Books on Macedonia
% of GDP
Update No: 088 (27/08/04)
Referendum looks likely; government may fall
Opponents of a Western-backed agreement giving Macedonia's Albanian minority
greater local powers said on August 23rd that they had collected the signatures
needed to force a referendum on the issue.
The World Macedonian Congress said that many more than the required 150,000
people had signed a petition calling for a vote to overturn the deal adopted by
parliament earlier this in August under pressure from the European Union. The
number of signatures was reckoned to be more like 185,000. But this has yet to
be officially endorsed
The move could provoke already strained ethnic relations and further postpone
implementation of a peace accord brokered by NATO in 2001, which ended months of
clashes between government security forces and ethnic Albanian guerrillas.
Macedonia's moderate prime minister, Hari Kostov, has said he would resign if
such a referendum goes against him.
"By the end of Saturday (August 21st) we had 178,000 signatures for the
referendum," said Todor Petrov, who heads the Macedonian World Congress
(SMK). Petrov says the agreement on local powers effectively divides the Balkan
country of two million along ethnic lines and encourages separatists.
The signatures were to be handed over to parliament later in the week at the end
of August, he said, adding that they would then be verified by the Justice
Ministry. The authorities are obliged to call a referendum if a sufficient
number of names have been collected.
"The problem is that an already delayed process will be further
delayed," said one Western diplomat about the prospect of a referendum. It
was a setback for the government even if the vote was unlikely to go against the
agreement hammered out by coalition partners, including an ethnic Albanian party
that emerged from the guerrilla force, the envoy added.
Voter turnout must reach at least 50 percent among a largely apathetic
electorate for the referendum to be valid.
Brussels has made clear that full implementation of the peace agreement is
crucial to Macedonia's EU membership bid, submitted in March. For these reasons
the decentralisation agreement is likely to stand and the government prevail.
But the decentralisation deal, which represents the final section of the accord
that ended the fighting, has polarised opinion and in July provoked riots in
western Macedonia. The government plans to introduce a new administrative
structure for the republic, reducing the number of districts from 123 to 80.
It redraws boundaries so that ethnic Albanians become the majority in 16 out of
80 municipalities, most of them bordering Albania and Kosovo, the
Albanian-dominated province in southern Serbia governed by the United Nations
since its 1999 war.
The multi-ethnic government has said the decentralisation measures in the
bill, which will see 16 municipalities pass into Albanian control, are essential
for peace and democracy.
But many Macedonians fear the law will make it easier for Albanian minority
areas to secede from Skopje and unite with neighbouring Kosovo, should it ever
gain independence from Belgrade.
They say it will divide Macedonia along ethnic lines. The European Union has
made it clear that full implementation of the peace accord is essential for
Macedonia's membership bid.
At stake is the survival of the Social-Democratic-led government. For
Parliamentary Speaker Ljuco Jordanovski had stipulated that were a referendum to
be held, new elections were to be called, with a new government on the cards. No
incumbent government is popular in the post-communist Balkans for obvious
Several politicians from minor parties alleged that obstructionist tactics by
the government tried to prevent the 150,000 signatures from being collected,
namely Vasil Tupurkovski of the Democratic Alternative and Pavle Trajanov of the
Democratic Union. More than likely they were right. But the tactics failed.
The campaign has left the opposition stronger. The SMK came out in alignment
with the main opposition force, e conservative Internal Macedonian Revolutionary
Organisation (VRMO-DPMNE). The SMK, founded in 1990 and now led by Todor Petrov,
unites Macedonans in the diaspora abroad with those at home. It blends well,
therefore, with the domestic-oriented VRMO-DPMNE.
They should be able to mount an effective challenge at the next parliamentary
elections. One after-effect of the campaign is that the town of Struga, which
was right in the vanguard of it, has now developed ambitions to acquire the
status of San Marino in Italy, in other words de facto independence. No
government in Skopje is likely to tolerate that, however. The secessionist
aspirations of the ethnic Albanians have been sidelined for now. So will those
of the good citizens of Struga.
Macedonia gets first ever S&P credit rating
Standard & Poor's announced on July 30th that it assigned Macedonia a BB/B
foreign currency and BB+/B local currency sovereign credit rating with a
positive outlook, New Europe reported recently.
This is the 104th sovereign to receive a rating from Standard & Poor's and
Macedonia's first ever.
The agency's credit analyst, Kai Stukenbrock, said the ratings are supported by
rapid progress towards political stability, driven by the Ohrid Framework
Agreement and the prospect of EU membership, macroeconomic stability and
moderate levels of external indebtedness, also citing as risks interethnic
relations and structural and governance issues.
Excluding the crisis over 2001-2002, the general government budget has been in
moderate-to-low deficit since the second half of the 1990s, and is expected to
record slightly less than 1.5% of gross domestic product (GDP) in the medium
run. If grants are included above the line, the budget will be broadly balanced.
Continued moderate deficits will push the debt level down to 42.8% of GDP in
2006, from 47.7% in 2003.
Macedonia applied for European Union membership in March 2004 and might be
awarded candidacy status as early as 2005. Support for EU membership is broadly
based, and a large share of new legislation is already geared towards EU
requirements. For most of the new EU members joining the Union in May 2004,
prospective EU membership served as a strong policy anchor, which in turn
resulted in credit rating upgrades.
"On the way toward EU membership, Macedonia will have to address many
weaknesses, such as improving and sustaining political stability, dealing with
the structural imbalances in the economy, and approaching governance
issues," Stukenbrock said. "An upgrade of ratings on Macedonia is
contingent on progress in these areas."
Alkaloid in talks with Actavis
The biggest pharmaceutical company Alkaloid and the Icelandic pharmaceutical
group, Actavis, are negotiating joint promotion at third markets, New Europe
Depending on the courts of negotiations, a takeover of alkaloid is also
possible. Alkaloid is one of the most successful Macedonian companies, whose
shares are traded the most at the FYROM bourse. It made a 3.8m Euro profit last
year, rising by 200,000 Euro the profit made in 2002. Actavis, which changed its
name to Farmako in May, owns eight pharmaceutical companies in five countries,
three of which are in the Balkan region. It presence in Macedonia has been
already secured by its animal drugs production plant in the vicinities of Stip.
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