Turkey focuses on boosting economic ties with Kosovo after recognition
Friday, February 22, 2008

KOSOVO: The new state of Kosovo needs a lot of investment. AFP photo

Turkey is a major partner for Kosovo and Ankara’s political recognition as well as the lion’s share Turkish businessmen have in the country’s foreign trade are hailed by top political figures in the newborn Balkan state. Now the challenge lies in harnessing the energy of the Turkish private sector to launch direct invesments

MUSTAFA OĞUZ
ANKARA – Turkish Daily News


 Increasing direct investments in Kosovo will be Turkey's next challenge after Ankara's full political support to the country's independence.

   Turkish businessmen's dominant position in Kosovo's foreign trade should be coupled with direct investments, said a Turkish diplomat in an interview with the Turkish Daily News. “Nearly 90 percent of the consumer goods you buy in Kosovo are of Turkish origin, but Kosovo also needs massive amounts of capital to build a sound infrastructure,” stressed Volkan Türk Vural, head of the Economic Affairs Directorate of the Foreign Ministry.

 Kosovo's top officials welcomed the idea, said Turkey's special envoy to Kosovo, Ambassador Mehmet Taşer, late Wednesday. “Kosovo President Fatmir Sejdiu and Prime Minister Hashim Thaci announced that they expected investments from Turkish businesspeople in their country,” he said.

 Favorable political conditions for greater Turkish investments in Kosovo were clear from the first day of its declaration of independence. “The first Kosovo flags were manufactured in textile factories in the Turkish city of Bursa, sewed in Adana and carried to Kosovo free-of-charge by Turkish Airlines,” Vural said.

 “Serbia is officially Kosovo's largest trading partner and Macedonia comes second. Turkey is third, but if we take into account the fact that at least 70 percent of the goods entering Kosovo from Macedonia are of Turkish origin, it is obvious that Turkey is the leader in Kosovo's external trade,” said Vural. Turkey's success came despite the lack of bilateral free trade agreements that Macedonia enjoys with Kosovo, he said.

  “The ice-cream market is a good example. Kosovo's market reaches 4.5 million euros and it is dominated by two Turkish companies,” said Vural. One impediment was that Kosovo preferred to import poultry from Brazil instead of Turkey, but that problem was also solved in favor of Turkey: “Most consumer and construction goods are now imported from Turkey,” he said.

 Exact figures on Turkey's total trade volume with Kosovo are not available, said Vural, as bilateral trade was registered under the Serbia section thus far.  

 ‘Country hungry for direct investments'

 Turkish direct investments in Kosovo, however, are not in line with the flourishing bilateral trade. “Turkish direct investment in Kosovo is limited, since Kosovar authorities were unable to give a sovereign state's guarantees for investments so far. But things have started to change after the declaration of independence,” said Vural.

 Major privatization projects in the telecommunications and energy sector are on Kosovo's agenda. But Kosovo's tendency to grant privatization bids to the company with the largest offer creates problems, he said.

 “The most luxurious hotel in Kosovo, the Grand Prishtina Hotel, was sold to an Albanian businessman. But he could not handle its management,"  he said.

 Another example is the two competing offers for a pipeline that passes from the Ferijai region. “A businessman offered $900 million and decisively beat the Turkish entrepreneur who offered $200 million. Although he got the contract, he was unable to pay the promised amount. Authorities then demanded from the second bidder to pay the $900 million. This system does not work properly, but it will be reformed,” said Vural.

 Turkey's flagship investment came with the Turkish Economy Bank, which opened a branch in Prishtina, said Vural.

 “Kosovo depends on a refinery in Skopje as there is none in the country. Power cuts are frequent due to the severe gas shortage. They may choose natural gas coming from Azerbaijan to Greece via Turkey or prefer gas from Bulgaria,” he said. The newborn Balkan state also needs improved roads to connect to rest of the continent and the world. “The only trade route passes through Macedonia and is the route used to carry 80 percent of the external trade. It is a narrow road that will be widened. Similarly, a highway that will link Kosovo to the sea via Albania is also contemplated,” said Vural.

‘Turks should expect competition':

 Although it is common sense that Turkey can benefit from kinship between Turks and Kosovars, as Prime Minister Recep Tayyip Erdoğan said recently, bagging direct investment opportunities requires much more than cultural familiarity. “The European Union will grant 1 billion euros in the next two years to Kosovo. They naturally will want EU firms to succeed in national bids,” said Vural. Kosovo annually imported 1.1 billion euros, but exported merely 80 million in 2006, he said. “This is why I call it an untouched economy. Turkey is a major partner in trade, but this has to commit itself to direct investments as well.”