The dispute between Kosovo and Serbia is most acute in Kosovo’s northern municipalities. The North has not been under effective control from Pristina for two decades; its sparse and predominantly rural Serb population uniformly rejects integration into Kosovo. Though small and largely peaceful, it is the main obstacle to reconciliation and both countries’ European Union (EU) aspirations. A Kosovo-Serbia dialogue mediated by the EU began on 8-9 March 2011 and is likely over the coming months to look at some of the consequences of the dispute for regional cooperation, communications, freedom of movement and the rule of law. For now, however, Belgrade, Pristina and Brussels have decided that tackling the North’s governance or status is too difficult before more efforts are made to secure cooperation on improving the region’s socio-economic development, security and public order.

For some time, the North will remain in effect under dual sovereignty: Kosovo’s and Serbia’s. Kosovo seeks to rid the region of Serbian institutions, integrate it and gain control of the border with Serbia. It is willing to provide substantial self rule and additional competencies as suggested under the Ahtisaari plan, developed in 2007 by the then UN Special Envoy to regulate Kosovo’s supervised independence. But local Serbs see the North as their last stand and Mitrovica town as their centre of intellectual and urban life. Belgrade will continue to use its influence in the North to reach its primary goal, regaining the region as a limited victory to compensate for losing the rest of its former province.

Serbia and Kosovo institutions intersect and overlap in the North without formal boundaries or rules. The majority Serb and minority Albanian communities there live within separate social, political and security structures. They have developed pragmatic ways of navigating between these parallel systems where cooperation is unavoidable. Yet, in a few areas – notably criminal justice – cooperation is non-existent, and the only barrier to crime is community pressure.

Northern Serbs across the political spectrum overwhelmingly cleave to Serbia. However, Belgrade and the Northern political elites belong to different parties and are bitter rivals. Apart from the technical work of managing the North, they share only one common interest: keeping Pristina out and blocking any international initiative that could strengthen common Kosovo institutions, notably police and courts. Two other groups, former local leaders who retain strong influence behind the scenes and an organised crime underworld focused on smuggling, share this one overriding goal. Belgrade prosecutes criminals and rivals selectively, allowing others room to operate; their presence in the North provides plausible deniability for many of its actions.

Observers in Pristina and friendly capitals see Serbia’s massive payments to the North as a major obstacle to the region’s integration into Kosovo. As long as Serbian money sustains their way of life, Northerners have little incentive to compromise. Yet, Kosovo’s own constitution expressly permits Serbian funding for education, medical care and municipal services, provided it is coordinated with Pristina, which currently it is not. Only the small amounts that support Serbian police and court systems directly undermine Kosovo’s integrity.

Virtually all Northern Serbs reject integration into Kosovo and believe their institutions and services are far better than what is offered south of the Ibar River, especially in education and health care. Recent scandals in Pristina, such as alleged massive corruption in the governing PDK party and a December 2010 Council of Europe report claiming implication of top Kosovo officials in organ trafficking, reinforce this view. Serbs distrust Pristina, believing that rights and protection promised now would be quickly subverted after integration. They are willing to cooperate with Pristina individually but not to accept its sovereignty. The North is subject to none of the pressures that brought a measure of integration to Kosovo’s southern Serb enclaves, and its views show no sign of softening.

Like Kosovo as a whole, the North suffers from a reputation for anarchy and domination by gangsters and corrupt politicians. And as in the rest of Kosovo, the reputation is largely false. Crime rates are similar and within the European mainstream; urban Mitrovica has more than its share of offences, the rural municipalities much less. Neighbouring Albanian-populated districts fall between these two Serb-held areas in rates for violent and property crimes. The real problems are contraband and intimidation directed at political and business rivals and anyone associated with Pristina.

Well-established Albanian-Serb networks, nevertheless, smuggle goods, free of duty and tax – especially diesel fuel – from Serbia via the North to southern Kosovo. The trade supports a criminal elite that, while small in the regional context, is still large enough to dominate Northern Kosovo. Curtailing this smuggling would benefit all and is achievable with the tacit support of Belgrade and most Northern Serbs. Some goods remain in the North, however, and residents feel no sympathy for policies that would enforce their separation from Serbia.

Nowhere is the North’s dual sovereignty as problematic as in law enforcement. Rival Kosovo and Serbian systems each have only partial access to the witnesses and official and community support they need. The Kosovo police lack the community’s trust and have a poor reputation. Serbia’s police are barred by a UN Security Council resolution and operate covertly. Serbian court judgments and orders are enforceable only in Serbia itself and are limited in practice to civil matters and economic crimes. Kosovo’s Mitrovica district court technically has jurisdiction north and south of the Ibar but is paralysed and can hear only a handful of cases, judged by internationals from EULEX, the EU’s rule of law mission. The insistence of Kosovo and international community representatives that the Mitrovica court can only fully function after Serbs accept its authority in the North adversely affects Kosovo Albanians in the south and undermines the sense that rule of law is the priority.

The North suffers from a near-total absence of productive employment and depends on state subsidies for its survival; rule of law is weak. These problems are real but insignificant compared to the North’s effect on Kosovo and Serbia. Neither can join the EU while the North’s status is in dispute. Addressing local problems by improving on pragmatic solutions already in place and finding a framework for criminal justice acceptable to the local population would likely perpetuate its uncertain status, by keeping it distinct from the rest of Kosovo. Belgrade and Pristina should use the EU-facilitated talks to consider autonomy for the North in exchange for Serbia’s recognition of Kosovo statehood, as Crisis Group recommended in August 2010. If the political will for this comprehensive compromise is lacking, the parties should not allow the dispute to block progress in other areas. They should instead seek flexible, interim solutions to improve law enforcement, customs collection, and allocation of financial aid in the North.

Pristina/Mitrovica/Brussels, 14 March 2011