Kosovo: Despite another electoral win, the ruling party’s loss of parliamentary majority will complicate governing

Event

On 9 February, the ruling LVV party (“Self-Determination Movement”) won the parliamentary elections with a large 41% of votes. However, unlike at the previous elections in 2021, PM Kurti failed to win a majority, constraining him to difficult talks with opposition parties to form a government coalition. Those parties are also contemplating to negotiate to form a coalition and keep Kurti out of power.

Impact

PM Kurti’s new electoral victory has confirmed the wind of political change that started blowing in 2021, when the historical independence parties were defeated. However, his rule has been marked by sharply heightened tensions with Serbia and the Serb community in Kosovo’s north, leading to rising external pressures and suspended EU aid. Centre-right parties, on the other hand, have pledged to improve relations with Serbia and are open to EU and NATO memberships. Consequently, the type of government that will be in place will matter a lot in tracing Kosovo’s future trajectory. The LVV party’s capacity to get the necessary support from an opposition party to form a government is questionable given their poor relationship. Therefore, a coalition of opposition parties is a credible scenario but could trigger LVV supporters’ protests and have difficulties to keep a united front over time. All in all, policy-making could be more complicated in the coming years.

Whichever government will be in place, improving relations with the EU will pass through easing tensions and normalising relations with Serbia and Kosovo’s Serb community. This is even more important now that the external context has changed because, once in power, Kurti could face an adverse US administration in addition to currently frozen US aid. Therefore, the future government could strive to seek the lifting of EU sanctions to limit the economic damage. Indeed, the economic outlook for 2025 is clouded by the economic crisis in Europe, fuelled by an aggressive US trade policy – especially expected increased import tariffs – and amid weaker competitiveness in the EU. Moreover, the economic downturn in Germany could negatively impact workers’ remittances to Kosovo despite their usual resilience.

All Kosovo’s country risk ratings are expected to remain unchanged in the near term.

Analyst: Raphaël Cecchi – r.cecchi@credendo.com