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Cablegate: Macedonia: Scenesetter for Codel Pomeroy

DE RUEHSQ #0064/01 0421425
P 111425Z FEB 10



E.O. 12958: N/A

SKOPJE 00000064 001.2 OF 002

Sensitive but unclassified. Please protect accordingly.

1. (SBU) Summary: Ambassador Philip Reeker and team warmly
welcome Congressman Pomeroy and his delegation to the Republic
of Macedonia. Unfortunately, the Ambassador will not be able to
greet you at the airport. Michael Fritz, Mission Director of
USAID Macedonia will meet you and accompany you to the hotel.
Ambassador Reeker is looking forward to seeing you at the dinner
that evening. 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. The work that the HDP is doing with the Macedonian
Parliament to increase its ability to perform its oversight
function is of high importance. End summary.

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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 Q including USAID, DOJ,
and security assistance Q totals about $25 million, primarily
geared toward rule of law, democracy and good governance,
economic growth, education, counterterrorism, and military

...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 Q 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 MacedoniaQs 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 Q which boiled over into the civil
conflict in 2001 which was resolved with the Ohrid Framework
Agreement Q 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 Q or lack thereof Q 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.


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