Honorable participants of the second donors conference, in my presentation I will concentrate on:

ONE, a few aspects of the political situation and

TWO, current economical situation and the measures for its resolution.

1.  A FEW ASPECTS OF THE POLITICAL SITUATION

Overall, the situation of security could be worse. Many of the initial problems are overcome, however it remains essential to clarify the legal state and reinstall an air of tolerance. Tensions are weakening while the civilian administration is increasingly taking hold of the situation. However, I want to convince you that Kosova and Kosovars passed the exam of respect towards the state even when it does not function. They know how to appreciate life and wealth, even when there is no law and police. The vacuum that has been created with the entrance of NATO forces in Kosova has been overcome without anarchy or great loss of life and wealth, that is usually the case in similar situations.

Kosovars are not angels, but neither are they devils.

The domestic political forces which pretend to be in the power in Kosova, are convinced with the new reality. In Kosova there is no political force that does not recognize and cooperate with UNMIK. On the other hand UNMIK is aware that it can not function without local political support; and this was stated by its highest authorities including Mr. Kouchner. Efforts are being made to establish mechanisms that will enable this symbiosis to function. Joint bodies have already been established such as the Economic Policy Board and the Board for Legislation. UNMIK has to continue the process of sharing administration.

2.  THE CURRENT SITUATION IN ECONOMY AND THE MEASURES FOR ITS RESOLUTION

The consequences of war are not yet overcome. A substantial part of the population will face the winter without a roof over their heads. It could be that the delays will be paid with a much higher price, with human lives. A true human catastrophe could take place this winter.

The economy of Kosova has been, more or less, completely destroyed. This is a consequence of not only damages caused by war, but also by ten years of savage usage done by the Serb occupier. During a full decade there have only been the smallest investments. Naturally, this was their purpose. Technology has been morally and physically depreciated. Financial capital is non-existent; banks have been robbed. Currently in Kosova there is no functioning bank. Infrastructure, connections and telecommunications are in a miserable state.

Mr. Dixon and I, as co-chairman of the Board for Economy, are working on the creation of a legal framework, that would provide the necessary guarantees to the investors. Saying this, I have in mind the Law on Enterprises, on Property, on Foreign Investments, while the Economy Board is seriously working to create the framework of an economic system on which the politics and economic policy measures will rely. As you might know, customs are operating and partially so is the tax system.

A few days ago, two more regulations were signed, that are expected to give life and provide security for the economy. Those are the Regulation on Banking and Payments Authority of Kosova and the Regulation on Bank Licensing, Supervision and Control. We intend to build a modern banking system in accordance with the model of western banks, a solvent and liquid system that would be subject to rigid supervision and control, in order to avoid the schemes that appeared in some of the states of the former communist block. We have had the assistance of both the IMF and World Bank to whom we give grateful thanks.

UNMIK should be given assistance for two reasons. First to increase its credibility with the population; second to stop the possible social and political tensions in Kosova.

Priorities include:

First, ruined family economies. Unemployment has brought the population to the limits of its existence.

Second, particular programs and assistance should be provided for the employees who are out of work because of verified technical advance or because the administration is using their assets.

Third, salaries paid to employees from the budget should be on the level commensurate with responsibility especially for those categories of employees that have particular duties as in courts, customs, Central Bank etc. If this is not to be the case, UNMIK may be accused of assisting in the development of corruption within the system however innocently their intentions may have been.

And at the end, Kosovars showed amazing will and desire to build their country. They, as no one before, returned from the countries that showed hospitality towards them, to their own in a record period of time. They did not want to cause disturbances to the others, but want to solve their problems by themselves. They have hope and you are their hope. There is nothing more beautiful and humane than to feed the hope.