Приказна за македонскиот популизам: „Се’ што сакаме е сешто!”

АНАЛИЗА НА ПРОГРАМСКИОТ ДИРЕКТОР НА ФОРУМ ЦСИД ОБЈАВЕНА ВО НАЈНОВОТО ИЗДАНИЕ НА ПУБЛИКАЦИЈАТА CHAILLOT PAPERS НА ИНСТИТУТОТ ЗА БЕЗБЕДНОСНИ СТУДИИ НА ЕВРОПСКАТА УНИЈА ОД ПАРИЗ.

THE STORY OF MACEDONIAN POPULISM: ‘ALL WE WANT IS EVERYTHING!’

Sašo Ordanoski

The views expressed in this chapter are the author’s own views and do not represent those of any organisation or institution. An early version of this paper was originally presented as a paper at the colloquium ‘The Western Balkans and the EU’ held in Paris by the EUISS at the end of January 2011. The author would like to point out that this chapter does not take account of any political developments in Macedonia since mid-March 2011.

Nikola Gruevski, Macedonia’s Prime Minister and undisputed leader of the governing Internal Macedonian Revolutionary Organisation- Democratic Party for Macedonian National Unity party (VMRO-DPMNE), firmly believes that he has invented a magic formula for staying in (absolute) power forever. It is a simple formula consisting of two main pillars and one additive.

The first pillar is the number of public administration employees.1 When Gruevski came to power in mid-2006 after VMRO-DPMNE won the elections largely thanks to promises of economic revival, there were some

95,000 public sector employees. At the time, this was considered to be an excessive number of state bureaucrats. While previous governments provided no clear strategy, the overstaffed public sector was supposed to be reduced in the years ahead as part of the general endeavour to boost economic growth and cut fiscal deficits.

However, Gruevski soon realised that public administration staff cuts in a country with low social welfare standards and an unemployment rate of around 32-35 percent were widely unpopular among voters. The table overleaf illustrates the mag nitude of the problem.

So, the Gruevski government decided to begin a mass recruitment drive in the state administration, pushing numbers to unprecedented levels. Today, in early 2011, there are some 130,000-140,000 state employees (excluding staff in public enterprises). The real figures are unknown to anyone outside the highest levels of government and when questioned on the matter the political authorities give deliberately vague answers. The number of ministries, state agencies and various other state bodies has grown significantly, making Macedonia a regional leader in high-, mid- and low-ranking state officials. The number of drivers, secretaries, office assistants, assistant deputies and deputy assistants grew accordingly.

In addition to this employment strategy, extensive state subsidies were distributed to the agricultural sector. This sector, encompassing some 190,000 farm holdings, was largely ignored in the past two decades, and the governing party wanted to correct this historic injustice.

These two strategies paid off for the governing party. VMRO-DPMNE confirmed its convincing victory in the early parliamentary elections in 2008 and won an absolute majority in parliament on the same ‘economic revival’ election platform.6 In 2009, VMRO-DPMNE won both the local and presidential elections decisively. They installed their own people as mayors in most of Macedonia’s 85 municipalities and their candidate Gjorge Ivanov as president.

The only ‘catch’ to getting state employment or a subsidy was to have a membership card of one of the coalition government parties, preferably VMRO-DPMNE. As a result, not only did the party win the elections, but party membership also grew. The consequences in the public sector were obvious: it became heavily partisan from top to bottom.

The party’s capture of the state did not stop at the threshold of public institutions and administrative bodies. In an attempt to widen its political base and replace the elite, it soon embarked on a complete ‘VMROisation’ of all socio-economic layers, with the governing party targeting the business sector, the media, the health system, the academic and educational community, non-governmental organisations, trade unions, professional and sports associations, agricultural unions, etc. There was little opposition. As in ‘the good old days’ of communism, if you wanted prosperity, you had to be a member of the governing party.

But partisan loyalty – a typical instrument for post-communist reformers of all parties in Macedonia – was neither the only, nor the main criterion of trustworthiness promoted by the current government. VMRO- DPMNE’s leadership went one step further than this ‘proof ‘ of political allegiance by promoting family loyalty as a qualification to win the highest confidence of the leaders. Fathers, sons, brothers and sisters, godfathers, close relatives and other family members and friends were appointed by the dozen to top positions in government, including the secret police, customs, the justice system, ministerial and diplomatic posts, independent regulatory bodies, the state energy sector, state agencies, public companies and their managing boards. A number of them occupied several posts simultaneously in order to limit the number of decision-makers and maximise personal income.

This omerta-style clientelism was rampant throughout all levels of government, from the very top down to the lowest ranks of state and municipal administrative structures. Four years after VMRO-DPMNE came to power, there were unprecedented and widespread conflicts of interest in Macedonia’s transitional society and what seemed to be a real plague of systematic corruption, favouritism in public spending and cronyism of the worst kind.

GOVERNING BY THE POLLS

The second pillar of Gruevski’s formula for staying in power involves influencing public perceptions. The ruling party realised that by spending an adequate amount of money on public relations (PR) and political marketing techniques, public perceptions could be manipulated and they could thus establish ultimate authority over the country. PR activities were stepped up dramatically. The public was literally overrun by dozens of campaigns: announcing economic reforms; promoting moral values; inviting foreign investors; proclaiming a clean environment and a green future; pleading for tolerance; combating domestic violence; promoting literacy; warning against the dangers of smoking, drugs and alcohol; encouraging regular health checks; calling for people to buy Macedonian products; encouraging families to have a third child; proclaiming education for all, education for the elderly, tennis courts in every town, transparency and the fight against corruption; announcing an ‘open day’ with the government and live TV broadcasts of government sessions … At times over the past few years the government must have been simultaneously running around 15 campaigns per week.

Transparency Macedonia has estimated that Gruevski’s government was/ is spending around 1.5 percent of the annual state budget on domestic and international public relations and promotional and advertising campaigns, from CNN and The Financial Times to local television and village radio stations. Bearing in mind that Macedonia’s media advertising market is very small, representing some €40-50 million annually, the influx of such large amounts of government money caused mayhem among media owners and eliminated any semblance of fair market competition.

Governing through public relations had added value for the ruling class: as a result of the government giving millions of euro to the owners of some of the main national commercial television stations, independent editorial policy gave way to uncritical support for government policy. The prime minister’s chief of cabinet and general secretary of VMRO- DPMNE, Martin Protog jer, became the most influential spin doctor in the country. Censorship and self-censorship became the order of the day for many journalists and editors employed by state-sponsored media owners.

Opinion polls also became a key instrument for deciding government policies. Polls were commissioned on a regular basis, sometimes weekly, and there was an explosion of new ‘independent’ polling institutes. The pollsters looked into every possible issue; ministerial agendas depended on the results. Pride of place was given to the ratings of the prime minister, who developed an obsession with poll results.

Given this mode of government – unlimited state employment, widespread subsidies and relentless, round-the-clock public relations – it is not surprising that the machinery was soon to be oiled by a little ‘additive’: the concentration of power in the hands of the Prime Minister and his party engendered growing fear in all political and social spheres. The omnipresent state was in control of everything, from the ‘independent’ justice system and news media, through much of the economy, to sports clubs and theatre companies. The few remaining independent institutions left in the country – the Constitutional Court, the Governor of the National Bank, the Broadcasting Council, the new President of the State Anti-Corruption Commission, and several influential media outlets and NGOs – were put on the government’s ‘blacklist’ and now come under constant attack from the pro-government media and suffer government and party bullying. The state flexes its muscles through televised arrests and by deploying police in full riot gear for the smallest of offences. Government spokespersons give several press conferences a day, openly attacking (usually ad personam) anyone who disagrees with the official government line. Businesses deemed ‘hostile’ to the state are regularly subject to financial and other state inspections. Ads openly attacking political opponents can be seen in the daily press.

Party activists are regularly sent to demonstrate in front of the main headquarters of the opposition party or the EU offices in Skopje. The people fell silent. To voice a different opinion to that of the government became an act of bravery in a country which acquired EU candidate status in 2005. It was soon clear that instead of democracy, it was demokratura – a combination of democracy and dictatorship – that has steadily taken hold in Macedonia over the last four years.

WHEN DISNEYLAND MEETS LES CHAMPS ELYSÉES

In the first few years of government, Prime Minister Gruevski and his team were praised by many in domestic and international circles as promising ‘young technocrats’, as opposed to the ‘old-fashioned’ and ‘corrupt’ social democrats that governed Macedonia for most of the post- communist transition period from the beginning of democratisation in 1990. Macedonia stood out as a clear outperformer in the World Bank’s Doing Business 2010 Report. In the World Economic Forum’s Global Competitiveness Report 2009-2010, Macedonia – together with Albania and Montenegro – increased its ranking. In its Corruption Perception Index 2010, Transparency International ranked Macedonia 62 out of 178 countries (in equal position with Croatia, Ghana and Samoa), 43 places up from 2006.

The last few years have seen many celebratory press conferences and official government announcements. Opinion polls in 2006, 2007, 2008 and 2009 suggested that Gruevski was by far the most popular politician in the country, and VMRO-DPMNE had an almost three-figure lead over the opposition Social Democratic Union of Macedonia (SDSM).

Gruevski’s political ratings were largely attributed to his tough and ‘strictly principled’ stance on the Macedonian-Greek name issue: Macedonia is not going to change its name, so Greece should either give in or face the consequences on the international scene.

He got further support from the majority of ethnic Macedonians as a result of his ‘soft’ but effective nationalistic treatment of ethnic Albanians. Unlike VMRO-DPMNE’s previous, more aggressive and confrontational policy towards Albanians, Gruevski adopted a quieter and more contemptuous approach, applying a ‘technocratic touch’ of corporatist power-sharing with their political representatives.16 Making virtue out of necessity, Gruevski has tried all the ethnic Albanian political parties as coalition partners in the last four years in government, exploiting their influence over their voters at will. The 2001 Framework Ohrid Agreement is treated more as a manual for proportional budget spending, than as a key interethnic political agreement for power sharing and consensus building as a long-term strategy. Right-of-centre ideologists in Skopje are giving serious consideration to Angela Merkel’s declaration of the failure of multiethnic society.

But it was not only ‘politics as usual’. In order to confirm its ‘extended and upgraded’ national revival agenda, the government introduced the grandiose ‘Skopje 2014’ project. The idea is, by 2014, to change the ‘socialist’ architectural face – and, by extension, soul – of the nation’s capital, Skopje, at a cost of hundreds of millions of euro. A number of neoclassical and neo-baroque buildings will be erected around Skopje’s main square to be inhabited by a range of state institutions and a handful of businesses. The ‘historic’ part of the project includes the construction of a large Triumphal Arch to All Macedonian Victories. Some 50 different monuments to the ‘glory’ of ancient, medieval and modern Macedonia will adorn the square. A Museum of National Struggle with 100 or more life-size wax models representing historical figures will stand next to the restored National Theatre (destroyed during the 1963 earthquake). There will be a monumental Orthodox church (conveniently called The Church of St. Nikola). A giant panoramic wheel is planned as an attraction on one side of the square, not too far from the artificial summer beaches already established on the banks of the river Vardar. Several fountains will play in the river itself as part of a ‘son et lumière’ show.

The centrepiece of this architectural extravaganza will be the monument of Alexander the Great, over 35 metres tall, to be erected in the middle of the square and expected to be completed by the end of 2011.

Neither professionals nor the general public were consulted on the look and content of ‘Skopje 2014.’ The majority of Skopje’s inhabitants expressed reservations in opinion polls. When a large group of students from the Architectural Faculty in Skopje tried to protest peacefully against the project, they were brutally beaten – in the presence of the police and media – by VMRO-DPMNE hooligans. Regardless of the dramatic rise in poverty in the country, construction of this multimillion-euro project is already underway.

The national revival agenda held some other surprises. For instance, as a part of the search for an ethnic identity and in recognition of newly discovered roots, the Prince of the Hunza people and his entourage were invited on an official visit to Macedonia. Full state protocol was accorded to this well-mannered gentleman representing his people from an isolated valley in the mountains of Pakistan who are famed for their longevity. They are believed to be descendants of Alexander the Great’s conquering army, which was deemed sufficient reason by the current Macedonian government to establish relations between modern Macedonians and their alleged ancestors. His Royal Highness the Prince of Hunza was even given a plot of land in Macedonia to build his own imperial palace.

There was a major push to introduce educational and cultural programmes, generously funded by the state, to promote religious values and practices, ancient and pre-ancient Macedonian history, and the country’s rich cultural heritage. Macedonia was ambitiously building its future through the relentless exploration/exploitation of the past.

At the same time as devoting so much attention to the past, the government sought to steer a modern course through a number of ‘e-projects’: it launched a ‘computer for every child’ campaign in schools, and opened ‘Internet points’ in far-flung villages; the fact that the inhabitants still live medieval lives without decent roads, running water or electricity did not stop the authorities from bringing twenty-first century virtual reality to their doorsteps.

All this and more was part of the government’s grand project for the ‘revival of Macedonia.’ Some measures, such as the ‘digital and internet revolution,’ did boost business in certain sectors. Others, like the government’s populist decision to allow the import of cheap second-hand cars over 10 years old, pushed the new car dealers’ import businesses to the verge of bankruptcy. But many of the government’s ‘innovative’ policies and policy decisions were implemented in haste, ill-prepared or unfinished, and accompanied by various financial scandals and occasionally comical organisational mishaps; many millions of euro were wasted through mismanagement or for want of proper cost-benefit analysis.

Given the social fallout from never-ending economic transition and disillusionment engendered by previous political disasters, for a while Macedonians said of their prime minister: ‘Well, at least he is doing something!’ Gruevski’s aura shone like no one else’s before in modern Macedonian politics.

Unnoticed by the government pollsters, however, more and more people were refusing to answer the numerous public surveys. Before long over 50 percent of all responses were either ‘don’t know’ or ‘don’t wish to answer’. In most of the 2009 and 2010 polls, this figure was constant. This trend did not go unnoticed by international organisations dealing with democratic standards in the world, but was ignored or downplayed by pro-government media, local think tanks and the ruling party.Other statistics revealed the negative trend in public attitudes towards the government: while in 2008 48.1 percent of respondents trusted the state, only 38.7 percent (10 percent less) did in 2010; trust in the government dropped even further, with 51 percent in 2008, and only 36.8 percent in 2010.

REALITY CHECK

There was only one flaw to this grand populist socio-political engineering project initiated in 2006 with VMRO-DPMNE’s first election victory: in order to be sustainable and successful, it required a constant flow of money – a lot of money – and close to double-digit annual growth.

This simply did not happen.

After the first few, economically unconvincing, years in power (2007- 2008) spent preparing for and announcing the economic rebirth of the country, the global financial crisis erupted and the Macedonian government found itself in the cold. Lavish spending on the growing public sector, large sums needed for various subsidies, and unproductive but expensive projects: all dug a deep hole in the state budget which was impossible to fill with such little revenue coming in. There were also a large number of elections in just four years (two parliamentary elections, one presidential and one local election) which cost a great deal in terms of PR and increasingly lavish election campaigns. Some 90 percent of the state budget went on salaries and unproductive expenditures.

In the last five years, there has been no money left over for any major capital investment project. There has been no significant investment in roads, railways, energy, infrastructure, technology or the tourist industry. The government had planned nothing that could create economic added value in the future or start a new economic cycle. Many ceremonial ribbons were nevertheless cut and dozens of ceremonial holes dug – empty holes that remain scattered around the country in testimony to pre-election promises.

The biggest disappointment was the low level of foreign direct investment (FDI) which in the last five years has never come even close to the expectations of Macedonians who over and over again were promised billions of dollars by the government. Tax and investment incentives were introduced, ‘one-stop-shop’ investment services were promoted, a ‘Regulatory Guillotine’ project aimed at removing legal obstacles was established, a number of free economic zones were opened … Many ‘letters of intent’ were signed, there were ‘road shows’ in foreign countries, an expensive ‘Invest in Macedonia’ campaign was launched in prominent world media, numerous upbeat statements and press conferences were given. At the beginning of its mandate, the ambitious government even cancelled the extension of the IMF arrangement, claiming that its very existence sent out a bad signal to foreign investors.

But no major investors actually came to Macedonia, not on the scale needed by the local economy. In 2007 the sum total of the country’s FDI was about €500 million; in 2008 the FDI was €399 million, while in 2009 it plummeted to around €150 million; in 2010 the FDI rose to €309 million. Compared to neighbouring Western Balkan countries, Macedonian FDI figures resemble pocket money. Those who did invest put their money mostly into building flamboyant shopping malls, as if Macedonia was set to become the Dubai of the Balkans.

These results are even more depressing considering the state structure that was put in place to attract FDI. Gruevski’s government created not one but two ministerial posts responsible for bringing in foreign investors. There is a full-size state Agency for Foreign Investments. An important part of the Finance Minister’s portfolio was to attract foreign investors, and likewise for the Deputy-Prime Minister in charge of economic affairs. Some 30 ‘economic promoters’ or ‘investment ambassadors’ with formal diplomatic status were sent to capitals around the world to attract foreign investors. At the top of this pyramid of very young and mostly inexperienced people, was Gruevski himself, symbol of this huge effort which was in fact a huge failure.

EXIT STRATEGY: TAKE OUT MORE LOANS

Today, with 32 percent of the population below the poverty line, and an official unemployment rate of 32-35 percent, nobody in Macedonia jokes about the government’s false promises. The healthcare system is falling apart. Payments of benefits and financial support for the most vulnerable parts of the population are many months overdue. The government cannot pay the generous farm subsidies promised in 2010, leading to mass roadblocks by angry farmers. The state pension fund is seriously depleted. Frustrated citizens are turning their backs on the government, in protest and disdain. Even Gruevski’s and his party’s ratings are taking a downturn. In December 2010 the opposition held a protest march which brought around 50,000 demonstrators onto the streets of Skopje, the largest political gathering in Macedonia in the last decade. Pressure for early elections was growing daily.

In order to fill the widening budget gaps, the government decided to turn to short-term domestic borrowing. In 2010 the government issued short-term state bonds – with an interest rate of 9.2 percent and six months maturity – amounting to €460 million, most of which was spent on urgent fiscal transfers for public sector salaries, pensions, and other social expenditure. Again on 1 February 2011 the government issued €42 million worth of bonds (with an interest rate of 4.1 percent) which, according to the Finance Minister, is still not enough to cover February’s financial obligations on previously issued state bonds. Social peace in the country depended on expensive weekly borrowings. Soon the government was borrowing in order to pay back previous loans, increased by interest due.

However, this strategy consumed a large proportion of the free bank capital intended for loans to the developing domestic business community. This community was supposed not only to feed some 300,000 employees and their families, but also to provide tax revenue and raise key social funds. The government’s strategy produced fairly predictable results: commercial banks were making hefty profits, while small and medium- sized enterprises were going bankrupt overnight, unable to cover their daily costs or fund development projects.

In 2010 the state deficit reached unprecedented levels. It was never officially confirmed how large it was, but it was mostly likely anything between €500 million and €1 billion. The state could not pay electricity or phone bills, or even pay for hospital food. Thousands of people relying on state health insurance could not get vital medication. VAT returns were months late. Hundreds of private companies went unpaid by the government for outsourced services and many went bankrupt (with no right of appeal).

But tax inspections and police traffic controls were as vigorous as ever. And construction work on ‘Skopje 2014’ never ceased.

Five years after the last IMF agreement in Macedonia, at the end of 2010 Gruevski’s government was forced to seek another loan. The country was given a credit line of €480 million over two years, on the pretext that it was a safeguard against the potential effects of exposure to the global economic crisis. The credit line is based on the government’s economic programme and on the projected 2.5 percent GDP fiscal deficit for 2011 – if the deficit remains lower than 2.5 percent of the GDP, the government will not need to withdraw funds from the IMF’s approved credit line. Indirectly, the IMF sent a signal to other creditors that it has faith in the economic stability of Macedonia, as a country that is making progress. But it also regained some control over the country’s economic development, which it lost five years ago when Gruevski came to power.

The government mostly blames the global financial and economic crisis for the lack of foreign investors, poor general economic development and GDP growth. It is certainly true that the global crisis is partly to blame for the enormous difficulties.

However, many local economic experts argue that the country is becoming less attractive for investors and is economically ‘frozen’, not because of its bad taxation policy and global economic trends, but rather because of its dysfunctional institutions, underdeveloped business and banking sector, widespread corruption, uncontrolled spending, and stalled NATO/EU accession bids, all of which are key factors for the stability of the country and which in the current state of play hinder economic growth.

Most of these issues are linked to Macedonia’s bid for Euro-Atlantic integration. ‘Greeks are to blame for everything,’ is the convenient mantra of government representatives when criticised for failed reforms and lack of progress.

THE ‘NAME DISPUTE’

Macedonia’s Euro-Atlantic integration process has been effectively blocked by the well-known dispute over the ‘name issue’ with Greece. The dispute is about to enter its third decade of fruitless diplomatic negotiations, currently mediated by UN special envoy Matthew Nimetz. Despite the fact that the Greek and Macedonian prime ministers have met more frequently in the last year, there has been no significant progress, just a series of futile photo opportunities. Both governments give the impression that they are either unable to find a compromise or are not really interested in finding one.

This is certainly true of the current Macedonian government. It has not taken any positive initiatives or made any goodwill gesture that might indicate it is ready for a compromise. On the contrary, Gruevski’s government has toughened its stance on the name issue by indicating unofficially that it is prepared to leave the negotiation process, mediated unsuccessfully by the UN for the last 15 years. In the early days of his government, Gruevski clearly stated that any compromise solution, if and when it came, would be put to popular referendum, and that his government would not support any compromise that involved changing or adding to the name ‘Republic of Macedonia.’

With its aggressive policy of cultural and historical ‘antiquisation’ of Macedonia, by renaming Skopje’s Airport ‘Alexander the Great’ and building an over 36-metre high monument of Alexander the Great in the centre of Skopje, by initiating proceedings against Greece in November 2008 in the International Court of Justice in The Hague, and through various other initiatives that may be deemed unnecessary nationalistic provocations, it seems that the government actually used the dispute mainly for domestic purposes: to boost its ratings among the ‘patriotic’ voters and to use it as an excuse for every and any political failure.

However, in the process, the government has lost its moral and diplomatic standing on the international scene, and eroded support in Brussels and Washington for Skopje’s arguments. Both Brussels and Washington insisted time and again that ‘both sides’ should make an effort to reach an acceptable compromise, but now more often than not the finger is pointed at Macedonia for refusing to compromise.

At the end of February 2011, Macedonian Foreign Minister Antonio Milošoski publicly admitted sending a letter to the UN Secretary General in which he reiterated that Macedonia was ready to discuss a compromise name: ‘Republic of Macedonia (Skopje)’, the same one that was on the table at NATO’s 2006 Bucharest Summit. This move was an anxious reaction to Gruevski’s diplomatically disastrous visit to Washington D.C. on 16 February 2011, when he openly spurned the United States’ encouragement and offer to help resolve the name dispute. After separate meetings with Vice President Joe Biden, Secretary of State Hilary Clinton and Assistant Secretary of State Philip Gordon, according to the official statement from the State Department, Gruevski and his hosts had discussed ‘a wide range of bilateral and regional issues’ and Americans ‘expressed concerns about trends regarding rule of law, independent media, and civil society’ in Macedonia; Hillary Clinton ‘reiterated [their] hope that Macedonia and Greece resolve together the longstanding name issue so that Macedonia can move forward on seeking NATO membership and fulfilling its Euro-Atlantic aspirations.’

Gruevski was not invited to make a common press statement with Vice- President Biden or Secretary of State Clinton, but gave his statement to a handful of Macedonian journalists on a pavement outside the State Department building.

At home, the Social Democratic opposition party, accused again and again by VMRO-DPMNE of being an ‘internal traitor’ because of their pro-compromise position, decided to refrain from making any public comments on the way Gruevski was handling the dispute. They simply declared that they would ‘support any acceptable solution for Gruevski’ which would resolve the dispute and speed up Macedonia’s Euro- Atlantic integration. VMRO-DPMNE’s coalition partner, the Albanian Democratic Union for Integration (DUI), has no power to steer Gruevski towards a compromise.

These developments – or, rather, non-developments – served as a good excuse in Brussels for further inactivity regarding Macedonia’s integration. A number of countries in the EU, either overwhelmed by enlargement fatigue or openly supporting the Greek side in the dispute (France, Cyprus), use this situation as a justification for the slow pace of Macedonia’s progress towards full membership.

SHARP DIVISIONS ON EU PERSPECTIVES

Gruevski and his associates have never been over-enthusiastic about Macedonia’s integration into the EU. Or, to be more precise, their attitude can be summed up as: integration – yes, but not under EU terms. European bureaucrats and their close monitoring of the reform processes were seen as major obstacles to the ‘VMROisation’ of Macedonia which the governing party had in mind and which was their main priority rather than EU integration. They had to make up for years lost in opposition, while Brussels was insisting on professionalism, efficiency, tolerance, political dialogue, a sound economy, and independent state institutions, an autonomous judicial system, free media, etc.

Like all populists, the only policy that Gruevski understands is a domestic one, one that brings in votes here and now. Bowing and scraping in Brussels and promises of a better future in a few years or decades are a recipe to lose elections. Moreover, being very sensitive to any criticism of his style of government, Gruevski easily took offence at any sign of disapproval from Brussels.

The government’s immediate tactic was to talk loudly about EU reforms and put constant pressure on Brussels to speed up the integration process. But the promised reforms were highly selective and only in areas and to an extent compatible with the party’s priorities. In this context, the dispute with Greece served as a perfect excuse for any and every stumbling block in Macedonia’s path to NATO/EU integration.

Still, the leadership in Skopje makes every effort not to antagonise the international community, especially when it comes to regional strategic issues. They maintain just the right level of involvement in regional initiatives, particularly as regards American interests or issues relating to Albanians in the Balkans, and manage to stay just below the international radar of special attention devoted to troublemakers.

However, it seems that this strategy also keeps them below any radar. Once – five years ago – a leading Western Balkan candidate for EU membership, today Macedonia is at the very end of the queue in this regional process. Using the European monetary and constitutional crisis as a pretext, various pro-government actors started to develop conspiracy theories: since the EU is falling apart anyway, and the eurozone is in its death throes, Macedonia should stay out of the EU like Norway or perhaps offer a confederation pact to its neighbour Bulgaria, or join the Non-Aligned Movement, become neutral like Switzerland or turn to China as the world’s next superpower … In 2011 and 2012 Macedonia is opening new embassies in Tokyo, Buenos Aires and Astana.

This confusion and the deadlock in the integration process, mainly due to the name dispute, has had an adverse effect on public attitudes towards the EU. For the first time in years, polls have showed increasingly anti-European feelings among ethnic Macedonians: 72 percent of ethnic Macedonians do not trust EU policy towards Macedonia (while 74 percent of ethnic Albanians do); 50 percent of ethnic Macedonians believe that Macedonia will be the last country to join the EU. At the same time, a majority of respondents (51 percent) are not satisfied with the government’s policy on EU integration, as opposed to 47 percent of those who are satisfied.

The country is sharply divided as to which key strategic direction it should take.

FUTURE PROSPECTS

Macedonia’s macroeconomic projections for 2011 are more optimistic, showing modest improvement. Real GDP is estimated to grow around 2 percent. The national currency, the denar (de facto pegged to the euro), will remain stable with moderate inflation of around 3 percent, provided that food and energy prices do not surge. The budget deficit should stabilise at about 2.5 percent of GDP. More foreign investments are expected to enter the country, but the government is planning a significant increase in capital investments. The budget is projected to be €2.6 billion, 85 percent of which is going to be spent on salaries, goods and services for the state. It is expected that domestic commercial banks will increase their credit supply by up to 10-15 percent. Exports will increase thanks to the ongoing recovery in the economies of Macedonia’s traditional international trading partners. Private transfers will continue to grow.

All in all, the Macedonian economy will grow in 2011 and 2012, but not so much as to make a difference to ordinary people in their everyday lives.

The government’s ratings are likely to continue falling in 2011, while there will be a modest increase in support for the opposition. More and more people from the undecided ‘silent majority’ will choose sides or lose their nerve. The government will become even more sensitive and prone to flexing its muscles, while corruption, organised crime, political scandals, and media witchhunts will continue to dominate the socio-political scene. Political dialogue will deteriorate further, making it impossible to build a common vision of key domestic and foreign challenges. Interethnic relations – as always in times of social and political crisis – will deteriorate overall, but this will probably not amount to more than squabbling and name-calling with rare violent outbursts.

The financial situation is likely to decide Gruevski’s political future. If he finds enough money to proceed with the current unsustainable (but politically beneficial) ‘two-pillars-and-an-additive’ formula for governing, he will probably wait for the next elections in mid-2012. If the government fails to control the budget deficit and meet the population’s growing social needs, then Gruevski may choose to go to early parliamentary elections in order to avoid even greater delegitimisation of his government.

Since the prospect of early elections suddenly seems more likely at the time of writing (spring 2011), it would appear that Gruevski has understood that he needs to overhaul his priorities and his team, if not his entire method of governance. It seems clear that whoever forms the government will have a much smaller power base to form a governing coalition, with a substantially smaller majority in parliament.

But there is also a broader regional and European reality which affects Macedonia’s politics. The possibility of a more dynamic EU policy towards the Western Balkans in the next couple of years may put additional pressure on the government to deal with the name issue and concentrate on the domestic EU agenda rather than the current domestic VMRO-DPMNE agenda. Since Gruevski needs funding and support to perpetuate his way of government, the international community has the means to bring its influence to bear. However, it might not be willing to support yet another typical populist regime in the Balkans that is failing to produce democracy, economic sustainability and progress.

Being an economist by training and a technocrat by profession, it seems that Gruevski believes that the economy will save Macedonian politics. This has rarely been the case in the Balkans. History teaches us that, for small Balkan states like Macedonia, a clear political orientation has always been a more powerful drive for increased economic output, even for far more successful economies.

That is why, sooner or later, Macedonia will have to follow a democratic, liberal, pro-European and pro-Western path. With or without the current government. With or without international help. But sooner rather than later.

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