Kosovo’s recent decision to establish a single-currency system for commercial and cash payments has rekindled tensions with Serbia. Prishtina is enforcing a euro-only policy, which has enraged Belgrade. Kosovo hopes the move will make commercial transactions easier and boost economic growth, but in the northern part of the country closest to Serbia, it faces political challenges.
Kosovo Serbs inhabit northern Kosovo. In that area, the Serbian currency, the dinar, carries historical and cultural significance. Kosovo Serbs rely on Serbia for financial support. The dinar is not just a means of exchange. It is a symbol of connection and identification with Serbia. For that reason, the new euro-only policy from Kosovo’s Central Bank (CBK) is inflaming tensions.
The policy riled the Serbian population, which has protested against the measure. Protesters believe the imposition of a single currency disregards unique cultural circumstances and impedes the integration of the Serbian community in Kosovo. However, having a single currency would facilitate economic cooperation and increase the movement of goods, services, and capital. Through this decision, the quality of life for all inhabitants of Kosovo will increase, regardless of ethnicity.
Frustratingly for Kosovo, the Serbian pushback alarmed five of its Western allies (the US, UK, Germany, France and Italy) who issued a joint statement urging the CBK to postpone adopting the euro as a single currency. That means the topic is likely to trigger new negotiations between Kosovo and Serbia.
Not a slight against Kosovo Serbs
Kosovar Prime Minister Albin Kurti has defended the euro-only policy, stating the regulation of the single currency is not a slight against Kosovo Serbs or the financial assistance they receive from Serbia. The regulation is more about limiting opportunities for corruption and organised crime which has deep roots in northern Kosovo.
A terrorist attack near the Serbian Orthodox monastery in Banjska last year, led by the former deputy head of the Serb minority party Lista Srpska, Milan Radojičić, drew attention to the urgent need for measures to limit organised crime and related issues. Nevertheless, the EU has failed to impose sanctions on Serbia or any Serb-linked organisations, even after such a troubling attack. They are trying to find further evidence to impose sanctions on Serbia.
The irony lies in the imposition of sanctions from the EU on Kosovo for its failure to de-escalate tensions in the northern part of the country, where NATO peacekeeping troops were attacked, even while Serbs seem to be behind the tensions but Serbia suffers no sanctions. Despite the evidence and footage that the former deputy of Lista Srpska organised the terrorist attack, the EU continues to hesitate to impose sanctions and cites again the need for further evidence. This approach raises questions about the EU’s commitment to addressing security threats in Kosovo and the Western Balkans region.
In Serbia, the current ruling party and its closeness with Russia could lead to further destabilisation in northern Kosovo. Serbian President Aleksandar Vučić appears to strive for turmoil and turbulence. According to the Kosovo authorities, his government was behind a recent shootout. Serbia is also assembling an unprecedented number of troops at the border with Kosovo. Serbia’s approach is designed to destabilise its neighbour.
An economic, not political decision
Kosovo uses the euro despite not being part of the EU. Kosovo needs to reaffirm its sovereignty within and beyond its borders. It is an independent country with an independent central bank. Continuous pressure from Serbia is just more unnecessary fuel on the fire of political tensions.
Kosovo Serbs will continue to use the dinar for pensions, salaries, and social benefits distributed by Serbia. They continue to rely on the government of Serbia for financial support. However, the euro-only policy does not affect their financial support. There is no interruption to money flowing from Serbia to the Kosovo Serbs. In fact, the Kosovo government has asked the CBK to open discussions with Serbia’s National Bank to help align the new euro-only policy with the existing payment procedure, but no discussion has occurred.
Instead, Serbia wants to politicise the issue by taking it out of the central banks’ hands and wedging it into political discussions where it does not belong. Serbia is being disingenuous and intransigent, using politics to hold up the process of Kosovo implementing its euro-only policy.
Historically, Serbia has been predacious and arrogant towards Kosovo. This attitude has not changed, as Serbia continues to refuse to recognise Kosovo’s independence and attempts to undermine its sovereignty. In this context, Kosovo’s adoption of the euro as a single currency is not a provocation or political decision. It is a symbol of its self-determination and independence. It is a reaffirmation of Kosovo’s identity and a rejection of Serbia’s failed attempts to wield control. It remains a decision based on economic factors, not political ones.
Serbia is using the excuse of the single-currency policy as leverage to exacerbate tension. Kosovo’s allies in the West should restate Kosovo’s sovereignty and independence, including its right to establish a single currency as a democratic choice, not a political provocation. The decision aims to integrate, improve, and facilitate Kosovo’s population and economy. Kosovo needs support from the US and Europe to do that in the face of Serbia’s politicking.
Photo by Anatolii Shcherbyna on Unsplash.
