20 December 2007 The Kosovo authorities remain relaxed about a threatened Serbian embargo, but some experts warn about possible energy and food supply problems, the more so as the government has done little contingency planning.
By Arbana Xharra in Pristina
It seems only a matter of weeks before Kosovo, now under UN administration, opts for unilateral independence.
Belgrade has warned repeatedly it will take strong, though unspecified, measures when Kosovo proclaims its independence some time early in the new year. Serbian sanctions against Kosovo are likely to be followed by diplomatic retaliation against some of the countries that recognise the newly-independent state.
William Montgomery, a former US ambassador to Belgrade, has been quoted as saying that Serbian responses could include the establishment of "Serbian-controlled areas in Kosovo ... similar to those set up in Bosnia and Croatia 16 years ago".
Other measures could include protests, closing the roads leading into Kosovo to trade and traffic and cutting the power supply to the province, moves that would also hit Kosovo’s 16,000 strong NATO-led peacekeeping force and the entity’s Serb minority.
Kosovo has been administered by the UN since 1999, when NATO bombing forced the Serbian authorities to withdraw from the territory. Since then, relations between Kosovo and Serbia have been difficult and intensely politicised.
Yet in spite of the tensions and hostility of recent years, Serbia remains Kosovo’s biggest source of imports. According to Kosovo’s Ministry of Trade and Industry, Serbia supplies goods worth about €300 million each year to its breakaway region.
Figures from Kosovo’s Statistics Institute indicate that Serbia accounts for 13.6% of Kosovo’s imports, followed by Macedonia, with 12%. Other trading partners are lagging a long way behind.
Now, reassuring voices are coming from the entity’s UN administration, UNMIK, as well as from the Kosovo government about the territory’s ability to sustain a rift in trade relations with Serbia.
Mechthild Henneke, a spokesperson in UNMIK’s economics department, has told Balkan Insight that the administration “is preparing for anything that can happen regarding an embargo,” but did not want to reveal any details.
Kosovo Government Spokesperson Avni Arifi pointed out that “Serbia has put up different barriers to prevent the development of Kosovo through various instruments since 1999,” but he insisted to Balkan Insight that recent threats from Serbian officials should not be taken seriously.
However, there’s a general fear that an embargo would further damage Kosovo’s already weak economy, which has had to contend with severe electricity supply problems since 1999, with frequent power cuts, especially during the winter.
Due to limited domestic generation of electricity, Kosovo households depend on imported energy, which is largely drawn from the Serbian grid.
Nermine Arapi, a manager for export and import of energy within the Kosovo’s Energy Corporation, KEK, told Balkan Insight that Serbia is the only route through which KEK imports electricity.
Arapi explained that the UNMIK administration reached an agreement with the Serbian authorities in 2001, for energy exchange between Kosovo and Serbia. That agreement applies only in cases when there is a crisis of supply with electricity, which is by no means rare in Kosovo.
“Serbia can cause Kosovo a lot of trouble even if we want to import electricity from other countries, because it has to pass through Serbia’s network”, Arapi said.
She added that other neighbouring countries do not posses large production facilities and suffer from a lack of electricity themselves.
Nezir Sinani, KEK’s spokesperson, told Balkan Insight that Kosovo imports about 15% of its energy from or through Serbia. Sinani explained that this percentage is the annual average and that this can go up to 40% of usage at certain times of the year.
“The electricity was taken mainly during the emergencies”, Sinani said.
Ethem Ceku, Kosovo’s Minister of Energy, believes that Serbia’s threat of an embargo should not affect the energy situation substantially.
“We have a 400-kilovolt transmission line that is connected to Montenegro and Macedonia [and] we have enough generating capacity”, Ceku told Balkan Insight.
Fadil Ismaili from Kosovo’s Electricity Transmission Company says that Serbia uses the 400 kilovolt transmission network of Kosovo to trade energy with other countries.
However, Ismaili explains that due to political sensitivities, Kosovo never benefited from these transfers “because the Serbian electricity network company, EMS, declared the transmission assets in Kosovo as their own property”.
Bearing in mind that 80% of the power that passes through the 400-kilovolt network of Kosovo is transit energy, supplied to other countries, Ismaili argues that an embargo would harm the entire region.
There is a further threat to electricity supplies in the form of power generation in Kosovo itself. Sinani explains that water required for the cooling system of the “Kosovo B” thermal power station comes from Lake Gazivoda, in northern Kosovo, which is under Serbian control. “Kosovo B” supplies over 50% of the electricity used in Kosovo.
“If the Serbs who operate the lake’s facilities decide to cut off the water that supplies the power plants, we will not be able to produce any electricity”, Sinani says.
When talking about Kosovo’s dependence on imported goods from Serbia, Kosovo economic experts predict some short-term problems.
Muhamet Sadiku from RIINVEST Institute says that an embargo might create an initial crisis, but not lasting one because Kosovo has other trade routes and the market is open.
“An eventual crisis could lead to an increase in prices of about 5% but traders have always found other routes to get the goods”, Sadiku said. He added that Serbia will be more damaged by the embargo as its businesses will find their access to the Kosovo market closed.
Kosovo business executives do not believe that a Serbian embargo would affect businesses in any major way. Agim Shahini, president of the Business Alliance of Kosovo, told Balkan Insight that restrictions from Serbia are not something new, as some have been in place since 1999.
“A similar embargo was announced by the Serbian authorities earlier, but it has never really been put into practice”, Shahini says.
According to him, there will always be channels for export and import of goods from Serbia, whether legal or not.
“The smuggling of goods cannot be banned”, Shahini adds.
Muhamet Farizi, the head of the Kosovo Millers’ Association,
says that such an embargo will not have a substantial impact on wheat imports.
“We have three options to import grain through Albania, Montenegro and [via Macedonia] through the Greek ports”, Farizi told Balkan Insight, and explained that bread prices are increasing in Kosovo because they depend on grain prices around the world.
Economists say bread is likely to cost even more if grain has to be shipped through these countries because of longer transport routes and particularly poor roads in the case of Albania.
In the meantime, Kosovo’s government is convinced that it will be able to deal with whatever measures Serbia decides to take when Kosovo becomes independent.
However, when it comes to action, it appears that little has been done. When asked about the issue recently, Naim Maloku, a member of parliament for the junior party in the outgoing administration, the Alliance for the Future of Kosovo, admitted that Kosovo did not have reserves of flour and bread, because of what he called “technical matters”.
Maloku was speaking during the high-profile “Life in Kosovo” television debate, a production of Balkan Insight’s publisher, BIRN Kosovo. He was severely criticised by Xhavit Haliti from the opposition Democratic Party of Kosovo, who condemned the government for having done nothing so far.
Speaking for the government, Arifi remains confident because Kosovo has dealt with similar problems before. He mentions restrictions Belgrade has imposed, such as its refusal to recognise documents issued by Kosovo or UNMIK, its ban on the entry of into Serbia of vehicles that bear Kosovo number plates and its prohibition on airlines’ use of Serbia’s airspace when flying to or from Kosovo.
“A few months ago Serbia’s government banned Serb businesses from selling agricultural products to Kosovo companies” says Arifi, and explains how this has had no little impact because the Kosovo “government made possible the arrival of supplies from other countries”.
Arifi’s words reflect the views of those who say that a new embargo will make little difference. Kosovo hardly exports anything to Serbia, as things are at present. Its imports from Serbia are unlikely to be cut drastically because of the likelihood of smuggling. And much of the expected shortfall can be made up by imports from elsewhere.
“The embargo will not benefit anyone, and in particular not Serbia”, he concludes. (BIRN)
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