Aug 27, 2011

Croatia, Serbia In War Of Words Over Kosovo


RFERL

Former wartime foes Serbia and Croatia's on-again, off-again relationship took a new turn for the worse this week after Croatian Prime Minister Jadranka Kosor's visit to Kosovo.
Croatian Prime Minister Jadranka Kosor (left) welcomes Serbian President Boris Tadic to Zagreb in November 2010. No longer best friends forever?

The diplomatic incident also came hot on the heels of Serbia's change of position on EU membership, after the visit of German Chancellor Angel Merkel, from "both EU and Kosovo" to "Kosovo before EU."
On August 24, Kosor said in Pristina that her country was Kosovo's best friend because both countries suffered from the nationalist and war-making regime of late Serbian leader Slobodan Milosevic in the 1990s.

Serbia's increasingly gaffe-prone and blunt-speaking foreign minister, Vuk Jeremic, blasted her a day later: "Whoever has Jadranka Kosor as a best friend, doesn't need enemies."

On August 26, Kosor said that after 20 years of independence, won after a bloody war with Belgrade-backed Serbian separatists in the early 1990s, no Croatian politician or prime minister would ever again go to Belgrade to ask for permission about what to do or think.

"Those times are, luckily, gone forever," she said.

No More Mr. Nice Guy
This type of rhetoric in Serbian-Croatian relations appeared to be over after the pro-European and mild-mannered Ivo Josipovic was elected president of Croatia in early 2010, replacing Stipe Mesic, who rarely minced words when it came to criticizing Serbia over Kosovo and its support for separatist Bosnian Serbs.

Josipovic and his Serbian counterpart Boris Tadic have held a series of meetings that, despite occasional hiccups related to unresolved war-related issues, appeared to have improved relations in the region.

Serbia has also held EU-sponsored technical talks with Kosovo on administrative and bread-and-butter issues, but these have stalled and appear uncertain after last month's rioting by Kosovo Serbs after Kosovo's police tried to take over border crossings in Serb-held northern areas.

Merkel told Serbia that it had to dismantle parallel structures it supports in northern Kosovo if it wanted to move closer to the EU. Belgrade had hoped to get candidate status by the end of the year.

But with a clear choice on Kosovo to make and Serbian general elections scheduled for spring next year, Tadic has shifted the Serbian policy to the right, saying, "If we are going to get a request for Serbia to make a choice...my answer would be that Serbia would not give on any of its political interests."

Independent parliament deputy Vesna Pesic told RFE/RL: "Starting [with] the [Serbian Orthodox] Church, everybody thinks that Serbia should not betray Kosovo. This means that because of the forthcoming elections and internal pressure from the general public, [Tadic] needs to act tough."

Aug 23, 2011

Angela Merkel to press Serbia on Kosovo


BBC
German Chancellor Angela Merkel has begun a visit to Serbia with the message that it must normalise ties with Kosovo if it wants to join the EU.
She is the first prominent Western leader to visit since the capture and extradition of war crimes suspect General Ratko Mladic in May.
(Tanjug)
Talks between Serbian and Kosovan negotiators are due to resume next week in Brussels under EU mediation.
Belgrade still regards the breakaway territory as part of Serbia.
Speaking on a visit on Monday to neighbouring Croatia, which is due to join the EU in 2013, Mrs Merkel said:
"My story in Belgrade will be this: look at Croatia, they succeeded, we want you to have peace, to improve, to develop socially and economically... to join us at the table, but you need to do something in return.
"One of the preconditions for Serbia is Kosovo, that relations between those states get normalised."
Violent clashes have erupted this summer over the control of borders between Serbia and Kosovo.
Business interests
Serbia aims to be granted official EU candidate status later this year and to be given a start date for accession talks, the BBC's Mark Lowen reports from the Serbian capital.
This is the first visit to Serbia by a German chancellor in several years and is intended to encourage Serbia's government to maintain its pro-EU path, our correspondent says.
Germany was one of the first countries to recognise Kosovo's declaration of independence from Serbia in 2008 and has been an outspoken critic of Belgrade's refusal to accept the split, he adds.
A large delegation of business leaders is accompanying Mrs Merkel in the hope of increasing Germany's already significant investment in Serbia.
German companies including Siemens have large factories in Serbia and there are plans to expand further.
Overall, our correspondent says, the German visit is a sign that Serbia is moving more into the European mainstream and that the West has its hand outstretched.

Gadhafi son resurfaces, free and vowing to fight

TRIPOLI, Libya (AP) — The son and heir apparent of Libyan leader Moammar Gadhafi, Seif al-Islam, resurfaced free and defiant early Tuesday a day after rebels claimed to have captured him, boasting in a bizarre reappearance that his father's loyalists still control parts of Tripoli and would crush the rebellion.
Moammar Gadhafi's son, Seif al-Islam gestures to troops loyal to his father in Tripoli, Libya, Tuesday, Aug. 23, 2011. Seif al-Islam, who was earlier reported arrested by Libya's rebels, turned up early Tuesday morning at the hotel where foreign journalists stay in Tripoli, then took reporters in his convoy on a drive through the city. (AP Photo/Imed Lamloum, Pool)
Seif al-Islam's sudden — even surreal — arrival at a Tripoli hotel where foreign journalists are staying threw the situation in the capital into confusion. It underlined the potential for Gadhafi, whose whereabouts remain unknown, to lash back even as his grip on power seemed to be slipping fast.
Rebels say they control the large majority of Tripoli, but on Monday they were still fighting pockets of fierce resistance from regime loyalists firing mortars and anti-aircraft guns. Rebel spokesman Mohammed Abdel-Rahman, who was in Tripoli, said the "danger is still there" as long as the elder Gadhafi remains on the run. He warned that pro-Gadhafi brigades are positioned on Tripoli's outskirts and could "be in the middle of the city in half an hour."
The rebel leadership seemed stunned that Seif al-Islam was free. The leadership's spokesman, Sadeq al-Kabir, had no explanation and could only say, "This could be all lies."
He could not confirm whether Seif al-Islam escaped rebel custody, but he did say that another captured Gadhafi son, Mohammed, had escaped the home arrest that rebels had placed him in a day earlier. On Monday, the rebels had said Seif al-Islam was captured, but did not give details on where he was held. The Netherlands-based International Criminal Court — which indicted Seif al-Islam and his father — had confirmed his capture.
Seif al-Islam, with a full beard and wearing an olive-green T-shirt and camouflage trousers, turned up early Tuesday morning at the Rixos hotel, where about 30 foreign journalists are staying in Tripoli under the close watch of regime minders.
Riding in a white limousine amid a convoy of armored SUVs, he took reporters on a drive through parts of the city still under the regime's control, saying, "We are going to hit the hottest spots in Tripoli." Associated Press reporters were among the journalists who saw him and went on the tour.
The tour covered mainly the area that was known to still be under the regime's control — the district around the Rixos hotel and nearby Bab al-Aziziya, Gadhafi's residential compound and military barracks. The tour went through streets full of armed Gadhafi backers, controlled by roadblocks, and into the Gadhafi stronghold neighborhood Bu Slim.
At Bab al-Aziziya, at least a hundred men were waiting in lines for guns being distributed to volunteers to defend the regime. Seif al-Islam shook hands with supporters, beaming and flashing the "V for victory" sign.
"We are here. This is our country. This is our people, and we live here, and we die here," he told AP Television News. "And we are going to win, because the people are with us. That's why were are going to win. Look at them — look at them, in the streets, everywhere!"
When asked about the ICC's claim that he was arrested by rebels, he told reporters: "The ICC can go to hell," and added "We are going to break the backbone of the rebels."
In Benghazi, the de facto rebel capital hundreds of miles east of Tripoli, the head of the rebel National Transitional Council said the rebels have no idea where Gadhafi is or whether he is even in Tripoli.,
"The real moment of victory is when Gadhafi is captured," Mustafa Abdel-Jalil said. An Obama administration official said the U.S. had no indication that Gadhafi had left Libya.
President Barack Obama said the situation in Libya reached a tipping point in recent days after a five month NATO-led bombing campaign. However, he acknowledged that the situation remained fluid and that elements of the regime remained a threat.
The Obama administration official said the U.S. believes 90 percent of the capital is under rebel control, while regime loyalists still control Sirte and the southern city of Sebha. The official spoke on the condition of anonymity because the official was not authorized to speak publicly.
Gadhafi's forces remained active, firing off a short-range Scud missile Monday near Sirte, Gadhafi's hometown and one of the few remaining cities still under his control, said U.S. military officials, who spoke on condition of anonymity to discuss military operations. It was unclear where the missile landed or if anyone was hurt.
It was only the second Scud missile fired during this year's conflict. On Aug. 15, Libyan government forces launched one near Sirte that landed in the desert outside Brega, injuring no one.
NATO vowed to keep up its air campaign until all pro-Gadhafi forces surrender or return to their barracks. The alliance's warplanes have hit at least 40 targets in and around Tripoli in the past two days — the highest number on a single geographic location since the bombing started in March, NATO said.
A day after the rebels rode into the city of 2 million, the situation remained volatile. Even though rebels claimed they were in control of most of Tripoli, they still appeared to be on the defensive, ducking for cover during frequent clashes with regime fighters. Stores were shuttered and large areas were lifeless, including the old gold market, in the past a draw for tourists.
Throughout the day, the rebels sent reinforcements to the city from the north, south and southeast, and a rebel field commander said more than 4,000 fighters were part of the final push to bring down the regime. Rebels manned checkpoints on the western approaches to the city Monday, handing out candy to motorists and inquiring about their destinations.
Intense gun battles erupted throughout the day. At Bab al-Aziziya compound, government tanks emerged from the complex and opened fire at rebels trying to get in, according to the rebel spokesman Abdel-Rahman and a neighbor.
Around midday Monday, rebel fighters took over a women's police college near the Mediterranean and declared that they would set up their new headquarters there.
"We are going to protect the city of Tripoli from all attacks and threats," fighter Munir al-Ayan said after kneeling and kissing the ground in the compound.
"I was bowing down to the Almighty God who helped us get rid of this brutal dictator," he later explained.
But the rebels' optimistic mood of the morning quickly changed. By mid-afternoon, the college came under heavy fire. Snipers from nearby high-rises aimed at motorists speeding by. An anti-aircraft gun pounded the compound, creating a deafening noise. A handful of rebel fighters inside seemed jumpy and unsure what to do.
Gadhafi loyalists also launched attacks in two other areas of Tripoli, said Ashraf Hussein, a rebel fighter who sat pressed against an inner wall of the compound for safety.
Drivers trying to evade sniper fire ducked into side streets, or stopped at rebel checkpoints to find out whether the next stretch was safe. Booms of mortar rounds and small rockets reverberated across the city, mixed with battle cries of "God is great."
Later Monday, another battle erupted around a school where rebels and journalists had set up camp. Rebels fired small rockets, and Gadhafi troops responded with mortar shells.
Still, revelers flocked to Green Square, the symbolic heart of the fading Gadhafi regime. They flashed the "V'' for victory sign and motorists circled the plaza, honking horns and waving rebel flags.
"We came out today to feel a bit of freedom," Ashraf Halati, a 30-year-old Tripoli resident, said as he and four of his friends watched several hundred people celebrating at Green Square. "We still don't believe that this is happening."
Late Sunday night, rebels took over Green Square, which they have been calling Martyrs Square, restoring the name it had before Gadhafi's regime took power more than four decades ago. Google's map of Tripoli has already adopted the new name. The opposition also took up the pre-Gadhafi flag of Libya as their own at the start of their uprising six months ago.
The Rixos hotel where foreign journalists are staying also remained under the control of Gadhafi forces, with two trucks loaded with anti-aircraft machine guns and pro-regime fighters and snipers posted behind trees.
About 30 journalists remained in the hotel where armed pro-Gadhafi youths kept a close eye on them and did not allow to them to exit the building. Journalists began to worry that food, water and fuel that powers the hotel's generator were running low.
Some of the journalists attempted to walk out of the hotel but were met with hostility by the armed guards, who said they were put there to "protect" them. Journalists said they felt like they were being held hostage.
Outside of Tripoli, almost all of eastern and western Libya is now under rebel control. The east of the country from the Egyptian border to Benghazi fell into rebel hands at the beginning of the uprising. In the weeks leading up to Sunday's lightning advance on Tripoli, the rebels consolidated control of the western Nafusa mountain range near the border with Tunisia. It was from there they staged the run on the capital. Most of the rest of the country was quickly falling into their hands.
The city of Sirte, Gadhafi's hometown to the east of Tripoli, was the most important loyalist bastion to remain fully under his control.
On Monday, the city was without power and full of heavily guarded Gadhafi checkpoints, said Hassan al-Daroui, an official with the rebel council in Benghazi who was in touch with people there by satellite phone. Many people there were not even aware that rebels had pushed into the capital, 250 miles (400 kilometers) to the northwest, he said.
On Saturday rebels said they gained control of the oil refineries and airport at the oil terminal of Brega, on the road heading out of Benghazi west toward Tripoli.
The rebels' startling breakthrough on Sunday, after a long deadlock in Libya's 6-month-old civil war, was the culmination of a closely coordinated plan by rebels, NATO and anti-Gadhafi residents inside Tripoli, rebel leaders said. Rebel fighters from the west swept over 20 miles (30 kilometers) in a matter of hours, taking town after town and overwhelming a major military base as residents poured out to cheer them. At the same time, Tripoli residents secretly armed by rebels rose up.
Libyan state television was off the air Monday amid reports it had been seized by rebels.

Aug 2, 2011

AP Interview: Kosovo PM Backs Drive For North

by Nebi Qena
(AP and OfficialWire)

Kosovo's Prime Minister Hashim Thaci said Monday he won't back away from his drive to extend authority over the Serb-run north, which rejects Kosovo's independence.
"There is no turning back and there is no compromise with anyone over the country's security," Thaci said.
The former rebel leader, who fought Serbia during Kosovo's 1998-99 independence war, ordered special police units last week to set up customs points on two border crossings with Serbia citing a decision to enforce a ban on goods coming ii from across the border.
Thaci told The Associated Press in an interview he felt the country's "patience was abused" by international institutions that have allowed the northern region to slip away from Pristina's control.
"The change in the situation there is unstoppable," Thaci said following a visit at the special police units' base some 20 kilometers west of the capital Pristina.
The operation that left one policemen dead prompted resistance from local Serbs who set a border post on fire and shot at NATO peacekeepers deployed to thwart further violence.
It also drew criticism from the European Union, whose 3,000-strong mission there — known as EULEX — was taken by surprise by Pristina's move.
The EU has launched talks between Kosovo and Serbia, with a recent agreement to ease travel between the two territories being hailed as a breakthrough in the bitter relations. 
The violent flare-up, however, has revived the simmering animosity, with Serbs setting up roadblocks to stop NATO troops or Pristina's security forces from sending reinforcements.
NATO said Monday some roadblocks had been cleared, but hundreds of Serbs still manned barricades on the main roads leading to the north.
EU mediator Robert Cooper is due in Pristina Tuesday in a bid to get talks back on track despite the recent controversy
Pristina sees the crossings as essential to prove its authority over Kosovo's full territory, while Belgrade seeks to maintain its influence in the north and undermine Kosovo's 2008 declaration of independence.
Kosovo's independence is currently recognized by 77 states, but Serbia has vowed never to accept the secession.

IMF Executive Board Concludes 2011 Article IV Consultation with the Republic of Kosovo

Public Information Notice (PIN) No. 11/105
August 1, 2011
On July 6, 2011, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Kosovo.1

Background
Kosovo enjoyed robust economic growth in the 2000s and weathered the global financial crisis well, owing to limited integration into global financial and goods markets. The economy is expected to grow by more than 5 percent in 2011, up from 4 percent in 2010, supported by continued large remittances inflows from the Kosovar diaspora, robust credit growth, especially to households, and higher public spending, including on infrastructure projects. Inflation follows closely price developments for imported food and gasoline, triggering deflation in 2009 and double-digit inflation in early 2011, but core inflation has remained well-behaved. While credit growth has moderated, banks’ portfolio quality has deteriorated only modestly and profits have remained high. Large capital buffers suggest banks—which are mostly foreign owned—have ample shock-absorbing capacity.
While Kosovo pursued a conservative fiscal policy during most of the 2000s, since 2008 the government has moved to an increasingly expansionary stance, financing the resulting deficits from accumulated savings, the sale of assets, and donor support. As a result, the general government balance shifted from a surplus of more than 7 percent of GDP in 2007 to a deficit of 2.6 percent in 2010. Capital spending has been the main driver of this expansion. Last year, construction started on a highway connecting Pristina with Albania’s border, with total costs estimated at more than 20 percent of annual GDP spread over a period of 4 years. In 2011, the government increased public sector wages and benefits for war invalids and their families by 30 to 50 percent.
An 18-month Stand-By Arrangement (SBA) was approved by the IMF Executive Board on July 21, 2010. The program supported by the SBA was built around (i) restraint on current spending, higher revenues and privatization receipts to contain the impact on the investment program on the overall deficit, and (ii) bolstering the government’s deposits with the Central Bank to build buffers for fiscal and financial contingencies. The 2011 budget adopted by the newly constituted Assembly deviated from the budget agreed in the context of the SBA, notably the large public sector wage increases. As a result, no review under the program could be completed.
Executive Board Assessment
Executive Directors welcomed the progress made by the Kosovar authorities in building key social and economic institutions. Nevertheless, further efforts are necessary to enhance competitiveness, ensure fiscal sustainability and safeguard financial stability.
Directors highlighted the need to reorient Kosovo’s growth model, especially to address the uncertain prospects of remittances and Foreign Direct Investment (FDI), which have so far supported growth. Going forward, policies should focus on enhancing competitiveness to foster the emergence of a tradable sector that can drive economic development and self-sustained growth, and help reduce unemployment. To this end, it will be critical to upgrade public infrastructure and education, improve the business climate, and maintain competitive wage levels.
Directors noted that while the unilateral adoption of the euro provides a strong monetary anchor, it also increases demands on macroeconomic management. A premium should be placed on disciplined fiscal policies and flexibility to adjust to external shocks.
Directors noted that Kosovo’s shift to an expansionary fiscal stance since 2008 was unsustainable. They stressed that improving fiscal management is essential to maintain fiscal sustainability. For the near term, Directors urged disciplined budget execution and public financial management. This should include prudent wage policies, and a careful design and sequencing of social and capital spending initiatives, with thorough assessments of the resulting fiscal costs and compensating savings measures as needed. Over the medium term, it will be critical to reorient fiscal priorities, including by raising more revenue from direct taxes.
Directors welcomed the progress on developing Kosovo’s financial system. They noted that a strong institutional framework, especially improved legal capacity and defined property rights, will be crucial to safeguard financial stability. Passage of the new banking law will be an important step in this direction. Building the capacity to provide emergency liquidity assistance to the banking system is also a priority and the authorities should undertake measures to make this operational.
Directors welcomed the agreement reached on the staff-monitored program (SMP). They underscored that steadfast implementation of policies under the SMP would allow Kosovo to take decisive steps towards ensuring fiscal sustainability and pave the way for a future Fund-supported program.


Kosovo: Main Indicators, 2008-12


2008
2009
2010
2011
2012



Est. 
Projections

Real growth rates





GDP
6.9
2.9
4.0
5.3
5.0
GDP per capita
5.3
1.4
2.5
3.7
3.4
Consumption
4.3
1.0
2.7
2.7
2.9
Investment
18.1
10.1
5.2
13.3
6.6
Exports
4.7
8.9
30.1
7.2
6.9
Imports
5.9
4.7
11.0
5.5
2.6
Price changes





CPI, period average
9.4
-2.4
3.5
8.3
2.6
CPI, end of period
0.5
0.1
6.6
6.2
1.9
GDP deflator
6.2
-1.3
3.0
5.8
3.3
Real effective exch. rate (average; -=depreciation)
3.2
-1.0
-0.7
Real effective exch. rate (end of period; -=depreciation)
0.2
-1.0
0.9
General government operations (percent of GDP)





Revenues, incl. interest income 1/
24.5
29.3
27.8
27.1
27.5
Primary expenditures
24.7
29.9
30.2
31.8
30.8
Of which





Wages and salaries
5.9
6.8
7.4
8.3
7.9
Subsidies and transfers
7.1
7.3
6.4
6.3
6.4
Capital and net lending, incl. the highway
7.6
11.6
12.0
13.0
12.3
Capital expenditures on the highway 2/
2.9
5.3
5.8
Overall balance
-0.2
-0.7
-2.6
-5.0
-3.5
Debt financing, net
0.0
-0.2
0.3
0.2
1.5
Privatization
0.0
0.0
0.0
6.4
0.0
Stock of government bank balances
10.8
8.7
5.8
6.5
5.8
Recommended minimum bank balances
5.8
7.6
5.8
Financing gap
0.0
0.0
0.0
0.0
1.8
Savings-investment balances (percent of GDP) 3/





Domestic savings
-12.6
-7.4
-7.1
-7.3
-5.0
Transfers excluding general government (net)
14.0
11.9
12.6
12.1
12.1
Net factor income
4.3
2.3
3.0
2.6
2.9
National savings
5.8
6.8
8.5
7.4
10.0
Investment
28.6
31.8
33.5
37.8
36.6
Current account, excl. official transfers
-22.8
-25.0
-24.9
-30.4
-26.6
Balance of payments (percent of GDP)





Current account balance, incl. official transfers
-15.2
-17.2
-16.3
-25.0
-20.5
Of which: official transfers 4/
7.6
7.8
8.6
5.5
6.0
Net foreign direct investment
8.9
7.0
7.4
15.2
7.2
Portfolio investment, net
1.7
-1.4
-5.5
-3.0
-1.6
Banking sector (percentage change)





Bank credit to the private sector
32.7
8.9
12.6
12.9
11.0
Deposits of the private sector
25.8
22.2
23.1
12.0
11.3
Non-performing loans (percent of total loans)
3.3
4.3
5.2
5.9 5/
GDP (millions of euros)
3,851
3,912
4,192
4,672
5,066
GDP per capita (euros)
1,785
1,786
1,886
2,070
2,212


1/ Projections assume grants of EC and IDA.
2/ Based on World Bank estimates.
3/ Savings-investment of the economy including donor sector
4/ Excluding capital transfers
5/ March 2011.

1 Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.imf.org/external/np/sec/misc/qualifiers.htm.