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The end of illegal financial offices in the north

The absence of a solution to the dinar issue within the Serbian community, following the Kosovo Police's action to shut down illegal financial offices, sparked a new wave of reactions, including mentions of war. A year after violent protests in the north and amid fragile security, culminating in a terrorist attack in Banjska, Zvecan, concerns of another crisis are still present.

A few days after negotiations in Brussels failed, the Kosovo Police launched an operation against Serbian financial institutions in the north, closing six branches of the Serbian Postal Savings Bank and the Serbian People's Bank.

The police operation led to the confiscation of various material evidence, including "about 1,600,000 euros, approximately 74,700,000 dinars, about 19,500 Swiss francs, approximately 13,800 US dollars, and about 40 Australian dollars."

According to Kosovo institutions, the goal of the operation was to establish order and legality within financial transactions that had operated outside the local system for many years.

However, in Serbia, a different narrative was promoted, portraying it as another move aimed at making life harder for Serbs.

The European Union and the U.S. Department of State condemned the action, labeling it one-sided, which further escalates tensions and undermines efforts to normalize Kosovo-Serbia relations.

However, Prime Minister Albin Kurti reiterated that it is Serbia attempting to instigate a new conflict in Kosovo. During a speech at the London Defense Conference, he stated that Serbia's armament reveals its intention to escalate the situation in the region.

Ivica Dačić, the Serbian Minister of the Interior, argued that Kosovo Prime Minister Albin Kurti’s raids on financial offices are continuing actions that could lead to a humanitarian catastrophe for the Serbian population in the north.

Part of the narrative associated with the situation in the north also involves international missions.

On the day of the operation, members of the EULEX mission were stationed near the area. These members do not have executive mandates since 2008. Commenting on the presence of this mission, Dačić spread misinformation, stating that neither EULEX nor KFOR stopped the police’s actions, mentioning that Serbia could not intervene on the ground.

However, EULEX clarified that they were simply monitoring as part of their core mandate:

“To effectively exercise our monitoring capacity, we need to have a physical presence at the scene of activities conducted by Kosovo institutions across the entire justice chain. This means on-site monitoring, impartial toward the actions and behavior of Kosovo authorities, to assess their compliance with the rule of law principles and human rights obligations, with a strong commitment against any form of human rights violations or discrimination,” it is said in their statement sent to the media.

EULEX confirmed that during monitoring activities, they fully respect the independence of the judiciary and the principle of non-interference. However, if significant shortcomings are identified through these monitoring activities, the Mission will address them with the relevant responsible authorities.

Meanwhile, KFOR stated that they were informed about the action but did not participate in it.

Since the end of the war, Kosovo has been home to illegal financial institutions that have been sustained by Serbia, not only in the majority-Serb north.

The Serbian National Bank sent the dinars via the international company “Henderson” to a vault in the Municipality of Leposavić. From there, the funds were distributed to the financial institutions operating under the Serbian system, such as the Serbian Post and Postal Savings Bank, which were subsequently closed by the Kosovo authorities.

With the implementation of the new Central Bank Regulation and the end of the transitional period, the euro is the sole official currency for cash transactions.

This decision was met with opposition from Serbs in the north, who received payments in dinars.

In the seven meetings held in Brussels regarding this issue, the parties failed to find a solution to the implementation of the Regulation. There was no rapprochement around the proposal made by the EU special envoy for dialogue between Kosovo and Serbia, Miroslav Lajčák, which involved a temporary solution. The permanent solution is left to be negotiated in later stages as part of the dialogue for normalizing relations between the two countries.

Based on the statements made after the meeting, their stances are diametrically different, and a feasible solution does not appear to be in sight. The Serbian side has requested permission to open a Serbian branch, through which payments in euros would be distributed, but bypassing the BQK Regulation. The Serbian chief negotiator, Petar Petković, has accused the Kosovo side of rejecting the proposal.

The proposal has been rejected by the Government of Kosovo, citing that this would legitimize the parallel structures from which Serbian citizens would not benefit. The Kosovo side’s proposal has been to adopt the logic of the Telecom and Energy agreements when implementing the BQK Regulation.

After the failure to find a solution, mediator Lajčák stated that in the absence of an agreement, it is unclear “how this will impact the daily lives of the affected communities in Kosovo.” He expressed readiness for another meeting on the topic, with the condition that the parties show constructive engagement in reaching an agreement.

Kosovo and Serbia, within the framework of dialogue, have reached some agreements addressing the integration of parallel structures within local jurisdiction. However, these agreements have not been sustainable nor have produced the intended results. In 2016, about 700 members of the “Civil Defense” formation and the Serbian MUP were integrated, most of them in the Kosovo Police. Nevertheless, there have continuously been complaints from the government in Brussels that Belgrade continues to sustain these structures to provoke tensions.

The instability of the agreements was confirmed in November 2022, when members of the Serbian community resigned from all Kosovo institutions as a sign of protest after the Government’s decision to convert Serbian license plates to RKS. This institutional vacuum continues to await a solution that would allow the return of Serbs to their positions.

*This article is published as part of the Western Balkans Regional Initiative against disinformation.  “Qendra kundër dezinformatave në Ballkanin Perëndimor: ekspozimi i ndikimeve keqdashëse përmes gazetarisë mbikëqyrëse.”

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