Macedonia, a Free Nation on the Move

Macedonia, a Free Nation on the Move

(Photo credit: Government of the Republic of Macedonia)

Two months after Nikola Gruevski, the right-wing Macedonian nationalist and leader of the VMRO-DPMNE party, was reelected Prime Minister, he went on a trip around East Asia to promote foreign direct investment in the landlocked republic in order to tackle what might be the most serious problem of his new term in office – unemployment. He stopped in Hong Kong on 3 July and spoke at an evening function, the Financial Times-organised global series Investing in Macedonia. His trip then took him to Tokyo, Seoul and Guangzhou in Mainland China

Aspiring to get Macedonia into the EU and NATO (“we deserve it”, as he put it) and holding high the pride of being the country of Alexander the Great, Gruevski was a rising political star in the 1990s. Born on 31 August 1970, he made the first transaction on Macedonia’s stock exchange when the country abandoned communism – he had already become Finance minister by 1999 at the age of 29. He has led the VMRO party since 2003, making him the second youngest head of government across Europe when his party, comprised mostly of ethnic Macedonians, won the 2006 elections.

Macedonia, home to ethnic Macedonian majorities of Orthodox Christians and a sizeable number of Muslim Albanians, was annexed into the post-war socialist Yugoslavia, and became entangled in the republic’s violent fall when dictator Josip Tito died in 1980. The only country amongst former Yugoslav republics that avoided bloodshed in the independence process when Milosevic’s killing was most severe, Macedonia peacefully seceded from Yugoslavia in 1991. In 1993, when the Bosnian war displaced millions on the peninsula and Sarajevo was under siege by Milosevic-sponsored Bosnia Serbs, Macedonia was admitted into the UN. The country has been an EU and NATO candidate since 2005.

China was also a visiting destination of the Prime Minister during his first term in office. In June 2013 Gruevski met with Xi Jinping in Beijing, barely half a year after Xi had taken over the Chinese Communist Party. During this meeting, both sides pledged to further promote close bilateral relations in various areas, including Chinese investment in Macedonia. On that same occasion, Gruevski also took part in a summit between China and Central and Eastern European Countries in Chongqing.

However, relations between the two nations were not always as friendly and smooth as they are today. In December 1993, when Sarajevo was under siege, the new-born republic set up an embassy in China following its recognition of Taiwan as an inalienable part of the People’s Republic China. In the meantime, Milosevic’s aggression in the post-Yugoslav Balkans devastated Macedonia’s economy and left hundreds of thousands in the two-million-population country unemployed. Taiwan’s promise of US$ 1 billion in investment made the country take a U-turn on its stance, and establish diplomatic relations with Taiwan in January 1999. Furious, Beijing vetoed the renewal of the UN peace-keeping mission in the country at the UN Security Council, the same year Milosevic’s troops were looting and killing in Kosovo. Had it not been because of the NATO bombings and the subsequent passing of Resolution 1244 under international pressure, the very existence of Macedonia could have been at stake. Comprehending China’s international influence and Taiwan’s inability to keep its investment promises, ties between China and Macedonia were restored in 2001.

Macedonia’s route to peace and democracy was not without trouble. UNHCR estimates that during the 1998-99 Kosovo war, a total of 244,500 people fled into the neighbouring Macedonia. At the same time, around 12,000 NATO soldiers were stationed on the Macedonian-Serbian border to prevent Milosevic moving further south. “If it were not for the NATO forces stationed on the border, the very existence of Macedonia could have been a problem”, remarked Frank Ching, Wall Street Journal’s first Beijing bureau chief and an associate professor at the Chinese University of Hong Kong. In the spring of 2001, ethnic conflicts between Albanian minorities dominating the northwestern part of the country and Macedonia’s security forces almost ignited a full-scale civil war. Thanks to the Ohrid Framework Agreement, signed by both sides in August 2011, Macedonia entered another golden area of peace and development. Nevertheless, Gruevski had to deal with a large-scale Albanian protest in response to a controversial court verdict the first day upon his return from this month’s one-week investment promotion trip.

Economy and investment were high on the Prime Minister’s agenda during his East Asian tour. Described as “an investment destination still under the radar” by the Hong Kong function’s host, Financial Times publication fDi Magazine Editor-in-Chief Courtney Fingar, Macedonia’s unemployment rate registered at 31.2 percent in 2012, according to the IMF. Although it dropped slightly to 30.02 percent in 2013, many remain poor, destitute and homeless. But Gruevski seems determined to turn the tide around. According to the Prime Minister, Macedonia ranked 25th on the World Bank’s Ease of Doing Business Index in 2013, up from the 94th position in 2006, when he took office. Still fighting for space and recognition in the international areana, Macedonia puts high emphasis on education, spending around 6 percent of national GDP on it, according to Gruevski, who went on to say that education until secondary school is free of charge int he country and English is taught throughout primary and secondary school. Gruevski also emphasised Macedonia’s economic achievements on the first quarter of this year – in the three-month period immediately before April’s general election, when 61 out of the now 123 seats in the Assembly went to his party, unemployment dropped to 26 percent and GDP growth rate was the highest in Europe at 3.9 percent. Other remarks made by Gruevski to encourage FDI include the country’s low taxes (10 percent personal income tax and 10 percent corporate profit tax), free trade zone arrangements (no tax for 10 years) and streamlined bureaucratic procedures in dealing with foreign investment.

A high level panel discussion followed Gruevski’s keynote speech, which included his cabinet and a few foreign conglomerates that have already invested in the country, such as Yazaki North America, KEMET Corporation or the Weibo Group. While Deputy Prime Minister Stavreski detailed the tax and immigration benefits for investing in his country, the three tycoons all praised the approachability and extensive knowledge of international business operations of Macedonian government officials, which became obvious when the final presenter, Viktor Mizo, Chief Executive Officer of Macedonia’s Free Zones Authority, said: “you come here not for the love of us and the country, you come here to make money.”

Investing in Macedonia is a year-long Financial Times Live event themed “putting capital to work in south-east Europe” and spanning eleven cities across the globe. It is co-organised by the Government of the Republic of Macedonia and the Financial Times publication fDi Magazine.

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