SCENESETTER FOR SECRETARY GATES' OCT 7-8 VISIT TO MACEDONIA

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SIPDIS
BELGRADE PLEASE PASS PODGORICA

FOR SECRETARY GATES FROM AMBASSADOR REEKER

E.O. 12958: DECL: 09/30/2028
TAGS: PREL MOPS MK
SUBJECT: SCENESETTER FOR SECRETARY GATES' OCT 7-8 VISIT TO MACEDONIA

CLASSIFIED BY: Ambassador Reeker for reasons1.5 (b) and (d).


1. (S) Summary: Macedonia faces an uncertain international future,
quiet but deep-seated domestic divisions, and an economy still
struggling to reach full potential. Their appreciation for U.S.
support and friendship remains very strong. We have concerns about
recent GoM steps in rule of law, responsible government, and defense
funding and are engaging in concert with the international community
here. Settling the name dispute with Greece is crucial for
Macedonia's NATO and EU aspirations. However, the GoM has made a
number of moves which irritate Greece and make resolution more
difficult. The latest UN ideas offer a chance to close a deal but
this requires new flexibility from both sides. Interethnic relations
are more stable following the election, but there are tensions
between the ruling party and its ethnic Albanian partner. Macedonian
leaders will look to you for assurance of U.S. solidarity, insights
on next steps in Iraq and Afghanistan, and leadership regarding the
challenge from Russia. End summary.


2. (C) I warmly welcome you to Macedonia and look forward to meeting
you in Ohrid. Your visit comes as Macedonia is still struggling to
cope with not being invited to join the Alliance as a result of the
Greek veto at the Bucharest summit in April. PM Gruevski failed to
heed our advice to strive --with President Bush's personal support --
for an immediate agreement with Athens on the name issue. Instead,
Gruevski called snap elections in an effort to boost his majority in
parliament. This succeeded, but election-related violence
(predominantly in ethnic Albanian areas) and irregularities compelled
the international community to conclude that the polls failed to meet
standards. Worse, the campaign and government-formation process
delayed any serious work on the name issue for months, now placing a
NATO invitation in 2008 almost beyond reach. Macedonia is still
actively engaged in UN-led negotiations since Bucharest, but its
leaders are not optimistic that a solution will be reached soon.

Kosovo: Good News Story
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3. (C) Macedonia is preparing to recognize Kosovo, apparently having
stuck to its word to do so once the border demarcation process is
essentially complete. In the face of threats from Serbia, PM
Gruevski has told us that he would prefer to recognize along with
Montenegro (and possibly Portugal) by mid-October. Cooperation
between the Kosovars and Macedonians on demarcation has been good
beyond expectations, and the GoM has been transparent with us while
seeking to minimize the fallout with Belgrade. The Macedonians had
at first been nervous about Kosovo's independence, but now understand
it as a stability multiplier in the region and a way to maintain a
positive dynamic with its own ethnic Albanian population.

Domestic Politics: A Mixed Bag
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4. (SBU) The Gruevski government has misstepped on issues of rule of
law and political dialogue. During the summer the parliament rushed
through over 150 laws using an emergency procedure, snuffing out any
chance for debate. At the same time, the authorities arrested the
main opposition party's Vice President, Zoran Zaev, on corruption
charges, alerting the media in order to subject him to a high-profile
"perp walk," then manipulating the judicial process to ensure he
remained in preventive detention even when the presiding judge
ordered him released. The party, SDSM, walked out of parliament,
only agreeing to return after President Crvenkovski, who himself
hailed from SDSM, pardoned Zaev and refused to sign most of the laws
passed under emergency procedure. (This last move was symbolic, as
these vetoes were easily overridden in parliament.) Needless to say,
poor relations between Gruevski and Crvenkovski have led to both
sides showing more interest in personal politics than in governing.


5. (SBU) More positively, Gruevski's ruling VMRO took the largest
ethnic Albanian party, DUI, on as its coalition partner, and this
partnership has been proceeding relatively well. Gruevski finally
accepted DUI's long-standing demand for a law permitting greater use
of Albanian in official contexts; it passed on July 25 (albeit under
the emergency procedures noted above). Macedonian recognition of
Kosovo -- another key DUI item -- appears imminent. There are
tensions under the surface, however, currently chief among them the
government's decision to proceed with four cases against ethnic
Albanians stemming from the 2001 conflict that the ICTY recently
decided not to pursue further. Most in the Albanian community argue
that under the 2002 amnesty law, the government is not permitted to

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proceed with these cases, some of which implicate the most senior
leadership in DUI. Should these cases proceed further, it could tear
the coalition apart and, more significantly, spark inter-ethnic
tensions. Prolonged exclusion from NATO and the EU would only
exacerbate these problems.

Economy and Defense Budget Issues
--------------


6. (U) If NATO and EU membership remains distant, it will not help an
economy which, though growing, still is struggling to transition.
GDP growth is at about 6%, but unemployment remains high (officially
about 35%, though the gray economy ameliorates this somewhat). The
GoM has pursued a generally sound fiscal policy, though growing trade
and current accounts deficits are putting a strain on the economy
which is compounded by only modest foreign direct investment.


7. (SBU) While the Macedonian leadership still remains committed to
NATO membership and maintaining Alliance standards, the GoM did carry
out a budget rebalancing in June which shifted 11 million Euro from
the Ministry of Defense to Interior. This brought the defense budget
to just below two percent of GDP, not a black and white NATO
requirement but a standard the Macedonians had long touted to show
their commitment to the Alliance. The Defense Minister told NAVEUR
ADM Fitzgerald on Sept. 16 that the GoM was planning to increase his
budget by some 36% (2.4% of GDP).

Recommendations: Solidarity, Georgia, Redeployment from OIF
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8. (U) While here, we recommend you very briefly address the press to
thank the Macedonian people for their contributions to Iraq and
Afghanistan and express continued U.S. solidarity with the country.
Both publicly and privately, you should address Russia's recent
aggression and urge Macedonia to stand by Georgia.


9. (S) The Macedonian leadership responded calmly to the news that
their forces in OIF (75 soldiers, mostly SOF) will not be needed in
Iraq after Dec 31. Washington has encouraged Macedonia to consider
folding some of their OIF contribution into NTM-I, and Macedonia is
positively disposed and actively considering this, indicating that
they have 5-10 qualified trainers who could serve there. Macedonian
leadership will likely be receptive to U.S. requests for increasing
their troop contribution in Afghanistan but will look to us for a
specific request (Macedonia already has 150 troops in ISAF). We
recommend you engage the leadership on this issue. While Macedonia
has domestic problems, its desire to contribute to peace and security
side by side with us remains undiminished.

REEKER