Kosovo: Reconstruction and Development Assistance

Publication Date: June 2001

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: International relations

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Abstract:

Efforts to reconstruct and develop Kosovo following the devastation and disruption caused by the war will require billions of dollars and support from multiple donors. In P.L. 106-429, the FY2001 foreign aid bill, Congress limited Kosovo aid to 15% of donor assistance. The Bush Administration has requested $120 million for Kosovo activities under the SEED account in FY2002.

Assessments conducted by the World Bank and the European Community in 1999 estimated external financing needs for Kosovo reconstruction at $2.3 billion over four to five years. UNMIK, the U.N. Interim Administration Mission in Kosovo, is the chief governing body in Kosovo, supported by the OSCE (Organization for Security and Cooperation in Europe) and the European Union.

At the two 1999 Kosovo donor conferences, $1.5 billion was pledged for reconstruction-related efforts. In 2001, more than $593 million has been pledged. Reconstruction programs include a wide variety of activities. Support for the UN administrative budget, economic policy reform, establishment of rule of law, and efforts to stimulate a nascent private sector and civil society are being undertaken by the United States and other donors.

One issue for Congress is the level of aid to be provided and the proportionality of U.S. assistance vis a vis European donors. Both the FY2000 and FY2001 appropriations limited U.S. contributions to 15% of the total. Some are also concerned that Europeans are not matching pledges with actual disbursements and necessary dispatch.

Whether aid pledged will go to meet actual needs is another issue of possible concern to Congress. Both external financing for the UNMIK administrative budget and numbers of international civilian police have not met targets in the past.

Some observers have been critical of the way the program has been implemented thus far and others are concerned regarding the possibility of corruption in the aid program as well as in the new Kosovo government. Steps are being taken by donors to address these issues.

The relationship of Serbia to Kosovo will affect future reconstruction. At present, efforts to remake Kosovo are creating a de facto independence, although the U.N. continues to recognize the sovereignty of Serbia over Kosovo. The October 2000 change of government in Serbia may facilitate a resolution to this issue.