Source: http://www.worldbank.org/html/today/
Accessed 15 July 1999

15 July 1999

 WEST PONDERS REBUILDING OF KOSOVO, BALKANS.

Although they have been heartened by evidence that physical destruction inside Kosovo is less severe than first feared, Western officials know they face a daunting task in helping to put the war-blasted province back on its feet, reports Reuters. The World Bank has vast experience, most recently in Bosnia, of reviving poor countries ravaged by conflict or natural disaster, says the story. But Rory O'Sullivan, the Bank's special representative for southeast Europe, said Kosovo was different.

While Bosnia's administrative structures remained intact after the 1992-1995 war and could be harnessed by the international community for its $5.1 billion five-year rebuilding plan, Kosovo has no local administration to speak of. "There is no education service, there is no health service. There is no budget. There is no tax collection," O'Sullivan is quoted as saying.

The emphasis on administration rather than reconstruction might seem misplaced. But Sir Brian Unwin, the head of the European Investment Bank, said the EIB's experiences in the West Bank and Gaza highlighted the problems potential lenders faced when there was no viable state. "You have to have somebody we can lend to," Unwin said. "You have to have somebody who can raise taxation, who can operate customs and so on. All that is lacking at the moment in Kosovo."

Setting up a payments system will also be a priority, says the story. Kosovo's has collapsed.

"So how do you transfer money from point A to point B?" O'Sullivan is quoted as saying. "You transfer it in cash in a safe. And that safe might be hijacked and you might lose $50,000 or $100,000 or whatever."

Moreover, even before the destruction wrought during NATO's 11-week war, Kosovo's socialist economy had fallen into ruin due to neglect from Belgrade and international sanctions. Income per capita in 1995 was estimated by the World Bank at $350, lower than Albania, Europe's poorest country. Still, Western governments hope that once the international community has done the heavy lifting, small businesses will flourish and foreign investors, lured by subsidies and investment guarantees, will step into the breach.

At the High-Level Steering Group meeting in Brussels on Tuesday, both World Bank President James Wolfensohn and EU Monetary Affairs Commissioner Yves-Thibault de Silguy declined to put a concrete figure on the expected reconstruction costs in Kosovo and the rest of the Balkans, reports the Jyllands-Posten (Denmark, 7/14). The Independent (7/14), the Guardian (7/14, p.15), Libération (p.6), Les Echos (p.5), and Il Sole 24 Ore (p.16) also report on Tuesday's meeting.

Also reporting on the High-Level Steering Group meeting in Brussels on Tuesday, Le Monde (p.3) notes that a first estimate could be given at the upcoming donors meeting, to be held on July 28 in Brussels, and that a meeting outlining financial commitments will not be possible until the autumn.

In other news, Reuters reports that the Montenegrin president has criticized European countries for not giving Montenegro financial aid, and called for help in developing the country and helping it move to a market economy. The World Bank said the G7 had agreed to supply only humanitarian aid to Yugoslavia, but would look for further ways to support Montenegro, the story notes.

Commenting in a leader, the Aftenposten (Norway, 7/14) says the message that came out of the first High-Level Steering Group meeting was that without economic development, there would be no peace and stability in the Balkans. The group, an impressive congregation led by the World Bank and the European Commission, has now shown in practice that the international community has understood that peace and security cannot be guaranteed unless countries dig deep into their pockets and demonstrate that promises of assistance are more than words.

The need for help is enormous, not only to repair the material damage the war caused in Kosovo-which has fortunately turned out to be smaller than had been feared. More important, says the Aftenposten, is the long-term task of helping to develop the economies in the region that have lagged considerably in the last decade and which fell even farther behind during the conflict.

The international community has a problem to which it has yet to find an answer, notes the leader. So long as Yugoslav President Slobodan Milosevic is in charge, Serbia will receive only humanitarian aid. At the same time, Montenegro can expect foreign aid-which could create a dangerous situation. There will be no peace in the Balkans unless Serbia is also drawn into the development process, the leader says.