II. Country Assessment--Macedonia


U.S. Government Assistance to Eastern Europe under the Support for East European Democracy (SEED) Act
Bureau of European and Eurasian Affairs
January 2006
Report

Country Overview

Map of MacedoniaCountry Facts

  • Area: 9,781 sq mi (25,333 sq km), slightly larger than Vermont
  • Population: 2,045,262 (July 2005 est.)
  • Population Growth Rate: 0.26% (2005 est.)
  • Life Expectancy: Male 71.28 yrs., Female 76.37 yrs. (2005 est.)
  • Infant Mortality: 10.09 deaths/1,000 live births (2005 est.)
  • Gross Domestic Product (GDP): $14.4 billion (purchasing power parity, 2004 est.)
  • GDP Per Capita Income: $7,100 (purchasing power parity, 2004 est.)
  • Real GDP Growth: 1.3% (2004 est.)

Overview of U.S. Government Assistance

In FY 2005, the USG allocated an estimated $51.04 million in assistance to Macedonia:

  • $13.62 million in democratic reform programs;
  • $12.48 million in economic reform programs;
  • $9.06 million in social reform programs;
  • $12.19 million in security, regional stability, and law enforcement programs; and
  • $3.71 million in cross-sector and other programs.

In FY 2005, a total of 257 Macedonians traveled to the United States on USG-funded exchange programs.

FY 2005 Assistance Overview

U.S. STRATEGIC INTERESTS

A Europe whole, free, and at peace is the overriding U.S. strategic interest in South Central Europe, including Macedonia. Throughout the region, the United States supports continued peace and stability, ethnic reconciliation, neighborly relations among states, development of market-based economies, and integration into Euro-Atlantic institutions. Macedonia's relatively well-educated population, strategic location, and mineral resources make it a potential force for economic growth and stability in the region. Macedonia's ongoing implementation of the 2001 Ohrid Framework Agreement, which improved inter-ethnic relations and decentralized government power, provides an example for other multi-ethnic countries in the region of a peaceful, democratic solution to ensuring minority rights. The Government of Macedonia (GOM) lent its airspace and voice at the United Nations (UN) in support of Operation Enduring Freedom, contributed troops to our coalitions in Iraq and Afghanistan, and continued to provide lines of communication for the operations of NATO's Kosovo Force (KFOR). Macedonia aspires to EU and NATO membership and was granted European Union (EU) candidate country status in December 2005. It is working to reduce its attractiveness as a transit route for smugglers, traffickers, and money-launderers, and to complete its transition from a socialist to a market economy. U.S. interests lie in advancing Macedonia's stability and prosperity by promoting its continued political, judicial, economic, and military reforms.

KEY ISSUES

Since gaining its independence in 1991, Macedonia has struggled to overcome a legacy of socialism and to deal with challenges to its territorial integrity, sovereignty, and state/national identity. Macedonia's economic growth rate was 3.6 percent in FY 2005, and the official unemployment rate remained over 37 percent. In accordance with its International Monetary Fund (IMF) Standby Agreement, the government maintained tight macro-economic and fiscal policy. A corrupt and inefficient judiciary often hampered effective enforcement of rule of law, discouraging foreign direct investment, which increased slightly compared to the preceding year but remains low.

Macedonia is a member of the UN, Organization for Security and Cooperation in Europe (OSCE) and the World Trade Organization (WTO). The GOM signed and ratified an Article 98 agreement with the United States in 2003. Macedonian troops are deployed in Iraq and Afghanistan, serving with distinction alongside U.S. forces.

In February 2001, inter-ethnic tensions turned violent. Following several months of fighting between ethnic Albanian insurgents and government forces, international mediators brokered a ceasefire. In August 2001, ethnic Macedonian and Albanian political leaders signed the Ohrid Framework Agreement (FWA), ending the conflict. The FWA included extensive constitutional and legal measures to address ethnic minority group grievances. By the end of FY 2005, the government had implemented the legislative requirements of the FWA.

Macedonia faced two significant political challenges during FY 2005. The first was a national referendum in November 2004 organized by opponents of the decentralization plan that was an essential element of the FWA. The referendum vote failed, allowing for the successful start in July 2005 of the devolution of selected government powers and funds to local authorities. The USG has provided strong support to local authorities as they have taken on their new responsibilities. Municipal elections in March and April 2005 posed a second political challenge. Although judged by international observers to have been generally successful, the polling was marred by serious irregularities in a number of locations that highlighted systemic weaknesses in Macedonia's democratic system. The Prime Minister resigned in mid-November 2004, citing a lack of political support and alleging government corruption. Transition to a new government was orderly; the Parliament elected current Prime Minister Vlado Buckovski and his cabinet to complete the term of the government, which has been in office since parliamentary elections in September 2002. The next regular parliamentary elections will be held in the summer or fall of 2006.

Public and government attention has now turned toward economic and employment issues, NATO and EU membership, and issues perceived as threats to Macedonian national identity, including the ongoing name dispute with Greece. Macedonia submitted its application for EU membership in 2004 and is working to bring its legislation into conformity with EU standards and to carry out EU membership-related reforms. In December 2005, the European Union granted Macedonia candidate country status. The government and public were disappointed when NATO announced this year that no decisions on enlargement would be made at the next summit in 2006. The government continues to pursue military and NATO-related judicial and economic reforms, with significant U.S. assistance, aspiring to an invitation to NATO membership in 2008.

Economic reform continued in FY 2005. Macedonia maintained good macro-economic stability, with low inflation, a balanced budget, a stable currency, and rising growth. These accomplishments led to a positive country credit rating from Standard and Poor's and other international credit rating agencies. Macedonia also negotiated new three-year agreements with the IMF and World Bank. However, domestic and foreign investment remained relatively low, in large part due to corruption, bureaucratic inefficiency, and poor enforcement of the rule of law. Assistance for economic reform from the international community, including the U.S., EU, World Bank, IMF, European Bank for Reconstruction and Development, and the United Nations Development Program, focused on reforms to strengthen government institutions, to improve the business climate, and to increase Macedonia's competitiveness in regional and global markets.

With substantial U.S. and other international assistance during the past 15 years, Macedonia is on a positive path to consolidating democratic reforms, increasing economic prosperity, and completing its integration into global and regional organizations.

COUNTRY PERFORMANCE MEASURES

Macedonia Democratic Reform

The "radar" or "spider web" graphs below illustrate Macedonia's democratic performance during 2004. Ratings are based on a 1 to 5 scale, with 5 representing the greatest advancement. These charts provide a disaggregated look at each of the indices and are reported to Congress on a regular basis. The gray shaded area represents 2004 performance levels, while the two dark lines indicate how each country compares in its progress vis-�-vis two standards: (1) the average of Romania's and Bulgaria's performance in each indicator as of 2002 (2002 was the year that Romania and Bulgaria - the "threshold countries" - were invited to join NATO and received favorable indications of future EU membership); and, (2) where the country stood in each indicator in 1999. Together, these charts provide a broad picture of where remaining gaps are in a country's performance, and to what extent these gaps are being filled. For more information, including a detailed explanation of each indicator shown in the graph, see USAID/E&E/PO, "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 9 (April 2005). Found online: www.usaid.gov/locations/europe_eurasia/country_progress.

Graph shows electoral process, 3.3; civil society, 3.5; independent media, 2.8; governance/public admin, 3.0; rule of law, 3.0; average of Romania and Bulgaria, 2002; corruption, 2.3.

The graph shows Macedonia's democratic reform scores in 2004* (the gray shaded area) as compared to the average of Romania's and Bulgaria's democratic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.

 

*Actual 2005 not yet available.

Graph shows electoral process, 3.3; civil society, 3.5; independent media, 2.8; governance/public admin, 3.0; rule of law, 3.0; 1999; corruption, 2.3.

The graph shows Albania's democratic reform scores in 2004* (the gray shaded area) as compared to its democratic reform scores in 1999. For example, Macedonia has made progress in two of the six areas with the greatest in Rule of Law.

 

*Actual 2005 scores not yet available.

 

Macedonia Economic Reform

The "radar" or "spider web" graphs below illustrate Macedonia's economic performance during 2004. Ratings are based on a 1 to 5 scale, with 5 representing the greatest advancement. These charts provide a disaggregated look at each of the indices and are reported to Congress on a regular basis. The gray shaded area represents 2004 performance levels, while the two dark line indicates how each country compares in its progress vis-�-vis two standards: (1) the average of Romania's and Bulgaria's performance in each indicator as of 2002 (2002 was the year that Romania and Bulgaria - the "threshold countries" - were invited to join NATO and received favorable indications of future EU membership); and (2) where the country stood in each indicator in 1999. Together, these charts provide a broad picture of where remaining gaps are in a country's performance, and to what extent these gaps are being filled. For more information, including a detailed explanation of each indicator shown in the graph, see USAID/E&E/PO, "Monitoring Country Progress in Central and Eastern Europe & Eurasia," No. 9 (April 2005). Found online: www.usaid.gov/locations/europe_eurasia/country_progress/.

Graph shows private sector share, 3.5; export share of GDP, 1.5; 1999; FDI per capita cumulative, 2.5; GDP as percent 89 GDP, 2.5; 3 year average inflation, 5.0; external debt percent GDP, 3.5.

The graph shows Albania's economic reform scores in 2004* (the gray shaded area) as compared to the average of Romania's and Bulgaria's economic reform scores in 2002 (the bold line) when they were invited to join NATO and received favorable indications of future EU membership.

 

*Actual 2005 scores not yet available.

 

 Graph shows private sector share, 3.5; export share of GDP, 1.5; 1999; FDI per capita cumulative, 2.5; GDP as percent 89 GDP, 2.5; 3 year average inflation, 5.0; external debt percent GDP, 3.5.

The graph shows Albania's economic reform scores in 2004* (the gray shaded area) as compared to its economic reform scores in 1999. For example, Macedonia has made the greatest progress in the Private Sector Share.

 

*Actual 2005 scores not yet available.

 

 

FY 2005 Country Program Performance

Democratic Reform

Macedonia continued to pursue democratic reform in 2005. The GOM completed the key legislative requirements derived from the 2001 Ohrid FWA. The GOM conducted a referendum on decentralization in late 2004, and held local elections in the spring of 2005. Although generally well administered by the State Election Commission, the local elections were marred by serious political irregularities in a number of locations, calling into question the strength of the democratic system. In July, the central government began devolving authority and funding to local municipal governments.

Macedonia's parliament and judicial institutions increasingly are exercising their roles as independent branches of a balanced democracy. For the first time, the Parliament originated legislation and amended legislation introduced by the Executive branch. Despite this progress, public decision-making continues to be dominated by a limited political elite and a patron-client political regime directed by the Executive branch. This year's public opinion survey showed continued public disillusionment with the government; only 33.9 percent found the government effective. A majority of the public believes the government is corrupt and that there is no transparency in public decision making.

U.S. ASSISTANCE PRIORITIES

USG assistance in the area of democratic reform and governance focused on increasing citizen participation in political and social decision-making, making democratic institutions more effective and transparent, strengthening an independent and responsible media, and improving the effectiveness and accountability of local governments. The USG is committed to assisting Macedonia in completing implementation of the FWA and achieving the standards necessary for NATO and EU membership.

PROGRAM PERFORMANCE

Local elections in March 2005, conducted with support from the USG and other international donors, coincided with preparations for government decentralization. Although well administered by the State Election Commission, the elections were marred by serious irregularities, including reports of ballot box stuffing, intimidation, and voter list problems that tarnished Macedonia's democratic credentials. However, the election results generally were accepted, and new mayors were elected in 85 percent of municipalities.

USG coordination of international donor efforts led to the development of a unified introductory training program for all mayors and council members prior to the beginning of decentralization in July 2005. This training involved all relevant Macedonian Government agencies and international donors. In partnership with the EU, the USG is leading capacity building for municipal officials across Macedonia in core competencies, such as finance and tax administration, urban planning, basic services, economic development, and citizen participation.

The Parliament reached unprecedented levels of transparency and effectiveness with committees holding legislative, investigative, and oversight public hearings that provided citizens with access to the legislative process. Approximately 40,000 citizens visited constituent offices of Members of Parliament that opened throughout the country. Plenary sessions and committee meetings were televised for the first time on the new Parliamentary TV channel, and all draft legislation and parliamentary debate was made available via the internet. The U.S. is the only international donor working with the Parliament to help carry out these activities.

The Democracy Commission Small Grants Program, administered through the U.S. Embassy's Public Affairs Section, supported 17 projects in FY 2005. The themes of the projects included: improving inter-ethnic relations; teaching democratic principles; supporting independent media; and strengthening non-governmental organizations (NGOs). For example, one project supported a program on Skopje's only bilingual radio that brings together Albanian and Macedonian professionals in the same fields to discuss their work. In addition to its educational content, the program demonstrates that the participants share similar experiences and challenges, regardless of ethnicity.

The USG sent six media professionals to professional development training for an entire academic year at U.S. universities. In the course of the training, the participants learned how independent, responsible media function as an invaluable element of democratic societies.

The USG also sent a Macedonian judge to Bratislava to receive a "Champion of Freedom" award from President Bush. The judge had resisted political pressure to allow manipulation of parliamentary election results in 2002. The Macedonian media covered the event hosted by President Bush, highlighting a case in which democratic principles trumped partisan political pressure.

Peace Corps volunteers assisted democratic reform through their work with non-governmental organizations and municipalities. The volunteers assisted these organizations in learning how to design and manage projects. Volunteers also organized and led a series of summer camps for children of all ethnic groups in Macedonia, helping them understand their common interests, concerns and experiences.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.

Please find below an important indicator in the area of Democratic Reform. In the chart, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year. "CY" stands for "calendar year," or January 1 - December 31.

Performance Indicator: Judicial Framework and Independence Rating. This indicator highlights judicial reform including judicial independence and administrative capacity, constitutional reform, the status of ethnic minority rights, guarantees of equality before the law, treatment of suspects and prisoners, and compliance with judicial decisions. (7-point scale: 1 is the highest, 7 is the lowest). Source: Freedom House, Nations in Transit 2005. This volume covers events from January through December 2004. Found online: www.freedomhouse.org/research/nattransit.htm.

CY 2003 Baseline

CY 2004 Rank

CY 2005 Target

CY 2005 Rank

4.50

4.00

4.00

3.75

Macedonia has shown some improvement for 2004, when the country applied to join the EU and recognized the need for substantial change. In April 2004, the Minister of Justice announced that his team was working on a package of legal amendments that would provide a framework essential for the successful reform of the system. USG assistance will continue to work with the all levels of the government as well as NGO's to strengthen judicial capacity and effectiveness.

Economic Reform

Macedonia has been successful in establishing and maintaining macroeconomic stability, with low inflation (.05 percent in 2005) and low external debt. However, unemployment rates of over 37 percent, low foreign investment, and low single digit growth rates (about 3.6 percent for 2005) leave little political maneuver room to address economic issues. While Macedonia has made progress on passing economic reform legislation, the implementation of these reforms has lagged. Effectively, there has been little progress in reducing poverty and increasing employment. The security crisis in 2001 and its aftermath complicated matters by discouraging investment and focusing government energies on actions to defuse the inter-ethnic situation, including implementation of the FWA. Major resources were also devoted to the political process of EU accession. U.S. assistance programs, the EU decision on Macedonia's candidate status, and new three-year programs with both the IMF and World Bank should provide continued political and practical support for the necessary economic reforms.

U.S. ASSISTANCE PRIORITIES

USG assistance to accelerate private-sector development and growth focused on improving economic policy and the business environment, improving private sector competitiveness, increasing agricultural sector productivity, strengthening the financial services sector, and increasing access to capital. The USG also assisted Macedonia in the process of developing and executing the GOM's budget.

PROGRAM PERFORMANCE

USG economic and business development assistance focused on policy and legal reform. Assistance was provided in drafting and enacting commercial legislation, and public education on corporate governance and shareholder awareness. Excellent cooperation was achieved with the EU, as well as with the World Bank, IMF, and Dutch and German bilateral donors. The USG also assisted the GOM in meeting commitments arising from WTO membership. A trade coordination mechanism was introduced and a major effort was devoted to reforming the telecommunications sector. Sophisticated Information and Communications Technology (ICT) tools were provided and government-to-government, business, and citizen ICT-based services soon will be introduced.

Private sector competitiveness continues to be a major focus of USG assistance. With USG support, the National Entrepreneurship and Competitiveness Council is gradually becoming a major national partner and player in improving competitiveness. This council is a private-public partnership aimed at creating a more competitive economy. Five industry groups ("clusters") receiving USG support have shown increased understanding of competitiveness concepts and the benefits of working together. Several export consortiums were formed to address client preferences for larger production capacities, flexibility, and quick response. Exports from the cluster groups increased between 25 percent and 400 percent over the past year.

The business sector is expanding the use of ICT through seven business centers that provide innovative solutions and services to entire industries, such as Computer Aided Design/Computer Aided Management (CAD/CAM) services to the apparel, footwear and machine tool industry, web portals for the tourism and apparel industry and management training centers. The USG is also having considerable success expanding local employment opportunities by increasing the competitiveness of craft-based businesses in local, regional, and export markets through business training, product development, and market access. Local and export sales for craft enterprises increased by 520 percent in 2005.

Agricultural sector productivity was enhanced through a Seal of Quality and agribusiness assistance program that introduced food quality standards and assisted the sheep industry with exports of meat and cheese. Dairies exported more cheese in the first quarter of 2005 than they did in all of 2004. A poultry industry development project successfully demonstrated the feasibility of local production of fresh poultry through a public-private partnership with two local companies. Six hundred thousand chickens were brought to market and 140 new jobs were created.

With major USG assistance, most of the institutions required of a modern financial sector are now in place, have been established on a sound organizational basis, and function with relative efficiency. USG programs were successful in significantly strengthening the capital markets necessary for a modern, open economy.

USG activities providing financing to small and medium companies continue to successfully fill a gap in the Macedonian financial sector by providing innovative and unique financial instruments. One microfinance institution mobilized more than $1 million in rural savings in 2005. Overall, USG supported credit funds provided loans totaling $20 million during the year.

A USG advisor helped the Ministry of Finance develop a government budget and treasury system to better plan and execute fiscal policies. The advisor provided technical assistance and training to help the GOM implement its budget and treasury system. SEED assistance to Macedonia in the economic reform sector is slated to phase out in 2010.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how USG assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.

Please find below two important indicators in the area of Economic Reform. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year. "CY" stands for "calendar year," or January 1 - December 31.


Performance Indicator: Second Stage Economic Reforms Average. Measures five economic indicators: enterprise governance, competition policy, banking reform, capital market reform, and infrastructure reform analyzed in the "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, #9 April 2005, drawing from EBRD, Transition Report. The 2005 rank is based on 2005 data. Ratings are based on a 1 to 5 scale, with 5 being most advanced. Found online: inside.usaid.gov/EE/po/mcp.html.

FY 2003 Baseline

FY 2004 Rank

FY 2005 Target

FY 2005 Rank

2.2

2.2

2.5

2.2

High unemployment continues to deter overall improvement in the indicator. Priority USG programs will continue to work to support economic reform and growth with specific emphasis on competitiveness to attract foreign direct investment and increase private sector employment.

Social Reform and Humanitarian Assistance

The need to implement major economic and political reforms, and the GOM's focus on EU integration, have detracted from the country's capacity for sustained social reforms. As Macedonia works toward EU accession, it must continue to improve the quality of its education system, increase access for minority and disadvantaged populations, and ensure that what is taught in primary and secondary schools is relevant to the needs of the 21st century marketplace. The high rate of unemployment for Macedonian youth (over 40 percent) is of particular concern. The national and international success of Macedonia will be directly determined by the country's ability to provide quality education at all levels, develop research, reinforce creativity and innovation, promote interethnic cooperation, and facilitate citizens' use of information technology.

U.S. ASSISTANCE PRIORITIES

The USG implemented programs designed to increase quality, access, and relevance in education. Interventions at all levels of education for the Roma disadvantaged group provide equitable access to quality education for the Roma community. The integration of information technology in primary and secondary education has created a revolution: Macedonia is becoming known as the first "wireless country" with affordable broadband Internet connectivity in all its schools. In line with decentralization in education, USG assistance is working to professionalize and depoliticize the role of school directors through an extensive management training program leading to the certification of directors.

PROGRAM PERFORMANCE

The USG's initiative in vocational secondary education has succeeded in building stronger linkages between schools and business communities by establishing career centers, virtual firms and real companies in schools. During 2005, 50 career centers, 12 virtual firms, and 44 real companies were established in vocational schools.

Information and Communications Technology (ICT) has been established in all primary and secondary schools through cooperation between the Chinese Government and the USG. A Chinese Government donation of 5,300 computers equipped 460 schools with computer labs. The USG provided Internet access to these computers and training to the teachers. The extensive ICT training of teachers will improve the quality of teaching and learning, and will prepare students to enter the 21st century labor market. The ICT training also provides an arena where ethnic Albanian and Macedonian students and teachers in ethnically-mixed schools can collaborate and communicate.

The USG is strengthening the quality of higher education at the multi-ethnic and multi-lingual South East European University through its support of the Business Administration and Communications Science and Technology faculties. Improving the business management, communications, and computer skills of students is providing them with employable skills to compete in the job market. The USG is also assisting pre-service teacher training institutions to improve the quality of teaching and learning by introducing interactive methods.

Thirty-two Peace Corps volunteers worked in primary and secondary schools throughout Macedonia. The volunteers instructed over 6,200 children in English and led programs to train teachers in interactive teaching methods and incorporating ICT in classroom instruction. SEED assistance in the social sector is slated to phase out in 2010.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.

Please find below an important indicator in the area of Social Reform and Humanitarian Assistance. In the chart, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year. "CY" stands for "calendar year," or January 1 - December 31.

Performance Indicator: Secondary School Enrollment. Source: "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, #9 April 2005, drawing from UNICEF, Social Monitor 2004, World Bank, World Bank Development Indicators 2004 and EBRD, Transition Report 2004. Ratings are based on a 1 to 5 scale, with 5 representing most advanced. The 2005 rank is based on 2004 data. Found online: www.inside.usaid.gov/EE/po/mcp.html.

FY 2002 Baseline

FY 2004 Rank

FY 2005 Target

FY 2005 Rank

3.0

3.0

3.5

3.0

While the FY 2005 rank, which is based on FY 2004 data, does not indicate a positive change, in fact, USG support did contribute to the increase in educational opportunities for ethnic minorities.

Security, Regional Stability and Law Enforcement

Macedonia made a number of advances in the area of security, stability and law enforcement in 2005. Completion of the legislative requirements of the FWA cemented the country's stability and reinforced the willingness of different ethnic groups to adhere to democratic processes. Macedonia continued to participate in the global war on terror, with military personnel serving in coalition operations in Iraq and Afghanistan. The Ministry of Justice developed and approved a comprehensive Judicial Sector Reform Strategy that will increase the effectiveness and transparency of the judiciary and define their program to reach EU standards. The Macedonian Parliament passed a number of important laws in the area of security and law enforcement, including the first export control law on potential dual use technology. However, rule of law remains inconsistent in Macedonia due to widespread corruption and weak legal and law enforcement institutions plagued by limited resources, low salaries, and insufficient training and equipment.

U.S. ASSISTANCE PRIORITIES

USG assistance in the security and law enforcement area are designed to help prepare Macedonia for NATO membership and to strengthen rule of law. USG-funded programs target corruption, organized crime, and trafficking in persons. Prosecutorial training is: strengthening the independence of the judiciary; enhancing the efficacy of public prosecutors; promoting the reform of the substantive and procedural criminal codes of law; and encouraging cooperation between prosecutors and the police. The program is also strengthening Macedonia's institutional capacity to stop the trafficking of women and children across its borders. The Export Control and Related Border Security (EXBS) Assistance Program is providing training and materials to thwart proliferation of materials with weapons-of-mass-destruction (WMD) and ballistic missile applications through an effective export control regime. Foreign Military Financing (FMF) and International Military Education and Training (IMET) funding support military reform to bolster Macedonia's NATO candidacy and have enhanced the Macedonian military's ability to interoperate with NATO-member forces in regional exercises, as well as in Iraq and Afghanistan.

PROGRAM PERFORMANCE

In FY 2005, the USG and the international community continued to support programs focused on controlling cross-border crime, strengthening the rule of law, fighting corruption, and preparing the Macedonian military for potential NATO accession. In FY 2005, the USG provided training to law enforcement officials, prosecutors, and judges in the areas of money laundering and financial crimes, corruption, trafficking in persons (TIP), and organized crime. The USG also provided support in drafting constitutional amendments (adopted in FY 2006) to strengthen the independence of the judiciary from political influence.

USG assistance provided seminars and workshops during the year for police, prosecutors, judges and forensic experts on organized crime, human trafficking, implementing law enforcement task forces, money laundering, narcotics, corporate criminal liability, cyber crime, weapons of mass destruction, and sentencing and legislative reform. Programs included legal study tours to the U.S. for prosecutors and judges.

USG assistance supported a number of GOM law enforcement actions, including: passage of a law on witness protection; adoption of a memorandum of cooperation between a number of Macedonian law enforcement agencies on developing and prosecuting organized crime and corruption cases; the creation of a regional prosecutors' network, including Macedonia, Croatia, Bosnia-Herzegovina, Albania, and Serbia and Montenegro; adoption of a Code of Ethics for Prosecutors; and passage of the Laws on Enforcement and Civil Procedure, that will greatly reduce the backlog of cases managed by the civil courts and improve enforcement of judicial decisions, including contracts.

USG assistance supported the Border Police and the Customs Administration in detecting and deterring illicit movement of WMD and conventional weapons through specialized training and equipment donations. EXBS provided the Customs Administration with equipment to help detect and intercept smuggled weapons, including two vans with mobile X-ray scanners, radio communication equipment, and protective equipment to protect against potential chemical or biological weapons. Macedonian police, customs officers, health workers, and members of the Ministry of Defense participated in USG-funded training in detecting and responding to WMD. With USG technical assistance, Macedonia adopted its first law on export control of potential dual use technology. This provides the legal foundation for regulating exports of technology that could potentially be used for proliferation or terrorist purposes. The GOM also strengthened the law enforcement powers of customs officers, increasing their effectiveness.

In addition, USG assistance supported the regional World Bank/U.S. co-sponsored Trade and Transport Facilitation in Southeast Europe (TTFSE) Program, which works to facilitate trade in the region. TTFSE promotes more efficient, less costly trade flows across the borders of participating states by developing EU-compatible customs standards. The project supports the implementation of ongoing customs reforms that focus on integrated solutions at selected pilot sites located on main European corridors. The program's goal is to increase the productivity of border agencies and reduce processing time and lines at border crossing stations. The customs reforms and pilot site border crossings are supported through funding for infrastructure upgrades, such as updated computer systems, training, and other essential programs. This program was completed in FY 2005.

Much of the USG's Foreign Military Financing (FMF) for Macedonia is directed at enhancing the capabilities and deployability of Macedonian forces in support of international peacekeeping and coalition missions in Iraq and Afghanistan. Without FMF support, Macedonia would be hard-pressed to maintain its commitment to supporting U.S. forces deployed in these countries. Additionally, almost 40 percent of FMF is targeted to improving the operations of special-capabilities units. Macedonia also has continued to use FMF to support two defense reform projects that provide close guidance and support in the areas of Officer and Non-Commissioned Officer (NCO) career development, force structure transformation, training, and the development of formal programs of instruction. The project has been successful in helping Macedonia meet its NATO reform targets, specifically in encouraging the transition to a lighter, more flexible, professional force. FMF also financed radios and other equipment to afford Macedonian forces better interoperability with NATO-country forces during regional exercises and with coalition forces in Iraq. Under the International Military Education and Training (IMET) program, 50 Macedonian officers and NCOs, ranging from Sergeants to Generals, broadened their military education in the United States. SEED assistance in the security and law enforcement sector in Macedonia is slated to phase out in 2011.

MEASURES OF PROGRAM EFFECTIVENESS

In order to determine how U.S. Government assistance affects a country, U.S. embassies set targets for improvement called "performance indicators." Data for these indicators are collected by research institutes, embassies and international organizations. By examining data over time, U.S. policymakers better understand whether specific assistance programs are making their intended impact and, if necessary, how to adjust these programs to improve the impact.

Please find below two important indicators in the area of Security, Regional Stability and Law Enforcement. In the charts, the "Baseline" refers to a starting point from which to measure progress or regression over time. The embassy and its partner organizations then agree on a "Target" figure that they hope to achieve as a result of U.S. assistance programs. The "Rank" figure is the resulting measurement. "FY" stands for "fiscal year," the period of the U.S. budget that runs from October 1 - September 30 of the following year. "CY" stands for "calendar year, or January 1 - December 31.

Performance Indicator: Constitutional, Legislative, and Judicial Framework Rating. This indicator highlights constitutional reform, human rights protections, criminal code reform, judicial independence, the status of ethnic minority rights, guarantees of equality before the law, treatment of suspects and prisoners, and compliance with judicial decisions. (7-point scale: 1 is the highest, 7 is the lowest). Source: Freedom House, Nations in Transit 2005. This volume covers events from January through December 2004. Found online: www.freedomhouse.org/research/nattransit.htm.

CY 2003 Baseline

CY 2004 Rank

CY 2005 Target

CY 2005 Rank

4.50

4.00

4.00

3.75


Macedonia's continued improvement on this scale reflects the GOM's efforts, supported by USG assistance, to increase judicial independence and improve the professional conduct of police, prosecutors, and judges.

Performance Indicator: Trafficking in Persons Country Ranking. The annual Trafficking in Persons (TIP) Report includes those countries determined to be countries of origin, transit, or destination for a significant number of victims of severe forms of trafficking. The Report rates countries as Tier 1, Tier 2, Tier 2 Watch List, or Tier 3. Tier 1 reflects countries whose governments fully comply with the Trafficking Victims Protection Act 2000 minimum standards; Tier 2 reflects countries whose governments do not fully comply with the Act's minimum standards but are making significant efforts to achieve compliance with those standards; Tier 2 Special Watch List is the same as Tier 2 but also denotes a deteriorating trafficking environment (i.e. the absolute number of victims of severe forms of trafficking is very significant or is significantly increasing); and Tier 3: Countries whose governments do not fully comply with the minimum standards and are not making significant efforts to do so. Source: State Department TIP Report 2005. Found online: www.state.gov/j/tip/rls/tiprpt/2005/.

CY 2003 Baseline

CY 2004

CY 2005 Target

CY 2005 Rank

Tier 1

Tier 1

Tier 1

Tier 2

With USG assistance, Macedonia continued to prosecute TIP cases, bringing 52 cases to court and securing indictments against 113 persons. Macedonia also provided shelter and resources to TIP victims, and worked with NGOs to publicize the risks of TIP. Nevertheless, the Government's lack of appreciable progress in aggressively attacking the trafficking problem led to a classification of Tier 2.



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