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M. Bozinovich | Columns | Serbianna.com Kosovo's war on property rights

By M. Bozinovich

Imagine yourself away from your home, perhaps vacationing, during which time a self appointed authority sells your home and in anticipation of your grievance sets up a panel of judges that will decide whether you are deserving of a compensation and in what amount. It's bad enough that you lost control of your own property and have to go through unnecessary legal proceedings but when the panel of judges decides to pay you way less then what you could have sold the property... you decide to leave.

Congratulations! You've been successfully cleansed from the territory.

Well, this is exactly what is happening in the UN administered Kosovo province and the cleansing is ethnic. In Kosovo, the UN has formed a Kosovo Trust Agency (KTA) and empowered it to seize Serbian owned property and do precisely as with your imagined home. Worse yet, no Serbian owner has been reimbursed for the loss of property so far and given terror that accompanies any movement of ethnic minorities in Kosovo, the 5 judges on the panel may end up collecting a salary just for wearing the robes of justice during this massive property plunder.

Institutionalized Plunder

Standard jurisprudence assumes that the owner of the property also has the right of its control but during the long march of the enemies of private property - communists, nazis and various leftists and nationalist movements including those in the Balkans - control of the property has been virtually wiped out across the globe and as Kosovo indicates, the very foundation of liberty, that of property ownership, is under a global attack by schemes proclaimed legal by the fiat of power. Even in the chambers of the American Supreme Court, a supposed last remaining fortress of sanity, a judge was found who affirmed property seizures. In the typical protocol of anti-liberty, the seizures were relabeled with a new jargon - eminent domain.

"[S]pecter of condemnation hangs over all property. Nothing is to prevent the State from replacing any Motel 6 with a Ritz-Carlton, any home with a shopping mall, or any farm with a factory," wrote Justice Sandra Day O'Connor in her dissenting opinion on the eminent domain.

However, in Kosovo, condemnation of property may no longer be a specter but rather an institutionalized practice. According to the Regulation No. 2005/18 the KTA "shall possess full juridical personality and in particular the capacity to enter into contracts, acquire, hold and dispose of property," and item 5.1 of the regulation grants KTA the authority to administer any property owned by government that was "registered in Kosovo as at 31 December 1988 or any subsequent date," or any assets "located in the territory of Kosovo since 22 March 1989."

Serbian government that has pumped in over $17 billion into Kosovo from the taxes confiscated from ordinary Serbs since 1970 alone was suddenly dispossessed of all property by a UN Resolution.

The Resolution itself, just like all other confiscatory laws developed in the West, are an evolution, a slow marginal process of subsequential precedents whose source may necessarily be a pressure group and not the commonly accepted principle of jurisprudence. In case of Kosovo, however, these subsequential legal precedents are being developed in an environment that closely approximates absence of law.

"The laws that the Serbian regime promoted and implemented in Kosova after 1989 were illegal from the constitutional perspective and the result of violence. These were discriminating laws... Fictitious ownership transactions and forceful 'integrations' that happened at that time cannot be considered as legal," opines Riinvest Institute, an economic research arm for the Kosovo separatist movement of the President Ibrahim Rugova's political wing.

The Institute held this belief since its foundation in 1995 because of its separatist political aims and not necessarily sound jurisprudence but... the UNMIK that governs Kosovo wholeheartedly agreed with these separatist goals and suspended all laws that were in effect in the province since March 22, 1989, including those that regulate property and commerce. UN then definitively threw property rights out in the wind and the only challenge was whom should the property be reassigned.

Ethnic-based Property Rights

The first step in Kosovo's evolution of ethnic-based property rights was in May 2000 when UNMIK published a paper called "Enterprise Development Strategy" or the "White Paper" that attempted to deal with the peculiarity of the Yugoslav social ownership of property that governed Kosovo municipalities and concluded that a Kosovo Agency for Privatization was necessary. The paper did not elaborate on the specifics of the mandate for this Agency but it did stipulate management rules of the enterprises.

In June of 2000, the World Bank got into the mix and suggested that socially owned enterprises can be classified into 5 distinct privatization groups and suggested a privatization method of asset liquidation, auctions and management concessions for very large enterprises, namely Trepca mines that many covet internationally.

The Zeqiri family from Albania illegally squatting land in Kosovo. Global Policy Forum reports an "epidemic of illegal house building" in Kosovo.
World Bank's report was the critical mass that the UNMIK sought in order to satisfy the swell of pressure by the Kosovo Albanians eager to eradicate property ownership of Serbian entities.

By October of 2000, the eradication was underway. That month, first Municipal elections in Kosovo were held and the victorious Ibrahim Rugova's LDK party took over local municipalities whose representatives appropriated control of the local enterprise for itself and appointed managers in them that were politically connected to the party and/or come from the same clan as the municipality chief. The Gnjilane municipality, for example, appointed a manager at the Jugoterm who began paying out holiday bonuses while diverting assets and business to his own private company.

Asset stripping and threats of violence were rampant. At a Battery Factory IBG, the manager had to evacuate his family due to threats on their life; at the Pristina based Higijena Teknika the manager hired body guards because LDK officials were threatening to kill him. Meanwhile, in August 2001 the workers at Higijena Teknika seized the garbage trucks and the landfills and threatened violence if the municipality appointed director is not installed.

Kosovo property chaos instigated by appeasing separatists was addressed in June of 2002 by the Regulation No. 2002/13 that establishes KTA and a Special Chamber of the Supreme Court of Kosovo to be made up of 5 judges, 3 of which are internationals and 2 local Albanians. The primary mandate of the special chamber was to resolve property claims on the enterprises it appropriated to itself for administration. Technically, regulation 2002/13 removed political control of the enterprises by the municipalities but it did not define who owns the property.

The LDK leadership and Rugova were keen on this regulation because it also initiated restructuring of the enterprises by breaking up the enterprises into smaller units, incorporating them and selling them on the market where his political cronies could snap them at depressed prices.

By July 2003 the first wave of privatization was complete and 6 enterprises were sold. There were no Serbian bidders and all sales went to ethnic Albanians. The prized possession, the mighty Energoinvest whose parent company is a stellar performer on the nascent Belgrade Stock Exchange, had only 5 bidders for the broken up units bought by an ethnic Albanian company, Arda Rei for little over 1.2 million Euros. The new owner, Afrim Ethemi along with Behgjet Pacolli are the emerging Kosovo Albanian oligarchy that may no longer depend on illegal money to fund the Albanian separatism in the province.

Serbia objected to the privatization process on basis that it violates property rights but after 3 stoppages, KTA continues to privatize Kosovo's enterprises. On November 30, 2005 KTA has launched its 11th wave.


Veselin Kocanovic, a coordinator for development and reconstruction for the Coordination Center for Kosovo, says that the UN is misappropriating Serbian property through privatization because it forces the owner to relinquish control of its property that is intrinsic within the principle of property ownership. According to Jessen-Petersen's decision, says Kocanovic, property ownership is irrelevant because it can be established by litigation at some later date.

"I would love to hear the views of the Venice Commission on the privatization in Kosovo," says attorney Nikola Radosavovic who represents 17 plaintiffs in Kosovo property confiscations. Among his clients is Sartid, a Serbian steel company now owned by US Steel, whose assets were confiscated in Kosovo.

"Although sale of socially owned property can be explained from the economic perspective, it cannot from the legal, because Serbs are precluded from the bidding by an atmosphere of intimidation," says Radosavovic.

So far the Kosovo Trust Agency that runs the privatization process has sold off 145 firms for 148 million Euros, which translates in an average selling price of little over 1 million Euros and critics like Radosavovic argue that this is too low of a price and the depressed prices may indicate that the privatization was done in a rigged market that is transparently flawed.

As a result of the flawed market, the KTA trust fund appears to be insolvent before it paid out a single settlement.

According to the KTA rules, 80% of the sales proceeds are to go into a trust that will be used to compensate ownership claims while 20% is to be used to compensate the workers of the privatized enterprise so that based on the collected revenues thus far, 118 million Euros is to be allocated for property compensation and 30 million for the workers. However, two property rights suits brought by Jugobanka add up to more then 75 million Euros against the trust fund while suddenly, records of Serbs employed at various privatized enterprises are missing.

"When Soren Jessen-Petersen was asked to whom does the property of enterprises belong he said the workers. Now that Serb workers have been fired and every trace of them ever being employed erased the KTA is forcing these vanquished Serbs to prove that they were employed in the first place," says Radosavovic. "The exception was only at one firm, UTVA, where 10 Serbs were somehow found on the employment list."

The complaints against the UNs suspension of post-1989 laws and contracts in Kosovo are mounting. Kocanovic cites the case of a Pristina-based wallpaper company, Fazita, that was originally purchased by a firm Sinteleon from Backa Palanka located in Vojvodina province. When Fazita was sold, the majority Albanian workers cashed in by selling their shares of stock to Sinteleon. In 2002, Kosovo's international authorities have declared Sinteleon's purchase null and void and Fazita was resold. Sinteleon was never compensated.

"All warnings sent to the UN, World Bank, IMF and others that the privatization is against private property principles and basic tenants of a market economy were futile," says Kocanovic.

Unofficial sources say that the Serbian negotiating team is actively recruiting economic and business experts to catalogue the property and its finances in the province and present the economic case that may demonstrate that Kosovo's independence may be more of an economic problem then a solution.

Meanwhile, assault on private property continues unabated in Kosovo.

M. Bozinovich 
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