MACEDONIA: CODEL TANNER SCENESETTER

UNCLAS SECTION 01 OF 02 SKOPJE 000109

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EUR/SCE

E.O. 12958: N/A
TAGS: PREL PGOV OVIP MK
SUBJECT: MACEDONIA: CODEL TANNER SCENESETTER


OVERVIEW: MULTI-ETHNIC DEMOCRACY, NATO CONTENDER
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1. (SBU) Welcome to Macedonia, a strong NATO membership
contender and a multi-ethnic democracy, the only one in the
region. From 2001, when the country teetered on the brink of
an inter-ethnic civil war, to today, when it is at peace,
implementing reforms, and pursuing an ambitious free-market
economic growth and prosperity program, Macedonia has made
tremendous strides. NATO Membership Action Plan assessments
and separate USG assessments confirm that Macedonia has made
steady progress on meeting NATO standards. The country looks
to the United States for leadership and support, and has
demonstrated that it is a supportive ally and reliable
international partner.

KEY MESSAGES
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2. (SBU) Your visit to Skopje comes as PM Gruevski's
multi-ethnic governing coalition heads down the home stretch
to the NATO Summit at Bucharest, where it hopes to receive a
membership invitation. We are urging Skopje to continue
pursuing the following actions to make it the strongest
possible contender for a NATO invitation, the Macedonian
government's top foreign policy goal:

--Continuing constructive and flexible engagement with UN
Special Negotiator Nimetz toward a solution to the name
issue, which will benefit Macedonia, Greece, and the region;

--Continuing respect for the 1995 Interim Agreement between
Greece and Macedonia on the name issue;

--Continuing anti-corruption efforts, as demonstrated through
non-partisan arrests and prosecutions; and

--Continuing work with the opposition on implementation of
the Framework Agreement (FWA) and the May 29 agreement.

NATO MEMBERSHIP: A COMPETITIVE CANDIDATE
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3. (SBU) Macedonia is a competitive candidate for membership
given its strong performance on defense reforms, its
increased contributions to NATO operations in Afghanistan and
it years of contributing special forces troops to coalition
efforts in Iraq. It has made solid progress on economic
growth (just over 5 percent GDP growth in 2007),has
intensified efforts to combat trafficking in persons, and
passed a religious freedom law in 2007 that is arguably the
most liberal in the region and guarantees all religious
communities and groups the right to register and worship
freely. Public support for NATO membership is consistently
high (90 percent),with strong parliamentary consensus in
support of that goal. The government has accelerated
anti-corruption efforts, and Macedonia jumped 21 points on
the Transparency International corruption perceptions index
last year.

NAME ISSUE: WORKING TOWARD A COMPROMISE
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4. (SBU) A bilateral name dispute with neighboring Greece --
though not a NATO membership criterion -- remains the single
largest obstacle to Macedonia's NATO membership prospects.
Greece has threatened to veto Macedonia's NATO membership
invitation unless Skopje agrees to a compromise on the name
on Greece's terms (changing its constitutional name).
Greece's position is at odds with its undertaking, per the
1995 Interim Agreement, not to prevent Skopje's entry into
international institutions so long as Skopje agreed to do so
under the provisional "former Yugoslav Republic of
Macedonia." Skopje's counter-offer is a "dual name"
proposal, under which it would keep its constitutional name
for bilateral and international use, while offering a
mutually-acceptable name for use with Athens. We have
encouraged both sides to show greater flexibility in working
with UN Special Negotiator Nimetz to find a compromise
solution; the Macedonian government has indicated it will
give serious consideration to any proposal from Nimetz.


SKOPJE 00000109 002 OF 002


FWA IMPLEMENTATION AND MAY 29 AGREEMENT: STEADY PROGRESS
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5. (U) The government has stated its commitment to full
implementation of the 2001 Framework Agreement (FWA) that
ended the inter-ethnic conflict in Macedonia that same year.
In fact, all FWA-required legislative requirements have been
met since 2006 and inter-ethnic relations are good.
Implementation of decentralization (the devolution of power
from the central government to local governments) was
launched in 2005, and equitable representation of ethnic
minorities in public administration has progressed steadily.
The challenge for this government is to build on what was
achieved by its predecessor and to fully implement
decentralization and equitable representation in a
non-partisan manner.


6. (SBU) PM Gruevski's VMRO party and the ethnic Albanian
opposition DUI party (the largest ethnic Albanian party in
Macedonia) reached an agreement on May 29, 2007, that
returned DUI to parliament following a boycott and committed
PM Gruevski to more specific FWA implementation. Three of
the five key requirements of that agreement have been
implemented. The remaining two requirements -- a package of
social benefits for victims of the 2001 conflict and a draft
law on the use of languages -- are being addressed in working
groups. We are urging the government to set a start date for
implementing the social benefits package, and are working
with both sides to reach agreement on a draft language law.

KOSOVO: CONSTRUCTIVE PARTNER
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7. (SBU) Macedonia's position on Kosovo final status is
closely aligned with ours -- support for UN Special Envoy
Ahtisaari's plan for Kosovo status, which adequately resolves
the question of demarcation of the Macedonia-Kosovo border.
(NOTE: The border was delineated, but not demarcated, in a
2001 agreement between Belgrade and Skopje, which Pristina
rejected due to the fact that a sliver of Kosovo's territory
was ceded to Macedonia in that agreement.) Relations overall
are excellent, and Skopje has worked closely with Pristina to
offset a potential Serb blockade after Kosovo declares
independence. The GOM has indicated it does not want to rush
a decision on recognition of an independent Kosovo, as it
tries to balance relations with Belgrade and Pristina. At
the same time, it is determined not to be among the last
countries to do so, given the importance of gaining
Pristina's confidence prior to beginning the process of
border demarcation.

ECONOMIC REFORM AND GROWTH PROGRESS
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8. (U) Macedonia is showing positive economic performance,
with the country recently ranked by the World Bank as one of
the top 10 "most improved" countries in carrying out business
environment reforms. PM Gruevski has raised public sector
wages and cut VAT rates on some key consumer items, which has
helped keep his poll numbers strong. Starting in 2008,
personal and corporate tax rates fell from 12 percent to 10
percent (flat tax),one of the lowest tax rates in Europe.
The government hopes to succeed in attracting additional
foreign direct investment to support its efforts to tackle
unemployment, officially at over 37 percent.
MILOVANOVIC