Kosovo needs $2 billion in near-term aid, US says

By Susan Cornwell

WASHINGTON, March 4 (Reuters) - The newly independent state of Kosovo will need an estimated $2 billion dollars in foreign aid over the next few years, about half of which should be provided by Europe, a senior U.S. official said on Tuesday.

The rest of the money could come from the United States and such institutions as the World Bank and International Monetary Fund, Assistant Secretary of State Dan Fried said. He was testifying before the Senate Foreign Relations Committee.

Helping the fledgling state, which declared independence from Serbia on Feb. 17 with strong backing from Washington, will require top-level attention into the next U.S. administration, Fried said. U.S. President George W. Bush leaves office in January.

"We cannot simply assume that Kosovo is on autopilot and walk away. This is going to take high-level sustained attention through the end of this administration and into the next" said Fried, who is also acting undersecretary of state for political affairs, the State Department's third-ranking position.

Fried stressed the $2 billion was a "crude estimate." To help make Kosovo economically viable, the United States will participate in a major donors' conference on Kosovo in June, he said. He said Congress had already appropriated $350 million in aid for Kosovo.

Backed by Russia, Serbia rejects Kosovo's secession and is instructing the new country's 120,000 remaining Serbs to do the same, worsening the ethnic divide and raising fears Kosovo is heading for de facto partition.

But Fried said there was no evidence Russia was contemplating a military intervention in Kosovo.

"I find that unlikely" given the presence of thousands of NATO troops there, he told Indiana Republican Sen. Richard Lugar, who asked about sabre-rattling comments from the Kremlin.

Kosovo, which has a majority ethnic Albanian population, has been under United Nations administration for nearly nine years following NATO's air war to evict Serb forces and protect Albanians. NATO has over 16,000 troops there, and a European Union law enforcement mission is preparing to go in.

Fried warned leaders in Bosnia not to push for further partition of their country now that Kosovo has seceded. Bosnia's Serb Republic shares Bosnia with a Muslim-Croat federation, but Serb leaders want closer links with Serbia.

(Editing by Cynthia Osterman)