Opening Remarks by Mr. Christiaan Poortman, Country Director and Regional Coordinator for Southeast Europe, The World Bank

Let me join Reinhard Priebe welcoming all of you this morning. A special welcome to the delegation from Kosovo, Special Representative of the UN Secretary General, Michael Steiner, Prime Minister Bajram Rexhepi and their colleagues.

In my brief opening remarks, I wish to touch upon three themes:

• the regional context;

• the much debated issue of aid dependence; and

• sustainability.

First, I would like to put in a regional perspective what has been achieved in Kosovo during the past three years. To start with, today there is no open conflict in Southeast Europe, FRY has reintegrated in the international community, democratic elections have taken place in all the countries, and regional cooperation has advanced through the Stability Pact. Of course, the gains achieved in the region and in Kosovo itself are fragile. There are also setbacks from time to time. Nonetheless, the last three years mark important overall progress in this region that suffered from wars and ethnic divide for so long.

We, in the international community, had learnt a lot from our experience in Bosnia and Herzegovina when we embarked on helping to rebuild Kosovo in 1999. Of course, the situation in Kosovo was vastly different from that of Bosnia after the war. However, the international community was much better prepared to quickly mobilize humanitarian and reconstruction assistance, and set up a functioning international administration. Three years later, we should take pride of the achievements. The humanitarian crisis was dealt with effectively, the results of the reconstruction effort are clearly visible everywhere in Kosovo, economic activity has been restarted, and the provisional institutions of self-government have been set up. However, the job is not finished. We need to continue to assist Kosovo to become a multi-ethnic, democratic society with a modern economy. And this leads me to my second point about aid dependence.

Kosovo does not want to become aid dependent. In fact, there has been tremendous progress towards increased sustainability. The speed at which Kosovo has been able to build up local revenues has been truly impressive. It is not to say that more cannot be done. There is a whole agenda of reforms, that we will hear more about today, that will need to be implemented to further economic sustainability. However, I disagree with those who say that continued donor support would risk increasing aid dependence. Obviously, the past levels of donor support cannot and should not be maintained. Official development assistance should gradually reach more "normal levels", characteristic of economies of Kosovo's size and level of development. However, this process of reduction (and I emphasize not exit) of donor support will have to take into account the particular constraints Kosovo faces. These constraints, at least at the moment, affect Kosovo's ability to borrow externally, export to certain parts of the world or benefit from free trade agreements, proceed quickly with privatization of publicly owned assets and thus attract higher levels of direct foreign investments. These constraints are a fact of life but they should not be an excuse for avoiding tough decisions related to the restructuring of Kosovo's economy or for slow implementation of reforms. UNMIK has done a lot to alleviate these constraints. On the other hand, as long as they exist, special international assistance will be justified. And this takes me to my final point on sustainability.

At the end of the day, what matters is that the people of Kosovo have a better life. There are far too many people without jobs, people who are poor, and people who could still not return to their homes in Kosovo. Only sustained high levels of economic growth can create jobs and incomes that pull many of the poor out of poverty and also provide economic opportunities for returnees. This is why it is so important that conditions for private sector investment are put in place rapidly. The Government's program, that will be presented by Prime Minister Rexhepi, later today, sets out the right priorities for Kosovo's delayed transition to a market economy. Its rapid and consistent implementation, coupled with continued donor support, will be key to Kosovo's future economic prosperity, and thus improved stability in the region.

Thank you.

¹ Kosovo (Federal Republic of Yugoslavia) - UNSCR 1244