Nations in Transit - Macedonia (2006)

Capital: Skopje
Population: 2,000,000
Status: Partly Free
PPP: $1,980
Private Sector as % of GNI: na
Life Expectancy: 73
Religious Groups: Macedonian Orthodox (32.4 percent), Muslim (16.9 percent), other (50.7 percent)
Ethnic Groups: Macedonian (64 percent), Albanian (25 percent), Turkish (4 percent), Roma (3 percent), Serb (2 percent), other (2 percent)

NIT Ratings	1999	2001	2002	2003	2004	2005	2006
Electoral Process	3.50	3.75	4.50	3.50	3.50	3.00	3.25
Civil Society	3.50	3.75	4.00	3.75	3.25	3.25	3.25
Independent Media	3.75	3.75	3.75	4.00	4.25	4.25	4.25
Judicial Framework and Independence	4.25	4.25	4.75	4.50	4.00	3.75	3.75
Corruption	5.00	5.00	5.50	5.50	5.00	5.00	4.75
Governance	3.00	3.75	4.25	4.50	4.00	N/A	N/A
National Democratic Governance	N/A	N/A	N/A	N/A	N/A	4.00	3.75
Local Democratic Governance	N/A	N/A	N/A	N/A	N/A	4.00	3.75
Democracy Score	N/A	N/A	N/A	N/A	N/A	3.89	3.82

Executive Summary

A former constituent republic of the Socialist Federal Republic of Yugoslavia, Macedonia declared its independence on November 21,1991. In contrast with other former Yugoslav republics, it enjoyed a peaceful and broadly uncontested transition to independence. However, full international recognition was delayed by Greek objections to the new state being called Macedonia (this being the name of a Greek province and its use, in the Greek view, implying pan-Macedonian ambitions), and admission to the United Nations was blocked until April 1993, when it took place under the interim designation "Former Yugoslav Republic of Macedonia." Although the reference to the former Yugoslav past was to be used within the UN as a result of Greek pressure, other international institutions have also used the interim reference. Besides the "name issue," during the democratization period the interethnic relations and the question of minority rights were at the forefront of the domestic political agenda. Following the warlike crisis in early and mid-2001, and the signing of the Ohrid Framework Agreement, Macedonia made a number of amendments to the 1991 Constitution that clarified the position of national minorities in the legal system, preserving territorial integrity and sovereignty.

Two major events characterized 2005: the local government elections and the granting of candidate status to Macedonia by the European Union (EU) Council of States in early December. In the local elections, the ruling coalition, led by the Social Democratic Alliance of Macedonia, won 352,089 votes, 435 elected councillors, and 37 mayors. The opposition coalition, led by the Internal Macedonian Revolutionary Organization-Democratic Party for Macedonian National Unity, won 226,295 votes, 323 elected councillors, and 21 mayors. Although the Social Democratic Alliance of Macedonia won more votes and mayors, the opposition won in the capital city, Skopje, securing the constituent municipalities of Centar, Aerodrom, Butel, Gazi Baba, and Kisela Voda. The new mayor of Skopje was an independent candidate but supported by the opposition. Among Macedonian Albanians, the ruling Democratic Union for Integration won over the opposition Democratic Party of Albanians. Although the local elections were marred by a number of irregularities, a positive recommendation was given to Macedonia by the EU Commission.

Following the 2001 conflict, the general level of security has gradually improved, and in 2005 police presence was ensured all over the country. As many police patrols are ethnically mixed, the trust of the minority communities has also improved. With the exceptions of a number of localities in the former crisis areas, where police activities require a considerable level of sensitivity, the government's authority extends over the full territory of the country. However, the question remains how to collect the illegal weapons still circulating within Macedonia.

National Democratic Governance. Macedonia's desire to become a member of the EU and NATO influences the fulfillment of democratic principles of governance. The prospect of integration has built a consensus among political groups and citizens on democracy as the basis of the country's political system, although much of the national government's work is conducted behind closed doors and the population is increasingly separated rather than integrated. The implementation of the Ohrid Agreement has stabilized the country so that citizens recognize the legitimacy of national authorities and the laws that govern them. The political system is free of such threats to stability as war or insurgencies. In 2005, the government enjoyed a year of political stability and public support for its reform agenda, yet this new stability is still very fragile. Macedonia's rating for national democratic governance improves from 4.00 to 3.75 as a result of the normalization of the functioning of institutions and the EU-related reforms undertaken by the government.

Electoral Process. According to the law, local elections in Macedonia are to be conducted every four years. The previous local elections took place in November 2000 in 123 municipalities. Owing to the early presidential elections (two rounds in April 2004) and the referendum on the territorial organization of local self-government units (November 7,2004), the elections were postponed until spring 2005. The citizens elected mayors and council members of the new 84 municipalities and the city of Skopje, the voting conducted at 2,976 polling stations. In the first round, voting was regular, fair, and democratic across much of the country. But in some municipalities, a complete violation of the election process occurred. A report by the Organization for Security and Cooperation in Europe/Office for Democratic Institutions and Human Rights (OSCE/ODIHR) said the vote had "failed to meet key commitments guaranteeing universal and equal suffrage and the secrecy of the ballot." The second round of elections was much better organized, with very few irregularities observed. Macedonia's electoral process rating worsens from 3.00 to 3.25 given the partially successful implementation of the 2005 local elections and the unfavorable assessments by the OSCE, especially concerning the conduct during the first round.

Civil Society. Although Macedonian civil society boasts over 5,500 nongovernmental organizations (NGOs) by some estimates, the civil sector continues to lack capacities and consistent funding. In 2005, the level of quality improved in only a handful of local NGOs, while many others disappeared from the scene altogether. The main factor behind the boom in the sector is the availability of funds. Various international donors support the NGO sector in Macedonia, each with its own agenda that is often not coordinated with local needs and NGO demands. There is a top-down approach by the international community, offering funding to local organizations only if their programs and projects match the funding priorities of the donors. Few civil society groups are financially viable in the long term. Macedonian civil society has yet to attain the critical mass needed to become a serious actor at either the national or the local level. Instead of relying on funds on a project basis, local NGOs would be better served if core funding to key sectors was available from donors. Macedonia's rating for civil society remains at 3.25.

Independent Media. Although attacks on journalists decreased in 2005, interference with editorial policies have remained at 2004 levels. In 2005, a number of key editors and journalists from A1 Television claimed influence on their work by the owner and resigned. A few private broadcasters, such as TV Sitel or Kanal 5, are considered to be politically influenced, as the owners of these outlets are also presidents of political parties. The majority of print and electronic media are privately owned, and the German media conglomerate WAZ has owned the three biggest-selling dailies since July 2003, which could be considered an excessive concentration of media ownership. During local elections, the media generally provided diverse information to voters. The government has not yet made any attempts to amend the criminal code and the criminal character of libel. In 2005, several journalists were convicted to probationary prison sentences. Premier Vladimir Buchkovski heavily criticized unnamed media and journalists for being "manipulated and paid to write biased texts." A much-awaited Law on Access to Public Information has not been adopted. Macedonia's rating for independent media remains at 4.25 owing to the lack of progress in decriminalizing libel and the lack of a legal framework for access to public information.

Local Democratic Governance. Following the Ohrid Agreement, which ended the conflict between ethnic Albanian irregulars and the security forces through comprehensive reforms of the legal and the political system, Macedonia has engaged in a thorough decentralization effort, committing itself to devolve responsibilities of the central government to local government units. Devolution of powers was enacted in the spheres of urban planning and service delivery, fiscal management, and local economic development, among others. The transfer of competencies started on July 1,2005, although many municipalities were understaffed or had low staff capacities to take over the devolved responsibilities. Macedonia's rating for local democratic governance improves from 4.00 to 3.75 owing to the implementation of an overwhelming – and imperfect – local government reform effort.

Judicial Framework and Independence. While the Macedonian legal framework provides for the protection of fundamental political civil and human rights and equality before the law, in 2005 the government concentrated efforts on judicial reform. One of the problems has been how to shield judges from political influence and ensure their independence. Another problem is the inefficiency of the judiciary and the enormous backlog of cases awaiting trial or execution. The main principles of reform were approved by the Parliament on May 18,2005, by a broad majority. Draft amendments were presented by the government in June, and in August the Parliament adopted 15 draft amendments that have been debated publicly. The reform was scheduled to be completed by the end of 2005. Macedonia's rating for judicial framework and independence remains at 3.75, the reform of the judiciary still pending.

Corruption. According to a survey done by the domestic polling company Strategic Marketing, 73 percent of citizens believe that the government is corrupt. Given that few cases of corruption have actually been resolved, it is clear that the Macedonian public has "internalized" and "normalized" official corruption. In 2005, allegations of corruption were given wide and extensive airing in the media. Recognizing that the government has a direct impact on various spheres of the economy that have not yet been liberalized, new departments were established in the Ministry of the Interior and the Office of the Public Prosecutor to combat organized crime and corruption The effectiveness of the State Commission for the Prevention of Corruption depends in large part on the cooperation of the state institution, the public prosecutor in particular. In May, the commission released a report complaining that the level of cooperation with the public prosecutor is very limited. Macedonia's rating for corruption improves from 5.00 to 4.75 owing to the political will to put the issue on the national agenda.

Outlook for 2006. Boosted by EU candidacy status, the reform process is expected to continue in 2006 and be completed in the reform of the judiciary. Further harmonizing of Macedonian legislation with EU law is expected. The national elections scheduled for the fall will be a crucial test of the speed of Macedonia's EU accession. The EU accession process is expected to further consolidate political stability. Ethnic relations might be affected by complications concerning a permanent solution to the status of Kosovo.

Electoral Process (Score: 3.25)

The authority of the Macedonian government is based on universal and equal suffrage, with regular, free, and fair elections conducted by secret ballot. Moreover, the electoral system is free of significant barriers to political organization and registration, and ethnic and other minority groups have sufficient opportunities to participate in the political process. In the years since independence, the electoral system has been multiparty based, with the public engaged in the political life of the country. Power has rotated among different party coalitions representing competing interests and policy options. The field of political contenders is generally free from domination by power groups, such as the military, foreign powers, totalitarian parties, regional hierarchies, and/or economic oligarchies. Domestic and international election-monitoring organizations judged the most recent national legislative elections, conducted in the fall of 2002, to be free and fair. According to the OSCE, the most recent presidential elections held in April 2004 were free and fair, generally complied with international standards, and experienced a relatively small number of election irregularities, such as proxy voting, political violence, the presence of unauthorized personnel at polling stations, and voter intimidation.

According to the law, local elections in Macedonia are to be conducted every four years. The previous local elections took place in November 2000 in 123 municipalities and the capital city of Skopje. The next elections were to be held in 2004, but owing to the early presidential elections and the referendum on the territorial organization of local self-government units, the elections were postponed until spring 2005. Citizens elected mayors and members of councils of the new 84 municipalities and Skopje, with voting conducted at 2,976 polling stations.

On March 13 and 27,2005, Macedonia held local elections, which were regular, free, and democratic throughout most of the country. In some municipalities, however, a complete violation of the election process occurred. Thus, after the vote on March 13, the Supreme Court ordered a repeat of first-round voting at 33 polling stations in 10 municipalities, including Skopje, and in the second-largest municipality, Tetovo. Despite just recently applying for EU membership, the multiethnic coalition government led by SDSM did not manage to keep its promise of organizing free and fair elections. A report by the OSCE/ODIHR said the vote had "failed to meet key commitments guaranteeing universal and equal suffrage and the secrecy of the ballot." OSCE observers reported problems in about 10 percent of the polling stations visited, including ballot stuffing, tension in and around polling stations, and intimidation. The police were called to intervene in 20 cases, and several people were detained. Most irregularities were reported in the predominantly Albanian municipalities of Saraj and Arachinovo, near Skopje, as well as in the Roma stronghold of Shuto Orizari. Although charges were pressed against the individuals who violated the election process, the ruling coalition was to blame for failing to protect the electoral process since it had already witnessed irregularities, including fatal shootings, in previous elections in some of these same municipalities.

Many appeals and complaints were submitted to the State Electoral Commission as well as to the courts. The rejection of many of these complaints led to a boycott of the second round of the local elections by the Albanian oppositional bloc. In the second round, a Macedonian NGO, MOST, reported irregularities, including group voting and ballot stuffing, at 14 polling stations. Although Deputy Prime Minister Radmila Shekerinska maintained that less than 1 percent of the country's 2,057 polling stations were affected and Premier Buchkovski expressed "great pleasure" with the voting, saying that authorities had succeeded in blocking attempts to undermine the elections, the local elections in 2005 marred Macedonia's EU integration efforts.

In the first round of local elections, 17 mayors were elected in the 84 municipalities and Skopje. The remaining mayors were elected in the second round, which took place on March 27 and April 10. SDSM in coalition with LDP and a number of other smaller parties won 352,089 votes, 435 elected councillors, and 37 mayors. The opposition coalition, led by the Internal Macedonian Revolutionary Organization-Democratic Party for Macedonian National Unity (VMRO-DPMNE), won 226,295 votes, 323 elected councillors, and 21 mayors. DUI won 113,881 votes, 213 elected councillors, and 14 mayors. VMRO-DPMNE won 117,047 votes, 136 elected councillors, and 3 mayors, while the Democratic Party of Albanians-Democratic Party for Prosperity won 110,662 votes, 131 elected councillors, and 2 mayors. Although SDSM won more votes and mayors, the opposition won in Skopje, securing the municipalities of Centar, Aerodrom, Butel, Gazi Baba, and Kisela Voda. The new mayor of Skopje was an independent candidate but supported by the opposition.

Civil Society (Score: 3.25)

During Communist times, when Macedonia was part of the Yugoslav federation, the country's civil society was suppressed. Established institutions like the Association of Women of Macedonia or the Association of Youth of Macedonia could not in fact be characterized as nongovernmental institutions. But during the 1980s, Macedonia witnessed the rise of a plethora of civic groups, movements, and associations. The signs of emerging pluralist tendencies were especially evident on the Macedonian cultural scene. For example, in the mid-1980s, a number of young intellectuals and artists launched Makedonska Streljba, a multimedia project that was precursor to the acclaimed Slovenian movement Nue Slowenische Kunst, thus emphasizing the importance of the Macedonian language and culture in the Yugoslav context and the desire to develop new political models in Macedonia and the Socialist Federal Republic of Yugoslavia.

Following independence, opportunities for the development of civil society became real. Now, the state by law confirms the rights of the independent civic sector. In the last 15 years, the number and scope of NGOs in Macedonia have risen dramatically. Many deal with significant societal, political, and economic issues. The legal framework for the functioning of civil society is free of excessive state pressures and bureaucracy. Under the 1998 Law on Citizen Associations and Foundations, NGOs are registered as civic organizations. The law prohibits NGOs as well as trade and professional organizations, employer and employee unions, interest groups, and foundations from being involved in direct economic activities. There are, however, two significant obstacles for the civil sector that contribute to its weakness: access to information and the taxation of NGOs.

Macedonian civil society groups also lack sufficient organizational capacity to sustain their work. Most NGOs are poorly managed, lack professionalism and communication skills, and have few experienced practitioners or trainers. Key NGOs such as the Foundation for Open Society Macedonia and the Macedonian Center International Issues have been led by the same managers/directors since their founding and dominate the activities of the civil society.

Currently, the country can boast many NGOs – over 5,500 by some estimates – but only a few groups show much in the way of capacity. The main factor behind the boom in the sector is the availability of funds. Various international donors support the NGO sector in Macedonia, each with its own agenda, which is often not coordinated with local needs and NGO demands. The donors take a top-down approach, offering funding to local organizations only if their programs and projects match the priorities established by the funders in Washington or Brussels, for example. Few civil society groups are financially viable in the long term. Local philanthropy and volunteerism are almost nonexistent, while the participation of religious groups in charitable activities is minimal. A number of civic organizations represent the interests of women, physically impaired persons, and sexual and ethnic minorities, and these receive most of the attention and funding. Macedonian civil society has yet to attain the critical mass needed to become a serious actor at either the national or the local level. Instead of relying on funds on a per project basis, local NGOs would be better served if core funding in key sectors were available.

Today, Macedonian society is free of excessive influence by extremist and intolerant nongovernmental institutions and organizations. In fact, there are no visibly active organizations, private militias, or vigilante groups advocating racist or xenophobic agendas or threatening political and social stability or the country's transition to democracy. The Macedonian education system is free of political influence and propaganda.

Although the government respects the right to form and join civil society organizations, including free trade unions, it is hardly receptive to policy advocacy by interest groups, policy research centers, and other nonprofit organizations. Government officials rarely engage civil society groups by inviting them to comment on and influence pending policies or legislation. The media, on the other hand, are more receptive to civil society groups and serve as independent sources of information and commentary, thus contributing positively to the country's civic life.

Independent Media (Score: 4.25)

The Macedonian public enjoys a diverse selection of print and electronic sources of information at both national and local levels, representing a range of political viewpoints. The distribution of privately controlled newspapers and the media's editorial independence and news-gathering functions are free of direct government interference. In the broadcast media arena, hundreds of private outlets try to survive in market conditions that are adverse even by regional standards, making the commercial sector as overcrowded and inefficient as the public sector. The law allows Macedonian Public Television to broadcast commercials and compete for marketing revenues with private media. This is seen as the main obstacle to the financial viability of private broadcasters.

A few, such as TV Sitel and Kanal 5, are considered to be politically influenced since the owners of these outlets are also presidents of political parties. In 2005, a number of key editors and journalists from A1 Television resigned, claiming influence on their work by the owner. The majority of print and electronic media are privately owned, and since July 2003, the German media conglomerate WAZ has owned the three biggest-selling dailies, Vest, Dnevnik, and Utrinski Vesnik. This is considered by some to be an excessive concentration of media ownership. During the local elections, the media generally provided diverse information to voters in compliance with the election law that requires equal access to the media for all candidates and political parties during an election campaign. However, the OSCE observed a degree of bias in favor of government interests on state channels MTV1 and MTV3, though noting an improvement in MTV1's coverage of the campaign prior to the second round.

The society enjoys open access to the Internet, with a diverse range of sites and viewpoints, although penetration is remarkably low. Estimates reveal that between 6 and 10 percent of Macedonian citizens use the Internet on a daily basis, significantly lagging behind other countries in Eastern Europe. Access to all sites is unrestricted, and registration of new sites is simple. Still, official use of the Internet could be improved. Macedonian courts, for example, are not connected to the Internet, do not have official Web sites, and do not allow citizens to search court archives digitally. Less than 4 percent of the candidates for local elections in 2005 had Web sites. Macedonia is the last country in the region without legislation on access to public information, with a draft still in the works in 2005. With no such law on the books, citizens are often unjustifiably denied access to public information.

In principle, Article 16 of the Constitution, adopted in 2004, guarantees freedom of speech and access to information. Although journalists and media outlets are able to form their own viable professional associations – the Association of Macedonian Journalists and the Macedonian Institute for Media being particularly active – the government has not yet decriminalized libel by amending various articles in the criminal code that prohibit the spread of false information and slander. While the 2005 World Press Freedom Index by Reporters Without Borders ranked Macedonia 43 – below Italy, but higher than the United States – problems with "irresponsible" journalism remain. In fact, Macedonian courts are quite efficient when it comes to trials against journalists accused of slander and defamation. In 2005, Kanal 5 TV editor Ida Protugjer was sentenced to three months' probation for allegedly miswriting that the current mayor of Skopje, Trifun Kostovski, was the owner of Eurostandard Bank. The daily Vecer had previously revealed this information, and even the premier pointed out that Kostovski was indeed the owner of the bank. A number of other journalists, including TV Sitel reporter Liljana Georgieva, Kanal 5 reporter Marijana Panova, Vecer journalist Violeta Cvetanovska, and Vest journalist Aleksandra Stojanovska, were also taken to court. The government's attitude toward journalists has not been helpful. On November 22, for example, Premier Buchkovski claimed that "some media and journalists" were "manipulated and paid to write biased texts on the tender for making new passports." Furthermore, on November 28 he accused journalists of disturbing the good relations between Macedonia and Croatia, referring in particular to those journalists who reported that a Macedonian general had participated in the war in Croatia as an officer of the Yugoslav Peoples Army.

The Broadcasting Council is responsible for regulating electronic media in Macedonia. The council grants licenses to media outlets and oversees compliance to regulations and established standards. A new Law on Broadcasting, adopted on November 9, was deemed by the OSCE media freedom representative as being in line with OSCE media freedom standards. The new law, which is a result of close cooperation between the Macedonian government, the OSCE, the Stability Pact for South Eastern Europe, the Council of Europe, and the European Commission, aims to ensure an effective Broadcasting Council and to establish a system for the independent functioning of the public broadcaster.

Judicial Framework and Independence (Score: 3.75)

While the Macedonian legal framework protects fundamental political, civil, and human rights and equality before the law, in 2005 the government concentrated efforts on judicial reform. One pressing issue is how to shield judges from political influence. Another problem is the inefficiency of the judiciary, buried as it is under hundreds of thousands of untried cases. In 2004 alone, more than a million legal cases were processed in the Macedonian courts. The courts are burdened with administrative work and are also expected to deal with a high number of misdemeanor and decided cases that require law enforcement. In March 2005, the total number of pending cases was 730,700; among these, 296,000 were "execution" cases (already ruled, needing enforcement) and 227,000 were "misdemeanor" cases. The average duration of a civil proceeding is nine and a half months at first instance and over 70 days for an appeal, while in criminal cases it is nine and a half months. The judiciary's insufficient infrastructure and lack of resources are also serious problems. The EU has stated that "the independence, as well as the quality, of the judiciary is further weakened by the absence of a comprehensive merit-based career system and an appropriate disciplinary system for judges."

The government adopted a Strategy and an Action Plan on Judicial Reform in November 2004, outlining key changes to the country's legislation and Constitution to increase efficiency and to free the courts from political influence. The main principles were approved by the Parliament on May 18,2005, by a broad majority. Draft amendments were presented by the government in June, and in August the Parliament adopted 15 draft amendments, which have been debated publicly. Meanwhile, a new Law on Enforcement of Civil Judgments was adopted in May 2005 to abolish the separate motion for execution of judgments and to create a privatized bailiff system under the Ministry of Justice. This law will apply from 2006, subject to the adoption of secondary legislation and the necessary preparatory measures to put the new system in place. Although a new Law on Civil Procedure was adopted in September 2005 to introduce changes that should make court procedures more efficient, a new secondary legal framework will be needed to implement these changes.

Major changes have been planned regarding the composition, selection, and competencies of the Judicial Council. Throughout 2005, authorities discussed reforms to the Judicial Council's system for electing members in order to limit political interference. An expert committee has already been hired and dismissed in that process. The Judicial Council consists of seven individuals appointed by a parliamentary commission and proposes the appointment, dismissal, and disciplinary decisions concerning judges, with such decisions then taken up by the Parliament. Since members of the Judicial Council are selected by a simple majority of votes in the Parliament, the governing coalition effectively has control over the appointment of both.

Ten constitutional amendments were passed on December 7, with the opposition VMRO-DPMNE voting against them. According to Amendment 30, the competence, establishment, abolishment, organization, and operation of the Office of the Public Prosecutor are regulated by law, which is adopted with a two-thirds parliamentary majority. Amendment 38 notes that the 15-member Judicial Council is elected with a two-thirds majority. Ex officio members of the council shall be the president of the Supreme Court of the Republic of Macedonia and the minister of justice. Eight of its members must be judges. Three members of the Judicial Council shall be elected by a majority of votes from the total membership of the Parliament. Two members shall be appointed by the president, one of whom shall be a member of a community that is not of the majority. According to Amendment 29, equitable and just representation of the citizens who belong to all communities shall be observed in the election of judges, lay judges, and presidents of the courts. The Parliament also passed legislation on the enforcement of the amendments specifying that by July 30,2006, new laws on the Judicial Council, the courts, misdemeanors, the Council of Public Prosecutors, and the public prosecutor will be passed. Work on these laws and the planned reforms is expected to be completed in 2006.

Corruption (Score: 4.75)

Given that few cases of corruption have actually been resolved, it is clear that the Macedonian public has "internalized" and "normalized" official corruption. According to a survey by the company Strategic Marketing and Media Research Institute, 73 percent of citizens believe that the government is corrupt. International reports and surveys such as Transparency International's Corruption Perceptions Index indicate that corruption in Macedonia is a serious and widespread problem that affects many aspects of social, political, and economic life despite the intensification of efforts to fight it and increased awareness of its negative impact on the country. In 2005, allegations of corruption were given wide and extensive airing in the media. There was continual media coverage related to the allegedly corrupt sale of state-owned land on the main square in Skopje by former minister of transport and communication Agron Buhxaku. Other reported cases included the sale of the Sasa mine; various military barracks, apartments, and real estate; and the Electric Supply Company and alleged corruption concerning the buying of state land by greengrocer market management company Skopski Pazar. Also, much attention was focused on the failed initial tender to sell state-owned land by the National Bank of Macedonia to the Greek supermarket chain Veropulous.

According to a 2003 report by the State Audit Office released in January 2005,18 million euros were spent by public institutions without proper documentation. A number of other irregularities were pointed out, but the government has not taken appropriate action. The minister of finance, Nikola Popovski, even objected to the report. Similarly, the minister of health categorically denied wrongdoing in his sector. In 2005, government agencies responsible for overseeing the liberalization of public enterprises were reluctant to review the privatization of Fershped, a company that many analysts believe was illegally privatized.

A State Commission for the Prevention of Corruption was established in November 2002 and in June 2005 prepared an annex to the National Program for Prevention and Repression of Corruption on measures to prevent corruption at the local level. In 2005, new departments were established in the Ministry of the Interior and the Office of the Public Prosecutor to combat organized crime and corruption. The effectiveness of the State Commission for the Prevention of Corruption depends in large part on the cooperation of state institutions, the public prosecutor in particular. In May, the commission released a report complaining that cooperation with the public prosecutor is very limited. The report also stated that there "were no real effects of the fight against corruption, and the rule of law remains only a political declaration." Although the report was delivered to the Parliament at the beginning of the year, it wasn't discussed until late May 2005. A recent Group of States Against Corruption report has outlined 14 recommendations to the Macedonian government in the fight against corruption.

The government advertises jobs and contracts, and there are adequate laws requiring financial disclosure by public officials. However, these and laws disallowing conflict of interest are not fully implemented. Many government officials maintain other jobs while holding public office – the most obvious examples being law professors Vasil Tupurkovski (vice premier 1998-2002), Denko Maleski (foreign minister of Macedonia 1991-1993 and ambassador of Macedonia to the UN 1993-1997), and Jane Miljovski (vice premier, minister of finance, and minister of privatization 1992-1998). Moreover, the SDSM-led government has a direct impact on various spheres of the economy that have not been liberalized.

Macedonia should have achieved alignment with the EU acquis regarding electronic communications in April 2005; "all the basic starting conditions for liberalization and harmonization had to be in place by then, such as cost accounting and/or tariff transparency, [publishing an] interconnection reference offer (interconnection completely available on nondiscriminatory conditions), carrier selection and preselection, and fixed number portability." The opening of this market has been frustrated by a lack of commitment at the governmental level, which has led to delays in adopting liberalization measures. Although a new Law on Telecommunications was passed in 2005, a number of bylaws need to be adopted. Passing this law without bylaws does not indicate a turning point in the government's commitment to address liberalization and transparency.

In fact, by not liberalizing markets, the government has actually helped private monopolies or duopolies in important sectors, such as telecommunications, the oil and gasoline industry, and air travel. Macedonia's market economy is further impeded by such institutional weaknesses as slow and cumbersome administrative procedures, shortcomings in the judiciary, and limited progress in land and property registration. For example, local governments are not able to sell land to interested investors without the consent of the government.

Author

Dr. Zhidas Daskalovski is a senior analyst at the Center for Research and Policy Making and a visiting professor at the Department of Political Science at the University of Cyril and Methodius in Skopje. His newest book is Walking on the Edge: Consolidating Multiethnic Macedonia, 1989-2004, published by Globic Press.

Local Governance (Score: 3.75)

The Macedonian Constitution defines municipalities as the basic unit of local government and establishes general principles for the organization, function, and financing of local governments, with details to be elaborated in subsequent legislation. This foundation was largely provided in the 1995 Law of Local Government, which provides for a directly elected mayor, who is responsible for administrative operations, and an elected council. Although the 1995 law identified an impressive range of local government competencies, before the 2004 reforms and for a variety of reasons, "including poor statutory drafting, apparent lack of central government resolve, and the regime of fiscal austerity to which the overall public sector has been subject since 1994, Macedonia's local governments actually exercised few of these competencies."

Since the 2001 Ohrid Agreement, which ended the conflict between ethnic Albanian irregulars and the security forces through comprehensive reforms of the legal and political system, Macedonia has engaged in a thorough decentralization effort, committing itself to devolve responsibilities of the central government to local government units. The government has worked to correct the functional deficiencies of municipalities and enhance their capacity to create sustainable economic development through independently collected local revenues. Thus, decentralization also implies transferring responsibilities concerning tax collection and reallocation of funds for financing public services on the local level.

The law sets limits on the central government's authority and outlines new possibilities for free association of municipalities. With the package of laws passed in 2004, devolution of powers was designated in the areas of urban planning and service delivery, fiscal management, and local economic development, among others. To prevent the potential mismanagement of resources at the local level, a number of stringent conditions were established that have to be met before individual local authorities can assume their new responsibilities. The key challenges for decentralization reform in 2005 were the calculation of sectoral block grants – the funds that support education, health care, and social protection at the local level – and the distribution of the equalization fund. There is concern that the central government is not transferring sufficient funds to municipalities for the normal functioning of public institutions such as primary and secondary schools.

Decentralization is a strategic goal for the Macedonian government as it develops a new model of state governance. This recent distribution of power should in the long term transform the whole public administrative system, leading to a more efficient and effective government brought closer to the people. The process of decentralization is linked to three key areas: territorial division (reducing the number of municipalities from 124 to 84, including 10 within the capital, Skopje), the funding of municipalities, and the status of Skopje. The process has not been easy – local elections were postponed twice amid a dispute over the Law on Territorial Division, which has been regarded as too favorable toward ethnic Albanians, and finally took place in March 2005. The transfer of competencies started on July 1,2005, although many municipalities lacked sufficient personnel and resources to take over the devolved responsibilities.

Municipalities are to be financed from own-revenue sources, government grants, and loans. The own-revenue sources will comprise property, inheritance, and gift taxes, sales taxes on real estate and rights, and municipal fees. Moreover, the municipalities will now be responsible for setting tax rates and municipal fees with maximum and minimum limits specified by the Laws on Property Taxes. Other local revenues will include the 3 percent share of the personal income tax paid by local residents. In addition to these revenues, the Law on Financing the Local Self-Government Units envisages a number of grants provided for municipalities from the central budget: revenues from value-added tax (general grants), block grants, earmarked grants, capital grants, and grants for delegated competencies. The law also allows municipalities to borrow additional funds in the capital markets, if approved by the Ministry of Finance.

In various surveys, Macedonian citizens express dissatisfaction with the quality of local government public services, listing poor skills, accountability, and lack of motivation as major weaknesses. Good municipal management is not easily achieved. There are considerable gaps between the human resource capacities of local self-government institutions on the one hand and the requirements implied by the devolution of competencies on the other. Even though staff was transferred from the central level to municipalities throughout 2005, establishing adequate social services at the local level will remain a challenge for several years to come.

Macedonian citizens elect municipal officials by secret ballot in direct local elections. These are held regularly and subject to independent monitoring and oversight. Multiple candidates participate in local elections and in local government bodies, which are free from dominant power groups. Democratically elected local authorities exercise their powers freely and autonomously and will have the resources and capacity needed to fulfill their responsibilities with the help of anticipated reforms. Still, a few problems remain, such as stimulating meaningful participation by citizens in local government decision making and transparency and accountability in the work of local authorities.

A 2004 survey by Transparency International revealed that 41 percent of Macedonians were not aware of their constitutional right to access public information. Citizens are "reticent to react against the lack, insufficiency, or low quality of public services, the abuse of constitutional rights, and a low participation in developing and defining public policies." In a few cases, municipalities, in cooperation with the international community, have encouraged citizens to get involved in policy making and legislation development, yet many Macedonians perceive government officials as "untouchable" and powerful cliques. As the debate over the country's new Law on Territorial Division demonstrated, citizens in Macedonia remain passive concerning public life and policy making until their direct interests are threatened.

On the other hand, the prevailing political culture in the country is such that the government's policy-making process is typically done behind closed doors, without the input and consultation of a wider network of stakeholders, such as citizens, civil society groups, and academic experts. A somewhat typical example was the government's decision-making process in the new territorial organization of municipalities, which was a highly secretive and reticent affair.

National Governance (Score: 3.75)

Modern Macedonia came into existence in 1945 as one of the six constituent republics of the Socialist Federal Republic of Yugoslavia. When Yugoslavia disintegrated in 1991, Macedonia declared independence on November 21,1991, and today is a democratic multiparty state. Power is divided among the three branches of government: the Parliament (Sobranie), the executive (the government with the president and premier), and the judiciary (Supreme Court, Constitutional Court, and the public prosecutor).

The unicameral Parliament (Sobranie) is composed of between 120 and 140 members elected by direct, universal suffrage. All Parliaments prior to the current one have had 120 members. According to the electoral laws adopted in June 2002 (the Law on Election of Members of Parliament of 2002, the Law on the Voter List, and the Law on Election Districts), members of Parliament (MPs) are elected for a four-year term in six electoral districts. Each district has about 275,000 voters and elects 20 members by proportional representation subject to a 5 percent threshold. Citizens vote for an electoral list, and seats are distributed on a proportional basis, according to the D'Hondt formula. The nomination lists may be submitted by parties, coalitions of parties, or groups of at least 500 voters. At least 30 percent of the candidates on each list must be of different gender. There were 31 lists for the parliamentary elections in 2002.

The legislature has sufficient capacity to fulfill its lawmaking and investigative responsibilities. There are 18 permanent working bodies in the Parliament, 7 of which are chaired by MPs from the opposition. A Committee on EU Affairs was established in November 2003, and the government submits quarterly reports on EU integration activities to the Parliament. The assembly has also formed delegations to cooperate with the Parliaments of other nations and international organizations. The parliamentary budget is part of Macedonia's national budget and is projected by the Ministry of Finance. Since this does not necessarily reflect estimates by the parliamentary budgetary committee, there have been discussions about adopting a Law on the Parliament that would provide for a truly independent source of revenue for the assembly.

Pursuant to Article 88 of the Constitution, executive power is vested in the government, which is responsible for the organization and coordination of all state administrative bodies. It initiates draft legislation, oversees the operation of state institutions, and executes laws and regulations adopted by the Parliament. In the last 15 years, the governments have been formed by a coalition of parties, typically a major Macedonian and Macedonian Albanian party and a smaller Macedonian party as a junior coalition partner. Although the president has the legal duty to nominate candidates, the Parliament appoints the premier, who is the head of government and selected by the party or coalition that gains a majority of seats in the Parliament. The current government is led by Premier Vladimir Buchkovski and includes the Social Democratic Alliance of Macedonia (SDSM), the Democratic Union for Integration (DUI), and the Liberal Democratic Party (LDP).

The Macedonian political system is semipresidential, akin to the French model. By law, the president represents Macedonia at home and abroad and is the commander in chief of the armed forces. The president may veto legislation adopted by the Parliament with a simple majority. However, this veto power is quite limited, and the Parliament can vote on the same law again within 30 days. If the law in question is approved again by a two-thirds majority, the president must sign the decree into law. Since the president is elected by direct ballot and has a term of five years, with the right to one reelection, the personality of the president has a great impact on the position's actual power. Kiro Gligorov, acting as "father of the nation" from 1991 to 1999, set the trend for strong presidents, with the late Boris Trajkovski and the current president, Branko Crvenkovski, following his example.

The Constitutional Court has a dominant role within the Macedonian judiciary. The Court oversees major acts of Parliament and the cabinet, having the power to annul legislation or decrees that are found to violate the Constitution. The Judiciary Council similarly provides oversight of the court system and judges. The Parliament appoints council members as well as Constitutional Court judges and the public prosecutor through a system of double majority voting, which requires a majority of the votes of MPs who are members of minority ethnic groups.

Although Macedonia is a parliamentary democracy, in practice the government dominates the assembly by introducing laws to be adopted or amended. Still, there are strong mitigating factors preventing the concentration of power in cases where a political party or coalition gains control (after elections) of both the legislature and the executive. First of all, the strong figure of the president works to balance the dominant tendency of the premier. Second, the Macedonian political system features an informal rule of having the government composed of a multiethnic coalition. Governing such a coalition requires advanced political skills and accommodation, which in turn necessitates much political maneuvering and compromise, making the concentration of power unfeasible.

Macedonia is a multiethnic state with a population of around 2 million. Macedonians are 64 percent of the total population, while Albanians are the biggest minority with 25 percent. As with a number of other countries in Eastern Europe, Macedonia's reforms in the last 15 years have been focused simultaneously on two issues-state building and setting up the legal base for a functioning market economy. Problems consolidating Macedonia's democracy have been related to its interethnic relations. Armed conflict erupted between Albanian rebels and government forces in 2001 but was quickly ended through an EU- and U.S.-mediated agreement, signed in August of that year.

In the years after independence, Macedonian Albanians made major demands on the central government: a reform of the Constitution, greater representation of Albanians in the civil service sector, a university conducted in the Albanian language, and decentralization of state power. Gradually, reforms were enacted and improvements were made, resulting in a rise in participation of the civic sector by Macedonian Albanians in recent years. Similarly, a law was passed allowing private education in languages other than Macedonian, while a European-financed trilingual (Albanian, English, and Macedonian) university was opened in 2001. However, with a major segment of the population challenging the very foundations of the state, Macedonia could not have begun the development of a just and democratic political system before the 2001 Ohrid Framework Agreement and the subsequent adoption of amendments to the 1991 Constitution.

Since the 2001 conflict, the general level of security has gradually improved, and police presence is now ensured all over the country. Since many police patrols are ethnically mixed, the trust of minority communities has also improved. With the exception of a number of localities in the former crisis areas, where police activities require a considerable level of sensitivity, the government's authority extends over the full territory of the country. However, questions remain about how to collect illegal weapons still circulating within Macedonia.

To ensure the government fulfills its obligations from the Ohrid Framework Agreement, the EU made the further integration of Macedonia into Europe conditional on full implementation of the agreement. The EU had already signed a Stabilization and Association Agreement with Macedonia – the first signed with any government in the region – in April 2001. Macedonia's formal application for EU membership, which was submitted on March 22,2004, was followed by a European Commission questionnaire with more than 4,000 queries. On November 9,2005, the commission recommended that the EU council grant candidate country status to Macedonia. Moreover, the commission determined that negotiations for accession should be opened once Macedonia reaches a sufficient degree of compliance with membership criteria.

In fact, Macedonia's desire to become a member of the EU and NATO has spurred the building of a strong consensus among political groups and citizens on democracy as the basis of the country's political system. The implementation of the Ohrid Agreement has sufficiently stabilized the country so that citizens recognize the legitimacy of national authorities and the laws that govern them. And the national political system is currently free from such threats to stability as insurgency or war.

Macedonian citizens and the media have regular access to legislators and the legislative process, and parliamentary sessions are open to the public. Even so, citizen involvement in political culture is rather low. NGOs and concerned citizens have not been engaged in budget oversight, and local governance is a largely unchecked endeavor in Macedonian political life.

Macedonia has yet to adopt freedom of information legislation, which would solve many of the nation's government transparency issues, including budget monitoring. It is the last country in the region and one of only a few countries in Europe that does not have a freedom of information act. Although the Constitution says freedom of information is a fundamental human right, this has not been enough to ensure access to information. Moreover, information is not readily given to citizens, even if they ask for it explicitly. A survey by the Macedonian section of Transparency International showed that 70 percent of those citizens who requested information from state institutions had difficulties obtaining it and that 27 percent did not receive any answer from the state, while 33 percent were refused access to the needed information with no explanation. Transparency International and other local NGOs have initiated a draft law that was expected to be adopted by the Parliament in 2005. Prepared and debated since 2003, this latest proposal has been given a positive verdict by the Council of Europe and Article 19 but has yet to be adopted by the Parliament.

The Law on Civil Servants enacted in 2000 regulates the status, rights, duties, responsibilities, and salaries of civil servants. As provided by law, the Civil Servants Agency was established to support the law's implementation. Since independence, however, political parties have acted as special interest groups, (mis)using power and the system's institutions to win economic benefits. Party membership is widely perceived as a significant factor when applying for jobs, and political officials appoint their followers or fellow party members rather than the most qualified candidates. Cronyism and nepotism are commonplace in both low- and high-level appointments, such as ambassadorships.

Once a political party loses power, the nonessential personnel in the ministries affiliated to it are laid off by the new minister or manager appointed by one of the main parties of the new ruling coalition, and vice versa. Since middle- and senior-level civil servants are seen as political rather than technical appointments, they tend to be replaced as administrations change. Consequently, there is little policy continuity, and political maneuvering within or between parties has led to policy paralysis and held up reform. Meanwhile, the use of public sector employment as a tool of patronage has led to an overstaffed and inefficient public sector. Clearly, these practices negatively impact transparency in public procurement, the development of a market economy, and consistency in respecting the law. The close link between political power and access to economic resources exacerbates these problems.

Macedonian political parties tend to seek control of state institutions for the economic rents they provide. Elections are seen as "winner take all," with few checks and balances for the winning coalition. This system of political spoils is pervasive. Party allegiance and patronage win out over merit and policy evaluation. As a consequence, the excessively centralized Macedonian state is plagued with poor delivery of services and a lack of sufficiently skilled human resources, especially in the area of policy development and implementation. This generates bad policy making, leading to frequent amendments to legal acts.

According to the Constitution, the army and the police are under civilian control. A National Security and Defense Concept, adopted in 2003, coordinates security in cases of crisis. Under the Law on Internal Affairs, the Ministry of the Interior is responsible for the internal security of the state. The ministry has a Bureau for Public Security, which includes the Department of Police, the border police, the criminal police, and the Directorate for Security and Counterintelligence. Reforms are in progress in the Ministry of Defense and in the army, driven by the prospect of Macedonia's membership in NATO. (The country has been an active member of NATO's Partnership for Peace.) This reform has already led to a reduction of military personnel. In 2005, the Ministry of Defense staff was reduced from 1,200 to 650. The reform also takes into account the objectives of the Ohrid Framework Agreement in terms of achieving equitable representation of individuals from minority communities in the civil service. According to the Constitution, the commander in chief of the armed forces is the president, while a civilian minister of defense oversees all security- and defense-related activities.