Ian Bancroft in Belgrade -

The organisation charged with overseeing Kosovo's democratic development declared on July 2 that international supervision of Kosovo had come to an end, four years on from its unilateral declaration of independence from Serbia.

With the planned closure of the International Civilian Office (ICO), which retains executive powers to ensure full implementation of the "Ahtisaari Plan", in September, Kosovo will assume full sovereignty - supposed recognition of the progress that the state has made under international tutelage.

However, in many respects, the ending of supervision is the international community's "mission accomplished" moment in Kosovo - ie. raising the victory flag whilst many serious underlying problems remain. Indeed, recent speculation suggests the EU is pushing for its rule of law mission, Eulex, to be included in Kosovo's constitution, in order to give its continued presence a sound legal basis.

Yet Eulex itself has been heavily criticized for its failure to make significant progress in the fight against organised crime and corruption - the twin scourges that continue to inhibit Kosovo's transition - and there are fears that any further progress will be severely constrained, particularly after a recent downsizing of its operations.

One of the main challenges concerns the north of Kosovo, where Serbs refuse to recognise the legitimacy of Pristina's institutions - a view confirmed by a referendum earlier this year. The north has witnessed makeshift barricades and sporadic outbreaks of violence since attempts to forcibly install Kosovo customs officials on the administrative boundary line with Serbia last July. Though Pristina recently opened an Administrative Office for the north, its presence and authority remain extremely limited.

The recent death of Dino Asanaj, the head of Kosovo's Privatisation Agency - who allegedly committed suicide by stabbing himself eleven times, amidst suspicions of corruption investigations against him - has re-focused attention on Kosovo's privatisation process. Riddled with mismanagement and corruption, privatisation remains contentious. Serbia continues to assert ownership of many state-owned companies and has called upon the UN to block the transfer of funds from privatisations to the post-independence Kosovo Privatization Agency, whose legitimacy Serbia does not recognize.

The Trepca Mine in Kosovska Mitrovica - which once upon a time employed 23,000 people - provides an important example of the ownership quandaries. Trepca is essentially two separate companies - one managed by Albanians, the other by Serbs. The latter, which employs around 3,500, continues to be hit by economic sanctions imposed by the Kosovo government. The Tax Administration of Kosovo has seized bank balances, whilst the Privatisation Agency of Kosovo refused to provide customs clearance for exports.

Though dialogue between Belgrade and Pristina has to date yielded a number of technical agreements - including on Kosovo's participation in regional fora - they remain sporadically implemented. New Serbian President Tomislav Nikolic has called for dialogue to take place at a higher political level, and has acknowledged his "historic responsibility" vis-a-vis Kosovo. With his counterpart in Pristina, Atifete Jahjaga, facing intense scrutiny about the length of her own presidential term, however, Kosovo's own domestic politics may provide new obstacles to securing a compromise, particularly as it begins to assert its newly awarded "full sovereignty."