Is Privatisation in Post-conflict Kosovo Possible?

Post-conflict Kosovo contains approximately 350 socially owned enterprises (SOEs). Formal privatisation of these SOEs is not possible since Kosovo is not a sovereign state and the United Nations Mission in Kosovo (UNMIK), despite being the ultimate authority in Kosovo, cannot legitimately effect permanent change of ownership upon Kosovo's SOEs. The solution to this problem has been to lease SOEs to private sector investors, therefore enabling private investors to take over control of an SOE while avoiding the need to determine true ownership of the SOE. The initial phase of privatisation offered SOEs to private investors under a ten year lease. This proved to be unsuccessful, attracting insufficient interest from private investors and was resisted by the incumbent management of SOEs. The second phase of privatisation using 99 year leases has been more successful; however, the overall scope of the privatisation program is limited by the fact that the majority of SOEs are not economically viable.