EU reprimands Kosovo's move to close down Serb bank branches over the use of the dinar currency

PRISTINA, Kosovo (AP) — The European Union reprimanded Kosovo Tuesday over the unilateral closure of six branches of a Serbia-licensed bank, saying the move would negatively impact the life of the ethnic Serb minority living in northern Kosovo and damage Kosovo-Serbia normalization talks.

Kosovo police closed the branches of the Postal Saving Bank the day before in line with the decision to ban the use of the Serbian dinar currency in the country. They also confiscated 1.6 million euros ($1.74 million) and some 75 million dinars ($700,000), which the judiciary will later decide what to do with.

Since Feb. 1, the government required areas dominated by the ethnic Serb minority in Kosovo to adopt the euro currency, which is used in the rest of the country, and abolished the use of the Serbian dinar.

Pristina postponed the move for about three months, following pressure from the EU and the United States, concerned that the decision would negatively impact the ethnic Serb minority in northern Kosovo.

An EU statement from Brussels, which was emailed to The Associated Press, considered the move as “escalatory … against the spirit of normalization,” adding that such “uncoordinated actions" by Kosovo put chances of reconciliation “at risk.”

The State Department also was “disappointed” with Kosovo’s lack of coordination with international partners for the move, fearing it would escalate tensions.

“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,” said a State Department spokesperson in response to a query.

The British embassy in Pristina also warned that the move would “risk escalating tensions and making a long-term solution to the currency issue in Kosovo more difficult.”

The Postanska Stedionica Bank, or Postal Saving Bank, assured Tuesday that its clients’ deposits were safe, adding that ethnic Serb clients can still be provided with its services at the nearest branches or offices.

Serbian Prime Minister Milos Vucevic condemned the move and said in a statement Monday Kosovo’s Prime Minister Albin Kurti launched “his latest act of savagery which directly jeopardizes the survival” of the ethnic Serb minority in Kosovo.

“Why are Kosovo’s Serbs, the only community in Europe which cannot do business normally? Don't Kosovo Serbs have the right to salaries and pensions?” Vucevic said. He also accused the international community of tolerating Kurti's “pressure on Kosovo Serbs.”

Kosovar Finance Minister Hekuran Murati said everything was done in accordance with the law.

“There is justified suspicion that such activity was conducted without the proper financial license, something which is illegal and should suffer legal consequences,” said Murati at a news conference.

Murati said Pristina has offered alternatives but they were not accepted by Belgrade “because they have had other intentions, not aiming at helping citizens' life.”

Brussels and Washington are pressing both countries to implement agreements that Serbian President Aleksandar Vučić and Kosovo Prime Minister Albin Kurti reached in February and March last year.

The EU-facilitated normalization talks have failed to make progress, especially following a shootout last September between masked Serb gunmen and Kosovo police that left four people dead and ratcheted up tensions.

Most of Kosovo uses the euro, even though the country isn’t part of the EU. Parts of Kosovo’s north, populated mostly by ethnic Serbs, continue to use the dinar. Many Serbs there rely on the government of Serbia for financial support, often delivered in dinars in cash.

“In the continued absence of sustainable alternatives, this will have negative effects on the daily lives and living conditions of Kosovo Serbs and other communities eligible for financial transfers from Serbia,” the EU statement said.

Serbia's and Kosovo's chances of joining the EU one day are jeopardized by their refusal to compromise, according to the bloc’s foreign policy chief, Josep Borrell.

The EU again urged Kosovo and Serbia to return to the negotiating table.

Serbian forces fought a 1998-99 war with ethnic Albanian separatists in what was then the province of Kosovo. About 13,000 people, mostly ethnic Albanians, died until a 78-day NATO bombing campaign pushed Serbian forces away. Kosovo declared independence in 2008, which Belgrade doesn’t recognize.