US Decries Kosovo Police Raid on Serbian Bank

(Bloomberg) -- The US and European Union condemned a raid by Kosovo police on a local Serbian bank, saying the operation wasn’t coordinated with Western allies and stokes already simmering tensions in the region.

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A decision by Kosovo’s government earlier this year to restrict the use of the Serbian dinar has triggered a standoff with Serbia over the treatment of the minority group. US and European Union negotiators have also criticized Kosovo’s prime minister, Albin Kurti, for a heavy-handed approach that would affect payments to pensioners and welfare recipients.

After weeks of talks to resolve the deadlock, tensions flared Monday after armed police in bullet-proof vests entered six branches of Banka Postanska Stedionica in northern Kosovo, home to the biggest Serb community in the country.

The move “undermines perceptions of Kosovo’s good faith in resolving outstanding issues with Serbia through the EU-facilitated Dialogue,” a State Department spokesperson said in a statement.

“Monday’s operation proves again that Kosovo authorities prioritize unilateral and uncoordinated actions rather than cooperation with its friends and allies,” the EU said.

EU-brokered talks in Brussels aimed at resolving the currency row last week broke down amid mutual recrimination. Kosovo, which unilaterally split from Serbia in 2008, has used the euro as a defacto currency since 2002 even though it’s not a member of the euro area, while the Serb minority has continued to make payments in dinar.

Kosovo says the measure is meant to increase oversight of the nation’s finance system by making the euro the sole currency, with Kurti having said the decision is “non-negotiable.” But US and EU authorities have urged Pristina to avoid inflaming tension with a softer approach.

‘Savage Act’

Kosovo’s interior minister, Xhelal Svecla, said the police raid was aimed at an “illegal financial institution.” Police said they seized some €1.6 million ($1.7 million), 74.7 million dinars ($690,000), 19,500 Swiss francs ($21,428) and $13,800 dollars in illicit cash from the branches.

The action came a week after Kosovo’s central bank announced that a transition period for the Feb. 1 regulation had ended. Six people, including Igor Radic, the director of the Postal Savings Bank of Serbia in Kosovo, were questioned, police told Bloomberg.

Serbian Prime Minister Milos Vucevic denounced the raids Monday, calling them “another savage act that directly jeopardizes the survival of Serbs in Kosovo.”

Read More: Currency Crackdown in Kosovo Turns the Screws on Ethnic Serbs

The rebuke from Western allies of Kurti’s government wasn’t the first this month. Kosovo offered a last-minute concession on recognizing a degree of autonomy for Serb communities just as it sought to put its bid to join the Council of Europe back on track.

But leaders of Germany, France and Italy rebuffed the overture, saying that it diverged from an EU blueprint and was insufficient to meet European demands.

“Regrettably, the steps you propose fall short from addressing the urgent need for decisive steps” toward granting autonomy, Chancellor Olaf Scholz, President Emmanuel Macron and Prime Minister Giorgia Meloni wrote in a joint letter May 15.

Kosovo’s hopes to join the Council — a step toward greater international recognition — were dashed for now as foreign ministers from the 46-member group that promotes democracy took the bid off the agenda.

--With assistance from Misha Savic.

(Updates with EU condemnation in headline, first, fifth paragraphs.)

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