By Aleksandar Vasovic and Fatos Bytyci
BELGRADE/PRISTINA (Reuters) - Shops, restaurants and bakeries in Serb-dominated northern Kosovo closed their doors on Monday to protest against a 100% tax the country has imposed on goods imported from Serbia, in a move that could further sour ties between Belgrade and Pristina.
The government introduced the tax last year in retaliation for Belgrade blocking Kosovo, its former province, from joining the international police organisation Interpol as a separate nation.
The move lead to an impasse in talks on normalising ties between Belgrade and Pristina, seen as crucial if both countries want to join the European Union.
Serbia's exports to Kosovo amount to around 500 million euros (£448 million) a year. Kosovo also imports from neighbouring Montenegro, Macedonia and Albania.
Four Serb municipalities in Northern Kosovo have pledged alliance to Serbia and openly defy the government in Pristina. Monday's protest was backed by the government in Belgrade.
"The closure of all shops in Northern Kosovo ... should demonstrate ... that Serbs will not remain silent," Veljko Odalovic, the Secretary General of Serbia's foreign ministry told state-run RTS TV.
The import taxes are expected to dent Serbia's economic growth this year but both its central bank and the IMF still expect its economy to expand 3.5% this year.
Milan, a shopkeeper from Northern Mitrovica, said all retail businesses in the Serb-held areas in Kosovo's north were eerily empty on Monday.
"People stocked some food, but this condition must not last forever. We should stop hurting ourselves," Milan, who refused to give his full name from fear of reprisals, said by phone.
Kosovo Prime Minister Ramush Haradinaj last week accused Belgrade of trying "to create a humanitarian crisis in this part of Kosovo."
Kosovo's government has said that goods coming from Serbia have been replaced by those from elsewhere in recent months.
The border with Serbia has been open to smuggling, which flourished after Pristina imposed its import taxes. In May, Kosovo police arrested 19 people including police and customs officers in connection with alleged smuggling deals.
Majority-Albanian Kosovo declared independence from Serbia in 2008, almost a decade after NATO air strikes ended Belgrade's brutal counter-insurgency in 1998 and 1999.
Serbia still considers Kosovo its own. Backed up by powerful ally Russia and several EU countries, it has been blocking Kosovo from joining international institutions.
(Reporting by Aleksandar Vasovic and Fatos Bytyci; Editing by Hugh Lawson)