Privatization in Kosovo: ‘Liberal Peace’ in Practice

Abstract

This article examines internationally led privatization in Kosovo as an example of international statebuilding. It concentrates on the period from 1999 to 2008, when privatization was planned and implemented under formal international management. International statebuilding is typically sought justified with the idea of ‘liberal peace’, and this article shows how the tension between the political and economic tenets of the idea of liberal peace manifested itself in Kosovo's internationally led privatization.

Keywords:

• Kosovo
• international statebuilding
• peacebuilding
• privatization
• liberal peace
• UNMIK
• accountability
• economic development

Acknowledgements

This article is based on the Norwegian Institute of International Affairs (NUPI) report by Augestad Knudsen (2010), for which around 50 original interviews were conducted with former and present local and international privatization officials, experts and observers in Kosovo, most of whom were interviewed on the condition of anonymity. The author would like to thank the two anonymous reviewers, as well as Gary Blank and Stephen Wertheim for their comments on earlier versions of this article. The original research was made possible through a grant from the Norwegian Ministry of Foreign Affairs.

Notes on Contributor

Rita Augestad Knudsen, Norwegian Institute of International Affairs (NUPI), is a PhD Candidate in International History at the London School of Economics and Political Science and the author of The Comprehensive UN Sanctions against the Federal Republic of Yugoslavia: Aims, Impact and Legacy (NUPI/Kolofon 2008). ([email protected])

Notes

1 The scope of this article cannot do justice to the idea of liberal peace—suffice it to say that ‘democratic peace theory’ is one influential conceptualization of the liberal peace idea (see Doyle 1983a, 1983b, 2005, Russett 1993; for later discussions, see Layne 1994, Owen 1994, Farber and Gowa 1997, Rosato 2003).

2 This article prefers to describe international statebuilding's economic postulates as ‘neoliberal’ rather than, as sometimes favoured, ‘liberal’ in order not to confuse its economic orientation with that of classical liberalism (see Chandler 2010, Roberts 2011).

3 In international statebuilding's own parlance, ‘accountability’ refers to accountability of targets (see e.g. UN Peacebuilding Commission 2007, p. 2), as international statebuilding staff is immune from legal process (UN General Assembly 1946; see also The International Law Association 2000, 2002, 2004, Hoffmann and Mégret 2005, Morimov 2005, Cameron 2006, Chandler 2006, Everly 2006).

4 Interviews with officials active in the international statebuilding project in Kosovo, conducted during research trips undertaken between 2006 and 2010.

5 For some background to Kosovo's economic situation in 1999, see Prasnikar and Pregl (1991), Adamovich (1995), Woodward (1995), Uvalic (1992, 1995, 1998, 2001), Lazic and Sekelj (1997), Palairet (2001), Perrit (2005), Ramet (2006), UNDP (2007), Zaum (2007), UNMIK (2007).

6 Neither in public communication nor in interviews conducted by the author. In interviews with former local and international privatization officials and close observers, in Prishtina during 2010, it was instead asserted that alternatives were not considered.

7 For two early examples, see the European Commission and the World Bank (1999) and RIINVEST (2001)—the latter study financed by the USAID, which also funded significant Pillar IV staff (Zaum 2007, p. 157). It might be remarked in passing that Kosovo's internationally determined concentration on privatization contrasts with the locally managed developments in other former parts of Yugoslavia, where privatization was debated and conducted more slowly, with a larger degree of protection of the state's role in the economy (Lazic and Sekelj 1997, Medjad 2004, p. 314, Mulaj 2007, Woodward 2009, p. 53; see also Bicanic 1996).

8 For a parallel from the field of ‘development’, see Ferguson (1994, especially p. 256).

9 Interviews with former privatization officials and inside observers, Prishtina, 2010.

10 UNMIK's eight SRSGs, from 1999 until today have all been men. Seven SRSGs have been from Western Europe, while the current SRSG—appointed in October 2011 with disputed (if any) powers—is from Afghanistan. See Muharremi (2010) for some analysis of UNMIK's post-independence status in Kosovo.

11 While the internationally managed Chamber could refer claims to local Kosovo courts, it would then retain ultimate authority as the appellative body (UNMIK Regulation 2002/13).

12 The KTA Regulation, as amended, does not use the term ‘spin-off’, but lays out the procedure in its Section 6.2 and Section 8. The method is further detailed in the ‘Land use’ Regulation (UNMIK 2003/13), as well as in KTA's ‘Rules of Tender for Spin-off Privatization’, 28 September 2005 (see also RIINVEST 2004a, 2004b, KIPRED 2005, p. 10, Knoll 2005, n. 71, Zaum 2007, pp. 157–158).

13 Interviews with privatization officials and observers, Kosovo, 2010 (see also EC and the World Bank 1999, p. 61, KTA 2004, p. 3).

14 Transformations deemed acceptable should be considered ‘for the sole purpose of identification of the Owners and distribution of the Proceeds’, and not in order to prevent sales or return property to pre-privatization owners (UNMIK Regulation 2002/12).

15 Interviews with former KTA staff and observers, Kosovo, 2010 (see also Perrit 2005, p. 174, Zaum 2007, p. 164).

16 Interviews with former privatization officials and inside observers, Kosovo, 2010 (see also Zaum 2007).

17 Interview with UNMIK legal official involved in formulating the regulation, Kosovo, 2010.

18 UNMIK communicated its last word on the transformations a few days before the KTA closed down in 2008. UNMIK Regulation 2008/27 of 27 May 2008 (another amendment of 2002/12) placed the burden of proof back with those claiming that transformations should be taken into account, stating that such transactions should be ignored unless evidently carried out in line with applicable law, in a non-discriminatory manner and adhering to the European Convention on Human Rights.

19 Interviews and media monitoring in Kosovo, 2009–2010 (See also Shala 2006, UNMIK 2007, p. 3, EC 2009, pp. 6, 10–11, Dell 2010, Feith 2010).

20 For recent figures see the Statistical Office of Kosovo, latest accessed at esk.rks-gov.net on 3 March 2012.

21 Interviews and media monitoring in Kosovo 2006–2010 (see also Valentino 2008, Lee 2009).