Corruption and the role of the state in Kosovo

I came along an interesting article about Kosovo in the London Review of Books by Jeremy Harding under the title "Saved and Depoliticised at One Stroke". Much of the article is will sound familiair to people who read more about Kosovo. But his musings about how corruption damages the society and whether the US/UK libertarian ideology isn't too much state-bashing for an area that needs state-building make it an interesting read. Below is an extract from the middle of the article.

Agani has misgivings about what’s happened in Kosovo since 1999. ‘We’ve lost the feeling of responsibility for each other. In the 1990s we discovered something really important. We didn’t know what to call it, but I think it was democracy. Rugova’s parallel structures served everybody, rich and poor. Since then we’ve sacrificed democracy to liberty . . . Tocqueville saw this in America and you can see it here.’ He is uncertain, too, about the ‘ruthless liberalisation’ he identifies: a result, no doubt, of the campaign in Kosovo having been spearheaded by the great exponents of liberal market ideology, the US and Britain, but in any case a process affecting all post-Communist ‘transition’ economies, among which Kosovo is just a latecomer. Partly because of the Milosevic years, but partly, as Agani believes, because of longstanding attitudes in Albanian society, there is only a dim sense of the purpose served by the state or public institutions. ‘We lived outside the state for years,’ he asserts, ‘and became very good at subsistence. Statehood is not a skill we’ve had.’ Dissent and resistance among Albanians were always framed in terms of the national question. There were few anxieties about wealth discrepancies; that some did better than others was a fact of life, ‘in the nature of things’, as Agani put it.

The word ‘nature’ seems to matter here: it was, after all, part of the Serbs’ view of Albanians that they were naturally backward and ill-prepared for life in a modern polity. (‘Backwardness was on our side,’ Agani told me, alluding to the Albanian birth rate, so much higher than that of the Serbs.) Now this nature is reimagined as a brake on majority-Albanian public institutions. At the same time, conveniently enough, it suggests a predisposition to the neoliberal ideal of an unregulated economy. Despite the deadweight of the UN, perhaps as a result of it, Kosovo expresses something of that ideal, but it is, in the words of one Albanian critic, ‘a market without an economy’, a case of unevenness without development, jolting between extremes of poverty and wealth.

People have a good idea where the new money comes from. Lately, it’s said, human trafficking has gone into decline in Kosovo: according to the OSCE, Serbia proper, once a ‘transit country’, is increasingly a ‘country of origin’. The drugs trade is also said to be waning, though an officer I spoke to in the Kosovo Police Service had made a bust involving 15 kg of heroin that morning. Ordinary cross-border smuggling is a profitable business and a trade in small arms is bringing in revenue for the syndicates in charge: according to Krenar Gashi, a journalist in Pristina, there are thousands of hunting rifles, fraudulently licensed or plain illegal, in Kosovo; one UN estimate puts the number of hand-guns at 400,000. Steady earnings from low-level impropriety can be rewarding too. Building permits left pending for years, civil cases gathering dust in the courts, medical treatment – all these can be expedited with cash, and the pocket money adds up. Pristina, meanwhile, is a chaos of haphazard development, its outskirts extending in disjointed fashion from the centre: it’s obvious, with several thousand illegal buildings already standing, that sums have changed hands simply to circumvent the planning regulations.

Every indigenous administration that’s governed since 2001 has been more or less corrupt. Procurement, public tenders and privatisations have been the main sources of temptation, setting local politicians and civil servants on a collision course with wealth opportunities from which they’ve failed to veer away in time. Ministry budgets begin to look baggy at close range, with rich pickings for contractor and client. Pharmaceutical companies have been asked for kickbacks by the Ministry of Health in return for a signature. Hospital equipment assigned to the health service has ended up in private practice. Sharp conflicts of interest hover over the future of public services – in telecoms and energy especially – where policy formulation is prey to decision-makers with one perch in the public domain, or indeed the privatisation office, and another on the arm of a company with much to gain from deregulation.

Public funds alone cannot resurrect the remains of the state sector and the rules drawn up for privatisation under the auspices of the Kosovo Trust Association, an EU-run component of the UN mission, are painstakingly thorough. One of the trust’s principles is that no privatisation can go ahead without management and workers being consulted. But according to Hasan Abazi, the deputy head of the Kosovo trade-union confederation, there’s nothing to stop the government preparing the ground by approving a new privatisation-friendly management team. The sale of Kosovo’s duct-pipe factory last year under KTA supervision was a variation on this theme. The old Belgrade management had been chased out in 1999 and the business commandeered by Albanians. Abazi says the company, barely functioning, was sold off for 3.5 million euros. The land alone, he reckoned, was worth three million and stocks about two million; he put the value of the machinery at 20 million.

A couple of days later I met Abazi’s son, who’d grown up by the factory. The orchards and fields that were part of the property, he said, had been deliberately run down to force a low sale and the factory’s output had fallen by 85 per cent since 1999. There was also the matter of outstanding compensation for Albanian workers cleansed from the factory in the old days: an adjudication which the KTA has sought to overrule and which the present management is in no hurry to honour. In several privatisations, the KTA’s insistence that workers receive 20 per cent of the value of the sale has got tangled up in the question: which workers exactly?

In one of the biggest privatisations overseen by the KTA, Kosovo’s ferronickel complex, badly bombed in 1999, was acquired by a subsidiary of the Eurasian Natural Resources Corporation, a large Kazakh mining and energy enterprise, for around 35 million euros. It’s well known in Kosovo that some of the workers there do not receive the minimum wage and that the superannuated grid has been selling electricity to the company at cut-price rates. Avni Zogiani, a journalist who now works as a corruption monitor for a Kosovo NGO, estimates the loss to the energy sector – and thus to the public purse – at 20 million euros a year.

One enterprise, the Trepca mining and smelting conglomerate, is so vast and dishevelled, its financing and foreign debt under Milosevic so arcane, that the internationals and the government cannot agree what to do with it. It was once regarded as Kosovo’s great earner and its lead-zinc extraction component still has real potential. But whoever takes on Trepca will be inheriting a total debt of at least 80 million euros, including unpaid workers’ pensions and payroll taxes from the Milosevic era, and a constellation of derelict plant.

Kosovo Serbs are suspicious of plans for this and other privatisations: even though Serbia is encouraged to put in claims for ownership and investment prior to 1989, they’ve tended to argue that privatisation is a form of plunder. But Kosovo Albanians are not so keen either. The Kosovo government wants to hold onto some of the Trepca complex, for example, even though it might cost 20 per cent of the annual budget, over several years, to put them in order. There are fears, too, that Serbian businesses will use privatisation to get control of Trepca and reservations about the policy of privatisation as a whole, so that the general wish to hasten foreign investment coincides with a growing edginess about the bargain-basement atmosphere in which public or ‘socially-owned’ assets will be going under the hammer.

Almost pointless, in this climate, to talk about workers’ rights and the role of trade unions, but that is Abazi senior’s job. (He was seriously assaulted after auditing the Kosovo TUC and exposing high levels of misappropriation.) By Abazi’s count, the labour laws drafted by the Kosovo assembly have been sent back six times with criticisms by Unmik’s head office. He isn’t sure whether it’s the UN itself raising the objections or an interested party in the wings – the State Department say, or the IMF – but he is tired of the UN failing to pull its weight when it’s required and sticking its oar in when it isn’t. Unmik’s 27-point programme on workplace practice, the only recourse he has in the absence of proper law, is inadequate to deal with his caseload of unfair dismissals, payment below the minimum wage, injury claims and illegal contracts.

In Kosovo every scam and indignity, from the protection of ex-KLA war criminals down, is common knowledge. The street is so alert and the journalists who matter so dogged in the face of intimidation that very little falls quietly into oblivion. The difficulty arises at the point of legal accountability. Big men may well be disgraced, and in Kosovan society dishonour is a sort of accounting. But it’s only in the last year that they’ve begun to face material consequences, including imprisonment, for their actions. In Kosovo the law is not an ass so much as a mule: a shambling hybrid of old Yugoslav law and Unmik decrees. Judicial interpretation, since the intervention, has been one of the great humanitarian mysteries, whether a judge is a local – and possibly loathed for his association with the ancien regime – or parachuted in under the ‘police and justice’ rubric of the international presence. Often when a case is agreed to be important, the Kosovan judiciary are elbowed out so that a foreigner, harder to bully or threaten, can do things properly.

After the events of 2004, Human Rights Watch decided to test the health of the justice system by monitoring the convictions that might reasonably have followed, with 56 cases of serious ethnic crimes under investigation. Of these, by 2006, two were pending, 29 were still at the pre-trial stage, a dozen had been dismissed and only 13 had resulted in convictions, with the minimum sentence handed down in several. In March, a month after Kosovo’s unilateral declaration of independence, HRW published an update. There were by now 35 convictions, most of those convicted receiving fines or suspended sentences.