The FRY government in Belgrade has appointed the Serbian Deputy Prime Minister, Nebojsa Covic, as the official interlocutor to mediate with UNMIK. The Administration welcomes Belgrade's endorsement of the Serbian Deputy Prime Minister who will work with UNMIK to find a solution for Mitrovica. A meeting between SRSG Haekkerup and Covic is expected in the coming weeks.

The task ahead for both Covic and Haekkerup is primarily to deal with security problems in northern Kosovo, Serb registration, the missing Serbs and Albanians, as well as the plan for the return of Serbs IDPs who want to come back to Kosovo.

Civil Registration and Voter Services, run by UNMIK and OSCE respectively, have only recently begun, thus Covic's visit to Gracanica on 4 August was well timed given his message to the Kosovo Serbs. While visiting families of missing Serbs in Gracanica, Covic encouraged the people to register and told them that instructions by some leaders in north Mitrovica to boycott the registration was contrary to the Federal Government's message. Nevertheless, demands for the improvement of security for Serbs in Kosovo have not diminished, and Covic has reiterated two conditions that need to be fulfilled prior to the Serb community in Kosovo participating in the elections.

The first condition is to provide security for all the Serb citizens. The second is to facilitate the returns process for all the displaced Serbs living outside Kosovo. Only if these conditions are met in the coming months is there a possibility that Belgrade will advise the Serb community to participate in the elections. Covic has made the FRY stance very clear: "International pressure alone will not force the Serbs to participate in the elections if the conditions for their security are not in place."

The governments of Yugoslavia and Serbia are considering a plan for Kosovo, details of which have neither been released nor formally presented to UNMIK. There have been references to the cantonisation of northern Kosovo with a view to establishing Serb institutions in the spheres of police, judiciary, health and education that would cooperate with their Albanian counterparts.
UNMIK does not accept the idea of cantonisation and has rejected parallel structures of any type in Kosovo. Nor does the Administration accept the notion that split entities fall within Resolution 1244 which refers to a unified territory of Kosovo.

The majority of Albanian representatives in Kosovo have accepted the importance of Serb registration. Both in the Interim Administrative Council (IAC) and in the Kosovo Transitional Council there is agreement on the need for the Serb community to participate in the elections and take part in building the future of the province. The IAC has already agreed to a statement of principles for the return of displaced non-Albanians, and plans are underway to prepare specified locations in Kosovo for the return of a specific number of Serb families.

Voter registration in Serbia was interrupted last week when the FRY authorities, faced with OSCE's refusal to allow the government access to confidential voter data, boycotted the process. The issue was resolved between Covic and OSCE Head, Daan Everts, and an agreement has been reached whereby the Yugoslav Commissariat for Refugees will be able to monitor data-processing and data-base development to ensure transparency throughout the registration process. To date five Kosovo Serb political parties have applied for certification.

IAC discusses macro-economic and budgetary priorities for 2002

Last week Tony Preston-Stanley, head, Central Fiscal Authority (CFA), presented some of the initial parameters of the 2002 budget to IAC members. Members discussed the contents of a CFA summary paper, entitled "Macro Economic and Fiscal Policy Issues for the Period 2002-2004."

Several items stand out for budgetary financing in 2002, he said. 1. The need to meet the costs of the New Assembly. No figures were cited. 2. Some form of pension scheme is widely expected to be introduced; 3. More allocations within the Kosovo Consolidated Budget (KCB) are expected to finance improved policing standards and the justice system; and 4. As UNMIK and the OSCE start reducing their presence the KCB may have to cover outlays now paid for by either of the latter. For example, the KPS training school and the Ombudsperson are now both financed by OSCE.

In addition, although education is the largest part of the present budget, Preston-Stanley said, improvements in this sphere are still needed. "No doubt there will also be pressure for increased health expenditure, as well as for a range of other issues," he added.
The CFA told IAC that it has already asked the JIAS Departments for their new policy proposals for 2002. In early September the CFA will review the costs of JIAS Departments' continuing activities.

Significant macro-economic issues affecting the 2002 budget include UNMIK's capacity to increase tax revenue. In this regard the extent to which UNMIK could improve compliance with taxes, customs and import regulations was an important issue. He also said that in 2002 an income tax was under consideration which "would not be a very high rate by European standards." A specific business profits tax might replace the current presumptive tax for those businesses which have fundamental accounting records and a fairly high degree of turnover. "There are no more than 1,000 to 1,500 such businesses in Kosovo," he said.

Briefs . . .

OSCE Voter Services, to be carried out both within and outside Kosovo, began on 30 July and will run through 8 September. During this period, a total of 173 Voter Service Centres will function within Kosovo, of which 48 are fixed centres; while 125 mobile Voter Service teams will operate in specific areas for a limited period of time. Two registration sites in Mitrovicë/Mitrovica were opened within the Bosniac Mahala area of the city. Sites were also opened on 30 July in Leposavic/Leposaviq municipality and on 31 July in both Zvecan/Zveçan and Zubin Potok municipalities.

Interviews were conducted to recruit staff from the minority communities in the municipal employment offices in the Pristina Region. This week interviews were held in Fushe Kosovo/Kosovo Polje Municipality and interviews are planned for Gracanica next week. By the end of August members of the minority community are expected to fill eight posts in the Pristina Region.

Equipment for the health insurance and the pension fund, financed through a grant from the World Bank, is expected to arrive next week, though closure of the FYROM border may disrupt delivery. As all the facilities are not yet ready for installation, storage of the forty computers remains a problem.

Environmental Impact Assessment (EIA) is a mandatory prerequisite for all new activities that have an impact on the environment. To facilitate the application of the relevant legislation on Environmental Impact Assessment, the Department of Environmental Protection is organizing a series of meetings with different municipalities to harmonize public administration works in relation to EIA and provide updated information. The first such meeting took place in Gjakove/Dakovica on 1 August.

As part of its democratisation efforts OSCE held a roundtable in Gjilan/Gnjilane on women's participation in politics, which dealt with the registration process, the structure of the Assembly, the Constitutional Framework and the election. In Skenderaj/Srbica, a meeting was held to discuss the management and the co-ordination of the activities of a women's centre in Vushtrri/Vucitrn.

KFOR Multinational Brigade-Centre is planning to continue training of KPC units within their area of responsibility. The training is scheduled to last three months, and will include map reading, code of conduct, team building and radio procedures. In the second phase the training will focus on vehicle maintenance, logistics, search-and-rescue, survival in hazardous situations, operations room management and information technology. The most skilled students will be selected to join the planned KPC Emergency Response Teams.

OSCE is taking an active role in promoting participation of youth in the political process. Several meetings were held with LDK and PDK youth members. In another civil society initiative, this week saw the opening of a multi-ethnic Internet café, supported by OSCE in Fushe Kosovo/Kosovo Polje, and the inauguration of two OSCE community centres, one in the north of Mitrovica and one in Zubin Potok.

OSCE'S Media Department/Press and Public Information Office (PPIO) continued to work with USAID Kosovo Transitional Initiatives (USAID/KTI) and the Kosovo Foundation for Open Society (KFOS) for the development of a TV channel for children in Shillove/Silovo, a site identified for Serb returns. OSCE actively coordinated the cooperation between the parties, which resulted in KFOS delivering a DM21,000 check to the Children's Channel in order to buy necessary studio equipment.

The initial training course for the KPC Mine-Clearance Teams will be conducted at the KPC Training Centre in Nashec/Nasec, Prizren, starting on 20 August. Approximately 100 KPC members will be trained over a period of three weeks on basic mine-clearance procedures. The NGO, Handicap International, will conduct the training.

A new primary school was inaugurated for the Kosovo Albanian school children of Caber/Cabra in Zubin Potok/Zubin Potok Municipality. A kindergarten was opened in Vushtrri/Vucitrn Municipality of Mitrovica region during the week.

Plans for repair and winterization works on the temporary community shelters located in each municipality are being compiled. These civic works are set to begin in September and should be completed by mid-November.

Preliminary documents required for implementation of the newly-signed grant from the World Bank and DFID for the Kosovo Social Protection project have nearly been completed. Submission of these drafts for donor approval is anticipated toward the end of the month.

A seminar was organized for PTK senior management to introduce the concepts of Business Plans to facilitate the restructuring of the enterprise along modern management lines. To date PTK has distributed 607,051 ID cards.

As part of the European Union contribution, 350 sets of fire protection clothing were delivered to the Kosovo Protection Corps (KPC). The equipment will be distributed to seven prioritized Emergency Response Teams throughout Kosovo that will form the core of the future emergency response capacity within KPC.

The Department of Youth is supporting a "Multicultural Youth Camp 2001" being held in Gjakove/Dakovica since 23 July. The aim of the project is to promote inter-ethnic integration between Kosovo youth through acquainting them with multicultural values, particularly in the fields of education, culture and art. The young people attending the camp are a mix of Macedonians from FYROM, Albanians from Albania, Bosniaks from Bosnia, and Albanians from Kosovo.

The development of administrative procedures and guidelines for the Municipal Cadastral Offices is underway (fees, cadastral procedures, property definitions, etc.). Currently, 23 MCO's have computerized data-bases, which are continuously updated, enabling residents to obtain a printout of their land ownership.