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Potential wealth plays hidden role in conflict

By Carole Hodge

The Scotsman Newspaper
Glasgow April 7, 1999

As it becomes evident that the Rambouillet accords are probably no longer valid as a basis for peace in Kosovo, several options are being floated by politicians and analysts in the search for a way forward.

These range from proposals that represent various degrees of appeasement on the one hand to the scorched earth approach on the other - in this case the conviction that the bombing should continue until Slobodan Milosevic capitulates, or Serbia is defeated.

In some quarters, partition is the loudest buzzword. At first glance, this may appear to represent the middle ground. Through this proposal, a section of Kosovo would be granted autonomy within Serbia, with the northern part (and probably a buffer zone along the border with Albania) falling under Serb control.

With growing concern that air strikes alone will not succeed in forcing Milosevic to withdraw his forces, partition is an idea rapidly gaining currency in some circles outside Serbia.

The pattern of recent ethnic cleansing in the province suggests that Milosevic may be repairing for such an eventuality. However, as with most "peace" proposals originating in Belgrade, the partition of Kosovo is not a recipe for peace.

Economic factors play a considerable role here. In the past decade or so, both Serbs and outsiders have generally come to believe that the central issue at stake in the battle for Kosovo is the protection of Serbia's cultural "heartland".

Kosovo has been the scene of a number of historical landmarks through the centuries for Serbs and ethnic Albanians, and the proliferation of Orthodox churches and monasteries gives credibility to the claim that Kosovo represents the cradle of Serbian medieval culture.

But possession of Kosovo is not merely, or even primarily, an ideological imperative for Belgrade. In controlling Kosovo, the Serbian regime also controls a significant economic asset. Paradoxically, although Kosovo was always the most underdeveloped part of the former Yugoslav Federation, it constituted at the same time the repository for much of its mineral wealth, including lead, nickel, zinc, lignite, and half of Yugoslavia's coal.

Kosovo also supplies electricity to much of Serbia, Montenegro and Macedonia, and would appear to be of economic and strategic importance for Serbia.

According to one Serbian economist, Laza Kekic of the Economist Intelligence Unit, however, Kosovo's mineral resources are relatively insignificant and diminishing. He suggests that it is the loss of its cultural monuments that is of most concern to the Serbs. This, however, belies information supplied to would-be investors in Serbia by the British Embassy in Belgrade.

It says that Yugoslavia is the only country in south-eastern Europe with large enough coal deposits to become a significant exporter of electric power, with proven exploitable reserves of more than 15,000 million tons of coal - much of which is in Kosovo.

The largest single development project planned for the next decade in Yugoslavia is be the Kosovo-C power station, which will include a new open-cast lignite mine.

There are also plans to improve power transmission links with neighbouring countries, including the construction of a cable link connecting Yugoslavia and Italy under the Adriatic, allowing the export of 500 megawatts of power.

Although significant investment will be needed to finance this venture, it has been rumoured that a foreign partner will be able to acquire a controlling interest of existing and proposed plants.

Confirming Kosovo's mineral wealth, the Serbian weekly political journal NIN raises the question of who will sell Trepca, Yugoslavia's largest mining-metallurgical conglomerate, valued at 5 billion in early 1997 - a question which may interest Evangelos Mitilineos, the Greek magnate who recently acquired a 30-year concession on the Trepca mines, after negotiations with Belgrade.

Since Trepca is in northern Kosovo, the question will also interest the Milosevic regime.Then there are the privatisation plans for Yugoslavia's state electricity company (EPS), with the Italian firm ENEL interested in acquiring the Kosovo EPS plants.

In 1997, Serbia's telecommunications system was privatised with the assistance of NatWest Markets, on the combined initiative of the former foreign secretary, Douglas Hurd, and a former Foreign Office executive, Pauline Neville Jones.

The sale of 49 per cent of the industry to the Italian and Greek companies STET and OTE contributed to the coffers of the faltering Serb economy at a crucial period in the prelude to the Kosovo war. The sale of the Kosovo EPS would bring in further much-needed revenue to Belgrade.

It is interesting that Serbian apologists are not prepared to admit the extent of Kosovo's mineral assets, or the implications for Serbia of their loss. Perhaps they fear losing some of the moral high ground they have still managed to cling to - especially in the perception of the Left - in posing as a small, virtually defenceless country at the mercy of a military giant representing the world's richest countries.

This may especially be so when the history of Kosovo's mines and their workers is considered. In Trepca in 1989, 1,300 Albanian miners staged a nine-day sit-in, more than 3,000 ft down the mineshaft, in a protest at Belgrade's retreat from the principles of the 1974 constitution, which had granted Kosovo autonomy.

The miners' strike was also a protest for democracy and workers' rights, the Albanians having long had less access to work than their Serbian counterparts. The general strike which ensued brought half a million people on to the streets of Pristina in support.

But the strikes failed, and Milosevic became recognised as the saviour of the Serbs, imposing de facto military rule in Kosovo and abolishing its autonomy, engaging at the same time the support of some of Serbia's leading intellectuals from the hitherto respected left-wing Praxis group.

An officially ratified partition of Kosovo would be the best solution for Milosevic. Without the Albanians, Serbia could lease or sell the mineral resources of Kosovo to the highest bidder, without the need to share the financial benefits.

And if an international force were to be introduced to police the peace, so much the better in that it would guarantee the assets for foreign investment. Meanwhile, the Albanians would be relegated to the less prosperous parts of Kosovo.

A just, sustainable solution, however, would require an internationally guaranteed security arrangement and the introduction of democratic structures. It is difficult to see how this could be achieved, other than within the framework of an independent state.

Such a solution , even in its announcement, would be likely to weaken Milosevic irreparably, and bring to a more rapid end his capacity for deeds which grip the world's attention. It would show all concerned the price of perpetrating or endorsing ethnic cleansing and genocide in 1990s Europe.

It may also prevent a humanitarian disaster from becoming a Europe-wide refugee crisis, with all that that may imply.

Carole Hodge is head of research at the South-east European Research Unit of the University of Glasgow.


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