Aid has not helped Kosovo

Despite billions in assistance over past 10 years, 15 pct of people live on less than 1 euro per day

A child is seen in the village of Buroje, in central Kosovo. Over the past decade Kosovo has received 3 billion euros in aid, according to the World Bank, and is expecting another billion by 2011.

By Fatos Bytyci - Reuters

DRENICA VALLEY – Nezir Jonuzi sips black tea, stares at Prime Minister Hashim Thaci’s boyhood home and wonders whether he can get a job to feed his family.

Thaci came to power in 2007 promising jobs, less poverty, better roads, 24-hour power and water. But while Kosovo elected local officials on Sunday in its first vote since independence from Serbia in 2008, many are pessimistic about the future. In the heartland of the ethnic Albanian rebellion against Serb rule 10 years ago, people like Jonuzi and his ethnic Albanian family are among the 15 percent of Kosovo’s 2 million people living in extreme poverty, making less than 93 cents a day, according to the World Bank.

“I know there will be nothing, no work during the winter,” said Jonuzi, 42, who has done odd jobs at construction sites.

For decades the poorest part of socialist Yugoslavia, Kosovo is weighed down by the destruction of the 1998-99 war and a legacy of waste and corruption, illustrating the limitations of international help.

Over the past decade it has received 3 billion euros in aid, according to the World Bank, and is expecting another billion by 2011. Yet officials in Pristina say they may need more. The government has been talking with the International Monetary Fund about a loan of $200 to $300 million and hopes to conclude a deal this month, according to the central bank governor.

In Kosovo, unemployment is 40 percent and average per capita income is 1,760 euros. That compares with average joblessness of just under 10 percent in the European Union and an average salary of about 24,000 euros ($35,930).

The government hopes big public projects will pull the roughly 45 percent of the population who earn up to 1.42 euros a day out of poverty. “If nothing improves in the next two years there will be social unrest from those who have no jobs and those working in the public sector but are not paid well,” said Alban Hashani, an economist working for development and research group Riinvest.

Its lack of exposure to financial markets, the unilateral use of the euro, fiscal stability and a balanced budget has saved Kosovo some of the woes of the global economic crisis.

Deputy Economy Minister Bedri Hamza says energy, roads and the private sector will fuel future growth. The country is expected to grow 4 percent in 2009, down from 5.4 in 2008.

But years of high growth will be needed to gain ground on even the poorest EU states. “To reduce poverty and unemployment we need to have economic growth of more than 8 percent for the next six or seven years,” said Hamza.

Economists are skeptical. An investment boom, widely expected after independence, has not materialized.

This week Kosovo abandoned a project to build a 2,000-megawatt power plant due to lack of investor interest, a problem in a country where water and power shortages happen every day.

With a budget surplus, privatization and pension revenues this year, Kosovo has a billion euros in unused cash, but officials are unsure how to use such funds effectively.

Hashani said government should use it to create jobs. “The country with the highest unemployment rate in Europe has a surplus? This is an economic phenomenon that does not happen anywhere in the world,” he said.

Many people give up the search for work and leave for the West, sometimes illegally. “The last day I worked was four months ago for 10 euros a day,” Jonuzi said at his house in the village of Buroje. “I am thinking about leaving the country and going somewhere to work, but I don’t have 3,000 or 4,000 euros to pay the traffickers.”