MACEDONIA: HDAC CODEL SCENESETTER (CODEL PRICE)

UNCLAS SKOPJE 000171

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EUR/SCE

E.O. 12958: N/A
TAGS: PGOV MK NATO GR
SUBJECT: MACEDONIA: HDAC CODEL SCENESETTER (CODEL PRICE)


OVERVIEW: MULTI-ETHNIC DEMOCRACY, NATO CONTENDER
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1. (SBU) Ambassador Gillian Milovanovic and the embassy team
warmly welcome you to the Republic of Macedonia, a strong
NATO membership contender and the only multi-ethnic democracy
in the region. Macedonia has made tremendous strides from
2001, when the country teetered on the brink of an
inter-ethnic civil war. Today, it is at peace, implementing
reforms, and pursuing an ambitious free-market economic
growth and prosperity program. NATO Membership Action Plan
assessments and separate USG assessments confirm that
Macedonia has made steady progress and now substantially meet
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, the Macedonian government's top
foreign policy goal. We are urging Skopje to continue
pursuing the following actions to make it the strongest
possible contender:

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

--Respect for the 1995 Interim Agreement between Greece and
Macedonia;

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

--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
its 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, guaranteeing 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 commitment, per the
1995 Interim Agreement, not/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; recent discussions between the Macedonian and Greek
negotiators in New York, with Nimetz mediating, resulted in
little movement toward a mutually acceptable solution.

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 measures.
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 foster 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.
NAVRATIL