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U.S. Executives Visit Kosovo in Search of Investment Opportunities

By Larry Luxner

PRISTINA, Kosovo — The Republic of Kosovo ranks hands-down as the most pro-American country in the world.

A 2018 Gallup poll reports that 75 percent of Kosovo’s 2 million inhabitants approve of the United States and President Donald Trump — even as the average rating globally hovers around 30 percent, an all-time low.

The main landmark of Pristina, the capital, is an 11-foot-high bronze statue of President Clinton — a show of gratitude for the man who launched a NATO bombing campaign in 1999 to force Yugoslav troops out of Serbia’s restive province. That paved the way for Kosovo’s independence nine years later.

And in November 2017, Kosovo’s post office issued a 2-euro stamp featuring Rep. Eliot Engel (D-N.Y.) — the first time in living memory a U.S. congressman has been so honored. As a lawmaker, Engel pushed the Clinton administration to intervene in the late 1990s against Serbian strongman Slobodan Milosevic, who had engaged in ethnic cleansing against the Kosovars.


Kosovo Michael Mintz
From left: Arian Zeka, executive director of the American Chamber of Commerce in Kosovo; New York businessman Michael Mintz; and Teuta Sahatqija, Kosovo’s de facto ambassador to the United Nations, discuss investment opportunities in the capital of Pristina.  Photo: Larry Luxner

Yet when it comes to investing in Kosovo, the Americans rank not first or even second, but fifth or sixth. Despite the country’s wealth of natural resources (such as coal, zinc, lignite and other minerals) and its flat corporate tax rate of 10 percent, tiny Kosovo remains one of the poorest nations in Europe.

“Ten years after the global financial crisis, Kosovo’s appeal to foreign direct investors remains low,” the Vienna Institute for International Economic Studies concluded in a September 2018 report. “In order to increase the quantity and quality of foreign capital, Kosovo needs to overcome challenges such as political instability, corruption, an unreliable energy supply, a large informal economy and the poor rule of law.”

To lure more U.S. investment to Europe’s newest nation, Kosovo’s Ministry of Foreign Affairs recently brought six American business executives to Pristina. Their March 11-14 trip was organized by Kosovo’s de facto mission to the United Nations and headed by New York real estate executive Michael Mintz; The Washington Diplomat was invited to tag along.

Among other dignitaries, the group met with Prime Minister Ramush Haradinaj; Foreign Minister Behgjet Pacolli; and Valdrin Lluka, minister of economic development. They also visited Prizren — Kosovo’s second-largest city — and toured Innovation Centre Kosovo (ICK), a hub for IT startups.

One-Stop Shop for U.S. Investors

Kreshnik Thaqi heads the investment promotion sector at KIESA, the Kosovo Investment and Enterprise Support Agency.

Kosovo Ari Zoldan
Young people listen to a lecture by visiting American public relations executive Ari Zoldan at the Innovation Center Kosovo (ICK) in Pristina. One investment advantage Kosovo has is its young population. The average age is 29, with 70 percent of the population under 26.  Photo: Larry Luxner

“Kosovo is one of the easiest places in the world to establish a business,” he said. “You can register your business here for free within a day if necessary. If you submit your application at 9 a.m., you can have your certificate by 1 p.m. And Kosovo is the only country in Europe that doesn’t tax dividends.”

By far, the largest foreign investor in Kosovo is Germany, with more than €500 million in FDI to date. (That’s partly because of the 400,000 or so Kosovars living in Germany and sending home remittances that help keep the country’s economy afloat). And under various agreements already signed, about 4,000 products from Kosovo — excluding milk and gasoline — can now enter the EU market duty-free.

With an unemployment rate of 31 percent, Thaqi said, “You can find the best employees you want. With a little training, you can fit them into your structure or business development. We Kosovars are known as very helpful people.”

Kosovo is one of the few countries with a Ministry of Innovation and Entrepreneurship. It’s headed by Besim Beqaj, who previously headed the ministries of economy, finance and privatization.

“Up until now, our economy was based on real, tangible economic resources,” he said. “That served us for a few years, but now we believe our young generation is moving faster than our institutions.”

One of his ministry’s biggest projects involves transforming a military camp near Pristina into an innovation and training park. Beqaj also hopes to create a business angel network for entrepreneurs to find people willing to invest in their ideas.

Beqaj said his country is trying to “change the mindset” — whether it’s regarding information technology, blockchain or machine learning.

“Maybe this is a dream, but we can be an Eastern European hub for IT and artificial intelligence,” Beqaj told the visiting American delegation. “We are trying to get big-name companies that can come and look globally at our market. Today, it’s a matter of marketing, and we believe we have human capital that can be exploited the best way.”

Next Balkan Start-Up Nation?

Arian Zeka is executive director of American Chamber of Commerce in Kosovo, which was founded in 2004 and now has 190 member companies, at least 30 percent of which are U.S.-based.

“We are very happy that we can share some ideas and that there are people willing to listen to those ideas and potentially see Kosovo as a place to invest,” he said. “We’re even more grateful that it’s coming from U.S. businesses.”

At present, the most prominent company here is Bechtel, which recently built an 80-kilometer highway from Prizren to the Albanian border, and is now building a similar highway at a cost of €800 million to Macedonia.

Kosovo Ari Zoldan
Members of a U.S. business delegation that visited Kosovo in mid-March pose for a picture in front of Pristina’s KFOR monument honoring NATO peacekeeping troops who have died since KFOR's establishment in 1999. Photo: Larry Luxner

While no official figures exist, cumulative U.S. investment in Kosovo is believed to be less than $100 million — well behind that of Germany, Switzerland and Turkey.

But that’ll change very soon, with a new €1 billion power plant that will immediately put the United States at the top of the list of foreign investors in Kosovo.

The 700-megawatt plant — which ranks as the largest single investment in the country’s history — will be located in the town of Obiliq, near Pristina, and will supply 50 percent of Kosovo’s power needs. The project is led by ContourGlobal, which is listed in the U.K.; four or five large U.S., German, Japanese and Korean conglomerates are also involved.

“Some people are against this project because it involves lignite,” Zeka said, referring to a type of soft brown coal. “But we have always said [coal] is a must for the country. Renewable energy is welcome, but the country itself cannot base all of its supply on renewables.”

He said Kosovo is believed to sit on one-fifth of the world’s lignite reserves, and one-third of Europe’s reserves.

“We see similar projects in Bosnia, in Slovenia, all over Europe,” he said. “Yes, it will cause pollution, but just recently we opened a new hydroelectric plant. That causes environmental degradation as well. And they say they’re going to use the most modern technology.”

Is Better PR the Answer?

Meanwhile, Berat Rukiqi, president of the Kosovo Chamber of Commerce, says his country enjoys a demographic advantage.

“People in Europe are getting old, and there’s a lack of labor,” said Rukiqi, whose association has 15,000 members grouped into 36 associations and seven sectoral units such as construction, retail, energy and transport. “Kosovo is part of the wider regional market, and this is one of our key advantages.”

Another is its low wages. The average monthly salary comes to €200, only a tenth of the €2,000 earned in a month by the average European. Another is its young population. The average age is 29, with 70 percent of the population under 26.

“We have lowest taxes in Europe, and stable fiscal indicators,” said Lluka, the economic development minister. “Even though we had average 4.5 percent GDP growth for the past 10 years, our public debt remains among the lowest in Europe. And Kosovo ranks number 40 in ease of doing business worldwide, and second in the region after Macedonia, which means we have undertaken lots of reforms to remove red tape.”

Yet Ari Zoldan, who runs a media and communications firm in New York, said Kosovo’s biggest public relations challenge is gaining positive name recognition.

“Only 10 percent of Americans have ever traveled outside the U.S., so they wouldn’t be able to pinpoint Kosovo on a map if their life depended on it,” said Zoldan, a member of the delegation who plans on returning to Pristina in late May. “And if they think of Kosovo at all, they associate it with tanks and ethnic cleansing. They’ve never seen the good side of it.”

That good side will only get better if Serbia and Kosovo can patch up their political and territorial differences; talks currently underway have not yet produced the desired results.

“It’s a matter of courage,” Prime Minister Haradinaj told his visitors. “We hope it will happen soon, that an agreement will be reached between Kosovo and Serbia. In the meantime, we are both losing out.”

 


The Washington Diplomat news editor Larry Luxner joined the U.S. delegation to Kosovo in March.

 
 

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