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Cablegate: Macedonia: Scenesetter for Codel Voinovich

VZCZCXRO7199
PP RUEHIK
DE RUEHSQ #0053/01 0360718
ZNR UUUUU ZZH
P 050718Z FEB 10
FM AMEMBASSY SKOPJE
TO RUEHC/SECSTATE WASHDC PRIORITY 8864
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE 0595

UNCLAS SECTION 01 OF 02 SKOPJE 000053

SENSITIVE
H PASS, SIPDIS

E.O. 12958: N/A
TAGS: PGOV PREL NATO EUN GR MK
SUBJECT: MACEDONIA: SCENESETTER FOR CODEL VOINOVICH

SKOPJE 00000053 001.2 OF 002


Sensitive but unclassified. Please protect accordingly.

1. (SBU) Summary: Ambassador Philip Reeker and team warmly welcome
Senator Voinovich, Senator Shaheen, and their delegation to the
Republic of Macedonia. Your visit comes as Macedonia's path toward
Euro-Atlantic integration (America's long-standing foreign policy
goal for the country) remains stalled due to the "name issue" with
Greece. Uneasy interethnic relations, problems with rule of law and
corruption, and sluggish follow-through on economic reform are all
exacerbated by the blockage of entry into NATO and the EU. End
summary.

Euro-Atlantic Integration...
----------------------------

2. (SBU) U.S. policy toward Macedonia has been consistent over its
two decades of independence: Euro-Atlantic integration as a stable,
multiethnic, multi-faith democracy. With an occasionally alienated
25% ethnic-Albanian minority, a limited domestic market, and its
location in a Balkan region in transition, Macedonia can in the long
run ensure its prosperity and stability only by joining NATO and the
EU and undertaking the reforms that membership in these
organizations requires. We dovetail U.S. assistance and diplomatic
efforts closely with others in the international community,
especially the EU and OSCE, who maintain significant missions here.
The U.S., EU, NATO, and OSCE are the guarantors of the Ohrid
Framework Agreement, which ended the 2001 civil conflict. USAID's
program in Macedonia was to end in 2011 but is now planned to extend
to at least 2015. Assistance for FY 2010 - including USAID, DOJ,
and security assistance - totals about $25 million, primarily geared
toward rule of law, democracy and good governance, economic growth,
education, counterterrorism, and military reform.

...Remains Blocked
------------------

3. (SBU) The ongoing "name issue" with Greece has stopped
Euro-Atlantic integration in its tracks. Athens blocked an
otherwise unified decision in April 2008 at Bucharest to offer
Macedonia membership in NATO, and also blocked the EU from opening
accession negotiations with Skopje in December 2009, pending a
solution to the dispute. Despite U.S. and European diplomatic
efforts with both sides -- and significant activity by UN Mediator
Matthew Nimetz and direct talks between Prime Ministers Papandreou
and Gruevski - the issue remains unsolved. Both the Greeks and
Macedonians have not helped matters by injecting essentially
irresolvable questions of Macedonian "identity" into the name
dispute.

Excellent Security Cooperation
------------------------------

4. (SBU) Macedonia has been a steadfast ally in international peace
support operations for a number of years. Since 2002,a total of
1264 Macedonian troops have served with ISAF in Afghanistan, and 490
Macedonian troops served in Iraq until the end of 2008, when the new
SOFA with Iraq mandated the departure of most coalition members. As
of April, an additional 79 Macedonian soldiers will deploy with the
Vermont National Guard's 86th Brigade Combat Team, bringing the
total number of Macedonian troops in Afghanistan to 242. The 2010
Macedonian contribution to ISAF almost doubles Macedonia's
commitment and by per capita population comparison places Macedonia
in the top five of all forty-two ISAF contributing nations.
Additionally, Macedonia provides small contingents in support of the
EU peacekeeping mission in Bosnia and Herzegovina (medical team,
legal advisor), KFOR (Host Nation Logistic Support Team), and the UN
mission in Lebanon (Staff Officer).

Economy Lags Behind
-------------------

5. (SBU) Macedonia has lagged behind the rest of former Yugoslavia
in transitioning to a market economy. The country has managed to
maintain macroeconomic stability with low inflation, but lags behind
the region in attracting foreign investment and creating jobs.
Macedonia's economic challenges are exacerbated not only by the lack
of Euro-Atlantic integration and a tiny domestic market, but also by
ongoing problems with rule of law (including direct political
interference in the judiciary and apparently politically-motivated
prosecutions), corruption, lack of implementation of reforms, and
lack of follow-though by the government even when presented with
potential foreign investors.

6. (SBU) Official unemployment remains high at 31.7%, but may be
overstated based on the existence of an extensive gray market --
estimated to be more than 20% of GDP -- that is not captured by
official statistics. In the wake of the global economic downturn,
Macedonia has experienced decreased foreign direct investment, a
lowered credit rating, and a large trade deficit, but lack of
integration and relatively strict financial regulations meant that
the banking sector escaped significant shocks. Macroeconomic
stability was maintained due to a prudent monetary policy, which
kept the domestic currency pegged to the Euro, at the expense of
increasing interest rates. GDP fell in 2009 by an estimated 1.5%.

Political Situation/Interethnic Relations
-----------------------------------------

7. (SBU) Prime Minister Gruevski's government has been in power
since 2006 and is still relatively popular (in part due to a weak
and discredited opposition), but it has been unable or unwilling to
effectively tackle the challenges outlined in this cable.
Interethnic relations - which boiled over into the civil conflict in
2001 which was resolved with the Ohrid Framework Agreement - remain
fractious. While Gruevski does have the largest ethnic-Albanian
party, Ali Ahmeti's DUI, in his coalition, we see a continuous low
boil of issues related to the use of the Macedonian and Albanian
languages in the schools and in official contexts, the allocation -
or lack thereof - of public resources in primarily ethnic Albanian
areas of the country and, most importantly, lack of progress on the
name issue and therefore on Euro-Atlantic integration. The
otherwise-fractured ethnic Albanian political spectrum agrees that
NATO (and less so EU) membership is the best way to guarantee their
rights as full citizens in Macedonia. The ethnic Albanian
leadership, particularly Ahmeti, are willing to be patient, but not
forever.

REEKER

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