Kosovo’s Resource Curse

Kosovo's coal: Blessing or curse?

Despite numerous energy initiatives, the development of the energy sector in Kosovo has not been very transparent. Indeed, the development of Kosovo’s energy sector has led to a number of questions, few of which have been answered by Kosovo’s policy makers. How will Kosovo’s real energy needs be met today and in the future? How many power plants should be built and with what capacities? How much of Kosovo’s energy is intended for the export market? How will environmental concerns be met? And perhaps more importantly, how much will Kosovo benefit financially from the privatization of its energy sector? The lack of clarity over the building of the Kosova e Re power plant and the lack of transparency over the privatisation process mean that none of these questions can be answered with any certainty.

In his latest book, Hot Flat and Crowded, the New York Times columnist Thomas Friedman talks about the phenomenon called the “resource curse”. In simpler terms, “resource curse” refers to the abundance of natural resources which can be bad for a country’s economy and politics. In Kosovo’s context, the reason that coal can be bad for economic development is that a struggle that can emerge about the control of those resources and about who gets how much money from them. Given that Kosovo is poor, Kosovars cannot afford a situation where politicians dominate all the economic aspects of life. In the international context, we are all witnesses of how Russia, Venezuela, Iran and others (all non-democracies) are using their oil and gas as political weapons while at the same time eroding civil liberties.

It is of course not an option for Kosovo not develop its energy resources. Kosovo has the world’s fifth largest coal reserves – it would be only natural to conclude that the exploitation of the country’s energy resources will lead to greater economic development. What Kosovo needs most is to conduct a fully transparent process in which the rules of the game are well known to all participants. We Kosovars must ensure that private sector firms do not pay politicians in return for winning concessions. In short, we need honest and clean leadership. The best way to avoid the resource curse is to uphold the rule of law, build an honest judicial system and have accountable government.

Indeed, the balancing act that needs to be struck between state involvement and privatization is not on the horizon yet. We are still years from the day a new Kosovo becomes a reality. The reason, I argue, is that we lack the leadership that will usher us into the era of privatization that is free from corruption. In other words, we have not convinced ourselves yet that we are ready, able, and willing to negotiate a deal that is in Kosovo’s best national interest.

Photo copyright Zach Reinhart