Serbian dinar ban risks new Kosovo crisis
Pristina – Kosovo may be on the verge of a fresh crisis after the government prepared to ban the use of Serbian money this week, with a chorus of Western countries warning the move could ignite a firestorm.
The move is likely to spark the latest in a long series of conflicts with Kosovo’s Serb minority.
The community of roughly 120 000 people has clung to the Serbian dinar since the brutal late-1990s war between Serbia and ethnic Albanian insurgents saw Serbian troops and government personnel withdraw from Kosovo.
Many Serbs in Kosovo work for Serbian institutions where their salaries, pensions and other financial transactions rely on the dinar, rather than the euro, which is Kosovo’s official currency. But according to a new set of regulations issued by Kosovo’s Central Bank, which began yesterday, “the only currency allowed to be used for carrying out cash payment transactions and in the payment system in the Republic of Kosovo is the euro”.
Kosovo unilaterally adopted the euro as its currency in 2002, despite not being a member of the eurozone, nor of the European Union.
Serbia has never acknowledged Kosovo’s 2008 declaration of independence, with the two sides perennially locked in bitter disagreements over the most minute bureaucratic matters in the former breakaway province, such as a recent spat over licence plates.
The Belgrade government has long held major sway with Kosovo’s remaining Serbs, in part by offering generous financial and employment packages to residents.
Serbia’s budget sets aside roughly the equivalent of €120 million (about R2 billion) annually for spending on Kosovo, with analysts suggesting the real value may be at least double that thanks to informal transactions.
That link will likely come under increased pressure with the new currency scheme, which could effectively lock Serbs using dinars out of Kosovo’s financial system.
Western governments have lambasted the move as inflammatory, warning the regulation may destabilise the already tense relations between Serbs and the Pristina government. –