VZCZCXRO1465
PP RUEHIK
DE RUEHSQ #0064/01 0421425
ZNR UUUUU ZZH
P 111425Z FEB 10
FM AMEMBASSY SKOPJE
TO RUEHC/SECSTATE WASHDC PRIORITY 8876
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE 0597

UNCLAS SECTION 01 OF 02 SKOPJE 000064 
 
SENSITIVE 
H PASS, SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL NATO EUN GR MK
SUBJECT: MACEDONIA: SCENESETTER FOR CODEL POMEROY 
 
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. 
 
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 
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 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. 
 
SKOPJE 00000064  002.2 OF 002 
 
 
 
¶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. 
 
REEKER