Serbia should stop servicing Kosovo debt: EconMin

By Gordana Filipovic

BELGRADE (Reuters) - Serbia should stop servicing Kosovo's foreign debt now the territory has declared independence, and instead spend the money on Serbian communities there, Economy Minister Mladjan Dinkic said on Tuesday.

He also warned Serbia risked losing foreign investment because of the political tensions, saying General Motors had cancelled a visit and some Italian companies were discussing selling land they had bought for development in Serbia.

Dinkic, a liberal in a government dominated by nationalist Prime Minister Vojislav Kostunica, said Serbia had to agree with international creditors to stop servicing Kosovo's debt after the Albanian majority declared independence on February 17.

Serbia lost control of Kosovo in 1999 but has continued to service the debt at a cost of some $150 million a year as part of efforts to maintain its claim on the territory.

"Under the circumstances, Serbian taxpayers' money will go to Albanians ... That's insane," he told a news conference at his party's headquarters. "We should save the money and redirect it to strengthen the Serbian communities in Kosovo."

Dinkic conceded the government was not unanimous on what to do with the debt, which the Serbian central bank calculates at some $1.3 billion at the end of 2007.

The money, owed mainly to the World Bank, was allocated to Kosovo in the 1980s when it was an autonomous province of Serbia within what was then Yugoslavia. Dinkic said the issue would be discussed with World Bank officials, due in Belgrade next week.

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