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C O N F I D E N T I A L SECTION 01 OF 03 PRISTINA 000255 
 
SIPDIS 
 
DEPT FOR EUR, EUR/SCE, DRL, INL, AND S/WCI, NSC FOR 
HELGERSON, USUN FOR SGEE, USOSCE FOR AHYDE 
 
E.O. 12958: DECL: 06/29/2018 
TAGS: PREL ETRD ECON EAID EAIR ETTC PTER KTFN UNMIK
KV, YI 
SUBJECT: KOSOVO: GOK STILL LOOKING FOR CEFTA BENEFITS 
 
REF: PODGORICA 92 
 
Classified By: AMBASSADOR TINA S. KAIDANOW FOR REASONS 1.4 (B) AND (D) 
 
¶1. (C) SUMMARY:  Since independence was declared in 2008, 
Kosovo has struggled to find its voice on the international 
stage.  The Government of Kosovo's (GOK) strong desire to 
shed the shackles of UNMIK in all realms has been 
particularly frustrating in organizations where Kosovo is 
represented by UNMIK, such as the Central European Free Trade 
Association (CEFTA).  Despite statements by some members of 
the GOK in recent months expressing a desire to participate 
in CEFTA as a sovereign nation minus UNMIK, the fact remains 
that Kosovo is not an official party to the agreement and 
cannot be an effective member without UNMIK.  While Kosovo is 
responsible for the substance and technical work, UNMIK 
remains the official recipient of all invitations to CEFTA 
meetings and is the only authorized signatory to CEFTA 
agreements.  The failure of the European Commission (EC) 
Liaison Office and the CEFTA Chair to successfully address 
Serbia's and Bosnia's non-acceptance of Kosovo customs stamps 
has also exacerbated the GOK's frustration with the current 
arrangement.  GOK officials agree that Kosovo's inclusion 
within CEFTA is important, but finding a workable balance 
between the government's desire to project unqualified 
sovereignty in all realms with meaningful participation in 
the organization will be a challenge.  END SUMMARY. 
REALITIES OF CEFTA MEMBERSHIP 
¶2. (C) Through UNMIK, Kosovo became a member of CEFTA, a free 
trade agreement between non-European Union (EU) countries in 
central and southeast Europe, in 2007.  While eager to 
highlight the country's membership in the organization, 
Kosovo has struggled to carve out an independent role for 
itself within CEFTA.  Since independence, the GOK has 
increasingly sought to minimize UNMIK's involvement in any 
aspect of Kosovo's affairs, including UNMIK's role as a 
facilitator for Kosovo in international fora.  Since UNMIK is 
the official party to CEFTA, Kosovo is not directly invited 
to official meetings, cannot sign CEFTA agreements or send 
official notifications to members.  Recognizing that Kosovo 
needs to take as much of a leading role as possible, UNMIK 
does not attend any CEFTA meetings unless the GOK also sends 
a representative.  Kris-Pierre Litiere, Acting Head of 
Economic Affairs at UNMIK, unequivocally stated that UNMIK 
only sends representatives to facilitate Kosovo's 
participation and emphasized that Kosovo is responsible for 
all the substantive and technical work on CEFTA. 
¶3. (C) Nevertheless, the legal realities that require UNMIK 
to facilitate even basic participation in CEFTA have been 
difficult for the GOK to manage.  Kosovo officials tell US 
Embassy Pristina (USEP) that they have a good working 
relationship with their CEFTA counterparts at the technical 
level, but they chafe at the fact that an UNMIK 
representative must be present at meetings, and on the 
insistance that UNMIK be identified on the Kosovo nameplate. 
This sentiment was unfortunately manifested in April when the 
Kosovo delegation walked out of a CEFTA sub-committee meeting 
on agriculture held in Montenegro over the use of &UNMIK8 
on Kosovo's namecard (see reftel).  At the end of May, Kosovo 
failed to send anyone at all to a CEFTA Deputy Prime 
Minister's meeting.  Deputy Prime Minister Hajredin Kuci 
flatly told USEP that he does not want to see &UNMIK8 and 
&Kosovo8 together on any placard, stressing that UNMIK 
representatives should do nothing more than sit in the room 
during meetings and not sign any decisions (Note:  To date 
UNMIK has not attempted to take any action, nor has it 
indicated it would ever do so without the express consent of 
the GOK.  End note.). 
NO CUSTOMS STAMP RESOLUTION 
¶4. (C) The GOK's actions are in part fueled by frustration 
over CEFTA's inability or unwillingness to resolve 
Kosovo-related problems.  After Kosovo Customs introduced new 
customs stamps last December, Serbia implemented a blockade 
on all goods marked with the Kosovo stamp and Bosnia started 
levying duties on Kosovo products that should be allowed to 
enter duty-free.  Encouraged to utilize CEFTA to work out 
these problems, the GOK sent a letter to the CEFTA Chair 
 
PRISTINA 00000255  002 OF 003 
 
 
notifying him of these member transgressions.  The Chair 
quickly responded that no action could be taken unless the 
letter came from the official party to the agreement.  After 
lengthy discussions and considerable persuasion from the 
European Commission Liaison Office and UNMIK, the GOK agreed 
to allow changes to the customs stamps to make them more 
neutral.  They also agreed to have UNMIK send a letter on 
behalf of Kosovo, per CEFTA instructions, notifying all CEFTA 
members of the new UN Resolution 1244-compliant customs 
stamps. 
¶5. (C) The notification was sent in May and over one month 
later, Bosnia and Serbia are still levying duties and 
blocking Kosovo goods.  The CEFTA Chair has yet to call a 
discussion about the issue and does not appear to have 
addressed it with either Bosnia or Serbia.  Minister of Trade 
and Industry Lutfi Zharku, who has publicly stated on more 
than one occasion that Kosovo should not participate in CEFTA 
through UNMIK representation, told USEP that the GOK is 
disillusioned with CEFTA.  While acknowledging that CEFTA is 
very important for Kosovo, Zharku expressed disappointment 
with the CEFTA Chair for not resolving the agreement 
violations or even calling a discussion of the issue, 
particularly after the GOK acquiesced to UMMIK stepping in to 
fulfill CEFTA notification requirements to the letter.  In a 
June meeting in Brussels with European Commissioner for 
Enlargement Olli Rehn, Zharku said he raised the issue of 
Bosnia's and Serbia's refusal to recognize Kosovo customs 
stamps.  He said Rehn seemed "surprised" to hear that the 
customs stamp issue had not yet been resolved, but he did not 
offer any solutions.  Zharku said that the EC has continually 
taken a soft approach toward Serbia and Bosnia, leaving the 
GOK feeling exposed to considerable political criticism at 
home for not achieving any results. 
MORE FOCUS IS NEEDED 
¶6. (C) The head of Kosovo Customs, Naim Huruglica, told USEP 
that the GOK lacks a coordinated approach on CEFTA.  While 
Huruglica does not think Kosovo should leave CEFTA, he also 
pointed out that there has been no result from the assistance 
of UNMIK or the EC in resolving the customs stamp issue.  The 
GOK also lacks expertise and the resources for dealing 
effectively with CEFTA.  The Ministry of Trade and Industry 
has one full-time person dedicated to tariffs and non-tariff 
barriers, one of the three CEFTA sub-committees, as well as 
customs issues and agriculture.  Tapped to work on CEFTA 
issues last September, Sytrime Dervisholli echoed Huruglica's 
concerns. From Dervisholli's point of view, there are simply 
not enough staff working on CEFTA, and the Ministry of 
Agriculture and Customs do not even have full-time personnel 
working on their respective sub-committee issues.  As a 
result, coordination within the GOK on CEFTA is difficult and 
haphazard, with few officials understanding what CEFTA is 
about or how it should be implemented.  Dervisholli also 
stressed the importance of CEFTA for facilitating Kosovo's 
regional integration, and for granting Kosovo citizens the 
ability to compare their economic development with 
neighboring countries.  Local businesses need to improve 
product quality and consistency in order to compete with 
other countries, says Dervisholli, and CEFTA will facilitate 
this growth. 
¶7. (C) Agim Shahini, head of the Alliance for Kosovo 
Businesses, told USEP that Kosovo's membership in CEFTA is 
worth all of the political headaches.  Membership in CEFTA, 
even through UNMIK, keeps Kosovo on the map, which might even 
be more important than the export opportunities, says 
Shahini.  In reality, very few local companies are in a 
position to export right now, and the lack of a coordinated 
GOK approach on CEFTA has not helped.  From Shahini's 
perspective, the GOK should be more pragmatic and use UNMIK 
as a tool to gain representation on the international stage. 
UNMIK gives Kosovo a platform and a voice in areas where 
Kosovo's sovereignty is not yet acknowledged; using UNMIK to 
be a participant is better than being invisible.  In order to 
resolve Kosovo's difficulties with CEFTA, Shahini urged the 
GOK to work with UNMIK to put pressure on Brussels to find a 
solution. 
TIME RUNNING OUT 
¶8.  (C) Changing the agreement in order to allow Kosovo to 
 
PRISTINA 00000255  003 OF 003 
 
 
become an official party would require ratification by all 
members.  Full ratification is not currently possible with 
Bosnia, Moldova and Serbia remaining as non-recognizing 
members, forcing Kosovo to continue to accept UNMIK as a 
facilitator if it wants to remain part of CEFTA.  Two events 
on the horizon will force more discussion about Kosovo's 
unique status within CEFTA.  One is the finalization of an 
annex of goods eligible for trade under CEFTA that will 
require the signature of all members in order to take effect. 
 While Kosovo could, in theory, authorize UNMIK to sign on 
its behalf as the official party, it is difficult to envision 
a situation where this would be politically acceptable or 
even recommended, given the pending case before the 
International Court of Justice on Kosovo's declaration of 
independence.  Minster of Trade Zharku suggested that a 
dual-signature option could be acceptable to the GOK, and 
UNMIK said they are exploring options with their legal 
office.  The second action forcing event is that the CEFTA 
Chair will pass to Serbia in 2010.  Given the level of 
sensitivity the GOK has so far displayed with having "UNMIK" 
and "Kosovo" mentioned together, this tension is bound to be 
amplified next year if a solution for the customs stamp or 
the name issue has not been resolved in a manner that is 
acceptable to all members before then.  There would also be 
the matter of ensuring Kosovo is physically able to 
participate in meetings held in Serbia.  As UNMIK has said it 
will not attend a meeting without a GOK representative, lack 
of quorum may cause serious damage to the ability of CEFTA to 
function as an institution. 
¶9. (C) COMMENT:  The Ministry of Trade says that at least two 
external advisors, funded by the EC, will be on board this 
fall to work on CEFTA and World Trade Organization issues. 
While this is a good start toward getting the GOK more 
focused on the larger CEFTA picture, Kosovo and CEFTA do not 
seem to be any closer to resolving the more immediate 
problems.  USEP is pleased that the GOK has been in 
discussion with the EC on how to proceed, but the EC's soft 
approach risks that Kosovo will be marginalized from CEFTA 
all together.  The EC should be more pro-active and insistent 
in promoting acceptance of Kosovo's customs stamps and 
clarifying Kosovo's representation in CEFTA.  Both Belgrade 
and Pristina should also be urged to take a more practical 
approach on CEFTA.  USEP will continue to encourage the GOK 
to work with its international partners to find acceptable 
solutions.  END COMMENT. 
KAIDANOW