VZCZCXRO1947
PP RUEHAG RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN RUEHLZ
RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHPS #0299/01 0941514
ZNR UUUUU ZZH
P 041514Z APR 06
FM USOFFICE PRISTINA
TO RUEHC/SECSTATE WASHDC PRIORITY 5988
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNDT/USMISSION USUN NEW YORK 0636
RUFOANA/USNIC PRISTINA SR
RHMFISS/CDR USEUCOM VAIHINGEN GE
RUFOADA/JAC MOLESWORTH RAF MOLESWORTH UK
RHFMIUU/AFSOUTH NAPLES IT
RHMFIUU/CDR TF FALCON
RHEFDIA/DIA WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RUEPGEA/CDR650THMIGP SHAPE BE
RHEHNSC/NSC WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC

UNCLAS SECTION 01 OF 03 PRISTINA 000299 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR DRL, INL, EUR/SCE, NSC FOR BRAUN, DOJ/OPDAT FOR 
SEASONWEIN, EMBASSY ATHENS FOR TOM YAZDGERDI, EMBASSY 
BELGRADE FOR LAURA BROWN 
 
E.O. 12958: N/A 
TAGS: PREL PGOV PHUM KDEM UNMIK YI
SUBJECT: KOSOVO STANDARDS DELIVERABLE: PROPERTY RIGHTS 
 
 
Sensitive But Unclassified; Protect Accordingly 
 
¶1. (SBU) SUMMARY.  UNMIK and the Provisional Institutions of 
Self Government (PISG) have created the Kosovo Property 
Agency (KPA) as a quasi-judicial forum for resolution of 
private real estate disputes.  The KPA will replace the 
Housing and Property Directorate (HPD), the independent 
agency that has adjudicated possession rights to 29,000 
residential properties affected by the Kosovo war.  The KPA 
inherits a significant piece of unfinished HPD business -- 
what to do with the 5,400 HPD-administered residential 
properties for which tenants are not paying rent to rightful 
owners.  In addition the KPA is charged with the adjudication 
of rights to an estimated 11,000 agricultural and commercial 
properties over which HPD had no jurisdiction.  Most of these 
leftover cases involve absentee ethnic Serb owners and ethnic 
Albanian tenants.  The new agency could establish itself as a 
champion of minority rights, and help the PISG realize one of 
the Standards for Kosovo, by instituting and enforcing a 
rental scheme for these thousands of properties.  END SUMMARY. 
 
Background 
---------- 
 
¶2. (SBU) On March 4, the SRSG Soren Jessen-Petersen signed 
into law UNMIK Regulation 2006-10 establishing the Kosovo 
Property Agency as a quasi-judicial body ostensibly operating 
under the authority of Kosovar courts within the Provisional 
Institutions of Self Government (PISG).  The regulation calls 
for each KPA decision to be sent to the courts whose failure 
to act within 45 days would be construed as affirmation of 
the KPA decision.  Court action options in any case are to be 
limited to affirmation of a KPA result or remand to the KPA 
for further consideration.  This unusual appellate structure 
embodied UNMIK's effort to involve Kosovo's struggling courts 
without overwhelming them.  USOP and other liaison offices 
argued that creation of an executive agency whose decisions 
would be appealable to the courts would be a better model, 
but UNMIK balked at such a substantive transfer of competency 
to the PISG.  Ultimately USOP was convinced that getting on 
with the resolution of the thousands of outstanding claims, 
most of which do not involve serious legal issues, was a 
higher priority than perfecting the process for rare appeals. 
 
¶3. (SBU) The Housing and Property Directorate (HPD) is often 
cited as one of UNMIK's most successful creations.  Operating 
out of offices in Pristina and Belgrade, HPD has resolved 
more than 29,000 housing claims stemming from the Kosovo 
conflict.  Given the wholesale destruction or removal of 
legal documents during the war, HPD did not undertake to 
quiet titles but rather adopted a pragmatic approach to 
sorting out possession rights.  Title disputes, in any event, 
were rare (and subject to jurisdiction of regular courts). 
Much more typical were cases of displaced persons occupying 
the homes of other displaced persons, a practical consequence 
of the destruction of 150,000 homes and the displacement of 
more than a million people. 
 
¶4. (SBU) HPD dealt with residential properties only. 
Non-residential claims are subject to jurisdictions of other 
entities.  More than 450 communist-era "socially owned 
enterprises" (SOE) are passing through Kosovo's privatization 
auction process under the administration of UNMIK's Kosovo 
Trust Agency (KTA).  Some 1,500 claims against the results of 
that process, about a third sponsored by the Government of 
Serbia, are pending before a special chamber of the Kosovo 
Supreme Court established to hear them.  KTA also administers 
Kosovo's five public utilities (telephone, electricity, 
railroads, airport, water).  Some 17,000 claims for war 
damages to real property, most against NATO, have been filed 
in Kosovo courts, nearly all by Kosovo Serbs.  Finally, OSCE 
estimates that possession rights to 3,000 agricultural 
properties and 8,000 commercial properties have yet to be 
resolved or even addressed by competent authorities. 
 
 
 
PRISTINA 00000299  002 OF 003 
 
 
KPA: New Agency Thrown Right Into The Fray 
------------------------------------------ 
 
¶5. (SBU) The KTA expects to fully privatize all marketable 
SOE's by the end of 2006 and is well on the way to 
incorporating all five public utilities in preparation for 
eventual privatization.  The courts are awaiting UNMIK 
guidelines on the war damages claims.  (NOTE. UNMIK evidently 
is anticipating a NATO declaration of immunity from suit. END 
NOTE.)  KPA will then be left to deal with more than 16,000 
cases comprising the 11,000 agricultural or commercial cases 
and 5,400 cases of HPD-administrated residential properties 
where no rent is currently changing hands. 
 
¶6. (SBU) Most of the agricultural and commercial claims 
involve property owned by displaced Kosovo Serbs and occupied 
by Kosovo Albanians.  Although anecdotal evidence suggests 
that some of these tenants are paying rent, in funds or in 
kind, the great majority are not.  Similarly, virtually none 
of the tenants in HPD-administered residential properties are 
paying rent.  HPD's resolution of these cases typically 
involved the legitimization of the status of squatters who 
already occupied the properties involved.  For their part, 
the absentee owners (mostly Serbs but a significant number of 
Albanians) gain at most some degree of assurance that their 
properties will not be destroyed by disgruntled evictees. 
 
¶7. (SBU) HPD never intended its administration of residential 
properties occupied by nonpaying tenants to be a permanent 
arrangement.  As KPA takes over these cases from HPD and adds 
the 11,000 agricultural and commercial claims, the new 
agency, per Regulation 2006-10, is obliged to institute some 
variety of rental scheme.  This is a potentially massive 
undertaking for KPA and its staff of 14 internationals and 
200 Kosovars, involving the setting and collection of rents 
in a market still seriously disrupted by the demographic 
upheavals and real property destruction of the war. 
 
¶8. (SBU) Two important social factors further complicate any 
KPA effort to institute a rental scheme.  First, Kosovo is 
ill-equipped to evict illegal tenants on a mass scale.  The 
HPD executed a small number of evictions, all with perimeter 
police support and all after first making sure that evictees 
had somewhere else to go.  There is no assurance that Kosovo 
Albanian society would tolerate the wide-scale eviction of 
tenants who, although clearly in the wrong legally, were in 
many cases themselves burned out of their homes during the 
war.  Second, agricultural production in Kosovo remains at 
less than half its pre-war level.  Getting land back into 
full production is a social imperative demanding attention 
even as the rights of individual land owners are recognized. 
 
¶9. (SBU) COMMENT. The war resulted in nearly one million 
displaced ethnic Albanians and huge damage to their homes.  A 
plan to compensate Serbs will therefore not be an easy 
political sell, but the issue of property claims will not go 
away.  The HPD's pragmatic resolution of thousands of 
property claims amounted to an invaluable service performed, 
largely by the international community, for the benefit of 
post war Kosovo.  As Kosovo moves towards realization of its 
final political status, the quick fix provided by the HPD to 
keep Kosovo's housing stock from even further damage needs to 
give way to a permanent arrangement.  In addition, the 
lawlessness that has characterized occupancy of a good 
portion of Kosovo's agricultural and commercial properties 
must be corrected.  These are heavy responsibilities for the 
new KPA, especially in that the ultimate result of these 
efforts would be a significant redistribution of real 
property and money in favor of the Kosovo Serb minority, many 
of them living in Serbia.  The shear number of such cases 
means that implementation and enforcement of a rental scheme 
will be a major undertaking.  But fundamental rule-of-law 
principles and the Standards for Kosovo program (septel) 
demand that it be done.  These are exactly the kind of 
responsibilities any government must accept and the PISG 
ostensibly seeks. 
 
PRISTINA 00000299  003 OF 003 
 
 
GOLDBERG