Kosovo Starts Trade War With Serbs Over Blocked Interpol Bid

(Bloomberg) -- Kosovo launched a trade war with its neighbor Serbia after failing to win enough votes to become member of Interpol, threatening years of efforts to reconcile the Balkan neighbors.

Kosovo, which declared independence from Serbia in 2008, is seeking recognition as a state in the international community, which its neighbor opposes. The two countries have been in talks since 2013 on improving relations so they can join the European Union and have even discussed a land-swap as a potential solution to their dispute.

That process hit a wall Wednesday after Serbia lobbied other countries to block Kosovo from being admitted to the international police network. Serb delegates jumped up and embraced each other when the vote went their way, calling it one of their "greatest victories.” Kosovo Deputy Prime Minister Enver Hoxhaj responded by imposing a 100 percent tax on imports from Serbia and said more measures were coming.

“Serbia is continuing its aggressive campaign against Kosovo in the int’l stage,” Hoxhaj Tweeted. “It is also undermining the normalisation process."

Serbian authorities won’t respond with counter-measures to what they see as a declaration of a trade war. They will instead try to help foreign companies operating in Serbia that also export to Kosovo, President Aleksandar Vucic said late Wednesday. He added that no new talks will happen until the tariffs are lifted.

Serbian Response

“They want to exert pressure on Serbia to win our unconditional capitulation and recognition of their independence. That will not happen,” Vucic said in a televised speech late Wednesday. “We understand that you consider Kosovo independent, but we do not.”

Tensions remain high between Serbia and Kosovo, which fought a 1999-2000 war that ended with a NATO bombing campaign that forced Serb troops out. Since Kosovo declared independence, Serbia, backed by its big international backers Russia and China, has obstructed its neighbor from joining international organizations, including the United Nations.

EU Foreign Policy chief Federica Mogherini, who facilitates talks between Serbia and Kosovo toward a lasting compromise, called on Kosovo to immediately drop the tax. Her message was supported by EU Enlargement Commissioner Johannes Hahn, who noted that the measure ran against the rules of Central European Free Trade Agreement, a trading bloc for countries that wish to join the EU.

“This act - which also hurts #Kosovo consumers and businesses - must be reversed immediately," Hahn wrote on Twitter.

Kosovo has accused Serbia of blockading some of its products, and Prime Minister Ramush Haradinaj said the new tariffs would remain until Kosovo is recognized.

Serbia is the biggest single origin of exports to Kosovo, followed by Germany. More than 2,500 Serbian companies export goods including food, drinks, chemicals and construction material to Kosovo, according to the Blic newspaper. The total value of Serbian exports to Kosovo was about 450 million euros in 2017, or about 3 percent of total exports. Kosovo exports about a ninth of that to its neighbor.

To contact the reporter on this story: Gordana Filipovic in Belgrade at gfilipovic@bloomberg.net

To contact the editors responsible for this story: Andrea Dudik at adudik@bloomberg.net, Michael Winfrey

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