PREVIEW: Hard to find where to start in underdeveloped Kosovo

By Fatmir Aliu Jul 10, 2008, 11:43 GMT

Pristina, Kosovo - The European Union holds a donors conference in Brussels on Friday, looking to help Kosovo, the poorest and least developed land to emerge from the violent disintegration of the former Yugoslavia.

But even with some 1.5 billion euros (2.35 billion dollars) expected in pledges, it is impossible to quickly fill all the gaping holes in the foundations of the new country.

The last to be hit by war, in 1999, Kosovo declared independence from Serbia in February and is now looking for aid to push along its transition from a repressed province, to an international protectorate, to a sovereign state.

Though some 40 countries, including the leading Western nations, have recognized Kosovo, Serbia refuses to acknowledge the departure of its Albanian-dominated province and has, with Russia's backing, so far blocked its induction into the United Nations.

Kosovo has a meagre gross domestic product of only 1,800 dollars per capita and even of that one-fifth is foreign aid and another 15 per cent is remittance from the loyal diaspora, mostly in Switzerland and Germany.

The modest economic growth of roughly 3 per cent annually can do little to help with the burning problem of unemployment, currently running at 30-40 per cent of the workforce in the nation of two million, 90 per cent of whom are Albanians.

The unemployment issue is aggravated by the highest-in-Europe birthrate, which delivers up to 30,000 adults to the moribund labour market every year. On top of that come some 120,000 pensioners and 50,000 families on welfare.

The Brussels donors conference seeks funding for some 600 energy, infrastructure, education, health and agriculture projects. Experts have criticized the list, saying at least some industrial projects should have been included.

'The government should first and foremost look at mid-term industrial development, where jobs can be generated,' said Rrustem Aslanaj, a professor of economics in Pristina. 'After all, our unemployment rate is the highest in Europe.'

However, it is also obvious that it is very difficult to pick priorities in Kosovo with limited funds in hand, particularly as donations dwindled since NATO intervened against Serbia to effectively remove Belgrade's control over Kosovo in 1999.

The territory, itself de facto firmly divided into the Albanian south and the Serbian quarter of the land to the north, has snowballed its trade deficit to nearly half of its GDP, according to International Monetary Fund estimates.

Many families in Kosovo depend heavily on small-scale agricultural production and about one-quarter lacks running water. One out of every three Kosovars is poor and 15 per cent are 'extremely poor' by World Bank standards.

The problems persist stubbornly as, amid uncertainties over Kosovo's future, foreign investors continue to avoid the territory.

Aggravating the situation further is the strength of organized crime, which has cemented its activities in the chaotic protectorate with porous borders since 1999.