Kosovo

The central Balkans were part of the Roman and Byzantine Empires before ethnic Serbs migrated to the territories of modern Kosovo in the 7th century. During the medieval period, Kosovo became the center of a Serbian Empire and saw the construction of many important Serb religious sites, including many architecturally significant Serbian Orthodox monasteries. The defeat of Serbian forces at the Battle of Kosovo in 1389 led to five centuries of Ottoman rule during which large numbers of Turks and Albanians moved to Kosovo.

By the end of the 19th century, Albanians replaced Serbs as the dominant ethnic group in Kosovo. Serbia reacquired control over the region from the Ottoman Empire during the First Balkan War of 1912. After World War II, Kosovo's present-day boundaries were established when Kosovo became an autonomous province of Serbia in the Socialist Federal Republic of Yugoslavia (S.F.R.Y.). Despite legislative concessions, Albanian nationalism increased in the 1980s, which led to riots and calls for Kosovo's independence.

The Serbs - many of whom viewed Kosovo as their cultural heartland - instituted a new constitution in 1989 revoking Kosovo's autonomous status. Kosovo's Albanian leaders responded in 1991 by organizing a referendum declaring Kosovo independent. Serbia undertook repressive measures against the Kosovar Albanians in the 1990s, provoking a Kosovar Albanian insurgency.

Beginning in 1998, Serbia conducted a brutal counterinsurgency campaign that resulted in massacres and massive expulsions of ethnic Albanians (some 800,000 ethnic Albanians were forced from their homes in Kosovo). After international attempts to mediate the conflict failed, a three-month NATO military operation against Serbia beginning in March 1999 forced the Serbs to agree to withdraw their military and police forces from Kosovo.

UN Security Council Resolution 1244 (1999) placed Kosovo under a transitional administration, the UN Interim Administration Mission in Kosovo (UNMIK), pending a determination of Kosovo's future status. A UN-led process began in late 2005 to determine Kosovo's final status. The 2006-07 negotiations ended without agreement between Belgrade and Pristina, though the UN issued a comprehensive report on Kosovo's final status that endorsed independence.

On 17 February 2008, the Kosovo Assembly declared Kosovo independent. Since then, over 110 countries have recognized Kosovo, and it has joined numerous international organizations. In October 2008, Serbia sought an advisory opinion from the International Court of Justice (ICJ) on the legality under international law of Kosovo's declaration of independence. The ICJ released the advisory opinion in July 2010 affirming that Kosovo's declaration of independence did not violate general principles of international law, UN Security Council Resolution 1244, or the Constitutive Framework. The opinion was closely tailored to Kosovo's unique history and circumstances.

Demonstrating Kosovo’s development into a sovereign, multi-ethnic, democratic country the international community ended the period of Supervised Independence in 2012. Elections were held throughout Kosovo in 2013 and 2014, at the municipal and national level respectively. Serbia continues to reject Kosovo's independence, but the two countries reached an agreement to normalize their relations in April 2013 through EU-facilitated talks and are currently engaged in the implementation process. Kosovo seeks full integration into the international community, and has pursued bilateral recognitions and eventual membership in international organizations, such as the UN, EU, and NATO.

highest court(s):

Supreme Court (consists of the court president and NA judges); Constitutional Court (consists of the court president, vice president, and 7 judges)

judge selection and term of office:

• Supreme Court judges nominated by the Kosovo Judicial Council, a 13-member independent body staffed by judges and lay members, and also responsible for overall administration of Kosovo's judicial system;
• judges appointed by the president of the Republic of Kosovo;
• judges appointed until mandatory retirement age;
• Constitutional Court judges nominated by the Kosovo Assembly and appointed by the president of the republic to serve single, 9-year terms

subordinate courts:

subordinate courts: Court of Appeals (organized into 4 departments: General, Serious Crime, Commercial Matters, and Administrative Matters; Basic Court (located in 7 municipalities, each with several branches)

note: in August 2015, the Kosovo Assembly approved a constitutional amendment that establishes the Kosovo Relocated Specialist Judicial Institution;

the court, located at the Hague in the Netherlands, began operating in late 2016 and tries crimes by members of the Kosovo Liberation Army during the late 1990s

Kosovo's economy has shown progress in transitioning to a market-based system and maintaining macroeconomic stability, but it is still highly dependent on the international community and the diaspora for financial and technical assistance. Remittances from the diaspora - located mainly in Germany, Switzerland, and the Nordic countries - are estimated to account for about 17% of GDP and international donor assistance accounts for approximately 10% of GDP. With international assistance, Kosovo has been able to privatize a majority of its state-owned enterprises.

Kosovo's citizens are the second poorest in Europe, after Moldova, with a per capita GDP (PPP) of $9,600 in 2016. An unemployment rate of 33%, and a youth unemployment rate near 60%, in a country where the average age is 26, encourages emigration and fuels a significant informal, unreported economy.

Emigration remains challenging, however, because Kosovo lacks visa-free travel to the EU. Most of Kosovo's population lives in rural towns outside of the capital, Pristina. Inefficient, near-subsistence farming is common - the result of small plots, limited mechanization, and a lack of technical expertise.

Kosovo enjoys lower labor costs than the rest of the region. However, high levels of corruption, little contract enforcement, and unreliable electricity supply have discouraged potential investors. The official currency of Kosovo is the euro, but the Serbian dinar is also used illegally in Serb majority communities. Kosovo's tie to the euro has helped keep core inflation low.

Minerals and metals production - including lignite, lead, zinc, nickel, chrome, aluminum, magnesium, and a wide variety of construction materials - once the backbone of industry, has declined because of aging equipment and insufficient investment, problems exacerbated by competing and unresolved ownership claims of Kosovo’s largest mines.

A limited and unreliable electricity supply is a major impediment to economic development, but Kosovo has received technical assistance to help improve the sector’s performance. In 2012, Kosovo privatized its electricity supply and distribution network. The US Government is cooperating with the Ministry of Economic Development (MED) and the World Bank to conclude a commercial tender for the construction of Kosovo C, a new lignite-fired power plant that would leverage Kosovo’s large lignite reserves.

MED also has plans for the rehabilitation of an older coal power plant, Kosovo B, and the development of a coal mine that could supply both plants.

In June 2009, Kosovo joined the World Bank and International Monetary Fund, and began servicing its share of the former Yugoslavia's debt. In order to help integrate Kosovo into regional economic structures, UNMIK signed (on behalf of Kosovo) its accession to the Central Europe Free Trade Area (CEFTA) in 2006.

Kosovo joined the European Bank for Reconstruction and Development in 2012 and the Council of Europe Development Bank in 2013. In 2016, Kosovo implemented the Stabilization and Association Agreement (SAA) negotiations with the EU, focused on trade liberalization. Under the SAA, Kosovo — which gets approximately 58% of government revenue from tariffs on imports — is required to phase out tariffs on EU goods over the next seven years.

In 2014, nearly 60% of customs duty-eligible imports into Kosovo were EU goods. In 2015, Kosovo negotiated a $185 million Stand-by Arrangement (SBA) with the IMF following the conclusion of its previous SBA in 2014. The IMF requested an extension of the current SBA to August 2017 to facilitate policy continuity and allow sufficient time for ongoing structural reforms to progress.

In August 2015, as part of its EU-facilitated normalization process with Serbia, Kosovo signed agreements on telecommunications and energy distribution, but disagreements over who owns economic assets, such as the Trepca mining conglomerate, within Kosovo continue.

Kosovo experienced its first federal budget deficit in 2012, when government expenditures climbed sharply. In May 2014, the government introduced a 25% salary increase for public sector employees and an equal increase in certain social benefits. Central revenues could not sustain these increases, and the government was forced to reduce its planned capital investments.

The government, led by Prime Minister MUSTAFA - a trained economist - recently made several changes to its fiscal policy, expanding the list of duty-free imports, decreasing the Value Added Tax (VAT) for basic food items and public utilities, and increasing the VAT for all other goods.

While Kosovo’s economy continued to make progress, it needs further reform and investment to enable the level of growth required to reduce unemployment and raise living standards in a meaningful way.