Kosovo: New currency regulation angers Serb minority

Since the beginning of February, the people of Kosovo are no longer supposed to use the Serbian dinar to make payments. Instead, the government wants all citizens — including those in predominantly ethnic Serb communities — to use the euro.

Kosovo, which has been an independent state since declaring its independence from Serbia in 2008, adopted the euro as its currency in 2002.

However, in the north of the country, where 95% of the population belongs to the Serb minority and Serbian flags are ubiquitous, all transactions are conducted in Serbian dinars.

Outside the bank in the town of Zubin Potok, long lines of people wait to withdraw dinars so that they can go about their daily business.

Major impact on the Kosovo Serb community

Milos Vucinic, a 26-year-old Kosovo Serb, lives with his parents in Zupce, a small village near Zubin Potok. He shops in the local store, where he pays in Serbian dinars. It's been like that all his life, but if the government in Pristina has its way, all that will change.

"Prime Minister [Albin] Kurti's decision about the dinar affects people here in the north," he told DW.

Milos's mother, Jelena, works in Zubin Potok in a Serbian preschool that is financed by the Education Ministry in the Serbian capital, Belgrade. Until now, she has received her salary in dinars from banks that are authorized in Serbia.

Now that Kosovo's Central Bank only accepts the euro as legal tender, Jelena had to travel 42 kilometers (26 miles) to Raska in Serbia to withdraw her most recent salary.

Three-month transition period

The euro regulation, which applies to all foreign currencies and not just the Serbian dinar, was due to come into force on February 1. Only three days later, Kosovo police officers seized a van containing four million dinars at the Serbian border. Another van was refused entry.

In the northern, predominantly Serb part of the city of Mitrovica, thousands of people took to the streets to protest the regulation. The international community was also critical of the Kosovo Central Bank's unilateral currency regulation, which came at short notice.

On February 12, the central bank backed down and announced a transition period lasting no more than three months and authorized three banks that operate in both Serbia and Kosovo to receive dinars and convert them into euros. Proposals were also made as to how people in Kosovo would in future be able to exchange dinars for euros.

Serbia finances schools and hospitals in Kosovo

"This problem does not just affect northern Kosovo, but the entire Serb population of Kosovo because it directly impacts salaries, pensions and social security payments for about 95,000 people," said Ilir Deda, Europe's Futures Fellow at the Institute for Human Sciences in Vienna.

The reason for this is that Serbia continues to operate schools, hospitals and other institutions in Kosovo.

For Deda, a former lawmaker in Kosovo, currency is not the main issue here. "The root of this crisis is not the use of currencies, but the fact that there is no comprehensive solution for the institutions in Kosovo that are financed and controlled by Serbia," he told DW.

EU-sponsored dialogue has stalled

The EU is hoping to achieve a resolution through its Belgrade-Pristina Dialogue. Unfortunately, this dialogue stalled in 2013 and has pretty much remained so ever since.

In recent times, the EU's foreign policy chief Josep Borrell and the bloc's special representative for the Belgrade-Pristina Dialogue, Miroslav Lajcak, have spent much of their time trying to prevent an escalation in Kosovo and violence resulting from disputes such as the license plate row.

The most recent attempt to revive the dialogue took place in Ohrid, North Macedonia, in March 2023. However, the agreement reached at the summit was never signed.

Indeed, Serbian PM Ana Brnabic sent a letter to Brussels last December formally confirming that she neither considered the agreements reached in Brussels and Ohrid legally binding, nor would she adhere to many of the points contained in them.

Emergency UN Security Council meeting

For Branislav Krstic, a Kosovo-Serb journalist and political analyst from northern Mitrovica, the currency regulation is "an infringement of collective rights. The decision on the dinar directly impacts our lives. The main objective is to make it impossible for Serbs in Kosovo to survive," he told DW.

Serbian President Aleksandar Vucic shares this view. He called for an emergency session of the UN Security Council on the grounds that Kosovo's policy on the use of the Serbian dinar is, in his words, a "crime against humanity" and a "breach of Kosovo Resolution 1244." The Security Council discussed the matter on February 8, giving both sides a chance to state their positions.

Kosovo promises improved communication and support

"The central bank's regulation seeks not to harm any single group of citizens, but rather to protect all citizens of every ethnic community from the threats of organized crime, arms trafficking and money laundering," said Kosovo PM Albin Kurti. He also pledged better communication and help for Kosovo Serbs on currency conversion.

The UN Security Council said that the EU-facilitated dialogue was the place to resolve such conflicts.

Political expert Ilir Deda agrees. "The EU Dialogue is a very challenging process, but it is the only one we have and the only one we will have in the foreseeable future," he told DW. "Without the decisive, credible and visionary commitment of the West, the chapter on the normalization of ties between Kosovo and Serbia will never be concluded."

Solutions needed in next three months

Pristina's currency regulation has made many regular transactions impossible. For example, the government in Belgrade gives grants to promising Serb schoolchildren in Kosovo. The schoolchildren in question get about 12,000 dinars' support (approx. €100/$108) a month.

Just how this money is supposed to get to recipients remains unclear. A solution will have to be found during the transition period.

All of this is making Milos Vucinic, who himself attended a Serbian school in Zubin Potok, anxious. He wonders what could come next: "A Kosovo stamp on our certificates and diplomas? Or even a ban on Serbian schools?"

In his eyes, the future of the Serb minority in Kosovo is uncertain. He sees his future in Serbia or further afield.

This article was originally published in German.