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Opening Kosovo to foreign capital
by Mine Aysen Doyran
18 January 2001 19:46 UTC
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State terror and the "free market"

Opening Kosovo to  foreign capital

 by Michel Chossudovsky (3-3-00)

Copyright March, 2000. Please see end of article for

 (Michel Chossudovsky is Professor of Economics at the University of
 Ottawa and author of The Globalization of Poverty, Impacts of IMF
 and World Bank Reforms, Third World Network, Penang and Zed
 Books, London, 1997.)

              www.tenc.net [emperors-clothes]

 In occupied Kosovo under the mandate of UN peace-keeping, State
 terror and the "free market" go hand in hand. The concurrent
 criminalization of State institutions is not incompatible with the
 economic and strategic objectives in the Balkans. Notwithstanding the
 massacres of civilians, the self-proclaimed KLA administration has
 committed itself to establishing a "secure and stable environment" for
 foreign investors and international financial institutions.

 The Minister of Finance Adem Grobozci and other representatives of
 the provisional government invited to the various donor conferences
 are all KLA appointees. In contrast, members of the KDL of Ibrahim
 Rugova (in duly elected parliamentary elections) were not even
 invited to attend the Stabilization Summit in Sarajevo in July 1999.
 More recently UNMIK Head Bernanrd Kouchner has called for the
 dissolution of Rugaova’s parliament.

 "Free market reforms" have been envisaged for Kosovo under the
 supervision of the Bretton Woods institutions largely replicating the
 structures of the Rambouillet agreement. Article I (Chapter 4a) of the
 Rambouillet Agreement stipulated that: "The economy of Kosovo
 shall function in accordance with free market principles". The KLA
 government will largely be responsible for implementing these reforms
 and ensuring that loan conditionalities are met.

 In close liaison with NATO, the Washington based financial
 institutions had already analyzed the consequences of an eventual
 military intervention leading to the occupation of Kosovo: almost a
 year prior to the beginning of the War, the World Bank conducted
 "simulations" which "anticipated the possibility of an emergency
 scenario arising out of the tensions in Kosovo". 1

 While the bombing was still ongoing, the World Bank and the
 European Commission were given a special mandate for
 "coordinating donors' economic assistance in the Balkans"2. The
 underlying terms of reference did not exclude Yugoslavia from
 receiving donor support. It was, however, clearly stipulated that
 Belgrade would be eligible for reconstruction loans "once political
 conditions there change".3.

 With regard to Kosovo, the World Bank rather than providing loans to
 rebuild the province’s infrastructure has focussed its intervention on
 providing "assistance in designing the reconstruction and recovery
 program" as well as so-called "policy advice in economic
 management" and "institution building" namely "governance" 4. In
 other words, an army of lawyers and consultants have been sent in to
 ensure Kosovo’s transition to a "thriving, open and transparent
 market economy." 5

 Support granted to the KLA provisional government would be geared
 towards "the establish[ment] [of] transparent, effective and
 sustainable institutions" 6. An "enabling environment" for foreign
 capital is to be established alongside suitably devised "social safety
 nets" and "poverty alleviation programs".

 Meanwhile, Yugoslav State banks operating in Pristina have been
 closed down. The Deutschmark has been adopted as legal tender and
 the banking system has been handed over to Germany’s
 Commerzbank A.G which is the sole private shareholder in Micro
 Enterprise Bank (MEB) formed in early 2000 at the initiative of the
 World Bank’s International Finance Corporation (IFC), the European
 Bank for Reconstruction and Development (EBRD) together with the
 Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden
 (FMO), Germany’s Internationale Micro Investitionen (IMI) and
 Kreditanstalt für Wiederaufbau (KfW). Commerzbank AG will gain
 control over commercial banking functions for the province including
 money transfers and foreign exchange transactions.7

 The Trebca Mines

 The "reconstruction" of Kosovo financed by international debt largely
 purports to transfer Kosovo’s extensive wealth in mineral resources
 and coal to multinational capital. In this regard, the KLA had already
 occupied (pending their privatization) the largest coal mine at
 Belacevac in Dobro Selo northwest of Pristina. In turn, foreign capital

 had its eyes riveted on the massive Trepca mining complex which
 constitutes "the most valuable piece of real estate in the Balkans,
 worth at least $5 billion." 8 The Trebca complex not only includes
 copper and large reserves of zinc but also cadmium, gold, and silver.
 has several smelting plants, 17 metal treatment sites, a power plant
 and Yugoslavia’s largest battery plant. Northern Kosovo also has
 estimated reserves of 17 billion tons of coal and lignite.

 The management of some of the State owned enterprises and public
 utilities were taken over by KLA appointees. In turn, the leaders of
 the Provisional Government of Kosovo (PGK) have become "the
 brokers" of multinational capital committed to handing over the
 Kosovar economy at bargain prices to foreign investors.

 In the wake of the bombings, the Zvecan smelter (belonging to the
 Trebca Complex) located northwest of Mitrovica, however, remained
 under Serb management.9 In July 1999, UNMIK head of mission
 Bernard Kouchner issued a decree to the effect that: "UNMIK shall
 administer movable or immovable property, including monetary
 accounts, and other property of, or registered in the name of the
 Federal Republic of Yugoslavia or the Republic of Serbia or any of its
 organs, which is in the territory of Kosovo".10 .

 In November 1999, the International Crisis Group(ICG) a think tank
 supported by Financier George Soros, issued a paper on "Trepca:
 Making Sense of the Labyrinth" which advised the United Nations
 Mission in Kosovo (UNMIK) "to take over the Trepca mining
 complex from the Serbs as quickly as possible and explained how this
 should be done" prior to their eventual privatization.11

 Meanwhile, the George Soros Foundation for an Open Society had
 opened a branch office in Pristina establishing the Kosovo Foundation
 for an Open Society (KFOS) as part of the Soros’ network of
 "non-profit foundations" in the Balkans, Eastern Europe and the
 former Soviet Union. Together with the World Bank’s Post Conflict
 Trust Fund, the Kosovo Open Society Foundation (KOSF) will be
 providing "targeted support" for "the development of local
 governments to allow them to serve their communities in a
 transparent, fair, and accountable manner."12 Since most of these
 local governments are in the hands of KLA appointees, this program
 is unlikely to meet its declared objective. Out of the 20 million
 budget for this program, only one million dollars is being provided by
 the World Bank.


 1. World Bank Development News, Washington, 27 April 1999.

 2 World Bank Group Response to Post Conflict Reconstruction in
 Kosovo: General Framework For an Emergency Assistance Strategy,
 http://www.worldbank.org/html/extdr/kosovo/kosovo_st.htm undated).

 3. Ibid

 4. Ibid

 5. Ibid

 6 World Bank, The World Bank's Role in Reconstruction and
 Recovery in Kosovo,
 http://www.worldbank.org/html/extdr/pb/pbkosovo.htm, undated)

 7. International Finance Corporation (IFC), International Consortium
 Backs Kosovo's First Licensed Bank,
 http://www.ifc.org/ifc/pressroom/Archive/2000/00_90/00_90.html Press
 Release, Washington, 24 January 2000.

 8. New York Times, July 8, 1998, report by Chris Hedges.

 9.See Diana Johnstone, How it is done, Taking over the Trepca
 Mines: Plans and Propaganda,
 Emperors Clothes, 28 February 2000.

 10. Quoted in Johnstone, op. cit.

 11. See Johnstone, op cit. For the ICG report see

 12. World Bank, KOSF and World Bank, World Bank Launches First
 Kosovo Project, Washington,
 http://www.worldbank.org/html/extdr/extme/097.htm November 16,
 1999 News Release No. 2000/097/ECA.

 C Copyright by Michel Chossudovsky, Ottawa, February 2000. All
 rights reserved. Permission is granted to post this text on
 noncommercial community internet sites, provided the essay remains
 intact and the copyright note is displayed. The text can also be
 photocopied for non-commercial distribution. To publish this text in
 printed and/or other forms contact the author at
 chossudovsky@videotron.ca or fax: 1-514-4256224.

Mine Aysen Doyran
Ph.D Student
Department of Political Science
SUNY at Albany
Nelson A. Rockefeller College
135 Western Ave.; Milne 102
Albany, NY 12222

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