Mark Baskin began by explaining the significance of local government. It is tempting, after all, to concentrate on the centers of power in capital cities, particularly in developing countries where international aid actors focus most of their activities on central government. But many development NGOs and international organizations are reorienting their gaze to local government because it is the first tier of government people confront in their everyday lives. Good local governance, it is now thought, hastens political institution building and economic development. At the same time, effective local government has the capacity for resolving conflicts at an early stage, which prevents local conflicts from escalating.

Kosovo makes a good case study. The attempt to resolve the 1999 violent conflict in the region led to the total dissolution of what remained of the local government's ties to the center in Belgrade, as well as weakening ties to the regional capital in Pristina. As a means of enhancing Kosovo's weak self-governing capabilities, international actors have concentrated on making Kosovo's towns and regions more independent by building strong local institutions. However, progress toward this end has been stalled by high levels of uncertainty.

Uncertainty stems from the absence of security, Kosovo's unclear future status and the conflict over the necessary standards Kosovo must meet before official separation from Serbia can be contemplated. The effects of uncertainty translate into unfavorable circumstances for improving local governance. Predictably, uncertainty is bad for business, with the result that Kosovo must import nearly all consumer goods and produces few exports. The economy can only support the cost of one-fifth of its imports, leaving the region highly dependent on foreign aid. Uncertainty has forestalled rebuilding infrastructure and creating a legal framework within which business can operate. As a result, corruption is prevalent: the best hope to accumulate wealth is to work for the government and line one's pockets with international subsidies.

Democratic local institutions in Kosovo lack technical competence and political inclusiveness—both essential for creating effective local governments. There is no sense of the public good or a civic ethos, which might prevent local leaders from corrupt privatization practices. This is not helped by the fact that the electoral process does not produce civil servants that are accountable to a specific constituency. Furthermore, while the media is relatively well-developed, it does not cover local politics effectively, which allows corrupt officials to operate with impunity.

The Council of Europe and other international organizations have offered excellent prescriptions for improving local government—plans which would surely improve local governance in many American cities. However, these plans have little hope of being implemented in Kosovo, which is contending with the multiple legacies of authoritarianism, violent ethnic competition and economic distress. The fragile, highly-dependent economy and deeply politicized public life in Kosovo must be addressed quickly. Baskin believes that a broader political settlement would simultaneously decrease uncertainty and ethnic competition, which would create a better foundation for institutional reform and foster economic development. However, since this is not on the international agenda (at least until mid-2005), he believes that half-loaf solutions are necessary to address immediate human needs in the region. First, Kosovo needs electoral reform, which would produce accountable politicians. Second, aid groups should focus on administrative reform rather than on politics and on building technical capacity of local government.