Repairing Kosovo war damage to cost pounds 720m

A PRICETAG of $1.2bn (pounds 720m) has been put on the physical destruction in Kosovo, a new indication that aid to the province will be much lower than predicted. The first formal assessment of damage caused by Serb ethnic cleansing and Nato bombing excludes the cost of providing immediate humanitarian help, or of regenerating an economy which the World Bank said yesterday is at near-standstill.

Officials said the assessment of destruction is "at the lower end" of early expectations with the vast bulk of the $1.216bn total taken up by devastation of housing. The damage is $1.172bn for housing, $21.45m for education, $10.10m for electricity, $6.94m for health and $5.05m for water, says the report, produced for the World Bank and the European Union.

A donor conference starts tomorrow to assess immediate humanitarian needs. The event, attended by representatives from 60 countries and 40 international institutions, will be asked for an additional sum of around $500m.

On Friday, world leaders converge on Sarajevo for a conference designed to launch the reconstruction programme. The outline of the aid package for reconstruction began to take shape yesterday, the priority being a plan to deal with returning refugees. Immediate work will be limited to partial repairs of homes so families can survive the winter even if much of their property is still in ruins.

Experts believe restoring Kosovo's productivity to its pre-war level will take 15 years. Aid agencies expect disenchantment from refugees over the limited resources being devoted to rebuilding.

Western experts are warning that the international community should be prepared to commit itself to remaining in Kosovo for a lengthy period. But the province's administration is unable to pay salaries of employees because of the absence of tax revenues. Bernard Kouchner, the UN chief administrator, has appealed for a special budget of around $50m for the next four or five months.

The European Commission has announced plans to offer 150m euros this year followed by 500m euros for the next three years. The United States is to offer $500m dollars in humanitarian aid. This is in addition to $300m dollars provided by the US since March.