Only the € from now on: the Kosovar currency policy that nobody likes

, by Mattia Fontana

Only the € from now on: the Kosovar currency policy that nobody likes
Euro Coins and Bank Notes, Avij (talk  contribs), Public domain, via Wikimedia Commons

The statement that Kosovo will only accept the euro as a legal tender within its borders as of February 1, 2024, has sparked concerns about potential future conflicts with Serbia because Serbs in the country’s north insist on using solely the Serbian dinar. The EU has urged both parties to refrain from escalating the situation.

With 350 million people using the same currency, payments in euros have evolved into a concrete symbol of European integration: currently, twenty of the twenty-seven Member States of the European Union, including the islands, departments, and overseas territories that are a part of or associated with these countries, have adopted the Euro.

Additionally, Kosovo and Montenegro also use the euro, despite not having formal agreements with the EU. As a matter of fact, although Kosovo is not a member of the eurozone, it did unilaterally adopt the euro as its currency in 2002; at the same time, it has permitted the Serbian dinar to continue to be used as currency, primarily in ethnically Serbian areas in the country’s north.

This was the case until January 2024, when the Kosovo Central Bank declared that starting on February 1st, the euro would be the only currency accepted for payments within the nation: of course, this caused immediately new tensions between Serbia and Kosovo, occurring only a few weeks after resolving the issue of the license plates that had already strained the relations between the two Balkan nations over the previous two and a half years, and that had resulted in protests, blockades, and the mass resignation of public officials in northern Kosovo; not to mention the terrorist attack near the Serbian Orthodox monastery in Banjsk on September 24, 2023, which was led, among others, by Milan Radoičić, deputy head of Lista Srpska, the main political party representing the Serbs in Kosovo.

Aleksandar Vučić, the president of Serbia, issued a warning after the Kosovo Central Bank’s statement, stating that he would employ “all available means against the ban on the dinar in Kosovo”. Consequently, at the beginning of February he assured that Serbia will persist in providing Kosovo Serbs with financial aid in Serbian dinars, including public sector salaries, social assistance, and pensions.

The announcement made by the youngest European state comes in response to the need to fight money counterfeiting and other financial crimes. Also, Kosovo Constitution specifically stipulates that the euro must be used exclusively in the country, and the recently enacted Regulation merely establishes the procedures for its implementation, and it does not, in any case, cover voluntary exchanges between parties using currencies other than the euro: this means that only the euro may be deposited into bank accounts and used as a medium of exchange within the borders of Kosovo, but the Serbian dinar can still be traded for other currencies, like the dollar or the Albanian lek.

The decision will, however, have a particularly strong effect on the northern parts of the nation, which are home to an ethnic majority of Kosovo Serbs. In these areas, certain governmental agencies and banks only accept the Serbian dinar as payment, having never adjusted to Pristina’s 2002 adoption of the euro. Tensions between Kosovo and Serbia are not surprising, but it is the usual hesitation, if not blatant bias, from the European Union that leaves dazed: Peter Stano, spokesman for the European External Action Service (EEAS), said that the European Commission “is still analysing this decision, the reasons for its adoption and the possible implications”, hoping that Serbia and Kosovo will address this issue in the context of the EU-facilitated dialogue.

However, it is important to keep in mind that the European Union currently sanctions exclusively Kosovo, not Serbia, and that these sanctions were adopted in June 2023 primarily to ease tensions with Serbia; and although the EU may have recently started considering the possibility of imposing similar sanctions against Belgrade, such measures would need to be approved by the Council through unanimity, and there would be a strong possibility of a veto coming from Viktor Orbán, the prime minister of Hungary, who is Vučić’s closest ally among the heads of state and government within the Union.

Even the United States seem dissatisfied with the new restriction regarding the use of other currencies in the country, according to the US State Department, and it opposes Kosovo’s plans to limit the entry of foreign currencies and particularly the Serbian dinar, citing the likely rise of new tensions in the region. Also, France, Italy, Germany, and the United Kingdom are among the Western European nations who have already pushed Kosovo to halt the currency regulation’s implementation.

Besnik Bislimi, the Deputy Prime Minister of Kosovo, responded to the international pressure by announcing that, in addition to the regulation’s adoption, a transitional period would be granted for Kosovo Serbs who continue to use non-Serbian currency: however, Bislimi did not specify the duration of this transitional period, and he downplayed the claims that the implementation of the policy would harm thousands of Kosovo Serbs who recieve their pensions from Serbia.

The need for Kosovo to adamantly reaffirm its sovereignty both inside and outside its borders and the needs of the Serbian communities living there to switch from the Serbian dinar to the euro are both fulfilled met by this decision. Kosovo is a sovereign nation with an independent Central Bank, and giving in to pressure of any type from Serbia or other countries would be viewed as a sign of weakness from a neighbour, Serbia, which is historically predatory and arrogant towards the young and small Balkan country.

We must also remember that Serbia and its current ruling class are still considered quite close to imperialist Vladimir Putin, and it is not beyond the pale that a Russian success in Ukraine could push Vučić to carry out a similar invasion of Kosovo or parts of it. We must not forget, in fact, that in the immediate aftermath of the abovementioned incident of 24 September, White House spokesman John Kirby said that Serbia was building an unprecedented number of troops at the border with Kosovo, and despite 4,500 NATO troops stationed in Kosovo through the KFOR peacekeeping mission, the threat of a full-fledged military offensive towards Kosovo at that time seemed very concrete. Nonetheless, after a phone call with US Secretary of State Antony Blinken, Vučić announced that he had ordered some troops to withdraw from the border.

Thus, the crisis between Serbia and Kosovo is not abating: tensions are not decreasing, and in fact, Kosovo’s adoption of the euro as its exclusive currency will serve to further exacerbate tensions between the two nations, as Kosovo still struggles to pursue a complete independence from Serbia.

What is much needed is a clearer or at least a more impartial position of the European Union on this issue, so far inclined to favour Serbian positions. To this point Western appeasement has only allowed the Serbian regime to prosper and to get increasingly closer to become an autocracy rather than a democracy, which is shameful for an EU candidate country and a dreadful example for other EU candidates or aspiring-candidate countries, such as, in fact, Kosovo.

In view of future disturbances planned and fuelled by Belgrade, it is appropriate that the EU changes course in its relation policies with the two Balkan countries, maybe even by urging the EU countries that still do not recognise Kosovo’s sovereignty (Cyprus, Greece, Romania, Slovakia, Spain) to change their decision.

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