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Kosovo

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Reconstruction
Priority areas of German cooperation with Kosovo
Promotion of public utility infrastructure (energy and water)
Economic development and employment promotion
Public administration reform and decentralisation
Basic education and vocational education and training

Situation and cooperation

Old bridge in Prizren. Copyright: Friederike KärcherIn 1999 the United Nations Interim Administration Mission in Kosovo (UNMIK) took over the administration of Kosovo as an autonomous territory. This development followed a civil war between the majority ethnic Albanian population and the Serbian government. Military intervention by NATO troops ended the war in 1999.

In November 2005, the UN Security Council resolved to begin negotiations on Kosovo's status. The negotiations were intended to decide the final status of the province under international law. However, several rounds of talks chaired by the UN Special Envoy for the Future Status Process for Kosovo, the former Finnish president Martti Ahtisaari, failed to produce an agreement.

On 17 February 2008 the Assembly of Kosovo in Pristina passed a resolution, in the face of Serbian resistance, declaring the independence of the state of Kosovo. On 15 June 2008 the first constitution entered into force, defining Kosovo as a democratic state and conferring rights of autonomy on the Serb-dominated regions. However, due to disagreements within the international community over Kosovo’s status, with Serbia and Russia in particular taking the view that the declaration of independence is at variance with international law, important areas of state responsibility such as control of the police, customs and judiciary continue to be monitored and mentored by the international donor community, above all the European Union Rule of Law Mission (EULEX). Experts from the United Nations and the European Union are helping the young state establish democratic structures in line with the rule of law. Since late 2008, EULEX has operated under the general framework of the United Nations.

Reconstruction

Pristina. Copyright: Friederike KärcherEven before the outbreak of conflicts within Yugoslavia, Kosovo was a structurally weak region, with a very high rate of illiteracy, a lack of infrastructure and a strong dependence on agricultural production.

The province was particularly badly affected by the devastation of war. Large parts of the province were destroyed and the population traumatised, which limited their capacity to cope with the difficult living conditions.

A decade after NATO's military intervention, the process of reconstruction in Kosovo still faces massive social and economic problems in a complex political environment. According to World Bank estimates, 37 per cent of its people are living in poverty, with 15 per cent living below the extreme poverty line, despite economic growth averaging 3 to 4 per cent in recent years. High unemployment at around 40 per cent, low productivity and a dependence on remittances are other challenges facing this young state. Whilst important elements of the infrastructure in the province have been restored or rebuilt, sustainable economic recovery has not yet set in. Although the overall situation has stabilised, tensions remain in the Serb-dominated areas of Kosovo.

Consequently, the government of the young republic and the international donor community still face a major challenge: to improve the living conditions for the people of Kosovo and thereby, ultimately, to promote the peaceful coexistence of the country’s various ethnic groups.

In July 2008 the European Commission therefore organised an international donor conference, where the international donor community pledged a total of 1.2 billion euros for Kosovo for the period 2008 to 2010. At the conference, the German government made the second largest bilateral commitment to Kosovo after the United States. Since the start of cooperation in 1999, Germany has provided some 340 million euros in total for reconstruction and development in Kosovo.

Priority areas of German cooperation with Kosovo

Germany’s cooperation with Kosovo began immediately after the end of NATO's military intervention. German support initially focused on emergency aid to supply the population with water and electricity. For some years now, cooperation has concentrated on sustainable development, i.e. projects with long-term impact. Since the EU Summit in Thessaloniki in 2003, all the countries of the Western Balkans have been offered a clear prospect of accession to the European Union. Kosovo’s closer alignment with EU standards and structures is therefore the main objective of cooperation between Germany and Kosovo.

Official government negotiations between Kosovo and Germany took place for the first time in September 2008, with further government negotiations following a year later. In 2010, Germany committed 33 million euros to Kosovo. Germany provides additional financial support via the EU’s funding programmes.

Cooperation between Kosovo and Germany focuses on the following priority areas:

  • Promotion of public utility infrastructure (energy and water)

  • Economic development and employment promotion

  • Public administration reform and decentralisation

  • Basic education and vocational education and training.

Promotion of public utility infrastructure (energy and water)

Stabilisation of the electricity and water supply, natural resource management and waste disposal are essential for Kosovo’s economic recovery and sustainable development. Improvements in living conditions also help to increase public acceptance of democracy and the market economy.

Germany's involvement in Kosovo therefore began with an extensive programme to repair and modernise the energy supply system. Two coal-fired power stations were upgraded and investments made to extend and consolidate the lignite mining industry. These measures have helped to improve the electricity supply for the general population, industry and commerce. They could also bring benefits by increasing electricity exports in future, as Kosovo has the fifth largest deposits of lignite in the world.

However, there are still technical shortcomings, and current power generating and transmission capacities will not be adequate for the country’s future development. Germany is therefore continuing to support measures to stabilise the power grid.

Germany has also recently started to provide support for more intensive use of district heating to heat buildings in Kosovo. District heating currently meets only about 3 per cent of the heat demand in Kosovo. German development cooperation is therefore supporting the repair and expansion of district heating systems in the cities of Pristina, Gjakova and Mitrovica.

Since 1999, Germany has also been involved in improving the urban water supply and sanitation. Within the scope of Financial Cooperation, the German federal government has committed funding of almost 33 million euros since 2000 to modernise the water supply system in 17 municipalities, thereby improving the water supply for 600,000 people in south-west Kosovo. The progressive introduction of environmental standards will help to improve living conditions for Kosovo’s population.

Economic development and employment promotion

Immediately after German development cooperation began, a microfinance bank was established with the help of KfW Entwicklungsbank. The ProCredit Bank (PCB) is tailored specifically to the needs of small and medium-sized enterprises (SMEs). In the first years of its existence, ProCredit Bank was the only functioning bank in Kosovo, and the only means of receiving foreign remittances on which the people of Kosovo so urgently depend. Since then, ProCredit Bank has become Kosovo's largest bank. It plays an important role, not only in promoting the SME sector, but also in the general development of the financial sector.

Sustainable structural reform – among other things, through the privatisation of the economy, individual entrepreneurship and the development of SMEs – is crucial for Kosovo’s further development. In the recent past, Kosovo's economic recovery has been driven primarily by small businesses engaged in trade, farming, crafts and manufacturing. In order to make these businesses more competitive, German development cooperation is offering specially tailored advisory services for each sector. German development cooperation is also promoting the establishment of vocational schools, chambers of commerce and trade, and professional associations.

A further priority area of cooperation is economic development in rural areas. This is intended to reduce rural poverty by improving income generation and employment opportunities.

Public administration reform and decentralisation

Under Kosovo’s constitution, a sustainable social and market economy as the basis of the economic order of Kosovo and a stable monetary and fiscal policy are defined as objectives of government action. This is intended to create attractive conditions for foreign investment. The requisite reforms of the political and economic environment, especially in relation to privatisation and in the energy sector, are still in their infancy, however. The same applies to decentralisation of the administration.

German development cooperation therefore supports measures to establish a transparent, well-performing administration which is responsive to citizens’ needs. German experts are therefore providing advisory services to the Ministry of Local Government Administration, the Ministry of Public Services, the Association of Kosovo Municipalities and selected local authorities, for example. In order to improve the opportunities for youth development and participation in Kosovo, Germany is also supporting the establishment of structures for the provision of youth services. By providing training for youth officers in the municipalities, the aim to ensure that qualified professionals are available to work on youth issues in future.

Basic education and vocational education and training

Vocational school Shtjefen Gjecovi in Pristina. Copyright:Friederike KärcherAround 50 per cent of the population of Kosovo is under 20 years of age, so basic and further education are essential if the country is to develop sustainably and offer its young people good prospects for the future. The education and training sector has therefore been a further  priority area of bilateral cooperation since 2007. The aim is to raise the number of children and young people who have completed basic education and initial vocational training and to reduce the number of unemployed young people. Germany is supporting reform of the education system in Kosovo. Measures in this sector include decentralisation of the education system, the provision of advice on the establishment of specialised centres of excellence in the field of vocational training, the development of pre-service teacher training programmes, and closer alignment of initial vocational training with local labour market conditions and EU standards.

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