PRISTINA (Reuters) - Two years after Kosovo’s independence from Serbia, increasingly wary Western donors are keen to wean the country from foreign aid and take more resolute steps to fight poverty, crime and corruption.
The landlocked country of 2 million people, mostly ethnic Albanians, is among the poorest in Europe, swallowing 4 billion euros in aid since the war with Belgrade ended in 1999.
It marks its independence anniversary on Wednesday, but economic woes still bear heavily. Donor help accounts for 15 percent of GDP and Finance Minister Ahmet Shala has said Kosovo will ask donors for more aid to fill this year’s budget gap.
Western countries, grappling with their own financial problems, want Kosovo to start developing a viable economy.
“International assistance will continue but this will not be enough to solve the economic problems and start up a real progress of this country,” said Michael Giffoni, the Italian ambassador in Pristina, whose country remains a big donor.
“There is a need to break this vicious circle of dependence on external assistance.”
The economy, driven by exports of metals, cannot generate enough revenue for the government, nor can its labor market absorb some 30,000 youngsters every year. Exports cover only 10 percent of imports, putting pressure on the public finances.
Unemployment stands at 40 percent.
“A Greek organization built my home in 1999 but today our last and only wish is to find jobs for my two sons,” said Naxhie Rushiti, 62, from the village of Raskove, near Pristina, echoing the sentiment of many.
Around 65 percent of the population is under 30 but many of them seek to leave Kosovo for Western Europe, mostly by paying 2,000-3,000 euros to human traffickers.
Deputy Prime Minister Hajredin Kuci told Reuters this week Kosovo would need foreign donors for another 3-5 years, but said that “our aim is not to receive foreign aid for survival but assistance for economic development.”
Sixty-five countries, including Washington and its key European allies, have recognized Kosovo but opposition from Serbia, Russia and China has prevented it from becoming a member of the United Nations.
Constant tensions between Albanians and Serbs, as well as rampant crime, have kept foreign investment away.
“Without a robust legal framework, Kosovo is in danger of turning into a persistently impoverished country and this can go on for decades,” said Marko Prelec, Balkans director of the Brussels-based think-tank International Crisis Group (ICG).
Despite the continuing presence of some 10,000 NATO troops and 2,000 police, judges and prosecutors from the EU, Kosovo remains “a source and a place of transit for organized crime activities,” according to a 2009 European Commission report.
Furthermore, the government still does not control 15 percent of its northern territory where half of 120,000 Kosovo Serbs live and do not recognize Albanian-run institutions.
“If you have no rule of law, public money is misused by officials and then there is no economy and without good economy you cannot fight crime and this circle always continues in Kosovo,” said Engjellushe Morina, director of Kosovo Stability Initiative, a non profit organization.
A decade after NATO bombing drove out Serb forces to stop the killing of Albanians, Kosovo thinks its economy can grow on the back of its mineral wealth - lignite coal, lead, zinc and nickel - and the energy of its fast-growing young population.
The economy should expand some 4 percent this year, more than any other Balkan peer, but experts say Kosovo needs much higher growth to fight unemployment and poverty. The annual per capita income is 1,760 euros while the EU average is 24,000 euros.
Reporting by Fatos Bytyci, additional reporting by Adam Tanner in Belgrade; editing by Zoran Radosavljevic and Dominic Evans