Serbia and Kosovo: The Economic and Other Consequences of a Potential Exchange of Territories


A sustainable solution between Belgrade and Pristina in the event of an agreement on exchanging territories would be to include only homogeneous territories in the process, i.e. municipalities predominantly populated by Serbs or Albanians. A requisite is that they be only border municipalities, but not the ones within Kosovo that are not physically linked to the border area. The inclusion of those enclaves would mean “the creation of potentially new, political, economic and security hotspots,” according to the authors of the study titled The Economic, Demographic and Social Effects of Normalized Relations Between Belgrade and Pristina, commissioned by the Open Society Foundation.


The study considered the possibility of exchanging the territories of three municipalities of the Presevo Valley in Serbia – Presevo, Bujanovac and Medvedja – for four municipalities in the north of Kosovo – Zvecan, Zubin Potok, Leposavic and northern Kosovska Mitrovica. The number of inhabitants of the Presevo Valley and their ethnic structure are not exact due to the Albanian population’s boycott of the 2011 census, thus the estimates in use are those made in 2015 with the help of international experts hired by the EU, the OSCE, and the U.S. and British ambassadors.


The experts found that in 2011 Presevo had a population of 29,619, 91 percent of which was Albanian, Bujanovac had 38,275 with 53.4 percent Albanian, while in Medvedja, 92.9 percent of the 7,442 inhabitants were Serbs and non-Albanians.


The study authors believe that including the municipality of Medvedja with an Albanian population of just 7.1 percent in the territory exchange would be an unsustainable solution, not just for Serbia, but for Kosovo as well. The municipality of Bujanovac, with a 50-50 ethnic structure, or specifically with a 53 percent Albanian population, hypothetically could be viewed as a potential territory for exchange, but in the long term it would probably be a source of new problems and security risks.


The one Serbian municipality that might be the subject of exchange with Kosovo is Presevo with a 91 percent Albanian population. Apart from the majority-Serb municipalities of Zvecan, Zubin Potok, Leposavic and northern Kosovska Mitrovica, which, in the event of an agreement with Pristina, could be exchanged for Presevo, the majority-Serb Gora and Strpce would not be part of the scenario as they are not located in the Serbia-Kosovo borderlying belt and would disrupt the territorial and administrative integrity of Kosovo with a majority Albanian population, the same as Gracanica in the east of Kosovo.


The estimate of the population size in northern Kosovo is based on the data gathered in a registration of population in Serbian municipalities organized by the Office for Coordination Affairs in September 2017 and pertains only to the areas populated by Serbs, Gorani and Roma, but not the parts inhabited by Albanians. The total population living in those four municipalities is 42,021, while the number of Albanians in that territory is relatively small and does not play a major part in the conclusions of the analysis, the study authors believe.


Provided that Presevo with some 30,000 inhabitants is exchanged for the municipalities in northern Kosovo with around 42,000 inhabitants, Serbia would get roughly 12,000 inhabitants more. That, according to the authors of the study, may be considered a demographic “gain” for Serbia, which would also get about 1,000 square kilometers of territory by giving away Presevo in exchange for the municipalities in Kosovo’s north.


Another gain for Serbia from the exchange of territories and integrating northern Kosovo municipalities into its political and economic system would be the 0.3 percent of GDP or about 100 million euros generated in the territory of said municipalities. At the same time, Serbia would hand over 0.14 percent of its GDP created in Presevo to Kosovo. If the costs of the Office for Kosovo and Metohija totaling 47 million euros per year were included in the expenditures, that scenario would see Serbia with an annual profit of about 90 million euros.


The scenario of normalizing Belgrade-Pristina relations, without exchanging territories and the status quo scenario would not have any direct effects on the amount of Serbia’s GDP, because the municipalities of northern Kosovo are already integrated with Kosovo’s legal and political system.


The economic sustainability of the exchanged territories requires that three other terms be met, specifically the internal exchange of territories, settlement through ownership transformation and the restitution of state-owned, church and private property. The internal exchange of territories would entail ceding the tourist and sports and recreational facilities on Mt. Sara to Kosovo in exchange for a territory that could be physically connected to the municipalities of Kosovska Mitrovica, Lipljan, Leposavic and Zubin Potok.


At this time, the study authors say, the most adequate replacement for the facilities on Mt. Sara would be Serbia’s ownership of the entire Trepca mining complex, which is divided into two technological units – Trepca North with facilities in Serb-populated municipalities and a workforce of some 4,000, and Trepca South with some 5,500 Albanian workers. The Crnac and Belo Brdo mines belong to the municipality of Leposavic, as their entrances are in that municipality, but the ore is mined in shafts reaching into Serbian territory, into the municipalities of Raska and Novi Pazar, as well as the Zuta Prla mine and the Koporic strip mine.


The Stari Trg mine and flotation in Kosovska Mitrovica is rich in lead and zinc ore, while the mines in the south – Novo Brdo, Ajvalija, Badovac and Kisnica also have processing facilities. The lead smelters are located in Zvecan, while zinc smelters are in Kosovska Mitrovica. Trepca South includes the main Stari Trg mine, whereas the mines in the south, near Pristina – Ajvalija, Kisnica, Badovac and Novo Brdo, are currently not operational due to an equipment and raw material deficit. Estimates say that the lead and zinc ore reserves in the territory of Kosovo and Metohija total between 50 and 60 million tons, while about a half  – 28 million tons – belongs to Stari Trg.


In the majority-Serb northern Kosovo the reserves are estimated at just 6.5 million tons. If those total reserves are translated into pure metal, the estimates, according to the study authors, oscillate around three million tons of lead and two million tons of zinc, well as about 4,500 tons of silver. The estimated value of said reserves ranges from eight to 13 billion euros, taking into account gold, cadmium, bismuth, germanium and the reserves of other raw materials.


The ownership transformation of companies, as one of the conditions in the territory exchange scenario, would entail the restructuring of large infrastructural, power and industrial complexes according to the property principle. The process envisages the unbundling of technical and technological units and the formation of separate companies that would include their entire property and ownership of those facilities also owned by the non-Albanian population not from that state.


The study authors pointed out that the infrastructure and other complexes had not been adequately maintained since the late 1980s, thus the focus in the settlement should be on natural resources, i.e. mines, necessary for the operation of Trepca and Glogovac-based Feronikl, as well as on the lignite strip mines in Obilic.



Source: Beta