AIM: start

THU, 29 NOV 2001 01:21:23 GMT

Great Expectations

After the adoption of constitutional amendments in an answer to the Albanian demands, Macedonia is trying to make the international community pay it for its cooperativeness. It is insisting on the organisation of the promised Donor Conference in mid December so that the burden of crisis would be somewhat easier to bear in the next year. The hotline between Skopje and Washington finally produced results.

AIM Skopje, November 23, 2001

These days, both ears and eyes of the Macedonian public are turned towards the international community that promised that it would not allow this country, still faced with a military-political crisis through no guilt of its own, to bear this heavy burden alone. After the adoption of constitutional amendments, which grant equal rights to all national minorities, especially the Albanians, the Macedonian politicians have launched an offensive aimed at "collecting payment" for their cooperativeness.

President Boris Trajkovski was the first to pick up the receiver and kindly remind his collocutors, first in Washington and then the others in Brussels, Copenhagen, Oslo, Stockholm, Paris, Bonn and Tokyo of the given promises to help this country get out of the crisis with the least possible damages. According to independent analysts, it is an illusion to expect that the Macedonian war-worn economy will be able to recover soon and become a pillar of future economic progress without a generous financial injection. He, therefore, stated that the meeting of donors willing to loosen the purse-strings must be held by the end of this year, i.e. before Christmas holidays. Only in that case, he emphasised, things could take a turn for the better, so eagerly awaited by everyone here.

The first to promise aid and support to the chief of state was IMF President Horst Coller. However, Mr. Coller reminded that in order for the Donors' Conference to be organised at all, Macedonia had to meet some additional conditions, because it did not conclude an arrangement with this international financial organisations this year. He recommended that negotiations on current macro-economic policy and "disciplined" frameworks for the next year be expedited and that the Government should accept the introduction of control over all income and expenditures of the state budget. A so called "staff monitoring" programme has been prepared for that purpose, according to IMF claims, customary for countries in crisis situation which need foreign financial assistance for recovery. In addition to the adoption of constitutional amendments, the world monetary authorities and bankers, as well as donor countries, demand of Parliament to adopt a Law on Local Self-Government and "tighten the belt" at all levels of public spending. More specifically, the plan is to reduce the budget deficit from USD 700 million to only 72 million. However, national experts openly doubt that the IMF intends to introduce a currency board for Macedonia, which would mean a definite loss of financial power and part of state sovereignty. Nevertheless, they agree that, in view of the country's extremely unenviable position, this would be better than risking being forced to carry the burden of crisis alone with highly uncertain prospects for the future. Therefore, they advised Prime Minister Georgievski not to have any dilemmas, but to quickly meet all the set conditions to the greatest extent possible.

In just a week since the adoption of constitutional amendments, negotiations with representatives of the World Bank, the European Union, USA and Holland have been intensified in Skopje and the basic elements agreed so that there are no more dilemmas. Literally, at the eleventh hour, Macedonia "caught the last train".

According to the official confirmation of both the Macedonian Government and representatives of organisers from the World Bank and the European Union, as well as greatest donor countries, the Donors' Conference for Macedonia will be held in Brussels by December 20, at the latest. Finance Minister Nikola Gruevski optimistically announced that there is a possibility that the Conference might be held even a week earlier, i.e. on December 14, so that some funds could be transferred to the national account in the current year! He also emphasised that Chief of UN Mission Bisvardhi Banerdzi would be coming to Skopje on November 26 so as to prepare technical details with his hosts for the signing of the agreed "staff monitoring" programme, whose implementation is scheduled to start as of January 1, 2002, as well as to agree terms for the start of negotiations on a new stand-by arrangement. His superiors instructed him to complete this task in the shortest possible time. According to Gruevski, this is a good sign which shows the flexibility of world monetary authorities, which is now customary. At the same time, this would be proof enough for donor countries that the money they decide to give this country would be used for macro-economic support, repair of war damages and economic stabilisation, and not for the acquisition of arms (which is very important for them) or end in private hands.

Gruevski also pointed out that already next week the Government would submit to the Macedonian Parliament the drafted Law on Local Self-Government, which parliamentarians would then adopt it within two weeks time. "We must gradually, but without fail reduce the budget for additional USD 9 million by the end of the year", pointed out the first Macedonian financer. Apart from two previous cuts since June and "saved" USD 63 million, as instructed by the international financial policemen, Macedonia would thus fulfil everything that has been asked of it and create conditions for the holding of the many-times announced and then postponed Donors' Conference, which should bring salvation to the country.

Minister Gruevski hoped that Macedonia would finally get what it needs to survive, a minimum of USD 120 million, which is the amount of uncovered budget deficit created by additional defence costs. He hoped for as much fresh money as possible, which less than was promised earlier, but not given because of the war and other reasons. He expressed fear that in Brussels, the donors would try to effect that "old assistance" so as to make the success of the Conference more glamorous.

Gruevski said that in addition to previously promised 45 million Euros Holland has announced another 10 million. Also, on top of the "old" 50 million Euros, the European Commission has prepared an additional package of 18 million in new European banknotes. They hope that this example would be followed by Governments of other countries-potential donors, with whose representatives head of state Boris Trajkovski will hold another preparatory meeting next week in Skopje. The aim is to present to the world as precisely as possible all the damages caused by the war, as well as real needs of the Macedonian economy. The most important thing is that, according to estimates, disagreements with the IMF have been patched up, that there is a good will for flexibility, that all relevant factors, at least openly and declaratively, believe that there are no other political obstacles for the return of peace and stabilisation and that they have every intention of keeping their promises.

This all sounds very well, but only has to be carried! Unfortunately, Macedonia has very bad experience with international conferences and donations, especially those held after the Kosovo crisis. At the Donors' Conference held in Paris in May 1999, it had been promised USD 252 million. Out of that amount USD 125 million was to be granted in the form of credits, USD 25 million for debt rescheduling and 102 million as grant-in-aid. Out of that sum, Skopje received barely 5 billion denars (USD 1 = 68 den).

This "bad luck" is precisely the reason why public is very cautious in its expectations from the forthcoming Donors' Conference, which will most probably be held in the EU Headquarters in Brussels. Some are optimists and convinced that the money will come in time for the repayment of many due credits and repair of war damages. Others do not trust the promises of the world financial potentates. For these "doubting homases" this Donors Conference is just a farce. We should wait and see who was right.