It is my profound honour to speak today as the President of the Republic of Kosovo, before this great audience, at this prestigious University. I use, with great delight, this opportunity to provide you with an overview of the recent developments and future challenges for the world’s newest country. The Balkans has in the past been a region of turmoil; a place where conflicts and wars, rather than its incredible cultural offerings, have shaped the outside perceptions.

Although it has faded away recently, this bleak image persists in the minds of many even today. Pictures of refugees, burnt down houses, and heartless soldiers beating powerless people are still fresh in the minds of people. Yet, we have been able to see that great changes have taken place on the grounds of willingness, support and commitment. I shall bring before you today, as I address this distinguished audience, the story of Kosovo’s success and its contribution to the overall peace and stability in the region.

Although over nine years have passed since NATO intervened in Kosovo and the Serb military aggression came to an end, it remains impossible to overlook the human and financial losses this war has caused. During a period of only 10 months, August 1998 to June 1999, Serb military, paramilitary and police forces, with the aim of ethnically cleansing Kosovo, killed over 15,000 Albanians. Of those, over 1.900 people are still missing to date and about whom their beloved families know nothing.

Every day, as I make my way to my office, I am reminded of the missing by the photographs hanging on the fence of the building, placed thereby their families, to remind us of the pain they feel each and every day. Despite it all, it is important to note that peace and forgiveness remain the chief principles of the philosophy of Kosovo Albanians. The recent past took much away from the people of Kosovo, but it did not take away from them the courage to live and work for the future, as all free and civilized people do.

June 12, 1999, when the international community gave an end to all this through its humanitarian intervention, marks the birth of the revival of the institutions of Kosovo in all political, economic, social and security areas. These past nine years have not been easy, but we were not alone in our struggles; we were together with the international community, which has provided us with substantial humanitarian and development support.

After a complex period of negotiations, and in full coordination with international friends and allies, on February 17, 2008 the Parliament of Kosovo proclaimed Kosovo an independent and sovereign country, which was followed immediately with recognitions from EU member states, the United States, and other countries from every continent of the world. Thus far, Kosovo has been recognized as an independent and sovereign country by 52 countries, and our diplomatic offices have now been established in many world capitals, including London.

In the 6 months of the independent functioning of the Republic of Kosovo, we have adopted the Constitution; our state’s highest legal act that establishes the foundations of our democratic state. The Constitution incorporates fully the recommendations made by the International Envoy, President Martti Ahtisaari, in his Comprehensive Proposal for the Kosovo Status Settlement. Further, on the day the Constitution entered into effect, I promulgated 41 laws passed by the Parliament of the Republic of Kosovo and that derive from the Ahtisaari package. I am happy to report that the implementation of those laws is fully ongoing and that the people and institutions of Kosovo are fully committed to achieving this important aim. To ensure the safeguarding of this modern Constitution, we are currently in the final phase of establishing the Constitutional Court of the Republic of Kosovo, arguably the most important institution of the land.

From its inception, Kosovo has always been a sui generis case and it remains so even as it develops its democratic institutions and builds itself up as a democratic and sovereign country. Our independence is supported by the principle of the international presence, the EULEX mission in particular, which will have a supporting role in the areas of security and rule of law. As agreed upon, this mission will be deployed throughout Kosovo as quickly as possible. The deployment of EULEX will help the establishment and functioning of the rule of law in all of Kosovo, including the North of Kosovo, once and for all, thereby ending Belgrade’s destructive involvement that has been continuously active and present since the end of the war.

Stability in Kosovo and the region, and all else for that matter, is conditioned on the full application of the rule of law throughout Kosovo. Kosovo marks a unique kind of a functioning state dependent on the synergy and balance of various stakeholders, therefore, maintaining such functionality will require increased coordination among all the stakeholders, including the institutions of Kosovo, the International Civilian Office, EULEX, and finally UNMIK, which is still present in Kosovo until its powers are fully transferred to the institutions of Kosovo. The international presence in Kosovo, which is welcomed by the Kosovo people and institutions, can only function properly if in full agreement with the institutions of Kosovo. To the contrary, as passed practice shows, Belgrade’s interference will only bring problems and further hinder the application of the rule of law throughout Kosovo.

Peace and stability in the region is closely tied to the peace and stability in Kosovo. The recognition of the Independence of Kosovo by the neighbouring countries, Albania, Macedonia and Montenegro, strengthened even more the persistence of peace and stability in the region. The building of friendly relations with all the neighbouring countries, including Serbia, remains one of our top priorities.

We are fully aware that strengthening regional partnerships is precondition for European integration; however, we also take note that this is a beneficial process for all peoples involved. I use this opportunity to call on my colleagues, leaders of these countries, to work jointly, with full dedication, and without any prejudice, in transforming our region from its current condition into a fully fledged part of Europe. Let us show greater commitment from our side in making Balkan ‘Scheme agreement,’ according to which all citizens regardless of where they live will be able to move freely without constraints from one country to the other. Liberalization of movement and capital would make for a greater rationalization of the economic and human potentials within the region.

Ladies and Gentlemen,

Our efforts in providing for a peaceful and secure environment, rest in our firm commitment to create a better place for all Kosovocitizens. The entire legislative framework, which is already in place and it is being implemented, urges active participation of all citizens of Kosovo regardless of their ethnic, religious, gender or other background. We have nevertheless paid even greater attention, through the enactment of special laws, to the encouragement of the participation of minority communities in all decision-making levels, guaranteeing them reserved seats in the Parliament and the Government; a number many times higher than their percentage share of the overall population of Kosovo. This is even more so present for the Serb community.

Moreover, Serbian language is one of the two official languages of Kosovo, the other being Albanian. In consideration of other communities, in municipalities where a community makes up a certain percentage of the population, the language of that community receives an official status. Naturally, people of all backgrounds are free tousling their language throughout Kosovo.

I am delighted to inform you that the Bosniaks, Turks, Gorani, Roma, Ashkali, Egyptians and other communities living in Kosovo are fully integrated in the institutions of Kosovo and are represented adequately in all spheres of life. We also have the partial participation of the Serb community, mainly those living outside of the Northern Kosovo. However, the integration of the small minority of the Serb community living in the Northern Kosovo remains hostage to Belgrade’s pressure and intimidation, which leaves them without the ability to make their own choices and decide for themselves. For instance, in the village of Svinjare in Mestrovic, the Government of Kosovo built houses for members of the Serb community who had returned to their homes. But, after threats from Belgrade’s parallel structures operating in that area, they were intimidated into returning the keys and leaving their homes. This logic unfortunately coincides with Belgrade’s lack of cooperation with the Hague Tribunal and its refusal to hand over the war criminals who roam free in Serbia.

To prove, yet again, our commitment in building a free and democratic Kosovo where all the citizens have equal opportunities, we are in the process of creating the Communities Consultative Council, which will function under my auspices. The Ahtisaari Package not only gives communities enhanced opportunities for greater representation in the central and local governments, but grants them clear expression of their identity, and secures special protection of their religious and cultural heritage. On the institutional level, the security and stability of my country will further be strengthened by a checks and balance system of our legislative, executive and judicial branches of government, as foreseen by the Constitution.

Moreover, we now are at a sensitive phase as we focus on the building of a security force in Kosovo, on the principles of the highest NAT standards and supported by it, which will ensure the peace and security of the entire Kosovo. We are building all of our security components in line with professionalism and political impartiality, making them profound to safeguard the interests and security of all citizens of Kosovo. The creation of a secure and stable Kosovo will create a favourable environment for all its citizens to live and prosper.

When speaking of creating a better environment for all, I must note Kosovo’s youthful population. Kosovo has a very young population, with over 50% of it under the age of 25. Yet, the existing educational system is not adequately equipped to make them resourceful for the labour market. So far, with the assistance of international community, we have taken concrete steps in educating some of these young people, who have returned to Kosovo and are now active in the Kosovo institutions and the private sector. But, we must work harder. I use this venue to call the attention of all developed countries, and ask them to assist Kosovo by providing greater opportunities for Kosovo’s young people to receive education and vocational trainings, so that they can be of immense use to the labour market in Kosovo.

Strengthening our regional cooperation in the educational sector through the development of joint projects in the area of science and research also enhances the chances for greater economic development within our countries and the wider region. We are aware, also, that wended to provide further exchange of faculty and students with world universities, which would bring new ideas and concepts into our educational system as well as theirs. We must emphasize that there are hundreds of Kosovo students who study abroad every year as a result of contributions by EU member states and the United States, for which wearer eternally thankful.

Turning to Kosovo’s economy, it is imperative to note that Kosovo has gone through a unique economic transition. Firstly, this transition has-been delayed for a period of at least 10 years due to the occupation and war, compared to the start of transitions in other post-communist states. Secondly, we inherited an economy in which there haven’t been any investments for a long time. Thirdly, majority of the assets and infrastructure supporting Kosovo’s economy were ruined during the war, businesses were destroyed and the private and family properties were looted. To make matters worse, the process of privatizing SOE’s and Poe’s started with delay as well.

All this led the post-war Kosovo to inherit a high level of unemployment, the unemployed being mostly young men and women. It is high concern for us that the current unemployment rate rests at 40.5%, of which over 70% are active young people. If we do not manage to create a perspective for them and our economy is unable to absorb them, then this will be a great challenge for the proper functioning of our market economy and will endanger our social stability.

As it can be seen, the major causes of this high unemployment in Kosovo are the changing structure of the economy and the destruction of big enterprises (i.e. Trepan), mainly in mining and processing industries. However, the economic picture of Kosovo is not, all bleak. Significant progress has been made in the overall economy, as evidenced by the European Commission’s Progress Report for 2008. According to this report, the real GDP of Kosovo grew by an estimated 4.4% in 2007; total investment grew from 23% in 2006 to 27% in 2007. Still, GDP per capita Kosovo in 2007 stood at €1.774, which is lower than those of other European countries. We believe that the pledged assistance made through the donor’s conference of July 11, 2008, amounting to €1.2 billion, will be used to carry out various projects that will help Kosovo’s economy. I use this opportunity to thank once more all those countries which have invested in Kosovo and continue to do so. Economic development will decrease unemployment and will make Kosovo a more attractive place for foreign investment, thereby reducing the need for foreign aid.

Kosovo’s economic development also depends in its accession into the IMF and WB, in which organizations we have already applied and are now looking forward to a quick accession.

Currently, we have a disproportionate relation between the need for public investment and the budget capacity, which is limited. Another difficult issue for our economy is the export-import imbalance. The export share of the import is only 5%. We are working hard to try to change even the structure of the budget revenues. As we stand, there is a very unfavourable structure of budgetary revenues, with 65% of revenues coming from customs, 21% from taxes, and non-tax revenues of4%, which are levied at the municipal level. Budget revenues for the year 2008 are estimated at €890mil, while for the year 2009 Kosovo will have a budget of €1.4 billion.

Another major factor that hinders economic development is the lack of electricity. This is not only a result of low collection rates, but also of commercial losses. Currently, Kosovo produces 900MW and we are at the conclusion phase of starting to build new capacities of coal power plants, which will make use of our great lignite reserves. Also, recently, there have been efforts to build wind and other energy supplies based on renewable energy resources.

Kosovo is very rich with minerals, with chrome, lead, zinc, lignite, etc. We are working on legislation to create new investment opportunities and stimulate private businesses to invest in these areas.

But Kosovo has its own share of successes. Among the success stories in Kosovo is its competitive banking system. Just in the last 2 years, there has been a great increase in banking deposits, and likewise an increase in loans. I can say that the banking system, according to the current estimates of local experts, has not been affected much by the financial crisis. Nevertheless, the actual financial situation is not much in favour of economic development. The loans have mostly been issued for trade (58%), services (17.5%), agriculture (4%), industry and energy (13.5%) and construction/building (7%).

Our government’s priorities to achieve a quick and more sustainable economic development are oriented towards a total free market economy without barriers or limits. In that vein, we are creating stable policies which will assure the investors and we encourage the home countries of those investors to also support them through their own policies. In order to create this favourable environment, we have decreased corporate tax from 20% to 10% and income tax from 5, 10 and20% to 4, 8 and 10%, while increasing the VAT from 15 to 16% and tobacco excise tax. We are, likewise, strongly committed to increasing competition and eradicating informal activities.

As we deal with these challenges, we are working in creating a friendlier economic environment, in increasing competing capability for local businesses, in creating greater potential for exports and offset the imbalance to imports, in increasing employment in the private sector, as well as increasing the share of private sector contribution to GDP. We also aim for the economic integration of Kosovo into the European Union and to shrink the difference in development with Remember states.

European integration is indeed one of the top priorities of our government. Just a few days ago, the European Commission came forward with the progress report for this year outlining the progress Kosovo has made in fulfilling the membership criteria. We have established democratic and sustainable institutions guaranteeing democracy and the rule of law. We have made sure to approximate our laws with the EU legislation and we consider EU directives when drafting new legislation. We have ensured, through legislation and in practice, highest protection for human rights and those of minorities, knowing how much this will help the development of a democratic and equal Kosovo for all, which is our ultimate aim. We have, laid down the necessary provisions ensuring a functioning market economy.

We have, also, proven our seriousness in cooperating with the neighbouring countries in the interest of overall peace and stability in the region. We are aware that peace and stability in the region, which will contribute to the general welfare of Europe and wider, rests on the establishment of great relationships with all neighbouring countries, a long term commitment of ours. We will continue to cooperate closely with the European Union as we fulfil the membership criteria. We hope that the outcome of EU’s feasibility study next fall will shortly give way to a contractual relationship between the EU and Kosovo. We strongly believe that the future of Kosovo lies within the EU, as does that of the entire region.

Ladies and Gentlemen,

Thank you for your attention and thank you for giving me this opportunity to provide you with my views on the important role Kosovo will have as a partner for peace and stability in the region.

Thank you!