Kosovo - first year of independence

Reuters
February 15

Kosovo is recognized as independent by more than 50 countries including the United States, but notably not by Serbia and its traditional ally Russia.

Here is a brief profile of Kosovo, an ethnic crossroads in the heart of the Balkans.

HISTORY

* Kosovo is about the size of Connecticut or Qatar. It was first inhabited by Illyrian and Thracian tribes, ruled by the Romans then populated by Slavs in the 6th century. It became part of the Kingdom of Serbia in the early 13th century, with a mixed population of Serbs, Albanians and Vlachs. The Nemanjic dynasty made it the spiritual heartland of Serbia, giving lands to the Orthodox Church and building monasteries that stand today.

ETHNIC MAKEUP

* Many Serbs left in the 500 years after the Ottoman Empire defeated the Serbs at the Battle of Kosovo in 1389. The Albanians, converts to Islam, grew in number. Mutual expulsions and migrations to and from Albania in the early 20th century changed Kosovo's makeup. Today, 2 million Albanians form 90 percent of the population. About 120,000 Serbs remain in Kosovo, just under half in the northern enclave and the rest in enclaves protected by NATO.

YUGOSLAV YEARS

* Landlocked and poor apart from mineral deposits, Kosovo was an autonomous region of the Socialist Yugoslav Federation and had effective self-government from 1974. But ethnic tensions escalated in the 1980s as Yugoslavia began to crumble and economic conditions deteriorated. Slobodan Milosevic used Serb nationalism as a springboard to power in 1989, restricting Albanian rights in education and local government. Strikes, protests and violence led Belgrade to declare a state of emergency in 1990, sending in the Yugoslav army and police.

WAR

* Albanians have officially demanded independence since renegade elections in 1992 made pacifist leader Ibrahim Rugova president of a self-declared republic. The demand was ignored as Serbs fought for pieces of Croatia and Bosnia, and support shifted to armed struggle by the Kosovo Liberation Army, a guerrilla force. Serb forces hit back so hard in 1998 that 100,000 Albanians fled and NATO powers warned Milosevic they would not tolerate another round of "ethnic cleansing" in the Balkans. Peace talks in France failed and in March 1999 NATO started bombing to force Serbia to withdraw. About 800,000 Albanians fled or were expelled to Macedonia and Albania before Milosevic gave in 78 days later. As his forces pulled out, up to 200,000 Serbs and other ethnic minorities left as well.

LIMBO

* Kosovo has been administered by the United Nations with NATO peacekeeping since June 1999. Unemployment is 40-45 percent among the overwhelmingly young population. Kosovo's uncertain future status virtually precludes outside investment. Spasms of ethnic violence, mostly by Albanians against Serbs, together with criminal gangs trafficking in contraband and people, have tarnished its image. Almost two years of Serb-Albanian negotiations ended in failure in December 2007.

INDEPENDENCE

* Kosovo declared independence on February 17, 2008 and Europe's newest country was soon recognized by the United States and most of the European Union member states. Serbia and its ally Russia reject Kosovo's secession. Kosovo has since established a new constitution, its own army, national anthem, passports, identity cards, intelligence agency and has opened its first 18 embassies, mostly in Western countries. Kosovo expects to join the World Bank and International Monetary Fund this year, however, Serbia and Russia are trying to block its membership in all international institutions.

See also:

EU is asking for reforms

Facts about Kosovo's Serb minority
Reuters

One year after Kosovo's Albanian majority declared independence ethnic tensions remain high and minority Serbs are not integrated into state institutions.

Here are some facts about Kosovo's Serbs:

* Up to 200,000 Serbs and other ethnic minorities left Kosovo after NATO bombing in 1999 to live in Serbia.

* About 120,000 Serbs live in Kosovo making up more than 5 percent of the total population. More than 50,000 live in the northern part of Kosovo which is linked to Serbia by road.

* The remaining 70,000 live south of the river Ibar in NATO-protected enclaves within ethnic Albanian territory.

* Serbia cherishes Kosovo as the cradle of its Orthodox Christianity, where some of its most treasured churches and monasteries dot the landscape.

* Some 3 percent of the Serbian population in Kosovo work in the public sector and are paid by Belgrade. Most of them get salaries from the Kosovo budget as well. Doctors, teachers and judges in Kosovo earn more than their colleagues in Serbia.

* Kosovo Serbs refuse to recognise Pristina institutions and travel to Serbia to get documents such as birth certificates, drivers' licences, passports and identity cards.

Kosovo's international status
Reuters

One year after its Albanian majority proclaimed independence, Kosovo is still looking for wider international recognition and membership in international financial institutions.

Here are some facts about Kosovo's international status:

* Kosovo's Albanian majority declared independence on February 17, 2008 -- nine years after NATO bombed Serb forces to halt ethnic cleansing.

* So far more than 50 countries including the United States and 22 European Union member states have recognised Kosovo.

* Serbia and its ally Russia, which do not recognise Kosovo, are blocking its membership of the United Nations.

* Kosovo has applied for membership of the World Bank and the International Monetary Fund and is expected to become a member of both institutions this year.

* Since its declaration of independence, Kosovo has adopted a new constitution, national anthem and flag. It has established 18 embassies and nine consular missions.

* Kosovo issued its first passports on July 30, 2008. Holders of Kosovo passports can travel to only a few of the countries that have not recognised Kosovo's independence.

* In January Kosovo launched its army, known as the Kosovo Security Force, which will have 2,500 personnel with 500 reservists.

Main challenges for Kosovo economy

A look at the main economic challenges it faces:

UNEMPLOYMENT

About half of the workforce is formally employed, with the rest either long-term unemployed or working unofficially. About 30,000 young people enter the job market every year, five times the number Kosovo businesses can absorb. The government wants to ensure formalised access to the EU labour market by setting up labour-exchange programmes in specific sectors.

POVERTY

About 45 percent of the population subsists below the poverty line of 1.5 euros a day. Wages average around 220 euros ($320) a month, and most households receive remittances from relatives abroad.

INFRASTRUCTURE

Kosovo's road and rail network was neglected in Yugoslav times, fell into a state of disrepair during the 1990s, and was partly destroyed in the 1998-99 conflict. The repair of major roads around the capital Pristina has been marred by low-quality planning and materials. The government plans international tenders for highway concessions.

Utilities, especially water and power, are unreliable although much improved since the previous decade. A major planned project, the third thermal power plant called New Kosovo, aims to draw on the territory's lignite deposits to turn Kosovo into a power exporter by 2015. A reliable water supply will require the political agreement of the Serb minority, which dominates the area around the main reservoir in north Kosovo.

EDUCATION

Serbia's decision to strip the province, with a 90 percent Albanian majority, of its autonomy in the late 1980s resulted in the creation of ad-hoc Albanian parallel systems of administration and education. The low quality of the informal schooling -- mostly in small groups, in private homes -- was exacerbated by the mushrooming of dubious private colleges after the United Nations took over in 1999, translating into poor skills even among university graduates.

Foreign language learning is a bright spot, with most young people being competent in one or two European languages due to the diaspora influence and the international presence.

CORRUPTION

A wartime legacy of racketeering combined with the Albanian tradition of strong family networks has created an opaque system of personal connections that permeates everything from simple administrative services to the allocation of tenders and scholarships. EU-standard laws were imported almost unchanged, but implementation is patchy. Media reports on corruption in the U.N. mission failed to lead to prosecutions due to immunity afforded to international officials, a fact adding to Albanian disenchantment with the system.

BUSINESS CLIMATE

The main drags on investor confidence and competitiveness are a weak legal system, high interest rates -- round 13 percent -- and the tax system, which frontloads start-up costs through customs duties on capital goods. Access to international financial institutions should help establish cheaper credit lines, and the government plans to shift the focus of tax collection to favour small and medium enterprise development.

To attract foreign investors, Kosovo's government set a corporate tax at 10 percent.

OTHER ISSUES

The unilateral adoption of the euro as the successor to the German mark imposed financial discipline and secured a low inflation environment, but left fiscal policy as the main tool of economic policy. Budget stability is seen as crucial as the government takes on responsibilities, and the associated costs, from its international overseers.