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Kosovo
>> Regional Overview >> Federal Republic of Yugoslavia Overview >> Kosovo
Program Summary
Last updated: 01
Introduction
The United States has compelling national interests in the political and economic stability of Kosovo and the region, and establishing a secure, democratic governing framework in which human rights are respected and ethnic conflict is contained, if not overcome. After a decade of military and civilian involvement seeking peace in the region, the United States, the North Atlantic Treaty Organization (NATO), the United Nations, and the European Union all have an enormous stake in building a peaceful Kosovo. Given continuing ethnic hatreds and desires for vengeance, the province currently remains a potential flash-point which, without the continued presence of NATO's Kosovo Implementation Force (KFOR), could erupt in renewed hostilities. Rebuilding economic, political and social structures that increase Kosovar citizens' control of their lives is one element that can increase their sense of security and help them over time to let go of past wrongs and focus on building their futures.
Over the past year, the international community has made significant progress in implementing United Nations Security Council Resolution (UNSCR) 1244, which authorized an international civilian and military presence in Kosovo to provide a transitional administration and to establish and oversee democratic institutions and the eventual transition to "substantial autonomy and meaningful self-administration." Kosovars have largely bought into the deliberate transition laid out in UNSCR 1244, and accept that establishment of democracy, self-governance, and substantial autonomy under the aegis of the United Nations Mission in Kosovo (UNMIK) are necessary, even desirable, steps on the road to a decision about Kosovo's final status.
Development Challenge
The 1999 conflict took a heavy toll, with direct war and inter-ethnic damage compounding the prior decade of lack of maintenance of most systems. The conflict most severely affected housing, agriculture and telecommunications. About 31% of housing units were damaged or destroyed. Agricultural production and agro-processing, which contributed significantly to pre-conflict GDP and employment, suffered more than 50% loss of livestock and other assets, and at least two cropping seasons were lost. Key parts of the telecommunications system were destroyed. While reliable statistical information is limited, donors estimate that per capita income plummeted $1000 in 1989 to $400. Estimates at the end of CY 2000 shows per capita income rebounding to over $700.
Fueled by remittances from the Albanian diaspora and by donor funding, however, the Kosovar economy continues to make a strong start in recovering from the contraction in per capita output over the last two decades and the devastation of the recent conflict. However, conflict related damage, the poor state of infrastructure, inadequate energy supplies, the denuded capital stock in enterprises, and the lack of financial inter-mediation remain powerful factors constraining economic growth.
In 2000, UNMIK laid the groundwork for stabilizing macroeconomic conditions, providing essential public services and creating an environment conducive to a private-sector-led recovery and long-term growth. In the past eighteen months, UNMIK, largely with the help of U.S.-funded technical assistance, has put in place a basic institutional framework for the economy, including a Central Fiscal Authority (CFA) to manage the budget and collect internal revenues; a Banking and Payments Authority to govern the nascent banking system; and a Customs Service to collect tariffs, a major source of local revenues.
The CFA administers the Kosovo Consolidated Budget (KCB) with the goal of moving toward a self-financing budget for Kosovo. The KCB for calendar year 2000 came to roughly DM 430.8 million (US $196 million), split 50/50 between donor contributions and domestically-raised revenue. The consolidated budget for calendar year 2001 projects a budget of DM 500 million, 68% of which will be funded locally.
The municipal elections of October 2000 attracted a huge turnout and were universally perceived as free and fair and as reflecting the will of the voters. Smooth implementation of election results is now underway, with the elected Municipal Assemblies in all of Kosovo's 30 municipalities sworn in and beginning to exercise control over local government functions. Three majority Serb municipalities, where voters did not participate in the elections, have not yet elected their Presidents and Vice Presidents. UNMIK is beginning to involve Kosovars in discussions of an "interim constitution," and has taken the first steps toward holding Kosovo-wide elections, both of which will encourage the continuing cooperation of all parties.
Despite major achievements, much remains to be done to build the rule of law. Faced with legal personnel who had not worked in ten years, a crumbling court infrastructure and a population which had lost all respect for the rule of law under former Yugoslav President Slobodan Milosevic, UNMIK has nonetheless been able, with international and Kosovar support, to establish courts at all levels that are staffed, equipped, and deciding cases based on defined legal codes. Ethnic tension has raised perceptions of unfairness in some cases, which UNMIK has tried to address through its appointment of international prosecutors and judges in each of the five judicial districts.
During FY 2001 USAID's Office of Foreign Disaster Assistance (OFDA) continued to help address the needs of thousands of families who were left homeless as a consequence of the conflict. Its other emergency activities during FY 2001 included health programs offering mobile primary medical clinics that served both minority and majority citizens in isolated enclaves in Gjilan and Mitrovica; water and sanitation programs for well cleaning and water testing throughout Kosovo; and support for agriculture programs. The closeout activity of OFDA's shelter program has been to assist 2,600 families during the winter of 2000/2001. OFDA's program ended on March 31, 2001.
USAID's Office of Transition Initiatives, through its Kosovo Transition Initiative (KTI), encourages political diversity, increases citizen participation in political and community affairs, and fosters professionalism and transparency in media and public service institutions. Since Kosovo's successful municipal-level elections, KTI has refined its focus in order to contribute to the cultivation of real and lasting relationships between citizens and elected governments for the identification and realization of projects that address community-identified needs. KTI will close out on September 30, 2001.
USAID's Food for Peace office and the U.S. Department of Agriculture provided over $90 million in food aid during 2000, roughly 85% to 95% of all food assistance distributed in Kosovo. These resources were vital to the welfare of refugees and returnees given the disruption in agricultural production from the conflict. A beneficiary case load that was as high as 870,000 persons has been whittled down to approximately 300,000 persons, which roughly approximates the number of permanent social cases in the population. Increased agricultural production, which has reached 75% to 85% of pre-conflict levels, combined with a social welfare program and supporting institutions developed through the joint efforts of USAID, the World Food Program, and UNMIK, allowed for the steady and orderly reduction of beneficiaries.
Other Donors
While the needs are great, the international community is fully engaged. Congressional and Administration interest in burden sharing will ensure that the United States does not provide more than 15% of total development assistance. European and other donors, rather than the United States, are undertaking major infrastructure and housing repair. Major donors include the European Union, European bilateral donors, and Japan. The World Bank has limited direct assistance but has been active in supporting donor conferences and participating in needs assessments. The International Monetary Fund has been limited in its ability to provide assistance as Kosovo is not a member state, but it has provided technical assistance and advice to UNMIK.
FY 2002 Program
The objective of the U.S. Government program is to support UNSCR 1244 and to aid in the creation of a secure, well-functioning, multi-ethnic society with an open and free market economy, a system of justice that is impartially administered, and opportunities for people to make informed choices and participate in their own social and economic recovery.
USAID will continue to provide technical assistance to the Central Fiscal Authority (CFA), in creating the budgetary, financial administration, and revenue-generating systems that serve as the backbone for all government operations in Kosovo. The systems that USAID has created at the CFA provide information necessary to Kosovar and UNMIK decision-makers for setting priorities and allocating resources. They are also the reason that domestically generated revenues account for such a high percentage of the consolidated budgets of calendar years 2000 and 2001. All of these systems were put in place in consultation with Kosovars and were complemented by extensive recruitment and training of local staff. USAID will also continue to provide support to the establishment of a functioning Banking and Payments Authority (BPK), which is responsible for the licensing and supervision of the financial sector. The rigorous bank licensing system and financial reporting and performance requirements are widely credited with helping establish stability in the financial sector and helping restore public confidence in the banking system.
USAID will continue to offer technical assistance to UNMIK Reconstruction Pillar's Department of Trade and Industry (DTI) to establish and implement a comprehensive privatization program and a market oriented commercial law framework. USAID will continue to implement a number of hands-on private sector development activities in FY 2002, including a credit program that provides loans to individuals and households, along with training in basic business principles, loan repayment, and management techniques; and a program that builds associations of wholesalers and retailers of agricultural inputs. At the beginning of FY 2001, USAID began implementation of its keystone private sector initiative, the Kosovo Employment Generation Program (KEG), which provides non-financial business service support to small and medium size enterprises (SMEs). This activity will be complemented by the creation of a financial institution to provide credit to SMEs.
Rehabilitation of basic infrastructure is necessary for economic growth and a return to normalcy. USAID's infrastructure rehabilitation program will continue to work with communities to prioritize and reestablish basic community level services. This program will fund up to 300 small-scale rehabilitation projects throughout the province including utility distribution systems, health facilities, schools, transport and municipal infrastructure. USAID will also continue to provide technical assistance in utilities management to municipalities.
USAID will remain engaged in a broad range of democracy building activities. These include election administration, development of political parties, independent media and civil society, and the establishment of an independent judiciary. A common thread running through all of the programs is that they build local capacity, cross ethnic lines, encourage participation, and foster an atmosphere of reconciliation and peaceful coexistence.
USAID's Kosovo Assistance Program, an umbrella grant implemented through non-governmental organizations, will continue to support priority activities that stabilize communities, such as income generation, the restoration of community services, increasing parental involvement in schools, and women's health.
Activity Data Sheets
- 167-013 Establishment of an Economic Policy and Institutional Framework
- 167-021 Accountable and Transparent Governance
- 167-031 Restored Normalcy in Living Standards and Opportunities
- 167-041 Special Initiatives
- 167-042 Cross-Cutting Programs
Country Background Information Resources
CIA Factbook
Library of CongressNational Geographic Country Maps
State Dept. Country Information
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Last Updated on: May 29, 2002 |
