James Pettifer is Professor at the Conflict Studies Research Centre, Defense Academy of the United Kingdom. He spoke at an EES noon discussion on October 19, 2004. The following is an updated summary of his presentation. Meeting Report 305.

The situation in the southern Balkans had generally been seen to be improving in 2003, with some institutional progress in Kosovo, the gradual implementation of the Ohrid Accords in Macedonia and activity on European Union (EU) accession in all countries. The international community was, though, excessively optimistic about the post-Milosevic climate in Serbia, which it believed would usher in a series of benevolent changes for the whole region and thus undermine nationalist sentiment in both Kosovo and Montenegro. In reality, little has changed in the Serbia-Kosovo relationship over the last three years. In this context, the Kosovo rioting and attacks on property and religious buildings in March 2004 were a shock to most of the international community. A number of random incidents led to the riots, which were also fueled by popular dissatisfaction with UNMIK's performance regarding unemployment and electric power generation. The riots did not halt the progress in transferring power and competencies to the new local institutions or the withdrawal of UNMIK from some spheres of Kosovo life. Nevertheless, they were a symbol of the deep underlying problems in Kosovo.

It is widely agreed that without a settlement of the Kosovo problem, the whole region south of Belgrade will have a cloud of potential future conflict and disorder hanging over it, and the blight of economic decline, the absence of social progress and lack of foreign investment will worsen. It was traditionally the poorest part of Yugoslavia and the farthest, both politically and geographically, from the closer relations with the EU of the northern ex-Yugoslav republics.

In Kosovo the political climate has been dominated by the ‘Standards before Status' policy, where progress towards independence for the 95 percent Albanian majority is judged by the international community according to a number of criteria. Most of them concern ethnic relations and the treatment of the approximately 70,000 resident Serb minority, and the unknown number of Serbs who may wish to return to Kosovo.

The international community appears unprepared for the arrival of the year of decision on Kosovo status, which is due in 2005. The ethnic Albanian majority believe that the international community has privately accepted that Kosovo's independence is inevitable, and the recent US recognition of Macedonia by its official name has further raised their expectations that the same process will apply to Kosovo. In the US and, to a slightly lesser extent, the UK, this is probably the case, but there is little sign in most of the EU that the political realities of the situation have been recognized.

The genuinely positive achievements of the 2001-2003 period, such as ending the international isolation of Serbia, some (if limited) progress towards cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY) and the initiation of military and security relationships with NATO, have produced a climate in Brussels towards Kosovo that, until March 2004, could be termed complacent. Commentators in publications such as the Wall Street Journal Europe have recently observed that synchronization of US, UK and EU policy is the key to success in producing a political settlement in Kosovo. But there are only limited signs to date that this is taking place. Many of the same thoughts could apply to Montenegro, where a new impetus towards independence has started with the adoption of a new national anthem and other symbolic indications of a popular desire to leave the federation with Serbia.

At the heart of the regional crisis—with Kosovo at its center—is the economic downturn. Except Macedonia, all of the countries in the region have reasonable, or even good, ‘on paper' growth rates, but these are from a low base and the statistics are unreliable. In reality, there is a very large poverty-stricken sector of the population, based on notional unemployment rates of at least 15 to 20 percent of non-farm workers. Moreover, since Balkan agriculture involves much underemployment and seasonal work, the real unemployment figures are higher. Large communities, particularly in Albania, Macedonia and Kosovo, are kept from destitution only by émigré remittances. Agriculture, the most promising industry in many places, receives little international interest or assistance. Moreover, Kosovo's uncertain legal climate makes it less attractive to investors, although there has been some recent progress in the involvement of the global corporations in local economies, i.e., with Coca-Cola in the American KFOR area of Kosovo. From the economic as much as the political point of view, the status quo is unsatisfactory. Some international actors are beginning to recognize the pre-independence realities. Despite the lack of a sovereignty decision, the World Bank has begun to make small amounts of money available for Kosovo projects.

A shortage of capital also affects Serbia. A considerable sum of money flowed into Serbia-Montenegro as a result of privatization but it was focused on only a few industries, such as tobacco, and has had little effect on the living standards of the majority of the population. The rising price of oil has also been a negative factor, since agriculture—a vital source of national hard currency revenue—depends on diesel oil.

This is perhaps the central weakness of the predominant outlook in the EU. It was assumed that economic progress based on a ‘democratic' Serbia as a new motor of progress would solve many problems in the region and reduce nationalist pressures. This neglected the weaknesses in the economic dimension of civil society in Serbia, where capital inflows have been highly selective and often focused on very specialized industries i.e. tobacco. The elite have enriched themselves considerably in selected areas, particularly in energy trading where there is little local economic enhancement. There has been little multinational interest in many old factories and enterprises set up within the framework of the Titoist planned economy.

Faced with these economic arguments for a status decision, the proponents of the status quo have had to fall back on the argument that giving independence to Kosovo would increase the risk of organized crime dominating the area. But this argument is based on poor data. The reality is that major trading in heroin and human trafficking is part of a multinational chain of activity starting in producer countries, such as Afghanistan, and passing through many other places before commodities reach their markets in Western Europe and the USA. On a common sense basis, it is extremely doubtful that independence or any other variant of political regime in Kosovo would make a substantial difference to this industry, given its transnational nature and massive profitability.

In the local political sphere, the autumn 2004 election in Kosovo was successful in the formal sense, like its predecessors, but few Serbs participated, probably fewer than in any previous Kosovo poll. The result produced more or less satisfactory results for the Albanian parties, but the largest party, Ibrahim Rugova's Kosova Democratic League (KDL), did not get enough votes to form a government independently. The new Ore Party, led by the western-supported Kosova journalist Veton Surroi, fared reasonably well, but did not establish itself as a major force, possibly due to the rather Yugoslavist attributes of its policy platform. The lack of a clear majority for the KDL was probably welcomed by the international community as there was a distinct possibility that the KDL might have declared immediate independence in the Assembly if it had won an overwhelming majority.

After a long period of inter-party discussions and negotiation, a coalition government between the KDL and the Alliance Party of ex-Kosovo Liberation Army (KLA) commander Ramush Haradinaj formed a government, naming Haradinaj as Prime Minister. The Democratic Party of Kosovo (DPK), led by ex-KLA political spokesman Hashim Thaci, garnered about 30 percent of the vote and will dominate the opposition in Parliament. Since Haradinaj was recently interrogated by Hague investigators and accused of war crimes by the Serbian government, his appointment as Prime Minister means the prospects for talks on the political status of Kosovo are problematic, since the Serbian government has stated that he will be arrested if he comes to Belgrade. Once again, a difference of approach has been visible between the EU, US and the UK. EU figures, such as Javier Solana and Chris Patten, have expressed concern over the direction of Kosovo Albanian politics but they do not seem to grasp that after a quiescent period, Kosovo is now taking a more radical turn. At a popular level, there is no doubt that the televised spectacle of political leaders, such as Fatmir Limaj, in the The Hague courtroom has increased alienation from UNMIK and the international community. In the Albanian-dominated Preshevo valley of southern Serbia, elections in late September also indicated a more radical direction, with a falling away of support for the Rugova-linked political forces, and a rise in support for the party linked to Thaci's DPK.

In certain quarters, the subject of a possible partition of Kosovo has risen on the agenda, if independence has to be granted. While this policy has a superficial attractiveness, in that it seems to recognize that the Serb-dominated opstinas (administrative regions) north of the Ibar river will never easily sit within an independent Kosova, it also has some very serious disadvantages. From an economic perspective, it will be much more difficult to achieve Kosovo viability without the mineral resources of northern Kosovo. Among other problems, partition could result in a full military reopening of the Preshevo valley insurgency, with Albanian demands that the Preshevo velley in Soutern Serbia be united with Kosovo to compensate for the loss of Mitrovica and Leposavac opstinas. Greece, the main regional actor within the EU, is widely believed to have made clear that while it accepts that the independence of Kosovo is coming, the ‘bottom line' for change lies with Preshevo: if it goes to Kosovo it would close off the main route linking Greece with fellow-Orthodox Serbia and the EU.

There is also a Macedonian dimension to this complex crisis. While progress has been made since the Ohrid agreements ending the short war in 2001, much remains to be done for the agreements to improve daily life in most places. The recent referendum on Ohrid has produced political discord, the resignation of Prime Minister Hari Kostov and government paralysis. There are many different views about the degree to which Kosovar Albanian and Macedonian-Albanian politics are interrelated, but there is no doubt that if there is no clear resolution of the Kosovo status issue before long, tensions in the Kosovo Albanian community will spill over into Macedonia, and vice versa.

For the next few months the usual factors of culture and the adverse climate affect politics and diminish political activity, but there is every reason to expect a renewal of tension as the spring approaches if there is no clear and orderly progress by the international community to review and begin to resolve the status issue. The mechanisms for doing this are not very clear. The Contact Group still exists but has produced little in the way of initiative or activity of late and is affected by the Russian influence within it. The EU has an obsolete, Belgrade-centric understanding of political reality in the region, and has some residual interest in trying to defend the Serbia-Montenegro Federation, however moribund it is in practice. One or two nations within the EU, principally Greece, are still fundamentally opposed to the whole political and security architecture that the US and its allies are trying to create in the region. Greece, aggrieved by the US Macedonian recognition decision is likely to use bureaucratic means to delay a Kosovo decision within international organizations. Russia increasingly sees the Balkans as part of its wider Black Sea policy and there is evidence of a renewal of activity within the more pro-active foreign policy of Vladimir Putin. Turkey, Slovenia, Albania and, to a lesser degree, Croatia, Bulgaria, Austria and Italy, are likely to be the main regional allies of the US and UK policy. 2005 offers many opportunities but also the prospect of a "Rebalkanisation of the Balkans," if there is not an effective coordination of US, UK and EU policy over Kosovo independence.