One of Europe’s poorest countries, struggles as Iran war drives up fuel prices

Farmers of Pestova firm on the back of a tractor plant potatoes in the village of Pestove[AP Photo]

Kushtrim Ajvazi is proud to be part of a successful business in one of the poorest countries in Europe. The company where he is a manager produces potato chips and other snacks that can be found in almost every shop in Kosovo and are exported abroad.

But Ajvazi’s company faces unplanned challenges because of a steep rise in fuel prices caused by the war in Iran, whose ripple effects have reached this small corner of southeastern Europe.

The Pestova company has nearly 100 acres of potato fields in eastern Kosovo that are used to make the potato chips sold under the name Vipa. Both the firm and its distribution network were hit when the wholesale price of fuel rose from 1.10 euros to up to 1.7 euros per liter, Ajvazi said.

Kosovo does not have its own fuel production. The price of diesel and gasoline is determined by importers whose profit margin is capped at 12%.

Ajvazi urged the government to help ease the burden. Spring is potato planting season.

The company needs a lot of fuel so costs are “extremely high,” he said. Fertilizer prices also have gone up, but the company had reserves.

“We are analyzing and calculating every additional cost, and if we see that this process of rising costs continues, we will be forced to adjust our prices,” Ajvazi said.

While other countries in Balkans have put in place measures to ease the effects on farmers, Kosovo’s government is yet to act. The government did not respond to questions.

Romania, Hungary and Serbia have introduced special diesel prices for farmers or lowered the state tax income.

In Kosovo, economic experts warned that the government should urgently respond in case of a further price increase, to prevent greater damage to the economy.

“There is not one sector that is not affected by the price increase,” economist Safet Gerxhaliu said.

Ajvazi said his company faces additional problems because around 40% of production is exported with prearranged, fixed prices that can be changed only with a 90-day advance notice. He said it is hard to plan anything without stable prices.

“We call on the government to ease this phase for us,” he said. “We are a company that exports to more than 23 different countries, including those in Europe.”

The price hike has also burdened ordinary citizens. Bardh Mehmeti, an IT professional from the capital, Pristina, said he now pays 100 euros ($115) for a full tank, up from 80 euros ($92) before the crisis. Mehmeti is now “seriously considering” ways to get an electric car.

Kosovo’s economy has struggled ever since the country declared independence from Serbia in 2008 following a war. Serbia does not recognize the split, and the unresolved situation has stalled the countries in their bids to join the European Union.

Also affecting Kosovo’s economic situation has been a prolonged political crisis that left the country without a fully functioning government for much of last year. The current government of Prime Minster Albin Kurti is again in a stalemate over a failure to elect a new president.

The main opposition Democratic Party has criticized what it calls government inaction and urged temporary tax cuts to help ease the burden on citizens and businesses. ZANA CIMILI, PRISTINA, MDT/AP