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Kosovo’s new Highway and Prospects for Economic Growth
Kosovo's new Highway and Prospects for Economic Growth
The Government of Kosovo's (GoK) €700 million contract with the American-Turkish consortium Bechtel-Enka to build the Morine-Prizren-Prishtina-Merdare motorway is publicly promoted as a step towards Kosovo's economic growth and a geopolitical unifier with Albania. President Fatmir Sejdiu has called the 117 km long motorway Kosovo's “hope for faster economic development” while Prime Minister Hashim Thaci referenced it as embodying the “physical and spiritual connection” with Albania. Policy-makers report the project will bring significant benefits by giving Kosovo faster access to world markets via Albania's Port of Durres, linking Kosovo to a regional transport network, creating jobs and facilitating the rationalization of agriculture and other comparative advantages.
However, evidence backing these claims appears controversial and the project's planning process has been problematic from the start. In the first instance, the GoK's cost-benefit conclusions have not wholly been made clear to the public, nor do they appear statistically or theoretically justified. National economic experts, international financial institutions in Kosovo, civil society actors and some GoK officials have publicly questioned the project's validity and necessity. Secondly, the Minister of Transport, Fatmir Limaj, and the ministry's Head of Procurement, Nexhap Krasniqi, are currently under investigation for corruption related to fraudulent public procurement practices. Throughout Prishtina, posters literally depicting public officials as pigs surrounded by Euros on the proposed highway reflect the symbolic nature the project has taken on. Lastly, the motorway's route is not finalized, leaving the issue of expropriation costs for private land uncertain and therefore actual overall project costs likely to overrun the original contract estimate.
The current situation represents the poor and complex environment in which strategies for Kosovo's economic development occurs. The dependence on international donors, the poor legal system and the incidents of high-level corruption presents several opportunities for oversight and mismanagement in national project planning. Consequently, the approach to public investments is characterized by a lack of or disregard for technical analysis and instead opting for costly politically motivated projects or those where transparency is easily compromised. Hyper-nationalism and geopolitical aspirations are additionally leading to what could only be seen as a perversion of national economic interests. Kosovo now is committed to build a highway with money it does not have and that is not guaranteed to bring drastic economic improvements, at the expense of maintaining the infrastructure it already has.
Kosovo's delicate economic status demands precise decision-making for public capital expenditures. With a GDP per capita of €1760, 35-40% unemployment and 40-50% of the population living in poverty, Kosovo is the poorest country in Europe. Thus, the challenge for the GoK has been to prioritize public projects geared towards generating growth while improving quality of life within a limited budgetary framework. Although the GoK appropriately prioritized investing in infrastructure for stimulating growth, its decision to build the motorway, also referred to as the Patriotic Highway, has become a divisive issue as the public does not seem convinced of its stated benefits. In light of the situation, this policy brief serves three purposes. First, it introduces the GoK's claims on how it expects the motorway to economically benefit Kosovo. Second, the brief discusses the theoretical debate surrounding highways and prospects for economic growth, taking into account the local, national and regional dynamics that influence economic development and private investment. Lastly, this brief offers several recommendations to policy-makers, which are summarized below:
To the Government of Kosovo:
• Present the land use and development plans which clearly show how the public investment in constructing the motorway will lead to economic and social improvements and benefits in Kosovo.
• Ensure strict and consistent project oversight, management and evaluations to prevent the misuse of funds and keep the public informed through regular public reporting.
• Prevent the unregulated development of businesses and housing in areas immediately next to the actual highway in order to ensure the service levels provided from it are not downgraded and to protect the safety of citizens.
• Immediately present the plans to address the existing maintenance backlog for rural and secondary roads and future plans to maintain the integrity and the value of Kosovo’s road network.
