Frozen funds, frozen progress: The impact of the EU’s measures against Kosovo

by Federico Baccini and Arian Lumezi

It has now been two years since Kosovo has been subject to restrictive measures imposed by the European Union. These are not sanctions, but rather “temporary and reversible measures” which, in reality, are proving to be neither temporary nor reversible, not even now that the European Commission has announced to start its lifting.

In the meantime, the financial toll on Kosovo—a country seeking EU membership—has become increasingly severe, with over €600 million worth of projects suspended or indefinitely delayed over the past two years.

“Even if the measures are lifted now, the impact of the two-year delay on these projects is greater than their face value,” said Rrona Zhuri, Research Coordinator at the GAP Institute for Advanced Studies who conducted the analysis on the financial impact of the EU measures on Kosovo.

An opaque procedure

In May 2023, tensions with neighbouring Serbia escalated in northern Kosovo, when protests against the Kosovo police’s intervention to facilitate the installation of four newly elected mayors descended into violent clashes, also involving NATO-led KFOR troops. The protests were led by the Serb List, the dominant Serb party in Kosovo, which maintains close ties with Serbian President Aleksandar Vučić.

Following a unanimous vote in the Council, the EU adopted “temporary and reversible” measures against Kosovo on 28 June 2023, in response to what the Commission described as a “lack of cooperation” from the authorities in Kosovo in de-escalating the situation in the north.

Since then, the EU has suspended all bilateral visits, except those conducted as part of the EU-facilitated Serbia-Kosovo Dialogue. The financial consequences have also been considerable. Funding through the Instrument for Pre-Accession Assistance (IPA) has been frozen, and proposals submitted under the Western Balkans Investment Framework (WBIF) are no longer being considered by the WBIF Management Board.

These measures are not formally classified as sanctions—which would require unanimous approval from all 27 member states every six months for renewal—but instead follow a procedure under the Common Foreign and Security Policy (CFSP) framework, which likewise requires unanimity in the Council for their removal.

In its December 2024 conclusions on enlargement, the Council stated that the EU “will gradually lift” these measures “in parallel with further steps” taken by Kosovo’s authorities. Consequently, the Commission announced that it had begun work on a “gradual, conditional and reversible” lifting. However, when asked for clarification, an EU spokesperson declined to provide details regarding the procedure, a potential timeline, and the conditions Kosovo must meet in terms of “progress on the ground” and “sustained de-escalation” in northern Kosovo.

“They should be fully revoked—and without delay,” Riho Terras, the European Parliament’s rapporteur for Kosovo, told The Parliament. If the EU’s objective is to restore dialogue between Kosovo and Serbia, “the unfair treatment of Kosovo does not support that objective,” he added, noting that—as Serbia’s conduct amid rising tensions in the region has not been met with any EU measures—it is “totally unacceptable” that the punitive measures against Kosovo have not yet been lifted “without delay.”

EU sanctions impact in the ground

The measures have caused significant disruption to development plans, hindered local governance, and affected Kosovo’s EU integration trajectory. According to a report launched in June by The Institute for Advanced Studies GAP, a think tank in Kosovo, the scale of the damage is substantial. According to aggregated estimates, projects valued at approximately €613.4 million have been delayed, suspended, or indefinitely shelved. This includes lost grants, postponed infrastructure developments, and blocked access to essential sectors such as energy, education, environment, and digitalization. For a small country like Kosovo, heavily reliant on EU assistance for public investment and development planning, the repercussions have been wide-ranging and deeply felt.

At the heart of the financial impact lies the suspension of projects under IPA II and IPA III — two key EU instruments for supporting candidate and potential candidate countries. Collectively, projects worth around €218 million have been affected. The 2020 IPA agreement saw €32.1 million in suspended projects, including a vital €25 million investment in the central heating system and €7.1 million in completely forfeited funds due to missed deadlines for project initiation. These funds were earmarked for critical areas such as agriculture, rural tourism, and boosting business competitiveness.

The 2021 IPA agreement included €37.5 million in projects that were likewise halted. These covered a range of fields: environmental protection, agricultural and rural development, market reforms, and public administration restructuring. Among the affected programs was the “Young Cell Scheme,” a flagship initiative offering scholarships to Kosovar students aiming to build expertise in EU law, governance, and administration—seen as essential for preparing Kosovo’s civil service for EU integration.

Even more consequential was the freezing of the entire IPA 2022 package, valued at €91.83 million. These funds had been allocated to support key reforms, including fundamental rights, socio-economic development, green transition efforts, and legal harmonization with EU norms. Although the IPA 2023 package was largely spared—with 90% of its €75 million energy-focused grant disbursed on time—plans under IPA 2024, worth €56.4 million, have been delayed and are now set for reprogramming in the 2025–2027 cycle. These include projects in justice sector reform, anti-corruption, energy, culture, and early education—sectors at the core of Kosovo’s EU approximation.

In addition to the suspended IPA projects, about €395.5 million worth of projects under the Western Balkans Investment Framework (WBIF)—jointly funded by the EU, international financial institutions, and bilateral donors— have also been affected.

Around €395.5 million in project applications were blocked. These include major co-financed undertakings with the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), and the World Bank, all of which were intended to modernize Kosovo’s physical and digital infrastructure.

According to the report by GAP Institute, among the hardest-hit sectors is the environment, which accounts for €350.7 million in frozen or delayed funding. The energy sector follows closely behind, with €114.4 million in impacted projects.

Digitalization, a priority for Kosovo’s public administration and education system, has also suffered setbacks. An estimated €57 million in WBIF-funded projects aimed at expanding high-speed internet and improving data infrastructure are on hold. Meanwhile, the culture sector has seen €15 million in potential investments frozen—funds that would have supported the construction of a national concert hall and art gallery in Pristina.

These projects were designed to be financed through a blend of EU grants, loans, and national contributions. The scale of this suspension has created a vacuum in public financing, severely limiting Kosovo’s ability to carry out its strategic development agenda.

Among the most significant is the €25 million central heating system project (Termokos), a key energy initiative from the IPA 2020 agreement. Of this amount, €17.6 million was pledged by the EU and €7.4 million by Kosovo. Another important project, the restoration of the Lumbardhi Cinema in Prizren, valued at €800,000, has been completely lost.

“For us, this has been a vital project. One of the core goals of our organization has been to restore the oldest cinema in Kosovo. The restoration also aimed to eliminate any attempt or idea of alteration. We have been advocating for this since 2015, when our organization was founded,” said Ares Shporta, director of the Lumbardhi Foundation.

“The process has been extremely prolonged — it began in 2017 with our initial dialogue and their first primary commitment. We’ve faced significant delays, a great deal of ambiguity and lack of clarity. In the end, we received a three-line letter from the EU Office for Cooperation saying they were sorry, but the project was canceled due to imposed sanctions,” he added.

The largest suspended IPA program is the “EU for Environment and Renewable Energy” initiative under IPA 2022, worth €68.85 million, which aimed to support projects in environmental protection, energy, and professional development.

The consequences are not limited to missed financial targets—they reverberate across Kosovo’s institutions and society. The delays have led to cost increases, lost momentum in vital reforms, and deteriorating services in energy, education, and environmental protection. Local governments, particularly in smaller municipalities, have faced a crisis of capacity, with several projects halted midstream. The Association of Kosovo Municipalities has warned that the disruption in EU funding has resulted in major cutbacks in service delivery, exacerbating inequalities between more and less developed regions.

“This article was produced as part of the Thematic Networks of PULSE, a European initiative that supports transnational journalistic collaborations.”