Macedonia (06/04)

OFFICIAL NAME:The United States and the United Nations officially refer to Macedonia by its provisional name, "The Former Yugoslav Republic of Macedonia," pending the outcome of UN-mediated negotiations between Macedonia and Greece.

GovernmentType: Parliamentary democracy.Constitution: Adopted November 17, 1991; effective November 20, 1991.Independence: September 8, 1991 (from Yugoslavia).Branches: Executive--prime minister (head of government), council of ministers (cabinet), president (head of state). Legislative--unicameral parliament or Sobranie (120 members elected by popular vote to 4-year terms from party lists based on the percentage parties gain of the overall vote in each of the six election units). Judicial--Supreme Court, Republican Judicial Council, Constitutional Court of the Republic of Macedonia, Public Prosecutor's Office, Public Attorney. Legal system is based on civil law system; judicial review of legislative acts.Subdivisions: 123 opstini (municipalities) plus the city of Skopje. Suffrage: Universal at age 18.Main political parties: Social-Democratic Union of Macedonia (SDSM); Internal Macedonian Revolutionary Organization-Democratic Party for Macedonian National Unity (VMRO-DPMNE); Democratic Union for Integration (DUI); Democratic Party of Albanians (DPA); Party for Democratic Prosperity (PDP); National Democratic Party (NDP); Liberal-Democratic Party (LDP); Socialist Party of Macedonia (SPM); Liberal Party (LP); Democratic Alternative (DA); Democratic Union (DU); Democratic Party of the Turks in Macedonia (DPTM); Democratic League of Bosniaks; Democratic Party of Serbs in Macedonia, United Party of Romas in Macedonia; Democratic Union of Vlachs from Macedonia; Labor-Agricultural Party of Macedonia, Socialist-Christian Party of Macedonia; Green Party of Macedonia.

GEOGRAPHYMacedonia is located in the heart of south central Europe. It shares a border with Greece to the south, Bulgaria to the east, Serbia and Montenegro (Serbia and Kosovo) to the north, and Albania to the west. The country is 80% mountainous, rising to its highest point at Mt. Korab (peak 2,764 m).

PEOPLESince the end of the Second World War, Macedonia's population has grown steadily, with the greatest increases occurring in the ethnic Albanian community. From 1953 through the time of the latest official census in 2002 (initial official results were released December 2003), the percentage of Albanians living in Macedonia rose 313%. The western part of the country, where most ethnic Albanians live, is the most heavily populated, with approximately 40% of the total population. As the population grew, more people moved into the cities in search of employment. Comparing 1948 census results to the 1994 recording, the urban population grew from 28.7% to 58.4% of the population.

HISTORYThroughout its history, the present-day territory of Macedonia has been a crossroads for both traders and conquerors moving between the European continent and Asia Minor. Each of these transiting powers left its mark upon the region, giving rise to a rich and varied cultural and historical tradition.

The ancient territory of Macedon included, in addition to the areas of the present-day Macedonia, large parts of present-day northern Greece and southwestern Bulgaria. This ancient kingdom reached its height during the reign of Alexander III ("the Great"), who extended Macedon's influence over most of Asia Minor, the Levant, Egypt, Mesopotamia, Persia, and even parts of India. After Alexander's death in 323 BC, the Macedon Empire gradually declined, until it was conquered in 168 BC and made a province by the Romans in 148 BC.

After the fall of the Western Roman Empire, the territory of Macedonia fell under the control of the Byzantine Empire in the 6th and 7th centuries. It was during this period that large groups of Slavic people migrated to the Balkan region. The Serbs, Bulgarians, and Byzantines fought for control of Macedonia until the late 14th century, when the territory was conquered by the Ottoman Turks; it remained under Turkish rule until 1912.

After more than four centuries of rule, Ottoman power in the region began to wane, and by the middle of the 19th century, Greece, Bulgaria, and Serbia were competing for influence in the territory. During this time, a nationalist movement emerged and grew in Macedonia. The latter half of the 19th century was marked by sporadic nationalist uprisings, culminating in the Ilinden Uprising of August 2, 1903. Macedonian revolutionaries liberated the town of Krushevo and established the short-lived Republic of Krushevo, which was put down by Ottoman forces after 10 days. Following Ottoman Turkey's defeat by the allied Balkan countries--Bulgaria, Serbia, Montenegro, and Greece--during the First Balkan War in autumn 1912, the same allies fought the Second Balkan War over the division of Macedonia. The August 1913 Treaty of Bucharest ended this conflict by dividing the territory between Bulgaria, Greece, and Serbia. The 1919 Treaty of Versailles sanctioned partitioning Macedonia between The Kingdom of Serbs, Croats and Slovenes, Bulgaria, and Greece. In the wake of the First World War, Vardarian Macedonia (the present day area of Macedonia) was incorporated into the newly formed Kingdom of Serbs, Croats, and Slovenes.

Throughout much of the Second World War, Bulgaria and Italy occupied Macedonia. Many people joined partisan movements during this time and succeeded in liberating the region in 1944. Following the war, Macedonia became one of the constituent republics of the new Socialist Federal Republic of Yugoslavia under Marshall Tito. During this period, Macedonian culture and language flourished.

As communism fell throughout eastern Europe in the late 20th century, Macedonia followed its other federation partners and declared its independence from Yugoslavia in late 1991. The new Macedonian constitution took effect November 20, 1991, and called for a system of government based on a parliamentary democracy. The first democratically elected coalition government was led by Prime Minister Branko Crvenkovski of the Social Democratic Union of Macedonia (SDSM) and included the ethnic Albanian Party for Democratic Prosperity (PDP). Kiro Gligorov became the first President of an independent Macedonia.

Macedonia was the only republic of the former Yugoslavia whose secession in 1991 was not clouded by ethnic or other armed conflict. During the Yugoslav period, Macedonian ethnic identity exhibited itself, in that most of Macedonia's Slavic population identified themselves as Macedonians, while several minority groups, in particular ethnic Albanians, sought to retain their own distinct political culture and language. Although interethnic tensions simmered under Yugoslav authority and during the first decade of its independence, the country avoided ethnically motivated conflict until several years after independence.

In November 1998 parliamentary elections, the SDSM lost its majority. A new coalition government emerged under the leadership of Prime Minister Ljubco Georgievski of the Internal Macedonian Revolutionary Organization-Democratic Party for Macedonian National Unity (VMRO-DPMNE). The initial coalition included the ethnic Albanian Democratic Party of Albanians (DPA).

Kiro Gligorov, the first President of an independent Macedonia, also was the first President of a former Yugoslav republic to relinquish office. His presidency ended in November 1999 after 8 years in office, in accordance with the terms of the Macedonian constitution. Gligorov was succeeded by former Deputy Foreign Minister Boris Trajkovski (VMRO), who defeated Tito Petkovski (SDSM) in a second-round run-off election for the presidency November 14, 1999. Trajkovski's election was confirmed by a December 5, 1999 partial re-vote in 230 polling stations, which the Macedonian Supreme Court mandated due to election irregularities.

Ethnic minority grievances rapidly began to gain political currency in late 2000, leading many in the ethnic Albanian community in Macedonia to question their minority protection under, and participation in, the government. Tensions erupted into open hostilities in Macedonia in February 2001, when a group of ethnic Albanians near the Kosovo border carried out armed provocations that soon escalated into an insurgency. Purporting to fight for greater civil rights for ethnic Albanians in Macedonia, the group seized territory and launched attacks against government forces. Many observers ascribed other motives to the so-called National Liberation Army (NLA), including support for criminality and the assertion of political control over affected areas. The insurgency spread through northern and western Macedonia during the first half of 2001. Under international mediation, a cease-fire was brokered in July 2001, and the government coalition was expanded in July 2001 to include the major opposition parties.

The expanded coalition of ruling ethnic Macedonian and ethnic Albanian political leaders, with facilitation by U.S. and European Union (EU) diplomats, negotiated and then signed the Ohrid Framework Agreement in August 2001, which brought an end to the fighting. The agreement called for implementation of constitutional and legislative changes, which lay the foundation for improved civil rights for minority groups. The Macedonian parliament adopted the constitutional changes outlined in the accord in November 2001. The grand coalition disbanded following signing of the Ohrid Framework Agreement and the passage of new constitutional amendments. Efforts are currently underway to implement remaining provisions in the Ohrid Framework Agreement with international assistance. A coalition led by Prime Minister Georgievski, including DPA and several smaller parties, finished out the parliamentary term.

In September 2002 elections, an SDSM-led pre-election coalition won half of the 120 seats in parliament. Branko Crvenkovski was elected Prime Minister in coalition with the ethnic Albanian Democratic Union for Integration (DUI) party and the Liberal-Democratic Party (LDP).

On February 26, 2004 President Trajkovski died in a plane crash. Presidential elections were held April 14 and 28, 2004. Then-Prime Minister Branko Crvenkovski won the election and was inaugurated President on May 12, 2004. The parliament elected Hari Kostov, former Interior Minister, as Prime Minister June 2, 2004.

GOVERNMENT AND POLITICAL CONDITIONSThe unicameral assembly (Sobranie) consists of 120 seats. Members are elected by popular vote from party lists, based on the percentage parties gain of the overall vote in each of six election districts of 20 seats each. Members of parliament have a 4-year mandate.

The prime minister is the head of government and is selected by the party or coalition that gains a majority of seats in parliament. The prime minister and other ministers must not be members of parliament.

The president represents Macedonia at home and abroad. He is the commander in chief of the armed forces of Macedonia and heads its Security Council. The president is elected by general, direct ballot and has a term of 5 years, with the right to one re-election.

General parliamentary elections were last held on September 15, 2002. Presidential elections were held April 14 and 28, 2004 to succeed President Trajkovski, who died in office in February 2004. Local elections will be held in late 2004.

The court system consists of a Supreme Court, Constitutional Court, and local and appeals courts. The Republican Judicial Council is composed of 7 members elected by parliament for a period of 6 years with the right to one re-election; it governs the ethical conduct of judges and recommends to parliament the election of judges. The Supreme Court is the highest court in the country and is responsible for the equal administration of laws by all courts. Its judges are appointed by parliament without time limit. The Constitutional Court is responsible for the protection of constitutional and legal rights and for resolving conflicts of power between the three branches of government. Its 9 judges are appointed by parliament with a mandate of 9 years, without the possibility of re-election. An independent Public Prosecutor is appointed by parliament with a 6-year mandate.

The country maintains an embassy in the United States at 1101 30 Street, NW, Suite 302, Washington, DC 20007 (tel: (202) 337-3063; fax: (202) 337-3093).

ECONOMYMacedonia is a small economy with a gross domestic product (GDP) of $4.6 billion, representing about 0.01% of the total world output. It also is an open economy, highly integrated into international trade, with a total trade-to-GDP ratio of 79.5%. Agriculture and industry have been the two most important sectors of the economy, but the services sector came on strong in the past few years. All three sectors provide a limited number of high-quality finished products. Like most transition economies, problems persist, even as Macedonia takes steps toward reform. A largely obsolete industrial infrastructure has not seen much investment during the transition period. Work force education and skills are competitive, but without adequate jobs, many with the best skills seek employment abroad. A low standard of living and high unemployment rates prompt occasional social unrest.

Five years of continuous economic expansion in Macedonia was interrupted by the 2001 conflict, which led to a contraction of 4.5% in 2001, despite the government being able to hold inflation at a stable average 5.3%. In 2002, the economy struggled to recover, posting only 0.7% growth. Growth started to pick up in 2003, with real GDP reaching 3.1%. The external debt-to-GDP ratio in 2003 was 38.4%. The economy still has not been able to fully recover to its pre-2001 crisis level. In 2004, real growth is projected to reach 4% with inflation of up to 2.8%. The United States is supporting Macedonia's transition to a democratic, secure, market-oriented society with substantial amounts of assistance.

BackgroundAfter the breakup of Yugoslavia in 1991, Macedonia, the former Yugoslavia's poorest republic, faced formidable economic challenges posed by both the transition to a market economy and a difficult regional situation. The breakup deprived Macedonia of key protected markets and large transfer payments from the central Yugoslav government. The war in nearby Bosnia, international sanctions on Serbia, and the neighboring Kosovo crisis in 1999 delivered successive shocks to Macedonia's trade-dependent economy. The government's painful but necessary structural reforms and macroeconomic stabilization program generated additional economic dislocation. Macedonia was especially hurt by the Greek trade embargo, imposed in February 1994 in a dispute over the country's name, flag, and constitution, and by international trade sanctions against Serbia that were not suspended until a month after conclusion of the Dayton Accords. As a result of these two border closures, 1995 GDP declined to 41% of its 1989 level.

Coincident to these problems, the country pursued an ambitious stabilization and reform program after independence. Despite external factors, the program yielded positive results through 1998 and won praise from the International Monetary Fund (IMF) and the World Bank. A robust financial austerity program stabilized the Macedonian denar and reduced the fiscal deficit. Inflation remained low for several years and was on average slightly negative in 1998 and 1999. Though economic growth suffered in the country's first 5 years of independence, a modest recovery was in progress--with 3.4% growth for 1998--until the Kosovo crisis.

Macedonia proved the most economically vulnerable of regional neighbors to the 1999 Kosovo conflict's spillovers. At the height of the crisis, Macedonia sheltered more than 350,000 Kosovar refugees, straining fiscal accounts and increasing social pressures. Per capita foreign direct investment (FDI), already the lowest in the region, worsened as investors lost confidence. With unemployment around 33%, the crisis exacerbated economic privation. Before the Kosovo crisis, up to 70% of the country's economy had been dependent on inputs from, exports to, or transport through the then-Federal Republic of Yugoslavia (FRY). At the height of the crisis, total exports had fallen to about 75% of the 1998 level. Exports to the FRY were down by about 80%. Exports which had previously transited the FRY (one-half of total exports) were hurt, as alternative transit routes through Bulgaria, Romania, and Greece increased transportation costs and delivery times, making Macedonian products less competitive. Export-processing contracts with other countries suffered cancellations over concerns about delivery risks.

Despite the impact of the Kosovo crisis on Macedonia's economy, marketing efforts were reoriented, new markets were identified and exploited, and the Kosovo market reopened in mid-summer 1999. A May 1999 international donors conference projected contraction of Macedonia's economy of around 5%--a swing of 10 percentage points from pre-conflict projections of 5% growth. However, these projections assumed the Kosovo conflict would continue through the end of the year. Early termination of the conflict in June led to an economic rebound and growth of around 2.7% in real terms for 1999.

Macedonia rescheduled its Paris Club debt in 1995, and again in early 1999, including $93 million of debt, interest, and arrears to the United States. The Kosovo crisis led to an appeal to have debt forgiven or deferred. A Paris Club agreement to defer Macedonian debt service ran out April 2000. Paris Club creditors agreed that repayment terms for amounts deferred during the Kosovo crisis would be set at 5 years, with 1 year as grace.

At the beginning of 2001, Macedonia's economic situation appeared to be improving, with visible signs of increased activity and dynamism, but with the start of the ethnic Albanian insurgency in Macedonia, the country's solid macroeconomic performance in 2000 and the beginning of 2001 began to slide and remained substantially depressed in 2001. Real GDP declined by 4.5% in 2001, as output deteriorated in most sectors. Inflation averaged 5.5% instead of the initially projected 2.2%. Current account deficit in the balance of payments was around 10.1% of GDP, down from an expected surplus of 1%, while the central government budget deficit reached 5.8%. From January through September 2001 the country lost around $200 million of its foreign currency reserves defending the targeted level of the denar against the German mark. Foreign direct investments, credits, grants, and donations declined when the insurgency began, and Macedonia's IMF program went off-track. The IMF and the Government of Macedonia agreed to a 6-month staff-monitored program, beginning January 1, 2002, but government decisions to reimburse depositors of a 1997 failed pyramid scheme and a general wage bill increase in public administration were seen as a threat to a viable budget expenditures policy, posing an obstacle to continuation of the staff-monitoring program and negotiations on a stand-by arrangement. Discussions between the IMF and the new government on a new agreement resumed in November 2002, and a new stand-by arrangement was signed in February 2003 and approved April 30, 2003.

The impact of the 2001 crisis, lower international demand for Macedonian products, canceled contracts in the textile and iron and steel industry, as well as the drought in 2001 affected Macedonia's growth prospects and foreign trade in 2002. Although Macedonia had been scheduled to graduate from International Development Association (IDA) financing in 2001, the World Bank provided $15 million in emergency economic assistance to finance critical imports for the private sector. Real GDP in 2002 grew by 0.3% on annual basis in spite of subdued inflation. The Consumer Price Index-based inflation in 2002 was 1.8%. Declining industrial output adversely affected foreign trade, with exports dropping by 3.7% and imports rising by 16.3%, resulting in a trade deficit of 23% of GDP. The current account deficit in 2002 was 8.8% of GDP. An international donors conference, organized by the World Bank and the European Commission, was held March 12, 2002, in Brussels, at which donors pledged $275 million to assist in covering the projected budget gap, implementing Framework Agreement reforms, and re-energizing the Macedonian economy. Donors also pledged an additional $244 million for general economic development in 2002, outside of the pledge categories defined by the World Bank and European Commission.

Most donor money came in 2003, rewarding the disciplined fiscal policy and stable monetary policy. The IMF signed a Stand-By Arrangement (SBA) with the Macedonian Government worth $27 million. In 2003, real GDP grew by 3.1%, mainly driven by the re-opening of a few loss-makers and strong exports given favorable prices on world markets. The consumer price index (CPI)-based inflation remained very low at 1.2%. The official unemployment rate climbed to 36.7% in 2003. A restrictive fiscal policy under the IMF program brought the budget deficit down to 1.1% of GDP, providing room for a relaxation of monetary policy which resulted in lower interest rates. Although exports grew faster than imports compared to 2002, the trade deficit in 2003 remained large at 20.3% of GDP, while the current account deficit stabilized at 6% of GDP. External debt stood at 38.4% of GDP.

Macedonia is committed to pursuing membership in European and global economic structures. It was officially accepted as a member of the World Trade Organization (WTO) on October 15, 2002. Parliament ratified the agreement in January 2003, clearing the way for Macedonia to become a full member in March 2003. Following a 1997 cooperation agreement with the European Union (EU), Macedonia signed a Stabilization and Association Agreement with the EU in April 2001, giving Macedonia duty-free access to European markets. After ratification in parliaments of all EU member countries, the agreement went into force on April 2, 2004.

Currently, Macedonia is undertaking substantial reforms in its economic and political systems, with the goal of boosting economic growth and attracting increased levels of foreign investment. Macedonia recently passed a progressive trade companies law, which should ease impediments to foreign investment, along with tax and investment incentives. Though concerns stemming from the 2001 conflict linger, the internationally mediated Framework Agreement is being implemented, and Macedonia's political and security situation has stabilized, allowing the government to refocus energies on domestic reforms. A rise in industrial output , fiscal consolidation, low inflation, and a fall in interest rates indicate a gradual recovery of the economy. Political and security normalization, macroeconomic stability and fiscal discipline are providing a foundation for higher growth rates. Real GDP growth is projected at 4% in 2004. The Macedonian Government's main economic policy goals remain to attract foreign investments, to increase employment and to reduce poverty. It has pledged to undertake measures to maintain fiscal discipline and to reduce interest rates even further. Developing the Small and Medium-Size Enterprise (SME) sector and intensifying structural reforms also are high on the government's list of priorities.

TradeMacedonia's foreign trade balance has been in deficit since 1994, reaching $936.7 million in 2003. Total 2003 trade was $3.66 billion, or 79.5% of GDP--imports plus exports of goods and services. Macedonia's major trading partners are Serbia and Montenegro, Germany, and Greece. The United States is Macedonia's seventh-largest trading partner. In 2003, U.S.-Macedonia trade in goods totaled $129.1 million. According to Macedonian trade data, U.S. exports accounted for 2.4% of Macedonia's total imports. U.S. meat, mainly poultry, and electrical machinery have been particularly attractive to Macedonian importers. Principal Macedonian exports to the United States are tobacco, apparel, footwear, and iron and steel.

Macedonia has signed Free Trade Agreements with Albania, Bosnia and Herzegovina, Serbia and Montenegro, Bulgaria, Croatia, Ukraine, Slovenia, Turkey, and the European Free Trade Association countries.

DEFENSEMacedonia established its armed forces following independence and the complete withdrawal of the Yugoslav National Army (JNA) in March 1992. The Macedonian Armed Forces consist of an army, navy, air and air defense force, and a police force (under the Ministry of Interior). Under its North Atlantic Treaty Organization (NATO) Membership Action Plan, Macedonia has launched a major effort to reform and reconstruct its armed forces with the goal of building and sustaining a modern, professional defense force of about 12,000 troops.

Since its independence in 1991, Macedonia has worked toward increased ties with the transatlantic community. Despite the fragile political, economic, and military situation in the region over the past decade, Macedonia has provided consistent support for NATO. Macedonia is engaged in military, economic, and political reforms to enhance its security and NATO candidacy, although the security crisis of 2001 represented a setback to those efforts. The Government of Macedonia plans to assume greater responsibility for its share of ensuring the security of the region without reliance on an international military presence. Successive Macedonian governments have viewed integration into Euro-Atlantic political, economic, and security institutions as the country's primary foreign policy goal. In pursuit of these goals, Macedonia is restructuring its military to be smaller, more affordable, defensively oriented, and interoperable with NATO. The Macedonian Government has welcomed close cooperation with the U.S. military and seeks to deepen this relationship as it restructures its forces.

The UN Preventive Deployment Force (UNPREDEP) in Macedonia patrolled the borders with Serbia and Albania from 1992 to November 1998, enhancing Macedonian stability. In early December 1998, the Macedonian Government approved local basing of the NATO Extraction Force (XFOR) and the Kosovo Verification Coordination Cell (KVCC), in anticipation of a political resolution of the Kosovo crisis, also contributing to Macedonia's safety and stability. Prior to the bombing campaign in Yugoslavia in March 1999, the number of NATO troops in Macedonia peaked at 17,000.

In the wake of the 2001 insurgency in Macedonia, at the government's request, NATO deployed Task Forces "Essential Harvest," then "Amber Fox," and later "Allied Harmony" in Macedonia in confidence-building tasks and protection for Organization for Security and Cooperation in Europe (OSCE) monitors in the former conflict area. Task Force Essential Harvest collected more than 4,000 weapons from the National Liberation Army (NLA) in a confidence-building effort to restore stability within Macedonia. "Amber Fox" (June through December 2002) and its smaller successor "Allied Harmony" (January to March 2003) worked with Macedonian security forces to ensure the safety of international monitors overseeing Framework Agreement implementation in Macedonia. On March 31, 2003, the EU (EUFOR) took over this role from NATO with the launch of "Operation Concordia," which ended December 15, 2003. At the Macedonian Government's request, the EU established a Police Advisory Mission in Macedonia in December 2003 to assist the country's police reforms.

Macedonia continues to play an indispensable role as the Kosovo Force's (KFOR) rear area, hosting the logistical supply line for KFOR troops in Kosovo. As part of these efforts, Macedonia hosts about 150 NATO troops, including U.S. troops, in support of NATO operations in Kosovo and assisting Macedonia's efforts to reform its military to meet NATO standards. Due to improvements in the security situation and U.S. KFOR drawdowns in Kosovo, the United States closed its Camp Able Sentry base in Macedonia in December 2002. Close U.S.-Macedonian bilateral defense cooperation continues.

FOREIGN RELATIONSIn February 1994, Greece imposed a trade embargo on Macedonia due to disputes over the use of the name "Macedonia" and other issues. Greece and Macedonia signed an interim accord in October 1995 ending the embargo and opening the way to diplomatic recognition and increased trade. After signing the agreement with Greece, Macedonia joined the Council of Europe, the Organization for Security and Cooperation in Europe (OSCE), and NATO's Partnership for Peace (PfP). Athens and Skopje began talks on the name issue in New York under UN auspices in December 1995, opening liaison offices in respective capitals January 1996. These talks continue.

The stability of the young state was gravely tested during the 1999 Kosovo crisis, when Macedonia temporarily hosted about 360,000 refugees from the violence and ethnic cleansing in Kosovo, as Serb atrocities against Kosovar Albanians and other minority groups caused a mass exodus. The refugee influx put significant stress on Macedonia's weak social infrastructure. With the help of NATO and the international community, Macedonia ultimately was able to accommodate the influx. Following the resolution of the conflict, the overwhelming majority of refugees returned to Kosovo. The Macedonian Government demonstrated a strong commitment to regional stability as an essential partner during the Kosovo crisis.

In addition to improving relations with its neighbors, Macedonia has made strides toward European and international integration, especially with the EU and NATO. Macedonia is an active participant in NATO's Partnership for Peace and Membership Action Plan, the OSCE, and United Nations, and was accepted as a member of the World Trade Organization (WTO) in October 2002. In 1999, the EU agreed to develop a Stabilization and Association Agreement (SAA) with Macedonia; negotiations with Macedonia were launched April 5, 2000, and the SAA was signed April 2001 and came into force in April 2004. Its trade and trade-related provisions have been in force since June 2001. For Macedonia to successfully integrate within the global arena, continued efforts to strengthen its multi-ethnic civil society institutions, to develop measures to promote economic growth and investment, and to foster strong indigenous non-governmental organizations are necessary.

U.S.-MACEDONIAN RELATIONSThe United States and Macedonia have enjoyed good bilateral relations since Macedonia gained its independence in 1991. The United States formally recognized The Former Yugoslav Republic of Macedonia on February 8, 1994, and the two countries established full diplomatic relations on September 13, 1995. The U.S. Liaison Office was upgraded to an Embassy in February 1996, and the first U.S. Ambassador to Skopje arrived in July 1996. The development of political relations between the United States and Macedonia has ushered in a whole host of other contacts between the two states.

During the 1999 Kosovo crisis, Macedonia played a key role in facilitating U.S. and international efforts in the region by accepting hundreds of thousands of refugees, served as a launching pad for allied military efforts, and functioned as the long-term conduit for humanitarian assistance programs and military logistics for Kosovo. The United States, together with its European allies, strongly condemned the initiators of the 2001 insurgency in Macedonia and closely supported the government and major parties' successful efforts to forge a peaceful, political solution to the crisis through the Ohrid Framework Agreement. In partnership with the EU and other international organizations active in Macedonia, the United States remains focused on facilitating the Macedonian Government's implementation of the Framework Agreement and fostering long-term peace and stability in the country. Macedonia continues to make an important contribution to regional stability by facilitating the logistical supply of NATO (including U.S.) peacekeepers in Kosovo.

Today, Macedonia and the United States enjoy a cooperative relationship across a broad range of political, economic, cultural, military, and social issues. The United States supports Macedonia's aspirations to build a democratically secure and market-oriented society, and has donated large amounts of foreign assistance for military reform, democracy and economic reform, and humanitarian relief efforts. The United States pledged $6 million in debt relief and $22 million in Economic Support Funds to Macedonia in 1999 to help offset the strains of the Kosovo crisis. The United States provided an estimated $35 million to Macedonia to help host communities cope with refugee inflows. In addition, the United States helped reduce the refugee impact on Macedonia by resettling in the United States more than 13,000 persons through the Humanitarian Evacuation Program. Bilateral assistance provided to Macedonia under the Southeast Europe Economic Development (SEED) Act totaled over $328 million from 1990 to 2002, including budget support and other assistance to help Macedonia recover from the 2001 crisis. Macedonia received $50 million in SEED funding in 2003.

The U.S. Agency for International Development's (USAID) development program in Macedonia targets four goals: accelerating economic growth and private sector development; strengthening democratic institutions; mitigating adverse impacts of market economic transition; and supporting cross-cutting and special initiatives. USAID provides assistance to Macedonian enterprises through a business resource center, credit and equity mechanisms, trade and investment facilitation, and other programs. In 2002 a competitiveness initiative identified constraints to economic growth. USAID legal advisers helped reform taxation, banking, bankruptcy, and monopoly regulations and assisted with Macedonia's accession to the WTO. Programs helped build the capacity of municipal governments to better serve the public and to advance the decentralization of power to municipalities under the Framework Agreement.

USAID assistance helps strengthen Macedonia's non-governmental organization (NGO) networks, bolster media professionalism, further legal system reforms, and increase public confidence and participation in the democratic process and institutions. Activities address the quality of education and work force development, through support for the private, accredited South East Europe University and primary and secondary education reforms to meet employer needs and market requirement in the 21st century. USAID efforts encourage job creation, especially for youth, expand markets for Macedonian artisans, and improve cooperation between municipalities and the private sector. USAID also is addressing cross-cutting issues such as ethnic cooperation, gender-based problems and disparities, youth, corruption, HIV/AIDS, and conflict mitigation. Through a small grants program, USAID's Office of Transition Initiatives is helping mitigate conflict and strengthen relations between diverse groups of peoples by bringing them together to identify and address common needs.

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