Kosovo Starts to Find Its Independent Identity

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Armend Nimani / AFP / Getty Images

T-shirts featuring Kosovo's flag hang on a tree in Pristina

In the trendy bar he owns in Kosovo's capital of Pristina, Petrit Selimi wants the world to know that Kosovars are a far cry from the stereotype of a peasant farmer with an AK-47 in his wooden shed. The young entrepreneur and former youth activist dressed in brightly checkered shorts stresses that his Kosovo is young, modern and liberal. "We had [rap star] Snoop Dogg playing here the other day; women's rights and gay rights are on the political agenda. And did you know the people in Pristina drink 20 million cups of caffe macchiato each month?"

Eleven years after a NATO air campaign forced Serbia to relinquish control of the territory, Kosovo is finding its identity. A unilateral declaration of independence in 2008 was recognized by 69 countries, including the U.S. and most (although not all) European Union member states. Last month's ruling by the International Court of Justice in the Hague that declaring independence was "not illegal" gave the young nation another boost, but Kosovo's claim to independence is still rejected by a number of powerful countries that fear the secessionist precedent. So Kosovo remains locked out of most international organizations, including the U.N. It doesn't even have its own country code, forcing phone operators to use the ones for Slovenia or Monaco. Still, for most Kosovars, achieving statehood is no longer in doubt.

One indicator of Kosovars' confidence in their independence is their changing relationship with neighbors in Albania, with whom most share a language and ethnic identity. While unification with Albania was a common theme among those fighting the Serbs a decade ago, political parties that advocate joining a greater Albania now poll just 2% of the vote.

Kosovars are certainly happy to have good ties with Albania, after Eastern bloc schisms left them isolated from each other for 50 years. (Communist Albania was aligned with China, while communist Yugoslavia was nonaligned.) A new highway link saw 1.3 million people crossing the border in July alone, a mind-boggling number considering Kosovo's population is barely 2 million.

Along the stretch of Pristina's Mother Teresa Square (she's a local heroine) stands sell the red Albanian flag with its black double-headed dragon motif. But there are also plenty of souvenirs bearing the rather anonymous Kosovo flag, a map of the country on a navy blue background with a half-circle of stars, clearly inspired by the E.U.'s own standard.

One diplomat observes that the Kosovo flag has even begun appearing in wedding parades, which were previously dominated by Albanian flags and even the star-spangled banner in honor of Washington's support for Kosovo. "The Kosovo thing is definitely catching on," says Selimi. "When Snoop Dogg played here this summer he paraded the Kosovo flag and you could feel a shiver of emotion going through the audience. Unification is not on the agenda anymore. Kosovars are working on their future independently."

Nation-building may be under way, but corruption is widespread at all levels of society, says Eulex, the E.U. rule-of-law mission in Kosovo. Senior government officials have recently fallen under suspicion. Organized crime and money-laundering are also a major concern. During the 1990s, resistance to Serb rule was thought by Interpol to be largely financed by drug smuggling. Even today, smuggling of everything from fuel to drugs to human beings is still the mainstay of organized crime in the country, although it has declined due to improved enforcement.

The legal economy is growing, but slowly, with unemployment at a staggering 47%, according to World Bank figures. The country relies heavily on imports, and its exports, of which base metals are by far the biggest, were equal to just 10.8% of its imports in 2008.

Using the euro as its currency muffles inflation but precludes devaluation as a strategy to reduce the trade deficit. A silver lining is the tax system. Revenue collection is "relatively strong," the World Bank reports, but Kosovo remains heavily reliant on foreign handouts. Remittances from abroad may account for as much as 15% of GDP, while contributions from donor countries account for a further 7.5%.

The business environment also has many entrepreneurs skeptical about survival. "The competition is wild," says Agim Dushi, who runs the Bonus water and soft-drink plant. He counts 25 water companies in Kosovo alone, often built on the cheap and without serious quality control. "We need to adapt if we want to survive." But with interest rates typically at 12%, he is doubtful about Kosovo's industries generating the investment to modernize. Electricity shortages are also holding businesses back, though improvements to the country's coal- and hydro-based electricity system are under way.

A key problem for law enforcement is the unresolved status of the predominantly Serbian enclave in the north of the country, where the population sees Belgrade as its legitimate government. Its border with Serbia is not patrolled, leaving the door open for smugglers — and law enforcement is difficult because the police in the north do not report directly to the authorities in Pristina.

"The north is becoming more of a law-and-order issue by the day," says Kosovo's police commissioner Behar Selimi. He sees some progress in cooperation with local enforcers in the north, but still describes the situation as chaos.

The most important and elusive breakthrough in Kosovo's quest for independence will be a thaw in relations with Belgrade. Having failed to convince the International Court of Justice to reject Kosovo's independence, Belgrade may be slowly becoming more amenable. While recognition is not on the table, it now speaks of finding mutually acceptable solutions for all open issues. "The current situation is in no one's interest," Serbia's state secretary for Kosovo recently told Kosovo broadcaster RTK. Belgrade and Pristina both hope to join the E.U., and if that spurs greater cooperation, it could create a headache for a lot of smugglers. It might also mean the end of a boom in Monaco-based cell-phone numbers in Kosovo.