EU bickers over Kosovo rebuilding

EUROPE INDULGED in a new round of squabbling yesterday over the spoils of Kosovo reconstruction. European Union foreign ministers argued about rival bids to host a Balkan regeneration agency, and a separate dispute broke out over the bill for a special summit.

The dispute over the location of the European Agency for Reconstruction, which ended in a messy compromise last night, is the latest in a series of disagreements to have dogged the rebuilding effort.

One senior European Commission official said the member states were behaving in a "disgraceful" way, and United States diplomats have been taken aback by the naked self-interest of the infighting.

Greece had been promised that the agency, which will co- ordinate EU aid to the region, would be based in Thessaloniki, rather than in the Kosovan capital of Pristina. The pledge was part of elaborate horsetrading over Kosovo reconstruction that took place in Rio at a recent EU-Latin America summit, when the EU leaders agreed on candidates for plum reconstruction jobs. Germany, Austria and Greece all had contenders for key positions in the reconstruction, and Bonn won when Bodo Hombach, a close aide to the German Chancellor, Gerhard Schroder, became the candidate to take over the EU's "stability pact", designed to integrate the Balkans into the European mainstream.

In a deal struck late at night, Austria was bought off with the job of the new United Nations representative in Bosnia and Greece was promised the site of the reconstruction agency. Athens has argued that the agency should be based outside Kosovo as a signal that the rebuilding will embrace the wider Balkans, including Serbia when President Slobodan Milosevic leaves office.

That deal provoked an outcry, with the European Commission objecting on the basis of the waste of money involved in siting an agency 125 miles from the main areas of construction. As the wrangling reached a climax, one Greek diplomat said yesterday: "Thessaloniki is a European city which is also close to the theatre of rebuilding. If it is in Pristina, that is a message that only Kosovo is going to benefit."

A European official argued: "This is the usual EU horsetrade. If it goes to Thessaloniki you have the economic advantages for the local economy in terms of employment and spending by Eurocrats."

Last night, a compromise emerged under which the agency will be divided between the two, with a "general services administration" in Thessaloniki and an "operational centre" in Pristina. According to one diplomat the centre in Pristina will enjoy "a considerable degree of autonomy".

A spokesman for the European Commission could only give the deal a half- hearted welcome, arguing that "heads of government in Rio thought Thessaloniki should be the location. This is a reasonable compromise."

Yesterday's meeting of foreign ministers also agreed that some sanctions, including an EU flight ban on Yugoslavia and measures to discourage sporting links with Belgrade, as well as the oil embargo on Montenegro and Kosovo, would be lifted soon. The ministers also agreed to look at ways of aiding "democratic forces", including the municipalities within Yugoslavia that have opposed Belgrade, as part of a wider strategy to undermine Mr Milosevic.

Meanwhile, Mr Hombach has put noses out of joint by arguing that 30 European Commission officials should staff a separate office, controlled by him. Mr Hombach, who has a house not far from Brussels in Muhlheim, wants his base to be in the Belgian capital.

A further dispute has broken out over the summit, due to take place in Sarajevo on 30 July and designed to launch the reconstruction efforts. Finland, which has taken over the EU presidency, has refused to foot the bill for the meeting, arguing that it was bequeathed it by its predecessors, the Germans.