O'Brien's warnings extend beyond the ban on the dinar in Kosovo

Writing for Kosovo Online: Dragan Bisenic

The Government of Kosovo surely did not anticipate that what seemed like a seemingly benign issue of the use of the dinar as currency and means of payment would once again bring Kosovo to the brink of strained relations with the Americans. Assistant Secretary of State for European and Eurasian Affairs James O'Brien, who typically maintains a calm demeanor and a routine constructive tone, appeared quite angry when he recounted all this a few days ago and announced that the US might not consider Kosovo as a partner if it made decisions without consulting Washington, following the dinar ban.

"I'm not making vague threats in public. I would say, if we're not taken as partners, we won't consider the Kosovo Government as a partner either," O’Brien said.

Special US envoy for the Western Balkans, Gabriel Escobar, immediately after O’Brien, stated that "there cannot be unilateral moves" when it comes to relations between Serbia and Kosovo, and that such moves "will have consequences". O’Brien also sharply criticized the government for being "unable to serve its citizens", and reiterated that it was "unable to form a partnership".

The regulation of the Central Bank of Kosovo - which stipulates that the euro is the only currency that can be used for cash payments throughout the country - came into force on February 1, despite calls from the international community to delay implementation and despite the opposition of Kosovo Serbs. Following Serbia's request, an emergency session of the Security Council was held on this issue, attended by Serbian President Aleksandar Vucic. Given that O’Brien's harsh assessments came after the Security Council session on this issue, it is clear that Kosovo achieved nothing at this meeting and that many of the topics raised there were seen as wrong by American eyes and ears.

To make everything more convincing, the US Ambassador to Pristina, Jeffrey Hovenier, elaborated thoroughly on O'Brien's statement.

Hovenier particularly dismissed any attempts to downplay O'Brien's statement with claims that "everything is fine" and that the partnership was unquestionable, stating that O'Brien's remarks "do not correspond to the real situation", which is untrue.

"That's not the case. As O'Brien said, this situation has already affected the quality of the partnership between the two governments. Those who claim otherwise misinterpret what we said. We have sought ways to assist the affected population," Hovenier emphasized.

The Central Bank of Kosovo announced on February 12 that the transitional phase of implementing its regulation would last for three months, while Albin Kurti stated that Kosovo would not back down from the decision to ban the dinar in cash payments, but would respect the demands of the international community on this issue.

The Central Bank of Kosovo has opened a toll-free line regarding the dinar issue. James O'Brien specified that the Kosovo Government had been alerted to all this "within the first 5 to 10 minutes" after they had learned about these decisions in Washington. He said that Kosovo should have immediately suspended the decision of the Central Bank and worked as a "modern European state" to find a solution to "this specific problem".

"People need to know how they will pay. When I read the statement from the Central Bank, it does not say that the use of dinars will be allowed. It says that an alternative will be offered. This had to be done before the decision was implemented in cooperation with the affected communities and neighbors affected by that decision and with the European Union (EU) and us," O'Brien said.

"Nevertheless, the government continued with the implementation of the decision without warning and left a number of citizens confused about how to pay for bread, rent, and electricity, some of whom had just begun to pay. This is not effective governance. We are very concerned because it shows the government's inability to serve the citizens and to engage in partnership," he said.

After news emerged that the implementation of the decision had been postponed for three months, the Governor of the Central Bank in Pristina, Ahmet Ismaili, stated that the bank had not postponed the deadline for implementing the regulation on banning the dinar in Kosovo and Metohija, nor had it provided an additional deadline for its implementation.

"The Central Bank has not postponed the deadline for implementing the regulation, nor has it provided an additional deadline, nor has it changed its regulation. The plan we announced only mitigates the effects on the Serbian community, allowing greater access to finance and financial services".

Sometime later, he only partially corrected his statement with another in which he claimed that it was not possible to repeal the bank's decision and reiterated what was commonly heard from the Pristina side. Now, unlike Kurti, Ismaili stated that "the dinar is not banned", but rather it was simply about greater transparency. All of this has only convinced the American side that Pristina continues to pursue its own agenda.

The use of the dinar, undoubtedly, has existential importance for the Serbs in Kosovo. However, what prompted the US administration to address Pristina with such firm language is the broader issue that has pushed the dialogue conducted through the EU to the brink of abyss. By doing this, it is once again shown that Pristina is not moving closer to the establishment of the Community of Serb-majority Municipalities, but rather further away and distancing itself from it. One of the functions of the Community of Serb-majority Municipalities is the envisaged possibility of direct financing of education, health care, and other agreed-upon institutions directly from the budget of Serbia. Naturally, this would involve financing in dinars.

O'Brien himself stated that there were several ways to solve the issue of money that Serbia sent to Kosovo, where he mentioned that this could be possible through the Community of Serb-majority Municipalities, which Kosovo had agreed to establish in dialogue with Serbia under the EU mediation.

"The Community would solve this problem by clarifying the issue of the money sent and the purposes for which it would be used," O'Brien emphasized.

By abolishing the dinar, the most important pillar for the establishment of the Community of Serb-majority Municipalities is abolished, so here it is actually about not only abolishing the dinar as a means of payment but also about abolishing all chances of establishing the Community of Serb-majority Municipalities and thus finally successfully concluding the normalization of relations between Belgrade and Pristina. This normalization would significantly improve Kosovo's international status, but it would not bring recognition from Serbia, nor would it provide any guarantees of UN membership.

For experts from the International Crisis Group, the dinar "is not just a currency, as the Serbian community depends on it in both good and bad times".

The ban on the circulation of the dinar and the closure of several parallel Serbian municipalities in Kosovo will have a very negative impact on the Community of Serb-majority Municipalities, which is expected to be formed. "As things stand now, either we will not have the Community, or we will have, so to speak, an empty institution, which the government will unilaterally form, without any real effort to meet the needs of that community. And that is sad," Marko Prelec from the International Crisis Group assessed.

Prelec believes that the background of the harsh reactions, "which are completely understandable", lies in the understanding that "these things are extremely important for the Serbian community in Kosovo, both in the north and in the south", and that "their existence depends on Serbian institutions". The most important consequence of such behavior will be that the majority of Serbs would have no choice but to leave, Prelec concludes. This would have "fatal consequences for the multi-ethnic character of Kosovo and its hopes for improving relations with Serbia, as well as for full integration into the international community".

However, this is not the only concern. If this regulation were to remain in force, it would directly lead to new conflicts and confrontations in the north. The Kosovo Government has so far shown that it sees the use of the police as the dominant means of dealing with issues related to the functioning of the Serbian community in the north, so based on past experiences, it could be assumed that the implementation of this regulation would go hand in hand with the use of police repression and coercion. This is something the United States would in no way want to see again in Kosovo.

Therefore, O'Brien's ominous warnings extend beyond just the ban on the dinar in Kosovo. James O'Brien directed his warning towards all unilateral actions taken in Pristina. This means that it concerns the style and manner of governance and administration in Kosovo that excludes consulting those who will be affected by certain measures, which typically includes the Serbian community in Kosovo, and it also lacks consultation with international partners in all of this.

We first heard about the announcement of Kosovo's uncertain partner status in Washington in May last year from the US Ambassador to Belgrade, Christopher Hill. It came amid escalating tensions between Kosovo and Washington, but soon the Washington stance was significantly softened, and by the fall, it seemed that Pristina's lack of cooperation had already been absorbed and that everything had returned to normal relations.

The US diplomacy and foreign policy, as a rule, are understanding of "young" and "minor" democracies, and even their wanderings and mistakes, but they are not willing to overlook it if they conclude that such behavior is deliberate and intentional. The punishment of Germany after World War II was far more brutal than the punishment of Japan, precisely because of the understanding of "adult German nation" and "minor Japan".

Ambassador Hovenier believed that it would be good to present O'Brien's stance to the public of Kosovo in great detail. "When negotiating the Dayton Agreement on behalf of the United States, Richard Holbrooke did that, and he then held the position currently held by O'Brien. He is the boss of Gabriel Eskobar and me. When he uses such a tone with such content in an interview, it is a rarity and reflects the problem," Hovenier emphasized.

While Prelec from the International Crisis Group concludes that the US and the EU are facing a "lack of influence" in Kosovo, there are also those who warn that the US is "right even when they are wrong". If faced with such a choice, it seems quite clear how the US will behave.