The Peculiar Case of Kosovo

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Kosovar Prime Minister Agim Ceku arrived for a busy tour of Moscow on Wednesday. These are crucial days for the leader as the international community considers reaching a decision on the final status of Kosovo. Russia will obviously play a very important role in this, both as a member of the Contact Group and as a permanent member of the United Nations Security Council.

As Kosovo's independence nears, international pundits disagree over what implications this will have for international law in general and, more specifically, on other separatist movements in places like South Ossetia, Abkhazia and even Chechnya.

If handled properly, the case of Kosovo will not create any precedents. It is a unique case for at least three reasons.

First, Kosovo has the right to self-determination, stemming from egregious human rights violations perpetrated against Kosovar Albanians by Serbia. Second, Kosovo has the right to independence as a constitutive unit of the former Yugoslavia, similar to that granted to other republics upon dissolution of the federation. It is worth remembering that Kosovo's constitutional rights as a part of Yugoslavia were terminated in the 1970s by unconstitutional means, at which point the territory was included under the constitution of Serbia.

Finally, a strong argument can be made that Kosovo's de facto independence under the United Nations Mission in Kosovo, or UNMIK, has created de jure independence by matter of circumstance. By transferring responsibility for the administration of Kosovo to the Kosovo Provisional Government, rather than to Belgrade, since 1999, UNMIK bestowed upon Pristina the functions of government, including the capacity to enter into contractual relationships with other sovereign entities. Kosovo has already signed bilateral trade agreements with Macedonia, Montenegro and Albania.

Clearly Kosovo's case is not one of intervention by an external power. UNMIK is at present an international mission, set up by the Security Council. It is a different matter if another state decides unilaterally to intervene on the territory of another sovereign state. This would contravene international law.

Belgrade, on the other hand, has been stripped of its obligations and rights as the administrator of Kosovo.

Can Kosovo work as an independent entity? Certainly -- it is already working. Kosovo has a stable currency and inflation is under control. Pristina privatized close to 90 percent of its public assets and has announced two major tenders, in the telecommunications and energy sectors, over the last two weeks.

A study group from the Kyrgyz Ministry of Finance recently visited Kosovo to familiarize itself with its public financial management system and budget process. Kosovo has a system with a broad tax base, few exemptions and low marginal rates, as well as a flexible labor market.

Kosovo is also energy rich. It is home to world's fifth-largest deposits of lignite, a form of coal most often used for electricity generation.

Russia has economic and energy interests in a stable Kosovo and a prosperous Balkan region. An independent Kosovo is a precondition to optimizing regional economic development.

Serbia doesn't need Kosovo. The best interests of the international community, including Russia, at this point lie in providing a quick fix and regional economic vitality. Serbia will be in a much better position to take advantage of the economic opportunities available in Kosovo if the two are separate and able to manage their own development strategies. Only if Kosovo and Serbia are separated politically can they establish a meaningful economic partnership.

Regional economic integration should also open new opportunities for Russian direct investment. With the economies of states in the Balkans growing at an average of 4 percent annually, demand for energy can only increase.

The Balkans have enormous energy potential but energy supply in the region is actually diminishing as a result of neglected research and development. This year, for the first time, all of the western Balkan states will be forced to buy some electricity on the spot market, which means paying spot prices. Russia could become a major energy supplier for the region by exporting more gas there by way of Turkey's Blue Stream pipeline. Russian energy giants could also invest in regional energy projects to help upgrade obsolete infrastructure.

Russia has all the room and every reason it needs to be pragmatic on the question of Kosovo. The economic factors are obvious, but another factor is that Moscow is losing its appeal in Belgrade. Serbia is now European Union-bound and the new intellectual elites are pro-Western. Serbian pressure groups in Moscow have increasingly less relevance in Belgrade, which suggests that the Serbian diaspora is becoming more of a liability for the Kremlin than an asset. President Vladimir Putin should turn his back on this group and establish direct links with the modern Serbia in Belgrade. Russia should not risk a rupture in its relations with the United States and the EU by promoting the interests of an increasingly marginalized group.

Russia has an interest in ensuring that Kosovo's transition to independence takes place. A flexible and pragmatic Russian approach to the issue of Kosovo's final status would be welcomed by the rest of the region and by the international community in general.

Borut Grgic is director of the Institute for Strategic Studies in Ljubljana, Slovenia.