Serbia Seeks Escape From Kosovo Trap as Violence Risks EU Entry

In the divided Kosovar town of Mitrovica, Serb flags snap in the breeze along the Ibar River. On the Albanian side, NATO troops guard a bridge after a policeman was killed and a checkpoint torched in July.

“I know it would be a good thing to have a normal situation,” said Shukrije Behrami, a 45-year-old ethnic Albanian, as she peered across the river. “Maybe things will get better in 10 years.”

Serbia can’t wait that long. President Boris Tadic will seek to persuade German Chancellor Angela Merkel today that Serbia is serious about peace with Kosovo as it strives to win a date for European Union entry talks by year-end. The Balkan nation turned over the last war-crimes suspect last month, and now needs to stem escalating violence with its former province to keep EU aspirations alive and win billions of euros to improve roads, bridges, utilities and transportation systems.

“Serbia is in a very difficult situation,” said Predrag Simic, a political analyst at the Faculty for Political Sciences in Belgrade. “It’s vital for Serbia to continue dialogue” with Kosovo “because that dialogue is a pre-condition for further EU integration.”

A political settlement with ethnic Albanians, who account for about 90 percent of Kosovars, would have been unthinkable in the years after the North Atlantic Treaty Organization expelled Serb troops in 1999 from Kosovo, which declared independence in 2008 and is recognized by 22 of 27 EU states. After condemning Serb actions in Kosovo leading up to the 1999 war, The EU criticized Pristina in the latest dispute for provoking skirmishes by seizing border checkpoints over a trade dispute with Serbia without prior consultation.

‘Hooligans, Gangsters’

Tadic risked losing his own country’s nationalist support before elections next year by blaming part of the July violence on some of the local Serbs, calling them “hooligans” and “gangsters” for burning down a building at a border crossing. He also urged a return to negotiations with the Kosovar government, which Serbs refuse to recognize.

“Serbia needs to normalize its relations with Kosovo at a certain stage for it to join,” said European Commission spokesman Michael Mann in a phone interview, adding that recognizing it as a state is not a formal condition for membership.

At the same time, “good neighbourly relations is kind of normal business in the EU” and “cooperation is a key part of the EU’s political criteria,” Mann said.

‘Scars of the Past’

Merkel’s visit to Serbia to meet Tadic and other Serb officials follows a stopover in Croatia yesterday. She will also meet the widow of Zoran Djindjic, who was assassinated in 2003 while serving as Serbia’s prime minister. Djindjic was the force behind the 2000 ouster of strongman Slobodan Milosevic and his handover to the United Nations war crimes tribunal in The Hague, where he died.

“There can’t be any European prospect for this region unless everyone makes an effort, even if the scars of the past still fester in a deep and difficult way,” Merkel said in her weekly podcast released Aug. 20. One of her tasks in Belgrade will be to urge Serbia to “resume the dialogue with Kosovo.”

Serbia’s economic development fell behind other former communist nations after the civil wars that followed Yugoslavia’s collapse in the 1990s. That has started to change with EU prospects.

The central bank is working to bring down Europe’s second- highest interest rate and investors to pour $683.8 million into the economy in the first five months, up from $540.8 million a year earlier.

Economic Rebound

Gross domestic product in the country of 7.2 million people is set to expand 3 percent this year, driven by investments, according to the International Monetary Fund’s website. That compares with 2.5 percent in Germany, Europe’s largest economy, and 1.7 percent in the U.K.

Serbia, which became a pariah to the West under former President Slobodan Milosevic, turned over the last remaining war crimes suspect, Goran Hadzic, for trial in The Hague on July 20, earning praise from the European Commission.

Four days after Hadzic was caught, Kosovar police seized a border crossing and the government imposed a trade embargo on Serb products because the larger neighbor rejected customs declaration forms stamped with the Republic of Kosovo insignia.

Kosovar Prime Minister Hashim Thaci said the seizure was “legitimate, legal and in line with international standards,” though EU Foreign Policy chief Catherine Ashton said the blockade was “not done in consultation” with the EU. During the dispute, a Kosovar policeman was shot and killed and Serb youths torched a building at a border crossing.

Trade Links

Also at risk is 310 million euros ($442 million) in cross- border trade for both countries. Kosovo, whose economy may expand as much as 5 percent this year, also said it expects 300 million euros in lost tax revenue this year.

The Kosovar trade embargo against Serbia, which is also diminishing the supply of goods to local Serbs in Kosovo, is prompting the Pristina government to strengthen trade ties with other surrounding countries, including Croatia and Bulgaria. Croatian Prime Minister Jadranka Kosor will visit Kosovo on Aug. 24 to discuss trade, Croatian daily Vecernji List reported on Aug. 12.

Kosovar Trade and Industry Minister Mimoza Kusari Lila said the government needed to increase security at the border because of organized crime, such as smuggling. She said local Serbs in the area would also benefit if control is strengthened at borders.

“They are like two prisoners chained at the ankles hopping about but, while chained, unable to go where they need to go,” said Tim Judah, a Balkan expert at the Economist and the author of “The Serbs: History Myth and the Destruction of Yugoslavia.”

To contact the reporters on this story: Boris Cerni in Pristina via Ljubljana at 1006 or bcerni@bloomberg.net Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net Misha Savic in Belgrade at msavic2@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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