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 
 
SKOPJE 00000053  002.2 OF 002 
 
 
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