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As Macedonia’s Political Deadlock Drags On, Economy Slows And Social Costs Mount

Macedonians at yet another protest in March.
Macedonians at yet another protest in March.

Jovan Angelov doesn’t need to close his eyes and think hard to picture what may happen next. He’s seen it before.

As Macedonia plunges deeper into political gridlock, the effects on the economy are starting to seep into the daily lives of ordinary Macedonians like Angelov, a government worker.

“I was in the same situation in 2002 when I was let go from Electro Skopje," he tells RFE/RL's Balkan Service, referring to his dismissal from a state-owned power distributor during struggles the country faced after ethnic tensions brought it to the brink of civil war in 2001. "I expect the same thing now, and I'm afraid."

Tensions have risen more recently in the Balkan state of around 2.1 million, with a Macedonian Slav majority and a large ethnic Albanian minority, as protests over the inclusion of ethnic Albanian partners in a proposed governing coalition led by the Social Democrats enter their seventh week.

Macedonia fell into its current political crisis two years ago amid claims that the governing conservative party, VMRO-DPMNE, led by former Prime Minister Nikola Gruevski, was responsible for the illegal surveillance of some 20,000 people including journalists, politicians, and religious leaders.

VMRO-DPMNE leader Nikola Gruevski
VMRO-DPMNE leader Nikola Gruevski

Massive antigovernment protests led to a European Union mediation effort that created a Special Public Prosecution (SJO) to investigate the wiretapping and the eventual resignation of Gruevski's government.

Despite four snap elections over the next two years, Macedonia, where nearly one in four people is jobless, is no closer to political stability.

"Unfortunately, there is a direct consequence of this instability, and that is the stagnation of the economic growth,” Fatmir Bytyqi, executive director of the Chamber of Commerce of Northwestern Macedonia, tells RFE/RL.

“Businesses are struggling with liquidity problems, with their current business operations, with the inability to pay their debts. And this goes along to include state institutions. Some are being forced to terminate their contracts or make layoffs because they are unable to continue because of such problems."

The nationalist VMRO-DPMNE won 51 seats to the Social Democrats' 49 in the December balloting for 120 mandates in parliament, making it impossible to form a government without parties explicitly representing ethnic Albanians, who compose about one-quarter of the population.

Zoran Zaev, the leader of the opposition Social Democratic Union, has agreed to form a coalition with some ethnic Albanian parties in exchange for accepting their demands for greater rights and the establishment of Albanian as a second official language in certain areas of the country.

But President Gjorge Ivanov, a VMRO-DPMNE ally*, has refused to give Zaev the official mandate to move ahead with the plan. Ivanov has argued that the language issue was an attempt to destroy Macedonia's independence, and he has accused Albania of interference in its domestic affairs.

SDSM leader Zoran Zaev
SDSM leader Zoran Zaev

Stalemate Continues

By the numbers, the Macedonian economy appeared to be holding on despite the turmoil. Economic output increased every year between 2012 and 2015.

But in the second half of last year, growth slowed to 2.2 percent due to investment contraction and weaker credit growth “reflecting political uncertainties,” according to the International Monetary Fund (IMF).

“The economy has endured a number of shocks in the last two years, including a prolonged political crisis,” analysts at the Washington-based IMF said in their most recent report on Macedonia’s economy.

“Growth has so far shown resilience benefiting from accommodative policies, low commodity prices, sustained foreign investment, and improving labor-market conditions. However, the prolonged domestic political crisis is beginning to take a toll on confidence and the country’s EU accession prospects.”

The current crisis is the deepest since diplomatic efforts helped Macedonia avoid a civil war during an ethnic Albanian insurgency in 2001 through promises of eventual European Union and NATO membership.

At a recent EU summit, leaders of the 28-nation bloc said they remain committed to bringing the Balkans into the bloc’s fold. That pledge has taken on even more urgency with Russia’s apparent efforts to increase its influence in the region.

EU Enlargement Commissioner Johannes Hahn urged Macedonia’s leaders on March 21 to rise above the political bickering and form a government as soon as possible to break the deadlock with the “economy hurting.”

One Skopje resident who declined to give his name tells RFE/RL that having endured so much turmoil in recent history, Macedonians have become numb to the pain.

Macedonians Voice Frustrations With 'Constant Crisis'
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“Macedonian citizens are constantly threatened by the financial and economic aspect of these crises. The country is all the time in crisis, from the '90s until today we keep having crises and we keep having problems. The situation just goes from bad to worse,” he says.

To be sure, not everyone is feeling down about the country’s economic prospects.

The IMF noted that economic growth should accelerate this year, though that forecast came with the caveat of stability following the December elections.

Gjokica Bozinovski is confident, too, saying he has little concern about the economic outlook and calling the current crisis “artificial.”

“Despite this forced and artificial political crisis, new investments are coming and the country offers young people favorable conditions to open businesses. I have no fears from it,” he says.
* CORRECTION: This story has been amended from an earlier version to note that President Ivanov is an ally of the VMRO-DPMNE​ rather than a member of that party.
With reporting by Vladimir Kalinski of RFE/RL’s Balkan Service in Skopje