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DJENERAL JANKOVIC, Serbia (Reuters) - Kosovo's U.N. administration took two substantial steps toward cementing the province's autonomy Friday, declaring the German mark its currency of choice and starting up a customs service.
Both moves distance Kosovo from the Yugoslav state, of which it officially remains a part.
The Yugoslav currency, the dinar, remains legal tender but using it will not be encouraged and all revenue from the customs service will be used in Kosovo, not transferred to Belgrade.
But administration chief Bernard Kouchner, declaring the customs service open at the Hani I Elezit/Djeneral Jankovic border crossing with Macedonia, insisted he was not taking Kosovo down the path to independence.
"This is not the start of independence for Kosovo. It was autonomous before. It had its services," he said.
Kosovo lost its autonomous status in 1989 as the Serbian state cracked down on its ethnic Albanian majority. Western powers' policy is that Kosovo should regain self-government but stay within the framework of the Yugoslav federation.
"I'm in the process of starting the very beginnings of a democratic system," Kouchner added. "It's not finished and it's going to take a long time, believe me."
Since Yugoslav forces withdrew in mid-June and NATO-led peacekeepers moved in to take their place, Kosovo has been a customs-free zone, with goods flooding in untaxed from neighboring countries.
United Nations officials saw re-establishing the customs service as a priority to start bringing in much-needed revenue to fund their administration when temporary financing from the international community runs out in a few months.
"For us, this is very important -- not only to organize the first customs service in Kosovo but to get money, taxes to build the Kosovo budget," Kouchner said.
Kouchner's administration has insisted it wants a multi- ethnic Kosovo, with Serbs and Albanians living and working alongside one another despite years of mutual mistrust and 16 months of armed conflict ended by NATO bombing this year.
Both members of Kosovo's ethnic Albanian majority and Serbs would be welcome in the service, U.N. officials said.
But Yugoslav federal staff would not be at the borders, said Joly Dixon, the official in charge of Kosovo's economy "because they haven't shown that they want to be there."
The U.N. Security Council resolution which formally brought an end to the Kosovo crisis allows Yugoslav and Serbian personnel to maintain a presence at key border crossings.
Dixon said the U.N. mission in Kosovo (UNMIK) had decided to make all currencies legal tender in Kosovo but it would use marks where possible. People could still pay UNMIK in dinars but would be charged an administrative fee for doing so.
He said the new measure had also done away with all foreign exchange controls in Kosovo. "It's an extremely open and modern piece of legislation," he told reporters in Pristina.
The mark and other foreign currencies have been widely used for years by Kosovo Albanians, who have relied on payments from relatives abroad to supplement their income, and they have become even more common since the withdrawal of Serb forces.
"We've simply accepted what's been the implicit rule for a long time," Kouchner commented.