Pristina/Brussels, 19 December 2001: Kosovo cannot look forward to a stable future without economic security. A new ICG report published today, "Kosovo: A Strategy for Economic Development", identifies major structural problems and suggests ways to address uncertainty over the province’s future status to attract investment.

Post-war reconstruction is only part of the challenge. Much of Kosovo’s industry, plagued by mismanagement and starved of investment before the Yugoslav Army campaigns and NATO bombardment, is decrepit and unsalvageable. However there are opportunities in agriculture and manufacturing, with about 100 viable socially-owned enterprises suitable for privatisation. The United Nations administration (UNMIK) should find the nerve to forge ahead with plans already prepared by its Department of Trade and Industry to make these assets more liquid.

Thanks to the ‘parallel system’ that developed during the years of repression in the 1990s, Albanian entrepreneurship was already well developed, and there has been a boom in construction and trade since 1999. But progress on manufacturing and utilities has been disappointing. To retain credibility the international community needs to start delivering, especially on energy, telecommunications, water and roads.

A major problem is the uncertainty over Kosovo’s final status. Potential investors have been deterred because they do not know which jurisdiction will finally apply and they need to be sure that a future change in political status will not put investments at risk.

However ICG Kosovo Project Director Peter Palmer said: “UNMIK can address this issue by providing a guarantee to investors that any final status settlement will include acceptance by the ultimate sovereign of all privatisation decisions taken, and corresponding rights acquired, under international administration.”

This step is both urgently needed and appropriate since UNMIK has restricted the competencies of Kosovo’s self-government institutions – now being set up after the November 2001 elections – to exclude crucial areas of economic decision making.

ICG Balkans Program Director Mark Thompson said: “Given the European Union’s special responsibility for economic development in Kosovo, EU member states should push UNMIK to implement this guarantee.”