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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

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

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

Bulgaria.S.4% of GDP. In 2010. that frees individuals to pursue their God-given potential with a minimum of government interference and that opens up the creative spirit in people. meat. total trade between Macedonia and the United States was $116.873 billion in 2008.one that delivers jobs and growth. Macedonia signed a Stabilization and Association Agreement with the EU in April 2001. A significant 56. In the first 8 months of 2011. and the trade deficit amounted to $2. Russia. giving Macedonia duty-free access to European markets. Total trade in 2010 (imports plus exports of goods and services) was $8. Principal Macedonian exports to the United States are tobacco.they want to succeed. total trade was $7. healthier economy -.752 billion.5% of Macedonia's total trade was with EU countries. iron. or 23.6 million. obtaining candidate country status for EU accession. and Italy.778 billion.149 billion. a former trade minister and finance minister in the government headed by the VMRO-DPMNE in 1998-2002. not Macedonian nationalism. . and steel. emphasized economic reform in its campaign." wrote Gruevski in the Washington Times on July 4. Following a 1997 cooperation agreement with the European Union (EU). The party. In December 2005. which reached a record high of $2.470 billion and the trade deficit was $1. said EU Enlargement Commissioner Štefan Füle. From the things mentioned above VMRO-DPMNE has learned the right lessons. Economy Macedonia remains committed to pursuing membership in the European Union and NATO. U. It became a full World Trade Organization (WTO) member in April 2003. mainly poultry. it moved a step forward. Serbia. VMRODPMNE's election platform was based on a comprehensive and detailed study of reforms by other countries in the Central and Eastern Europe.2% of GDP. Greece.Understanding on fulfilling the country's strategic goal of EU membership and resuming dialogue with the journalists". headed by the youthful Nikola Gruevski. or 30. Macedonia's major trading partners are Germany. Macedonia has had a foreign trade deficit since 1994. Radical reformers of Central and Eastern Europe are seen as examples to be followed. and electrical machinery and equipment have been particularly attractive to Macedonian importers. "We believe that Macedonians want to do more than just survive -. and in the first 8 months of 2011 it was $65 million. apparel. And to succeed we need a stronger.

curbing credit growth to 7.9% 0.0% 0.6 19.0 24.6% growth in the construction sector.8 21.7 5. 13.9% 6.4 13.0 5.6% 4. 12.8% 4.7 11. and many experts estimate Macedonia’s actual unemployment as being somewhere between 20%-25%. supported by a policy-based guarantee by the World Bank.4% at the end of September.1 10. and manufacturing.5% 0. 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.3 19.1 9. The government budget has generally kept within projections. which the government plans to cover by borrowing from international capital markets. Despite lowering the Central Bank bills rate.0 13.2%.9 20. by the end of the year a financing gap remained of about 50 million to 60 million euros (approx.3 25.1% 4.9% 3.9% Real GDP in the first half of 2011 increased by 5.5% in the first three-quarters of 2011. Many people work in the gray economy.6% 4. inflation increased in the first half of 2011.2 13.7% 2.1 10.0 14. However. $298 million) drawn from an IMF Precautionary Credit Line (PCL) in March. The official unemployment rate dropped to 31.3% 4.3% in the second quarter of 2011. but represents a gradual increase from previous years.2 3.8 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 4.6 19. the Central Bank has not changed liquidity indicators for banks or the reserve requirement since 2009. and fiscal authorities seemed committed to keeping it under the projected target of 2.9 5. and 4.8 23.6 9.7 18. but remained one of the highest in Europe.2% in mining. This robust growth was mainly driven by 23. fuel. Due to rising prices for energy. Low public and external debt and a comfortable level of foreign exchange reserves allowed for further relaxation of monetary policy.1% 5.9% 3. The central government's public debt remained low at 26% of GDP.4 16. with the reference interest rate of the Central Bank decreasing to 4%.Macroeconomic trends GDP Year GDP (USD Billions) GDP (PPP) (USD Billions) GDP growth rate 12. In addition to 220 million euros (approx.5% higher than in the same period of 2010.4% in wholesale and retail trade. but later decreased to an annualized rate of 3. Industrial output in the first 8 months of 2011 was 7.2% in transport and communication services.1 12.5% of GDP by the end of the year.0% 3.7 9.9 8. .8% 2.7 6.3 15. quarrying. The budget deficit at the end of August 2011 reached about 2% of GDP. and food on international markets. $67 million to $81 million). financing mostly came from domestic borrowing.4 12.4 3.7 27.

surpassed only by Montenegrin prime minister Igor Lukšid. export growth in the first 8 months of 2011 reached 41. Bush. topping import growth of 36. His government has many new faces.Macedonia’s external trade struggled in 2010 due to the slow recovery from the economic crisis of its main trading partners. particularly EU members. strengthen employability and social protection. On 1 June 2008. mostly during the summer. the coalition led by his party VMRO-DPMNE won the Macedonian parliamentary election. On August 25 he constituted the new government. Macedonia has the best economic freedom in the region. according to the 2012 Index of Economic Freedom. Albania. 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. In October 2010.[16] The polling was marred by a number of violent incidents and allegations of fraud in some ethnic Albanian dominated municipalities. Prime Minister of Albania and Ivo Sanader. Prime Minister of Croatia.S President George W. This was due primarily to a 4. President of the United States. In June 2007 Gruevski attended a meeting in Tirana. their third electoral victory in a row.5% of GDP.2 million by end-July 2011.8%. . This program gives Macedonia a line of credit worth 475 million euros (about $675 million) over 2 years.7%. think tank Heritage Foundation and the Wall Street Journal. mostly in their 30s in key ministries and other positions. The trade deficit has widened to 18. 2008. the World Bank Board of Directors approved a new Country Partnership Strategy (CPS) with Macedonia for the period 2011-2014. In the election Gruevski earned the distinction of becoming the first elected European head of government born in the 1970s. At the same time. 2011. intended to be accessed only in case of need brought about by external shocks. He remains the second youngest head of government in Europe. winning more than half of the seats in the parliament.3% of GDP. the coalition led by his party VMRO-DPMNE won Macedonian parliamentary election.S. released in January. Starting from a very low base. a level that comfortably covers 4 months of imports and about 110% of the country's short-term debt. approaching the end-year target of 21. This CPS will provide the country assistance of about $100 million in funding for the first 2 years to improve competitiveness. their second electoral victory in a row. and came despite a poor level of foreign direct investment (FDI) of only $237. 2006. a process that had been started as of November 2011. He created a government with the Democratic Union for Integration. along with U. Sali Berisha. The IMF expects that there will be no additional withdrawals from the PCL. the current account balance deficit significantly improved and the end-year projection was revised upward to 5. winning 56 out of the 123 seats in the parliament.4% higher inflow of current transfers. The credit line was approved after extensive consultations with the IMF in October and December 2010. Foreign currency reserves remained at about $2.6 billion. Macedonia became the first country eligible for the IMF’s Precautionary Credit Line in January 2011. On 5 June 2011. and increase the use of sustainable energy.9% of GDP. 2012 by the conservative U. The VMRO-DPMNE won the Macedonian parliamentary election.

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