VZCZCXRO5933
PP RUEHIK
DE RUEHPS #0084/01 0481534
ZNR UUUUU ZZH
P 171534Z FEB 10
FM AMEMBASSY PRISTINA
TO RUEHC/SECSTATE WASHDC PRIORITY 9735
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHNO/USMISSION USNATO 1362
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RUCNDT/USMISSION USUN NEW YORK 1924
RHFMIUU/AFSOUTH NAPLES IT
RHMFISS/CDR TF FALCON
RHEFDIA/DIA WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RUEPGEA/CDR650THMIGP SHAPE BE
RHEHNSC/NSC WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC
RUZEJAA/USNIC PRISTINA SR

UNCLAS SECTION 01 OF 05 PRISTINA 000084 

SIPDIS 
SENSITIVE 

DEPT FOR EUR/SCE, INL, DRL 

E.O. 12958: N/A 
TAGS: PGOV PREL PINR KDEM EAID SR KV
SUBJECT: KOSOVO CELEBRATES SECOND ANNIVERSARY WITH SUCCESSES AND 
CHALLENGES 

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SENSITIVE BUT UNCLASSIFIED - PLEASE PROTECT ACCORDINGLY. 

¶1. (SBU) SUMMARY: Kosovo celebrated the second anniversary of its 
independence on February 17. These two years have seen political 
stability that has allowed the country to create legitimate new 
institutions, including the Constitutional Court and the Kosovo 
Security Force, and to start fulfilling its Ahtisaari Plan 
obligations, such as decentralization. Challenges remain, and 
Pristina and the international community must focus on moving the 
country towards eventual membership in the Euro-Atlantic 
institutions that will act as a guarantor of Kosovo's viability and 
security. Progress towards European Union membership and a role 
within NATO will require a concerted focus on building institutions, 
strengthening the country's system of justice, protecting its 
multi-ethnicity, and developing its economy. In each of these 
fields, Kosovo has been active in laying foundations for progress. 
However, we cannot ignore that work remains. Political parties need 
to move beyond their regional bases for support and cooperate better 
in pursuit of national goals. The GOK, with more effective support 
from EULEX, needs to build on its initial reforms in the justice 
sector and intensify its anti-corruption efforts. Pristina, with 
the help of the international community, wants to replicate the 
success of decentralization in southern Kosovo that empowers Serb 
communities and extend the same hope to northern Kosovo, where 
Belgrade maintains an illegal stranglehold on municipal governance. 
The GOK must use its string of economic reforms and privatizations 
as a springboard to motivate private-sector growth. Eventual 
membership in the European Union and other Euro-Atlantic 
institutions will mitigate the challenge that Kosovo's small size 
poses. The largest threats to this agenda come both from Belgrade 
and the risk that Brussels will not use its influence there to 
compel Belgrade's greater cooperation in allowing Kosovo to develop 
and strengthen. END SUMMARY 

KOSOVO AT TWO YEARS 
------------------- 

¶2. (SBU) The Republic of Kosovo turned two years old on February 17. 
It has been two years marked by a number of successes. Most 
notably, we have seen peace and government stability. Kosovo has 
taken responsibility for ensuring its own democracy with elections 
that it ran on its own for the first time since the end of the 
conflict. Serbs in southern Kosovo participated in these elections 
and are starting to accept that their survival runs through Pristina 
rather than Belgrade. More Serbs, in fact, cast ballots in Kosovo's 
municipal elections in November 2009 than in the illegitimate 
parallel elections for local Serbian institutions that took place 
throughout the year. New institutions, like the Constitutional 
Court, are standing up and starting to earn respect as legitimate 
bodies. Internationally, Kosovo has secured membership in both the 
World Bank and the International Monetary Fund, and recognitions of 
Kosovo's independence now stand at 65 countries. At the 
International Court of Justice, Kosovo (supported by many in the 
international community, including the United States) presented a 
strong case to challenge Belgrade's contention that the country's 
independence fails to accord with international law, and we expect 
that even an ambiguous opinion from the Court will open the door for 
more states to recognize the country's independence. 

¶3. (SBU) In short, Kosovo has much to celebrate on its independence 
day. We must not forget, however, that Kosovo is a nascent state 
that still confronts challenges. Its stability is laudable, but 
its political scene is fractious as inexperienced political parties 
tend to elevate narrow interests above national goals. The legacy 
of conflict and socialism has weakened its institutions, and its 
economy remains a work in progress. Kosovo continues to look to the 
international community for guidance, and it sees in this advice a 
path that will lead to eventual membership in the Euro-Atlantic 
community of nations, an end-goal that will act as a guarantor of 
the country's independence, viability, and stability. In helping 
Kosovo ultimately realize both European Union and NATO membership, 
we need to focus our efforts in fostering the state's institutions, 
developing the rule of law, promoting its multi-ethnicity, and 
strengthening its economy. 

BUILDING INSTITUTIONS 

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--------------------- 

¶4. (SBU) Kosovo's two largest parties -- the Democratic Party of 
Kosovo (PDK) and the Democratic League of Kosovo (LDK) -- have 
coexisted in stable government since national elections in November 
¶2007. This stability has allowed the GOK to focus on several 
post-independence institution building projects: embarking on 
decentralization, standing up the Kosovo Security Force (KSF), and 
creating the Constitutional Court, among others. The results have 
been positive. We have seen Serbs turnout in large numbers to elect 
Serb candidates for mayor and municipal assemblies in the new, 
Ahtisaari-mandated, Serb municipalities. The KSF has broken ties 
with the legacy of the Kosovo Liberation Army and is showing a 
commitment to becoming a multi-ethnic force with its new pan-Kosovo 
recruitment campaign. The Constitutional Court has earned 
legitimacy as the final arbiter of elections-related disputes. 

¶5. (SBU) The stability allows us to focus on critical economic 
projects -- like the New Kosovo Power Plant and the privatization of 
the state telecom, Post and Telecom of Kosovo -- with a stable 
government partner focused on work rather than campaigning. It also 
gives us time to encourage Kosovo politics to move beyond its 
post-conflict paradigm, when all parties focused on independence to 
the exclusion of other considerations. Left-right policy dimensions 
do not yet exist here. The large political parties have not yet 
developed policy platforms that extend beyond reaffirming promises 
to their core supporters. The LDK still sees itself as the 
standard-bearer for late President Ibrahim Rugova. The PDK and the 
Alliance for the Future of Kosovo (AAK) are outgrowths of the KLA 
and continue to appeal to regional support bases. These lingering 
identities too often obfuscate priorities and encourage leaders, at 
times, to forget that national interests must take precedence. 

IMPORTANCE OF THE RULE OF LAW 
----------------------------- 

¶6. (SBU) On February 16, President Sejdiu appointed new Supreme 
Court judges and prosecutors. This action builds on a years-long, 
continuing process of vetting for professional competence judges and 
prosecutors. The vetting process involves both Kosovo and 
international community arbiters, and the GOK's full acceptance of 
the results shows a commitment to developing an independent 
judiciary that will start to fill the gaps that exist in Kosovo's 
rule-of-law institutions. A similar process of interviews and 
testing went into the selection of the Constitutional Court justices 
last year, and we have seen this court grow in legitimacy over the 
past several months. It has already had its own minor Marbury v. 
Madison moment, exercising unchallenged authority over legislation 
that controls the funding of the state radio and television 
broadcaster. Although the ruling has invited critics and 
controversy, none of these critics has questioned the role that the 
Court has played. This is a significant step in shoring up the 
independence of the country's judicial institutions. 

¶7. (SBU) There remains a need for more progress. In January of this 
year one of Kosovo's most widely read newspapers noted in an 
editorial that Kosovo's system of justice needs deep reform. The 
GOK, too, recognizes that it faces a challenge in developing its 
legal institutions, and the Prime Minister has adopted a legislative 
strategy for the year that prioritizes the rule of law. It is a 
strategy that will modernize and reform the court structure, 
invigorate the country's prosecutorial ranks, and create an 
institutional foundation where objectivity has an opportunity to 
flourish. Concurrent with this legislative strategy, the GOK -- 
with more active assistance from EULEX -- will need to strengthen 
its anti-corruption efforts, a difficult challenge in a country this 
small, where businesses often claim a political patron. Despite the 
inherent difficulties, our institution-building efforts must 
prioritize the rule of law and the fight against corruption. The 
public needs to feel confident that laws apply to everyone. EULEX 
needs to step up its activity and deliver long-promised arrests of 
high-ranking corrupt public officials, or we run a risk that our 
rule-of-law reforms will fall flat and leave the public with a 
perception that the government is little more than a kleptocracy. 

A MULTI-ETHNIC STATE 

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-------------------- 

¶8. (SBU) Kosovo has made a strong start in fulfilling its promises 
under the Ahtisaari plan to empower Serb communities. Serb mayors, 
following municipal elections in November 2009, now hold office in 
the new municipalities of Gracanica, Klokot, and Ranilug. In 
Strpce, a pre-existing municipality where the Serb majority refused 
to participate in the November 2007 elections, a new legitimate Serb 
mayor has taken significant steps to undo the influence of the 
illegal parallel municipal government that answers to Belgrade. In 
Pristina, the central government is devolving more authority to all 
municipalities, giving local residents a louder voice in shaping 
their communities' future. Most refreshing is that that the GOK 
continues to focus on these Serb communities, providing them with 
significant new resources in the 2010 budget that will allow them to 
strengthen the new municipal structures and develop their 
infrastructure. 

¶9. (SBU) In northern Kosovo the challenges surrounding integration 
are greater. Belgrade's legitimacy outstrips Pristina's in the 
northern municipalities of Leposavic, Zubin Potok, and Zvecan, but 
it may not be as unchallenged as Belgrade would like us to think. A 
municipal preparation team (MPT) is now working in the planned new 
municipality of North Mitrovica, which will hold a special election 
later this year to select its inaugural government. This MPT is the 
GOK's first step in building on the success of its decentralization 
efforts in the South. It has adopted a comprehensive approach to 
the North that entails an incremental "hearts and minds" campaign to 
win greater support from northern Serbs to work with Kosovo 
institutions. The illegal parallel institutions that control the 
North are little more than fronts for organized crime, and the 
region has become stagnant. The Serbs north of the Ibar River 
consistently point to the absence of the rule of law there, and this 
could prove to be the tool that begins their acceptance of Pristina 
-- if the GOK and EULEX, together, can make meaningful progress in 
shutting down the criminal networks that dominate throughout the 
North. Pristina can offer hope, but it cannot achieve success on 
its own. The Europeans need to contribute. EULEX needs to crack 
down on organized crime, and Brussels must use the lure of EU 
integration to compel Belgrade to play a helpful role in returning 
law and order to northern Kosovo. Pristina cannot return hope to 
the North if the international community will not stop Belgrade from 
interfering in the region's development. 

ECONOMIC REFORMS AND PRIVATE SECTOR GROWTH 
------------------------------------------ 

¶10. (SBU) At the central level Kosovo has laid a strong foundation 
for economic reforms. In recent months the Assembly has adopted a 
debt law that sets rational limits on the amount of debt that the 
country can incur and should allow Kosovo to pursue a sovereign 
credit rating that will permit it to finance its development. The 
IMF has provided guidance on a Central Bank law that will both 
strengthen the institution and open opportunities for more 
development assistance. And, the GOK is demonstrating an ever 
improving control of its budgetary process, delivering a 
comprehensive and reasonable 2010 budget to the Assembly that 
prioritizes critical needs. Amid these steps, privatization 
continues. The GOK hosted a pre-bid conference for representatives 
from three pre-qualified consortia interested in entering into a 
public-private partnership for the Pristina Airport which we expect 
will attract a 100 hundred million Euro investment, with a contract 
awarded in April. Further cause for optimism is on the near horizon 
with the upcoming privatization of the Kosovo Energy Corporation and 
development of a new 500MW power plant that will put an end to the 
rolling blackouts that still affect the country. When this plant 
comes online, industry will find a more inviting environment for 
setting up business. 

¶11. (SBU) These important steps do not mask Kosovo's current 
economic woes that leave many Kosovars without work. With an 
unemployment rate of greater than 40 percent, the economy is 
suffering. There is little industry, the private sector is 
underdeveloped, and the country's greatest natural resource -- 
lignite -- is underutilized due to a dilapidated power 
infrastructure. At present, the government remains the primary 

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engine that drives the economy, a model that is not sustainable. 
Government contracts for road-building projects help to provide 
temporary employment, but they do not offer the longer term economic 
stability that the country requires. In the coming years, both the 
government and the international donor community need to redirect 
their efforts towards projects that will spark greater dynamism and 
diversity within the private sector. The central reforms that have 
occurred -- and will continue throughout the rest of the year -- 
provide hope that Kosovo will soon feature a strong economic 
framework where private sector growth will necessarily follow. 

EURO-ATLANTIC INSTITUTIONS 
-------------------------- 

¶12. (SBU) Kosovo's small size presents a challenge for its survival, 
a challenge that the international community can help surmount with 
its Euro-Atlantic institutions. The lure of these institutions -- 
in particular, the European Union and NATO -- are tantalizing 
opportunities that focus the attention of the GOK. With a small 
population where family and klan ties provide dominant affiliations, 
Kosovo is susceptible to corruption that will retard development. 
On the security front, Kosovo is currently a NATO protectorate, but 
those forces are beginning to withdraw, and Kosovo leaders are 
wondering whether or not the small (no more than 2500 active members 
according to the Ahtisaari Plan) and lightly armed Kosovo Security 
Force (KSF) can fill the void that KFOR will leave. The antidote 
for both of these problems is membership within the European Union 
and NATO, and this Euro-Atlantic orientation is the primary issue 
that unifies the country's dueling political forces around a core 
national vision. 

¶13. (SBU) Prime Minister Thaci, daily, expresses his commitment to 
readying Kosovo for EU consideration, and he regards the next 
European Union Progress Report on Kosovo, due in June, with a mix of 
anxiety and optimism. He wants to show the electorate that his 
leadership is bringing Kosovo closer to Brussels, and he wants to be 
the person who brings EU visa liberalization to Kosovo. Over the 
longer term, the country needs EU membership as an outlet for its 
young workforce and as a unified market for exports. It also needs 
to define its future relationship with NATO. Every Kosovar desires 
full membership in an institution second only to the United States 
in the hagiography of Kosovo's recent history. The limitations that 
the Ahtisaari Plan places on the Kosovo Security Force are going to 
prove contentious over time, especially once KFOR withdraws 
completely. Without an agreed and viable connection to NATO, we run 
the risk that unofficial militias will again develop out of fear 
that the country is unable to defend itself from aggression. 

COMMENT: 
-------- 

¶14. (SBU) Kosovo's independence has been a success story. The worst 
fears -- large scale population movements and outbreaks of violence 
-- following February 17, 2008, never materialized. The political 
scene, while fractious, works together on the big issues, like 
decentralization and establishing new institutions. The 
international community and the Kosovars, themselves, can feel good 
about the positive steps that have occurred over the past two years, 
but we cannot ignore the challenges that remain. With each passing 
day we need to see the GOK take more responsibility for securing the 
country's future -- more activity on lobbying for recognitions, more 
temperate political debate, greater respect for the rule of law, and 
a concerted focus on national interests -- but there remains an ever 
present role for the international community. Pristina cannot yet 
extend its authority across its entire territory. The International 
Steering Group on February 8 gave its blessing to a comprehensive 
approach that will bolster Pristina's presence in the North, but 
this approach will also require international support. Indeed, each 
of the steps towards Kosovo's eventual membership in the European 
Union will require international attention, and we need to make sure 
that Brussels gives Pristina the same consideration that it pays to 
Belgrade. Above all, the progress that Kosovo makes in overcoming 
the challenges it confronts should play the determining role in the 
country's qualifications for European Union and NATO membership. We 
need to keep the GOK's focus squarely on its responsibilities while 
reminding our European partners that they too have a role to play. 

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END COMMENT 
DELL