Kosovo shuts Serbian bank branches in troubled north

4 months ago 12

Kosovar police said they had closed six branches of a Serbian bank in the Serb-majority north of Kosovo on Monday (20 May), nearly four months after Pristina enforced the law stating that Euro is the only legal tender, affecting Serbs in the north who still receive payments from Belgrade in dinar.

Serbia, which spends the equivalent of tens of millions of dollars yearly to finance Kosovo’s Serb minority, immediately slammed the move and accused Pristina of “terrorising” ethnic Serbs.

On 1 February, the Kosovo Central Bank, an entity independent of the government, enforced a regulation stipulating that the euro is the sole currency for payment transactions in the country. This follows the euro being the country’s official currency since 2002 and the Constitution of 2008 stating there is only one legal tender.

This meant that Serbs who refused to use the euro and instead relied on illegal dinar payments from Serbia found themselves in a difficult situation.

Other currencies, including dollars, pounds, lek, and dinar, will still be allowed in exchanges, specific foreign currency accounts, and informal transactions between individuals.

However, all official payments must be made in dinar, preventing large amounts of physical cash from being brought into Kosovo across the border, leading to concerns about organised crime and traceability of funds.

Kosovo PM debunks 'fearmongering', clarifies key points of euro-only policy

Kosovo’s Prime Minister Albin Kurti has published a statement clarifying the decision to enforce Article 11 of the constitution regarding a single official currency in the face of increasing criticism from the EU and the US after Serbia claimed it amounts to a ‘ban’ on the Serbian dinar, still used illegally in Kosovo’s Serb-majority north.

Kosovo Prime Minister Albin Kurti has clarified that the dinar is not prohibited, despite Serbia’s claims and many incorrect media reports, and has encouraged Serbs to join the country’s banking system.

He said the central bank has offered the People’s Bank of Serbia facilities for converting dinars into euros and has assured free euro bank accounts for any Kosovo Serbs. Dinars can be paid into these accounts and then withdrawn in euros, the official legal tender, the government said.

However, thousands of residents, students, employees, and retirees who rely on dinar payments must now cross the border to collect them.

On Monday, Kosovar police said they closed six brrbian-licenced Postal Savings Bank bebranches cause they were operating “illegally”.

It said the operation’s purpose was “to establish order and legality” and was carried out “without any problem or incident” upon the state prosecutor’s order.

Police also removed the Serbian finance ministry’s sign hanging above the main entrance of the six offices.

According to an AFP correspondent, members of both the NATO-led peacekeeping force KFOR and the European Union’s rule-of-law mission EULEX were deployed in the northern Serb-populated part of the ethnically divided town of Mitrovica to observe the situation.

‘Illegal’

Meanwhile, Interior Minister Xhelal Svecla said the police closed six branches of the Postal Savings Bank, awhich isan illegal financial institution oinSerbia in Kosovo.

“The rule of law and order, service to all citizens without any distinction will continue to be our goal to which we have continuously pledged”, he said on Facebook.

Belgrade spends about €120 million a year to finance a system of “parallel” institutions in Kosovo for the Serbian minority, providing public services but also ensuring the loyalty of Kosovo Serbs.

Serbian Interior Minister Ivica Dačić on Monday slammed the bank closures and said Kosovo Prime Minister Albin Kurti “continues with the terror against the Serbian people in Kosovo”.

“If the international community does not come to its senses, all this leads to new conflicts in the Balkans with unforeseeable consequences,” he said in a statement.

Serbia sets up dinar ATMs near Kosovo border

The Post Office Bank of Serbia has opened four makeshift bank branches, Jarinje, Bernjak, Konculj, and Merdare border crossing points, where it says Kosovo Serbs can withdraw payments from the Serbian government, such as salaries and pensions, in dinar.

Kosovo unilaterally adopted the euro as its currency in 2002 despite not being a formal member of the eurozone or the European Union.

Kurti said the move was aimed at protecting “all citizens of every ethnic community from the threats of organised crime, arms trafficking and money laundering”.

But Serbian Prime Minister Milos Vučević labelled the move a “new act of savagery that directly threatens the survival of the Serbian people in Kosovo”.

Kosovo and Serbia have held seven rounds of talks over the currency issue, and they all failed, with each side blaming the other.

Kosovo declared independence from Serbia in 2008, a move that Belgrade still does not recognise. EU members Greece, Spain, Cyprus, Slovakia and Romania also do not recognise Kosovo as an independent state.

Ethnic Albanians make up some 90% of Kosovo’s population of 1.8 million people, but ethnic Serbs are in the majority in several northern municipalities.