First effects of EU sanctions sting Kosovo

Kosovo could lose some €500 million in EU funds by the end of 2023 due to sanctions adopted by the European Union following unrest in the north between Kosovar Albanians and Serbs and Pristina’s non-compliance with demands laid down by Brussels and Washington.

The Alliance of Kosovar Businesses has warned that the sanctions imposed by the European Union would damage Kosovo diplomatically, economically and politically and are one of the most concerning moments since the country’s independence declaration in 2008.

“The Alliance of Kosovar Businesses warned how serious these measures are because they will seriously damage the economy by limiting funds from IPA funds, programs of the European Commission, as well as by suspending the Stabilization and Association Agreement and suspending all bilateral meetings with the EU. The government must come to its senses when it comes to relations with the EU and the US,” the announcement of the group states.

They continued that such measures are unlikely to encourage foreign investment, reducing economic growth and Kosovo’s good reputation.

“If this continues, by the end of the year, Kosovo may lose more than €500 million in export support approved by the EU, and the possibility of postponing the deadline for the start of visa liberalisation for Kosovo is not ruled out,” the Alliance said.

Visa-free movement for Kosovo citizens in the EU was scheduled to start no later than 1 January 2024, but this date could be called into question as whispers of freezing the process as another form of sanction have circulated.

Meanwhile, Kosovo, along with the Republika Srpska in Bosnia and Herzegovina and Montenegro, have been left out of EU grants for projects within the Framework for Investments in the Western Balkans.

The framework is a €1.2 billion joint initiative of the EU, financial institutions and donors aimed at facilitating the socio-economic development and European perspective of countries in the region.

In an announcement this week, Serbia, Albania, North Macedonia and the Bosnian-Croat Federation within Bosnia and Herzegovina will receive funds. Kosovo will not, due to the sanctions levied.

Kosovo previously benefitted from this mechanism since 2009, with more than €1.8 billion being pumped into 30 projects. These include construction, railway rehabilitation, and improving central heating and sewage systems.

It was reported earlier this year that Kosovo had applied for two investment grants and four technical assistance grants under the scheme, which are no longer to be considered for disbursement.

On Monday, Kosovo’s Prime Minister Albin Kurti said the country’s exclusion from the framework and other initiatives was unfair.

“It is about visits but also about temporary measures, which in my opinion are unfair”, adding that the value of the “stuck” grants is around €120 million.

The EU plan for the escalation of the situation in the north of Kosovo includes the withdrawal of the special units of the Kosovo police from the municipal buildings in the north, the relocation of the mayors from the municipal facilities – which are also used by the Serbian parallel structures – to alternative buildings, and the announcement of early elections in the north.

Pristina has agreed to implement the points but has made its stance clear on various matters and has asked for specific measures from Serbia, local Serbs, and internationals, which have, until now, been ignored.

(Alice Taylor | Exit.al)