Trade with Albania had been on a constant rising trend even before the construction of the highway which has only replaced Montenegro and Macedonia as transit countries for Kosovo exports to Albania but has not any impact on the volume of exports, says a study by Kosovo’s KIPRED Institute
TIRANA, July 10 – The Kosovo-Albania highway, estimated to have cost the Kosovo government around Euro 800 million, has served more to replace regional Montenegro and Macedonia border crossing points as transit countries to Albania rather than increase Kosovo- Albania trade exchanges, according to a study conducted by the Kosovar Institute for Policy Research and Development (KIPRED). The study on Kosovo’s economic and trade relations in the past five years following its declaration of independence says the construction of the highway nicknamed the Highway of Nation has increased the use of the Vermice border crossing point with Albania to 27 percent for exports and 18 percent for imports.
“Although the highway has increased the use of the Vermice border crossing point with Albania, it has not significantly increased trade with Albania. Trade with Albania had been on a constant rising trend even before the construction of the highway which has only replaced Montenegro and Macedonia as transit countries for Kosovo exports to Albania but has not any impact on the volume of exports,” KIPRED says.
The report shows the Hani i Elezit customs point with Macedonia covered 35 percent of Kosovo’s trade exchanges, around 4.3 billion euros during the 2008-2012 period. Second came the Merdare customs point with Serbia with 14 percent followed by the Vermice checkpoint with 11 percent of total trade exchanges from 2008 to 2012.
The highway has not had a significant impact even for Kosovo imports from Albania. “As a result it can be concluded that the highway has not had a major impact in the integration of the Kosovo and Albanian markets but has been used to find alternative markets beyond the borders of Albania and Kosovo,” says the study.
Data from the report show some 78 Albanian companies operated in Kosovo in 2012 ranking the fourth biggest regional foreign direct investor in Kosovo.
Kosovo to complete highway to Albania by year-end
The Prishtine-Merdar highway linking Kosovo to Albania will be fully open to traffic by next December, completing the Highway of Nation linking the two neighbouring countries in the shortest possible way, officials from Kosovo’s Infrastructure Ministry say. Considered the biggest infrastructural project of the Kosovo government, the Prishtina-Vermice highway linking the Kosovo capital to the Albanian border started being constructed in 2010. Some 60 kilometres of the highway named after late Kosovo President Ibrahim Rugova have already opened to traffic while the remaining 40 kilometres are expected to open by next December.
The same as in Albania, the highway’s cost which Kosovo government says will be at Euro 800 million is one of the most controversial issues. Economy experts question the benefits of the huge infrastructural investments, saying that they are unable to reduce key issues in Kosovo such as high unemployment and poverty rates. After completing the highway to Albania, the Kosovo government plans to start construction a new highway linking it to Macedonia.
The Vermice-Prishtine-Merdare road, a continuation of the Durres-Kukes highway linking Albania to Kosovo, has currently had 60 kilometres open to traffic in a few days, Kosovo government officials have confirmed.
The highway is being built by Bechtel-Enka, the same US-Turkish consortium which built the Rreshen-Kalimash highway in Albania.
Rising trade exchanges
Albania’s trade exchanges with Kosovo have considerably increased in the past few years after the construction of the Highway of Nation linking the two countries in the shortest possible way despite ongoing trade barriers and disputes over reference prices, but yet remain below their potential. Data from Albania’s state Institute of Statistics, INSTAT, show Albania’s exports to neighbouring Kosovo climbed to 17.4 billion lek (Euro 122 million) in 2012, up 18.5 percent compared to 2011. Compared to 2009 when Albania finished its part of the Durres-Kukes highway, exports to Kosovo have more than doubled. Metals and minerals account for around 70 percent of Albania’s exports to neighbouring Kosovo which ranked the second most important destination of Albanian exports in 2011 and the third top destination in 2012 after Italy and Spain.
Trade disputes
Last March, the ban of two Albanian milk brands in Kosovo because of slightly higher levels of potentially carcinogenic aflatoxin sparked a new trade dispute between Albania and neighboring Kosovo.
Back in 2012, both Albania and Kosovo were involved in trade disputes over reference prices on cement and potato exports. In August 2012, the Kosovo government decided to lift the 35 percent reference prices on imported cement after fierce reaction by both the business community in Albania and Kosovo during its 50 days in force.
Earlier in 2012, Albania introduced reference prices on Kosovo potatoes which Kosovo considered as unacceptable under the CEFTA agreement and warned of imposing reciprocity measures. However, in April 2012 reference prices for Kosovo potatoes were restored to the previous levels.
