Tagarchief: Kosovo

April 2001

April 2001

April 2001

Emerging flashpoints Q1 2001

Conflicts anno 2001

The world is still ridden with several conflicts, conflicts which continue since a number of years. Or conflicts which seemed to have diminished but flared up again. The world has not become any more secure since the end of the super power stand off. On the contrary the world has become less stable and prone to new and enduring conflicts which are out of control. International diplomatic pressure can not end or even mediate in these conflicts. Any mediation is all to often simply used to improve the situation of all parties involved. It is a tactical decision to join any mediation or negotiations and not a decision to end the conflict.

Nearly all continents on the earth are victim to one or more conflicts. And the poorer the area the more likely a conflict will be present or about to start. Conflicts are not about politics anymore, they are about power, money, ethniticity and/or religion. This makes the majority of the conflicts even more brutal and long lasting.

To name a number of conflicts, on the Indian sub-continent, the fight between the Tamil minority, the LTTE, and the government in Sri Lanka. The fight between the Kasmiri independence movements against the Indian government. The fight in Afghanistan between the Pushtun Taliban and the coalition of movements in the northern alliance. And the communist insurgency in Nepal, which is getting worser every month.

In South America, in general there are problems with the drugs/criminal organisations which undermine the countries in the northern part of South America. And the more serious problem, namely, the fight between two leftist organisations, the FARC and the ELN, againt the government in Columbia.

The former territory of the Soviet Union. The fight between the Chechnian minority against the Russian government in Chechnya. The fight in Uzbekistan, Kyrgyzstan and Tajikistan against the IMU, an islamic movement fighting for the establishment of an Islamic state in Uzbekistan.

The problems in South-East Asia and Pacific Asia. The fight between the Karen and Shan minorities in Myanmar against the government. And the regular clashes at the border with Thailand between the Myanmar army and the armed forces of Thailand if the Myanmar security forces cross the border in pursuit of the Karen and/or Shan resistance movements The fight in the Philippines between the government and the Islamic/Moro movements in the south of the country. And the Philippines are facing a resurgent communist party, NPA, who are gaining strength and are increasing the actions against the government, often in cooperation with the Moro movements.

The African continent is facing probably the most intensive and deadliest conflicts.

The fight in Guinea between the Guinean armed forces and rebel movements out of neighboring Sierra Leone. The fight in Sierra Leone between the government with support of the ECOMOG and the forces of the RUF. The socalled first Great War of Africa in the Democratic Republic of Congo, DRC. The DRC is deeply divided by several movements with external support who fight eachother for the control of the country and its wealthy resources. The fight in Uganda between the several opposition movements and the government who want to eliminate the current government. The struggle between the Tutsi dominated government and the surpressed Hutu majority in Burundi. And finally the decade long fight in Angola between the government controlled MPLA and the rebellious UNITA.

These are the largest and intensive conflicts in the world and the world seems to get a couple of new conflicts added to the already to long list. Beside the here mentioned conflicts there a number of conflcts which are relatively small and are therefore not listed . Never the less these conflicts are dangerous and deadly but will probably be contained, remain small of scale and probably have a chance to be ended on the short term

The new or better intensified conflicts are on the Balkan, in the Middle East and in Indonesia. And these might if Murphy’s Law has a part in it become really dangerous and involve more countries.

Balkan

The last decade has not been a peaceful decade on the Balkan. The fragmentation of Yugoslavia did not happen without any problems. With the exception of Slovenia, all other new countries experienced problems in becoming an independent country. At first the problems with the Serbian dominated government in the former Yugoslavia about the establishment of an independent country. And secondly, there after the worsest of both, the internal struggles between the several ethnic groups in the societies of Croatia and Bosnia.

The last victim of this kind of conflict is Macedonia. The Albanian minority in the country with rather large support from Albanians out of Kosovo, and probably even on their instigation demand to be equally treated by the Macedonian government.

Another UCK kind of army/movement has become active in Macedonia. This organisation came out nothing. It was established within about two weeks. They call themselves, National Liberation Army, NLA. The NLA is probably led by Albanians out of Kosovo but is recruited mainly in Macedonia.

The first operation of the NLA was at the same time the birth of the organisation. The NLA occupied some hills in Macedonia and started to attack a couple of towns, Tetevo and surroundings, with long range ineffectual shootings. The NLA is hoping to receive massive support from the Macedonian-Albanians in their fight against the Macedonian government. The Macedonian-Albanians have until now an attitude of wait and see what is going to happen. Even if they support the idea behind the actions of the NLA. At the moment they are not certain about what to do, they support them because they are Albanians but do not yet accept the violence they use.

The reaction of the Macedonian government has been gradual. At first the Macedonian government reacted with police forces to end the problem but later they sended army units with heavy equipment to defeat the NLA. In the beginning the police and army forces returned fire from the build up areas and did not enter the mountains where the NLA was firing from. Attempts to seal the area were made but they were not be very succesful to defeat the NLA. Later on the Macedonian forces were moving into the mountains where they trapped the NLA. The strength of the NLA force which is fighting the governement is estimated from as low as 50 fighters to as many as 300 NLA fighters. As the Macedonian army moved into the area the majority of the NLA fled the area but a part remained and digged themselves in. This will be however a matter of time until they will be removed. The use of the heavy weapons have been limited until now for the danger of civilian casualties and not to receive any comments of the media and the west that they were using excessive and indiscriminatory violence to force out the NLA.

The KFOR in Kosovo is at the same time busy to seal of the border between Kosovo en Macedonia to make any support out of Kosovo difficult if not impossible.

The danger of this new action of the NLA in Macedonia is the idea behind these new operations. They are not fighting for equal rights, the Macedonian-Albanians are supposedly treated as second class civilians which they are certainly not, they have been treated different in the past but since then the situation has improved and will continue to improve.

The NLA is essentially having a hidden agenda. They want to create a great Albania, consisting out of the Albania, Kosovo, the territories with a large number of Albanians in Macedonia and the Presevo-Medevo area in Serbia which is also inhabited by a majority of Albanians.

These ideas were already visible in the Kosovo conflict but was downplayed by all involved parties. The NLA is planning a replay of the Kosovo conflict, first start a civil war, which includes the help of the whole population and there after create large number of fugitives and stories of massacres to force the international community, read NATO, to intervene and create a defacto independent new country.

The family/clan structure of the Albanian society, with the vendetta thinking, will promote the support of the NLA but the price paid could proof to be to high.

It will be not that easy this time to get the support they had in the Kosovo conflict. The Albanians had in Kosovo the advantage of being the victim of the bad Serbians, a long time of suppression and a number of years of peaceful resistance.

The cards in Macedonia are totally different, it is true the Albanians were suppressed in the use of their own language and culture just after the beginning of Macedonia as an independent country. But at the moment there had been made progress to the improvement of the conditions of the Albanians in Macedonia. They can use their own language, have their own schools, even an university, can live according their own customs, have a large political freedom in their own region and are represented in the national government. So they are hardly the second class civilians the NLA claim them to be. They have received everything short of an independent Albanian state from the Macedonian government.

The NLA can and will start a new guerilla war in Macedonia, get even some support out of the local population and inflict damage to the government and the relations between the moderate Albanians and the government but they will not be as succesful as in Kosovo. Militarily and politically they will be much weaker and need to fight on their own, with the only supporters in Kosovo and Albania proper. They might have large stocks of weapons and ammunition in Kosovo but fighting a long conflict is an expensive business and the resources are limited.

They certainly will not receive international support and even large number of refugees will not impress that much anymore, as they can only go to Kosovo and Albania and live over there in poverty. And most importantly the refugees, Albanians will be blamed for their own miserable position. But considering the policy and objective of the NLA movement they will not care to much about the well beingof the local population as they consider their objective as the higher value, and much more important to achieve.

The problem of this conflict is that if the impossible should happen, the desintegration of Macedonia, then you would get an area wide conflict. Several countries would want to claim a part of Macedonia, and there would be several overlapping claims. The following countries would be willing to claim a part; Albania, Greece, Bulgaria and Serbia. Greece is the strongest of the four, but alliances could make the conflict really nasty and long. This is the large scale scenario.

The small scale scenario is that the NLA will continue their war against the Macedonian government, involve it in a longer guerilla war and some how achieve to gain their own nation or a greater Albanian nation with parts of Macedonia. This will leave a crippled Macedonia behind with the neighboring countries aspiring also some territorial changes. In the end leaving an economic unviable nation behind. Or ofcourse that the NLA can get support from other Albanians and even Albania proper and pull these two countries in a low to mid intensity long drawn conflict. With both sides getting as much support as possible from other countries. And eventually drawing them into the conflict.

The only policy to implement for Macedonia is to defeat the NLA rebel forces and to win the hearts and minds of the Albanians. The defeat should be intelligent as a scorched earth policy and to much killing of civilians will only increase the strength of the NLA. The hearts and minds policy should give the Albanians the same rights and an equal treatment in Macedonia. In this case it is benificial to do so as a generous attitude is te only way to built a lasting peace. But the NLA or violence in general is unacceptable as any negotiation on the basis of the threat of violence will only increase the demands of Albanians, and they will never get enough whatever they are offered.

Middle East: Israel and the Palestinian question

The much promising peace process in the Middle East collapsed after the Al Aqsa intifadah got on his way and the majority of the cooperation between the Israeli government and the Palestinians ended. The mutual cause, the achievement of peace in the region, ended as the insecurity in Israel and the frustration in Palestine took over control.

The peace process which was already slowed down because of the lack of progress in the implementation of the accords which were agreed upon on during previous negotiations. The socalled big offer of former prime minister Barak to the Palestinians was an unacceptable offer for the Palestinians, Arafat. They could have never agreed to that as East-Jerusalem, the return of the Palestinian fugitives from the neighboring contries and the return of 90 % + of the West Bank without conditions are an absolute minimum which should be fulfilled.

The visit of Ariel Sjaron to the Temple Mount, Al Aqsa, was the sign for the Palestinians to show their frustrations with Israel and the peace process. The escalation of violence in the time following the incident destroyed all further hope on a fast and easy end of the Israeli-Palestinian conflict.

The Palestinians first escalated the violence by attacking several kibbutz and Jewish settlements on the West Bank. They fired with assault rifles/machine guns at those places and the Israelis reacted harshly at the attacks but by now the Palestinians are preparing another kind of intifadah. The Palestinians want to end the attacks for the moment and change their tactics and have another peaceful, if you can call it that way, resistance. The Palestinian people should be involved again to make life very hard for the Israeli security forces. A popular revolt without using violence is always very difficult to control. It will take a higher toll on the Palestinians but the security forces will get all the blame if there are any casualties.

From a media viewpoint this strategy will bring them a good press and put Israel in the corner of the ruthless and suppressive occupation power. The effectiveness of the attacks of the Palestinians, or better of the Tanzim and the Hamas, was not very high. It has not been very damaging for Israel only irritating and it gave them an excuse to close down the Palestinian territories, destroy the local economy and suppress all resistance with all means available. This means the use of armoured forces and rocket launching helicopters. Not very appropriate to defeat the Tanzim and the Hamas but very impressive. The Palestinian case was however not be promoted by the agression of the Tanzim and the Hamas and it even did not bring to much international support. Even no widescale Arab support, only words that the Arab nations supported the Palestinian claim and position but no real support.

That is probably the main reason why the Palestinians, the Tanzim, decided to change directory of their actions. Peaceful resistance is less impressive but much more beneficial to the cause.

Any public statements that the Palestinians will return to violence on the very short term as a reaction to any Israeli attack on Palestinian people and property is mere a public relation play to garner more support in the population and to satisfy the hardliners in the PA.

At a later stage the Palestinians can always return to a more aggressive position towards the Israeli security forces, especially if they were to use the succesful tactics which were used by the Hizbollah in Lebanon. But at this stage it would be to early as the Israeli position is still to strong and would first need to be softened up.

This will deliver international support and progress for the Palestinian cause. And it will put Israel in a worse position militarily and politically, undermine the moral of the security forces and the Israeli society as an end to the Palestinian uprrise would not be feasible and this would improve the position during any negotiations. As peacefull resistance is not really violence, it is just very uncomfortable and difficult to deal with. The Palestinians would to be protrayed as the good guys, and civil disobedience and peaceful demonstrations make this possible. The Israeli security forces will inevitably overreact and use excessive violence and will be portrayed as the bully and occupier.

To really reach this the Palestinians, Palestinian Authority, have to create a bigger difference between the Palestinians, PA and the Tanzim and the Hamas. The Hamas is having a different ideology and will continue to use violence, bomb assaults, against the Israelis. This would be bad for the PA in any possible negotiations but on the other hand beneficial to keep the pressure on Israel. A twin track policy, uncoordinated and without any relations between eachother what so ever, could be the best for the Palestinians on the medium to long term and not considering the costs in human life. The Hamas as the uncontrollable religious fanatics and the PA as the moderate and reasonable opposite.

The continuation of the violence, shootings, and even possible incursions of the Hizbollah would be on the other hand undermining the Palestinian position. It would deliver the security forces an excuse to use all means available and could even lead to the involvement of Syria in the conflict. A widening of the conflict to the neighboring countries would be just as useless as the continuation of the violence. It will bring no international support to the Palestinian cause, it will only be beneficial to the Israeli position.

A new conflict in the Middle East is always possible but this should not be overestimated. An Israeli attack in response to an act of terror of the Hizbollah on Syrian targets might call for a Syrian reaction. The military potential of Syria is at the moment however limited and certainly not capable of fighting against the much superior IDF. So an escalation is not very likely. And in the first place Israel will only attack Syrian targets in Lebanon if they might pose a direct danger to Israel or the IDF and not out of retaliation. The political consequences of an attack might be worser that the military consequences.

That is why the target selection in Lebanon has to be very careful and only aimed at the Hizbolllah and Lebanese targets more or less connected to the Hizbollah.

Indonesia

The problems in Indonesia are not only limited to troubles in the outer provinces/islands were independence and autonomy movements are putting heavy demands on the Indonesian government. They are willing to use, as they do, violence to support their demands.

Ethnic and religious differences are also playing a major role in the problems in the outer provinces/islands. The local population is ventilating their problems with the migration policy of Jakarta. The large number of migrated people, who very often live in better circumstances, are being targeted by the local population. This is further aggrevated by the fact that the migrants are supported in return by socalled Jihad fighters from Java to protect and support the migrants in the troubled areas. This is fuelling the conflicts in these areas to a large extent.

There is another probably even larger threat to the stability in Indonesia. The government of Indonesia is at the moment relatively weak. The current president, Abdurrahmann Wahid, is under pressure because of several scandals and his rather indecisive style of government. There are demands that he should withdraw. This situation is further worsened by the fact that the economy of Indonesia is still very weak and dependent on foreign aid, loans, to survive.

The greatest danger in Indonesia is however that all political organisations have their own kind of militias and these are more than willing to fight other parties if they consider that their man has been treated unfairly. And it is rather simple to make them feel unfair treated as only not to agree with them is enough to get their attention and to feel their displeasure. This displeasure will be felt by the agression which they are more then willing to use.

Indonesia received last month an impression of what could happen if the differences between the parties would come into existence. The militia of Wahid, or to be correct of the organisation, Nahdlatur Ulama, NU, of which he is chairman, went on to the streets and destroyed party offices of political opponents in the East and the center of Java. If Wahid woud be removed from office, it could be likely that there would be an explosion of violence.

There are 4 major parties in Indonesia which could create chaos and ofcourse a fifth group, the armed forces, which also could play a decisive role. Some kind of civil war is certainly possible. Even if the security forces, the armed forces and the police, should be able to restore order on the short term with the use of excessive violence. But it could turn out different if the disorder could spread and the security forces would be slow in their reaction. And there would always be the question of loyalty in the security forces. It could happen that parts of the armed forces join of the fighting parties. Civil war could be much more close than is anticipated.

The four parties are the NU, 40 million members, with its Banser militia. The Banser militia also played a major role in the past, in 1965/66, as about half a million alleged communists were killed in the socalled left coup d’etat. There is also a considerable threat from the NU with the Banser militia. The militia is very loyal to the NU and have no doubts about the justness of the NU. The Banser militia is mainly recruited out of the Pesantren Islamic schools. So this could even deliver a religious quantity to the possible struggle. And the NU is willing to use the Banser militia to reach their goals. As have been proven in history.

The second, the old Golkar party with its old structures. Not as strong anymore as it used to be but still an important party in any possible struggle for power.

The third is the party of the Muhamadiyah led by the chairman of the Peoples Congress Amien Rais. The Muhamadiyah is an like the NU an Islamic organisation with 28 million members. The relations between the two are not very good as they fight for about the same people and goals. The Muhamadiyah is only sometimes claimed to be a little more fundamentalistic than the NU.

The fourth party is the PDI-P of vice-president Megawati Soekarnoputri with the Satgas militia. The militia is already used for all kind of guard and support jobs but Megawati has until now not made any use of the Satgas in political problems. At least until now, this might change in an all out conflict between the major political parties if Wahid would be forced to leave office.

As long as Wahid is president the situation will remain relatively calm. There might be demonstrations but not an all out conflict for power. But if Wahid would be forced to go, things could change overnight. A kind of civil war could erupt between the four major parties about who would succeed Wahid. Megawati would try to get power with support of the political system but none of the others might be willing to accept Megawati as president. Or will try to achieve control by the use of their militia. Or the likeliest the Banser militia will out of frustration start to revolt and this could put the whole country into jeopardy.

A civil war is the most likely result of the ejection of Wahid, if he is not prepared to go by himself. The security forces should be able to restore order but it is uncertain if the officers corps cannot agree to a new leader. And even more important, if the NCO’s and soldiers do not agree with the decision of their commanders. There is also a chance that the security forces will be split in several factions each supporting one of the parties involved. This would severely undermine Indonesia as the movements in the outer provinces/islands would be more than willing to use this internal weakness of the central government to draw more control from the government.

The highly dangerous combination of unrest in a number of provinces in the country and the fragmented leadership in the center might destroy the country. The problems with the several seperatist movements in the countryside is putting enough tensions on the integrity of Indonesia. A conflict in the center of government between the major parties would mean the end of Indonesia as we know it.

The armed forces could use this troubled sitiation as a last bid to recover the power they have lost in the recent years but this is a really dangerous attempt as they are not the same as before the changes. Command structures have changed, alliances broken, there is certainly not the old used to be loyalty present. And more importantly the economic situation will not leave much room for dangerous experiments which are sort of mixed with suppression and military rule.

The problem in Indonesia is, can they solve their problems politically or face a civil war. The civil war scenario is very much likely as all involved parties are ready to start and fight a civil war. The political system and the parties participating in it have the key to the future of Indonesia. But somehow they are to busy with promoting their own position and cause, which will make a conflict about power more likely.

 

Standaard
July 1999

July 1999

July 1999

Updates on Kosovo and Kashmire – Financial assesment

Updates on Kosovo and Kashmire

The world is still a volatile place to be. There are many internal and external problems, tensions and conflicts. Not to lessen the terrible impact on society and the individual’s life of war/conflicts but these are mostly of small scale and low intensity but a number of them have become high intensity and touching large scale levels.

Some perfect examples of these are the problems about Kosovo, the continuing struggle in Kashmire which recently received a new dimension.

Where as the Kosovo problem have reached its peak and a more normal situation is promising to return on the short term, Kashmire has become even more dangerous.

Kosovo

The regime of president Milosevic finally accepted the terms as presented by the G8 meeting in Cologne, Germany, and started to withdraw from Kosovo. It took 78 days of an ever increasing bomb campaign, the ever more likely possibility of the use of NATO ground forces and especially the increased activities of the Kosovo Liberation Army, KLA, against the Yugoslav army, VJ, and Serbian special police forces, MUP, in Kosovo, to make president Milosevic accept the demands of the international community or better NATO. Under the terms of the accord signed in Macedonia on 9 June, the Serb armed forces and security units were given 11 days to leave Kosovo.

Kosovo would be divided into 5 sectors, an US, an Italian, a British, a French and a German sector would be established under command of NATO. The name of the force would be KFOR, Kosovo Implementation Force. NATO would be in command and furnish the majority of the forces. The sector forces would be responsible for the maintenance of law and order, clear the area of mines, booby traps and unexploded munitions, restore the infra structure and support the UN civilian mission in restoring the government and the economy in Kosovo.

The withdrawal of the Yugoslav/Serbian units from Kosovo started on time and was concluded within the given timeframe. At the same time two large movements of people came to live. The Kosovo-Albanians returned to their homes or what was left over from them and a large number of the Serbians afraid for the revenge of the Albanians packed their belongings and moved into Serbia.

NATO KFOR forces moved in as fast as they could but the inadequate infrastructure and the possible existence of mines and booby traps in Kosovo slowed down their movement. A small Russian unit of paratroopers took the opportunity and moved from Bosnia through Serbia into Kosovo and occupied the airport at Pristina. The Russian could now reinforce their rightfull place in the solution of the Kosovo conflict and at least try to claim an own sector in Kosovo.

After prolonged negotiations it has been agreed with the Russians that they will send in about three battalions with support forces, about 3.600 men, into Kosovo. They will be stationed in the Italian, US and German sectors under NATO command but with a seperate command line to Moscow.

The KLA moved in reaction on the Serbian withdrawal out of the countryside into the towns and cities and they started to arrest people and occupy buildings to install their own structures. Often before the NATO KFOR forces arrived the KLA was alrady on the streets. The KLA have become a force to be reckoned with in the immediate time after the Serbian withdrawal.

NATO command and the sector commanders could persuade the KLA out of the positions they more or less had quietely occupied. After negotiations between NATO and the KLA, the latter decided to obey the NATO orders for the moment as this would be the most prudent and beneficial. The NATO and the international community have something to offer Kosovo and the Balkan region in general desparately needs, financial, material and technical support to reconstruct the region. And ofcourse the threat of the fighting power of the full deployed NATO KFOR force which is no adversary to the KLA. But as long as the NATO KFOR is not fully deployed and some civil government structures like a police force is not re-introduced violence between the two groups will continue and KFOR can only react and try to stop the most severe cases of agression, revenge.

NATO can have some kind of agreement with the KLA leadership and some of the local KLA commanders but some KLA units still do what they want and behave as they were in control. They continue to intimidate, arrest, beat and steal from Serbians, Gypsies and Albanians they suspect of collaborating with the Serbians. They feel and behave as the majority of the Albanians do, they are the victors and because of the wrong doings, atrocities, of the Serbians, they can take revenge and burn the houses of the Serbians and threat them very badly.

The problems and the hatred between the two people are very large. The economy, the infra structure and a large number of houses in Kosovo are destroyed. The Serbians who remain in Kosovo are afraid of the hostility of the Kosovo-Albanians. The Albanians in turn are angry because of the injustice, to phrase it mildly, done to them by the Serbian security forces and want retribution, revenge.

The psychological pattern of the peoples living on the Balkan, black and white-you win or loose-you are for us or against us mentality, will make revenge, ethnic cleansing and agression against opponents a normal and to expected reaction. In this particular environment, agression between the two groups will continue and will be very difficult to stop.

NATO KFOR have until now be greeted by the Albanians and be at best considered neutral by the Serbians. This could change very easily in this climate if one or both get the feeling of being treated unfair. KFOR is in danger to become a target from both sides. Any weakness will be exploited by both groups, a determined and hard but fair intervention of KFOR is necessary if they want to keep the respect of both groups and minimise the violence.

A living together will prove to be very difficult as there are to many bad feelings to eachother and the demands and expectations are very divergent. Yugoslavia and the Serbians living in Kosovo want to keep Kosovo part of Yugoslavia, which will be very difficult to achieve. And a large number of Kosovo-Albanians want to become independent and would like to eject all Serbians living in Kosovo. A small number of Kosovo-Albanians, the hardliners in the KLA, would like a greater Albania which would be unacceptable to the international community and especially to Macedonia, Montenegro and Greece with small numbers of Albanians within their borders.

The KFOR forces in Kosovo will minimise the violence in Kosovo if they can get and keep the respect of the people in Kosovo. KFOR could deliver a kind of violent free society, occassional clashes between the two people’s can not be excluded, but in general the situation will be stabile. KFOR can thus create an artificial stability which wil give the people an opportunity to rebuild their country. The real problem in Kosovo can not be solved by KFOR as the Serbians and the Albanians in Kosovo have to learn to live together if they want to have a common future in Kosovo.

The position of the Serbians will be diminished after the Belgrade government lost all its influence in the province, at least as far as they stay in Kosovo. But this will also be true for the KLA. The KLA, which is a very loose and diversified organisation, will find it increasingly difficult to rally support for their goals. In the immediate aftermat of the Kosovo conflict the KLA will find supporters but if stability has returned two things are prone to happen. First the KLA will find it very difficult to remain together as two major groupings are represented. Namely a right and left wing, the right wing are more fascist bred and the left wing communist bred. And second, the attractivity of the KLA will loose its glamour as the war will be over and the war-heroism will fade away.

Moderate policies, reconstruction and even some better relations between the two people will be the road to a better future of Kosovo. The relations question could however take another two decades.

Kashmire

The problems between India and Pakistan about the divided region of Kashmire intensified as some people occupied a number of hills in the vicinity of the town of Kargil which are overlooking the vital national highway 1A linking Srinagar to the town of Leh on the border with Tibet. The people, group, responsible for the occupation are described by India a mercenaries/terrorists commanded and supported by Pakistan, in particular the secret service SIS and commandos of the Special Service Group. And by Pakistan as Kashmiris, freedom fighters, who want to liberate Kashmire of the Indian occupation.

The size, 600 men, the equipment, assault rifles, mortars, snow scooters, heavy and specialised radio and radar equipment, special clothing, the organisation and the occasional artillery support out of Pakistan make it very unlikely that the group acts on its own. The operation is to large, to well prepared and furnished with advanced equipment, in short to complicated to be the work of the Kashmiris. The operation has the same blue print as the Pakistani operation and support of the Afghan Taliban coup. The Pakistani influence is to clear to be covered.

This essential small and low level operation, a small group occupying a small tract of land, is a good opportunity for Pakistan to pressure India and put Kashmire on the international agenda but it could have dramatic consequences between the two countries. The strategic importance of the site, the highly specialised character of the force and operation which is only possible with outside support and the more then obvious advantage for Pakistan will strain the relations between the two countries to the max. Everything seems to be possible in this situation. If India perceives its position worsened and Pakistan’s alleged involvement and advantage increased this could lead to a direct confrontation between the two countries.

The geographical conditions of the region favour defensive operations. A well trained and positioned force will be difficult to eject out of the Kargil region. Indian forces encountered several difficulties in removing the intruders. With the use of air assaults, artillery barrages and carefull pressing foreward infantry forces at night they could slowly take over positions of the intruding force. If the resistance remains the same than this operation could take a couple of months, in a worst case scenario, before all intruders have been defeated.

This time of initial combat is the most dangerous of all as India refuses to accept any diplomatic offerings of Pakistan or the international community and the intruding force on the hills is not yet eliminated. A wrong interpretation and perception of the situation could easily escalate the conflict in an all out war between India and Pakistan.

India is partly right in its refusal of mediation because this would legitimate the action of the intruding forces around Kargil. Any mediation and acceptance would lead to a strengthening of the position of the intruders, make it more difficult the remove them in the future and more importantly it would be beneficial for Pakistan.

This operation is always beneficial for Pakistan because even if nothing happens the Kashmire problem receives more international attention then before. And with some luck Pakistan could gain by the use of a small force, a reunification with or independence of Kashmire, virtually free of charge if India would accept the ploy. Something they could not achieve in war and the decade long attrition warfare in the Karakorum mountain range/Siaachen glacier. A piece of brinkmanship between nuclear states with a high reward at low cost.

Financial assesment

The world economy is not doing very badly, the developed markets continue as before and the Asian, Latin America and Russian markets show some recovery after the disasters in 1997 and1998.

The U.S. economy is doing the best of all and contrary to last year the growth is based on a larger number of sectors. This widening is a sign that the American economy as a whole is doing fine. The only disadvantages in the U.S.A. are the possible interest rates rise and the high valuation of large number of very good stocks. A rate hike will diminish the growth of the stock market as do the high valuations but these will also make other companies more interesting and worthwhile to procure. The earnings of a large number of companies from a larger number of sectors are very promising, the first announcement from the companies support this trend. This will mean a broadbased growth not only the financial and some groups of tech stocks will do good but also the basic industries as Caterpillar and Georgia-Pacific.

The Asian economies have bottomed and are now coming back although it will take some time before old levels and growth can be reached and maintained. There are still very large problems in Asia which need to be adressed. All growth is largely export induced where as internal consumer demand and financial business prudency are the most needed to create sustainable growth.

Some of the Latin America economies are also slowly showing some more growth. But there are still a rather large number of problems like the currency and fiscal problems in countries like Brazil and Venezuela. They will continue to depress earnings growth and keep the economies in the danger zone. The stocks in those countries are cheap but risky.

Colombia is in much deeper trouble. They will be forced to devaluate their currency which could have a negative effect on the other countries in the danger zone.

The more promising countries and responsible for the Latin growth are Chile and Argentina. They are more stable and will show increased economic growth. Their economies have better weathered out the Asian crisis and they have contrary to former agreements closed their markets to for example Brazilian products and circumvented product dumping and protected their own industries.

The Russian economy is still suffering from the deficiencies in government leadership, trade and financial legislation and with lagging consumer purchasing power and investments into the industries. The demand is to low to generate growth. And the whealing and dealings of criminal organisations and the peculiar way of doing business of certain, what they call in Russia, bizznismen are also not very promising as preconditions for a healthy economy. Not withstanding all these problems the Russian economy has improved somewhat as the industrial production improved. But this stems largely from the fact that Russian products have become more popular because western or eastern products for that matter are simply to expensive. The improvements in the stockmarket are more based on former weakness then on regained strength. The Russian stocks remain therefore very speculative and uncertain in their performance.

The European economy is differentiated. Some countries have a weak economy because of the high unemployment figures, large budget deficits and low demand. And some countries are doing much better in Europe. Countries like the Netherlands, Spain, Ireland and the United Kingdom have shown in recent years a steady and above average growth of their economies.

The first signs of a recovery are visible in the weaker European countries with a lower unemployment figure and higher demand. They are not over the hill as a lot of problems have to be solved but within two years the situation will see a substantial improvement and a rejuvenated Europe.

The stockmarkets

The stock markets are partly reflecting the healthy situation of some economies. As the markets are sometimes more worried about inflation and valuation than in the results of the companies. And ofcourse some reports, good and bad, have an above average impact on the price of stocks. Psychology is distorting the price of stocks.

The financial markets have been moving sideways. There have been no large rises nor droppings on the stock markets of the U.S.A. and Europe. As the better then expected earnings came out the markets were moving up but the inflation nightmare, the rising of interest rates, pushed the markets down and nothing really happened. The market indexes remained approximately on the same line with a slight upward movement.

The majority of the other stock markets, Asia, Russia and Latin America, have done better and experienced a period of growth. They have been growing on average 25 % since the beginning of the year.

July 1999 will maybe mean a break of the sideway trend of the U.S. stockmarket, this depends on the decisions taken by the U.S. Federal Reserve, the Fed, to do nothing or rise the interest rates by an unknown number of basispoints.

If, very unlikely, the Fed is neutral the markets will move up by 5-8 % as a correction to the recent downward push in the market. If the Fed, most likely, rises the rates by 25 or even 50 basispoints the market will remain the more or less same and do nothing. A rise of 25 – 50 basispoints is an expected move and the market has anticipated this development and pushed the market down. But if the Fed rises the interest rates by more than 50 basispoints or is talking and thinking of a 1994 style of three or four consecutive rises of interest rates, the market will react violently and fall by at least 5-10 %.

The other markets around the world will react on the interest rates in the U.S. because they will increase the costs of U.S. dollar denominated debts and make exports into the U.S. cheaper and more profitable.

The effects for the third world will be bad as they are not able to profit from exports into the U.S. The will have only negative consequences of the interest rates rise, namely higher debt service and more expensive imports.

The situation in Asia and Latin America is more stable and will remain the same for most cases as the higher export revenues make up the higher costs of imports and debt service. Asian and Chilean and Argentinian stock markets will probably deliver a continued growth on the second part of 1999. The growth will be lower than in the first two quarters but will remain in the double digit range.

Only the weakest of Asia and Latin America, like Indonesia and Colombia, who do not have their financial affairs in order and who’s industrial/economical activities are still not up and running will get additional problems because of the Fed’s action.

Only Europe will benefit a little from higher interest rates as the export revenues and opportunities will increase. As the Euro will loose some value to about US $ 1,015 to 1,025 vs. an Euro but this reflects the strength of the U.S. economy and the present not so strong European economies. Afterall the Fed rise is not for fun but to contain an overheating of the U.S. economy and inflation. The lower value of the Euro vs. the U.S. dollar is not dramatic or a prove that the Euro has failed as a currency, it happened not so long ago that the U.S. dollar had the value of DM 1,90-1,95 and higher. Remember the Reagan days.

The European stock markets will benefit from a possible U.S. interest rates rise and the slowly improving European economies. New highs are therefore very likely in the second part of 1999. The first decade of the next millennium could become an European decade. The European economies are recovering from a depression and it might be their turn to experience an economic boom after the Japanese eigthies and the U.S. nineties.

Standaard
May 1999

May 1999

May 1999

The Kosovo conflict, history, exits and future

Kosovo a new Bosnia, were opposing ethnic groups do their utmost to make live unbearable for the other side. Including ethnic cleansing and occasional mass murders to create facts which will prove difficult to change in the future. The goal of all those operations is to exclusively reserve a part of territory for their own group.

A peace which only could be reached at the point of a gun or for that matter at the point of a cruise missile. In the Bosnia conflict peace could be reached by the use of NATO forces, IFOR and SFOR, and that peace can be maintained just by the stationing of a large contigent of forces. Does Kosovo get and even need a similar treatment.

Bosnia have been pacified and they could, with some problems and differences, start with the reconstruction of the country. If the current Kosovo problem is solved, the people in Kosovo have to do the same. But the international community is willing to help and a new Balkan wide kind of Marschall plan is being put together. This should boost the economic development and with some luck social relations in the region.

A short history

The Serbian minority of about 10% of the population of Kosovo which at their height, before the second world war, made up 30-40% of the population and the Serbians as a whole who have strong historical connections with Kosovo want to remain in control in the region.

The autonomy status granted to Kosovo by the late president Tito was changed in 1990 into a provincial status under direct control of Belgrad. The Kosovo-Albanians were satisfied with the autonomy but the remaining Serbian minority had the perception that they were treated unjust in general by the Albanian majority and particularly because of the positions they occupied. Especially the Albanians who had a position in the government apparatus. The Serbians protested loudly and violently and demanded immediate action out of Serbia, Belgrad.

The Serbian president Slobodan Milosevic first wanted to pacify the situation in the normal communist way. They were after all comrades in a communist country. Differences between peoples, especially the working classes, were impossible according the communist ideology or world view.

After the sweeping changes in Eastern Europe and Russia, Milosevic recognized the potential of the Serbian claims in Kosovo. The nationalistic card provided an opportunity the consolidate his power generally in Yugoslavia and particularly in Serbia. The take over of Kosovo rallied, as expected, the Serbians behind Milosevic and gave the Serbians in Kosovo their demanded powerfull and preferred position.

The Kosovo-Albanians reacted in the first six to seven years with a policy of peacefull resistance. They created a kind of shadow society in Kosovo out of, as mentioned before, resistance and necessity. But they were essentially forced to have a separate society because the Albanians were pushed out of all government positions and out of the larger companies in the region which were still owned and managed by the state or better Belgrad.

As the peacefull resistance was not particularly succesfull an increasing number of the Kosovo-Albanians looked for an alternative. The Ushtria Clirimatare e Kosoves – Kosovo Liberation Army, UCK-KLA, which wanted to force out the Serbians by force attracted ever more support. Especially when the UCK-KLA proved to be the only group who did something and who promised some protection against the suppression of the Serbians and the actions, sometimes even atrocities, of the Serbian security forces. The protection proved to be an illusion as the first larger scale Serbian operations against the UCK-KLA and on a smaller scale against the population started.

Methodically the Serbian security forces took over control in the border areas with Albania, here the first ethnic cleansing started, and almost simultaneously the Serbian started to force out the UCK-KLA out of the territories they claimed to control. The UCK-KLA crumbled under the first Serbian pressure and were forced to retreat into the mountains and to Albania and to a lesser extent Macedonia.

International mediation brought some temporary relieve to the UCK-KLA as some Serbian security units were withdrawn and international observers of the Organisation for Security and Cooperationin Europe, OSCE, moved in to verify the withdrawal and future operations of the Serbian security forces.

This gave the UCK-KLA an opportunity to regroup, retake some of the lost territory and to assault Serbian security units. The OSCE observers were able to limit the operations of the Serbian security forces. The increased activities of the UCK-KLA, which proved to be more resilient and stronger than anticipated by the Serbians, led to increased activities including new atrocities in Kosovo against the Kosovo-Albanians by the Serbian security forces.

The Serbian atrocities led to international, especially western, demands to end the Serbian activities, start diplomatic negotiations to solve the problem and finally to the creation of the Rambouillet agreement which the Yugoslav government found unacceptable. The Rambouillet agreement would give something to all parties. It declared autonomy for Kosovo in Yugoslavia for at least three years whereafter the future of Kosovo would be arranged by a conference, the best protection imagineable for minorities and the stationing of a NATO force, KFOR, including Russians and Ukrainians, in Kosovo to execute the agreement. Just like SFOR in Bosnia.

The stationing of an international NATO led force, KFOR, was unacceptable for Yugoslavia, Serbia. They considered it as an right to occupy the whole of Yugoslavia. This is however a falsification as the Rambouillet treaty clearly defines does and doesnots of KFOR. The name NATO, which is mentioned in the annex to the Rambouillet agreement, stands for the coalition of forces which were to be stationed in Kosovo and therefore is the same as KFOR. NATO would be the partner in the Rambouillet agreement with Yugoslavia just as NATO is the partner in the Dayton agreement with Bosnia where SFOR is the implementation force of the agreement.

The Serbians were from the beginning againt a diplomatic solution as another plan was preferred. Namely the elimination of the Kosovo problem by a combination of ethnic cleansing and subjugation of the Kosovo-Albanians. To attain thet goal the Serbians increased the number of security units in Kosovo and the scale of the operations against the Kosovo-Albanians. This led to the withdrawal of the OSCE observers and finally to the first air strikes by NATO forces. The west expected that Milosevic would accept the Rambouillet agreement after a couple of days of air strikes.

The west underestimated, just like the Serbians underestimated the UCK-KLA, the resistance of Milosevic. The Serbians did not accept the western demands and accelerated a large scale campaign to solve the problem in the old fashion. They started to ethnically clean large areas of Kosovo-Albanians. Consequently large crowds of refugees fled into neighbouring countries. The identity cards of the fleeing Kosovo-Albanians were confiscated and the population records destroyed. The existence of all refugees was essentially destroyed.

The continuing air campaign could do nothing to stop the Serbian security forces, who in the meantime received support of shady militias like the Arkan Tigers, in their operation to ethnically clean Kosovo. The human tragedy of over a half million refugees in Albania, Macedonia and Montenegro and about the same number in Kosovo is a clear proof of Serbia’s inhumane policy.

The air strikes at Yugoslavia have destroyed a large part of its command and control system, air force and defence systems, military property, military and civilian infrastructure and capabilities in oilproduction and arms and arms related industry. Yugoslav, Serbian, industrial and defence capabilities have been severely degraded by the air campaign. And first signs of weakness have become visible in the Serbian society and political leadership.

The air campaign cannot deliver short term results but if it continues it will cripple or better virtually destroy Yugoslav economy. The price for noncooperation, non adherence, to the ideas of the Rambouillet agreement will be very high.

Exit options

There are several scenarios how the conflict might be ended or what policies are available to end it. There are about four options which are possible or acceptable to happen.

The first is the acceptance of the Yugoslav government of the ideas which were presented in the Rambouillet agreement. The second option is the continuation of the current policy. Force Yugoslavia to comply to the ideas of Rambouillet. The third option is an agreement between the two sides to stop all military activities and start a new round of negotiations. And the fourth option is the use of ground forces to end the Serbian acitivities in Kosovo.

There are ofcourse more options but they are less likely or even impossible to happen.

Acceptance of agreement

The easiest and fastest way to end the conflict is the Serbian acceptance of the ideas of the Rambouillet agreement. Even if this demands some compromises from both sides. Rambouillet might be considered death but the ideas about the protection of people, the institution of civil rights to guarantee the rights of minorities and the stationing principle remain as valid as before.

The end of the air campaign would stop the disastrous effects of the air strikes at several important parts of Yugoslavia. A Rambouillet like agreement would guarantee the rights of the Serbian minority where as Kosovo would remain part of Yugoslavia. It would be the best position attainable for the Serbs. But they should be quick because the longer they wait the stronger the UCK-KLA will become. The UCK-KLA have demands and wishes of their own and the more they have to fight, the more they gain and the more Kosovo-Albanins suffer in Kosovo and abroad in refugee camps the more power and influence the UCK-KLA will get.

The diplomatic position of the Serbian side is weakening and the position of the Kosovo-Albanians will improve. An independent Kosovo will be one of the possibilities if they wait to long. The Serbian policy of creating facts and act on it could backfire. They might get a Kosovo which they can not control as the UCK-KLA with support of the NATO would beat the Serbian security forces and control ever larger tracts of land.

Continuation of policy

The second option is the continuation of the current air campaign, the limited use of the battle helicopter – artillery combination and an increase of attrition warfare of the UCK-KLA against the Serbian security forces. The weather improvements will make the air assaults and the air support of the UCK-KLA ever more effective and they will slowly but certainly destroy Serbian capabilities.

This policy will take longer but a victory of NATO will be certain as the fighting power and the logistic support of the Serbian security forces will slowly be destroyed. The UCK-KLA will be active in supporting this operation as their fighting power has increased, their logisitic support improved and military support, close air support, has dramatically been improved. The UCK-KLA has learned a lot of its two former defeats by the Serbian security forces. The organisation structure, strategy and tactics and the quality of the fighting men has been improved.

The much improved UCK-KLA is very motivated to continue the struggle against the Serbian security forces. As they fight and conquer parts of Kosovo they will get a bigger and more important say in every political solution which might be concluded.

If NATO has to force the Yugoslav – Serbian forces out of Kosovo or adhere to the conditions set in the Rambouillet treaty the Serbian position will be fundamentally undermined. In the following negotiations it can be stated with a high degree of certainty that an independent Kosovo will be one of the options. The UCK-KLA will hold after a prolonged fight/struggle considerable parts of Kosovo and they will be very unwilling, even not willing, to hand back Kosovo to an international force or allow any Serbian official or entity to stay in the area. The UCK-KLA is and has become a powerfactor of which little is known but it is or has created facts which will be difficult to circumvent. Any agreement, if you like or not, will need the consent and cooperation of the UCK-KLA.

Diplomacy

The third option, not very likely, would be the cessation of hostilities and the resumation of negotiations between the Yugoslav government, NATO and the Kosovo-Albanians.

A third country for example Russia could persuade all sides to give diplomacy another chance to solve the problem. In the negotiations, under Russian leadership or guidance, a compromise should be reached which would satisfy all sides and most important would protect the Serbian position on the Balkan. This will be however very difficult with a high level of wish thinking. The Kosovo-Albanians and NATO would have to give a lot just to satisfy Serbia and even condone the ethnic cleansing. And this would be unacceptable to NATO and the international community. The position of Russia remains important and any solution and especially the implication should be ideally with political support and military involvement of Russia. But not at all cost should Russia be accomodated, more important issues are at stake.

Russia has been calling for the cessation of hostilities from the start of the air campaign. They did so out of concern of their Serbian allies. Both, Serbs and Russian are of Slavic descent and this has created a kind of kinship. Out of tradition and the communist and nationalistic parties in Russia are favouring to support the Serbians. And in time of elections provides the Kosovo-conflict a very good opportunity to rally support in the population. By exaggeration and one side views at the happenings the Serbians are portrayed as the victims of NATO agression who are in need for support of their big Slavic brother. This picture of the situation has been modified a little to temper the feelings as their was talk of world war III and agression against western targets in Russia. But Russia remains on the side of Yugoslavia.

Russia even if economically a chaos remains a great power with a lot of nuclear weapons. The west, NATO, has to respect Russia and its sentiments about Serbia. And therefore any solution, to attain and execute, should preferably involve Russia. Russia could play an important role as a mediator to end the conflict by persuading Yugoslavia to adhere to the demands of NATO. In this position they could protect Serbian interest the best.

The use of ground forces

The fourth option, the most agressive one, is the use of ground forces to stop the human tragedy in Kosovo. Ground forces could push out the Serbian, Yugoslav, security forces out of Kosovo. They could than create a cordon around Kosovo to implement the proposals of the Rambouillet agreement and to protect it from any Serbian incursions.

The use of ground forces is possible even if there are a number of problems which have to be overcome. First, organise a force of about 80.000 personell. Second, deploy them to the region. Third, improve the infra-structure in Albania to simplify deployment and the logistic support and fourth chose a way into Kosovo.

The resistance of the Yugoslav army could be fierce but should not be overestimated. The quality and quantity of the forces are clearly below the level of NATO forces. The Yugoslav armed forces have been neglected in the preceding five years. There have been no modernisations and the training has been below standard out a lack of funds. Milosevic preferred the police and special police forces as they were politically more reliable and as good in the low level, counter insurgency, operations Milosevic preferred to wage. In all recent problems with Slovenia, Croatia and in Bosnia the Yugoslav armed forces pulled out without a fight and they did not do that out of superiority. And finally after the NATO air campaign the Yugoslav armed forces have been degraded, demoralised and logistically crippled. Impressive against unarmed civilians and usefull against a lightly armed inexperienced guerilla-like organisation like the UCK-KLA but no adversary against an all-arms NATO combat force.

There are four roads into Kosovo. Firstly, from the south through Macedonia. This would be the best way considered the connections with harbours in Greece and the relativily good developed inroads into Kosovo. The Macedonian government opposes however any offensive operations out of Macedonia because of the large group of Serbians in the country. And Greece is not particularly keen on supporting an offensive because of religious connections and traditional good relations with Serbia. Secondly, from Albania which would meet no political objections but would require extensive construction of infra-structure. The inroads into Kosovo are a little more difficult but poses no impregnable barrier. Thirdly, through Montenegro. This would be possible because of the harbour facilities in Montenegro. There are two objections to this plan, first you have to conquer the harbour and in a worst case situation you would have to fight yourself through the country. Military it would not pose to be impossible or difficult but it would be a big nuisance. Second, the mountain range between Montenegro and Kosovo are the heighest in the region which would make it more difficult to cross them. And fourthly, from the north out of Hungary. The Hungarian government has allowed NATO to use bases in Hungary. This would be the easiest entry into Yugoslavia. The geography is the most suitable as there are no mountains to limit movements. The military resistance of the Yugoslav armed forces will be the same as in Kosovo where as in Kosovo they have the advantage of defensive favourable terrain. But they should not rely on favourable terrain to beat of an offensive opponent, as Julius Caesar stated in his book the Gallic War; people in some geographic areas, like mountains, rely on the terrain for their defense but every determined force will break their defense. The Hungarian route is military feasible but it requires a larger logistic effort. The advantage of this entry are that any possible problems in the Vojvodina between the Hungarian minority and a Serbian nationalistic plan could be solved before it surfaces, all installations which could become a threat could be destroyed, any logistic support for the Serbian forces in Kosovo could be destroyed at the source and people accused of war crimes or crimes against humanity could be apprehended. The real problems with the Hungarian road are political, Russia will not be happy, more likely very angry, if this road was used. The Russians and many other states would view it as an illegal act of agression against Serbia.

All possible entry points, except probably the Montenegro road, are possible. The road which would meet the littlest problems is through Albania as there is only one big problem the missing infra-structure.

The Future of Kosovo

President Milosevic is fighting, or better sitting out, a lost battle. His calculations that he could solve the Kosovo problem by ethnic cleansing and create facts which cannot be turned back will prove to be false. The NATO air campaign will continue until the Serbian security forces and the Yugoslav army have left the region. The NATO did not get divided about the Kosovo conflict but stood firm in support of the policy decided on. And there is no country, even not Russia, who going to help him. Yugoslavia receives some political or moral support but not the much needed arms and physical back up.

However and whenever the conflict will end is up to Milosevic, if he decides to cede to the demands of withdrawal of the Serbian security forces and the Yugoslav armed forces, the implementation of self determination for the Kosovo-Albanians and the installation of an international force with a large number of NATO forces, more or less what is stated in the Rambouillet agreement, the air campaign will stop immediately. Until now, the end of April 1999, Yugoslavia still has a small chance to influence the outcome of the conflict and the future position of Kosovo. If they wait another month or so, time or reality will make the choices for them.

The other option is that the NATO will, if they do not use ground forces themselve, with increasing support of the UCK-KLA destroy the Serbian security forces and army units in Kosovo and all the important logistics, support and infra-structure in Yugoslavia. Consequently, on the medium to long term the UCK-KLA will take over Kosovo and than it will be independent. There will be no negotiations or any role for Yugoslavia left in Kosovo.

The future of Kosovo will be determined by the Kosovo-Albanians. After the Serbian forces left the region Kosovo will be a semi-independent state on the short term. After the refugees have returned to their homes the final position of Kosovo will be determined. It can be an autonomous province in Yugoslavia as proposed in the Rambouillet agreement but more likely it will be an independent state considering the atrocities committed by the Serbs and the efforts of the Kosovo-Albanians, the UCK-KLA, to return to Kosovo.

A reunion with Albania, to create a great Albania, will probably be a bridge to far. Albania has to many problems of their own to expand and get even more problems. And the international community might disagree with a great Albania because they could consider it as potential new problem which could lead to a new conflict between neighbours. The Kosovo-Albanians and the Albanians have to be carefull whay they do as they are in need of western economic support to reconstruct their countries. And a new conflict between Macedonia and Albania is the last the thing the west is willing to tolerate.

The future of the Balkan could be with a small and impoverished Yugoslavia if it makes the wrong choices. The international community, the U.S.A. and the Europan Community, are planning an economic support package for the Balkan. This mini-Marschall plan should not only support Albania, Kosovo and Macedonia in the reconstruction of their economies but is aimed at the Balkan as a whole. Roumania, Bulgaria and possibly even Yugoslavia are included in this plan. The plan should boost the economies, support and promote democracy, civil rights, trade and cultural exchanges and start a self-supporting economic growth in the region.

The creation of political, economical and social stability in the Balkan is the key to peace and progress. It will be the only way to break the negative spiral of poverty and conflict in the region. The peoples of the Balkan have to be learned to live together and solve conflicts and disagreements by diplomacy instead of resorting to nationalistic and tribal inspired violence at the first possible occasion.

Standaard
August 1998

August 1998

August 1998

Is the bull getting tired? – Conflicts turning violent

Is the bull getting tired?

The Asian crisis turned all emerging markets, Russia and South America, moving south. Currencies got under pressure and markets disappeared. The solution of the Asian crisis is largely dependent on the economic recovery of Japan. And as long as Japan is not seriously solving their economic problems, clean up the bad loans, restructure their financial system, eliminate the connections between business, government and crime and restore confidence into the government, Asia and the other emerging markets will not be able to stem the tide.

The European and U.S. economies on the other hand are doing allright. The Asian crisis forestalled the threatening ghost of inflation in the booming U.S. and the recovering Europe. The stock markets on the old and new continent have reached in the mean time new records. The Dow broke the 9300, the Dax the 6000 and also the smaller markets like the Dutch AEX broke trough the 1300 level.

How long can the Western markets continue this growth? If Asia would return to their former might everything would be OK but this will take another two or three years at least. The growth of the western markets has also to be carried by the home markets and the markets in Eastern Europe which are less influenced by Asia then the other emerging markets. The economic fundamentals are thereby not that bad for the majority of the companies but there are a number of buts which could have a negative effect on the development of the stock market.

One of those buts is the price/earnings ratio. The market valuation is becoming very expensive. The Standard and Poor 500 index is traded at 20 times earnings, the best performers of the S&P even 35 times earnings and the profit expectations for 1999 are just a mere 1,5 till 1,9 %. The weak position of the U.S. stock market becomes more clear by a look on the advance-decline line of a combination of the NYSE and the Nasdaq, it is dropping. There are reported fewer new highs but more new lows. The booming stock markets are builded on the just a few strong stocks, the breadth is very small. And finally money is moving out ot the stock market and into the money and bond market.

The European valuation situation is not yet that worse as in the U.S. but the earning forecasts are just as disappointing as in the U.S. Disappointing is not the right word, they just not that impressive as before. The economic performance in especially the manufacturing sector will deliver single digit growth where as the financial, telecommunication and some tech stocks are however still able to deliver double digit growth. This small breadth of high performing stocks will disappoint the analysts and the investors.

This will result in a lost of trust in the strenght of the market. A lot of people will take profits and wait to re-enter the market at a better price. And more dangerously the stock community will react very harshly on most of the earnings warnings which might be given by companies. Consequently there will be some ups and downs but the year to date growth will remain positive for the quality stocks.

The earnings growth of several companies will be less then in the preceding years and this will limit the growth of the market. The volatility of the stock market will continue till the end the year. It can be described as a slow down but to call it the beginning of the bear cycle might be a little premature. The overall economic position is still to positive. The economic outlook on the world economy for 1999 is despite the Asian crisis promising, especially the U.S. and European economies are responsible for the well being of the economy. The last quarter of 1998 or the first quarter of 1999 will show some improvement to the market. The earnings situation will get better at that time. The improved market/economy with a cheaper stock price because of the slow-down/correction will improve the valuations and this will boost further growth in 1999. The bull will continue in 1999, it is only taking a little break in the second half of 1998.

The third quarter and possibly the fourth quarter will bring some volatility. This could include a correction of 10-15 %. This will not have a lasting impact. But if you want to be on the save side and have good night sleep you could consider to protect the profits you have gained till now by the use of a put-call option combination. This will protect you to any losses and it will keep your portfolio unimpaired. This can be done at little cost because the majority of the costs will be covered by the earnings of the put. This little exciting operation will protect your holdings but will limit the growth chances of the second part of 1998, there are however some more exotic derivative combinations which could increase your gains even more. But this is attached with a higher risk.

Conflicts turning violent

The world in 1998 is still not a peacefull place. There are several regions where people, organisations, groups, religions and sometimes even states have differences with eachother. Some of those problems can be solved by mediation but some will use violence as a way to improve their position. In Kosovo most of the above mentioned differences are present , included the preferred way to solve it.

Kosovo, bushfire or war

The conflict in Kosovo gets worser by the time. Both groups, the Kosovo-Albanians and the Serbian security forces increase the use of violence towards eachother but also against the civilian population.

The Serbs and the Albanians are getting far away from a diplomatic solution. The demands of both sides essentially rules out a diplomatic solution. The Serbians want to keep Kosovo part of Yugoslavia with no special position. The Albanians are insisting on independence or a possible link up with Albania proper and a part of Macedonia to create a Greater Albania.

The major party which represents the Albanians have become the UCK/KLA who have more or less controlled a large part of Kosovo before the Serbian/Yugoslav forces started their operations. The military power of the UCK/KLA is limited. The numbers are relatively small and the armament beside the personal arms of the fighters is limited to heavy machine guns, mortars and grenade launchers including AT systems. This is enough to carry out a querrilla war but it is not enough to impress or defeat the Serbian security forces. Especially, what is the case, when they receive support from the Yugoslav army. The Yugoslav army will be the decisive factor. They can deliver the necessary military weight, MBTs, artillery and manpower to destroy the UCK/KLA military power. But they could, in the end, also force the Serbians politicians to accept a diplomatic solution. The Yugoslav army are not loyal supporters of Serbian president Milosevic and his policy. This could mean a chance for a diplomatic solution. But in the beginning they will support Milosevic to destroy the UCK/KLA because they pose a danger to the integrity of Yugoslavia. A strong UCK/KLA can not be tolerated by the army but a less threatening querilla force could be an acceptable negotiation partner.

The intensified fighting between the UCK/Albanians and the Serbian/Yugoslav forces pushed the former in the defensive. The Serbian military operations to regain control over the important roads between Pristina and Prizren and between Pristina and Pec proved to be a dangerous development for the UCK/KLA. Because the Serbians already controlled the border with Albania, incidentally they even followed the UCK/KLA into Albania and clashed with the Albanian border troops, the UCK/KLA got trapped in its hide out around the town of Malisevo. Malisevo is the HQ of the UCK/KLA and it is situated in the centre of the triangle Pristina-Pec-Prizren. And the line Prizren-Pec is about 10 KM of the border which is under control of the Serbian security forces. The intensed fighting in the triangle led to loss of the UCK/KLA HQ and this was a bad development. They not only lost a clear sign of their power but they also lost morally. They are not that strong as was thought and they are also not able to protect the Kosovo-Albanians from the Serbian terror. It was essentially the end of a myth.

The fighting will be in the advantage of Serbia. The military fortunes of the UCK/KLA are bad. They are pushed back by the Serbian/Yugoslav forces and they will be finished as conventional force very quickly. After that they will only be able to operate as a querilla force. The situation is further deteriorated by the fact that the logistic support of the UCK/KLA has become very difficult because the Serbian security forces control and “evacuated” the border territory with Albania. The Serbian forces are thereby willing to eliminate the Albanian support of the UCK/KLA in Albania proper. They have moved into Albania and destroyed UCK/KLA forces over there.

Time will be advantageous to the Serbian forces. The resistance of the UCK/KLA will be further undermined by the coming winter which is very harsh in those regions. The many displaced persons who fled because of the agression can be of no help to the UCK/KLA in their resistance. The resulted uninhabited villages can not be used as a hide out for the UCK/KLA. And local support is necessary in a querilla war.

The position of the UCK/KLA is finally undermined by their own policy to try to get the support of all Albanians in the region and their insistence on maximum demands. The UCK/KLA has become a powerfull force in the area and they try to rally support not only from the Albanians in Kosovo but also in Macedonia and Albania proper. This could draw three countries into Kosovo-conflict. Albania might like the idea of a greater Albania even if it would create a ungovernable country and that it is not clear who will run the country. The other involved entities, Yugoslavia, Macedonia and the international community, would however fundamentally oppose such a development.

The military operations in Kosovo has forced the UCK/KLA in the defensive. They had to give up the limited/conditional control they possessed over some areas. They are hard pressed because of the operations of the Serbian/Yugoslav forces. They even called for intervention by the international community. The UCK/KLA might be tempted to use a possible cease fire to regroup and reinforce their positions and try to save what is possible.

The demand for international intervention might be to late. The military operations in Kosovo might soon be over as the military power of the UCK/KLA is broken. The Serbian security forces can handle the querilla threat by the Kosovo-Albanians on their own with the usual terror. The political position of the Kosovo-Albanians will then be weaker then before and a low-level querilla war will be the only mean of resistance leftover.

The Serbian leaders will feel encouraged by the demand for international intervention because that is the evidence that they are stronger and can solve the Kosovo problem their way. The silence of the international community during the recent military operations will also give Milosevic the idea that the West does not object to the steps taken to keep Kosovo within Yugoslavia.

To prevent a forced military solution by the Serbians the UCK/KLA and other political organisations in Kosovo like the LDK should unite and work together. With one strong voice they should then try to get as much as international support as possible. If they at the same time are willing to accept a compromise solution of autonomy within the state Yugoslavia it could be feasible to reach it. The international community could press Milosevic to accept that compromise especially now the Yugoslav army has been involved into the conflict.

The psychology of the people in the region however encourages the choice of maximum demands and any compromise is a sign of weakness. Their thinking is black and white. You win or loose and something in between is not possible. If the Kosovo-Albanians let traditional feelings run their policy they will loose.

The Kosovo conflict will be a limited conflict. The threatened new Balkan war is very unlikely. The UCK/KLA is to small, politically and militarily, to really influence the outcome of the conflict. The Albanians in the region are thereby not in a position to create a Great Albania. They have to many internal differences and they are simply to poor. The neighbouring states have intrests in the region but they have little in common with wishes of the Albanians and they are certainly not willing to die for Pristina or a Great Albania.

 

Standaard