Kosovo celebrates its first anniversary of political independence from Serbia on Tuesday February 17, but reports of the mini-state's success as a sovereign nation have been dismal.

The belief by many that independence would quickly put an end to the country's extreme poverty and misery has evaporated among its mainly ethnic Albanian population.

With the moribund economy still dependent on substantial foreign capital, nearly half of the workforce is unemployed and many Kosovo Albanians barely survive on remittances from relatives working in the European Union.

In spite of billions of euros that have been pumped into Kosovo since the end of the war a decade ago, the country's infrastructure and public roads are in need of repair.

Lawlessness and corruption

Kosovo had been a ward of the United Nations since the end of the war in 1999, but it took nearly a year to deploy the EU's law-enforcing Eulex mission, whose mandate is to replace the dwindling UN forces.

Since the 205-million-euro ($261 million) bill for sending security forces, judges and prosecutors had been footed in advance, the cause for the delay in transferring administrative authority from the UN to the EU was due to political rather than financial factors.

Continual wrangling between the EU and the UN missions over jurisdiction has left one-quarter of Kosovo's territory under the control of neither, creating a vacuum where local smugglers engage in the illicit trade of everything from petrol to human beings.

Corruption is rampant among not only among local politicians and bureaucrats, but has filtered up to international officials. The chaos and lawlessness also help the Serb minority, who mainly reside in Kosovo's north to resist Pristina's authority.

Diplomats and observers say that the problems are likely to remain for a long time.

Ethnic conflicts still below the surface

To many, it appears that Kosovo lost its place at the top of the international agenda as soon as the immediate risk of renewed bloodshed abated. But ethnic tensions and conflicts are still bubbling below the surface. On February 10, thousands of Serbs in the town of Mitrovica staged a protest against the ethnic Albanian majority's security forces.

"The situation in Kosovo has remained stable in the past year, but (the protest) highlights the continued fragility of the situation on the ground," said Pieter Feith, the EU's special representative to Pristina, to the AFP news agency.

The EU blames Belgrade for hampering EULEX's work in the majority Serb parts of the country.

Joost Lagendijk, a high-level EU official told AFP, "It means that the mission depends on the goodwill of the Serbs in these areas, and the courts there and Serbian police do not want to cooperate with EULEX or apply Kosovo's laws."

Conflicts for moderate Serbs

Analysts say that moderate Serbs are in a difficult bind when it comes to cooperating with the EU's EULEX forces, since the leadership in Belgrade does not want to be seen as supporting Kosovo's independence.

European diplomats don't want to be seen forcing Belgrade's hand either, for fear of undermining the moderate pro-European government of Boris Tadic and bolstering nationalists.

Another reason for EU caution has to do with internal bickering among the member states with regard to Kosovo's split from Serbia.

The former autonomous Serbian province unilaterally declared its independence one year ago on February 17, prompting 22 out of 27 EU states to recognise the tiny new country in the Balkans.

EU internal divisions on Kosovo

The European Union's Big Three -- Germany, France and the UK -- all recognized Kosovo and German Foreign Minister Frank-Walter Steinmeier even termed the split a "European success." But Spain, which worries about its own separatist movements in Catalonia and the Basque country, viewed Kosovo's secession as a violation of international law.

So far 54 countries, including the United States, have recognized Kosovo. But Moscow, in support of its Serb ally, has used its permanent seat in the United Nations Security Council to strongly condemn Pristina.

The Serbs regard Kosovo as the cradle of their civilization and national identity and say they would never recognise Pristina.

The EU, which generally supports the policy of the Big Three, has argued that Kosovo, due to its history of ethnic cleansing at the hands of Serbian forces, has always been a special case.

EU top diplomat Javier Solana and most European leaders were convinced that there was no alternative to independence for the country after peace efforts brokered by the UN had failed.