The European Commission also estimated yesterday that the cost of catering for the 700,000 refugees in the region will range from pounds 214m to pounds 492m,depending on the length of the current conflict.
Officials said they expected Europe to provide 50 to 60 per cent of the funds, a figure in line with the aid given to Bosnia after the 1992- 95 war.
At yesterday's meeting of finance ministers several governments, including that of The Netherlands, argued that the money should come from within existing spending plans - the first indications of the political sensitivities surrounding the issue.
The Commission's analysis points to one central difficulty in channelling aid to Kosovo and to the republic of Montenegro, which has taken in about 70,000 refugees from Kosovo. "Since neither is a sovereign country, neither is eligible for membership of the International Monetary Fund and hence not for membership of the World Bank," the report says.
The document puts the estimated costs of reconstruction in Kosovo at "$2-3.5bn [pounds 1.3-2.2bn] over perhaps three years". It warns: "Since Kosovo is likely to enjoy a significant degree of political and administrative autonomy, significant resources will have to be directed to rehabilitate or create from scratch the necessary institutions within the territory." The report says assistance may need to extend to neighbouring countries, such as Romania and Bulgaria.
It adds: "Preparations should begin immediately so that, as soon as there is ceasefire the EU and the rest of the international community is able to put in place, within a short space of time, a priority reconstruction programme with financing assured for at least the first three months and committed for the first year."