Kosovo's Dinar ban sparks cash crunch for ethnic Serb community

Serb communities in parts of Kosovo are struggling to get their hands on dinars, jeopardising the salaries, pensions and social security payments that thousands there get from Belgrade.

Frustrations are spiking more than a month after a controversial new rule made the euro the only legal currency in Kosovo, effectively outlawing the use of the Serbian dinar.

The move sparked anger in Belgrade, which does not recognise Kosovo's independence and continues to finance a parallel health, education and social security system for Serbs there.

But the Kosovo government has repeatedly blocked currency shipments at the border, hoping to choke off the supply of cash that authorities claim is the lifeblood for organised crime groups across the north where most Serbs live.

Kosovo's roughly 100,000 Serbs have clung tight to the dinar since a brutal late-1990s war between Serbia and ethnic Albanian insurgents saw Serbian troops and government personnel withdraw from the breakaway province that declared independence in 2008.

Those living near the northern border with Serbia have greater connections to Serbian government institutions and still have access to a trickle of dinars.

But it is much harder for enclaves further from the frontier already more integrated into the Kosovo system.

'Freakish decisions'

In Gracanica home to a 14th-century Orthodox church seen as a spiritual and political stronghold for generations of Serbs, the dinar regulation has been hitting the surrounding community hard.

Long lines have been forming at Serbia's Postal Savings Bank, the only place where Serbs could receive pension payments and salaries for work in Serbian institutions in the area.

With its cash reserves dwindling, the bank has imposed a 10,000-dinar (85-euro) withdrawal limit.

"The pension is late, but the bills are not. I don't know how we will make it," said Snezana Vujovic, a 43-year-old nurse.

"The economic situation is already difficult, and without the money from Serbia it is even more harsh," Momir Jeftic, a 68-year-old pensioner told AFP as he stood next to an empty cash machine.

"Now whoever wants money must go to Serbia," Jeftic added, saying he would likely have to dip into emergency food supplies saved for a rainy day.

The spiralling financial crisis has forced many Kosovo Serbs to spend hours on the road travelling back and forth to the nearby border towns of Kursumlija, Vranje and Bujanovac in Serbia for money.

Despite criticism of the ban by several Western governments, including the US, Kosovo authorities have doubled down on the measure.

Officials have introduced a three-month transitional period to help the Serb community adapt.

Branimir Stojanovic, a Kosovo Serb civil society leader based in Gracanica, said the measure would likely bridle the parallel state that allowed Serbs to bypass Kosovo institutions.

"When you cut off what supplies that mechanism, you have actually made a move to shut down that entire system."