The Balkans' underbelly.

Author:Phillips, David L.

PRISHTINA, Kosovo -- For nearly two years Kosovo, the world's newest nation, has struggled to be recognized as a sovereign state. On July 22, 2010, the International Court of Justice [IJC] removed uncertainty about Kosovo's status since its declaration of independence from Serbia on February 17, 2008--concluding that the declaration did not violate international law. But Kosovar Albanians knew long before the court's opinion that their freedom from Serbia was, and remains, irrevocable. They would never stand for the return to Serbian control.

Bread, Butter and Business

While the IJC opinion was a defining moment, Kosovar Albanians are more focused on bread-and-butter issues, like the country's moribund economy. Legitimacy is not just a legal matter--Kosovar Albanians want their leaders to focus on state building. Like many post-conflict and post-communist nations, Kosovo suffers from crime, corruption and ineffective governance. This is the poorest country in Europe, with an average annual per capita income of only $2,500. Forty-five percent of the country is poor, while some 15 percent of Kosovo's citizens live in extreme poverty. Corruption compounds economic problems by corroding Kosovo's economic development.

According to Transparency International, between 13 percent and 22 percent of those surveyed indicated that they had bribed a public official in 2009. A total of 38 percent believe that the judiciary is Kosovo's most corrupt institution. Contracting and licensing, especially at the local level, is highly politicized. Businesses must navigate a dizzying array of officials, many of whom take care of those who take care of them.

Beyond individual rights, the rule of law must regulate economic activity and counter corruption. Its cornerstones include an independent judiciary and prosecutors who operate independently from the government. In Kosovo, government loyalists are too often named as prosecutors to important anti-corruption positions. Anti-corruption investigations are used to intimidate or discredit opponents of the government. Dr. Ilir Tolaj, the former permanent secretary of the Ministry of Health and a prominent government critic, was charged with owing back taxes while far more serious offenders walk free.

Watchdog groups report that an increasingly narrow clique of government-related friends and family control the procurement of contracts for ministries. The same clique controls government-owned enterprises poised for privatization. Perceptions of corruption and cronyism are sharpened by the government's reluctance to take action against high-profile violators, including ministers in the Cabinet, deputy ministers and political party apparatchiks. Fatmir Limaj, the Transportation Minister, has a notorious reputation for self-dealing as does the governor of Kosovo's Central Bank.

Culture of Corruption

Locals maintain that the Kosovo Information Service [SHIK] is largely responsible for the culture of corruption and criminality in Kosovo. SHIK is the underground intelligence agency of the Democratic Party of Kosova [PDK], the leading member of Kosovo's coalition government. Though loyal to the PDK, SHIK is ultimately accountable to no-one. This is the root of the nation's problems.

As a clandestine organization, there is no documentation on SHIK's activities. Credible sources--including former members of the Kosova Liberation Army [KLA] and three former prime ministers--affirm that SHIK members permeate public and private life in Kosovo, generating inestimable sums from bribery, extortion and racketeering.

The business model is simple. Those who cooperate are rewarded. Critics are targeted. Journalists who report on corruption are harassed and threatened. The Kosovo...

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