Experts: Institutional Deadlock Threatens the Economy, Investment and the Normal Functioning of the State

The continuing institutional crisis is raising concerns about the impact it could have both on economic development and the functioning of the state.

Experts say incomplete institutions are worsening the investment climate, increasing uncertainty among businesses and jeopardizing the use of significant European Union funds earmarked for reforms and development.

Although the private sector may benefit from a more stable legal framework because rules do not change frequently, the deadlock is causing significant delays to public projects, infrastructure investment and strategic reforms.

The prolonged blockade is also creating a vacuum in the functioning of the state, increasing security risks and weakening democratic oversight.

According to experts, the economy cannot develop sustainably, investment cannot be attracted and the state cannot be strengthened without complete and functional institutions.

Economics expert Jakup Bellaqa told “Bota sot” that the absence of fully constituted institutions in Kosovo is having serious consequences for the economy.

According to Bellaqa, the institutional vacuum is producing consequences on both the political and economic fronts. He explains that political instability translates directly into economic instability, harming the business environment and macroeconomic and macrofiscal indicators, while also deterring foreign investors from strategic sectors of the economy.

He says the negative effects of this situation are evident in economic growth, social welfare and citizens’ quality of life.

Bellaqa emphasizes that non-functional institutions cannot achieve the highest level of efficiency, while the consequences of this inability are directly reflected in economic development and the population’s well-being.

The expert also warns that Kosovo could lose access to an important source of European Union funding.

According to him, the country risks being unable to use EU loans worth more than 800 million euros, allocated under the Growth Plan and intended for structural economic reforms and public administration.

Bellaqa stresses that Kosovo’s economic integration becomes more difficult if the country does not have stable, functional and fully constituted institutions.

He says that, under these circumstances, the economy cannot integrate into either the regional or European market. According to him, foreign investors are reluctant to sign medium- and long-term contracts because they view Kosovo as a country marked by economic instability and legal uncertainty.

According to the expert, the consequences also affect the labor market. The current situation has a direct impact on Gross Domestic Product growth and creates instability in employment, particularly for younger generations, who are still not sufficiently prepared for the demands of the labor market, Jakup Bellaqa concludes.

A different perspective is offered by Korab Rashiti, an Albanian lawmaker in Bern, Switzerland. He says that when examining the consequences of the absence of fully constituted institutions, a clear distinction must be made between the private economy and the functioning of the state.

In a statement to “Bota sot,” Rashiti says a measured analysis of the situation requires these two aspects to be considered separately. He is not convinced that the private economy is necessarily harmed by the absence of fully constituted institutions.

According to him, the fact that Parliament is not continuously passing new laws and regulations may provide greater legal stability. Above all, businesses need predictability, and when the rules do not change every month, entrepreneurs find it easier to plan and invest.

Rashiti rejects the idea that economic development is measured by the number of laws passed. He notes that politicians sometimes behave as though the economy depends on the number of measures approved, when in reality wealth is created by citizens and businesses, not in the halls of Parliament.

However, he emphasizes that the picture changes entirely when it comes to the functioning of the state apparatus.

According to Rashiti, public projects, infrastructure investment and strategic reforms cannot be carried out without functional institutions. After more than two years of political deadlock, many projects have been postponed, and it is reasonable to expect some of them to face delays lasting several years. He adds that the cost of time lost in politics is later passed on to the administration and citizens.

Summarizing the distinction, Rashiti says the private sector may benefit from greater legal stability when politicians do not constantly change the rules, while state projects bear the greatest burden of the institutional deadlock.

According to him, the concern is not limited to the economy, as the blockade also affects security and institutional functioning.

Rashiti warns that institutions operating at half capacity for an extended period create an institutional vacuum. He recalls that history shows such vacuums never remain unfilled, because various actors, whether domestic or foreign, may extend their influence over institutions and society.

For this reason, he says, the proper functioning of the state is crucial not for producing as many laws as possible, but for ensuring order, security and the enforcement of the law.

Rashiti also criticizes the political class for allowing the crisis to drag on. He says the economy does not stop when politicians do: businesses open every morning, workers report to their jobs, entrepreneurs take risks and citizens create value, while politicians continue debating who will get each seat.

In his assessment, Kosovo does not lack politics, but governance. Rashiti raises the possibility that the problem over these years has not been too little politics, but too much of it and a lack of governance.

He emphasizes that states do not progress through the number of statements issued or crises manufactured, but through functional institutions and citizens who are enabled to work and build the future.

Commenting on current political developments, Rashiti also raises the question of whether this situation may suit the acting Prime Minister.

According to him, from a political standpoint, it is more comfortable to govern without a fully functional Parliament and without constant scrutiny from parliamentary committees than to be held accountable every day. This, Rashiti says, is precisely where the problem lies, because in a serious democracy, those in power should never feel comfortable when institutional oversight is absent.

Rashiti concludes that when a government becomes accustomed to exercising power without oversight, it is no longer the opposition that loses, but democracy itself.