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MACEDONIA


 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 4,705 3,712 3,400 118
         
GNI per capita
 US $ 1,980 1,700 1,690 111
Ranking is given out of 208 nations - (data from the World Bank)

Books on Macedonia




Update No: 118 - (29/03/07)

The straggler of the Balkans
Macedonia is a very poor country by European standards, probably overtaken by now by Albania, whose GDP has been booming at circa 7% per annum annual growth since 1999. Macedonia has achieved nothing like that, lacking the impetus that the Kosovo War then gave Albania, hitherto the most impoverished country in the region. 

Macedonia was always the poorest of the former Yugoslav republics, Slovenia, the richest, being five times better off. The disparity remains. But there is a man with a mission to rectify this.

The man in charge
Macedonian politics is now virtually a one-man band affair. The figure in question is the young (36 year-old), fresh-faced reforming economist, Nicola Gruevski, who is well thought of in Brussels and the West generally, unlike some of his former colleagues. He is the prime minister by reason of heading his party, VMPO-DPMNE. 

He was Minister of Finance in the VMRO-DPMNE government led by Ljubco Georgievski from 1999 until September 2002, which was tarred by serious charges of corruption and outright stealing of government property (for an account of this read the last text attached below, written by somebody who really knows what he is talking about). 
After VMRO-DPMNE was defeated in the parliamentary elections in 2002, there was a period of infighting within the party. Gruevski emerged as the clean pro-EU leader, beating off the Georgievski camp. The former prime minister set up his own party (VMRO-People's Party); but VMRO-DPMNE retained most of the party's supporters.

The VMRO-DPMNE won the parliamentary elections of 5 July 2006. On August 25th Gruevski constituted the new government. His government has many new faces, mostly in their 30s in key ministries and other positions. He was the first to incorporate Macedonian expats from various world-wide positions as CEO's in his new government. Moreover he is bringing on more women into government. Expats and women are for one thing less likely to be corrupt.

Gruevski re-elected VMRO-DPMNE leader
His position has become almost unassailable. The delegates, attending VMRO-DPMNE's 13th Congress, have unanimously re-elected Gruevski to the position of party leader. All 409 delegates attending the Congress out of the 417 accredited cast their vote for Gruevski on March 19th. One cannot obtain a better mandate than that.

Gruevski after the vote called on VMRO-DPMNE delegates to fulfil their election promises in the next four years, as they had been doing in the previous six months, after the government was formed. He added that the demonstrative confidence was an encouragement to him, but also a call to pursue improving living standards in Macedonia and its EU integration process.

"Our objective must not only be NATO and EU integration. Our goal is to improve the quality and life standards in Macedonia," said Gruevski stressing that the citizens have high expectations from VMRO-DPMNE, thus they mustn't be disappointed in any case.

Furthermore, Gruevski promised to create new jobs in the forthcoming period and to implement firmer social policy in order for "Macedonia to reach the standard of European countries".

Gruevski's record as a reformer
Gruevski started his reform course eight years ago at the treasury. Among Gruevski's achievements as Minister of Finance was the privatisation of Fenimak. The government sold the Macedonian Telecom to Hungarian Matav. 

Gruevski also implemented financial reforms, including the VAT (Value Added Tax) of 18%, requiring fiscal receipts for all Macedonian businesses, which was a programme designed to fight tax evasion. 

His most famous programme was "Buy Macedonian Products", which promoted buying Macedonian products, designated by logo with a sun with a happy face. His hope was that the programme would boost domestic businesses. 

But his reform course became becalmed as troubles mounted for the Georgievski government. His tenure as premier has only been for eight months so far. A new impetus is required and the EU accession issue can provide it, he hopes.

Macedonian EU Info Centre opens in Skopje
The 50th anniversary of the signing of the Rome Treaty is providing a suitable moment for an EU overture towards Macedonia. The Secretariat for European Affairs has opened a MK-EU Info Centre, located at Skopje square "Macedonia".

"Today, 50 years after the signing of the Roma Treaties, we have the opportunity to open the Macedonian EU Information Centre", Gruevski said at the opening ceremony on March 25th, adding that Macedonia had thereby received an "information window to the world" in order to increase the knowledge of its current situation and the country's Union integration process. 

According to Gruevski, Macedonia's full-fledged EU membership has been one of the country's main objectives since its independence in 1991."The path of reaching this goal develops step by step in several stages. EU membership requires a number of adjustments, the introduction of new values and the adoption of existing European standards," stressed Gruevski.

He pointed out that one of the centre's intentions was to demystify Macedonia's approach to the Union. "Citizens should know that at the day of our accession we will continue to go to work, but the process of permanent change in the sphere of rule of law and living standards would register permanent progress," underlined PM Gruevski.

Vice Premier in charge of European Affairs Gabriela Konevska-Trajkovska, one of the women in his cabinet and with a most responsible job, emphasized that the opening of the Macedonian EU Information Centre is part of the Government's Working Programme and Strategy for information and communication with the public in the process of Union accession.

Representative of the EU Mission to Macedonia Joan Pearce voiced support for the Centre's activities, because the EU attaches great significance to communication and information. In the centre, citizens will have Internet access to EU and Macedonian Government websites, foreign newspapers and direct broadcast of events in EU institutions, as well as a rich literature of about 600 titles from a number of EU areas.

EU urges Macedonia to step up reform
That Macedonia is keen to join the European Union (EU) is an understatement as regards its reformers. They know that an outright rejection from Brussels would immediately stall their efforts. Fortunately Brussels knows that too.

EU Enlargement Commissioner Olli Rehn on February 8th urged Macedonia to step up reforms, if the country wanted to realize its hope of joining the EU, news media from Skopje reported. 

Rehn said Macedonia had slowed down the pace of its economic and political reforms since becoming a candidate for the EU membership in December 2005. "I reiterate that we expect much more because your country is a candidate for the EU now," he said after meeting with Macedonian Prime Minister Gruevski. 

Rehn also called on Macedonia's ruling and oppositional political parties to ease tensions and reach political consensus between them. "The government should take an initiative and create conditions for dialogues, and the opposition should act in a constructive manner," he said. 

Deputies from the Democratic Union for Integration, the largest Albanian political party, have boycotted Macedonian parliamentary sessions since January, accusing the government of ignoring the rights of the Albanian minority. But at least this is a peaceful protest, moreover at a very delicate time.

The Albanian question
Macedonia cannot but be closely concerned about the fate of neighbouring Kosovo, hanging in the balance. The overwhelmingly Albanian-populated province of Serbia is intent on secession from it, now more than ever after Montenegro broke away from it last year.

Macedonia's own Albanian minority, one quarter of its two million population, is no longer so restive or at any rate violent and is grateful to NATO for what it did in 1999 to save the Albanian Kosovars. But Skopje wants to see a peaceful process in place there.

Kosovo plan of UN Envoy acceptable to Macedonia: Nikola Gruevski
The document presented on February 3rd by UN Special Envoy for Kosovo Martti Ahtisaari to the authorities in Pristina is acceptable to Macedonia, Gruevski said after meeting Kosovo opposition leader Hashim Tachi, the Macedonian MIA agency reports. The plan for Kosovo may contribute to the stability of the region, and help its countries in their preparation for the European Union, NATO membership, Gruevski said.

The document also resolves the technical problem related to demarcating the Macedonia-Kosovo border, which is particularly important for Macedonia, Gruevski said, giving credit to the international community for its role in this matter.

As stipulated in Ahtisaari's plan, Macedonia and Kosovo should set up a joint committee within 120 days, including one international representative. The border demarcation process should be completed in one year.

Tachi extended gratitude to Gruevski's Cabinet over the correct position on the Kosovo status settlement. 
The settling of Kosovo's status will pose no problem to anyone. Kosovo is opened for cooperation with all countries, Tachi said.

                                               ******
The following caustic article is by someone who really knows what he is talking about, having been, until 2002, the Economic Advisor to the Government of Macedonia.

He is a most interesting man in his own right.

Sam Vaknin is the author of Malignant Self Love - Narcissism Revisited and After the Rain - How the West Lost the East. Both of these are marvellous works, living up to their great titles.

He served as a columnist for Global Politician, Central Europe Review, PopMatters, Bellaonline, and eBookWeb. He was a United Press International (UPI) Senior Business Correspondent, and the editor of mental health and Central East Europe categories in The Open Directory and Suite101.

Don't Hurry to Invest in Macedonia
February 06, 2007 by Sam Vaknin

In the near past, Macedonia seemed to have been bent on breaking its own record of surrealism. While politicians in other countries in transition from communism and socialism strive to be noticed for not stealing, their Macedonian counterparts, without a single exception, aim to steal without being noticed.

The previous VMRO-DPMNE government (1999-2002), in which Gruevski served as Minister of Finance, plundered the country shamelessly. The local papers accused then outgoing prime minister, Ljubco Georgievski - a virtual pauper when he attained power - of owning land and a residential building in the capital's most expensive neighbourhood. The erstwhile Minister of Defence, Ljuben Paunovski, was recently sentenced to 42 months in prison for his pecuniary shenanigans during his tenure. Another leading figure, the former Minister of interior, Ljube Boskovski, is in the dock in the Hague on war crime charges.

Inevitably, VMRO-DPMNE lost power to the SDSM in the heated elections of 2002 and then fractured as its new leader, Gruevski, purged the old guard and installed his own cohorts everywhere.

Then prime minister designate, Branko Crvnkovski (the country's current President whose legitimacy is contested by the Gruevski government), vowed to learn from his party's (SDSM) past mistakes when they venally ruled the land until 1998. In a sudden and politically-motivated resurrection, the high court began scrutinizing the "Okta" deal: the opaque sale of the country's loss-making refinery to the Greeks in 1999. Heads will roll, promised both the election victors (the SDSM) and their Western sponsors. Nothing happened.

The country's current Governor of the Central bank and then minister of finance, Petar Goshev, a former socialist high-level functionary known for his integrity, announced that his top priority would be to eradicate corruption by instituting structural and legal reforms. His newfound socialist partners - he headed a center-right outfit - found this bizarre ardor unpalatable and promptly kicked him out of office.

Four years later, with Georgievski relegated to the political wasteland, Crvnkovski ensconced in the presidential suite, and his successor, Buckovski a resounding failure, Gruevski's ascent in 2006 was all but secure. It was the SDSM's turn to crumble acrimoniously amid a virulent contest for its leadership. It has never recovered and Macedonia has had no viable opposition ever since.

Macedonia's post-electoral euphoria faded, in July 2006, into arduous coalition-building negotiations replete with arm-twisting by the worried representatives of the "international community". 

The country's new VMRO-DPMNE Prime Minister, Nikola Gruevski (36), excluded from his government the party that won the majority of Albanian votes because of its roots in the much-hated Albanian NLA, National Liberation Army, the instigator of the 2001 near-civil-war. Albanian factions clashed in a chilling reminder of the country's inter-ethnic fragility. 

To add to Macedonia's precarious standing, its greenhorn Minister of Foreign Affairs, Antonio Milososki, engaged in intermittent - and utterly avoidable - spats with its neighbour and biggest foreign investor, Greece, virtually guarantee delayed accession to both NATO and the European Union, the much ballyhooed strategic goals of the current administration. Milososki adopted a similarly belligerent and ill-informed stance against Bulgaria, another flanking polity and the newest member of the coveted European club.

Where the government claims great strides is in its uncompromising stance against all forms of malfeasance and delinquency in both the public and the private sectors. From the army to various municipalities, scandals erupt daily in an atmosphere often bordering on a frenzied, media saturated, witch-hunt.

Gruevski is alleged to have rejected a bribe of 3 million euros (c. 4 million USD) offered to him by a Serb firm. His government embarked on highly publicized campaigns against illegal construction (the "urban mafia") and other festering nests of corruption. 

Alas, Gruevski himself appointed members of his family and innumerable political hacks to senior government positions in a series of blatant acts of nepotism and cronyism decried by the European Union and other watchdogs. Consequently, with one exception (Zoran Stavreski, the talented vice-premier), the government in all echelons is largely made up of utterly inexperienced operators. Plus ca change.

Politics, venality, and terrorism are the sole venues of social mobility in this tiny, landlocked, country of 2 million impoverished people. Immediately following their insurgency, the former terrorists of the Albanian National Liberation - courtesy of Western pressure and the Albanian voters - occupied crucial ministries with lucrative opportunities of patronage of which they are rumoured to have availed themselves abundantly.

Comic relief is often provided by bumbling NGOs, such as the International Crisis Group. In 2001, its representative in Macedonia, Edward Joseph, went to Prilep to conduct an impromptu investigation of the thriving cigarette smuggling trade. Posing to the cameras he declared that only the local leaf-rolling plant was not involved in this pernicious line of work.

Macedonia is a hub of expats and consultants in the Balkans. Ante Markovic, an Austria-based former Yugoslav prime minister, who served as an oft-criticized economic advisor to the government until he was dumped, sued Macedonia for $1 million. In 2001-3, the youthful former minister of finance, Nikola Gruevski, was asked by USAID, on behalf of the Serbian-Montenegrin government, to serve as its consultant on matters of reform of the financial system. The author of this article acted as Economic Advisor to Georgievski's government and, later, to Gruevski himself.

But to no avail. The country is a shambles. In the wake of a civil war, the official unemployment rate is 31-35 percent. Close to 70,000 people work in the bloated central and local administrations. The trade deficit is an unparalleled 17 percent of GDP. In 2001, the budget deficit climbed to 5 percent, though it was since halved.

"The Heritage Foundation" has consistently ranked Macedonia 95-97 out of 155 countries in terms of economic freedom. The country is "mostly unfree" it correctly concludes in its reports, though it cites sometimes erroneous data. A moderate level of trade protectionism, low tax rates, moderate inflation, a moderate burden of the government, moderate barriers to capital flows and foreign investment, and moderate interference in the economy are offset by a dysfunctional banking system, intervention in wages and prices, low level of protection of property, a high level of regulation, and a very high level of activity of the black market.

Owing to the IMF's misguided emphasis on exchange rate stability, the currency is inanely overvalued. The manufacturing sector has all but evaporated. Industrial production declined by a vertiginous 20 percent in August 2002 compared to the average the year before - or by 11 percent year on year. The trend has not been reversed since.

Macedonian steel is exempt from the latest bout of American protectionism, but not so its textile industry. Europe is fending off the country's agricultural products. People make their meagre and desultory living catering to the needs of an ever-expanding international presence or dabbling in illicit activities. Piracy of intellectual property, for instance, is thought to yield c. 1 percent of GDP.

Close to half the population is under the poverty line. The number of welfare cases increased by 70 percent between 1994 and 2002. Generous and incessant multilateral and bilateral credits sustain the faltering economy (and line politicians' ever-deepening pockets). The country is alternately buffeted by floods and droughts. There has been only one day of rain in all of January 2007.

In a much-touted donor conference after the 2001 skirmishes, the pledges amounted to a whopping 15 percent of GDP. Then governor of the central bank, Ljube Trpski (currently detained for his role in a murky affair involving the country's foreign exchange reserves), cheerfully predicted that these handouts will cover the gaping hole in the balance of payments. 

Macedonia also received 7.5 percent of the gold reserves of the former federated Yugoslavia of which it was a component. At between $700 million and one billion USD net, foreign exchange reserves are at an all-time high. Macedonia has recently decided to prepay its $104 million debt to the Paris Club creditors.

Both the IMF and the World Bank, who did their best to obstruct the previous VMRO-DPMNE government in its last few months in power, promised a speedy return to business as usual. A hitherto elusive standby arrangement is likely to be concluded by the end of the year. World Bank funds, frozen in material breach of its written contracts with the state, will flow again. The EU promised development funds if the new government acts in a "European spirit" - i.e., obeys the diktats of Brussels.

The incoming administration is likely to enjoy a period of grace with both the trade unions and international creditors. Strikes and demonstrations by dispossessed miners and underpaid railways workers have waned. But Macedonia joined the WTO in 2002 and will thus be forced to open even more to devastating competition. Labour unrest is likely to re-erupt soon.

Foreign investment in the country mysteriously wanes and waxes - some of it laundered money reinvested in legitimate businesses. The government is doing a great job of building up the image of Macedonia as an FDI (Foreign Direct Investment) destination. But public relations and perceptions management must be followed by palpable actions and the new government is woefully short on concrete steps. It talks the talk but hitherto does not walk the walk.

The government's attempts to attract foreign investors by introducing lower taxes may backfire: studies clearly evince that multinationals worry less about taxation and more about functioning institutions, a commodity that Macedonia is irreparably short of. Moreover, vanishingly lower taxes signal desperation and Macedonia indeed sounds more desperate than confident. No one wants to buy the country's leading bank, long on offer. Only one contender (Mobilkom Austria) entered a bid for Macedonia's third operator cellular network licence.

On a few occasions, domestic firms, using international fronts, have bid for local factories, such as the textile plant "Astibo." The national payment card project has been guzzled by two banks incestuously close to the outgoing ruling party, VMRO-DPMNE.

But there are real investments, too. The capital's central heating utility was purchased by a unidentified French energy outfit, announced the general manager. The utility's shares were listed in the Athens stock exchange. The Macedonian construction firm "Granit" will build a $59 million highway in Ukraine, with which Macedonia enjoyed an unusually cordial relationship, to American chagrin. Johnson Controls and others are eying a string of free trade zones and infrastructure projects (dams, roads, railways, oil pipeline). A much hyped Vardar Silicone Valley is in the works.

The contentious census in the first two weeks of November 2002, a part of the "Ohrid Framework Agreement" which ended the internecine fighting the year before, was conducted fairly. The count showed that Albanians make c. one quarter of the population rather than one third, as most Albanians spuriously insisted.

But, with Kosovo's independence looming across the border, the restive Albanians are likely to coerce the enfeebled Macedonia into translating this numerical reality into political and economic clout. The Macedonians are likely to resist. The West will intervene. Macedonia is facing a hot spring and a sizzling summer.

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ENERGY

Edison SpA mulls bid for hydroelectric plant

Italian company Edison SpA is interested in bidding for a 500 megawatt hydroelectric plant in Macedonia as part of its strategy to expand in the Balkan region, Edison CEO Umberto Quadrino was cited as saying by Makfax on February 20th. 
"We meet the criteria for entering a bid for the plant," Quadrino was quoted as saying, adding that Edison SpA is interested in expanding in the Balkan region by investing in power stations in Greece, Albania and Turkey.
"Edison SpA is among the six companies that have qualified for the projects on construction of hydro-power plants Cebren and Galiste at the confluence of Crna River," the economy ministry's spokesman Marija Vesova was quoted by the website as saying. She added that the short listed companies will be soon invited to pick up the tender documents. The bidders are to submit their offers within a three-month deadline. The government will sign a contract with one of the bidders. The deadline for construction of Cebren and Galiste is put at seven years. The construction must start within a two-year deadline after the signing of the contract, Vesova said. The public notice for pre-qualifications was published on June 13th, 2006, as part of Macedonia's plans to utilise the overall hydro potential for generating electric power. The move aims to overcome the power shortage on yearly basis. 

Negotino power plant to be privatised

Sencap, the company that was jointly established by PPC and Contour Global, reportedly expressed interest for the privatisation of Negotino oil-fired power plant in Macedonia, website reporter.gr said on February 13th.
Sencap is reportedly among the 18 companies that expressed interest. Macedonia's government is selling 100 per cent of Negotino's installed capacity of 219 megawatts (MW) to a strategic investor at a minimum sale price of 38 million Euro. At the same time, the strategic investor will commit to construct a new generation unit of minimum additional power of 300 MW on the same location. The investor committed to start the construction of the new unit in a period of six months from the day of signing of the agreement and to complete the construction in a period of four years after the starting day of the construction, it was reported. The buyer should be chosen by July. Marfins analysts viewed positively PPC's efforts to expand to neighbouring countries. Should PPC implement the aforementioned investment, the company will be able to produce electricity for sale on the free market and possibly export to Greece, the website said. 

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FOREIGN LOANS

World Bank lends US$20m for agriculture

The World Bank will give US$20 million credit to Macedonia for reform in agriculture, New Europe reported on March 12th. 
Preparations have started for a project to absorb the money, which in view of the work so far done is to be ready by June and then it has to be adopted by the Word Bank Board of Directors. Then, with the project adopted, Macedonia will sign a contract with the Bank to reform its agriculture in the following four years. It is expected reforms will start from June.

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INFORMATION TECHNOLOGY

Siemens invest in software development centre 

Siemens' regional manager for development, Vasilis Kastanis, and Macedonian vice-prime minister in charge of economic issues, Zoran Stavrevski, announced that the German electronic giant will invest in a software development centre in Maceonia, Makfax reported on February 19th.
The software centre, which will be located in Skopje, plans to employ 10 to 20 people in the initial stage of the project, Kastanis was cited as saying. According to Stavrevski, opening of the Siemens's software centre stands as a proof of increasing interest of the foreign companies to invest in Macedonia. "We expect the software development centre in Macedonia to grow and to supply a large portion of Siemens's demand," Stavrevski was quoted as saying. He expressed hopes for the broadening of cooperation with Siemens to the fields spanning transportation and healthcare. Kastanis underlined that his company has great confidence in Macedonia's potential. "The facility to be set up in Macedonia will be part of the company's global network, spread across 190 countries throughout the world," Kastanis said.

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TELECOMMUNICATIONS

Mobilkom Austria may become 3rd mobile operator 

The tender for the third mobile operator in Macedonia was issued on October 30th, 2006 by the Agency for Electronic Communications, in which both domestic and foreign companies, with at least two million enlisted users of public mobile communications services and an annual turnover of over 300 million Euro in the period 2004 to 2005 had the right to participate. 
Mobilkom Austria is the sole company that has submitted a bid for the third tender, officials from the Agency for Electronic Communications said after unsealing the bid on January 31st 2007, MRTOnline reported. 
Liljana Denkovska, president of the Commission for Implementing the Tender, was cited as saying that only one bid was submitted until the January 25th tender deadline, adding that the required documentation was complete. The opening of the bid took place in presence of the commission and bidder representatives in accordance with the Law on Electronic Communications and Tender Documentation. After reviewing the bid, the commission will draft a report within a period of five days, which will be submitted to the Agency for Electronic Communications, it was reported. Offering low prices of client services will serve as a basic criterion in choosing the best bidder. The winning company will be bound to start operations in Macedonia within six months after radio-frequency licence granting. 

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