GOVERNMENT AND POLITICAL CONDITIONS


In 2001, UNMIK promulgated a Constitutional Framework that established Provisional Institutions of Self-Government (PISG) for Kosovo. Under the Constitutional Framework, the President of Kosovo is the head of state and serves a term of 5 years with the right to one re-election. The Prime Minister is the head of government and is elected by the Kosovo Assembly.

The unicameral Kosovo Assembly consists of 120 seats, 10 seats of which are reserved for ethnic Serbs, and 10 seats for other minorities (4 seats for the Roma, Ashkali and Egyptian communities (RAE), 3 seats for the Bosniak community, 2 seats for the Turkish community, and 1 seat for the Gorani community). Three of the remaining 100 seats are also held by minority members (for a total of 13). All members serve 4-year terms. Jakup Krasniqi (PDK party) is President of the Assembly.

These arrangements were superseded by Kosovo's new constitution, which entered into force on June 15, 2008. Under the new constitution, which enshrines the relevant provisions of the Ahtisaari Plan, Kosovo will undergo a comprehensive shift in governance from the Constitutional Framework of 2001 to a legal charter based upon its new status as an independent state.

The main political parties in Kosovo include the Democratic League of Kosovo (LDK), formerly led by Ibrahim Rugova and now led by Kosovo President Fatmir Sejdiu; Democratic Party of Kosovo (PDK), led by former KLA political chief Hashim Thaci; and the Alliance for the Future of Kosovo (AAK), led by former KLA commander Ramush Haradinaj. Kosovo held its first parliamentary elections in November 2001. After significant political wrangling, politicians agreed to establish a coalition government in March 2002, with Bajram Rexhepi (PDK) as Prime Minister and Ibrahim Rugova (LDK) as President. In the same year, the Kosovo Assembly began to function and pass its first laws. Beginning in 2003, UNMIK began transferring governing competencies to these ministries.

On November 17, 2007, Kosovo held parliamentary and municipal elections. These elections were deemed free and fair by international observers. The PDK gained 34.3% of the vote, the LDK gained 22.6%, the New Kosovo Alliance (AKR) won 12.3%, the Democratic League of Dardania (LDD) won 10%, and the AAK won 9.6%. Smaller minority parties also made some small gains. These elections led to a coalition between the LDK and the PDK and to the elevation of Hashim Thaci as Prime Minister of Kosovo. At the behest of Serbian leaders in Belgrade, virtually all Kosovo Serbs again boycotted the vote.

In June 2008, UN Secretary General Ban decided to "reconfigure" UNMIK and reduce the size of the UN presence in Kosovo, effectively ending the UN's role as administrator of Kosovo and welcoming EU deployment of its Rule of Law Mission (EULEX). As Ban stated in his report to the Security Council, "UNMIK will no longer be able to perform effectively the vast majority of its tasks as an international administration." The EU will gradually assume increasing responsibility in the areas of policing, justice, and customs throughout Kosovo.

The Kosovo judicial system started adapting to the new legal charter on June 15, 2008. Supreme Court judges and prosecutors, district court judges, and municipal courts judges already appointed by the SRSG will continue to serve in their posts until the expiry of their appointment. After the transfer of rule of law functions to the Government of Kosovo, the Kosovo Judicial Council (KJC) will propose to the President of Kosovo candidates for appointment or reappointment as judges and prosecutors.


ECONOMY


Kosovo's economy has shown significant progress since the conflict of the 1990s; it is, however, still significantly dependent on the international community and the diaspora for financial and technical assistance. Remittances from the diaspora, located mainly in Germany and Switzerland, account for about 30% of GDP.

Kosovo's citizens are the poorest in Europe, with an average annual per capita income of approximately $1,800, about one-third the level of neighboring Albania. 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 lack of technical expertise.

As a result of international assistance, Kosovo has been able to privatize 50% of its state-owned enterprises (SOE) by number, and over 90% of SOEs by value. Privatized companies have been able to increase sales sevenfold and attract more than 450,000 Euros (approximately $688,500) in new investment. Technical assistance to the Kosovo Electricity Corporation (KEK) has helped improve procedures for billings and collections, increased revenues, strengthened internal accounting procedures and controls, and rationalized budgeting and investment planning. The installation of bulk meters at the sub-station level is facilitating greater accountability for collection performance at the district level. The U.S. Government has cooperated with the World Bank to prepare a commercial tender for the development of new generation and mining capacity. The capacity of KEK's workforce was bolstered by continuing on-the-job training provided to 325 employees.

Economic growth is largely driven by the private sector, mostly small-scale retail businesses. The official currency of Kosovo is the Euro, but the Serbian dinar is also used in Northern Kosovo and other areas where ethnic Serbs predominate. Kosovo's use of the Euro has helped keep inflation low. Kosovo has maintained a budget surplus as a result of efficient tax collection and inefficient budget execution. 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. In February 2008, UNMIK also represented Kosovo at the newly established Regional Cooperation Council (RCC).

Some of the commodities that Kosovo exports are: mineral products, base metals, leather products, machinery, and appliances. Its main export partners are countries that are members of CEFTA. Some of the products that it imports include: live animals and animal products, fruit and vegetable products, minerals, food products, base materials, machinery, appliances and electrical equipment, textiles and related products, wood and wood products, stone, ceramic and glass products, and chemical products. Its main import partners are the EU, Macedonia, Serbia, Turkey, and Albania.


Trade and Industry


Kosovo has been laying the foundations of a market-oriented economy for the past eight years but is still struggling to develop viable and productive domestic industries. Kosovo has one of the lowest export/import rates in the region. In 2007, Kosovo imported $2.3 billion in goods and services and exported only $151 million, resulting in a trade deficit close to 65% of Kosovo's GDP. This deficit is largely financed through foreign assistance and remittances from Kosovo's diaspora. Kosovo's leading industries are mining, energy, and telecommunications.


Agriculture


Agricultural land comprises 53% of Kosovo's total land area and forests 41%. According to data from the Food and Agriculture Organization, 741,316 acres of land are under cultivation and 444,789 acres are upland pasture. The majority of agricultural land is privately owned (80%), providing subsistence farming for individual households. Although Kosovo's agricultural sector is generally characterized by small farms, low productivity, and the absence of advisory services, agriculture contributes around 25% of Kosovo's overall GDP. Agriculture is the largest employment sector in Kosovo, providing jobs for 25% to 35% of the population, primarily on an informal basis. The agricultural sector also accounts for 16% of total export value and remains an important creator of national wealth, although Kosovo is still an importer of many agricultural products, which accounted for 24% of overall imports ($448.7 million) in 2005. Forestry in Kosovo is minimal; wood-processing and wood products (flooring and furniture) are industry contributors, although not yet in significant numbers.


FOREIGN RELATIONS


In March 2008, Kosovo passed legislation to establish a foreign ministry. This legislation went into effect on June 15, 2008. The Government of Kosovo appointed Skender Hyseni as its first foreign minister. The Government of Kosovo has not yet established diplomatic missions overseas but is expected to do so soon.


U.S.-KOSOVO RELATIONS


The United States and Kosovo established diplomatic relations on February 18, 2008. The strong bilateral ties the United States shares with Kosovo are maintained through the U.S. Embassy in Pristina, which was opened on April 8, 2008 by then-Charge d'Affaires ad interim Tina Kaidanow. Prior to independence, the United States maintained U.S. Office Pristina (USOP), with a chief of mission. The U.S. also continues to contribute troops to the Kosovo Force (KFOR), and will be providing staff to the ICO and EULEX missions.

During a European Commission-hosted international Donors' Conference on July 11, 2008 the United States pledged $400 million for 2008-2009 to support, among many other things, helping relieve debt Kosovo may inherit. U.S. assistance in Kosovo continues to support good governance through strengthening civil society and political processes, especially targeting minority communities, and will strengthen economic institutions and help private enterprise grow.


TRAVEL AND BUSINESS INFORMATION


The U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Country Specific Information, Travel Alerts, and Travel Warnings. Country Specific Information exists for all countries and includes information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Travel Alerts are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.


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