Kosovo heads to polls as political deadlock threatens vital funds

By Fatos Bytyci and Edward McAllister

PRISTINA, Dec 22 (Reuters) - Kosovo will hold elections on December 28 after a year-long political stalemate that led to the dissolution of parliament and left a 1-billion-euro hole in the small Balkan country's shaky finances.     

Prime Minister Albin Kurti’s Vetevendosje party won the last election in February, but failed to secure a majority or find a willing coalition party after an acrimonious campaign. Many fear a repeat could throw Europe's newest state into further crisis, just four months before parliament must vote for a new president and as deadlines loom to ratify international loans. 

“These elections will be the most important ones in recent Kosovo history because they are coming after one year of deadlock, but also four months before a new president will be elected," said political analyst Artan Muhaxhiri. 

"If Kurti wins again with around 42%, all this deadlock will be repeated, because the gap between Kurti and other parties is huge, unbridgeable."

Polls are not made public in Kosovo, so there is little sign of how the vote will go. 

But it appears unlikely that any of the major opposition parties will be willing to form a government with Kurti, who they say has stoked tensions with Kosovo's ethnic Serb minority in the north, done little to improve living standards, and tarnished Kosovo's reputation abroad.

Kurti, who came to power in 2021, blames the opposition for the stalemate and remains publicly optimistic about winning the 500,000 "hearts" required to gain an outright majority. 

At a rally this week, he promised to increase salaries, spend one billion euros a year on capital investment and create a new prosecution unit to fight organised crime. 

“Now I believe that it has never been more realistic than now to have Kurti Three," he told local TV station Kanal 10 this month, using his term for a third mandate. 

YEAR OF POLITICAL PARALYSIS

Kosovo gained independence from Serbia in 2008 with U.S. backing, which included a 1999 NATO bombing campaign against Serbian forces waging a brutal campaign to crush an uprising by the 90% ethnic Albanian majority.

Despite international support since, the country of 1.6 million people has struggled with poverty, political instability and organised crime. Kurti's first tenure was the only time a Pristina government has completed a full term.

That instability was on full show this year, when it took lawmakers 73 votes over six months to elect a parliament speaker - a position that had to be filled before a winning party could try to form a government. 

Even then, Kurti could not pull together a majority and stepped aside to allow his ally Glauk Konjufca to try. When Konjufca failed, President Vjosa Osmani dissolved parliament and called the December elections.

"At the moment, the state isn’t effective. Everything here needs to change because nothing is functioning," said 79-year-old Pristina resident Shaip Gashi.   

VITAL LOANS DELAYED BY STALEMATE

The result has been dire for Kosovo's finances, which are already strained by European Union sanctions imposed over what the EU said was Kurti's role in fanning strife with Serbs in north Kosovo, where they form a majority.

The EU is set to lift those measures after Serb mayors were inaugurated following local elections held in October. 

Still, some 880 million euros ($1.03 billion) in EU funds for Kosovo's budget has been delayed, as has 127 million euros of financial support from the World Bank, including some aimed at strengthening health and education systems.

Those funds are urgently needed in one of Europe's poorest countries that falls short of its Balkan neighbours in both sectors. 

The World Bank told Reuters that 90 million euros of that support will be terminated if not ratified by the Kosovo parliament by February 13. Deadlines for the rest are in April and May. 

Some of the EU money may also be at risk, politicians have said. An inconclusive election could scupper all that money if a parliament is not formed quickly. 

"People are desperate to see things moving forward. They are struggling to pay for medicine and electricity," said Vlora Citaku from the opposition Democratic Party of Kosovo, which has campaigned on raising quality of life through healthcare and education and increased salaries. 

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(Reporting by Edward McAllister in Athens and Fatos Bytyci in Pristina; editing by Mark Heinrich)