US, EU and Serbia Condemn Kosovo’s Closure of Serb Banks

The EU and US have questioned Kosovo’s commitment to dialogue with Serbia after it closed six Serb bank offices under a ban on cash transactions in any currency other than the euro.

Kosovo faced a chorus of criticism on Tuesday for closing six Serbian bank offices, a move the United States and European Union said cast doubt on the country’s commitment to resolve relations with Serbia through EU-mediated talks.

Police on Monday shut down six premises of Serbia’s Post Savings Bank in four Serb-majority municipalities in northern Kosovo, acting on an order by the Central Bank banning cash transactions in any other currency other than the euro.

The Serbian dinar continued to be used extensively by Serbs in northern Kosovo even after Kosovo declared independence from Serbia in 2008, almost a decade after NATO bombs drove out Serb forces accused of atrocities during a counter-insurgency war.

Serbia’s pointman for Kosovo, Petar Petkovic, condemned the bank closures as “a violent attack on the dialogue itself” aimed at causing “unrest and chaos”. The main Belgrade-backed Serb political party in Kosovo, Srpska Lista, said it was carried out by police “armed to the teeth”.

The EU called the move “escalatory”, saying it was made without any prior notification or coordination. The closure, it said, “undermines Kosovo’s good faith in achieving normalisation of relations through the Dialogue”.

The US, Britain and the Organisation for Security and Cooperation in Europe, OSCE, joined the chorus of disapproval.

“Issues associated with these offices have been the subject of lengthy discussions under the EU-facilitated Dialogue,” a US State Department spokesperson told BIRN, saying that the move “undermines perceptions of Kosovo’s good faith in resolving outstanding issues with Serbia” through that dialogue.

“The United States reiterates its clear concerns about the implementation of the amended Central Bank of Kosovo regulation that restricts the import and use of the Serbian dinar in Kosovo,” the spokesperson said in an email on Tuesday.

The closures came a week after Kosovo’s Central Bank announced that a three-month transition period for its euro-only cash transaction policy had ended. Besides closing the branches, the police confiscated 1.6 million euros and over 74 million Serbian dinars.

Kosovo Interior Minister Xhelal Svecla said the closures were about “the rule of law and order”.

“I congratulate all the institutions for the cooperation and success shown,” he wrote on Facebook.

Kosovo had announced the dinar ban on February 1. On May 19, the EU’s chief mediator between Belgrade and Pristina, Miroslav Lajcak, said he had hosted negotiations on cash operations but that no agreement had been reached.