A decade and a half after declaring independence in 1991, the Republic of Macedonia is a candidate for membership to the European

Union.1 Measured solely through financial, economical or cultural criteria, the EU could very well place Macedonia together with the other countries of the Western Balkans "on hold" for quite some time. That is why the decision of the European Union to grant Macedonia a candidate status is an act of vision on part of its political leadership. Namely, the admission of the countries of the Western Balkans will mean further implementation of the idea of an integrated Europe, a peace-plan contemplated, for a long time, by distinguished Europeans that became a way of controlling malignant European nationalisms causing two wars and the tragedy of the holocaust in the twentieth century. After the last Balkan wars, European integration became essential for the stability and the progress of the Balkan region and the European continent as a whole. Macedonia's road to the EU has been a difficult one. Never wavering from its initial strategic foreign policy aim formulated in 1991 membership in the EU, the Republic of Macedonia, however, had to surmount serious internal and external obstacles in order to survive and to move towards its goal. Internally, while most of the other countries of Eastern Europe had to make one transition from communism and dictatorship to capitalism and democracy, Macedonia had two additional transitions from war to peace and from a nation-state to a multinational state. Externally, Macedonia's historically contested nationality and territory put the fledgling state to serious tests in the relations with its neighbors. After the declaration of independence 1991, Macedonia's new democratic pluralist political system had to be reinvented. It was essential for future stability that representatives of all the ethnic communities participate in laying the constitutional foundations of the democratic state. But in the chained chaos of the dissolution of Yugoslavia, fear and suspicion dominated the behavior of the representatives of the parties as representatives of their respective ethnic groups. The Constitutional system, written and voted by ethnic Macedonians in parliament, did not have protective mechanisms for minorities as collectives, so politics could not absorb their requests and translate them into state policy. In such conditions, nationalism, not democracy, became the only game in town with anger and mutual intolerance growing by the day. Macedonia was on the road to ethnic conflict. It was only a matter of time when Macedonian nationalism would be challenged by Albanian nationalism. Democracy, many were convinced, would resolve future conflicts between the two ethnic groups. But, in the decade after the proclamation of the Constitution yet another theses in politics was confirmed that in conditions of freedom, a just solution of the relation polis-demos or state-people should precede the shaping of the democratic institutions. Namely, a democratic state is possible only if loyalty of all its composing elements. In the case of Macedonia, in order to pass the Constitution with the support of the Albanians in Parliament, an exquisitely difficult task had to be fulfilled the construction of a rightful relation between the state and its nations! In order to do that, an agreement between the demoi was essential, which however, was not reached in 1991. This deficiency could not be surpassed with democracy, because, as Robert Dahl, another authority in democracy studies, warns: the criteria of the democratic process presupposes the rightfulness of the unit itself since it can not be made rightful simply by democratic procedures.4

Under international pressure and with the help of NATO and the EU, the military conflict was brought to a halt, and Macedonia was forced to abandon the constitutional architecture of 1991. The Ohrid Agreement positioned the Macedonian state on the right track that leads towards a multiethnic state.Consensual democracy lay in the foundation of the new strategy, in the shape of a combination of political liberalism, based on the individual rights and the collective rights of the nations. The Ohrid Peace Agreement is a compromise: Macedonia remains a unitary state (there are no territorial solutions for the ethnic conflicts, states the Agreement) but power is shared with ethnic Albanians through several mechanisms: a proportional electoral model that enhances Albanian representation in parliament (27 of 120 MP); a new decentralized local-self government and the creation of municipalities where they are in majority; a right of veto in Parliament over several important issues; Albanian language as a second official language; equitable representation of the minorities in public administration, the police , the army and in the judiciary; the creation of two Albanian universities. The implementation of the Ohrid Framework Agreement is a difficult process, since the majority is inevitably the one that will have to give up some privileges in a very difficult time. With record unemployment, Macedonia became the European leader with almost 40% jobless and a very low level of investments; growing poverty; a weak service in the public sphere (especially in health protection); an inefficient judiciary system; corruption; an underdeveloped system of protection of human rights; and a deficit in the democratic capacity of the state to deal with the problems. The intensity of these serious problems and their continuation makes for the inability of the institutions to establish conditions for the rule of Law, which erodes the legitimacy of political authority. Under such circumstances, the problem of political confidence between ethnic groups has become sharper. Post-Ohrid Macedonian society is on the right track. Constitutional foundations for inter-ethnic stability have created a positive climate for further economic and political development. Reforms in the military have brought the country closer to NATO membership, together with the other two members of the Adriatic group, Croatia and Albania. The expansion of the Western military alliance to the region will, in time, resolve the "security dilemma", creating conditions for economic development and membership in the EU. Fifteen years after the breakdown of the Yugoslav federation, the process of creating new territorial entities is coming to a close. Kosovo will be the last piece of the new mosaic of states created by war and peaceful self-determination. But the end of the process of fragmentation of the region into seven states will have to be followed by the beginning of a process of integration through the creation of a customs union. With the assistance of EU, the Balkan region that amounts to 2% of the economic power of the Union, could easily be absorbed by this pan-European plan. This will liberate the economic potentials that are confined to small and, for foreign investors, unattractive markets. It could, undoughtedly have a positive influence on political stability as well. True, "spiritual union" in a cultural sense could be achieved in a "Balkan without borders", but what will be the political implications of this process? The EU is not a substitution to the state, at least not for the near future. Thus, what are needed in the Balkans today are functioning democracies, capable of commanding the loyalty of all their citizens, regardless of ethnic origin. A multiethnic state such as Macedonia will have a hard time to maintain successfully its internal ethnic balance if caught by a wave

of Albanian radicalism. So will moderate Albanians in Macedonia and the Balkans as a whole, who could fall in the gap created between a slow and arduous democratic process of economic and cultural emancipation, and the call of radicals for fast solutions of the "national question", possibly combined with manifestations of " Islamic radicalism". Macedonia' s divided society is united around a single idea today - the idea of European integration. Of course, there is a lot of simplification and idealism; yet, all the political segments see the country's future in an integrated Europe. The gradual process of reshaping the Macedonian state that has begun with the Ohrid Agreement was the result of a European-led multilateral intervention. With the help of the European Union whose top officials and institutions committed their resources and credibility in containing the crisis of 2001, Macedonia's recovery was a major achievement. Now that questions concerning emotional issues of national identity and their articulation through the institutions of the political system have been resolved, new problems arise. At the heart of the "revolution of great expectations" for members of all ethnic communities lies a yearning for better life. People, especially the young generations graduating from universities, including the two in Albanian language, expect a job and a better life for themselves and their families. If the state improves its performance in the economic field and creates opportunities there will be stability. There are many positive signs that things are also moving in the right direction in the economy. This trend should continue with the assistance of the Union, an organization that has experience in dealing with stagnant economies and poverty. Because, in the near future, economic issues might turn into dangerous interethnic quarrels that could cause further separation of the ethnic communities destabilizing the state and the region. The huge costs of ending the wars in Yugoslavia, and reconstructing the devastated economies taught us that timely intervention is essential. In the case of Macedonia the EU, together with the USA and NATO, demonstrated that lessons have been learned from the wars in Bosnia. Their timely intervention in Macedonia prevented what was to be a full-blown civil war. Now the country must move away from this abyss, by developing its economy, yet again with the support of the European Union. So must the Balkans as a whole. That is why the idea of a Balkan integrated into the Union by the time of the hundredth anniversary of the other Balkan wars of 1912 - 1913, is a goal worth fighting for. The leading political parties on the government and the opposition side - in the country should show their responsibility towards the citizens and follow the recommendations of the international community and stop the confrontations and proceed with a real political, constructive dialogue within the democratic institutions of the country. A boycott of elections cannot solve Macedonias severe problems and it was more than ever important to show that Macedonia really deserves the start of negotiations and was honestly willing to work on positive results according to democratic values and EU recommendations. "Progress has been made over the last six months. The challenge is now to maintain that momentum, so that full use can be made of the existing opportunities. To that end the political agreement of 1 March should be fully implemented, including on the Committee of Inquiry, the cross-party Memorandum of

Understanding on fulfilling the country's strategic goal of EU membership and resuming dialogue with the journalists", said EU Enlargement Commissioner tefan Fle. From the things mentioned above VMRO-DPMNE has learned the right lessons. The party, headed by the youthful Nikola Gruevski, a former trade minister and finance minister in the government headed by the VMRO-DPMNE in 1998-2002, emphasized economic reform in its campaign, not Macedonian nationalism. "We believe that Macedonians want to do more than just survive -- they want to succeed. And to succeed we need a stronger, healthier economy -- one that delivers jobs and growth, that frees individuals to pursue their God-given potential with a minimum of government interference and that opens up the creative spirit in people," wrote Gruevski in the Washington Times on July 4. VMRODPMNE's election platform was based on a comprehensive and detailed study of reforms by other countries in the Central and Eastern Europe. Radical reformers of Central and Eastern Europe are seen as examples to be followed. Economy Macedonia remains committed to pursuing membership in the European Union and NATO. It became a full World Trade Organization (WTO) member in April 2003. Following a 1997 cooperation agreement with the European Union (EU), Macedonia signed a Stabilization and Association Agreement with the EU in April 2001, giving Macedonia duty-free access to European markets. In December 2005, it moved a step forward, obtaining candidate country status for EU accession. Macedonia has had a foreign trade deficit since 1994, which reached a record high of $2.873 billion in 2008, or 30.2% of GDP. Total trade in 2010 (imports plus exports of goods and services) was $8.752 billion, and the trade deficit amounted to $2.149 billion, or 23.4% of GDP. In the first 8 months of 2011, total trade was $7.470 billion and the trade deficit was $1.778 billion. A significant 56.5% of Macedonia's total trade was with EU countries. Macedonia's major trading partners are Germany, Greece, Serbia, Bulgaria, Russia, and Italy. In 2010, total trade between Macedonia and the United States was $116.6 million, and in the first 8 months of 2011 it was $65 million. U.S. meat, mainly poultry, and electrical machinery and equipment have been particularly attractive to Macedonian importers. Principal Macedonian exports to the United States are tobacco, apparel, iron, and steel.

Macroeconomic trends
GDP Year GDP (USD Billions) GDP (PPP) (USD Billions) GDP growth rate 12.1 12.4 13.0 14.3 15.4 16.7 18.3 19.6 19.6 19.9 20.8 21.8 23.0 24.3 25.7 27.2 3.4 3.7 5.0 5.9 5.7 6.9 8.6 9.1 9.7 9.1 10.1 10.7 11.4 12.2 13.0 13.8 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

4.5%

0.8%

2.8%

4.6%

4.3%

4.9%

6.1%

5.0%

0.9%

0.7%

2.9%

3.6%

4.1%

4.0%

3.9%

3.9%

Real GDP in the first half of 2011 increased by 5.2%. This robust growth was mainly driven by 23.6% growth in the construction sector; 13.2% in mining, quarrying, and manufacturing; 12.4% in wholesale and retail trade; and 4.2% in transport and communication services. Industrial output in the first 8 months of 2011 was 7.5% higher than in the same period of 2010. Low public and external debt and a comfortable level of foreign exchange reserves allowed for further relaxation of monetary policy, with the reference interest rate of the Central Bank decreasing to 4%. Due to rising prices for energy, fuel, and food on international markets, inflation increased in the first half of 2011, but later decreased to an annualized rate of 3.4% at the end of September. The official unemployment rate dropped to 31.3% in the second quarter of 2011, but remained one of the highest in Europe. Many people work in the gray economy, and many experts estimate Macedonias actual unemployment as being somewhere between 20%-25%. The government budget has generally kept within projections. The budget deficit at the end of August 2011 reached about 2% of GDP, and fiscal authorities seemed committed to keeping it under the projected target of 2.5% of GDP by the end of the year. In addition to 220 million euros (approx. $298 million) drawn from an IMF Precautionary Credit Line (PCL) in March, financing mostly came from domestic borrowing. However, by the end of the year a financing gap remained of about 50 million to 60 million euros (approx. $67 million to $81 million), which the government plans to cover by borrowing from international capital markets, supported by a policy-based guarantee by the World Bank. The central government's public debt remained low at 26% of GDP, but represents a gradual increase from previous years. Despite lowering the Central Bank bills rate, the Central Bank has not changed liquidity indicators for banks or the reserve requirement since 2009, curbing credit growth to 7.5% in the first three-quarters of 2011. Nikola Gruevski says the government will pay off its entire debt to the private sector by February 2013 in order to improve the economy's overall liquidity.

Macedonias external trade struggled in 2010 due to the slow recovery from the economic crisis of its main trading partners, particularly EU members. Starting from a very low base, export growth in the first 8 months of 2011 reached 41.7%, topping import growth of 36.8%. The trade deficit has widened to 18.3% of GDP, approaching the end-year target of 21.9% of GDP. At the same time, the current account balance deficit significantly improved and the end-year projection was revised upward to 5.5% of GDP. This was due primarily to a 4.4% higher inflow of current transfers, mostly during the summer, and came despite a poor level of foreign direct investment (FDI) of only $237.2 million by end-July 2011. Foreign currency reserves remained at about $2.6 billion, a level that comfortably covers 4 months of imports and about 110% of the country's short-term debt. In October 2010, the World Bank Board of Directors approved a new Country Partnership Strategy (CPS) with Macedonia for the period 2011-2014. This CPS will provide the country assistance of about $100 million in funding for the first 2 years to improve competitiveness, strengthen employability and social protection, and increase the use of sustainable energy. This assistance also includes a commitment of $30 million in direct budget support in the form of a policy-based guarantee by the World Bank to the government to facilitate its access to financing from international capital markets, a process that had been started as of November 2011. Macedonia became the first country eligible for the IMFs Precautionary Credit Line in January 2011. This program gives Macedonia a line of credit worth 475 million euros (about $675 million) over 2 years, intended to be accessed only in case of need brought about by external shocks. The credit line was approved after extensive consultations with the IMF in October and December 2010. The IMF expects that there will be no additional withdrawals from the PCL. Macedonia has the best economic freedom in the region, according to the 2012 Index of Economic Freedom, released in January, 2012 by the conservative U.S. think tank Heritage Foundation and the Wall Street Journal. The VMRO-DPMNE won the Macedonian parliamentary election, 2006. On August 25 he constituted the new government. His government has many new faces, mostly in their 30s in key ministries and other positions. In the election Gruevski earned the distinction of becoming the first elected European head of government born in the 1970s. He remains the second youngest head of government in Europe, surpassed only by Montenegrin prime minister Igor Lukid. In June 2007 Gruevski attended a meeting in Tirana, Albania, along with U.S President George W. Bush, President of the United States, Sali Berisha, Prime Minister of Albania and Ivo Sanader, Prime Minister of Croatia. On 1 June 2008, the coalition led by his party VMRO-DPMNE won Macedonian parliamentary election, 2008, their second electoral victory in a row, winning more than half of the seats in the parliament.[16] The polling was marred by a number of violent incidents and allegations of fraud in some ethnic Albanian dominated municipalities. He created a government with the Democratic Union for Integration. On 5 June 2011, the coalition led by his party VMRO-DPMNE won the Macedonian parliamentary election, 2011, their third electoral victory in a row, winning 56 out of the 123 seats in the parliament.

Objections of misuse of state resources, including the blackmail of over one hundred thousand public servants to act as agitators were neglected, and elections were declared valid. Gruevski formed the new government, again in coalition with the Democratic Union for Integration. On January 6, 2012, Gruevski opened the triumphal arch Porta Macedonia in Skopje as a monument to 20th anniversary of Macedonian independence, and admitted that he personally has been the instigator of the Skopje 2014 project.