. They 
have  contributed  to  drafting  of  various  strategies  such  as  crime  prevention,  community  and 
intelligence-led policing, small and light arms control and collection. Police have continued to 
respond  to  cases  of  illegal  possession  of  weapons,  including  their  confiscation.  Kosovo  has 
adopted a strategy for integrated emergency management system. The acting director-general 
of police has also issued a number of emergency operational orders.  

Kosovo Police have taken over new tasks from KFOR entailing operational challenges such 
as  securing  a  cultural  heritage  and  religious  sites  and  securing  the  border  with  Albania. 

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53 

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Kosovo  Police  managed  well  the  security  of  the  enthronement  ceremony  of  the  Serbian 
Orthodox Church patriarch. Agreements on international police cooperation have been signed 
with Albania, Austria, Croatia, France and the former Yugoslav Republic of Macedonia. The 
police  have  also  improved  their  crowd  and  riot  control  capability.  Information  flows  within 
the police have improved following the creation of the centralised regional units and changes 
in the chain of command. 

The  job  descriptions  of  the  senior  management,  including  the  two  Deputy  Directors,  have 
been approved and signed by the Minister of the Interior together with the new structure of 
the  police.  A  new  salary  system  for  officers  has  been  adopted,  involving  additional  budget 
expenditure.  

However, police also need to build-up its intelligence-led policing capability to tackle serious 
crime,  as  its  effectiveness  in  dealing  with  organised  and  complex  crimes  continues  to  be 
limited.  The  police  need  to  be  more  pro-active  in  theirs  approach  to  tackling  crime.  The 
Kosovo  Police  Information  System  needs  to  be  upgraded  to  serve  as  an  operational  EU 
standards-compliant  IT  solution.  Currently,  Kosovo’s  vehicle  information  system  is  not 
connected  to  this  system,  which  limits  performance  of  the  police  related  to  cases  of  stolen 
vehicles. EULEX has access to the Kosovo Police Information System. However, the limits 
placed  on  this  access  complicate  independent  exercise  of  EULEX’s  executive  mandate  in 
some cases. 

Given  the  estimates  of  large  amounts  of  weapons  possessed  by  the  public,  police  need  to 
enhance its activities to confiscate and destroy them. Efforts on following up hate and ethnic-
based crimes need to be increased. All newly established municipalities are not yet equipped 
with police stations, while police presence is maintained. 

The  strikes  within  the  police  during  the  reporting  period  have  illustrated  managerial 
deficiencies,  dysfunctional  trade  unions  and  political  interference.  The  restructuring  of  the 
police is a challenging process that needs to be accompanied by a comprehensive review of 
allocation of resources. In this context, the performance-based indicators system still needs to 
be established.  

The  disciplinary  mechanisms  within  police  and  oversight  mechanisms  of  police  need  to  be 
reinforced. Corruption, nepotism and political interference remain issues of serious concern. 
A better division of responsibilities between the Police Inspectorate of Kosovo and the Police 
Standards Unit is needed. The newly appointed acting director for the Police Inspectorate of 
Kosovo  needs  to  contribute  to  these  efforts.  Police  also  need  to  improve  procurement 
processes in order to fully comply with the legislation in force.  

International  police  cooperation  is  hampered  by  the  political  circumstances,  preventing 
Kosovo  from  integration  into  international  and  regional  cooperation  mechanisms.  It  is  an 
issue  of  concern  that  the  police  officers  are  still  not  authorised  to  arrest  an  internationally 
wanted person provisionally on the basis of an Interpol wanted notice. EULEX continues to 
play an important role in facilitating information exchange particularly with Europol. 

Overall,  Kosovo  Police  have  managed  general  public  safety  and  security  well,  albeit  in 
difficult situations. They have taken on increased responsibilities in a number of areas (e.g., 
protection of cultural sites) and performed them in a professional manner. However, in terms 
of  investigative  capacity,  ability  to  fight  organised  crime,  corruption  or  any  other  complex 

EN 

54 

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type of crime and use modern tools and procedures, Kosovo Police remain at an early stage of 
development.  

4.3.5.  Fighting organised crime and terrorism 

Limited  progress  has  been  achieved  in  tackling  organised  crime.  A  strategy  on  crime 
prevention has been adopted. A law on cyber crime has been adopted and is compatible with 
EU  standards.  Additional  special  prosecutors  have  been  appointed  to  deal  with  organised 
crime. Kosovo special prosecutors have been involved in investigations of serious organised 
crime  and  financial  crime  and  have  represented  the  Special  Prosecutors  Office  in  trials.  In 
some  cases,  they  have  worked  in  mixed  teams  with  EULEX  special  prosecutors  who  have 
also  exercised  executive  powers  independently.  Eurojust  experts  will  visit  Kosovo  in  the 
coming  weeks.  Ministry  of  Justice  has  adopted  organisational  structure  of  the  agency 
managing confiscated and sequestrated criminal assets. A budget has also been allocated and 
a  chief  executive  officer  has  been  appointed.  However,  the  agency  still  needs  to  be  made 
operational. 

Kosovo  also  needs  to  step  up  considerably  its  efforts  to  tackle  organised  crime.  Organised 
criminal networks active in Kosovo are involved in international drug trafficking, smuggling 
of migrants, trafficking of stolen vehicles and firearms and smuggling of cigarettes. There is 
no  adequate  system  to  reward  informants.  The  lack  of  a  witness  protection  framework 
continues to inhibit activities in this area. There is still no possibility to tap mobile phones of 
one operator for investigative purposes. The police directorate against organised crime lacks 
equipment.  Political  interference  and  poor  intra-  and  inter-agency  cooperation  hinders 
effective  fight  against  organised  crime.  The  Customs  Service  and  border  police  need  to 
reinforce  their  enforcement  capacity.  Kosovo  lacks  a  track  record  of  convictions  related  to 
organised crime. It is of serious concern that the readiness of Kosovo judges and prosecutors 
to participate, or even take the lead, in adjudicating cases of corruption or organised crime is 
sometimes paralysed by threats against themselves or their families.  

Overall,  sustained  efforts,  supported  by  clear  political  will,  are  needed  in  the  fight  against 
organised  crime  which  remains  a  matter  of  very serious  concern  and  affects  the  rule  of  law 
and the business environment. In the north, police and judiciary efforts remain hampered by 
the political situation. 

There has been limited progress in tackling trafficking in human beings. Kosovo remains a 
place  of  origin,  transit  and  destination  of  victims  of  trafficking  for  commercial  sexual 
exploitation. The inter-ministerial working group has continued to meet on a monthly basis. In 
a  recent  case,  Kosovo  Police  have  responded  well  to  an  Interpol  request  concerning  a 
trafficking  case.  There  have  been  a  number  of  arrests  related  to  the  case  of  smuggling  of 
human  beings  across  the  River  Tisza.  The  Minimum  Standards  of  Care  for  Victims  of 
Trafficking  have  been  adopted.  Efforts  have  been  made  in  the  field  of  prevention,  with  an 
information campaign in educational institutions and at border crossing points, including the 
airport. The number of convictions has increased slightly over the reporting period. 

However,  the  number  of  victims  of  trafficking  identified  remains  low  and  does  not  fully 
reflect the scale of the phenomenon even though there has been a decrease in the numbers of 
trafficked  persons  across  the  whole  region.  Most  of  the  victims  have  been  local  women 
trafficked  for  sexual  purposes.  Child  trafficking  and  exploitation  for  forced  begging  is  an 
increasing problem. The capacity of Kosovo institutions to investigate, prosecute, convict and 
sentence  trafficking  in  human  beings  needs  to  be  further  strengthened.  The  level  of 

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55 

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punishment  of  perpetrators  is  not  always  adequate.  There  has  been  a  number  of  police 
operations  and  searches  of  premises  during  the  reporting  period,  but  the  results  are  limited. 
Police  regional  units  have  continued  to  face  difficulties  in  identifying  presumed  victims. 
Procedures  are  in  place  to  allow  victims  to  provide  anonymous  testimony,  but  witness 
intimidation has remained a serious problem and witness protection does not exist. Only a few 
victims  have  assisted  in  investigation  of  their  traffickers  during  the  reporting  period. 
Trafficking-related corruption also needs to be addressed. Some shelter facilities for victims 
exist, but reintegration services remain fragmented. 

Overall, Kosovo’s efforts in the fight against trafficking in human beings are at an early stage 
and much more needs to be done. In particular, the judicial follow-up to police operations is 
ineffective and perpetrators need to be appropriately sentenced. Kosovo need to enhance its 
action to identify and assist all victims, including those trafficked for forced labour and forced 
begging. 

Kosovo has made some progress in the fight against terrorism. The capacity of the counter-
terrorism unit within the Kosovo Police has been enhanced. A law on money-laundering and 
financing of terrorism has been adopted. Terrorism has been included in the national security 
strategy  adopted  during  the  reporting  period.  However,  operational  police  capacities  remain 
low and only few practical results have been delivered. 

Overall,  Kosovo  remains  at  an  early  stage  of  being  able  to  tackle  terrorism  in  a  strategic 
manner. 

4.3.6.  Protection of personal data 

Kosovo has made limited progress in personal data protection. In April, Kosovo has adopted a 
law  on  the  protection  of  personal  data.  The  government  has  also  appointed  members  of  the 
national agency for the protection of personal data. However, the agency is not operational. 
The  principles  set  out  in  the  framework  law  require  further  regulation,  in  particular  on  data 
protection in the law enforcement sector. The establishment of security, intelligence and law 
enforcement  bodies  and  upgrading  of  databases  has  not  been  accompanied  by  parallel 
measures to protect personal data. An adequate review of the implications of the new law for 
various agencies in the area of justice and home affairs has yet to be carried out. Individuals 
in Kosovo are not informed about their rights regarding protection of their personal data.  

Overall,  the  lack  of  personal  data  protection  in  Kosovo  is  an  issue  of  a  serious  concern. 
Achieving  adequate  personal  data  protection  is  key  to  Kosovo  enhancing  its  international 
cooperation in the area of justice and home affairs. Kosovo still needs to make major efforts 
in the area of personal data protection. 

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Statistical annex 

STATISTICAL DATA (as 14 October 2010) 
Kosovo under United Nations Security Council Resolution 1244/99 

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

National accounts 
Gross domestic product (GDP) (million national currency) 
GDP (million euro) 
GDP (euro per capita) 
GDP (in Purchasing Power Standards (PPS) per capita) 
GDP per capita in PPS (EU-27 = 100) 
Real GDP growth rate (growth rate of GDP volume, national currency, % change on previous year) 
Employment growth (national accounts, % change on previous year) 
Labour productivity growth: GDP growth per person employed (% change on previous year) 
Real unit labour cost growth (national accounts, % change on previous year) 
Labour productivity per person employed (GDP in PPS per person employed, EU-27 = 100)  
Gross value added by main sectors (%) 

Note

Note
1) 
1) 

Agriculture and fisheries 
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) 

Inflation rate 
Annual average inflation rate (CPI, % change on previous year) 

2000 
: 

2004 
2002 
2 016 
: 
10 887  10 887 10 887 10 887 10 887

2003 
1 985 

2001 
: 

2009 
2007 
2005 
2 041 
2 181p 
2 127 
10 887  10 887  10 887  10 887  10 887 

2006 
2 100 

2008 
2 153 

2000 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 

2002 

2001 
2004 
1 624  1 735e 1 797e 3 007e
1 624  1 735e 1 797e 3 007e

2003 

2006 

2005 
2009 
2007 
3 068e  3 192e  3 434e  3 841e  3 902p 
3 902p 
3 068e  3 192e  3 434e 
1473e  1 482e  1 520e  1 612e  1 784e  1 790p 

3 841 

2008 

: 
: 
: 
1.2e 
: 
: 
: 
: 

: 
: 
: 
: 
151.6 
34.5 
: 
12.5e 
98.6e 

905e 
: 
: 
3.1e 
: 
: 
: 
: 

: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 

147.5  109.7e
19.4e 
29.3 
3.9 
: 
7.1e 
10.4e 
40.1e 
87.1e 

: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 

: 
: 
: 
: 

: 
: 
: 
: 

: 
: 
: 
: 
111.9e  111.5e  114.0e  112.8e  109.9p 
21.7e 
19.3e 
4.3e 
4.2 
10.4e 
7.0e 
50.3e 
42.5e 

20.6e 
4.4 
8.9e 
45.5e 

24.4e 
4.1e 
13.8e 
55.1e 

26.3 
3.6 
15.5p 
55.4p 

: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 

: 
: 
: 
: 
163.1 
40.7 
: 
16.6 
120.4 

2) 

Note

2000 
: 

2001 
: 

2002 
: 

2003 
: 

2004 
: 

Note

2000 
: 

2001 
: 

2002 
-1.0 

2003 
0.3 

2004 
-0.8 

2005 
: 

2005 
-2.1 

2006 
: 

2006 
-1.5 

2007 
: 

2007 
2.8 

2008 
: 

2008 
12.4 

2009 
: 

2009 
9.7 

EN 

57 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance of payments 
Balance of payments: current account total (million euro) 
Balance of payments current account: trade balance (million euro) 
Balance of payments current account: net services (million euro) 
Balance of payments current account: net income (million euro) 
Balance of payments current account: net current transfers (million euro) 

of which government transfers (million euro) 
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 (%) 
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) 
Share of exports to EU-27 countries in value of total exports (%) 
Share of imports from EU-27 countries in value of total imports (%) 

Note

3) 

3) 

Note

Note

4) 
4) 

5) 
5) 
1) 

Note

2000 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 
: 

2000 
: 
: 

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

2000 
: 
: 
: 
: 
: 
: 

2001 
228 
-646 
10 
141 
723 
809 
: 
: 
: 
: 
: 

2001 
: 
: 

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

2001 
: 
: 
: 
: 
: 
: 

2002 
-104 
-890 
-23 
154 
655 
661 
: 
: 
: 
: 
: 

2002 
8.4 
: 

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

2002 
: 
: 
: 
: 
: 
: 

2003 
-204 
-941 
-14 
152 
599 
490 
: 
: 
: 
: 
: 

2003 
2.2 
: 

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

2003 
: 
: 
: 
: 
: 
: 

2004 
-209 
-983 
-18 
138 
655 
372 
43 
0 
: 
43 
: 

2004 
2.7 
: 

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

2005 
-248 
-1 079 
-8 
139 
700 
348 
108 
0 
: 
108 
: 

2005 
: 
: 

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

2006 
-226 
-1 173 
29 
159 
759 
320 
289 
-6 
: 
295 
: 

2006 
: 
: 

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

2007 
-331 
-1 368 
51 
186 
800 
301 
431 
-10 
0 
441 
72 

2007 
: 
: 

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

2008 
-602 
-1 668 
82 
156 
829 
289 
341 
-25 
2 
366 
64 

2008 
: 
: 

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

2009 
-642 
-1 690 
172 
70 
806 
319 
278 
-10 
1 
288 
66 

2009 
: 
: 

2009 
: 
: 
: 
: 
: 
1 289 
: 
14.1 
4.0 
1.000 
: 
501 

2004 

2005 

2006 

2007 

2008 

2009 

1 050.4 1 180.0 1 314.6 1 576.1 1 930.0  1 933.8 
165.3 

196.4 

81.7 

48.9 

147.3 
-1 131.1 -1 232.9 -1 428.8 -1 733.6  -1 768.5 
: 
42.6 
35.2 

: 
37.9 
38.4 

: 
47.7 
36.2 

: 
35.7 
34.2 

: 
43.1 
39.0 

56.6 
-993.8 
: 
29.3 
40.3 

EN 

58 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 
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 (%) 
Employment rate (15-64): share of population aged 15-64 that is in employment (%) 

Employment rate male (15-64) (%) 
Employment rate female (15-64) (%) 

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

Agriculture 
Industry 
Construction 
Services 

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 (%) 
Long-term unemployment rate: share of labour force that is unemployed for 12 months and more (%) 

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) 
Early school leavers - Share of population aged 18-24 with at most lower secondary education and not 
in further education or training (%) 

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

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

Note

Note

2000 
: 
: 
: 
: 

2000 
: 
: 
: 
: 
: 

: 
: 
: 
: 
: 
: 
: 
: 
: 

2001 
: 
: 
: 
: 

2001 
45.6 
19.6 
31.1 
8.1 
16.7 

: 
: 
: 
: 
57.1 
51.8 
69.9 
80.0 
47.6 

2002 
: 
11.2 
: 
: 

2002 
52.8 
23.8 
39.4 
8.8 
18.4 

: 
: 
: 
: 
55.0 
45.2 
74.5 
77.7 
47.3 

2003 
12.8 
15.1 
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 
14.1 
11.8 
: 
: 

2004 
46.2 
27.7 
46.4 
9.9 
23.9 

: 
: 
: 
: 
39.7 
31.5 
60.7 
66.5 
34.9 

2005 
14.5 
9.6 
: 
: 

2005 
49.2 
28.5 
45.8 
11.7 
25.2 

: 
: 
: 
: 
41.4 
32.9 
60.5 
70.5 
34.7 

Note

2000 
: 
: 

2001 
: 
: 

2002 
: 
: 

2003 
: 
: 

2004 
: 
: 

2005 
: 
: 

2006 
12.6 
12.7 
: 
: 

2006 
52.3 
28.7 
46.1 
11.8 
26.3 

: 
: 
: 
: 
44.9 
34.6 
61.6 
75.5 
41.1 

2006 
: 
: 

2007 
12.4 
11.1 
: 
: 

2007 
46.8 
26.2 
40.1 
12.7 
24.6 

: 
: 
: 
: 
43.6 
38.5 
55.2 
70.0 
37.1 

2007 
: 
: 

2008 
12.7 
9.8e 
: 
: 

2008 
46.2 
24.1 
37.7 
10.5 
23.8 

: 
: 
: 
: 
47.5 
42.7 
59.6 
73.0 
38.9 

2008 
: 
: 

2009 
12.5 
8.4p 
: 
: 

2009 
48.1 
26.1 
39.7 
12.5 
27.9 

: 
: 
: 
: 
45.4 
40.7 
56.4 
73.0 
37.1 

2009 
: 
: 

: 

5 304.0 5 005.0

: 

3 011.0 2 988.0 2 195.0 2 124.0 2 530.0 

: 

Note

Note

2000 
: 
: 

2000 
: 
: 

2001 
: 
: 

2001 
: 
: 

2002 
: 
: 

2002 
: 
: 

2003 
: 
158.7 

2004 
: 
169.5 

2003 
: 
: 

2004 
39.5 
: 

2005 
50.2 
: 

2005 
: 
0.0 

2006 
69.9 
: 

2006 
: 
0.0 

2007 
68.7 
: 

2007 
: 
0.0 

2008 
74.1 
376.2 

2008 
: 
0.0 

2009 
: 
369.1 

2009 
: 
0.0 

EN 

59 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Innovation and research 
Spending on human resources (public expenditure on education in % of GDP) 
Gross domestic expenditure on R&D in % of GDP 
Percentage of households who have Internet access at home (%) 

Environment 
Greenhouse gas emissions, CO2 equivalent (tons, 1990=100) 
Energy intensity of the economy (kg of oil equivalent per 1000 euro GDP) 
Electricity generated from renewable sources in % of gross electricity consumption 
Road share of inland freight transport (% of tonne-km)  

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) 

Note

Note

Note

6) 

Note

2000 
: 
: 
: 

2000 
: 
: 
: 
: 

2000 
: 
: 
: 
: 
: 
: 
: 

2000 
: 
: 
289 
59 
193 
: 
: 
: 
: 

2001 
: 
: 
: 

2001 
: 
: 
: 
: 

2001 
: 
: 
: 
: 
: 
: 
: 

2001 
: 
539 
347 
75 
230 
: 
459 
: 
169 

2002 
: 
: 
: 

2002 
: 
: 
: 
: 

2002 
: 
: 
3 853 
: 
: 
: 
3.2 

2002 
: 
: 
319 
110 
116 
: 
396 
: 
135 

2003 
: 
: 
: 

2003 
: 
: 
: 
: 

2003 
: 
: 
4 507 
: 
: 
: 
3.2 

2003 
: 
: 
: 
: 
: 
: 
: 
: 
: 

2004 
: 
: 
: 

2004 
: 
: 
: 
: 

2004 
: 
: 
3 944 
: 
: 
: 
3.5 

2004 
: 
: 
335 
55 
106 
: 
408 
: 
150 

2005 
: 
: 
: 

2005 
: 
: 
: 
: 

2005 
: 
: 
4 455 
: 
: 
: 
4.0 

2005 
: 
: 
352 
47 
152 
: 
441 
: 
159 

2006 
: 
: 
: 

2006 
: 
: 
: 
: 

2006 
: 
: 
4 553 
: 
: 
: 
4.0 

2006 
: 
: 
382 
68 
113 
: 
392 
: 
172 

2007 
: 
: 
: 

2007 
: 
: 
: 
: 

2007 
: 
: 
4 681 
: 
: 
: 
4.3 

2007 
: 
: 
322 
40 
152 
: 
295 
: 
117 

2008 
: 
: 
: 

2008 
: 
: 
: 
: 

2008 
: 
: 
5 466 
: 
: 
: 
: 

2008 
: 
: 
342e 
27e 
180e 
: 
438e 
: 
177e 

2009 
: 
: 
: 

2009 
: 
: 
: 
: 

2009 
: 
: 
7 842 
: 
: 
: 
5.3 

2009 
: 
: 
: 
: 
: 
: 
: 
: 
: 

: = not available 
p = provisional value 
e = estimated value 
1) No official national currency exists. Euro is the currency in use. 
2) Investment: including Donor sector, General government, Private investment (Housing and Other). 
3) The balance of payments sign conventions are used. For FDI abroad a minus sign means investment abroad by the reporting economy exceeded its disinvestment in the period, while an entry without 
sign means disinvestment exceeded investment. For FDI in the reporting economy an entry without sign means that investment into the reporting economy exceeded disinvestment, while a minus sign 
indicates that disinvestment exceeded investment. 
4) In 2000 the banking sector of Kosovo was at the initial stage of its establishment. Therefore all deposits at the commercial banks at that point in time were transferable. 
5) Since January 2008 interest rate on loans includes disbursement fee charged by banks. 
6) Data collected from the Kosovo Energy Corporation (KEK). 

EN 

60 

EN