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Key Economic Data 
  2002 2001 2000 Ranking(2002)
Millions of US $ 3,712 3,400 3,600 118
GNI per capita
 US $ 1,700 1,690 1,830 116
Ranking is given out of 208 nations - (data from the World Bank)

Books on Macedonia


Area ( 




Branko Crvenkovski

Private sector 
% of GDP 


Update No: 090 (27/10/04)

The political situation is becoming tense. A vital referendum looms on November 7th on the controversial issue of a territorial re-organisation of Macedonia that would go far to satisfy the aspirations of ethnic Albanians, but vexes many of the Macedonian nationalists. It is the brainchild of the present coalition government, led by Prime Minister Hari Kotov, which replaced a more nationalist one two years ago, whose constituent parties are now in opposition.

Hari Kostov's interview with Southeast European Times 
It is the constitution that is the basis for new laws on decentralisation aimed at creating ethnically diverse, financially stronger and politically more powerful municipalities, Premier Kostov said in the interview with Southeast European Times.
"The Macedonian government is meeting constitutional obligations for further implementation of the Framework Agreement. Decentralisation is seen as a significant step toward a stronger democracy and the Euro-Atlantic integration of Macedonia. I believe all the citizens in Macedonia are aware of these processes, which should not have a destabilising effect on the country. Instead, they emphasise the democratic approach to solving problems, which we have already proved by signing the Framework Agreement and having it implemented in the constitution and laws," Kostov said.
"The security situation in Macedonia should not be connected with the referendum despite individual -- I would say, unserious -- statements by some political parties. The security situation is stable, and this is also the opinion given by responsible international institutions. The government and responsible ministries will provide the conditions for citizens to cast their votes in a democratic and safe atmosphere."

Government survives
A group of just over 20 opposition lawmakers of the Internal Macedonian Revolutionary Organization (VMRO-DPMNE), the Liberal Party, and the Democratic Party of the Albanians (PDSH) moved a vote of no confidence on 15 September, with the referendum clearly in mind, but other issues also to the fore. Gjorgji Trendafilov of the VMRO-DPMNE said a no-confidence motion was the only way to raise some questions regarding the governing Social Democratic Union's (SDSM) poor record. Zarko Karadzoski, who authored the initiative, cited declining industrial production, high unemployment and security problems. "The government failed to keep up with the process of NATO and the EU integration," Karadzoski said, "[and] has made Macedonia a marginalized country in the Balkans and the wider neighbourhood". 
Macedonian Prime Minister Hari Kostov's government survived the no-confidence motion easily. On September 18th, 22 MPs voted for the motion, while 67 opposed it. 
As a result, the prime minister and his cabinet will be secure for the next three months. Under the constitution, no further no-confidence motions can be tabled during that period.
Defending the government's performance, Kostov said the opposition is split over economic and political policy and on how to implement reforms needed for integration. "I call upon the opposition to reach consensus on the way to the EU and NATO and act jointly with us to that end," Kostov said. "Macedonia will join the EU when it finishes its responsibilities at home."

Opposition in a quandary
The opposition's poor showing reflects a deeper internal struggle. The initiators of the no-confidence motion failed to get the backing of all lawmakers of their own party, the VMRO-DPMNE. But there are fault lines running through other opposition parties, such as the PDSH, as well. Not all opposition MPs signed the motion. Some argued that the timing was not right, and that the top priority was the upcoming referendum on Macedonia's new territorial organisation laws.
According to Gjorgi Ivanov, a professor of political science at Justinian I Faculty of Law in Skopje, the motion was doomed from the start because of the opposition's failure to agree on it. Only one faction in the VMRO-DPMNE -- that which is loyal to ex-Prime Minister Ljubco Georgievski -- signed on to the initiative. 
The opposition also demonstrated lack of preparation, Ivanov said. "We heard trite phrases and discussions without anyone saying which key points the government should focus on." 
"If you analyse the results of the debate and the issues touched, it is obvious that the whole motion was promoted by Georgievski's wing -- which wanted to distance itself from the current VMRO-DPMNE leadership. The submitters of the initiative knew at the very beginning that they would not have the majority. I believe one of their goals was to turn the attention away from the upcoming referendum, and direct the government's energy away from EU integration," Ivanov said. 
The conservative VMRO-DPMNE still suffers from the long-standing feud between former Prime Minister Ljubco Georgievski on the one hand, and former Finance Minister Nikola Gruevski, who succeeded Georgievski as party chairman, on the other. The rift between Georgievski and Gruevski resulted in the foundation of a new party, the VMRO-Narodna, by Georgievski's followers in July.
Some Macedonian media speculated that the no-confidence motion was masterminded by Georgievski to wrong-foot Gruevski, who had reportedly planned to move a no-confidence motion after the referendum against the government's redistricting plans, which is slated for 7 November. Gruevski's plan must now be postponed, as the constitution provides for a 90-day period between two no-confidence motions. 
Whereas Georgievski has kept a low profile in the leadership struggle, Gruevski is trying to stay in the headlines. With his latest interviews and editorials, Gruevski attacked the government, mainly for its performance in the administrative reform and its economic policy. 
It is clear that the VMRO-DPMNE -- independent of who is its leader -- wants to return to power, which it lost in the parliamentary elections two years ago. But the big question is who will be its ethnic Albanian coalition partner. 
In a long interview with the Bulgarian news agency Fokus, the ethnic Albanian party, PDSH Chairman Arben Xhaferi said on 16 September that a successful referendum against the government's redistricting plans would inevitably result not only in early parliamentary elections, but also in new negotiations to revise the 2001 Ohrid peace agreement and establish some form of "soft" international protectorate over Macedonia. "Unlike the Macedonian politicians, I have a positive attitude towards this solution," Xhaferi said. 
Regarding the VMRO-DPMNE, Xhaferi said his own party is now having difficulties finding a potential ethnic Macedonian coalition partner, since most parties have lost their clear ideological profile. "The VMRO has [given up] its [conservative] doctrine, has lost its essential nature as the VMRO, and turned into a DPMNE [Democratic Party for Macedonian National Unity] only," Xhaferi said, adding that the loss of the VMRO's ideological underpinnings has led it to make "unpredictable political decisions." The original VMRO was a Macedonian national-liberation movement against the former Ottoman Empire founded in the late 19th century. 
Macedonian media interpreted Xhaferi's statements as a clear sign that he would prefer a VMRO led by Georgievski rather than by Gruevski, who wants to transform the VMRO-DPMNE into a European-style moderate conservative party. 
Georgievski's followers, for their part, also say they would prefer to form a coalition with the PDSH. Vera Janevska, who leads the VMRO-Narodna, said the coalition of the VMRO-DPMNE and PDSH, which governed the country between 1998 and 2002, functioned much better than the current coalition government of the SDSM and BDI. "We, as the ideological successors of the VMRO-DPMNE [headed by Georgievski], are convinced that, working with the PDSH, we would find a much better approach to [redistricting] than the one forced upon us by the SDSM and the BDI," Janevska said. 
Gruevski reportedly told VOA that the PDSH leans towards Georgievski's wing of the VMRO-DPMNE, adding that he expects a new Albanian party to emerge because the PDSH has lost support among ethnic Albanians. 
However, it remains to be seen whether Xhaferi's PDSH will remain united. Xhaferi's recent appeal to his followers to support the referendum was not met with unanimous approval. PDSH Deputy Chairman Menduh Thaci, who is often regarded as the party's grey eminence, told the media on the sidelines of a party convention in Tetovo on 17 September that the party will not call on its members to support the referendum.

Government wants to create favourable economic environment, Kostov says
Meanwhile the business of government goes on. And, as US President Harding said in his time, the main business of government is business.
The planned industrial growth and revival of production have not been achieved at the expected pace because of the incomplete sale and failed restart of the so-called 'loser' enterprises (above all, the mines and smeltery in Veles) and bankrupt enterprises," Premier Kostov said in the interview with Southeast European Times.
"The physical scope of industrial production declined by 10 per cent, expected investments did not materialise, and a number of business partners were lost in 2001. As a result of improved economic ambience, industrial production recorded a 3.5 per cent increase in 2003. This year, Macedonia is recording again a decline in industrial production because of inactive significant capacities, which are in the sales phase," Kostov said.
"Activities are being directed at improving competitiveness, developing the base sectors in the industrial branches, improving the economic environment and creating conditions for improved economic activity and exports. Implementation of the National Programme for restructuring and conversion of the steel industry is of special importance. Industrial production is expected to achieve a significant increase. As for the issue of high unemployment rates, a trend of constant increases in the number of job seekers ceased in the first seven months of this year, according to data. Moreover, a gradual decrease in the number of jobless people has already been noticed in the past months," the Macedonian PM said.
Kostov said that the government has changed its approach to attracting FDI, emphasising the importance of a stable economic environment, targeting and selecting specific investors and enabling private sector leadership to contribute to the development of the Macedonian economy.
"A programme for stimulating investments in Macedonia has been drafted. It outlines the existing investment climate and existing economic, legal and political barriers that hamper investment. An action plan aimed at influencing the investment climate and increasing Macedonia's competitive position as a location for investment has been developed. Other measures, including promotional and informational activities, have been taken," Hari Kostov said.
In the interview he pointed out that in 2003, FDI in Macedonia amounted to 77.6m euros, an increase of 13.8m euros compared to 2002. The first six months of 2004 have seen FDI totalling 68.6m euros, and there are realistic prospects of increasing this amount by the end of the year



Macedonia starts negotiations for new arrangement with IMF

The structural reforms will be the focus of negotiations between the Macedonian team and the International Monetary Fund (IMF) Mission, which started recently with mission chief Franek Rozwadowski, In Focus reported.
"The new program is aimed at structural reforms, which are essential for attracting foreign investments and the country's economic growth," Rozwadowski said before the start of negotiations.
"The fiscal and budgetary policy for 2005 is due to be agreed in this first round of the negotiations," Finance Minister, Nikola Popovski, said.
He reiterated that the position of the Macedonian side in the talks would be a long-term, three-year arrangement with adequate IMF financing of the balance of payment.
Popovski also said that the final agreement for the arrangement would be completed after two or three months. 



Sweden to open embassy in Skopje in 2005

Sweden plans to open an embassy in Skopje in the autumn of 2005, which is going to alleviate the procedure of issuing visas, said Macedonian Foreign Minister, Ilinka Mitreva, following a meeting with her Swedish counterpart, Laila Freiwalds, who recently visited Macedonia, the Daily News Service reported. 
"Sweden supports Macedonia's wishes for membership of the European Union and I believe that the bilateral cooperation between the two countries is excellent," Freiwalds said. She explained that Sweden would open its embassy in 2005 to keep up the good relations. 
"We are now in the process of getting closer to the status of a candidate for EU membership by answering the questionnaire that came to Macedonia on October 1st. Macedonia made progress in coming closer to NATO too," Minister Mitreva said. She stressed that Sweden will support Macedonia in all the stages of its journey to the EU. Sweden is going to offer expert aid in answering the questionnaire of the European Commission. 
Minister Mitreva informed that they also discussed the Balkan Fund, which 170 businessmen have recently formed in Sweden. Five billion Swedish crowns will be invested in the Balkan countries. The focus in Macedonia will be on the shares on the Macedonian Stock Exchange. 



Greek Finance Minister, Molyviatis, visits Skopje

Greek Foreign Minister, Petros Molyviatis, arrived in Macedonia recently for a two-day visit, MIA News Agency reported. 
Molyviatis was scheduled to meet his Macedonian counterpart, Ilinka Mitreva, Prime Minister, Hari Kostov, President Branko Crvenkovski and leaders of several political parties, Greek Foreign Ministry spokesman, Giorgos Koumoutsakos said. 
"The Minister will reiterate Greece's interest not in illusory but real solutions (to the name dispute), acceptable to both parties," Koumoutsakos said. 




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