Kosovo government and European Union funds invested in northern Kosovo have, overall, failed to significantly support long-term economic stability in the north, according to a new policy paper by the Institute for Territorial Economic Development, InTER, and RTV Mir.

“The money was aimed at integrating northern Kosovo and supporting political leaders rather than at a strategic approach to economic development,” said researcher Jovana Jakovljevic at the report’s Prishtina launch on Tuesday.

After the end of the Kosovo War, Serbian-financed parallel structures continued to govern north Kosovo and Prishtina had little influence. In April 2013, a Brussels-brokered agreement between Kosovo and Serbia foresaw elections and the creation of four Serb-majority northern municipalities under the Kosovo government. The votes held in November 2013 brought the four municipalities—Mitrovica North, Zvecan, Zubin Potok, and Leposavic—under the de jure control of Prishtina (though Serbian structures continue to operate), creating conditions for the Kosovo government and the EU to provide financial assistance to local governments.

The report, titled “Do We Live Better? Effects of Financial Assistance to North Kosovo After the Brussels Agreement,” analyzed the impacts of three sources of funding following the agreement: the North Kosovo Development Fund (the ‘customs agreement fund’); exclusive funding to four northern municipalities allocated from the Kosovo Government; and EU grants specifically targeting beneficiaries in these municipalities.

According to the report, over 32 million euros have been allocated to 249 projects in northern municipalities from these three financial sources since 2013. Although some money has gone towards the business sector (such as EU funding for small-to-medium enterprises) the vast majority of funding has gone towards infrastructural projects that support short-term improvements in quality of life, such as road repavement and sewage systems.

“The selection of supported projects is questionable for all observed funds, especially in terms of incentives for economic development in north Kosovo,” the report reads.

The customs agreement, which established a fund financed by customs duty collections from “companies operating and goods destined to local population of the northern municipalities,” stirred controversy when implemented, with opposition activists claiming that it privileged northern municipalities over the rest of the country.  

“Do We Live Better?” argues that the customs fund has not contributed to increasing the accountability of local self-governments. “There is an evident lack of transparency in the Fund’s operation, primarily in publishing the goals, priorities and measures used to select projects,” the report says.

Although local leaders in the northern municipalities emphasize the importance of the individual projects funded by Kosovo institutions, “they mostly omit referring to the integration processes in Kosovo’s political and legal system.”

“We think that the local government representatives missed an opportunity to explain all of the changes in society and politics after the Brussels Agreement, especially after local elections and the establishment of local governments,” Jakovljevic said.

The EU was also critiqued in the report for its public outreach, and was recommended to strengthen its presence in the north “especially in public diplomacy and direct communication with the citizens.”

Libor Chlad, Head of Cooperation for EU’s Kosovo office, said that the office is taking the recommendations into consideration.

“You’re making great and valid points about how we can improve, but I must say that we have encountered a lot of a challenges when working with NGOs and businesses in northern Kosovo… some in regards to external circumstances—capability of local government institutions, the quality of regulatory environment, political pressures, legal uncertainties, and the commitment of the stakeholders.”

“We will continue to work with you. We are exploring new ideas, such as a the people-to-people approach–moving away from hardcore infrastructure and working more closely with people,” Chlad concluded.

“Do We Live Better?” was authored by Jovana Jakovljevic, Sanja Sovrlic, and Marija Milenkovic and was funded by the Kosovo Foundation for Open Society, KFOS.

*A previous version of this article incorrectly attributed the first quote to Marija Milenkovic. The attribution has been corrected to Jovana Jakovljevic.