Kosovo’s Kurti Says Euro ‘Non-Negotiable’ as Sole Currency

Gresa Kraja
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(Bloomberg) -- Kosovo’s premier warned that new rules enforcing the euro as the country’s sole currency are “non-negotiable” after the US and European Union said the regulations may disrupt payments to ethnic Serbs.

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Prime Minister Albin Kurti said Wednesday that Kosovo’s central bank will implement the decision independently based on the constitution. Moments earlier, the nation’s president, Vjosa Osmani, signaled that restrictions in effect as of Thursday will allow time for affected residents to adjust.

“We don’t want to punish anyone, but only to bring legality, constitutionality and regularity,” Kurti told reporters in the city of Podujevo, north of the capital Pristina. That includes “the north of Kosovo and everywhere where there are Serbs in Kosovo.”

The currency dispute risks deepening a rift between Serbia and Kosovo amid the worst tensions in over two decades. US and EU diplomats have failed to push the Balkan nations to establish normal relations, a requirement to join the EU. Serbia doesn’t recognize Kosovo, a former province that unilaterally declared independence in 2008.

Although not an EU or euro-area member, Kosovo has used the euro as a de-facto currency since 2002.

Kosovo’s international allies have called on the currency rules to be at least delayed after Serbian authorities said access to the dinar — used by ethnic Serbs for pension, health care and investment payments — could be imperiled by the restrictions. Authorities in Pristina say the new cash operation will better monitor money flows and take effect on Feb. 1.

‘A Direct Threat’

Kosovo’s central bank has said it will ban any lender from operating without a license, potentially affecting Serbia’s Postanska Stedionica, the key conduit for funds in Serbian dinars that some 90,000 Serbs in Kosovo rely on.

Previously, Kosovo’s predominantly Albanian authorities had minimal involvement in overseeing payments. Belgrade sends over $100 million annually to support Kosovo Serbs.

Serbia’s central bank, which maintains that the payments are recorded transparently and with oversight from Pristina, said in a statement last week that the restrictions present “a direct threat to the existence of the Serbian population and aims to drive more Serbian people from Kosovo.”

Osmani signaled that the rules would allow time for residents to adjust — and respect Kosovo’s euro rules even as they offer leeway for those affected to take action.

The rules will “leave some time for informing the citizens and transferring” dinars to other accounts, Osmani told reporters in Pristina. “It can be implemented without any problems and with the full support of the allied countries.”

Discussions on how to implement the new currency regime are ongoing and involve “a number of options,” Osmani said.

--With assistance from Misha Savic.

(Updates with Osmani comments, Kosovo-Serbia rift, analyst quote beginning in fourth paragraph.)

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