cj#1078> Chossudovsky: Opening Kosovo to foreign capital


Richard Moore


Opening Kosovo to
foreign capital
by Michel Chossudovsky (3-3-00)

Copyright March, 2000. Please see end of article for

(Michel Chossudovsky is Professor of Economics at the
University of Ottawa and author of The Globalization of
Poverty, Impacts of IMF and World Bank Reforms, Third World
Network, Penang and Zed Books, London, 1997.)

                www.tenc.net [emperors-clothes]

In occupied Kosovo under the mandate of UN peace-keeping,
State terror and the "free market" go hand in hand. The
concurrent criminalisation of State institutions is not
incompatible with the West's economic and strategic objectives
in the Balkans. Notwithstanding the massacres of civilians,
the self-proclaimed KLA administration has committed itself to
establishing a "secure and stable environment" for foreign
investors and international financial institutions.

The Minister of Finance Adem Grobozci and other
representatives of the provisional government invited to the
various donor conferences are all KLA appointees. In contrast,
members of the KDL of Ibrahim Rugova (in duly elected
parliamentary elections) were not even invited to attend the
Stabilization Summit in Sarajevo in July 1999. More recently
UNMIK Head Bernanrd Kouchner has called for the dissolution of
Rugaova's parliament.

"Free market reforms" have been envisaged for Kosovo under the
supervision of the Bretton Woods institutions largely
replicating the structures of the Rambouillet agreement.
Article I (Chapter 4a) of the Rambouillet Agreement stipulated
that: "The economy of Kosovo shall function in accordance with
free market principles". The KLA government will largely be
responsible for implementing these reforms and ensuring that
loan conditionalities are met.

In close liaison with NATO, the Washington based financial
institutions had already analyzed the consequences of an
eventual military intervention leading to the occupation of
Kosovo: almost a year prior to the beginning of the War, the
World Bank conducted "simulations" which "anticipated the
possibility of an emergency scenario arising out of the
tensions in Kosovo". 1

While the bombing was still ongoing, the World Bank and the
European Commission were given a special mandate for
"coordinating donors' economic assistance in the Balkans"2.
The underlying terms of reference did not exclude Yugoslavia
from receiving donor support. It was, however, clearly
stipulated that Belgrade would be eligible for reconstruction
loans "once political conditions there change".3.

With regard to Kosovo, the World Bank rather than providing
loans to rebuild the province's infrastructure has focussed
its intervention on providing "assistance in designing the
reconstruction and recovery program" as well as so-called
"policy advice in economic management" and "institution
building" namely "governance" 4. In other words, an army of
lawyers and consultants have been sent in to ensure Kosovo's
transition to a "thriving, open and transparent market
economy." 5

Support granted to the KLA provisional government would be
geared towards "the establish[ment] [of] transparent,
effective and sustainable institutions" 6. An "enabling
environment" for foreign capital is to be established
alongside suitably devised "social safety nets" and "poverty
alleviation programs".

Meanwhile, Yugoslav State banks operating in Pristina have
been closed down. The Deutschmark has been adopted as legal
tender and the banking system has been handed over to
Germany's Commerzbank A.G which is the sole private
shareholder in Micro Enterprise Bank (MEB) formed in early
2000 at the initiative of the World Bank's International
Finance Corporation (IFC), the European Bank for
Reconstruction and Development (EBRD) together with the
Nederlandse Financierings-Maatschappij voor
Ontwikkelingslanden (FMO), Germany's Internationale Micro
Investitionen (IMI) and Kreditanstalt für Wiederaufbau (KfW).
Commerzbank AG will gain control over commercial banking
functions for the province including money transfers and
foreign exchange transactions.7

The Trebca Mines

The "reconstruction" of Kosovo financed by international debt
largely purports to transfer Kosovo's extensive wealth in
mineral resources and coal to multinational capital. In this
regard, the KLA had already occupied (pending their
privatization) the largest coal mine at Belacevac in Dobro
Selo northwest of Pristina. In turn, foreign capital had its
eyes riveted on the massive Trepca mining complex which
constitutes "the most valuable piece of real estate in the
Balkans, worth at least $5 billion." 8 The Trebca complex not
only includes copper and large reserves of zinc but also
cadmium, gold, and silver. It has several smelting plants, 17
metal treatment sites, a power plant and Yugoslavia's largest
battery plant. Northern Kosovo also has estimated reserves of
17 billion tons of coal and lignite.

The management of some of the State owned enterprises and
public utilities were taken over by KLA appointees. In turn,
the leaders of the Provisional Government of Kosovo (PGK) have
become "the brokers" of multinational capital committed to
handing over the Kosovar economy at bargain prices to foreign

In the wake of the bombings, the Zvecan smelter (belonging to
the Trebca Complex) located northwest of Mitrovica, however,
remained under Serb management.9 In July 1999, UNMIK head of
mission Bernard Kouchner issued a decree to the effect that:
"UNMIK shall administer movable or immovable property,
including monetary accounts, and other property of, or
registered in the name of the Federal Republic of Yugoslavia
or the Republic of Serbia or any of its organs, which is in
the territory of Kosovo".10 .

In November 1999, the International Crisis Group(ICG) a think
tank supported by Financier George Soros, issued a paper on
"Trepca: Making Sense of the Labyrinth" which advised the
United Nations Mission in Kosovo (UNMIK) "to take over the
Trepca mining complex from the Serbs as quickly as possible
and explained how this should be done" prior to their eventual

Meanwhile, the George Soros Foundation for an Open Society had
opened a branch office in Pristina establishing the Kosovo
Foundation for an Open Society (KFOS) as part of the Soros'
network of "non-profit foundations" in the Balkans, Eastern
Europe and the former Soviet Union. Together with the World
Bank's Post Conflict Trust Fund, the Kosovo Open Society
Foundation (KOSF) will be providing "targeted support" for
"the development of local governments to allow them to serve
their communities in a transparent, fair, and accountable
manner."12 Since most of these local governments are in the
hands of KLA appointees, this program is unlikely to meet its
declared objective. Out of the 20 million dollars budget for
this program, only one million dollars is being provided by
the World Bank.


1. World Bank Development News, Washington, 27 April 1999.

2 World Bank Group Response to Post Conflict Reconstruction in
Kosovo: General Framework For an Emergency Assistance

3. Ibid

4. Ibid

5. Ibid

6 World Bank, The World Bank's Role in Reconstruction and
Recovery in Kosovo,
http://www.worldbank.org/html/extdr/pb/pbkosovo.htm, undated)

7. International Finance Corporation (IFC), International
Consortium Backs Kosovo's First Licensed Bank,
Press Release, Washington, 24 January 2000.

8. New York Times, July 8, 1998, report by Chris Hedges.

9.See Diana Johnstone, How it is done, Taking over the Trepca
Mines: Plans and Propaganda,
Emperors Clothes, 28 February 2000.

10. Quoted in Johnstone, op. cit.

11. See Johnstone, op cit. For the ICG report see

12. World Bank, KOSF and World Bank, World Bank Launches First
Kosovo Project, Washington,
http://www.worldbank.org/html/extdr/extme/097.htm November 16,
1999 News Release No. 2000/097/ECA.

C Copyright by Michel Chossudovsky, Ottawa, February 2000. All
rights reserved. Permission is granted to post this text on
noncommercial community internet sites, provided the essay
remains intact and the copyright note is displayed. The text
can also be photocopied for non-commercial distribution. To
publish this text in printed and/or other forms contact the
author at •••@••.••• or fax: 1-514-4256224.

 Further reading...

 For more on Western efforts to take over the Trepca Mining
 Complex see Diana Johnstone's How it is done - Taking over the
 Trepca mines: Plans and Propaganda at

             Other Articles by Prof. Chossudovsky

 "Cooking the books -
 NATO's ethnic cleansing claims challenged"

 "Seattle and Beyond: Disarming the New World Order"

 "NATO's Reign of Terror in Kosovo"

 "The KLA: Grim Origins"

 "Dismantling Yugoslavia, Colonizing Bosania"
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Richard K Moore
Wexford, Irleand
Citizens for a Democratic Renaissance 
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