Kurti's statements escalation of situation concerns foreign investors

Any situation that could affect the security of a region will also affect an investor's strategy, says Manfred Brander, an Austrian investor in Kosovo. Meanwhile, economic organisations say any security breach will distance investors from Kosovo.
Early in August, Kosovo Prime Minister Albin Kurti, in an interview for Radio Free Europe, has declared there has been a possibility that tensions on July 31st and August 1st in the country's north could escalate into armed conflict.

He has also indicated that he continues to think that the situation can escalate. Statements such as this, Kurti has issued in several other international media.

Brander, director-general of the company “Bit Media” member of “EEE group” [e-education, e-election, e-government, in Austria], came to Kosovo 11 years ago to invest with its technology firm, respectively.

He says such news of possible escalation of the security situation, circulated in the media, is of concern to him as international investors in Kosovo.

Any conflict between countries is disturbing or perhaps something that leads to the decision to delay investments or engage in them. But right now we're still positive about the situation and we're going on with our” investments, Brander says.

Brander in an interview given months earlier for Radio Free Europe had declared there are plans to expand his business in Kosovo. But now he says that if the situation becomes more complicated, then the “we must definitely evaluate or think of existing strategies for Kosovo”.

Meanwhile, statements of a possible conflict between Kosovo and Serbia, according to the executive director of the Council of European Investors, Emrush Ujani, cannot pass without leaving any trace to potential international investors.

“We are dealing with a political problem dealing with the neighbouring state. While we have this, it [the problem] always generates such situations that can have consequences affecting investors, even those potential”, says Wolfan for Radio Free Europe.

Of the meetings Wojan has had during these days with international investors in Kosovo, he says there has been no concern, but if such a pace continues, according to him, “there may be another” situation.

Founder of the European Investors' Council are investors from European Union member states and EFTA countries.

The EFTA member states are Iceland, Switzerland, Norway and Liechtenstein.

What does an investor from Kosovo want?

The executive director of the American Chamber of Economics in Pristina, Arian Zeka, says physical security, along with legal security, is one of the most important elements affecting investor decision-making to extend operations to a new state or market.

The “Declarations such as security violations naturally affect potential investors and, as such, they [investors] can avoid investments in Kosovo”, Zeka says.

He adds it is short time to know whether a potential investor may have given up investing due to such statements. But political instability, according to him, may in the past have been an indication that it has affected attracting foreign investment.

In 2007, a year before Kosovo's declaration of independence, foreign investments amounted to 440.7m euros, but have dropped over the years.

Political crises, decline in foreign investment

The biggest decline in foreign investment was marked in 2014, when Kosovo faced a political crisis.

This political crisis, according to the American Economic Ode, could have influenced the arrival of international investors.

Since early 2014, Kosovo's institutions had faced difficulties operating.

The then-led coalition government consisting of the Democratic Party of Kosovo and the New Kosovar Alliance had lost support for the majority in the Assembly. This led the country to early elections.

Elections held on June 8, 2014, won PDK.

But, leaders of the opposition parties at the time, Isa Mustafa from the Democratic League of Kosovo, Ramush Haradinaj from the Alliance for the Future of Kosovo and Fatmir Limaj from the party Initiative (later Social Democrat Initiative), decided to form a coalition with the claim to leave it in opposition, the winning election party, PDK.

By the angels The PDK insisted that it alone had the right to propose the Speaker of the Parliament as the winning party, while the LDK bloc, AAK and Initiative claimed it had created the largest parliamentary group, so it also intended to nominated Parliament's chairman, Isa Mustafen.

The solution to all of this had taken six months.

Institutions were formed on the basis of an agreement reached for co-government between PDK and LDK.

Rukiqi: potential investors, concerned by war conflict statements

Even the former head of the Kosovo Economic Ode, Berat Rukiqi, in a post on the Social Network Facebuk has written that spreading news to international media -- that there can be war in Kosovo -- does not benefit Kosovo.

According to him, investment-interesting companies in Kosovo -- among them an American who plans to open a branch in Kosovo in the coming months -- are concerned with the news they have read.

Kosovo, even without those statements, has an image of the country of conflict and high political risk, which has scared many companies to invest in Kosovo. It is not useful to feed this perception further”, Rukiqi wrote.

Foreign investments by representatives of economic organisations are considered the most important in economic development and job generation.

The Investment and Support Agency of Enterprises in Kosovo (KIESA) is the state-run agency whose mandate is to promote and support foreign investments.

Zef Dedaj, deputy director general of KIESA, has not responded to Radio Europe Free for comment on Prime Minister Kurti's statements and the effects they may have on potential investors.

The level of foreign investment between January and April this year, according to Central Bank data in Kosovo, is more than 170m euros, until in 2021 foreign investments were worth over 400m euros.

Over the years, foreign investments have seen decline.

As the reason for lack of investments, other than political instability, complicated legal infrastructure and energy uncertainty have often been mentioned.

In an American State Department report released in 2020 for the Investment Climate, it has been said that “one of the problems preventing foreign investors from going to Kosovo is the unreliable energy supply”.

Kosovo continues to face unstable energy supplies.

Corruption has also been cited as an obstacle to World Bank reports on doing business.

While, in this year's report by the international organisation, Transparency Internationl, published in January, it is said that Kosovo has noted easy progress in the fight against corruption, but remains among the countries that have high levels of corruption.

Investments in Real estate

The highest level of foreign investment between 2007 and 2009 was in financial and security activities. After 2009 to 2021, the highest level of foreign investment in Kosovo is in the real estate sector.

According to the Central Bank of Kosovo, the level of investments in real estate is done by the Kosovo diaspora.

Kosovo Prime Minister Albin Kurti, and Serbia's president, Aleksandar Vuciq, have held new round of talks with the European Union's mediation. But, the 18 August meetings in Brussels, under the dialogue, did not produce any agreements.

However, from the EU said the parties would continue dialogue on the issue of Serbian license plates and documents, which raised tensions in northern Kosovo on July 31st and August 1st, after local Serbs blocked the roads leading to the two border crossings of Jarinje and Brnjak border crossings linking Kosovo and Serbia, in sign of disappointment with the Kosovo Government's two decisions.

On 19 August, the chief of the Office for Kosovo in the Serbian Government, Petar Petkov, during a news conference held in Belgrade, said Serbia has submitted proposals for resolving the Serbian license issue and documents before September 1st, but they have not been accepted by Kosovo.

Damir Marushiq, senior associate of the European Centre of Atlantic Council from Washington, thinks the leaders of Kosovo and Serbia may be contributing to increasing tensions, to push ahead to reaching a final agreement between the two states.

According to him, diplomacy that encourages tensions is a dangerous game in a tense situation in northern Kosovo.