In the 1990s, Yugoslavia, which had once been a role model for development, became a symbol for state collapse, external intervention and post-war reconstruction. Today the region has two international protectorates, contested states and borders, severe ethnic polarisation and minority concerns. In this first in-depth critical analysis of international administration, aid and reconstruction policies in Kosovo, Jens Stilhoff Sorensen argues that the region must be analysed as a whole, and that the process of state collapse and recent changes in aid policy must be interpreted in connection to the wider transformation of the global political economy and world order. He examines the shifting inter- and intracommunity relations, the emergence of a 'political economy' of conflict, and of informal clientelist arrangements in Serbia and Kosovo and provides a framework for interpreting the collapse of the Yugoslav state, the emergence of ethnic conflict and shadow economies, and the character of western aid and intervention.Western governments and agencies have built policies on conceptions and assumptions for which there is no genuine historical or contemporary economic, social or political basis in the region. As the author persuasively argues, this discrepancy has exacerbated and cemented problems in the region and provided further complications that are likely to remain for years to come.