EU membership is currently the best alternative for the prosperity of both Kosovo and Albania and both countries should concentrate their efforts in building stable relations based on EU principles, experts say
TIRANA, April 28 – A common ethnic market between Albania and Kosovo cannot be established as long as both countries don’t build functional and competitive markets in their own economies, experts announced this week at a forum in Tirana.
“The economic cooperation between the two countries has little substance because of the unfavourable legacy and lack of communication, the implementation of laws, corruption and monopolies. An ethnic market is not possible without building a competitive market,” said Albert Rakipi, the executive director of the Albanian Institute for International Studies at a concluding conference on Albania-Kosovo relations organized this week by AIIS and a partner think tank from Kosovo.
Albania’s Economy Minister Arben Ahmetaj said both the Albanian and Kosovo governments are working to create a common Albanian-Kosovo market of around 5 million people, which would make both countries more attractive to foreign investors.
“The unified standards that will be applied between the two countries starting next July will make trade exchanges much easier and put to end to previous trade disputes,” said Ahmetaj.
“We are still far behind the endless opportunities that exist between the two countries but the recent measures taken by the two governments in their joint meetings will increase trade exchanges and lift barriers,” said Ahmetaj.
Arta Dade, a veteran diplomat and current head of Albania’s parliamentary foreign affairs committee, urged both governments to focus more on the concrete implementation of the signed bilateral deals rather than nationalist rhetoric and work more to improve the welfare of citizens in order to prevent the waves asylum-seekers in both countries.
Her Kosovo counterpart, Enver Hoxhaj said that for Kosovo, Albania is a political, economical, demographic and cultural brother and the strategic partnership between the two countries must extend in the regional Euro-Atlantic framework.
“Albania is Kosovo’s most strategic and natural partner and a common market is the future,” said Hoxhaj, a former Foreign Minister of Kosovo.
The conference organized by AIIS and Kosovo’s Institute for Development Policy concluded a series of round tables supported by the Friedrich Ebert Foundation (FES) organized both in Tirana and Prishtina measuring current Albania-Kosovo relations focused on the economy, but also EU integration, education, culture and arts.
Frank Hantke, the FES director in Albania, described the current relations between Albania and Kosovo as weak with the main obstacles being internal ones. “Albania and Kosovo should work with the real existing possibilities and use all of them before taking the next step,” he said.
In its study called ‘Albania and Kosovo in the quest for common future,’ the AIIS says EU membership is currently the best alternative for the prosperity of both Kosovo and Albania and in this respect both countries should concentrate their efforts in building stable relations based on EU principles such as solidarity, mutual respect, economic and social cohesion, sustainable development, free competition and the lifting of borders.
The think tank recommends further steps in the approximation of trade, banking and labour legislation between Albania and Kosovo and a long-term strategy to establish an economic area and common market in compliance with EU standards and regional economic policies.
Investments in joint infrastructure projects such as a railway network linking Durres to Prishtina, the modernization of customs points, a joint strategy on tourism, common energy projects and the unification of the education system are some of the concrete initiatives the AIIS proposes.
“The past characterized by a long period of isolation and lack of communication between the two societies is still present in new relations between Albania and Kosovo after the declaration of its independence in 2008. Despite strong support by the public of both countries, the societies, markets, economies and political elites of Kosovo and Albania have developed in different directions,” said Dritan Sulçebe, an AIIS researcher introducing a report.
However, in the frame of EU integration, both countries have little space to maneuver outside the general political and economical framework of the Union.
“If Albania and Kosovo fail to address accession criteria, then nationalism will gain ground and the supporters of Kosovo-Albania unification will increase. On the other hand, a successful and quick integration process for both Albania and Kosovo followed by economic prosperity and high democratic standards would set the appropriate conditions for the stability of two separate Albanian states in the western Balkans,” said the AIIS.
Kosovo’s Institute for Development Policy, INDEP, says that after Kosovo’s independence in 2008 both countries have undergone an increase in their trade exchanges also fuelled by the Highway of Nation but the quality and value of trade exchanges is very low mostly based on basic products and raw material with small value added.
“We call ourselves brothers, but when it comes to trade, we prefer Serbia and the EU respectively,” said Learta Hollaj, an INDEP researcher citing Albania’s former customs director Elisa Spiropali.
INDEP describes Albania and Kosovo as two small markets dominated by imports and with a small importance to European or global markets.
“A common market is imperative for the sole and essential reason that has to do with economic rationality, economic development by achieving the economy of scale, specialization in productive activity, rationalization in the use of resources based on comparative advantages and their constitution as attractive countries for foreign investors and serve as an example of stability in the region,” said the Kosovo think tank.
“Considering that Albania’s GDP at around 10 billion euros is twice bigger compared to Kosovo’s it is clear that Albania remains the driver of trade exchanges,” said INDEP.
Some 481 Albanian businesses and joint ventures operate in Kosovo compared to 230 Kosovo businesses in Albania.
Albanian foreign direct investment to Kosovo more than trebled to around 20 million euros in 2013, making it one of the largest investors in the majority ethnic Albanian country. Albanian FDI in Kosovo, dominated by the construction industry, registered its peak level of 23.3 million euros in 2009, one year after the country declared its independence from Serbia and soon after Albania completed its part of the Highway of Nation.
Meanwhile, Kosovo investors have been less active in Albania with their stock of investments estimated at 13 million euros at the end of 2013, according to Albania’s central bank data.
New deals target boost in trade exchanges
While the Albanian and Kosovo governments continue strengthening cooperation and signing formal bilateral agreements, the reality is trade exchanges between the two neighbouring ethnic Albanian countries remain significantly below potential and are hindered by continuous trade disputes and an unfavourable legacy.
More than a year after the inaugural joint meeting between the two governments in the Kosovo town of Prizren, trade exchanges between the two countries have registered only a modest recovery while Albania continues applying a ban on imports of medicines from a local Kosovo company.
Data published by the country’s state statistical institute, INSTAT, shows that five years after the construction of the billion euro Highway of Nation cutting distance between the two countries, the increase in trade exchanges with Kosovo has been modest with exports to Kosovo accounting for 7.3 percent of total and imports from Kosovo at a negligible 1 percent of total.
In the second joint meeting of the two governments held last March in Tirana, the two Prime Ministers signed 11 cooperation deals focusing on promoting trade exchanges, border control, agriculture and education while business associations submitted a list of 16 concrete proposals to ease trade exchanges and lift barriers between the two countries.
Seven years after Kosovo’s independence, Albania and Kosovo have made a significant step in overcoming frequent barriers in trade exchanges by establishing the first joint transit corridor at their largest border crossing point under a deal signed earlier this year.
The transit corridor significantly reduces costs for both Albanian and Kosovo businesses by speeding the circulation of goods and significantly cutting staying time in customs points, officials say.
Trade exchanges and movement of people between the two countries have considerably increased in the past few years, especially after the construction of the Highway of Nation cutting travel time between Tirana and Prishtina, but remain significantly below potential.
In addition, plans to impose Euro 5 tolls on the Highway of Nation by both Albania and Kosovo could further pose a barrier on trade exchanges and the movement of people.
Exports to neighbouring Kosovo, the country’s second main destination, seem on track this year when several deals have made trade exchanges easier. INSTAT data shows exports to Kosovo rose by 53 percent to around 4.4 billion lek (Euro 30 mln) year-on-year in the first quarter of this year.
Ongoing trade disputes between Albania and Kosovo over potatoes, cement, milk, flower, wine and pharmaceutical products have considerably curbed trade exchanges between the two neighboring countries in the past couple of years.
Albania’s exports to Kosovo registered a 15 percent increase in 2014, climbing to a record high of 18.7 billion lek (Euro 131 million), ranking the neighbouring country the country’s second most important destination of exports, according to INSTAT.
Back in 2013, several disputes over tariffs and barriers considerably affected trade exchanges between the two countries and for the first time since 2009, Albania’s exports to Kosovo registered negative growth rates.
Albania is Kosovo’s second most important trade partner accounting for 11 percent of its exports and 4 percent of imports, most of which are still covered by Serbia with 11.7 percent, according to data by the Kosovo Agency of Statistics for 2013.
