Kosovo Sacking Fails to Clear Air Over Privatisation

Monday, 21 February, 2005

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Arben Qirezi

When Harri Holkeri, head of the UN mission in Kosovo, UNMIK, recently sacked the director of the Kosovo Trust Agency, KTA, the move seemed aimed at healing a bitter row between the ethnic Albanian majority and the UN over privatisation.

An UNMIK announcement on April 10, saying Holkeri had used “the powers vested in him” to replace Marie Fucci as head of the KTA privatisation programme, was widely seen an attempt to regain Kosovar confidence, shaken by Fucci’s role in handling Kosovo’s state assets.

After an explosion of violent unrest in Kosovo on March 17-18, which many commentators blamed in part on economic woes, Holkeri told the Kosovo assembly on April 9 the stalled privatisation process was a factor in the region’s economic malaise.

UNMIK was responsible “for creating the economic opportunity that all the people of Kosovo rightly demand”, Holkerri said.

“I will continue to move the privatisation process forward as the way to meet this demand in cooperation with the Kosovo government,” he said. A day later, Fucci’s removal was made public.

The conflict over privatisation predates Fucci’s arrival. It has dogged relations between UNMIK and the Kosovo government ever since the privatisation scheme was first launched in mid-2003 in an effort to stimulate Kosovo’s economic development.

Andy Bearpark, former head of the EU component of UNMIK, which was put in charge of privatisation, at first set up a streamlined privatisation process. This involved selling state property to the highest bidders with few conditions.

Popular among Albanians, who comprised nearly all potential purchasers, the policy drew bitter protests from Belgrade, which insisted such sales were illegal, as Kosovo remains part of the Serbian state under UN Resolution 1244.

Serbia said Kosovo’s state assets were Serbian state property and could not be sold without its permission.

The Kosovo government replied that Serbia’s right of ownership was open to question, as much of the assets in question were seized arbitrarily under Slobodan Milosevic’s regime.

UNMIK tried dealing with the growing dispute by setting up a special privatisation chamber within Kosovo’s supreme court. But as Belgrade continued to mount protests to the UN peacekeeping department, DPKO, in New York, the fast-track privatisation programme hit more obstacles.

After the UN last October refused to grant legal immunity from prosecution to staff members involved in Kosovo privatisation, the process effectively stalled. The KTA suspended further sales until a new privatisation procedure had been agreed and established.

The KTA’s managing director resigned. Bearpark’s successor, Nikolaus Lambsdorf, then appointed Fucci as KTA’s new managing director. But the decision was made without gaining the consent of Kosovo government representatives on the KTA board.

As KTA’s new managing director, Fucci inherited a complex legal situation and from the start encountered opposition from Kosovo Albanians, angered over the suspension of the privatisation programme and the method of her appointment.

Kosovars on the KTA board also claimed that with the backing of Lambsdorf, Fucci made sweeping personnel changes, stripping power from Kosovars on the KTA and other international experts who challenged her approach.

The local media, meanwhile, dubbed Fucci “Belgrade’s friend”, owing to her earlier involvement in privatisation projects in the Bosnian Serb entity, Republica Srpska.

Although the final responsibility for the confusion over privatisation rests with Kosovo’s unresolved final status - and also with the UN - infuriated Kosovar trade unions and politicians lobbied continuously for Fucci to go.

Fucci retained Lambsdorf’s support, however, and the Kosovo government’s demand for the restoration of the initial privatisation procedure was rejected.

But after the Kosovo government boycotted the KTA board, effectively halting all possibility of further progress, Holkerri moved to end the logjam by replacing Fucci.

Although the Pristina authorities have welcomed Holkeri’s decision to remove her, the source of the mistrust between them and UNMIK remains the stalled privatisation process, rather than Fucci personally.

Ali Jakupi, trade and industry minister and a KTA board member, said the Kosovo government would only be satisfied with a return to the old procedure.

He said Kosovars feared Fucci’s removal was a cosmetic move and did not mark a change of policy. Jakupi said the legal state of play remained so unclear that the privatisation process could well be blocked indefinitely.

Fucci’s presence had been “a big obstacle to successful privatisation”, he maintained. “But her removal resolves nothing unless it leads to the reinstallation of the initial privatisation procedure.”

Further delays could result in industrial action, however. According to Bahri Shabani, president of the Trade Unions of Kosovo, which numbers over 200,000 members, the region may see a general strike if the privatisation process remained in limbo.

Brussels officials are reluctant to say anything. Neither Lambsdorf nor the EU spokesperson Kris Litierre would comment on Fucci’s dismissal. IWPR also repeatedly sought to contact Fucci herself, to no avail.

With no new appointment yet in sight, there are worries that the legal muddle holding up Kosovo privatisation could remain unsolved for months, further damaging the chances of economic growth in the region.

Arben Qirezi is a political analyst and a regular IWPR contributor.