Nations in Transit - Macedonia (2004)

Capital: Skopje
Population: 2,100,000
Status: Partly Free
PPP: $1,690
Private Sector as % of GNI: na
Life Expectancy: 73
Religious Groups: Macedonian Orthodox (67 percent), Muslim (30 percent), other (3 percent)
Ethnic Groups: Macedonian (64 percent), Albanian (25 percent), Turkish (4 percent), Roma (2 percent), Serb (2 percent), other (3 percent)

Executive Summary

Macedonia's post-Communist transition, unlike those of most of the other Yugoslav successor states, was marked by relative success in building democratic political institutions and introducing a free market economy after its independence in 1991. However, the deterioration in relations between the Macedonian majority and the Albanian ethnic minority (64.18 percent and 25.17 percent, respectively) in the late 1990s – driven in part by the Albanian insurgency in neighboring Kosovo – put an abrupt end to Macedonia's peaceful transition in 2001.

In his address to the 2003 European Union (EU) summit in Athens, Greece, Macedonian president Boris Trajkovski stated that the security of the country had been stabilized. The rule of law, he said, had been restored in the crisis areas, while political actors in the country have been committed to the implementation of the Ohrid Framework Agreement, which ended the open hostilities in 2001.

In reality, the situation in Macedonia in 2003 was slightly more nuanced. Numerous gains were noted during the year, such as the growing strength and vibrancy of issue-oriented nongovernmental organizations (NGOs), the launching of comprehensive reforms in the system of governance, the passing of laws that improve the representation of minorities, and the stepping up of efforts to fight corruption. Nevertheless, many challenges remained. For example, several parts of the country, especially in the northwest, continued to be under the control of village militias, which often identify with the Albanian National Army (Armata Kombetare Shqiptare, or AKSh).

The Macedonian government (often finding itself fighting small armed units that disturb the normal operation of government institutions and kidnap police officers) has failed to articulate what AKSh really is and to what extent it constitutes a national security threat. While Prime Minister Branko Crvenkovski described AKSh as a regional organization operating in Macedonia, Albania, Kosovo, Serbia, and Greece, Interior Minister Hari Kostov considers many of these armed groups to be small criminal units without any overriding political organization. Although there is some truth to both views, AKSh has nevertheless claimed responsibility for several severe bomb attacks on public buildings in Skopje, Struga, and Kumanovo and has issued ultimatums to the Macedonian government.

The rise of AKSh marks the failure to successfully incorporate the former National Liberation Army (NLA), the principal force behind the 2001 internal war, into the Macedonian political system. While NLA's successor, the Democratic Union for Integration (DUI), gained most of the ethnic Albanian votes during the 2002 elections and is part of the current ruling coalition, some Albanian militant factions apparently have not joined the DUI or any of the other Albanian political parties. The ongoing security challenges in the country, together with political fractionalization driven by partisan divisions in the Macedonian political establishment, pose a serious threat to the future of the state as mandated by the Ohrid Agreement.

President Trajkovski has repeatedly ruled out federalization as a potential solution to Macedonia's current troubles, but strong voices on both the Macedonian and Albanian sides are calling for partitioning. One can see how such propositions have gained ground in a situation of complete separation between the two major ethnic communities, where many public activities – from voting in elections to economic development – have been conducted along ethnic lines. Moreover, ambitious legislative and constitutional reforms introducing measures of decentralization and equal participation, now in their second year, have further strained the unitary character of the Macedonian state and have created additional tensions.

Electoral Process. Aside from interim local elections in five municipalities, no elections were held in Macedonia in 2003. During the previous year, the country's parliamentary electoral system was changed from a mixed type (plurality and proportional) to purely proportional, and the previous threshold of 5 percent for party representation in the Assembly was disbanded. As a result, the number of political parties in the Assembly has increased. The current government, led by the Social Democratic Alliance of Macedonia (SDSM), includes several ministers from the DUI. Tensions and political fractionalization among coalition members as well as within political parties themselves have been persistent but so far have not significantly affected the ability of the government to pursue its reform agenda. Macedonia's rating for electoral process remains unchanged at 3.50.

Civil Society. While it would be premature to speak of a vibrant civil society in Macedonia, the general development of the NGO sector has been positive. The growth of issue-oriented NGOs in Macedonia continued in 2003, and many organizations have been actively involved in solving pertinent societal problems, most notably in the area of interethnic relations. External support for Macedonian NGOs grew for the second year straight, mostly from the United States and the EU. Local NGOs have also registered progress in terms of increasing their organizational capabilities and institutional development. At the same time, a similar strengthening in the area of policy-oriented NGOs and think tanks is not yet evident, and compared with other countries in the region where such organizations play an important role in the policy-making process, Macedonia still lags behind. Macedonia's rating for civil society improves from 3.75 to 3.25 owing to increased external support, improved organizational capability, and greater involvement of local NGOs in the postconflict development of the country.

Independent Media. Physical attacks on journalists and interference with editorial policies in Macedonia declined sharply in 2003. The new government has established a better track record in dealing with the media, and there was only one reported incident of interference during the reporting period. However, the most recent changes to the criminal code expanded the criminal character of libel and introduced higher fines. Media independence also suffered in 2003 after the German media group Westdeutsche Allgemeine Zeitung bought three major dailies, thus establishing a monopoly position in the newspaper and print advertising markets. The smaller media organizations in Macedonia remain divided along ethnic lines and serve their respective communities. Macedonia's rating for independent media declines from 4.00 to 4.25 owing to the increased penalty fee concerning cases of libel in the revised criminal code and the negative impact of the concentration of the printed press market.

Governance. In 2003, the system of governance in Macedonia underwent the most significant changes since the country gained independence in 1991. A gradual transfer of power from the central government to the units of local self-government (municipalities) was initiated and is expected to be completed before the next local elections in 2004. This reform has already begun to empower local communities and mitigate the negative effects of ethnonationalism. However, many of the deadlines for adopting changes to several key laws regulating territorial division and local finances have not been met, and the government will need to provide further guarantees that the new territorial division will improve existing economic inequalities among Macedonia's regions. Macedonia's rating for governance improves from 4.50 to 4.00 owing to the nature and scope of reforms undertaken in 2003.

Constitutional, Legislative, and Judicial Framework. The constitutional and legislative reform process in Macedonia in 2003 was complicated by political and security factors. Nevertheless, new legislation reaffirming the commitment for representation of national minorities and the use of minority languages was adopted. Important progress was also made in the area of citizenship law and the legal protection of citizens' rights before state institutions, an example of which is the Law of the Ombudsman. The Assembly and the cabinet, however, have had a limited ability to push through reform efforts owing to the lack of a parliamentary majority by the SDSM, the position of the DUI as a veto player, and the radical position of the main opposition parties. Macedonia's rating for constitutional, legislative, and judicial framework improves from 4.50 to 4.00 owing to the adoption of new laws and a commitment on behalf of the government to proceed with the reform effort.

Corruption. There were several positive developments in the struggle against corruption in Macedonia in 2003. Recent legislative reforms and the establishment of an Anticorruption Commission were important accomplishments, along with the introduction of a requirement that public officials declare their private holdings 30 days after taking office. The Office of the Public Prosecutor also initiated several cases against corruption and misappropriation of funds, most of which were associated with people from or close to the former government. Ljuben Paunovski, former minister of defense, was convicted and sentenced to five and a half years' imprisonment in November 2003. However, the anticorruption initiatives of the government have been criticized as politically motivated and have lacked much-needed coordination among different governmental organizations, the judiciary, and the legislature. Macedonia's rating for corruption improves from 5.50 to 5.00 owing to the introduction of an Anticorruption Commission, important anticorruption legislation, and some visible enforcement.

Outlook for 2004. While a March 2003 poll by the Institute for Political, Sociological, and Legal Research showed that 47 percent of Macedonians considered the country to have become more stable, security will remain a dominant issue in 2004. In public opinion, the largest threat to Macedonia's national security was not ethnic extremism, but economic security and poverty. The continued activity of the AKSh and the lack of a permanent solution regarding the status of Kosovo will pose a constant serious threat to the sovereignty and territorial integrity of Macedonia. The upcoming local elections will be a major test of the ruling coalition's cohesiveness and of relations between ethnic Macedonians and ethnic Albanians. In addition, reform efforts initiated in the last two years awaiting 2004 implementation could be challenged by budgetary constraints.

Electoral Process (Score: 3.50)

As with other nations in transition, the decade-long challenge on Macedonia's road to democracy has been the establishment of political institutions based on free, fair, and democratic elections. In 1991, the founders of the republic chose a parliamentary system based on universal suffrage and provided a constitutional framework requiring regular elections. Indeed, Macedonia has since held several general elections with varying regularity – one presidential, two local, and two parliamentary. There are different electoral procedures for each level.

Presidential elections are conducted by a clear majority, with provisions for a second round in cases where candidates fail to receive half of the registered vote. This requirement forced the 1999 election to proceed in two rounds since none of the candidates garnered a clear majority. On the other hand, local elections are determined by a mixed system: a plurality vote to elect mayors and a proportional system to choose municipal councils.

Before 2001, parliamentary elections were similarly conducted using a mixed system. The Macedonian Parliament – known as the Assembly – has 120 members, 85 of whom, prior to 2001, were elected in single-mandate constituencies (essentially a plurality vote) and 35 according to national party lists using a proportional system. The proportional vote had a 5 percent electoral threshold for representation. Since 2001, the procedure for electing parliamentary representatives has changed significantly. Following the internal war of 2001 and amendments to the Constitution required by the Ohrid Framework Agreement (August 13,2001), Macedonia's legislators adopted a series of changes to the Law on Election of Members of Parliament, the Law on the Voters List, and the Law on Election Districts. Amendments to all three laws were enacted before the fall 2002 parliamentary elections.

According to the new rules, the electoral system for the Assembly is now purely proportional. Thus, in the 2002 parliamentary elections, all 120 seats were allocated according to a vote on closed party lists in six multimember constituencies (election districts). The districts are about equal in size (around 280,000 registered voters) and are designed not to coincide with established regions (reflecting the ethnic composition of the electorate). More important, the electoral threshold was done away with altogether, making the Macedonian system unique among other proportional parliamentary systems in Eastern Europe.

The adoption of a proportional system has empowered Macedonia's political parties over individual politicians. Although some experts have traditionally considered Macedonian parties to be organized and driven by charismatic individuals, the use of proportional representation with closed party lists means that access to the Assembly is determined by those drawing up the candidate lists at party headquarters.

For the two major political parties – the Social Democratic Alliance of Macedonia (SDSM) and the Internal Macedonian Revolutionary Organization-Democratic Party for Macedonian National Unity (VMRO-DPMNE) – this has important implications, since both parties have traditionally run in elections as leaders of multipartner coalitions. In the case of SDSM, which headed a 10-member coalition in the 2002 elections, the position of candidates on the lists determines the level of political bargaining power in postelection policy making.

The disbanding of the 5 percent electoral threshold has facilitated the inclusion of smaller political parties in the Assembly, such as the Albanian Party for Democratic Prosperity, the National Democratic Party, and the Macedonian Socialist Party, which received 2.3 percent, 2.1 percent, and 2.1 percent, respectively, in the 2002 elections. It is important to note that in other proportional systems, thresholds have traditionally been imposed to deny national representation to small and regional parties. In Macedonia's case, it appears that specific internal security issues necessitated going against this norm.

While the legal and constitutional framework of the Macedonian electoral system provides for national political contests, voter and political behavior continues to be constrained by ethnic boundaries and is, in essence, regional. Ethnic Albanians support ethnic Albanian parties, with specific preferences drawn by regional and family affiliations. Ethnic Macedonians in turn vote largely for the two major Macedonian parties. The other ethnic minorities (Serb, Turkish, and Vlach) support their respective political entities.

Such electoral and political fragmentation is also evident within Macedonian political parties. While it has been common for deputies to jump from one party to another over the past decade, a new dynamic emerged in 2003. The political parties that had formed the ruling coalition in the previous Assembly – the VMRO and the Democratic Party of Albanians (DPA) – lost the 2002 elections to become the opposition and have gone through a process of reform and consolidation. Within the VMRO-DPMNE, former prime minister Lujbco Georgievski resigned his post at the May 2003 party congress, opening the way for a smooth change in leadership.

The party also seems to have recovered from recent internal divisions, such as the December 2003 formation of a new political wing that was quickly integrated into the party. VMRO-DPMNE's former coalition partner DPA has similarly taken a firm stance against the official line in Skopje and has returned to its earlier and more radical platform, which its leader, Arben Xafferri, endorsed before the party joined the government in 1998.

The victory of SDSM, however, has opened up divisions and disagreements within the ruling coalition as well as within SDSM itself. The continuation of insurgent activities in parts of the country and the use of force by the SDSM-controlled Ministry of the Interior has tested the fragile majority of the Socialist-led government several times in 2003 (elected by 79 of 120 votes in 2002, SDSM fell short of an absolute majority by 1 deputy). SDSM's coalition partner, the Democratic Union for Integration (DUI), a successor to the major fractions of the insurgent National Liberation Army of 2001, has suffered a loss in popularity among Albanians as a result of these government actions.

SDSM had a similarly turbulent summer during its internal party elections. Examples of party election problems included throwing away membership cards in Stip, public offenses and accusations against party members in Kicevo, a drive for local party independence in Strumica, warring party factions in Bitola, and open turmoil in Kumanovo. While the party's general secretary, Nikola Kurciev, stated that these incidents reflect the internally democratic character of the party, party municipal elections in August (postponed after failing to elect leaders) revealed the potential for future fractionalization. Additional tensions within the SDSM-led coalition were apparent during the minor cabinet reshuffling undertaken by Prime Minister Branko Crvenkovski in early November 2003.

The promotion of a third political bloc in Macedonia composed of the Socialist Party (SPM), the Democratic Alliance (DS), and the Democratic Alternative (DA) has been planned since the early summer. The possibility for a future triple coalition offering an alternative to the traditional political blocs was discussed by SPM leader Ljubisav Ivanov, DA chairman Vassil Tupurkovski, and DS leader Pavle Trajanov before the summer vacation, when the parties adopted a joint political and economic platform. It remains to be seen if such an effort would introduce significant changes to the Macedonian political establishment.

Civil Society (Score: 3.25)

Unlike Macedonian politics – where popular sentiment and participation have been substantial since the start of democratization – civil society is still regarded by many with the utmost suspicion. A Western cultural "import," the concept of civil society and its organizational forms has predominated in Macedonia over the past few years because of support from abroad. More recently, however, the public and media have started to pay closer attention to nongovernmental organizations (NGOs) and their work because of the benefits, economic and otherwise, that the NGO sector is bringing to Macedonian society.

There have been varying estimates of the number and size of NGOs. While some older assessments have put the number at 300 (Guide to Non-governmental Organizations in Macedonia, 1998), the World Bank has more recently estimated 3,000 (World Bank Office Macedonian NGO Outreach, 2003), though it is not known how many of these are active. Part of the difficulty in providing an accurate number of registered NGOs is that Macedonian law does not provide appropriate criteria for differentiating among different types of groups, such as civil society organizations, professional associations, trade unions, employers unions, and other entities that are not commercial in nature.

What is certain is that the number of NGOs has been growing, especially in the last two years, owing to increased funding and a renewed emphasis on societal issues in which NGOs are considered to play an important role. The two major providers of external aid to Macedonia in 2003 were the United States through the U.S. Agency for International Development (USAID) and the European Union (EU) through the European Agency for Reconstruction (EAR). EAR support for Macedonia has averaged 33 million euros per annum since 2001, with funds earmarked for several key sectors: democracy and rule of law, economic and social development, protecting the environment, and justice and home affairs.

USAID increased its contribution from US$49 million in 2002 (actual) to US$50 million in 2003 (requested). Almost US$7 million was designated in the form of technical assistance, grants, and training for projects in the areas of democracy and governance. The prime partners executing the 2003 USAID program were the Institute for Sustainable Communities, International Center for Non-for-Profit Law, Louis Berger Group, American Center for International Labor Solidarity, Catholic Relief Services, International Research and Exchange Board, and Search for Common Ground.

American and European funds have greatly contributed to the financial viability and institutional development of Macedonian NGOs. The EU provided 3 million euros (US$3.6 million) in 2003 in support of projects to develop civil society and promote interethnic relations. Similarly, USAID, through its Macedonia Confidence Building Initiative (implemented by the International Organization for Migration), has been awarding grants averaging US$20,000 to $30,000 to support local-level interethnic compatibility, confidence-building initiatives, and citizen participation.

It is difficult to assess the performance of Macedonian NGOs solely on the amount spent for civil sector activities. However, it would be fair to say that the financial support and technical expertise provided to Macedonian NGOs is sufficient for sustaining a vibrant civil sector on the local level. This is apparent in the increased advocacy of a great number of NGOs working primarily in interethnic relations, minority issues, human rights, democratization, and civic participation. Many NGOs have been active in the government's implementation of the Ohrid Framework Agreement, from issues of local government and the reform of the Ministry of the Interior to arms collection.

Still, the number of NGOs involved in advocacy efforts that have the potential to impact policy making in Macedonia remains low. The Open Society Institute in Macedonia commissioned two studies in 2003 that received wider public attention. As part of the Civil Platform for Peace and Stability project, the first report declared the government's performance in its first 100 days as good in terms of fighting crime and corruption but lacking a strategy for reducing poverty and tackling unemployment. The second study noted corruption in the higher education system based on surveys of students at major Macedonian universities.

With perhaps only two NGOs identified as "think tanks," Macedonia lags behind other countries in Central and Eastern Europe, where policy groups are growing in number and have become prominent players in the public policy process. In Macedonia, this role has been played by international NGOs, such as the International Crisis Group, (ICG, making recommendations for improving national security and targeting corruption) and the Boston-based Conflict Management Group (which was reportedly commissioned by President Boris Trajkovski to help improve interethnic relations in the country by integrating conflict resolution and peace-building skills into education, according to Dnevnik Daily).

Trade unions in Macedonia have been reorganizing and adapting to Macedonia's new realities over the last decade. More recently, the Federation of Trade Unions of Macedonia, an umbrella organization for traditional unions, has made efforts to improve its public outreach by establishing a Media and Public Communications Department in 2003 and providing media training to local union leaders. The ability of the trade unions to protect workers' rights has been limited owing to the privatization and liquidation of state-owned enterprises. This has resulted in the emergence of a largely nonunionized private sector, as well as the growth of the informal economy in the country, where many Macedonians work without contracts.

The main religious organizations in Macedonia are the Autocephalous Macedonian Eastern Orthodox Church and the Islamic community, legally identified by the government as religious communities. The Roman Catholic Church, the Jewish community, and the Methodist Church are recognized as religious groups and are subject to registration. Religious organizations provide various forms of support to their congregants, including educational services. While all religious communities and groups are treated equally by the state, Macedonian law tends to favor the two main religions.

The number of issue-oriented NGOs that provide assistance to people in need continued to grow in 2003. Furthermore, ongoing external funding for NGOs provided greater opportunities for many young Macedonians in an economic climate with unemployment rates of almost 40 percent, according to government statistics. With local philanthropy and volunteerism virtually nonexistent, external support is crucial for the development of the civil society sector. Therefore, the projected decline in external aid from the United States and the EU in 2004 (due to tighter economies abroad) will pose a significant challenge to the viability of many Macedonian NGOs.

Independent Media (Score: 4.25)

The recent positive developments in the civil society sector in Macedonia have not been matched by trends in independent media. Although generous funds have been provided for media projects, journalist training, and legislative reform, freedom of the press declined in 2003. This occurred not so much as a result of increased state interference, but because of internal consolidation of the media industry.

Attacks on journalists and media offices in 2003 declined compared with the previous year. The May 2003 annual report on Macedonia by Reporters Without Borders (covering events in 2002) outlined five cases of physical attacks on journalists in Macedonia: Mare Stoilova and her cameraman (A1), Nina Kepeska (A1), Simon Ilievski (Utrinski Vesnik), and Zoran Bozinovski (Tumba). Some of the attacks were allegedly conducted by members of the then ruling VMRO-DPMNE and the special police unit "the Lions." The report also mentioned several cases of intimidation and pressure by officials of the Interior Ministry and complaints of phone taps on editors. Another annual report, by the South East Europe Media Organization, mentioned a total of 41 registered press freedom violations in Macedonia in 2002, putting the country near the top of the list, after Serbia (64), Romania (58), and Bosnia-Herzegovina (57).

In 2003, the situation improved, with only two reported incidents – an attack on a TV crew in the village of Aracinovo and a government raid of an Albanian editorial office – both of which took place in the spring. The first incident prompted protests by the Association of Journalists of Macedonia, which claimed that the crews of MTV and Sitel TV were assaulted by Albanian villagers while representatives of the EU-led Concordia mission stood by, choosing not to intervene. In the ensuing political debate on the rights and safety of journalists in Macedonia, Telal Xhaferi, a deputy from the ruling DUI, stated that "the local population reacted normally considering the fact that they were not appropriately informed."

The second incident involved an alleged April 11 raid on the editorial office of the Albanian section of MTV's Third Channel by Interior Ministry officials. According to the Albanian-language Fakti, the police raid followed the broadcast of a statement by residents of Tanusevci, Breza, and Malina warning that they would resort to civil disobedience in response to the government's failure to address pressing issues in their communities.

Although freedom of the press and access to information is guaranteed by the Macedonian Constitution (Article 16), access to public information remains limited, reports the Open Society Justice Initiative in Macedonia. Nevertheless, the government has made significant effort by supporting the drafting and adoption of a Law on Freedom of Information. At the same time, however, amendments adopted to the criminal code in fall 2003 further restricted freedom of the press. These legislative changes failed to alter the criminal characterization of offenses such as slander and libel.

Currently, prison sentences under these provisions range from six months to three years, and the amendments have also introduced a higher fine. The Media Task Force of the Stability Pact for South Eastern Europe has put Macedonia among the countries needing the most change in media legislation. A 2003 survey by the task force found that, among other problems, the process of issuing licenses and frequencies to electronic media is not transparent, the public broadcaster does not enjoy editorial independence, and the Broadcasting Council (a regulatory body) has only nominal independence.

While the current government has not applied pressure or interfered in the affairs of media organizations to the extent of the previous government, the freedom of Macedonian press is now facing a new and different challenge – industry consolidation. On July 28,2003, the German media group Westdeutsche Allgemeine Zeitung (WAZ) announced that it had bought three major Macedonian dailies: Dnevnik, Utrinski Vesnik, and Vest. The three newspapers were incorporated into the new company Media Print Macedonia, headed by Srdjan Kerim, the former Macedonian ambassador to Germany and the United Nations.

With an average circulation of 120,000 – and a much larger audience due to the common practice of readers sharing copies – the new conglomerate has established a virtual monopoly in the media market, since the other major newspapers (Nova Macedonia and Vecer) are considered to have much smaller circulation and investment capabilities. To offset ongoing speculations about the impact of WAZ on editorial policies and independent journalism, Bodo Hombach, one of the four senior managing directors of the German company and a key player in the buyout negotiations, stated publicly that the new ownership of the papers would provide journalists with more freedom and allow them to report politics more critically. Morevoer, in an announcement made soon after the buyout deal was completed, WAZ confirmed that it had signed the Principles for Guaranteeing Editorial Independence (sponsored by the Organization for Security and Cooperation in Europe).

Despite the publicity efforts of the new company, WAZ's track record in the region (already holding large stakes in the print media markets in Bulgaria, Croatia, Serbia, and Romania) suggests the conglomerate has the potential to dramatically change the local media environments where it operates. A 2003 report by the European Federation of Journalists claimed that most of the damage could result from foreign imposition of investment and editorial policies. In neighboring Bulgaria, where WAZ acquired the two major dailies Trud and 24 Chassa several years ago, both newspapers have taken a turn toward sensationalistic journalism, and efforts have been directed at monopolizing the advertising market, although no incidents of serious editorial interference have been reported. While the actual impact of WAZ's entry in Macedonia remains to be seen, the buyout has consolidated print media in a way that threatens the existence of a free and competitive market. This is a distinct possibility given Macedonia's ineffective antitrust legislation.

The near-monopolistic consolidation of print media in Macedonia was accompanied by requests for increased funding for the state news agency MIA in the fall of 2003. The request, which led regional affiliates of the International Press Institute to write protest letters to the president and the prime minister, was probably more politicized than necessary. The alleged damage to privately owned media outlets by increased subsidies to the public agency would be minimal given other sources of investment in the sector.

Governance (Score: 4.00)

The recent concentration in Macedonia's media market is the exact opposite of what has been occurring in the government sector. In line with the Ohrid Agreement, Macedonia has initiated political reforms aimed at state decentralization with the backing of national politicians and the international community. The most important piece of legislation, the Law on Local Self-Government, was adopted on January 24,2003, by overwhelming Assembly support. Amendments to the Macedonian Constitution required this law to be passed by a qualified majority of two-thirds of all deputies and a simple majority among deputies representing ethnic minorities.

Amendments to the Law on Local Self-Government are part of a larger package of legislative reforms intended to improve both interethnic relations and the balance of power between the central government and the units of local government (municipalities). In principle, local government reform in Macedonia does not envision altering the unitary character of the state; rather, it aims to transfer certain duties from the central to the local level.

The new Law on Local Self-Government provides municipalities with greater flexibility in managing their own activities, establishing and funding local educational institutions, and administering local primary health care. Several supplements were added to the law in July 2003, when the Assembly granted municipalities the right to facilitate contact between citizens and members of the Assembly elected from their district.

However, the essential phase in local government reform is still to come with the pending status of the Law on Territorial Division and the Law on Finances. There have been serious institutional challenges to drafting and adopting these laws, delaying previously stated deadlines. Reform plans are drawn up primarily by the government (Ministry of Local Self-Government), while similar duties are vested in the Assembly's Political System Commission. At the same time, the politically sensitive nature of the reform has opened rifts not only between ethnic Macedonian and Albanian parties, but also between the ruling coalition and the opposition.

Along these lines, the proposed changes to the Law on Territorial Division, envisioning a reduction in the number of Macedonian municipalities from 123 to 60, have sparked criticism from both Albanian political commentators and local politicians. The Albanian concern is that the new division will establish and consolidate ethnic Macedonian regions and push the Albanian population into enclaves. This issue also includes controversies surrounding the exclusion of Skopje from the law and regulating the capital city municipalities in a special law. On the other hand, many local mayors whose municipalities would be merged into others have voiced concern about the democratic nature of the entire process.

The Law on Finances has proven to be an even tougher reform to pass. This legislation would provide more fiscal autonomy to municipalities by allowing them to collect and use local taxes, fees, and other revenues. In anticipation of the Assembly passing the bill, the government launched a pilot project with 25 municipalities. The prospects for complete fiscal decentralization in the near future remain bleak, however, since that would require structural reforms of the central government for which additional time and resources would be needed. One example is health care, where insurance is provided through a centralized national system; another is education, where state funding could be provided on an ad hoc basis (such as the Albanian university in Tetovo). But it would be very difficult to establish a general system of state subsidies.

Another important issue in the reform of local government is financial sustainability. The process of fiscal decentralization will restrict the resources of the central government by diverting revenue streams to municipalities, eventually decreasing the already low levels of state subsidies. Owing to subregional and other idiosyncrasies, many municipalities would not be financially viable without the support of the central government. In 2002, for example, only 37 municipalities registered fiscal surpluses, while 87 ran deficits, some quite significant, as reported by the Association of the Units of Local Self-Government. Depending on the final determination of the territorial division, this could create inequalities in economic development and social welfare in certain regions that could easily undermine the fragile political stability of the central government.

Further delays might prevent these local government reforms from being implemented before the 2004 local elections. The May 2003 interim elections in five municipalities (Shuto Orizari, Kochani, Orizari, Vasilevo and Demir Hasan), while held in a generally legitimate fashion after some legislative changes, are in no way an indication of how the regular local elections might proceed in 2004. As the elections approach, political tensions may increase, since delays and poor public notification of governmental activities have already fueled speculation and conspiracy theories about alleged rights violations. While early indicators show that the government is determined to gradually initiate the transfer of duties to municipalities – beginning with sports, culture, and urban planning – many people consider the issue of local finances to be more of a priority.

Constitutional, Legislative, and Judicial Framework (Score: 4.00)

Ongoing local government reform is part of a much broader constitutional and legislative overhaul in Macedonia initiated after the 2001 Ohrid Agreement. The constitutional amendments and provisions of the agreement called for the adoption of roughly 20 new laws guaranteeing equitable representation of ethnic minorities in state institutions and the use of minority languages. Among these, the Law of the Ombudsman, adopted on September 10,2003, represents a major step toward combating discrimination and increasing equal participation of all communities at all levels of government. These and other legislative changes have in fact altered some institutional aspects of the Macedonian political system.

Since independence in 1991, the country has had a parliamentary system of government, with separation of powers among the legislature, the executive (cabinet and president), and the judiciary (Supreme Court, Constitutional Court, and public prosecutor). The 1991 Constitution and its subsequent amendments provide a leading role for the legislature and grant deputies significant powers. These range from appointing members of the executive and judicial branches to making decisions about raising and allocating resources to national and subnational organizations.

The powers of the Macedonian executive branch are shared by a cabinet of ministers (led by the prime minister) and the president. The cabinet has the right to initiate draft legislation – and does so actively – and is generally in charge of the day-to-day operation of state institutions. The president has certain prerogatives in foreign affairs and security matters and certain powers of nomination in the judiciary. The president also nominates the prime minister, who is appointed by the legislature. The president's power to veto legislation is quite limited; it can be overridden by a simple majority and does not apply to laws adopted by a qualified majority.

A key institution of the Macedonian judiciary is the Republican Judiciary Council, which holds power over the court system and judges. The council's members are appointed by the legislature, while the president provides two nominees (out of seven members). Another important institution is the Constitutional Court, which has the right to review acts of the legislature and the government to determine if they violate the Constitution. Judges in the Constitutional Court are similarly elected by the legislature. The Macedonian Assembly also appoints the public prosecutor.

The fact that the ruling SDSM does not have an absolute majority in the Assembly has contributed to some limitations in building consensus for policies and reforms. For example, in 2003 the SDSM failed in its first attempt to muster support for amendments to the Law of Executive Procedure and the Law on Courts. Similarly, there were serious disagreements over new appointments to the Republican Judiciary Council. VMRO-DPMNE deputies refused to support the appointment of chairwoman Lence Sofronievska, claiming that she is an SDSM partisan appointment. At the same time, the parliamentary majority firmly turned down the two nominations of President Trajkovski.

Nevertheless, political fragmentation in Macedonia – due to a greater number of smaller parties in the system as well as the lack of an absolute majority in the ruling coalition – has been overcome on many occasions by external factors. In such cases, Macedonian deputies have demonstrated that they can surmount partisan and ethnic divisions to successfully adopt key laws. Many legislative reforms – regarding money laundering, drug enforcement, wiretapping, and citizenship – have been mandated through Macedonia's commitment to the Stabilization and Association Agreement process with the EU.

Additionally, national security pressures have dictated the smooth adoption of changes in the criminal code, such as the voluntary handover of weapons. Likewise, deputies almost unanimously have ratified a number of agreements, such as the Convention for Elimination of all Forms of Discrimination of Women, the Convention on Children's Rights, and agreements banning child prostitution and pornography.

In general, the constitutional and legislative reform process in Macedonia over the past year has been quite successful despite political and security challenges. There have been positive developments in upholding basic human rights and respecting personal and religious freedoms, which are formally recognized in the 1991 Constitution. Important progress has been made in the area of citizenship law and the legal protection of citizens' rights before state institutions. According to the latest amendments drafted by the government (October 2003), the period of continuous residence in the country required for obtaining citizenship was reduced from 15 to 8 years, the Ministry of the Interior's right to turn down citizenship applications was abolished, and residents of other former Yugoslav republics who have lived in Macedonia since 1991 are now entitled to Macedonian citizenship.

Corruption (Score: 5.00)

The broad legislative and constitutional changes in Macedonia in 2003 also touched on the sensitive issue of corruption. Both the cabinet and the Assembly initiated new legislation and supported the full implementation of existing anticorruption initiatives. In Transparency International's 2003 Corruption Perceptions Index, Macedonia received a rating of 2.3 (10 being the most "clean"), ranking the country 106th out of 133 countries surveyed.

This ranking came in the aftermath of a report on corruption in Macedonia by the International Crisis Group – released not long before the 2002 parliamentary elections – and during a peak in popular perceptions of corruption in the country. The ICG report, entitled Macedonia's Public Secret: How Corruption Drags the Country Down, established a direct link between what was seen as endemic levels of corruption and the stability of the state. For example, the report offered interesting findings on how the Macedonian party apparatus is involved in sustaining corruption.

When SDSM leader Branko Crvenkovski was sworn in as prime minister after the 2002 elections, his speech to the Assembly acknowledged the high levels of organized crime and corruption in the country. He announced at that time that the new cabinet would prepare and implement widespread anticorruption measures. The government's program, publicized several months later, demanded broad constitutional changes that would limit or abandon the immunity of state officials in all branches of government in cases of serious allegations of corruption. The program also called for a separate reform of the judiciary, with the introduction of a nine-member Supreme Justice Council invested with certain powers in the appointment and oversight of judges. Similarly, the government's measures aimed to provide greater transparency and improve communications among executive, legislative, and judicial powers by establishing anticorruption networks. This ambitious program was prepared at the same time as a program of the State Commission for Combating Corruption, which is not part of the cabinet. The commission, established under the Anticorruption Law with a mission to curb corruption, is headed by Sladjana Taseva, one of Transparency International-Macedonia's executives.

Supported by a broad public consensus and considerable political will, the fight against corruption in Macedonia in 2003 saw tangible results. A law requesting public officials to declare their property was adopted in May 2002 but not enforced until the end of the year. The new cabinet members were among the first to fill out questionnaires specifying their real estate, financial, and other holdings, which according to law must be submitted within 30 days of taking office. This information is supposed to be processed and verified by the Public Revenue Administration and the State Commission for Combating Corruption. Since the law was introduced retroactively, the members of the previous cabinet are also required to publicly declare their property.

In addition, the Office of the Public Prosecutor initiated investigations and in some cases brought criminal charges against several members and associates of the previous government in 2003. The most publicized cases included Ljuben Paunovski, former defense minister; Besnik Fetaj, former minister for the economy; and Vojo Mihajlovski, former chief of the Health Insurance Fund. During the course of the year, many corruption cases were delayed in the court system for various reasons, compelling the public prosecutor, Alexandar Prcevski, to state publicly that there is corruption in the judiciary. At the same time, the opposition VMRO-DPMNE claimed that many investigations were politically motivated and the government was looking for scapegoats. Still, one of these high-profile cases was completed in early November 2003 when the Skopje court sentenced Paunovski to five and a half years' imprisonment for illegal procurement tenders.

In May 2003, a report commissioned by the Open Society Institute in Macedonia revealed evidence of perceived corruption in another sphere of public life – higher education. The survey was conducted in three major universities: St. Cyril and Methodius in Skopje, St. Kliment Ohridski in Bitola, and the Southeast European University in Tetovo. A large number of student respondents claimed there were irregularities in admission exams, tests, registration, and other academic matters. Following the release of the report, the State Commission for Combating Corruption initiated meetings with the administration of the surveyed institutions to discuss specific measures to curb corruption in the system of higher education in Macedonia.

Despite positive developments in the struggle against corruption in Macedonia in 2003, much remains to be done to enforce the anticorruption measures. Recent legislative reform and the introduction of an Anticorruption Commission is an important accomplishment, but greater coordination among different state institutions will be needed. A major shortcoming is that the commission is not entitled by law to any investigative powers, which means it can point to instances of corruption but cannot act on them. On the other hand, the government's anticorruption agenda envisions limiting the power of the judiciary and increasing the powers of the public prosecutor – something that would meet with significant resistance from the court system.

A successful implementation of anticorruption measures also depends on restating the relationship among police, investigators, prosecutors, and the court system by providing new rules of collaboration and cooperation. The government and the state commission also have failed thus far to address the issue of corruption as a societal phenomenon. Both institutions have focused their activities on curbing corruption among those in positions of power, while little has yet been done to raise public awareness of corrupt practices. Because each time someone takes a bribe, there is someone who gives it.

Author

Georgi Tsekov is a New York-based country and political risk analyst specializing in Eastern Europe and Latin America.