There are two political economies that form the gorge through which passes the River Ibar. To the south there is a political sphere inflated by the privatized hemorrhaging of socially-owned enterprises. To the north there is a political sphere whose margins have been set at the price of smuggled goods, and the illicit networks that protect and monitor them. The two appear to be at odds with the one another. Both regions are comprised of a political elite heavily invested in maintaining the status quo and willing to exploit age-old ethnic tensions to do so. With only tenuous, conflict drawn steps ahead this divide has become a significant starting point to understanding the contemporary nature of the Serb-Kosovo relationship and any ideas regarding integration of the territories. For any meaningful resolution to take place something needs to give, but can it?
………..
The political economy in the north is more mysterious, certainly, than that of the south. There was a political vacuum for some time after independence was declared by Kosovo in 2008, complicating the political spectrum and providing space for more radical groups to seek office. The Ahtisaari plan allows for Serbia to prop up Serb populations, through direct investment in schools, hospitals, public works, real estate, security and so on. The vacuum that occurred in 2008 is currently dominated by radical populist thinkers funded by Belgrade, but Serbia does not have control. It’s become something like a criminal fifth column.
Within this shifty parallel system there are two sets of political parties: those aligned with one of two parties in Belgrade and those which are not. The Council for Inclusive Governance recently reported that, “the relations . . . are tense.” The primary Belgrade-aligned parties are the Serbian Democratic Party (DS), the Serbian Democratic Opposition Party (DSS) and the Serbian Progressive Party (SNS). The latter is headed by Tomislav Nikolic, a man adamantly opposed to the rule of the incumbent president Boris Tadic. Of the four municipalities in northern Kosovo stalling negotiations over the current border crisis, all are split between parties aligned with one of the Belgrade leaders, as reported by the Koha Media Group, following recent elections. Northern Mitrovice is a primary subject for Serbian politicians for the following reasons: It is the largest urban municipality in the north, it receives the most funds from the Serbian budget, and the health of Serbia’s parallel institutions are indicative of Serbia’s national mission to reabsorb the disputed territory. Moreover, Kosovo is a sore subject for Serb nationalists still lamenting the loss of the territory.
Mitrovice happens to be straddling the river Ibar and the geo-political front-line so a few weeks ago I went to speak with a few people. I had already spoken with Serb Secretary of State for Kosovo, Oliver Ivanovic, and the President of Leposavic, Branko Nanic, but I hadn’t spoken to political leaders in Mitrovice or Zubin Potok. First, I found the municipal president of Mitrovice, Krstimir Pontic, sitting underneath a shade tent, in a plum field alongside the Rudare road block—the last block to be taken down since conflict broke out last month. Moving out from under the shade toward an unforgiving sun and in the company of many stressed civilians, we talked over the current conflict and possibilities for the future. When asked about resolution he stated that all four municipal presidents—Zvecan, Zubin Potok, Leposavic, and Mitrovice—just wanted life the way it was on July 24 before Prishtina sent special forces to block trade. This seemed a curious stance for a political leader, considering life on July 24 was life in a disputed territory wedged between two formidable opponents.
When asked why Thaci acted unilaterally Pontic responded that it was mere election bagging, “Thaci is in a social crisis and publicly unpopular.” He was quick to add, “but he could never keep this up.” He pondered the possibility that September 15 would not bring any new resolution and said, “my people will defend themselves against KFOR—with their bodies—if that is what it comes down to.” He feels that KFOR is on the Albanian side and that they too are waiting to begin persecuting the Serb population in the north. When I asked him about the criminality that seems to define life in the north he candidly said, “Yes in a sense we are all criminals, as long as a criminal is somebody unwilling to pay taxes to Prishtina.” But the black economy in the north is more than just tax evasion so I pressed him directly, “Do you benefit from the smuggling of goods across the border?”
He said, “Yes.”
Yet, Pontic thinks that Thaci’s administration is the bigger of the criminal organizations, even going so far as to say that Kosovar Albanians lived better under Milosevic. He said that it was merely a matter of time before Thaci’s regime lost control, but on that particularly blistering afternoon he just wanted the embargo to be lifted, as it was starting to make life expensive. Because price hikes are like a political death sentence, the status quo is the hardline political platform in North.
After leaving Pontic alongside the road at Rudare, I moved toward the bridge to meet with the infamous Doctor Milan Ivanovic. He is the leader of the Serbian National Council—the more prominent civilian operation unaligned with the Belgrade based parties (although they do have political representatives in northern municipal cities)—and he is from Zubin Potok. He is a known radical, rumored by officials to be one of the more ruthless criminals, and in control of the paramilitary group the BridgeWatchers, an armed and well trained group of Serb paramilitaries. He is tied to Tomislav Nikolic, and he thinks that Tadic has become soft by “making too many apologies over Kosovo.” He thinks that Vladimir Putin is a righteous leader: bravely standing up to the International community at large. Apart from the inflammatory or nonsensical, Ivanovic didn’t bring much else to the table other than his concern that things go back to the way they were on July 24. He does not know what constitutes humanitarian aid. In fact, he doesn’t have an economic inkling. When asked whether he had plans for resolving the current Kosovo-Serbia question he said that he hoped it would become democratic. But when asked whether a 95 percent majority could vote for an independent state he didn’t seem to think that counted. Fine, but why July 24?
EULEX recently published a report regarding the grey and black economies in Kosovo. The grey economy includes all underground or informal activities that evade taxes, while the black market includes drugs, arms, human trafficking, all non-taxable illicit flows. The amount of gross national product lost through illicit channels is disputed. Agim Sahini from the Kosovo Business Alliance estimates that between 30 and 90 million Euro are moved illicitly across the border each year; whereas the Interior Minister of Kosovo, Bajram Rexhipi, put his estimate at 150 million Euro. International Crisis Group estimates upwards of 50 percent of any potential GNP is lost to illicit flows. The primary taxable items smuggled are tobacco, petrol and food products; while the primary illicit, non-taxable, goods are sex, drugs, and arms. I was told by several worthy sources that a Kalashnikov rifle costs around 200 Euro if you don’t know who you are dealing with but are easy to obtain. The rumors that float around about the drugs are horrifying, and the sex seems to be consolidated into brothels and bars, highly streamlined, and actually operating by a intricate system of fraudulent contracts. (I am preparing a special report on trafficking.)
Simply put, the EULEX report holds household consumption figures against household incomes to find figures, between 39 and 50 percent of GNP. In their words, the two economy analysis “implies the dual existence of a formal and informal sector with each having the same players but different associated costs/ benefits related to economic activities.” The methodology used by the report is comprehensive, although I disagree with the basic tenant that these economies are characterized by the same actors. All of my experience and research paints a different picture and although there is extensive inter-ethnic cooperation, the political economy in the North has diverged from the political economy in the South, and some of the actors are now at odds with one another. Internally, criminal actors co-opt citizen proxies to incorporate legal commercial entities, and they become the front for broader illicit trades; the point being that the actors are stratified along socio-economic lines. Furthermore, the political actors in the South are publicly and legally bound to the sales of tenders and procurement, as in the case of Post and Telecommunications Corporation (PTK), and Kosovo Energy Corporation (KEK), The Ministry of Health, and highway projects we’ve covered over the last several weeks. In short, your typical general store manager/owner in the north, or in the south, is probably not knowingly trading in drugs, arms, and tampered petrol.
In June, there was a case in which EULEX officers arrested a Zubin Potok man on charges of money laundering, fraud, and embezzlement. He was an actor identified in the upper echelons of the organization. As soon as he was detained civilians took to the streets, blocked the roads, and protested for 22 days. One criminal was detained while freedom of movement throughout the municipality was arrested, by civilian protest, for nearly a month. In speaking with one of the EULEX officers involved in the June arrest, and subsequent protests, he expressed the real challenges facing the rule of law mission in the North. ‘They say that we don’t do anything, and so we aren’t welcome in the North. But every time we go into the North and arrest a known criminal they block the roads and shut down the city. There are serious implications to taking action against these guys.’
This case presents several questions, but specifically the motivation of the civilians to protest for such an extended period. Do they really feel that EULEX is menacing, or threatening? Or, do they feel the EU is discriminatory? As Serb Secretary of State for Kosovo, Oliver Ivanovic, explained to me several weeks back, the protesting is like a community event {link politics and people}, an act of solidarity. Really? I think realistically these are fierce indications that western concepts towards rule of law have not penetrated the social fabric in the north. In fact much of the region is still run by the archaic Kanun, or blood letting. In talking with an investigative journalist from Mitrovice, he was careful to explain that this situation is not because Balkan peoples are backward, rather the Kanun style blood letting is the only effective form of deterrence. Serb majority cities don’t trust the International presence, and they certainly don’t trust Prishtina, so encouraging them to access the rule of law mission has been nearly impossible. Again, this is a political perpetuation. I think that, ultimately, the June case is Zubin, and the road block format in general, demonstrates the shape of political economy and it’s organized crime.
………..
When a business is “set up” to import from Serbia they typically receive an 18 percent cut in the overall price of whatever stock load they are purchasing. Then they move the goods across the border, avoid customs taxes (Kosovo is a more expensive country to trade with), and put that money in their pockets. Furthermore they don’t pay any VAT in the north, pushing up the already record breaking profits. The petroleum ring really deserves its own essay, but this is where you tend to see the highest levels of inter-ethnic trading, as well the most skullduggery. I was actually standing in a NATO check point, at gate 31, speaking with a Slovenian soldier about customs controls and embargo, when I saw a fuel truck driving along the opposite side of the lake, smuggling several thousand liters of petrol across the border. Typically, once the fuel arrives in the North, it is diluted with mixers that degrade the quality but increase volume, then it is sold upwards of .80 Euro/ liter cheaper in the North before it travels to the South, and sold around 1.20Euro/liter. Cigarettes are a problem too: They are smuggled across the border (generally coming from former Satellite states like Kazakhstan) and then they are parceled out to teenage vendors who make their living hawking in clubs and on the street, again they are cheaper in the north than in the south. I would cringe in knowing the nicotine levels, as compared to Western Europe or the United States, but I’d take a good guess that eight out of ten Kosovars smoke a pack a day, if not more. The commodity list just rolls on. (I will highlight some more of these networks in the trafficking report I’m compiling).
As crime bosses “hire” civilians to register business fronts, they pay them off with the massive overhead they accrue. In a depressed economy, where an average citizen can pull in a mere 200 Euro a month out of the private sector, the illicit flow of money literally makes life possible. When those structures disappear, or are arrested, life tends to fall apart. As was expressed by Pontic, and both Milan and Oliver Ivanovic (of no relation) there is serious concern that life stay as it was on July 24th. Interestingly enough, it was discovered that it had never really been put into place because of inter-ethnic corporate trading through corporations like Kosovo Energy Corporation (KEK). Sound familiar? Just a few days ago the embargo was lifted.
The primary problem the region is going to face is that bad politicking has used age old ethnic mythologies to conjured up the Balkan ghoulies. Angela Merkel, arguably the most powerful politician in Europe, was not entirely successful at presenting Serb President Boris Tadic with the recent ultimatum: Kosovo or the E.U. That’s probably because Tadic isn’t poised to win 2012 elections, but Tomislav Nikolic is, and public opinion in Serbia seems to still hinge on the tiny southern territory. In fact, Nikolic recently went on hunger strike to try to force early elections. Curiously enough he is aligned with leaders like Lukashenko and Putin, a priori Municipal leaders in the four cities that effectively blocked talks over the embargo. Northern Kosovo, via parallel institutions and the mushrooming of organized crime is looking a bit like Serbia’s little Mexico. It will be a matter of time before the Balkan ghosts come out to play.


Crime families are notoriously bad at swallowing economic trouble and often go to great lengths to protect their profits. They require confusion over the status of the northern region. X said to me, “Who died on the border?” I said, “the Albanian Special forces officer…” “Sure, but who killed him?” I hesitated but replied, “…a Serb.” In this case X confirms that multi-ethnic crime families regularly exploit ethnic conflict to their advantage. ”It’s just politics of a different flavor.”

