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Mining a brighter future

Despite mineral wealth and an energetic populace, Kosovo's economic recovery will be a tough haul.

By SUSAN TAYLOR MARTIN Times Senior Correspondent

© St. Petersburg Times, published October 31, 1999

NOVO BRDO, Yugoslavia -- For 2,000 years, the mine in this northeast Kosovo town has been producing some of the world's most sought-after treasures. Gold. Silver. Lead. Zinc.

Can it now produce a miracle?

Hysen Vrajolli and 144 other men are convinced it can. Since NATO's war against Yugoslavia ended four months ago, they have worked without pay to restore the crumbling, antiquated mine to its status as one of the richest in Europe. They see the Novo Brdo mine, and dozens of other big mines and factories like it, as the key to Kosovo's prosperity.

"In not so many months, Kosovo will be the showplace of the Balkans," boasts Vrajolli, the mine's 40-year-old director.

International experts aren't so sure. While praising the energy of people like Vrajolli, they fear that many Kosovars have romanticized the past and have unrealistic notions of what it will take to rebuild their devastated economy.

"There is a terrible problem with memories of past glory in terms of industrial development," says Rory O'Sullivan, an official of the World Bank in Brussels. "When the factories and mines were spanking new, there were wonderful opportunities for the creation of wealth and employment, but the fact is they're in terrible shape now."

Kosovo's mines account for up to 70 percent of all the mineral wealth in Yugoslavia, and are seen as one reason Yugoslav President Slobodan Milosevic was so determined to wage war over the region. But to get the gold mines and other major industries running profitably again will take huge amounts of private foreign investment. And that is unlikely to come as long as Kosovo remains part of Yugoslavia or Milosevic stays in power.

Instead, experts say, Kosovo's redevelopment in the next few years will occur on a much more modest scale -- in agriculture, which supported 60 percent of all Kosovars before the war, and in small- and mid-size businesses.

For the time being, most of the cost of rebuilding will rest with the United States, the European Union and dozens of international aid organizations. Thus far they have pledged a total of $2-billion, with one big question hanging in the wind: How long will it take before Kosovo can do without help?

"We would foresee a four- to five-year program of aid," O'Sullivan says. "The key issue is what happens in the region. If the problem in (Yugoslavia) is resolved . . . then there is absolutely no reason for Kosovo not to stand on its feet. . . . But for the entire region there is an enormous way to go."

When talking about Kosovo, comparisons are inevitable with nearby Bosnia-Herzegovina, another victim of Milosevic's campaign to make his Serbian people first among Yugoslavs.

After a majority of Bosnians voted for independence in 1992, Serbs, Muslims and Croats fought a brutal, three-year civil war that left the country in ruins. Since 1995, the United States and other nations have poured in $5-billion worth of aid that has rebuilt homes, roads and bridges but done little to produce a self-sustaining economy.

As most observers see it, Kosovo has some advantages over Bosnia when it comes to redevelopment. Kosovo is smaller -- about a fifth the land area -- and has half as many people. Moreover, the fighting in Kosovo lasted only about a year, meaning that damage, while extensive in many places, was not as great.

Kosovo's biggest strength, though, may lie with the 1.9-million ethnic Albanians who make up 90 percent of its population.

In 1989, Serbs banned Albanians from most public-sector jobs including those in schools, hospitals and factories. Forced to fend for themselves, the Albanians developed a parallel economy, showing the resourcefulness that is serving them well now that the Serbs no longer control Kosovo.

"The level of entrepreneurial spirit we've seen is incredible," says Ben Atkins, spokesman for the European Bank for Reconstruction and Development. "Ninety percent of the refugees have returned, most of them are getting their lives back together and opening up businesses again."

Most outsiders agree that the Albanians in Kosovo have worked harder and have been less reliant on handouts than the Bosnians were at a similar stage in their recovery. However, Bosnia had one great advantage over Kosovo. When its war ended, it already was an independent country with its own government, albeit an ineffective one.

"The problem in Kosovo is more difficult because Kosovo has nothing," says O'Sullivan of the World Bank.

As a now-autonomous part of Yugoslavia, Kosovo lacks not only a government but the very basics of an economy. There are no banks, meaning all transactions are in cash. There is no system for paying public employees or billing for services like water and electricity.

And in a major barrier to redevelopment, there are no property laws. On paper at least, most of the factories and other large enterprises still belong to the Yugoslav government or Serbian companies. However, the Albanians do not recognize Serbian law or ownership, making it difficult, if not impossible, to sell the plants or attract foreign investment.

A Swiss company's effort to take over two steel mills -- which could employ 800 people -- has been blocked by a dispute over whether the deal should be conducted under Serbian or Albanian law.

"No company is going to invest a large amount of money in Kosovo until they understand what the local laws are," says Dominique Larsimont of the European Commission Task Force on Kosovo. "It's very difficult to promote business in such a vacuum."

In the meantime, the task force and others are trying to get Kosovo's big agricultural industry back on track and encourage the growth of private enterprise.

There are programs to clear land mines from the fields, and to replace livestock and tractors stolen by the Serbs. The first bank is due to open in November, making loans to restaurants, boutiques and other small businesses. Taxes are being collected on goods coming into Kosovo, and those will help pay public employees and restore pensions for the elderly.

Only when a basic economy is in place will officials turn their attention to a difficult and emotional issue: Are the once-great industries like the Novo Brdo gold mine worth the money and effort it will take to get them running again?

For the 145 men here, there is no debate. Nor is there any question about their willingness to work six days a week without a deutsche mark of compensation.

"We've gone nine years without pay," says Vrajolli, the director. "We can wait nine more months."

In 1989, the ethnic Albanians at Novo Brdo and other mines in Kosovo finally got fed up. Although they outnumbered the Serbian miners 9 to 1, they were sick of the Serbs getting higher pay, more promotions and better working conditions.

The Albanians went on an eight-day hunger strike to call world attention to the oppression they faced. The result: Within a year every last Albanian employee had been fired.

Hysen Vrajolli, a college-educated engineer and the mine's assistant director, spent the next nine years toiling as a farmer. His brother, who also worked at the mine, picked up what odd jobs he could. But over the years they kept in touch with their former colleagues. Last June 24, after NATO troops entered Kosovo and Serbs abandoned the mine, the Vrajollis and three dozen others got their first look inside in almost a decade.

What they saw shocked them.

Much of the equipment had been stolen and most of the rest was rusted and broken. Some of the mine shafts were impassable due to cave-ins. As a result of neglect and mismanagement, the mine's output had dropped from 18 tons a month before 1989 to just three tons in recent years, according to records they found.

"The Serbs didn't know how to run the mine," Vrajolli says. "They just liked to take -- they didn't put anything back into it."

The men immediately set to work, cleaning and repairing as much as they could without any money. They furnish their own bus transportation to and from Pristina, 20 miles away, and split the cost of the soupy stews that are dished out for breakfast at 8 a.m. in the drafty old cafeteria.

They are so eager to get to work on these cold autumn mornings that they literally run down the mountainside to the entrance of the No. 6 mine shaft, bored into the earth some 1,200 feet below the summit. Here, sloshing in the dark through calf-deep water, they are trying to move tons of fallen rock that lies between them and the riches inside.

While the men of Novo Brdo clearly think the mine can be profitable again, it is also obvious they have a deep sentimental attachment to it. They laugh at the idea that Milosevic, an ex-communist, was most interested in Kosovo because of its many Serbian religious sites.

"This is what the war was really fought about," says Vrajolli's brother Rizah, gesturing toward the shaft. "Milosevic didn't have churches on his mind -- he had mines on his mind."

Discovered 2,000 years ago by the Illyrians, the ancestors of today's Albanians, the mine contains gold, silver, lead, zinc and pyrite. There are 10 other mines like it in northeast Kosovo, all potentially rich but all in serious disrepair. Moreover, there is no place now to process the raw ore and separate the gold and silver from the other minerals.

Although gold prices have started to rise, experts question whether Kosovo's mines can ever again compete with those in South Africa or other parts of Europe.

"It's a very, very murky economic situation," says O'Sullivan of the World Bank. "Their capital assets have been severely run down and very substantial investment will be needed. People who have studied the large enterprises in Kosovo say that they are much worse than the worst seen in the former Soviet Union, which is quite an extreme statement."

The fate of the mines is also complicated by the fact that it is not clear who owns them -- the Yugoslav government or the people of Kosovo -- and whether they can be sold. While the legal questions are sorted out, some have proposed reopening the mines with public money -- an idea the World Bank strongly opposes.

"We've seen too many examples of state-owned enterprises not run efficiently and we're back into the old problems," says O'Sullivan.

The miners and most other ethnic Albanians are pushing for independence from Yugoslavia, saying Kosovo would attract more foreign investment if it were a separate country. But independence remains controversial.

"On the one hand, there is the driving energy that would come from the dynamism of the people," O'Sullivan says. "But on the other hand, independence might also lead to increased costs in terms of an army. Countries can sometimes spend substantial parts of their budget on defense."

Regardless of what happens, experts agree that Kosovars would do well to forget about massive reindustrialization in the next few years and focus instead on developing smaller enterprises, such as factories that make bricks or process fruit into jam. The overriding goal, though, is to convince all of the Balkan countries -- with 55-million people -- that they would make a far more attractive market for outside investors if they could resolve their political and ethnic problems.

"One theme we've got to push," says O'Sullivan, "is that the countries themselves must get more determined to go out and do things for themselves and not wait for things to be pushed on them from the outside."

That's exactly what the miners say they are doing in their efforts to restore the Novo Brdo mine to its former glory.

They have asked the Serbs to come back and work alongside them, they say, but the Serbs have refused.

"They won't work without being paid," Hysen Vrajolli says. "But we will, because this is our future."

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