Economic Cooperation - Country Assistance Policy

1. Relevance of Assistance 
(1) The Republic of Kosovo (hereinafter referred to as “Kosovo”) was placed under the interim administration by the United Nations in 1999 following the Kosovo conflict during the 1990s. In 2008, the country proclaimed independence from the Republic of Serbia (hereinafter referred to as “Serbia”).
The economy and society of Kosovo have been historically heavily dependent on the former Yugoslavia and Serbia, making its socio-economic infrastructure fragile. As a result, the country still remains among the countries of lowest income in Europe.
Situated in a region that aims to integrate into European path through EU membership, Kosovo needs to develop as a stable country through peaceful cohabitation of multi-ethnicities and significant economic-social development. The peace and stability of Kosovo is essential for not only in the Western Balkans but for the entire European region. 
In this regard, Japan launched its humanitarian and recovery assistance for the country in 1998 through international organisations, and direct bilateral assistance after the establishment of diplomatic relations in 2009. Following the establishment of the Embassy in Kosovo in 2020, Japan has intensified the assistance to Kosovo on economic and social reforms, and has been cooperating to strengthen its relations with neighbours, including Serbia, through cooperation in the Western Balkans based on the "Western Balkans Cooperation Initiative" announced in 2018.

 (2) At the time of independence, the country made a progress in designing systems, including legal framework, under the support of the United States and the EU. However, the establishment of the rule of law, including the improvement of operational and management capabilities and inter-ethnic harmony is still the goal to be duly achieved. The country is also focusing on the consolidation of social infrastructure including education, health and medical care and sustainable economic development, as well as measures against environmental pollution and climate change which are necessary for EU membership. The “National Development Strategy and Plan 2030” (NDS2030), which was developed in 2023, indicates high poverty, unemployment rates and gender inequality especially in rural areas. Kosovo is engaged in the reforms based on the following major pillars: 
・economic transformation through digitalisation 
・sustainable economic development through the development of railway networks and other transportation infrastructure connecting within the country and neighbouring countries 
・quality education and health services 
・human development through creating inclusive labour market and employment 
・strengthening rule of law, public safety and security and good governance. 

(3) Japan supports Kosovo in its efforts to achieve the Sustainable Development Goals (SDGs) especially in the areas of peacebuilding, education, gender equality, environment and climate change by making the best use of advanced technology and knowledge. Japan will help Kosovo promote sustainable nation-building process in coordination with the EU and the United States, and further strengthen bilateral relations with Kosovo as a friend of Japan which shares fundamental values and principles.

2 Basic Policy of Assistance: Promotion of Sustainable Nation-building through Consolidation of Economic and Social Infrastructure and Human Resource Development, Peacebuilding and Stabilisation of Western Balkans 
Japan supports Kosovo’s efforts in its sustainable nation-building and promoting peaceful cohabitation of multi-ethnicities through consolidation of economic and social infrastructure for all citizens of Kosovo, human resource development and strengthening good governance. Furthermore, under the "Western Balkans Cooperation Initiative," Japan intends to facilitate to solve the Western Balkans’ common issues to boost regional development, thereby encouraging the enhancement of relations among regional countries tandem with stabilisation and integration of the region into European path.

3 Priority Areas
(1) Consolidation of Economic and Social Infrastructure
It is indispensable for Kosovo to further consolidate its social and economic infrastructure,  business environment, education, health and medical care, domestic transportation as well as transportation connecting neighboring countries for the sustainable nation-building. Japan extends the assistance through technical cooperation and Grant Assistance for Grass-roots Human Security Projects, while cooperating in the development of the private sector focusing on areas where synergy with the assistance can be achieved. In addition, Japanese companies’ advanced technology and knowledge would be utilised for the bilateral economic cooperation based on the “Western Balkans Cooperation Initiative.”

(2) Enhancing Good Governance and Administrative Capacity
In the process of developing as a multi-ethnic society, tasks of fostering human resources in administrative agencies to improve the quality of services and diminishing the regional disparities are continued challenges for the Government of Kosovo. Mainly through technical cooperation, Japan aims to strengthen the capabilities of various administrative agencies and to contribute to minimise regional disparities. The scope of cooperation covers not only administrative agencies but also aims to foster talented human resources in general for the sustainable development of the country.

(3) Advancing environmental infrastructure and the capacity of management to combat environmental pollution and climate change
To support Kosovo’s efforts of transition to clean and efficient energy aspiring for energy security and adaptation for climate change, Japan assists Kosovo to reinforce its efforts in environment and climate change adaptation through cooperating in waste management, water resource management and air pollution control by utilising Japan's latest technology and knowledge, while encouraging cooperation within the Western Balkans.

4. Points to be considered
(1) For the strategic and effective use of ODA, ODA Task Force should be actively engaged during the project development phase to organically combine projects of different schemes and methods to enhance synergy.

(2) While approximately 90% of the population in Kosovo is from Albanian community, it is a country with multi-ethnicities, mixed with Serbs, Turks, Bosniaks, Goranis, Romas, and other minorities. In regard, selecting target areas of projects is expected to be helpful to the reconciliation of ethnic communities, especially in the north of Kosovo where the majority of population is Serbs and the friction between ethnic communities has brought international attention. Taking into account that there are municipalities, such as the capital Pristina, which are positive for the interaction with Serbian municipalities and are striving to promote inter-ethnic harmony within their municipalities, cross-border projects between municipalities that may accelerate the inter-ethnic cooperation and interaction could be considered during the project development phase.

Annex: Rolling Plan