PRISTINA, July 23 (Reuters) - Kosovo's central bank governor Hashim Rexhepi was arrested on Friday after police searched his home and office in a corruption investigation, the European Union Police and Justice mission said.
Central bank spokesman Besnik Kada said Rexhepi was arrested at his office. Kosovo's main currency is the euro and Rexhepi's role was to monitor the work of banks in the country, which proclaimed independence from Serbia in 2008.
"The related searches are in connection with an ongoing corruption and financial investigation into suspicion of abusing official position or authority, accepting bribes, tax evasion, trading in influence and money laundering," the statement said.
Kosovo, 90-percent ethnic Albanian, declared independence from Serbia in February 2008 but remains heavily reliant on foreign aid. Investors regularly cite organised crime and corruption as a major obstacle.
The arrest comes a day after the International Court of Justice ruled that Kosovo's secession from Serbia did not violate international law.
Analysts said the international community was sending a signal to Kosovo officials that financial aid would not last forever or be unconditional.
"It seems that immediately after the Hague verdict we have the first arrests that were promised by EULEX," said Shpend Ahmeti, head of Kosovo's Institute for Advanced Studies.
There were no longer fears that arrests could destabilise the country, he said.
With unemployment at nearly 50 percent, analysts say Kosovo needs double-digit growth and strong foreign investment to revive its economy, but the 4 billion euros of aid it has received so far, mostly from EU countries, was not sufficient.
In the past month EULEX has searched the ministry of transport, state-owned Kosovo Telecom and a number of private companies over cases involving alleged corruption.
"The arrest of the governor means that corruption is so deep and this state will have to work a lot to establish the rule of law," said Muhamet Mustafa, an economy professor at AAB-Riinvest university. "This is an individual case and banks are stable in Kosovo."
Rexhepi is Kosovo's representative at the International Monetary Fund, with which Kosovo earlier this year clinched a 108 million euro deal that should pave the way for other financing from the EU and the World Bank.
Some 10,000 NATO troops oversee the fragile peace while EULEX monitors the work of police and the judiciary and deals with sensitive cases such as war crimes and corruption.
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