Wednesday, May 31, 2006

"Unrealistic" Serb positions on Kosovo, charges UN envoy

Vienna - Deputy UN Kosovo envoy Albert Rohan charged Belgrade on Wednesday with defending "unrealistic positions" in the current Kosovo status talks.

But the Albanian side should also be more willing to compromise in the talks on the Serbian province of Kosovo which has been under UN administration since 1999, Rohan said in the newspaper Die Presse.

His interview was in in advance of the latest negotiating round in Vienna on Wednesday.

In the negotiations in Vienna up till now, there had in part been considerable agreement on practical issues. But the two sides' concepts were "totally different," said Rohan.

"The Serb side would like a Serb entity in Kosovo composed of majority Serb communities and Serbian Orthodox churches and monastries."

The Kosovo-Albanians, on the contrary, were in favour of measures protecting the Serb community, but only within the course of a normal decentralization process, and of protection for churches and monastries.

Rohan also commented on a letter by Belgrade complaining about the Kosovo negotiations so far to the foreign ministers of the United States, Russia, Britain, Germany, France and Italy.

The letter demanded that the basic question of the status of Kosovo be discussed immediately, and practical issues only afterwards.

Rohan said: "We regard this letter more as a tactical move by Belgrade to divert attention from the fact that faster progress is foundering on lack of willingness to compromise, above all on the Serb side."

He also pointed out that the schedule and issues of the negotiations were the exclusive responsibility of UN chief envoy Martti Ahtisaari.

On Tuesday, Kosovo turned down Serbia's proposal that it remain under United Nations auspices during a 20-year transition period. Pristina said it would not back away from its bid for full independence.

Describing Belgrade's offer as an "unacceptable offer for tutorship," Pristina's deputy premier Lutfi Haziri said that Kosovo "will not make a compromise over independence."

EU Launches Project To Help Kosovo's New Justice Ministry

PRISTINA, Kosovo (AP)--The European Union is launching a project to help Kosovo's fledging justice ministry, officials said Wednesday.

The program, worth EUR2 million, will offer the ministry help from foreign and local experts over the next 18 months, an E.U. statement said.

The U.N. mission, which has administered Kosovo since mid-1999, is in the process of transferring authority over judiciary and police to the local authorities as it reduces its presence, and hopes to turn over some other responsibilities to a possible E.U.-led mission once a decision on the province's future is reached.

In a report published Tuesday, New York-based Human Rights Watch criticized the province's criminal justice system as ineffective and warned it was posing a threat to Kosovo's future stability. The watchdog cited authorities' failure to address key problems with legislation, police and the courts.

The U.N. has administered Kosovo since a 1999 NATO bombing campaign halted the Serbian crackdown on independence-seeking ethnic Albanians.

Serbia wants to retain at least formal control over Kosovo in the future while the province's ethnic Albanians insist on gaining independence.

U.N.-mediated talks to resolve the issue are expected to reach a settlement by the year's end. [ 31-05-06 0928GMT ]

Police commissioner denies Kosovo is a black spot for crime

Text of report by Radio-Television Kosovo TV website on 30 May

As long as I have been working with the Kosova [Kosovo] Police Service [KPS], I have never noticed a decision that was made under the influence of politics. On the other hand, politicians must understand that they cannot interfere in the police, because political constellations change in the elections, while the police remain, UNMIK Police Commissioner Kai Vittrup said.

It is very important that neighbouring countries have started to trust Kosova and that Kosova is not a black spot of crime, but a place where the police fight crime seriously, Vittrup added. He said that the KPS needs the advice of international experts in some sectors while in other sectors also executive intervention. Regarding the risk of enclavization of the police service, Vittrup said that the police are looking for professionals and that we do not care about their nationality. Rather than more competencies, we need experienced police officers who will help fight organized crime. In order to be more successful in fighting economic crime, corruption and other forms of crime, the police need greater support from citizens.

Contact Group urges Standards improvements in Kosovo

Text of report by Radio-Television Kosovo TV website on 30 May

During its last meeting in Paris the Contact Group decided to call on Belgrade to change its negative policy towards the Serb minority in Kosova [Kosovo], to again encourage them to join Kosova institutions, and to return to Pristina the cadastral documents that were removed in 1999.

According to UNMIK [UN Interim Administration Mission in Kosovo] chief Soeren Jessen-Petersen, the Contact Group will ask Belgrade to change its very negative policies towards the Kosova Serbs, which make them choose between Belgrade and Prishtina. Regarding the 13 points [concerning Standards] for Kosova [Kosovo], Petersen said this should not come as a surprise to the Kosova government since they have come from the UNMIK [United Nations Interim Administration Mission in Kosovo] technical report for the implementation of Standards and have been identified by both the Kosova government and the international institutions in Kosova. This is not a new list, but focuses on a number of key points where additional progress can be made in Standards implementation, UNMIK chief Soeren Jessen-Petersen concluded.

Source: RTK TV website, Pristina, in Albanian 30 May 06

UN braced for Serb exodus from Kosovo - report

BELGRADE, May 31 (Reuters) - The U.N. has contingency plans for an exodus of thousands of Serbs from Kosovo in the event that the majority Albanian province wins independence from Serbia in talks this year.

According to the Belgrade daily Politika, the United Nations High Commissioner for Refugees (UNHCR) is braced for up to 70,000 leaving the province if Serbia loses sovereignty.

Despite Belgrade's strong opposition, Kosovo is widely expected to win independence in U.N.-mediated talks that began in February and could finish within the year.

A UNHCR spokeswoman told Reuters an internal document did exist, in order to "be ready to help a certain number of people who may be affected by a decision". But she declined to divulge details of the plan.

"Extending assistance is a logistical operation and the aim of such plans is for the organisation to be ready to provide protection if it proves to be necessary. It is possible that nothing happens at all," the UNHCR's Vesna Petkovic said.

Politika quoted the plan as saying Kosovo's independence "could provoke further political instability and civil disturbance and result in fresh movements of minorities from Kosovo towards the Serbia and Montenegro interior".

Even if Kosovo gets independence without large-scale violence "it is expected that 57,000 people would change their place of residence, of which around 33,000 would come to Serbia," Politika quoted the contingency plan as saying.

But if Albanians attacked Serbs, as many as 70,000 could seek safety in Serbia, it forecasts.


On Tuesday, Serbia-Montenegro Foreign Minister Vuk Draskovic warned major Western powers not to force Kosovo's independence on Belgrade, predicting "turbulence" across the Balkans if it was amputated from a sovereign Serbia.

There are around 100,000 Serbs left in Kosovo. An exodus on the scale foreseen would leave only pockets of Serb land.

Outnumbered 20-1 by two million ethnic Albanians, many Serbs say they would simply leave Kosovo, the territory considered Serbia's religious heartland dating back 1,000 years.

NATO bombed Yugoslavia in 1999 to drive out Serb forces and halt the killings and ethnic cleansing employed by Belgrade in a two-year war with Albanian separatist rebels. An estimated 10,000 ethnic Albanians died and 800,000 fled.

As Western alliance forces deployed, about half of the Serb population in turn fled a wave of Albanian revenge attacks.

Those who stayed on have become increasingly marginalised. They fear for the future and point to NATO's failure in March 2004 to prevent Albanian mobs from overrunning Serb enclaves, torching homes and churches. Nineteen people died in the riots.

The United Nations and a 17,000-strong NATO peace force stationed in Kosovo say a repeat is impossible.

Politika said the UN plans three contingencies: independence within current borders, autonomy within Serbia, and independence for Kosovo below the River Ibar, partitioninig the Serb-dominated north.

Major powers have ruled out partitioning Kosovo but there are indications that contingency plans exist for a breakaway attempt by Serbs in the divided city of Mitrovica. (Additional reporting by Beti Bilandzic)

Bosnia Serb PM drops talk of independence vote

BANJA LUKA, Bosnia, May 31 (Reuters) - Prime Minister Milorad Dodik on Wednesday dropped the idea of an independence referendum for his Bosnian Serb Republic, saying there was no international backing for its secession. "I am not an adventurer and I am aware that there is no support now for a referendum for the secession of Republika Srpska from Bosnia, nor is there a possibility that it would be recognised," he told reporters.

An independence referendum is promoted by a small group of Serb nationalists unhappy at sharing a state with Muslims and Croats they fought in the 1990s.

Their campaign got a boost when Montenegrins voted on May 21 to end their union with Serbia. Together with a probability that Kosovo Albanians will gain independence from Serbia this year, this has got some Serbs asking why them and not us?

Dodik, considered a moderate who adheres to the Dayton Accords that created Bosnia's two-part state after war ended in 1995, was criticised for making statements recently that seemed to endorse that the Serbs could vote themselves out of Bosnia.

Western envoys rejected the idea warning that major powers would not tolerate any threat to Bosnia's integrity as a state.

"There is no possibility for a referendum of this type in Bosnia and Herzegovina," deputy peace overseer Larry Butler told reporters on Wednesday.

It would violate the country's constitution and Dayton.

The Serb National Movement, a minor organisation made up of dozens of Serbs forced out of Croatia in 1995, said this week it had collected nearly 50,000 signatures of Serbs across the country for a petition to demand an independence referendum.

But since it cannot launch an initiative for a referendum in the parliament, the small Radical Party challenged Dodik to put the issue on the agenda and prove he was serious.

Dodik's political rivals had dismissed his remarks as pre-election rhetoric. But observers warned the idea could get wider support following harsh comments by Muslim parties and organisations who called for the abolition of the Serb Republic, saying it was built on ethnic cleansing and mass murder.

"Sarajevo needs to accept that Republika Srpska was not based on genocide and crime," Dodik said. "It was created in 1992, and these events took place later."

Serbs, Albanians argue over money in Kosovo talks

VIENNA, May 31 (Reuters) - Serbs and ethnic Albanians clashed over money on Wednesday at direct talks on the fate of the breakaway province of Kosovo, swapping demands for war reparations and the repayment of loans.

Discussion focused on how to divide state property and debt, the latest in a series of "technical" issues the United Nations wants addressed before tackling the Albanian majority's demand for independence, possibly in July.

Officials from the World Bank, International Monetary Fund, and the U.S. Treasury sat in as delegations locked horns over Kosovo's share of Serbia's external debt and a U.N.-run privatisation drive Belgrade says amounts to state plunder.

"The talks were very hard, and not very well prepared by UNOSEK," Serb negotiator Aleksander Simic said, adding to growing Serb criticism of the U.N. mediating team led by chief envoy Martti Ahtisaari.

Ahtisaari opened direct talks between Serbia and the Kosovo Albanians in February, seven years after the U.N. took control of the southern Serbian province with the end of the 1998-99 war in which 10,000 Albanians died.

Serbia says it is repaying 1.2 billion euros ($1.55 billion) of loans for state firms and projects in Kosovo while the firms that benefited are being privatised by the United Nations and Serbia sees none of the proceeds.

Belgrade says this is costing 100,000 euros a day.

Kosovo's 90-percent ethnic Albanian majority has indicated it is ready to take on its share of the debt to the World Bank and Paris and London Clubs, but only in cases where they know how the money was spent.

They do not like the idea of paying for a decade of discrimination culminating in a brutal counter-insurgency war in which whole villages were razed and 800,000 Albanians forced from their homes.

"We need precise data from creditors to define the external debt Kosovo has to take on," Kosovo Albanian negotiator Skender Hyseni told reporters.

The Kosovo Albanians also demanded war reparations from Serbia, ignoring U.N. warnings against raising the issue for fear of bogging down the talks.

"We know if they raise this there will be other intractable issues that Belgrade could then raise," a U.N. official engaged in the talks told Reuters.

Serb negotiators said they had demanded that Ahtisaari's deputy Albert Rohan halt the "illegal" U.N.-led privatisation of hundreds of state firms in Kosovo, a drive U.N. officials say is crucial to reviving the moribund economy and creating jobs.

"He said it wasn't in his mandate," Simic told reporters.

U.N. officials say the series of one-day meetings serve as an opportunity for the two sides to present their platforms before Ahtisaari's team drafts a compromise deal.

Serbs, ethnic Albanians fail to define Kosovo's economic status

VIENNA, Austria (AP) - A sixth round of talks between Kosovo's ethnic Albanians and Serb officials on Wednesday failed to produce an agreement on the disputed province's future economic status.

The latest round of U.N.-brokered talks on Kosovo's legal status focused on its debts, liabilities and investments, privatization issues and the future ownership of key industrial assets, said Albert Rohan, a U.N.-appointed mediator.

He described the meeting as fruitful, but added that "whatever the final status of Kosovo might be ... there will be some sort of division in (economic issues)."

Kosovo was placed under U.N. administration in 1999 following NATO air strikes that ended a Serb crackdown on separatist ethnic Albanians.

Stefan Lehne, an EU envoy who also mediated the talks, has said the Kosovo Albanians accepted sharing Kosovo's foreign debts with Serbia "on the basis of identifiable final beneficiary."

The multibillion-dollar international debt was inherited from the former six-republic Yugoslavia.

Both Serbia and Kosovo were integral parts of the former federation, and in the 1970s and 1980s, millions in international loans from the World Bank or the so-called London and Paris Clubs of investor countries, were allocated by former Yugoslav and Serbian governments for the development of Kosovo's industry and infrastructure.

Skender Hyseni, a key Albanian negotiator, said the two sides would now try to determine what amounts would have to be allotted to cover each portion of the debt. "We will accept any reasonable and identifiable debt."

However, ownership issues and privatization remained the key stumbling block.

Serbia still claims ownership of almost all major assets in Kosovo, including power plants, mines and a number of factories.

Many assets have been sold to private owners under the auspices of the Kosovo Trust Agency, a U.N. entity responsible for privatizing mainly inefficient and dilapidated enterprises.

Privatization is a sensitive issue in Kosovo. The process is complex because it is unclear whether Kosovo will become independent or remain part of Serbia, Lehne said.

Serbian negotiator Leon Kojen said the two sides had "little agreement" on the privatization and ownership issue "and as things stand now there's little hope for future agreement."

The Serbian government has bitterly opposed privatization in Kosovo claiming it was undertaken illegally and that lucrative assets were sold at rock-bottom prices.

"Kosovo's property belongs to its government and its people," Hyseni said. He also added that his delegation demanded compensation from Serbia for "victims of violence and injustice" -- a reference to the bloody 1998-99 conflict that left much of the province in ruins.

International mediators, ethnic Albanian and Serbian delegations welcomed the adoption of a protocol on the return of refugees, which was approved by the Kosovo government in Pristina on Wednesday. The document envisions the right of refugees to return to their homes in the province, but it also allows them to go to other places of their choice.

The sixth Vienna meeting followed five rounds of largely futile discussions on reforming Kosovo's local government and on allowing the province's Serb minority to run its affairs in areas where they form a majority. Last week, both sides agreed over the protection of Serbian Orthodox religious sites in the province.

U.N. mediators led by former Finnish President Martti Ahtisaari are expected to call in July for direct talks on the province's future.

Albania voices commitment to Stability Pact, calls for Kosovo's independence

Text of report in English by Albanian news agency ATA

Tirana, 31 May: "Albania is totally committed to the Stability Pact", Deputy Foreign Minister Edit Harxhi said during the proceedings of the Eleven Stability Pact meeting. The meeting, which held its proceedings in Belgrade, was attended by top officials from the region, the European Commission and the donor countries.

According to an announcement on Wednesday [31 May] of the Foreign Ministry, Harxhi in her speech "supported the initiatives taken for putting regional responsibilities in the limelight in the activities of initiatives and regional processes and the need of strengthening the coordinative role of the pact, with intention to avoid duplications and the superposition of the activities of regional multilateral initiatives".

Speaking on Kosova [Kosovo] issue, Harxhi said: "Albania hails the Stability Pact's initiative to include Kosova in its projects as a partner with equal rights in the region and wishes these initiatives proceed even in the future." In regard to Kosova's status, Harxhi stressed that "the independence will not only stabilize the region further, but it will also ensure long-term peace, security and total cooperation in the region".

The participants in the meeting confirmed the European perspective of the region, determining the integration into the EU as the final goal. One of the topics where the meeting focused was the future of Stability Pact responding to new developments in the region. The participants stressed the need for the continuation of the process of taking greater responsibilities from the countries of the region and the gradual passage of the Stability Pact into a mechanism of greater regional profile. The meeting determined the need of focusing regional cooperation on some main fields, such as economic and social development, infrastructure, justice and internal issues, cooperation in the field of security and building up of human capacities.

The regional meeting decided the setting up of the Council of Regional Cooperation, which will assume the responsibilities of the regional meeting and of the pact's working meetings at the beginning of 2008. The meeting acknowledged the considerable progress in the integration of Kosova into regional activities and extended a call for the strengthening of this connection in the future.

Source: ATA news agency, Tirana, in English 1712 gmt 31 May 06

Tuesday, May 30, 2006

UNMIK head expects first Kosovo-Serbia direct status talks to start end July

Text of report by Fatmir Aliu entitled "Jessen-Petersen: July - month of Prishtina-Belgrade meetings" published by the Kosovo Albanian newspaper Koha Ditore on 26 May

Prishtina [Pristina], 25 May: Soeren Jessen-Petersen, chief of the international administration in Kosova [Kosovo], said that it is very likely that the first direct meeting on the Kosova status between the leaders of Prishtina and Belgrade will be held at the end of July. But according to him, in order to reach this point, the central institutions should continue to fulfil the Standards according to this pace.

Jessen-Petersen, who travelled to Paris on Thursday [25 May], where he will meet political directors of Contact Group member states to arrange the positions on the path that awaits Kosova in the coming months, said that the status negotiations will not be held without the presence of the UN special envoy for Kosova, Martti Ahtisaari (UNOSEK).

But initially, according to him, there are some steps that will precede this great event.

"On 20 June, I will report to the [UN] Security Council, and most probably Ahtisaari will have a closed meeting at the Security Council in July, where he will report about what has happened in Vienna so far, but also about developments in Kosova. Based on these reports, he will suggest the path that should be pursued," he said. Jessen-Petersen added that "it is reasonable to expect that after these steps, he will request the first direct meeting on the issue of the status, naturally with UNOSEK, to take place before the end of July".

Although the first report on the technical evaluation of Standards fulfilment, which was published for the first quarter of the year, has a considerable number of positive "marks", Jessen-Petersen said that after 10 days there will be more data that will determine whether or not the status talks will be launched. The chief of the UN Mission in Kosova did not hide his optimism that there will be sufficient progress to include this issue on the agenda.

The Contact Group, in cooperation with the Kosovar institutions, has also come out with a number of objectives, which should be fulfilled in the plan of Standards, as trump cards that would give Kosovars more space for arguments during the talks.

These 13 points, according to the UNMIK [UN Interim Administrative Mission in Kosovo] chief, could be achieved only if there is sufficient political will. He announced that these 13 "requests" will be evaluated in Paris on Friday.

"The Contact Group has also requested another 13 to 14 other goals that should be fulfilled before 20 June or before the end of June. This is something that will be discussed in Paris tomorrow," he said.

At the tomorrow's meeting in Paris, diplomats of the Contact Group, according to earlier announcements, are expected to examine the work of the Kosovar institutions so far in the sensitive areas of Standards, which are mainly related to minorities. This is also expected to be followed by an evaluation of the process in Vienna and the course of the talks on technical issues.

Source: Koha Ditore, Pristina, in Albanian 26 May 06

Albania launches international tender to build road segment

TIRANA, Albania (AP) - Albania invited national and international companies on Tuesday to bid on contracts worth up to 6.7 billion leks (US$73 million; euro57.2 million) to build a 30-kilometer (18.6 miles) road to neighboring Kosovo, the Transport Ministry said.

The construction of Kalimash-Morine, 200 kilometers (124 miles) northeast of capital Tirana, will be financed with loans from the European Bank for Reconstruction and Development and the European Investment Bank. Construction is expected to begin within the next few months and end in 18 months.

That is part of the 170-kilometer (105 miles) road linking the Albanian port city of Durres with the Morine border crossing point to Kosovo, the ministry said in a statement.

Kosovo is important to Albania because most of the tourists visiting the western Balkan country are ethnic Albanians from Kosovo and Macedonia as well as expatriate Albanians returning from other parts of Europe.

Rights Group Says Kosovo's Justice System Fails Victims

PRISTINA (AP)--Kosovo's criminal justice system is failing the victims of this disputed province and threatens future stability, Human Rights Watch said in a report published Tuesday.

In a 74-page report, Human Rights Watch said that in the nearly seven years since the U.N. took over administering Kosovo, authorities have failed to address problems with the laws, police, and courts.

"Right now, accountability for the past crimes is not on the agenda in Kosovo" Holly Carter, the group's Europe and Central Asia director, said in a statement. "But resolving Kosovo's status without fixing the justice system will poison its future."

The report is a blow to U.N. efforts to establish a stable and democratic society in the ethnically divided province. While Kosovo has a government and fledgling ministries of justice and police, the ultimate responsibility lies with the world body as it steers the province.

Neeraj Singh, the spokesman for the U.N. in Kosovo said the mission welcomed the report's recommendations for improving what he called "the evolving criminal justice system in Kosovo."

The U.N.-mediated talks to determine Kosovo's future status are currently underway in Vienna, Austria and western envoys aim to finish the process by the end of 2006.

The most likely outcome of these talks is some form of independence for Kosovo, on the condition it can protect Serbs and other minorities, in the ethnic Albanian majority province.

The U.N. has administered Kosovo since 1999, after a NATO air war halted a Serb crackdown on separatist ethnic Albanians. About ten thousand people were killed and hundreds of thousands ethnic Albanians were displaced before the war ended.

After the war, it was the Serbs who fell victim to vengeful ethnic Albanians.

The worst violence was in March 2004, when two days of anti-Serb rioting left thousands homeless, at least 600 Serb homes and some 30 churches burned, and about 4,000 people - mainly Serbs - were forced to flee.

An estimated 50,000 ethnic Albanians participated in the rioting and 426 individuals were charged - mostly for minor offenses - with half resulting in final decisions, the report said.

"The inadequate criminal justice response to violence in March 2004 symbolizes one of the greatest problems faced by Kosovo today: rampant impunity for crime, particularly where it has political or ethnic dimension," the report said.

As a result, neither ethnic Albanian majority nor Serbs and other minorities, view the criminal justice system as effective, according to the report.

Singh defended the U.N.-run courts and said the "accountability for war crimes and interethnic crime is firmly on the agenda."

The report urges major powers for the E.U., which plans to take on some executive roles in the fields of justice and police after the U.N. administration leaves at the end of the status talks. [ 30-05-06 1140GMT ]

Contact Group formulates new demands for Kosovo and Serbia

Text of report by Kosovo Albanian television KohaVision TV on 29 May

[Announcer] The meeting of the Contact Group member countries and UNMIK [United Nations Interim Administration Mission in Kosovo] chief Soeren Jessen-Petersen in Paris produced several demands for Prishtina [Pristina] and Belgrade. In the meeting, which was held last Friday [26 May], the participants discussed implementation of the Standards [set for Kosovo by the international community] by the Kosova side, as well as Belgrade's obligations towards the Kosova Serbs.

[Reporter Blerta Dalloshi] The Contact Group has asked Kosova institutions to make more progress in the 13 points dealing with Standards the Contact Group has assessed that not enough progress has been made said UNMIK chief Jessen-Petersen in a meeting with Kosova Deputy Prime Minister Lutfi Haziri, informing him in detail of the points discussed. He said the Contact Group did not make any new demands but, after the technical assessment of Standards by UNMIK, it formulated new challenges for Kosova institutions.

[Soeren Jessen-Petersen, in English throughout with Albanian voiceover] So it is really not about new demands but rather the focus on key issues. We believe more progress can be made. We did this together and it does not come as a surprise to us.

[Reporter] Deputy Prime Minister Lutfi Haziri thinks the points listed by the Contact Group where more progress is sought are achievable.

[Lutfi Haziri] So far we have not had any unattainable demands. These have to do with the role of the [Kosovo] Assembly in adopting new laws; the role of the government, institutions and Kosova people in taking necessary action in order to provide further proof that the Kosova institutions are ready to assume responsibility for the full functioning of law and order and respect for ethnic groups that are part of our diversity and part of Kosovar values.

[Reporter] The Contact Group discussed the need to send Belgrade a number of messages concerning their responsibilities.

[Jessen-Petersen] There are specifically three points; Belgrade needs to encourage the Kosova Serbs those who wish to be engaged, and there are many; they have been waiting for this for two years. Second, Belgrade needs to give up the policy under which they ask Serbs to choose between Prishtina and Belgrade. Third, for 15 months we have requested Belgrade to return cadastral registers which are also important for Kosova Serbs. So I believe the Contact Group will make these demands to Belgrade.

[Reporter] Participating in the last meeting of the Contact Group was also the deputy UN special envoy for Kosova status talks, Albert Rohan. The group did not take into consideration Belgrade's request for changes to the agenda of discussions on Kosova's status.

Source: KohaVision TV, Pristina, in Albanian 1700 gmt 29 May 06

A decision on the province's independence may unlock a tide of investment

In the shadow of the Bjeshket e Nemuna, the Damned Mountains of western Kosovo, sits a small factory that slices, fries, spices and bags 100 kg of potato crisps an hour under the domestic brand name of Luko Chips.

Luko, the company, boasts assets of which most small businesses in Kosovo can only dream: free access to western technical expertise, a ready supply of fresh raw materials - four locally-grown varieties of potato - and investments of Euros 110,000 from a charitably-motivated Swiss owner who plans a distribution of shares to workers this year.

Luko's production line, overseen by polyglot managers in white coats, is orderly and clean and the company has succeeded in forming regular partnerships with local suppliers. Well-managed local production does, in fact, exist in Kosovo.

But the scarcity of such examples is a perennial concern for economists, who note that domestic businesses' overwhelming preference for small-scale, import-based trade and services - rather than production and export - contributes to a gaping trade deficit. In 2004, this ballooned to 41 per cent of gross domestic product.

With the province's current account deficit rising to 31.5 per cent of GDP last year, according to a World Bank estimate, a heavy burden of maintaining financial stability still falls to foreign donors, whose sizeable contributions are backed up by remittances from a robust Kosovo Albanian diaspora that sends home some Euros 350m (14 per cent of GDP) annually.

Kosovo's post-war economy has neither grown nor shrunk significantly since 2001, in spite of massive inflows of aid and remittances, plus rapid growth in local commercial and household lending.

Many companies, including Luko with its distinct advantages, struggle to turn a profit. "I cannot pretend this is a favourable environment," says Jan Stiefel, Luko's general-director.

The view from dusty Gurrakoc, where the potato chips factory is located, and the hundreds of other sleepy towns where most of Kosovo's population lives, contrasts sharply with the view given by elected officials in Pristina.

The politically-minded capital is buzzing this year with predictions of imminent independence, seven years after Serbia withdrew its forces from the rebel province. Local politicians routinely promise economic renewal if and when the province's secession becomes final. Independence, they argue, would allow Kosovo to capitalise directly on an ongoing privatisation process that has so far attracted Euros 240m in investment, revenues from which are held in a trust fund outside the province in the absence of sovereignty.

World Bank economists cautiously echo this view, calling Kosovo's unresolved status "the major deterrent to private-sector growth" although bank officials cite "heavy pressure" from the United Nations diplomats in charge of Kosovo not to publicise this opinion.

Soren Jessen-Petersen, special representative at the head of Kosovo's UN-run administration, says economic expectations should not be linked explicitly to the status issue.

"The lack of status is a major obstacle to foreign direct investment," he says, but adds: "The short term will be extremely difficult. You do not just raise the flag one day and the investors arrive the next day."

Whatever Kosovo's political status may be 12 months from now, those investors already on the ground say that everyday barriers are the primary obstacle to economic growth.

Ironically, some of the greatest difficulties are found in areas where Kosovo claims comparative advantages.

For example, UN and World Bank officials describe Kosovo's mineral and energy resources as critically important for its economic future. But the lack of a reliable electricity supply still forces companies to depend on their own power sources.

The potato chips factory in Gurrakoc, in typical fashion, powers everything - from production lines to the head office's fluorescent lights - using a diesel generator. The fuel costs drain a company whose monthly revenues fall just narrowly short of running costs.

Luko has addressed this typical problem in an innovative way. Pushed to cut spending in the face of soaring fuel prices, it last year started recycling sunflower oil by mixing it with diesel to run the generator.

Staffing problems are also rife. Companies report severe difficulties finding skilled workers, although an estimated 35 percent, possibly more, of the province's workforce is unemployed. Companies are flooded with applications, but recruiters complain that most job-seekers lack a standard high school education - a sad legacy of Serbia's blockade against Kosovo's home-grown schools during the 1990s.

Security also remains a problem. Some foreign investors complain privately about threats or intimidation by local rivals.

Even some pro-independence analysts say that the greatest obstacles to Kosovo's economic growth are practical and technical, rather than political.

"Kosovo is not a big economic problem. Believe me, it is easy to manage. You just need rule of law, better infrastructure and improved education for this big, young population," says Muhamet Mustafa, president of Riinvest, a leading economic research group in Pristina.

Citing the case of Estonia, Mr Mustafa notes that Europe's smallest, poorest transition economies were the quickest to emerge as success stories after the Soviet empire's collapse. Whether Kosovo can follow suit in the wake of Yugoslav rule - plus seven years of international guidance - remains to be seen.

Natural riches aplenty

Near the historic Field of Blackbirds, scene of the epic 1389 battle at the heart of Serbia's modern claim to Kosovo, two vast coal pits puncture the hilly ground.

The miners here carry a burden from the more recent past: the former Serb-dominated regime, pressed by international sanctions in the 1990s, scraped out a few hundred tons of lignite each year without investing in maintenance or removing enough topsoil.

The result today is a looming danger of fatal collapses, as the ethnic-Albanian authorities who now operate the 50-year-old mines try to extract the last six or seven years of supply for Kosovo's aged lignite-fired electrical generating stations.

But the remaining work at these mines - like the portable generator sets that chug through the afternoon hours in nearby Pristina and other cities throughout the province - is only a stopgap measure, according to Lorik Haxhiu, mining director at the provisional energy and mining ministry, which manages power supplies under United Nations supervision.

Lignite, or soft brown coal, could give the mostly ethnic-Albanian province, which hopes to gain legal independence from Serbia around the end of this year, a sustainable source of electrical power for the next two centuries or more.

"This is the third richest lignite basin in Europe, after the reserves in Germany and Poland," says Mr Haxhiu, standing over the Mirash pit and pointing northwards, where the same lignite vein stretches for a further five kilometres.

A report by the International Monetary Fund (IMF) earlier this year added impetus to the "lignite initiative" and could help to secure the large-scale private-sector investments needed to transform Kosovo's energy sector from makeshift to state of the art.

Kosovo C, the planned 2,000 MW generating station for which construction is meant to start in 2008, will propel Kosovo into the age of "clean coal" power, produced in line with European Union standards, energy officials say.

The nearly Euros 1bn project, in conjunction with an upgraded Kosovo B plant and a few modest dams to generate hydroelectric power, will cover the new country's energy needs and leave spare capacity for exports around the region.

The station will also generate Euros 150m per year for the state budget and spur growth throughout the economy, says Ethem Ceku, minister of mining and energy.

In the meantime, however, the cash-strapped Kosovo Electricity Company (KEK) is floundering, and officials wonder how to set the ambitious lignite initiative in motion.

Today's funding shortfalls are likely to hold up the construction of Kosovo C. "We can't do it without more money," says Shefqet Avdiu, manager of KEK's power generation division.

Costly emergency repairs have restored less than half of nominal capacity at the existing Kosovo A and B plants, while energy imports from Bulgaria, Serbia and other neighbours are draining around Euros 30m per year from Kosovo's modest budget. This is nearly double the amount allocated, leaving donors to make up the rest, Mr Avdiu said.

In the seven years since Kosovo slipped from Serbian control, international agencies have reportedly pumped more than Euros 1bn into the energy sector without preventing power cuts or weaning towns and industries off portable generators. Electrical failures have become one of the local population's loudest complaints against the UN interim administration.

While Kosovo A should have been retired years ago, plans call for keeping Kosovo B alive at least until 2023, so that the proposed new Sibovc lignite mine will be vital "even to keep up with refurbishments", Mr Haxhiu says.

Opening the new pit - including buying land, resettling villagers, laying down roads and installing new bucket excavators - will cost Euros 237m, part of the ministry's Euros 1.2bn estimate for "immediate investments" prior to starting Kosovo C.

Future development plans all hinge on revenue from KEK bill collections, as would be expected from any normal electricity company. KEK, however, collects on barely 40 per cent of the bills it issues. This is a great improvement on the comparable figure of just over 30 per cent a year ago, but far from enough to address the state-owned power company's debts of more than Euros 200m from the past five years.

In December, the authorities introduced the "ABC" system, tying hours per day of electrical supply to each district's payment record. Despite the logic of "less payment, less service," the result has been collective deprivation for whole communities.

Kosovo's ethnic-Serb enclaves - which still largely refuse to accept KEK, treating it as an arm of the ethnic-Albanian provisional government - all fall into the "C" category for the worst payment record. Many Serbs, however, say that no one has brought them a power bill since 1999.

The authorities have set a target of 90 per cent collection by 2008, before "first fire" at Kosovo C.

Big paying customers such as the recently privatised Ferronikeli nickel works will help to stabilise KEK's revenues, Mr Haxhiu says.

Normal bill collection from the public, meanwhile, would put a brake on thoughtless energy consumption, so that KEK can ramp up the power supply at a steady 5 per cent per year after 2013, when the new plant comes on line, he says. But he adds: "If there's not 90 per cent collection by 2013, we don't know what to do."

Minimum standards of safety remain elusive - HUMAN RIGHTS: The threat of ethnic violence is never far away, says Eric Jansson.- The Financil Times

Few Serbs can forget the jumpy young man who scaled the Church of St Andrew in Podujevo two years ago.

Thousands of times, television screens across Serbia - including the beleaguered Serb enclaves in breakaway Kosovo - have replayed the videotape. It shows the man climbing to the burning church's rooftop and attacking a metal cross - tugging, twisting it until it crashes down, to the delight of a crowd of ethnic Albanians in the churchyard below.

The unidentified man generated an iconic image of the pogrom that swept through Kosovo in March 2004. The three-day orgy of violence pitted tens of thousands of rioters against minority communities, Serbian Orthodox churches and their United Nations and Nato protectors.

The damage toll catalogued afterwards in a report from Kofi Annan, UN Secretary-General, listed 19 people killed, 954 injured, and 730 houses and 36 religious sites destroyed, some containing priceless examples of ancient Byzantine Christian art.

"The March riots" remain a vital reference point for diplomats and Nato military commanders gauging the probability of a sudden return to violence.

Since then, Kosovo's secessionist leaders have struggled to persuade others of their commitment to the safety and human rights of minorities in Kosovo amid discussions about possible independent statehood.

"There will be no repeat of March 2004. The citizens are aware how much damage an event like that can cause," says Fatmir Sejdiu, president since March this year.

But many observers warn that serious violence may erupt again if Kosovo's provisional authorities do not achieve full independence from Serbia this year.

The president denies this, but he warns: "The international community has to be careful. We do not want to stimulate politics that could generate conflict. It is not good to test the citizens' patience."

When the UN and Nato intervened in the province, they pledged to create a safe, multi-ethnic space before determining Kosovo's political status. It is no longer clear that this goal can be achieved. The UN initiated Kosovo's status negotiations in late 2005 although an overwhelming majority of Serbs in the province still say their basic right to safety is trampled routinely.

A steady trickle of violent incidents against Serb communities keeps the intimidation factor high. This month alone brought several shootings and the stoning of a busload of 60 Serbs travelling to market. On May 6 gunmen ambushed a Serbian Orthodox priest, his wife and two children travelling in their family car. They narrowly escaped.

Extremists also struck Podujevo, vandalising a second church and setting back reconstruction efforts funded by the Council of Europe.

Sava Janjic, an influential monk who is the Serbian Orthodox Church's diplomatic contact point in Kosovo, calls this "persecution".

He says: "The Church is its people, and our faithful people, clergy and monks have been living for years without basic freedoms and dignity. In most of Kosovo we still cannot move without military or police escort, and we are exposed to everyday verbal abuses and harassments."

Slavisa Petkovic, the only Serb minister in the provisional government, claims that open persecution ended in late 2004, when he took office, and that threats to minority communities are on the wane. "There has been a substantial relaxation of relations between most Serbs and Albanians living in Kosovo," he says.

Yet Mr Petkovic's own parents are among the many Serb refugees who choose not to return. More than 223,000 Serbs and other minority individuals have left the province since the war. Fewer than 15,000 have moved back, according to the UN High Commissioner for Refugees.

Contradicting both UN officials and Kosovo's elected leaders, Hilmi Jashari, the province's top human rights lawyer, says that little progress is being made. "I would not say that the human rights environment has changed dramatically from 2004 until today. In fact, from 2000 until now I have not seen a dramatic change," he says.

As acting chief of Kosovo's human rights office, a public institution founded by the UN mission but independent from it, Mr Jashari says he recently reopened his file on the March riots in response to complaints that they were "never properly investigated" by local or international authorities.

A Human Rights Watch report released today sides with the complainants, leding weight to claims that neither basic safety nor legal protection can yet be taken for granted.

Confident leader-in-waiting - POLITICS: The new prime minister promises tolerance and political maturity with independence, says Eric Jansson.

The popular independence movement that dominates democratic politics in Kosovo claims few greater heroes than Agim Ceku, prime minister of the breakaway province, elected two months ago.

Slim and youthful, the shaven-headed Mr Ceku, 44, exudes an effortless authority born of long experience as a military commander.

After fighting Serb troops as a high-ranking officer in the Croatian army in 1991, the Kosovo Albanian veteran went on to become chief of staff for the Kosovo Liberation Army (KLA).

Politics may be a softer game, but Mr Ceku now faces another decisive battle as leader of the Kosovo government that could this year gain formal independence for the province - or squander the apparent goodwill of the leading western powers.

Sitting in his oak-panelled office, the former commander points to a wall where an oil-painted canvas shows him hard at work in the aftermath of the Kosovo's 1998-99 war. Mr Ceku is depicted in rebel fatigues, sleeves rolled up, flush with victory over Slobodan Milosevic's Serb forces, plotting Kosovo's way forward in the company of Nato generals and United Nations envoys.

"At that time, I thought independence would come in two or three years," he says.

It is now seven years and counting for Mr Ceku, whose patience is being further tried this year as Pristina and Belgrade tiptoe through their first tentative efforts at postwar dialogue.

The prime minister's power remains strictly limited by the foreign diplomats who retain final decision-making authority over Kosovo's future status. His government claims only limited powers as one of several "provisional institutions of self-government" established under United Nations supervision four years ago.

Mr Ceku claims that the UN Security Council has already quietly made up its mind about Kosovo's future political status. "Everyone knows what the decision is going to be," he says, flashing a confident smile that leaves no doubt he means independence.

Soren Jessen-Petersen, head of the UN mission in Kosovo, insists that "nothing has been determined" about the details of the province's future status.

The Kosovo government's counterparts in Belgrade also disagree vociferously that independence is a foregone conclusion. The Serbian government remains fundamentally opposed to the province's secession, continuing negotiations notwithstanding.

In Belgrade, where the KLA is remembered as a "terrorist" army, Mr Ceku is still wanted on a warrant accusing him of war crimes, in Croatia and in Kosovo.

Vojislav Kostunica, the prime minister in Belgrade, holds Mr Ceku personally responsible for vicious anti-Serb violence that occurred both during the 1998-1999 war and afterward.

The Serbian government calls his rise to political leadership, even if welcomed by the UN, "completely unacceptable" and "a mockery of the values that democratic society is founded on".

Mr Ceku declines to comment, saying only that he cares more about the views in Washington and Brussels, where he claims powerful friends. He has been twice arrested on Belgrade's warrant - in Slovenia in 2003 and in Hungary in 2004 - and twice freed after hasty diplomatic interventions.

Ironically, Belgrade's campaign against Mr Ceku could help the Kosovo Albanians' drive for full and unconditional independence. Few in the international community see intractability and accusation as winning tactics.

For his part, Mr Ceku is wrong-footing Belgrade, toeing the international line whenever possible and openly courting Serb public opinion. To the shock of the ethnic Albanian deputies who filled the legislature in March for his inaugural address, he delivered a conciliatory speech in fluent Serbo-Croat, calling for reconciliation with the province's ethnic minorities.

"In a democratic Kosovo, you Serbs, like Kosovo's other citizens, will have a future, because it belongs to everyone, and together we will create a society guaranteeing freedom, equality, economic progress for everyone regardless of their ethnicity," he pledged.

Most Serbs disbelieve him instinctively. Conciliatory gestures have come from Pristina's leaders before, including some of Mr Ceku's predecessors who, when an anti-Serb pogrom swept through Kosovo in March 2004, hesitated before condemning the outrageous violence.

But the government's approach is accompanied, promisingly, by small signs that Kosovo's ethnically riven society has begun to normalise. Among Mr Ceku's colleagues is one Serb, Slavisa Petkovic, the minister in charge of refugee returns. He and other Serb politicians have begun openly questioning the longstanding policy, backed by Belgrade, of boycotting the elections and parliamentary sessions.

Western diplomats praise Kosovo's infant democracy for its weathering political upheavals. The death this year of Ibrahim Rugova, Kosovo's longtime president and a pacifist icon widely regarded as "the father of Kosovo independence", passed without incident, followed by parliament's election of Mr Rugova's successor, Fatmir Sejdiu. Similarly Kosovo in late 2004 peacefully received the resignation and extradition of a prime minister, KLA veteran Ramush Haradinaj, when international prosecutors indicted him for alleged war crimes.

Mr Petersen hails the ethnic Albanian majority for its "calm and dignity" in the face of such challenges.

But whether it would respond in such a way if forced to accept any future status for Kosovo other than full independence is the province's million dollar question.

Interest starts to stir PRIVATISATION: Foreign investors are gambling on regeneration, says Eric Jansson. - The Financial Times Special Report

Ferronikeli until recently lay broken and mostly abandoned. The battered mining and smelting complex in central Kosovo was a prime example of how disinvestment and war can bring heavy industry to its knees.

Quartered in offices with broken windows, a postwar executive board continued to meet but found little business to conduct.

Kosovo's international administration took this and other "socially owned" companies - defined under Yugoslav law as the collective property of workers - under trusteeship. In this post-Yugoslav arrangement, Ferronikeli's managers were compelled to seek permission for even minor transactions, such as the sale of scrap metal from the factory yard.

Now, suddenly, the grim situation is about to change. Kosovo's privatisation authorities this month finalised the sale of Ferronikeli to Zurich-based International Mineral Resources (IMR)/Alferon, part of Eurasian Natural Resources, one of the world's largest mining and metals groups. Foreign investors are ready to seek profits in the renewal of Kosovo's industrial base.

The deal - with a sales price of Euros 30.5m linked to a Euros 20m investment commitment - is Kosovo's largest privatisation. The sale comes shortly ahead of other big sales, including the Rahovec winery and vineyards, Peja Brewery and IMK pipe factory.

IMR/Alferon promises to reactivate at least 1,000 jobs while stimulating new business in a host of sectors linked to mining and metals. The earlier sale of another metals complex, the Llamkos galvanised steel plant, already shows this can work. The Llamkos sale yielded just Euros 4.2m initially but has since brought Euros 28m in capital investments to Kosovo, according to the Kosovo Trust Agency (KTA), the body in charge of privatisation.

The Ferronikeli sale places the KTA "firmly on track" to meet its target of selling "90 per cent of the value" of companies slated for privatisation by the end of 2006, says Joachim Ruecker, KTA chairman.

When Mr Ruecker, the German heading up economic reconstruction for the UN mission in Kosovo (UNMIK), set this sales target last year, it appeared unrealistic. Kosovo's internationally managed privatisation process, launched in 2002 but stalled almost from its inception, had barely begun to move by early 2005. But since Mr Ruecker took over, it has accelerated rapidly, so far bringing total sales to Euros 240m.

The privatisation chief says an executive decision made by UNMIK, granting the KTA the right of eminent domain in the province, has allowed the agency to press forward with sales. Previously, a host of practical and legal complications, often on ownership, caused delays.

The delays proved costly, depriving Kosovo's traditional industrial base of new investment over several years and contributing to a widespread perception among investors that the province has little to offer.

For example, Claudio Viezzoli, western Balkans director at the European Bank for Reconstruction and Development (EBRD), says the bank initially saw few opportunities, although it was among the first investors to arrive, 15 days after the war ended.

"We had the impression that all the large companies were either being dismantled or cannibalised, which in part is what did happen," he says.

UNMIK's decision to grant eminent domain to the KTA, however, opens the way for large projects, such as a potential Euros 50m investment Mr Viezzoli says the EBRD is now considering at Pristina Airport - ownership of which is contested by Serbia's military.

Yet UNMIK's "clever mechanism", as Mr Viezzoli calls it, only sidesteps the fundamental question dogging privatisation in the province. The very ownership of Kosovo itself - and with it the companies registered there - remains the subject of bitter dispute between leaders in Pristina and Belgrade.

Kosovo Albanian elected officials, all secessionists, sit on the KTA board where they are outnumbered by international officials. They say "the internationals" are selling off companies too slowly and too cheaply.

Bujar Dugolli, minister of trade and industry, acknowledges the Ferronikeli sale as a success. But he argues that Mr Ruecker and his UN colleagues should do more, transferring privatisation controls to Kosovo's democratically elected leaders and releasing privatisation revenues from UNMIK-controlled escrow accounts. Mr Dugolli proposes "unblocking the privatisation fund and loaning part of it to commercial banks" to stimulate economic growth.

As long as the UN seeks a mediated settlement, and as long as Serbian negotiators assert Belgrade's rights over companies in Kosovo, Mr Dugolli can probably expect to wait.

Underfunded capital scores high on potholes and restaurants. - The Financial Times Special Report

Opposition newspapers slam him for the "Izmet Beqiri holes" that pock the downtown road surfaces of Kosovo's capital city, Pristina. Mr Beqiri, mayor for the past three years, retorts that he is too strapped for cash to take care of basic maintenance, let alone pave the other 80 per cent of the municipality's roads. "Simply fixing the streetlights, which were all smashed up before, has been an achievement," he says.

His annual budget for capital investment is only Euros 9m. The municipality of Tirana, capital of neighbouring Albania, reportedly raises nearly four times that amount each year between fund transfers and tax revenues, although the population there is less than double Pristina's.

Tirana's reforming mayor, flamboyant artist and ex-culture minister Edi Rama, has won international acclaim for brightening up drab ex-communist urban facades. Mr Beqiri says he admires those achievements and longs for the same freedom to address similar social and environmental problems.

But here, the municipal organs are intertwined, financially and administratively, with the United Nations Mission in Kosovo (UNMIK), the executive arm of the UN protectorate in the mainly ethnic-Albanian province that broke away from Serbian control seven years ago.

Powerful financing options increasingly used by other south-east European cities, such as municipal bonds, are unavailable as long as Kosovo lacks the permanent, predictable status of a sovereign country.

Additionally, the unassuming Mr Beqiri - a loyalist of the ruling Democratic League of Kosovo (LDK) who formerly managed public swimming pools - shows some reluctance to tamper with his home city, where he has lived for 40 of his 41 years. "Pristina is beautifulin its own way," he says.

His top priority as mayor, he says, is to impose some order on haphazard growth. The municipal authorities recently adopted a General Urban Plan, the first of its kind in Pristina, outlining a comprehensive vision for the next 16 years, including three concentric ring roads to ease traffic flow around seven main districts.

In the past, only a few upscale pockets showed evidence of planning. One of these is Pejton City, the central commercial and diplomatic quarter named for the racy 1960s hit US television series "Peyton Place".

Josip Broz Tito, second world war partisan leader and Yugoslavia's president for life, had a flair for the theatrical, but he also understood how to balance conflicting interests. Residents still sometimes cite street names from the Tito period - a mix of Serb, Albanian and communist war heroes and literary figures - in place of the recently posted names from Kosovo's ethnic Albanian liberation struggle. Serb-nationalist signage put up under Slobodan Milosevic, Serbia's ruler in the 1990s, never took hold, whereas two of the latest street names - Mother Teresa Street and Bill Clinton Boulevard - are accepted.

Just as Constantinople became "Stamboul" and hence Istanbul, some locals say that Kosovo's capital started out as Prima Justiniana, an episcopal centre founded by Byzantine emperor Justinian I in the sixth century. But nothing comes easy for Pristina: neighbouring Macedonia's capital, Skopje, and a nearby southern Serbian city, Leskovac, both lay claim to the same origin.

Later Byzantine documents refer to Pristina only as a "village." Aside from Roman artefacts in the museum and some prehistoric house foundations uncovered on the outskirts, the city's heritage is most evident in the two Ottoman mosques dating to the 1400s in the "old town," which otherwise contains late nineteenth and early twentieth century landmarks.

Nearer the city centre, the buildings tell of Kosovo's more recent history. Next to the university library stands a large, unfinished Orthodox church, an attempt by Serbs under Mr Milosevic's leadership to assert their dominance.

Although most of the Serbs fled in 1999, Kosovo must now prove its readiness for independence as a tolerant, multi-ethnic society, say United Nations mediators in the ongoing status negotiations with Serbia. Patches of fresh white paint on the church's otherwise unpainted dome show where the authorities covered anti-Serb slogans.

While the independence war made the local society ethnically uniform, ethnic Albanian refugees from around the war-torn province packed into the capital, whose population swelled from around 250,000 to nearly 500,000, according to Mr Beqiri. At the same time, the internationals - aid workers, consultants and UN administrators - brought a new, multicultural element that the mayor says has become one of Pristina's greatest assets.

The striking youthfulness of the locals - around 70 per cent are under 30 years of age - could one day be a demographic time bomb, but for now it livens up the streets and provides strong human resources.

English is almost universally spoken in the servicessector, and expatriate westerners express surprise at the range of good restaurants around town. "It's not so bad, although there's no classical music," says a western European banker who flies home to his family about every three weeks. Another expatriate, a hard-bitten UN administrator, grudgingly calls Pristina "better than Sierra Leone".

On the downside for the mayor, the high-spending international presence is a magnet for continued rural-urban migration, even though "Pristina is not exempt from any of Kosovo's problems, including high unemployment".

As with any centre of post-conflict reconstruction, economists worry about what will happen to Pristina's flourishing small and medium-sized enterprises when the internationals eventually leave. Officials at the International Monetary Fund, however, say a local middle class has started to blossom, making much of the local services sector self-sustaining.

Last fight will shape the future Talks on the disputed province's status could end a stalemate, write Eric Jansson and Neil MacDonald.

International administrators have racked up an impressive list of achievements during their seven years on the ground in Kosovo, the mainly ethnic-Albanian province severed from Serbia through international military intervention in 1999.

Helped by foreign donations totalling Euros 2.14bn and further pledges worth Euros 610m, the United Nations administration established after the Yugoslav Serb regime pulled out has already left an indelible signature on this most unsettled corner of the western Balkans.

The UN Interim Administration Mission in Kosovo (UNMIK) has maintained law and order and, arguably, helped an enduring peace start to take root.

International administrators have designed and helped build a democratically elected provisional government, parliament and presidency, which will operate under direct UN supervision until further notice. UNMIK also advertises its success overseeing the installation of "the framework of a functional market economy".

In this landlocked province of fertile plains and snow-capped mountains - roughly one-third the size of the Netherlands - scarcely a town or village is untouched by the international reconstruction effort. Kosovo's 2m people have seen 1,400 km of roads and some 50,000 war-ruined houses rebuilt, as well as schools, hospitals and religious buildings.

Nato - which intervened with a 78-day bombing campaign to expel Serb military and police forces from the province - has taken on an equally daunting job. After Belgrade's capitulation in June 1999, multinational forces under Nato command brought basic security to the ethnic Albanians who account for an estimated 90 per cent of Kosovo's population, many of whom suffered bitterly at the hands of Serb authorities before and during the war.

The alliance has also protected Kosovo's acutely endangered Serb minority - with the exception of some fatal lapses.

Despite the basic peace and security, however, the international intervention in Kosovo cannot yet be called a success.

Kofi Annan, UN Secretary-General, in January expressed "serious concern" that Kosovo was backtracking in efforts to achieve the UN's stated goal - creating a "sustainable multi-ethnic, democratic society in which members of all communities can live in dignity and security."

Conditions could deteriorate further unless Kosovo is allowed out of the limbo it entered directly after the war. "The sooner we bring this holding operation to an end the better for all the people of Kosovo," says Soren Jessen-Petersen, the Dane who heads the UN mission as Mr Annan's special representative.

The way to end this holding operation is to resolve Kosovo's status - but that has not been achieved by the war, UN Security Council Resolution 1244 which established UNMIK, or the past seven years.

However, if current bilateral status talks in Vienna are to be taken seriously, a year from now Kosovo will be either a newly independent state or an autonomous territory remaining within Serbia's internationally recognised border.

The trouble is that Resolution 1244 offered fig leaves to both Nato and Serbia. For Nato, "victory" meant the expulsion of Serb forces; for Belgrade, then dominated by the authoritarian regime of Slobodan Milosevic, the Yugoslav president, "victory" meant preserving territorial integrity. The resolution offered both.

Seeking a new way forward, the UN initiated painstaking "status negotiations" between Serbia and the Kosovo Albanian leadership at the end of 2005.

But Belgrade's position is unambiguous. "This huge intention of the Kosovo Albanians to create an independent state is a grave contradiction of international law," says Alexander Simic, a high-level Serbian adviser on the talks. "You cannot create an artificial nation."

Neither side has made any concession on ultimate sovereignty. Belgrade has shown less discomfort over Montenegro's close-run referendum on May 21 to become independent - killing the last vestige of what used to be the

six-republic Yugoslav federation - than it does over the prospect of accepting a fait accompli in Kosovo.

But the Serb nation has a long history in Kosovo, which is, after all, still internationally recognised as part of Serbia's territory. Kosovo, unlike Montenegro, boasts no history of independent statehood, even if some Kosovan leaders call the 1987-99 period a "Serb occupation".

On this issue, moreover, Belgrade can summon allies on the UN Security Council. Vladimir Putin, Russia's president, has warned against setting a precedent for secession by minor provinces. Beijing, mindful of Nato's bombing of the Chinese Embassy in Belgrade in 1999, might also side with Serbia.

On the other hand, while UN officials insist that nothing about Kosovo's status is pre-arranged, diplomats from Washington and London have signalled that independence is likely around the end of this year.

Secessionist leaders from Pristina, Kosovo's capital, remain engaged in the stilted dialogue with Belgrade. A set of "ground rules" for the UN-mediated negotiations will help direct the outcome. These are: no partition; no return to direct Serb rule as before 1999; no creation of a "Greater Albania"; and any status decision being acceptable to the majority of Kosovo's people.

Most citizens in Kosovo demand independence. "The Serbs should look at the realities and see that independence is the only option supported by the majority. It is not negotiable," says Fatmir Sejdiu, Kosovo president and leader of the province's negotiating team.

No sooner did the UN call for status negotiations than graffiti appeared throughout the province. "No negotiations! Self-determination!" says the writing on walls everywhere, scrawled by youth activists whose political identity was formed in the 1990s under the late Mr Milosevic's oppressive rule.

Hashim Thaci, Kosovo Liberation Army militant and now leader of the parliamentary opposition, says: "We already created the reality of an independent Kosovo in June 1999. The only thing we are negotiating are modalities to implement the will of the people."

But independence - whether achieved through negotiation or by the imposition of an international deal against Serbia's will - would leave Kosovo with an uphill battle from the start.

Uppermost in many Western policymakers' minds is the province's capacity to export instability and crime - a factor that Boris Tadic, Serbia's president, argues would be more controllable within the framework of a larger state. Mr Sejdiu pledges an "absolute commitment to prevent Kosovo becoming a door or a springboard" for terrorism and crime. Nato forces and possibly European Union police are almost certain to stay on after any status settlement, just to make sure.

For most citizens, safety and money are the top issues. The province's economy remains in the doldrums, with 37 per cent of the population living on less than Euros 1.42 per day and 15 per cent lacking money to buy adequate food, according to the World Bank. The real rate of unemployment is unknown; most analysts put it above 30 per cent.

Adding to existing economic challenges, Kosovo could inherit a heavy burden of old debt from Serbia, which has continued servicing all its share of ex-Yugoslav obligations to international creditors.

Joachim Ruecker, the German diplomat in charge of privatisation, says foreign investment will ease Kosovo's way. "There is momentum here. There are very serious investors coming even before status. There is no reason to wait," he says.

Foreign investment has picked up lately. But Kosovo remains a place for the brave, and those who enter will still need nerves of steel.

Monday, May 29, 2006

Kosovo and Memorial Day By Wesley Clark

Dear Friend,

Last week, I returned to Kosovo for the first time since I retired from military service.

For me, this trip was very personal. In 1999, I commanded the NATO forces that stopped the genocide against ethnic Albanians by Slobodan Milosevic and his Serbian forces. Now Kosovo is on the road to independence, a nation that respects the rights of all its citizens. It was so moving to return to Kosovo and meet thousands of people who had been liberated from Serbian oppression, hearing their stories and learning about their experiences. You can see some of the photos from my recent trip here.

This was an example of how we CAN do it right: diplomacy first, strong leadership, working with others, and using force only as a last resort. We had a plan for what to do after the operation before we began air strikes.

During the Kosovo War, we were fortunate not to lose a single American soldier in combat -- but in most military operations we aren't so lucky. We owe the men and women of our armed forces our deepest gratitude for their willingness to serve in harm's way, whether it's protecting Americans during natural disasters here at home or defending our country and defending freedom abroad.

Today across America, we take time to remember those who have given their lives defending the cause of freedom throughout our nation's history. This year, as our soldiers are serving with honor in Iraq, in Afghanistan, in the Balkans, and around the world, I hope you will join me in observing Memorial Day, whether it's attending an event in your local community or simply taking a personal moment to remember the men and women who have made the ultimate sacrifice for our country and to honor their families.

As this Memorial Day passes, I urge our leaders and all Americans to fully honor our troops and respect their sacrifice. That means ensuring our men and women in uniform are properly equipped, trained, and organized.

That means providing our troops and veterans the medical care they deserve, and providing Reservists and National Guard members health insurance for themselves and their families through TRICARE, the military's health care system, just as the active force does.

That means eliminating the "widow's tax," which penalizes the survivors of those killed in combat by reducing the benefits to which they are entitled.

Finally, as we embark upon our fourth year in Iraq and as the Bush Administration continues its heated rhetoric toward Iran, we owe it to all of our brave service men and women, their families, and to all Americans, to recommit to the principle that military force should only be used as the very, very last resort. Only when all diplomatic, economic, and political options have been exhausted should we send our military forces into battle.

After all, the greatest way to honor our men and women in uniform is to require their sacrifice the least.

Gert and I send you our very best wishes for a safe and happy Memorial Day.


Sunday, May 28, 2006

Montenegro to be independent next week: president

PODGORICA, Serbia-Montenegro, May 28, 2006 (AFP) -

Montenegro is likely to become an independent country next week, the president of the tiny Balkan state said in an interview with AFP.

"I think it's expected next week Montenegro will declare independence," said the president of the former Yugoslav republic, Filip Vujanovic.

The head of the Republic Referendum Commission, Frantisek Lipka, had "come out with the official results and in the next week he will also give the same results, and Montenegro will be independent," he insisted.

Since the historic referendum on Montenegro's independence from a federation with Serbia was staged a week ago, Lipka, a Slovak diplomat, has twice announced preliminary results showing voters opted to break up the union.

According to the latest set given on Tuesday, a narrow majority of 55.5 percent of Montenegrins chose to create the world's newest mini-state, barely clearing a 55-percent threshold agreed with the European Union.

The May 21 vote consigned to history Serbia-Montenegro, the last shred of the former communist federation of Yugoslavia after Bosnia, Croatia, Macedonia and Slovenia left during the brutal 1990s Balkan wars.

Speaking to AFP after meeting his Serbian counterpart Boris Tadic on Saturday, Vujanovic said they had agreed to divide control of the military between them and share some diplomatic missions once independence is declared.

"I don't think that there are any difficult issues to resolve. I think that all issues we have are of a technical nature," said the Montenegrin president.

"We stated today that once Montenegro declares independence, the Supreme Defence Council and its competencies will be given to the president of Serbia and the president of Montenegro," he said in reference to the union's top military body.

Turning to the topic of diplomatic missions, Vujanovic said the issue was already in the process of being resolved, with Serbia and Montenegro likely to base their of model of sharing embassies on other regions.

"Serbia will of course have most diplomatic missions," said the pro-independence Montenegrin president.

"We'll have some discussions with Serbia, that for those places where Montenegro is not represented, that the diplomatic mission of Serbia could represent it.

"That is something that we have already seen in Baltic states and other regions with similar structures" including Malta and Cyprus, he added.

Vujanovic said the greatest threat to the talks on dissolving the union was a difference of opinions in the Serbian capital Belgrade.

"I think the hardest position is that of Prime Minister (Vojislav) Kostunica and his Democratic Party of Serbia," he said.

But he added: "I think that the discussions with them will start and that they will recognise our independence.

"And I expect that we will... resolve any issues."

Despite the international community's strong praise for the conduct of the referendum, Kostunica -- a moderate nationalist who openly supported preserving the union -- has only offered it his conditional approval.

The confirmation of the results has been delayed by allegations of referendum irregularities by a Belgrade-backed Montenegrin opposition.

The vote was made possible under the 2003 constitution which bound Serbia and Montenegro in a federation and contained an escape clause allowing either side to vote on independence after three years.

Its independence comes at a delicate time for Serbia, currently engaged in tough negotiations with separatist ethnic Albanian leaders in the southern province of Kosovo.

Friday, May 26, 2006

Kosovo's premier says that province's independence is inevitable

TIRANA, Albania (AP) - Kosovo's Prime Minister Agim Ceku said on Friday at the start of a two-day visit to neighboring Albania that the province's independence was inevitable.

"Montenegro's independence was an inevitable process and Kosovo's independence also is a very natural and inevitable process," Ceku told a news conference after meeting with Albanian Prime Minister Sali Berisha.

Last weekend Montenegro decided in a referendum to separate from Serbia-Montenegro, which was the last union between republics of the former Yugoslavia after that federation collapsed in a series of wars in the 1990s.

Ceku said that Belgrade should understand that the "Balkans configuration has changed," adding that Albania also shared the same stand on Kosovo's future status -- full independence.

"The only solution that would guarantee peace and stability in Kosovo and the region is the one that comes out from the right of self-determination of the Kosovo people, that is, respecting the Kosovo citizens' will, which is repeated continuously, for independence," said Berisha.

U.N.-sponsored talks to determine Kosovo's future are under way in Austria. Kosovo's ethnic Albanian majority wants independence, while Serbs want it to remain part of Serbia.

Kosovo to be independent in months - former NATO commander

Excerpt from report by Kosovo Albanian television KohaVision TV on 25 May

[Announcer] Kosova [Kosovo] will be an independent country in several months and it will respect the rights of its citizens regardless of their ethnic background, said former NATO Commander Gen Wesley Clark after meeting Kosova President Fatmir Sejdiu. Clark met also the negotiation team.

[Reporter] Former NATO Commander Gen Wesley Clark reiterated his conviction that Kosova will soon become independent. After meeting President Fatmir Sejdiu and the negotiating team, Gen Clark said Kosova would be a nation welcomed by other countries.

[Gen Wesley Clark in English with Albanian voiceover] I am confident this question can be resolved, perhaps in several months Kosova will be an independent country and will respect the rights of all its citizens, regardless of their ethnic background and I think this is a future nation that is bright with promise. It will be part of the community of nations and its citizens will have the opportunity to accomplish their dreams.

[Reporter] Fatmir Sejdiu thanked Gen Clark far all his contribution for the Kosova people and for his readiness to support them until they reach full independence [Passage omitted, repetition of words]

Wesley Clark met also Kosova Speaker Kole Berisha. In his speech held before Kosova Assembly, Clark said in an independent Kosova the economy would develop, new jobs would be created, and everyone would have a safe future. He said Standards [set for Kosovo by international community] for Kosova are not an international pressure; they are in the service of Kosovar welfare. The chief of NATO air strikes for the liberation of Kosova urged minorities to respect the will of the majority and recognize their commitment towards them. [Passage omitted]

Source: KohaVision TV, Pristina, in Albanian 1700 gmt 25 May 06

Kosovo officials reject Russian offer to build gas-fired power station

Text of report in English by independent internet news agency KosovaLive

Prishtina [Pristina], 26 May: The construction of new power plants on the basis of natural gas is not only in contradiction with the energetic strategy of Kosova [Kosovo], but it is also harmful since it would devalue the great reserves of coal.

The largest Russian gas company, Gazprom, expressed its interest to invest in Kosova in the construction of new power generating capacities using Russian natural gas.

Lorik Haxhiu, an adviser to the minister of energy and mining, told KosovaLive today that there were many companies who expressed their interest in the energetic sector.

"The construction of a power plant is not included in the energetic strategy approved by the parliament," said Haxhiu, adding that this is a difficult process as well, since Kosova has no sources of gas.

The deputy head of the KEK [Kosovo Energy Corporation] Pranvera Dobruna-Kryeziu, told the media that it is not in the interest of Kosova to build a power plant which would use natural gas.

KEK Managing Director John Ashley has discussed with different investors on the possibility of constructing the new power plant - Kosova C.

Source: KosovaLive website, Pristina, in English 26 May 06

Kosovo official: Document on minorities meets "most advanced standards"

Text of report in English by independent internet news agency KosovaLive

Prishtina [Pristina], 26 May: The deputy head of the Consultative Council for Communities, Ylber Hysa, said today that the document on minorities contains the most advanced standards for their rights, and as such it will help improving the lives of all communities.

Hysa made these comments after the meeting of the Consultative Council for Communities, which was focused on preparations for the Thessaloniki meeting.

"The document was introduced and the last inputs are expected to be added before the Thessaloniki meeting, which will be attended by relevant institutions involved on minority and human rights issues, including the Council of Europe," Hysa said.

He said that Vienna will be directly involved in the process, so that the document then can be included in the final document for the status.

"We agreed that representatives of each community and three representatives of the Serb community in Kosova [Kosovo] should be involved and contribute directly with their views in drafting the document, so that we reach a final document which shall be tabled in talks on status non-related issues," Hysa explained.

However, according to Hysa, the Serb party has not expressed any readiness to be part of the process, "but even without the Serb party, we will continue the work with the consent of Vienna".

"It is a voluminous document that includes the most advanced standards for community rights, including the right on representation, language rights and rights at the municipal level. It also addresses many other things that the minorities raised," Hysa said.

Source: KosovaLive website, Pristina, in English 26 May 06

The Balkans: Enter Montenegro

A new Balkan country


FOR a country that has just voted to become independent it is surprising how many people are fretting. On May 21st Montenegrins voted to divorce from Serbia. Immediately after the first results were announced, the sky over Podgorica, the tiny capital, was lit up with fireworks. Jubilant crowds came out onto the streets. With their girlfriends perched precariously on car roofs, young men drove around town in victory laps. The next morning, Montenegrin television repeatedly showed Milo Djukanovic, the prime minister, celebrating with champagne.

And yet, as the festivities died down, a distinct note of complaint started to be heard--and not just from those who had voted to keep the union with Serbia. Serbia and Montenegro have been linked in the same state since 1918. Montenegro's secession is one of the last acts of the dissolution of the old Yugoslavia that began 15 years ago. It is not the very last. Within a year, Kosovo, the mostly ethnic-Albanian province that is technically part of Serbia (which Montenegro was not) will also probably gain its independence.

Several things were striking about the referendum. First was the absence of conflict or violent incidents, in a highly divided society. According to the official results, 55.5% voted for statehood, and 44.5% voted to keep the union. That is a solid margin by any standard. Pro-union leaders say that Mr Djukanovic's supporters cheated, and that they will not recognise the result. But although they will lodge formal complaints, independence now seems a fait accompli.

The European Union had insisted that, for recognition, more than 55% had to vote in favour. This figure was reached, but only just. Montenegro has only 672,000 people, so it took only a little over 2,000 to tip the result. Unionists say that the government somehow found a way of financing the return of thousands of Montenegrins from abroad who were in favour of independence. Some of this was sour grapes. Serbian railways gave free tickets to mostly anti-independence Montenegrins living in Serbia to go home to vote.

Despite its size Montenegro has significant economic potential, especially in tourism. Now, however, some hard realities are beginning to sink in. Many people who supported independence loathe the 44-year-old Mr Djukanovic, who has been in power for 17 years. They believe that too many people around him have got suspiciously rich over the past decade.

Mr Djukanovic's position is hardly under threat. Igor Milosevic, a political analyst, says simply that "Milo will be king now." An election will be held this autumn. The main opposition parties have lost their prime reason for existence, which was to preserve the union. Predrag Bulatovic, leader of the largest pro-union block, may now resign; if he does, the opposition will lose one of the few people able to turn the party into a normal post-independence, social-democratic party. In June a new party will emerge, led by Nebojsa Medojevic, an economist. He hopes to gather support on the basis that he is for independence but against Mr Djukanovic, whom he accuses of creating "a Colombia on the Adriatic, a paradise for tycoons."

Mr Medojevic surely exaggerates. And Mr Djukanovic is a phenomenally clever politician, with an unerring instinct for survival. In the early 1990s he was a Serbian nationalist. Today he is hailed by many as the man who delivered independence from Serbia. But now he needs to do something else: deliver the fruits of independence to ordinary people.

Many of Montenegro's economic indicators are good, but most people do not see the results. Average salaries are a mere euro250 ($300) a month, and unemployment is running at 18%. A good many Montenegrins were not all that worried about independence; they just wanted the issue resolved so that the government could start delivering something for ordinary people. There is a lot of work to be done in Europe's newest state, and it needs to be done fast if it is to join the EU any time soon.

SOURCE: The Economist

Thursday, May 25, 2006

EU GEN Kosovo Iraq Clark

PRISTINA, Serbia-Montenegro (AP) - Retired U.S. Army Gen. Wesley Clark called Thursday for transition of authority in Iraq during the course of this year and said that the United States should soon begin the process of withdrawing the U.S. soldiers.

Clark, a four-star general who served as the supreme commander of NATO in 1997-2000 and unsuccessfully sought the Democratic presidential nomination in 2004, said the fledging Iraqi government must take charge and be given the means to address the security in the country.

"It's necessary ... to make this year a year of transition in Iraq," Clark told The Associated Press in an interview during his visit to Kosovo. "The Iraqi government must take charge."

He said that ministers of interior, defense and national security should be appointed, but also said that a lot of help is needed from the international community to strengthen the Iraqi government in meeting the needs of the people.

"And then we should begin the process of withdrawing the U.S. soldiers and other coalition soldiers from Iraq," said Clark.

"I do think that there should be no permanent bases there. I think that the United States should soon begin its process of redeployment," he said, adding that he believed there will be "some withdrawals very soon given where we are."

Clark, who was the commanding general in NATO's war in Kosovo in 1999 which halted Serb forces' crackdown on independence-seeking ethnic Albanians, said the issues in Iraq were not military issues, but were associated with economic development and the ability to form a strong government.

Clark is on a three-day visit to Kosovo at the invitation of the province's Prime Minister, Agim Ceku. He is considered a hero by the province's ethnic Albanians who want the province to become independent, but reviled by many Serbs for his role during the bombing campaign.

The U.N. is currently conducting talks aimed at steering ethnic Albanians and Serbian officials toward settling the final status of the province, a home to some 2 million.

Kosovo's ethnic Albanian majority wants independence, while Serbs want it to remain part of Serbia.

"I do believe that Kosovo will become an independent state," Clark said, sitting in a the building housing the province's government. The building has been renovated after being heavily damaged during the NATO bombing in 1999.

"I think an independent Kosovo will add to the stability of the region," he said. "It will terminate these long-lasting questions about the status of Kosovo and it will enable people both in Serbia and in Kosovo to focus on really important issues."

Kosovo to be independent in months: ex-NATO general

PRISTINA, Serbia-Montenegro, May 25, 2006 (AFP) -

The former US general who commanded NATO's 1999 air war against Serbia on Thursday predicted its southern province of Kosovo would become independent within months.

Wesley Clark told Kosovo Albanian leaders in Pristina he had confidence in their "strong, positive and visionary proposals" to find a solution for Kosovo, which has been run by the United Nations and NATO since 1999.

"I am confident that this issue will be solved very soon, and probably in few months, Kosovo will become independent and will respect the rights of all citizens," said Clark.

"I believe that Kosovo will be welcomed into the family of the nations and that there will be many opportunities for the citizens of this country to prosper, raise big families and make their dreams come true."

Clark, who is on a three-day visit to the disputed province, met Kosovo's President Fatmir Sejdiu and Prime Minister Agim Ceku, who said Clark was a great friend of Kosovo, who stood by it in its most difficult times.

"He is and will always be honored by the people of Kosovo," he said.

Clark commanded the 1999 NATO air strikes that drove Serbian forces loyal to former Yugoslav leader Slobodan Milosevic out of Kosovo because of their brutal crackdown on ethnic Albanian separatists.

INTERVIEW-U.S. urges Serbia to seize opportunities

BELGRADE, May 25 (Reuters) - Serbia should quickly establish a constructive new relationship with Montenegro following the smaller state's referendum vote to end their union, the U.S. ambassador to Serbia and Montenegro said on Thursday.

"There are moments in history and time when opportunities can be seized and right now this is one," Michael Polt said.

"But the real engagement has not yet begun. I hope and I trust it begins -- and certainly we will be pushing very hard for that -- very quickly after final results are announced."

Montenegro's mainly ethnic Serb opposition, which campaigned against independence in the referendum on Sunday, is seeking a re-run of the ballot in dozens of polling stations. Serbian Prime Minister Vojislav Kostunica has said he "will accept" the pro-independence vote, but only when final results are in.

Polt told Reuters in a telephone interview there was some concern about possible foot-dragging by Serbia on Montenegro, but "I trust that cooler heads and wiser heads will prevail".

He said Washington appreciated Serbia's problems. Talks on its European Union membership hopes are frozen over failure to deliver war crimes fugitive Ratko Mladic, and Albanian-dominated Kosovo province is driving for independence this year.

These challenges could be seen as "opportunities to be grasped very tightly" for the improvement of the Serbian people, Polt said. But he had "great concern they will not be seized".


Some Western countries are reluctant to put further pressure on Belgrade, worried about the government's fragility and the strength of the ultranationalist Radical Party.

"I don't lose a moment's sleep about the non-reformers," Polt said. His main concern was the lack of articulation "of where this government wants to take this country".

In U.N.-mediated talks on Kosovo, Kostunica's team so far seemed fixated on its determination to block independence.

"We are concerned that not enough attention is being given to the Serbian existence in Kosovo," he said. "What about real people? Belgrade keeps saying they care about what happens to the Serbs in Kosovo ... we need to get on with that and stop getting hung up over what it's going to be called."

Kostunica's government, a minority coalition relying on the unofficial backing in parliament of the Socialist Party of the late strongman Slobodan Milosevic, was failing to deal effectively with these major issues, the ambassador said.

A key coalition partner, the liberal G17 Plus party, has warned it will walk out on Kostunica and trigger a snap election if the EU talks are not resumed by the end of September -- implying that Bosnian Serb wartime commander Mladic will have to be in detention at the Hague war crimes tribunal by that date.

Polt seemed unimpressed by the party's four-month ultimatum.

He said he was disappointed at lack of credit given to deputy Prime Minister Miroljub Labus, who resigned on principle this month after the EU suspended talks saying he could not endorse policies that undermined his main objective for Serbia.

As for G17's deadline for delivery of Mladic, indicted for genocide in 1995, he said:

"I have torn up and thrown away my calendar. I take no deadline seriously ... Any discussion of future dates at this point is basically laughable."

Bosnian Serb premier says Kosovo also needs independence referendum

Text of report by Bosnia-Hercegovina Federation News Agency FENA

Banja Luka, 25 May: [Bosnian] Serb Republic Prime Minister Milorad Dodik believes that it would probably be good if Kosovo also held a referendum, which would provide a basis for reaching a decision on the status of the province.

Commenting Kosovo Premier Agim Ceku's statement that following the referendum in Montenegro it has become totally obvious that Kosovo too would become independent by the end of the year, Dodik told reporters in Banja Luka that according to the UN Charter the right to self-determination was the universal right of every nation, and that people should be given the right to declare themselves on the matter.

"I like this form of democratic expression of the will of the people to decide on such matters, and it would perhaps only be a formal question to hold a referendum on Kosovo on the status it wants, so this could provide a basis for reaching a decision," Dodik believes.

Source: Federation News Agency, Sarajevo, in Bosnian/Croatian/Serbian 1512 gmt 25 May 06

Serbs unhappy with mediator's efforts on Kosovo

By Matt Robinson1 hour, 31 minutes ago
Serbia has told the major powers guiding policy on Kosovo it is unhappy with the efforts of U.N. chief mediator Martti Ahtisaari to negotiate a deal on its southern breakaway province, diplomats say.

"Serbia has expressed dissatisfaction with the way it's going and with the people running it," a senior Western official in Kosovo told Reuters on Thursday.

Kosovo daily Zeri reported on Thursday that Belgrade had written to the Contact Group of major powers asking them to sideline Ahtisaari's U.N. team in Vienna and chair direct talks that would be held in the Macedonian lakeside town of Ohrid.

"It's half true," the western official said of the story, confirming the Contact Group -- the United States, Britain, Russia, Italy, Germany and France -- had received a letter expressing serious concern with Ahtisaari, former Finnish president.

Serbia is already reeling from the loss of the tiny Adriatic republic of Montenegro which voted in a referendum on Sunday to end a 90-year-union, one of the last acts in the break-up of the former Yugoslavia.

Diplomats expect Kosovo to be granted independence.

The western official in Kosovo said Belgrade's aim was to "delay the inevitable, be it by changing direction, venue,


Legally part of Serbia, Kosovo has been run by the United Nations since 1999, when NATO bombs drove out Serb forces accused of ethnic cleansing in a two-year war with ethnic Albanian separatist guerrillas.

Serbs consider it their religious heartland, but 90 percent of the people are ethnic Albanians demanding independence.

U.S. ambassador to Belgrade Michael Polt declined to comment on the report but told Reuters that Washington had "full confidence" in Ahtisaari's approach.

"We are firmly committed that that's the way it must stay," he said. "Our encouragement to our Serb friends is: work with Ahtisaari to find practical solutions to practical problems and don't get hung up on procedural issues or over your categorical status positions."


Diplomats want to secure the rights and security of the remaining 100,000 Serbs, a ghettoized minority, before independence. They say Serb leaders are aware of the direction Kosovo is heading but are ill-prepared to face it.

Appointed by the U.N. Security Council, Ahtisaari opened direct talks between Serbia and the Kosovo Albanians in February. They are currently tackling Serb rights, local government reform and protection for Kosovo's rich Serb Orthodox religious heritage. Talks on actual status could begin in July.

Serbian Prime Minister Vojislav Kostunica met Ahtisaari in Belgrade on Monday and said he wanted to hold face-to-face talks on status.

Ahtisaari's team is undecided whether to hold direct talks on status, or shuttle between capitals. Belgrade fears the latter mode would limit its room for maneuver.

U.N. officials accuse Serbia of being uncooperative, making unrealistic demands and blocking efforts to integrate the Serbs.

The Contact Group is "disappointed" with the level of engagement by Belgrade, the western official said.

"If only they could engage in reasonable dialogue. A little more enlightened self-interest would go along way."

The Contact Group says it wants a deal this year. It says the solution must be acceptable to the majority of the people, nearly all of whom who reject a return to Serb rule.

Foreign diplomats are concerned at a possible nationalist backlash in Serbia with possible snap elections looming. But they see little option other than to amputate Kosovo and place it under European Union and NATO supervision for years to come.

(Additional reporting by Douglas Hamilton)