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World pledges over €1bn for Kosovo

Latest update : 2008-07-13

The European Union and other donors promised to inject 1.2 billion euros into newly independent Kosovo's economy, but asked for guarantees against corruption.

International donors pledged 1.2 billion euros (1.9 billion dollars) Friday to help build Kosovo's battered economy, surpassing their target, but tied their offers to action against corruption.

Almost two thirds of the money was donated by the European Union, with Saudi Arabia, Turkey and Switzerland making big contributions, five months after Kosovo -- one of Europe's poorest regions -- broke away from Serbia.

"This is an extraordinary success for the prospect of Kosovo as a safe, democratic and multi-ethnic state," said Kosovo Prime Minister Hashim Thaci as the day-long donors conference in Brussels wrapped up.

Thaci pledged that his government would put the funds to good use.

"The government of Kosovo pledges to continue good governance," he said. "We will never disappoint you."

Kosovo, almost half of whose population lives in poverty and where the unemployment rate is around 40 percent, declared independence from Serbia on February 17.

The region, recognised by around 40 nations but not by Serbia nor its UN veto-wielding ally Russia, is desperate for funds to build its fledgling institutions and economy and to help draw investment.

But it is also notorious for corruption.

"Our pledge today is an expression of our trust. But implementation remains an outstanding issue. We are waiting to see the results," EU Enlargement Commission Olli Rehn said as he announced a 500 million euro commission pledge.

"I am sure that the Kosovo authorities know that they have to make the promises materialise for all people in Kosovo ensuring that every euro spent is accounted for and put to good use."

Thaci pledged that his government would remain accountable.

"We believe in openness and transparency, and we will ensure that development funds are never wasted nor leaked into the wrong hands," he vowed.

He said that his government's priorities are economic growth, success in implementing its new independent status, good governance and rule of law, and to increase social stability.

Of the EU donors, Germany gave most with around 100 million euros. Most big states pledged more than 10 million euros. France, which currently holds the EU's rotating presidency, offered 2.2 million, an EU official said.

Significantly, none of the seven EU nations that do not recognise Kosovo pledged any aid, but none objected to vast amounts of the bloc's funds being used for the cause.

But despite the amount raised beating expectations, the money -- for use over the next three years -- only scratches the surface of the financial support Kosovo will need in the future, and funds will be needed to ensure stability.

Kosovo has proved a particular powder-keg in the highly volatile Balkans region.

The territory has been run by the United Nations since 1999, after a NATO launched an aerial bombing campaign against former Serbian strongman Slobodan Milosevic's forces to stop the ethnic cleansing of Albanian separatists.

Donors have already contributed more three billion euros to Kosovo since then, while the United Nations has poured almost as much into its mission there, UNMIK.

"Economic stability is fundamental to political and social stability," said Thaci, who also announced Friday that Kosovo had applied to join the World Bank and the International Monetary Fund.

To help foster security, the EU is deploying a vast police and justice mission to Kosovo, to take over policing and some other duties from UNMIK and help chaperone the region to statehood.

But the EU's special envoy Peter Feith warned that it would be a tall order.

"Kosovo's economic development has been lagging behind its neighbours due to decades of neglect," he said. Kosovo will need financial support for the years and generation to come."

Date created : 2008-07-11