Independence of Kosovo: From War and Poverty to the European Union

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SEATTLE — February 17, 2018, marks the tenth anniversary of the independence of Kosovo from Serbia. In 2008, Kosovo’s unilateral declaration of independence was backed by most Western democracies that deemed it to be a necessary step toward reconciliation and the peacebuilding process between Serbia and Kosovo.

However, the international opinion varied among countries who did not share the sentiment of support, particularly Serbia and its strongest ally, Russia. Both countries viewed the move as a secession from Serbia rather than a self-determination act, stating that the independence of Kosovo violates the principles of territorial integrity under international law.

International community members have expressed worry over Kosovo’s capability to maintain law and order without the assistance of the interim law enforcement of the United Nations Mission in Kosovo, as well as its ability to build an economy from the ground up without the help of extensive foreign assistance programs.

The building of democratic institutions and maintaining a stable economy is a difficult process for any state. Nonetheless, ten years after declaring independence, the youngest European country has many reasons to celebrate. Currently, Kosovo is one of three countries being considered as a potential candidate for European Union membership, and one of four European countries to record positive economic growth consistently since the 2008 global economic crisis.

Additionally, in recent years, Kosovo has become an attractive market for private investors tapping into the opportunities that an emerging market has to offer. Foreign corporations have taken advantage of low labor costs, low trade barriers and tariffs, as well as a 10 percent corporate tax rates.

In terms of imports and exports, the majority of trade is conducted with European states, which make up approximately 43 percent of Kosovo’s total trade for fiscal year 2016. This is partially due to the independence of Kosovo, which has earned the country a membership in the Central European Free Trade Agreement. In contrast, the U.S. exports of goods account for €56 million in trade deals, or roughly 2 percent of Kosovo’s total imports.

Although direct U.S. export to Kosovo is low, the U.S. government encourages foreign direct investments and international trade relations with Kosovo through the U.S. Trade and Development Agency (USTDA), an independent government agency in charge of connecting developing international markets with lucrative U.S. corporations.

The USTDA plays a conservative role in evaluating emerging markets while protecting and promoting the U.S. national interest, while at the same time advancing economic development in those emerging economies. One such company is the Telecommunication Management Group based in Washington D.C., which provides technical and telecommunication consulting services to businesses both domestically and internationally, including Kosovo’s Telecommunications Regulatory Affairs.

The U.S. Overseas Private Investment Corporation (OPIC), established under President Nixon in 1971, is another government agency which strives to expand the private investment sector and American participation in developing countries. Comparable to the USTDA, OPIC supports American economic growth as well as economic stabilization in developing countries.

The agency has negotiated project agreements with American companies, including ContourGlobal, which was awarded a €1.17 billion contract to build a power plant in Kosovo. MicroVest is another U.S.-based asset management firm investing in Kosovo’s financial sector. The for-profit investment company provides capital to underfunded institutions. In return, the financial institutions are capable of providing microfinancing to Kosovar entrepreneurs and small business owners.

The U.S.-NATO humanitarian-based coalition played a major role during the 1990s crisis in the Balkans. The military intervention led to the independence of Kosovo, and the progress towards European Union membership.

The case of Kosovo is a good example how foreign aid and American foreign policy reduces global poverty and stimulates global economy by opening the doors to new markets. This, in turn, provides a comparative advantage for post-war developing countries and well-established economies, one that is based on national interest while reaping mutual economic benefits.

– Valona Pllana

Photo: Flickr

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About Author

Valona Pllana

Valona writes for The Borgen Project from Boston, MA. She holds a master’s degree in international relations from Harvard University, and a bachelor’s degree in business management and economics from University of South Florida. Her research work and academic interests include foreign policy, post-war reconciliation, nationalism and ethnic relations – with a particular focus in Southeast Europe and Kosovo-Serbia relations.

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