Macedonia is 'on the brink of
The government says the international community has
failed to fulfil promises made at the height of the Kosovo conflict,
writes Joe Cook
Macedonia is on the brink of an economic
crisis that could trigger conflict between the country's Slavic majority and
large Albanian minority, say government leaders and diplomats.
The government of the former Yugoslav republic blames its desperate economic
plight on what it perceives as the international community's failure to
deliver on promises of financial assistance made at the height of the Kosovo
At an international donor's conference in Paris in May, Macedonia was
promised $252m in credits and grants to help offset the economic impact of
the Kosovo crisis. However, Ljubco Georgievski, the prime minister, says the
country has so far received only $6m from the US and E12m ($12.1m) from the
"If we do not receive serious assistance by September we'll have a serious
crisis," he said. "And we should not underestimate the possibility that a
social disaster would displace ethnic tolerance."
Although western diplomats and international organisations in Skopje take
umbrage at the government's daily reminders of the west's unfulfilled
promises of aid, privately they are deeply concerned about Macedonia's
"The international community has to release aid before the autumn to stop
social unrest," said a western diplomat. "If we let this place become
destabilised we'll have a real mess on our hands."
Macedonia's small and fragile economy took a battering during the Kosovo
crisis as more than 300,000 Albanian Kosovar refugees - equal to 15 per cent
of Macedonia's population - streamed south across the border and the
country's main trade route through Yugoslavia was cut.
Yugoslavia was Macedonia's second biggest export market after the European
Union, accounting for 18 per cent of exports. This trade has stopped.
Transport costs have risen by an estimated 30 per cent as goods destined for
the EU are re-routed through Bulgaria and Romania.
Mr Georgievski says that Macedonia's losses directly attributable to the war
are $430m, excluding refugee-related costs.
The collapse in business activity has led to increased insolvency. Unpaid
corporate debts have risen by 50 per cent and the number of blocked bank
accounts by more than 40 per cent, according to a recent assessment of the
national economy by the Organisation for Security and Co-operation in Europe
(OSCE). Worse, an estimated 40 per cent shortfall in revenue collection has
left public finances close to exhaustion.
Mr Georgievski's government, formed last December, came to power promising
reform, growth and job creation. It signed an agreement with the
International Monetary Fund which included the planned closure of 12 huge
loss-making state enterprises that together employ some 50,000 people.
However, the Kosovo crisis has slowed the reform process and made the
government hesitant to close factories.
Unemployment has risen from 34.5 per cent in 1998 to 40 per cent of the
workforce, or about 320,000 people - 70 per cent of whom are aged between 15
and 24. On top of this, trade unions report that some 40,000 people are on
"forced leave" and that 120,000 workers have not been paid for two months.
"In the Balkans, the scapegoat is always the minority within," says
Madeleine Hagg-Liljestrom, an economist with the OSCE in Skopje. "Our fear
is that when autumn comes there will be problems."
Ethnic Albanians account for 23 per cent of Macedonia's 1.9m people.
Although Mr Georgievski's coalition includes an ethnic Albanian party and
tries to promote a policy of ethnic inclusion, Albanians find it difficult
to gain access to higher education, are under-represented in the state
administration and are generally disliked and mistrusted by Macedonian
There are some bright spots. In June, at the height of the crisis, Hellenic
Petroleum of Greece agreed to acquire a 54 per cent stake in the OKTA oil
refinery in a deal worth $184m. And in September Brussels is due to open
negotiations with Macedonia on the EU's new Stability and Association
Agreement. Mr Georgievski describes this as a "political satisfaction for
our role in the Balkans that I think we deserve".
Nevertheless, the country needs an infusion of money, fast. "We are not
asking for mercy, just for help," said Martin Trenevski, minister for
emigration. "And if help doesn't come we'll have a domino effect: economic
crisis followed by social crisis followed by ethnic crisis."