About the CBI

February 2006
Background Note: Macedonia

Flag of Macedonia is a yellow sun with eight broadening rays extending to the
edges of the red field.

PROFILE

OFFICIAL NAME:
Republic of Macedonia

Geography
Area: 25,713 square km. (slightly larger than Vermont).
Cities (2001 est.): Capital--Skopje 600,000; Tetovo, Kumanovo, Gostivar and
Bitola 100,000+.
Geography: Situated in the southern region of the Balkan Peninsula, Macedonia
is landlocked and mountainous.
Climate: Three climatic types overlap--Mediterranean; moderately continental;
and mountainous, producing hot, dry summers and cold, snowy winters.

People
Population (July 2004 est.): 2,071,210.
Growth rate (2003 est.): 0.4%.
Ethnic groups (2002): Macedonian 64.18%, Albanian 25.17%, Turkish 3.85%, Roma
2.66%, Serb 1.78%.
Religions: Eastern Orthodox 65%, Muslim 29%, Catholic 4% and others 2%.
Languages: Macedonian 70%, Albanian 21%, Turkish 3%, Serbo-Croatian 3%, and
others 3%.
Education: Years compulsory--8. Literacy--94.6%.
Health (2001 est.): Infant mortality rate--12.95 deaths/per 1,000 live
births. Life expectancy--males 71.79 years; females 76.43 years.
Work force (2003): 860,976; employed 545,108: services--32.6%; industry and
commerce--45.4%; agriculture--22.0%.

Government
Type: Parliamentary democracy.
Constitution: Adopted November 17, 1991; effective November 20, 1991.
Independence: September 8, 1991 (from Yugoslavia).
Branches: Executive--prime minister (head of government), council of
ministers (cabinet), president (head of state). Legislative--unicameral
parliament or Sobranie (120 members elected by popular vote to 4-year terms
from party lists based on the percentage parties gain of the overall vote in
each of the six election units). Judicial--Supreme Court, Republican Judicial
Council, Constitutional Court of the Republic of Macedonia, Public
Prosecutor's Office, Public Attorney. Legal system is based on civil law
system; judicial review of legislative acts.
Subdivisions: 84 opstini (municipalities) plus the city of Skopje.
Suffrage: Universal at age 18.
Main political parties: Social-Democratic Union of Macedonia (SDSM); Internal
Macedonian Revolutionary Organization-Democratic Party for Macedonian
National Unity (VMRO-DPMNE); Internal Macedonian Revolutionary
Organization-People's Party (VMRO-NP); Democratic Union for Integration
(DUI); Democratic Party of Albanians (DPA); Party for Democratic Prosperity
(PDP); National Democratic Party (NDP); Liberal-Democratic Party (LDP);
Socialist Party of Macedonia (SPM); Liberal Party (LP); Democratic
Alternative (DA); Democratic Union (DU); Democratic Party of the Turks in
Macedonia (DPTM); Democratic League of Bosniaks; Democratic Party of Serbs in
Macedonia, United Party of Romas in Macedonia; Democratic Union of Vlachs
from Macedonia; Labor-Agricultural Party of Macedonia, Socialist-Christian
Party of Macedonia; Green Party of Macedonia.

Economy (As of July 1, 2005)
GDP: $5,072 billion.
Per capita GDP: $2,570 (est.).
Real GDP growth: 3.7%.
Inflation rate: 0.2%.
Unemployment rate: 37.4%.
Trade: Significant exports--steel, textile products, chromium, lead, zinc,
nickel, tobacco, lamb, and wine.
Official exchange rate (2004 avg.): 49.4 Macedonian denars = U.S.$1.

GEOGRAPHY
Macedonia is located in the heart of south central Europe. It shares a border
with Greece to the south, Bulgaria to the east, Serbia and Montenegro (Serbia
and Kosovo) to the north, and Albania to the west. The country is 80%
mountainous, rising to its highest point at Mt. Korab (peak 2,764 m).

PEOPLE
Since the end of the Second World War, Macedonia's population has grown
steadily, with the greatest increases occurring in the ethnic Albanian
community. From 1953 through the time of the latest official census in 2002
(initial official results were released December 2003), the percentage of
Albanians living in Macedonia rose 313%. The western part of the country,
where most ethnic Albanians live, is the most heavily populated, with
approximately 40% of the total population. Due to population growth and as
part of former communist industrial policy, more people have moved into the
cities in search of employment. Macedonia also experienced sustained high
rates of emigration.

HISTORY
Throughout its history, the present-day territory of Macedonia has been a
crossroads for both traders and conquerors moving between the European
continent and Asia Minor. Each of these transiting powers left its mark upon
the region, giving rise to a rich and varied cultural and historical
tradition.

The ancient territory of Macedon included, in addition to the areas of the
present-day Macedonia, large parts of present-day northern Greece and
southwestern Bulgaria. This ancient kingdom reached its height during the
reign of Alexander III ("the Great"), who extended Macedon's influence over
most of Asia Minor, the Levant, Egypt, Mesopotamia, Persia, and even parts of
India. After Alexander's death in 323 BC, the Macedon Empire gradually
declined, until Rome conquered it in 168 BC and made it a province in 148 BC.

After the fall of the Western Roman Empire, the territory of Macedonia fell
under the control of the Byzantine Empire in the 6th and 7th centuries. It
was during this period that large groups of Slavic people migrated to the
Balkan region. The Serbs, Bulgarians, and Byzantines fought for control of
Macedonia until the late 14th century, when the Ottoman Turks conquered the
territory; it remained under Turkish rule until 1912.

After more than four centuries of rule, Ottoman power in the region began to
wane, and by the middle of the 19th century, Greece, Bulgaria, and Serbia
were competing for influence in the territory. During this time, a
nationalist movement emerged and grew in Macedonia. The latter half of the
19th century was marked by sporadic nationalist uprisings, culminating in the
Ilinden Uprising of August 2, 1903. Macedonian revolutionaries liberated the
town of Krushevo and established the short-lived Republic of Krushevo, which
was put down by Ottoman forces after 10 days. Following Ottoman Turkey's
defeat by the allied Balkan countries--Bulgaria, Serbia, Montenegro, and
Greece--during the First Balkan War in autumn 1912, the same allies fought
the Second Balkan War over the division of Macedonia. The August 1913 Treaty
of Bucharest ended this conflict by dividing the territory between Bulgaria,
Greece, and Serbia. The 1919 Treaty of Versailles sanctioned partitioning
Macedonia between The Kingdom of Serbs, Croats and Slovenes, Bulgaria, and
Greece. In the wake of the First World War, Vardarian Macedonia (the present
day area of Macedonia) was incorporated into the newly formed Kingdom of
Serbs, Croats, and Slovenes.

Throughout much of the Second World War, Bulgaria and Italy occupied
Macedonia. Many people joined partisan movements during this time and
succeeded in liberating the region in late 1944. Following the war, Macedonia
became one of the constituent republics of the new Socialist Federal Republic
of Yugoslavia under Marshall Tito. During this period, Macedonian culture and
language flourished.

As communism fell throughout Eastern Europe in the late 20th century,
Macedonia followed its other federation partners and declared its
independence from Yugoslavia in late 1991. The new Macedonian constitution
took effect November 20, 1991 and called for a system of government based on
a parliamentary democracy. The first democratically elected coalition
government was led by Prime Minister Branko Crvenkovski of the Social
Democratic Union of Macedonia (SDSM) and included the ethnic Albanian Party
for Democratic Prosperity (PDP). Kiro Gligorov became the first President of
an independent Macedonia.

President Gligorov was the first president of a former Yugoslav republic to
relinquish office. In accordance with the terms of the Macedonian
constitution, his presidency ended in November 1999 after 8 years in office,
which included surviving a car bombing assassination attempt in 1995. He was
succeeded by former Deputy Foreign Minister Boris Trajkovski (VMRO), who
defeated Tito Petkovski (SDSM) in a second-round run-off election for the
presidency November 14, 1999. Trajkovski's election was confirmed by a
December 5, 1999 partial re-vote in 230 polling stations, which the
Macedonian Supreme Court mandated due to election irregularities.

Macedonia was the only republic of the former Yugoslavia whose secession in
1991 was not clouded by ethnic or other armed conflict, although the ethnic
Albanian population declined to participate in the referendum on
independence. During the Yugoslav period, Macedonian ethnic identity
exhibited itself, in that most of Macedonia's Slavic population identified
themselves as Macedonians, while several minority groups, in particular
ethnic Albanians, sought to retain their own distinct political culture and
language. Although interethnic tensions simmered under Yugoslav authority and
during the first decade of its independence, the country avoided ethnically
motivated conflict until several years after independence.

In November 1998 parliamentary elections, the SDSM lost its majority. A new
coalition government emerged under the leadership of Prime Minister Ljubco
Georgievski of the Internal Macedonian Revolutionary Organization-Democratic
Party for Macedonian National Unity (VMRO-DPMNE). The initial coalition
included the ethnic Albanian Democratic Party of Albanians (DPA).

Ethnic minority grievances, which had erupted on occasion (1995 and 1997),
rapidly began to gain political currency in late 2000, leading many in the
ethnic Albanian community in Macedonia to question their minority protection
under, and participation in, the government. Tensions erupted into open
hostilities in Macedonia in February 2001, when a group of ethnic Albanians
near the Kosovo border carried out armed provocations that soon escalated
into an insurgency. Purporting to fight for greater civil rights for ethnic
Albanians in Macedonia, the group seized territory and launched attacks
against government forces. Many observers ascribed other motives to the
so-called National Liberation Army (NLA), including support for criminality
and the assertion of political control over affected areas. The insurgency
spread through northern and western Macedonia during the first half of 2001.
Under international mediation, a cease-fire was brokered in July 2001, and
the government coalition was expanded in July 2001 to include the major
opposition parties.

The expanded coalition of ruling ethnic Macedonian and ethnic Albanian
political leaders, with facilitation by U.S. and European Union (EU)
diplomats, negotiated and then signed the Ohrid Framework Agreement in August
2001, which brought an end to the fighting. The agreement called for
implementation of constitutional and legislative changes, which lay the
foundation for improved civil rights for minority groups. The Macedonian
parliament adopted the constitutional changes outlined in the accord in
November 2001. The grand coalition disbanded following the signing of the
Ohrid Framework Agreement and the passage of new constitutional amendments. A
coalition led by Prime Minister Georgievski, including DPA and several
smaller parties, finished out the parliamentary term.

In September 2002 elections, an SDSM-led pre-election coalition won half of
the 120 seats in parliament. Branko Crvenkovski was elected Prime Minister in
coalition with the ethnic Albanian Democratic Union for Integration (DUI)
party and the Liberal-Democratic Party (LDP).

On February 26, 2004 President Trajkovski died in a plane crash in Bosnia.
Presidential elections were held April 14 and 28, 2004. Then-Prime Minister
Branko Crvenkovski won the second round and was inaugurated President on May
12, 2004. The parliament confirmed Hari Kostov, former Interior Minister, as
Prime Minister June 2, 2004. Prime Minister Kostov resigned November 15,
2004. On December 17, 2004, former Defense Minister Vlado Buckovski was
confirmed by parliament as Prime Minister, maintaining the coalition with the
ethnic Albanian Democratic Union for Integration (DUI) and the
Liberal-Democratic (LDP) parties.

With international assistance, the current governing coalition has completed
the legislative implementation of the Ohrid Framework Agreement, which is a
precondition for Macedonia's integration into Euro-Atlantic institutions. A
referendum scheduled for November 7, 2004, which would have delayed
completion of this process, failed, freeing the way for the government to
complete Framework Agreement implementation. The government continues to make
significant strides on the practical implementation of the Agreement.

GOVERNMENT AND POLITICAL CONDITIONS
The unicameral assembly (Sobranie) consists of 120 seats. Members are elected
by popular vote from party lists, based on the percentage parties gain of the
overall vote in each of six election districts of 20 seats each. Members of
parliament have a 4-year mandate.

The prime minister is the head of government and is selected by the party or
coalition that gains a majority of seats in parliament. The prime minister
and other ministers must not be members of parliament.

The president represents Macedonia at home and abroad. He is the commander in
chief of the armed forces of Macedonia and heads its Security Council. The
president is elected by general, direct ballot and has a term of 5 years,
with the right to one re-election.

General parliamentary elections were last held on September 15, 2002.
Presidential elections were held April 14 and 28, 2004 to succeed President
Trajkovski, who died in office in February 2004. Local elections on the basis
of a new municipal division mandated by the Framework Agreement were held in
March-April 2005.

The court system consists of a Supreme Court, Constitutional Court, and local
and appeals courts. The Republic Judicial Council is composed of 7 members
elected by parliament for a period of 6 years with the right to one
re-election; it governs the ethical conduct of judges and recommends to
parliament the election of judges. The Supreme Court is the highest court in
the country and is responsible for the equal administration of laws by all
courts. Its judges are appointed by parliament without time limit. The
Constitutional Court is responsible for the protection of constitutional and
legal rights and for resolving conflicts of power between the three branches
of government. Its 9 judges are appointed by parliament with a mandate of 9
years, without the possibility of re-election. An independent Public
Prosecutor is appointed by parliament with a 6-year mandate.

Principal Government Officials
President--Branko Crvenkovski
Prime Minister--Vlado Buckovski
Deputy Prime Minister (EU Integration)--Radmila Sekerinska
Deputy Prime Minister (Economic planning)--Minco Jordanov
Deputy Prime Minister (Framework Agreement Implementation)--Musa Xhaferi
Foreign Minister--Ilinka Mitreva
Defense Minister--Jovan Manasievski
Economy Minister--Fatmir Besimi
Finance Minister--Nikola Popovski
Interior Minister--Ljubomir Mihajlovski
Justice Minister--Meri Mladenovska
Ambassador to the United States--Nikola Dimitrov
Ambassador to the United Nations--Igor Dzundev

The country maintains an embassy in the United States at 1101 30 Street, NW,
Suite 302, Washington, DC 20007 (tel: (202) 337-3063; fax: (202) 337-3093).

ECONOMY
Macedonia is a small economy with a gross domestic product (GDP) of about
$5.1 billion, representing about 0.01% of the total world output. It also is
an open economy, highly integrated into international trade, with a total
trade-to-GDP ratio of 90.2%. Agriculture and industry have been the two most
important sectors of the economy, but the services sector has gained
prominence in the past few years. Like most transition economies, problems
persist, even as Macedonia takes steps toward reform. A largely obsolete
industrial infrastructure has not seen much investment during the transition
period. Work force education and skills are competitive, but without adequate
job opportunities, many with the best skills seek employment abroad. A low
standard of living, high unemployment rate, and relatively low economic
growth rate are the central economic problems.

Five years of continuous economic expansion in Macedonia was interrupted by
the 2001 conflict, which led to a contraction of 4.5% in 2001. Growth started
to pick up in 2003 (3.4%) and continued in 2004 (2.9%) and the first half of
2005 (3.7%). Living standards still lag behind those enjoyed before
independence. In 2005, real growth is projected to reach 3.8% with inflation
of up to 1.5%. The United States is supporting Macedonia's transition to a
democratic, secure, market-oriented society with substantial amounts of
assistance.

Background
After the breakup of Yugoslavia in 1991, Macedonia, the former Yugoslavia's
poorest republic, faced formidable economic challenges posed by both the
transition to a market economy and a difficult regional situation. The
breakup deprived Macedonia of key protected markets and large transfer
payments from the central Yugoslav government. The war in Bosnia,
international sanctions on Serbia, and the 1999 crisis in neighboring Kosovo
delivered successive shocks to Macedonia's trade-dependent economy. The
government's painful but necessary structural reforms and macroeconomic
stabilization program generated additional economic dislocation. Macedonia's
economy was hurt especially by a trade embargo imposed by Greece in February
1994 in a dispute over the country's name, flag, and constitution, and by
international trade sanctions against Serbia that were not suspended until a
month after conclusion of the Dayton Accords. The impact of the 2001 ethnic
Albanian insurgency in Macedonia, decreased international demand for
Macedonian products, canceled contracts in the textile and iron and steel
industry, and poor restructuring of the private sector affected Macedonia's
growth and foreign trade prospects through 2004. An international donors
conference, organized by the World Bank and the European Commission, was held
March 12, 2002, at which donors pledged $275 million to assist in covering
Macedonia's projected budget gap, implementing Framework Agreement reforms,
and re-energizing the Macedonian economy.

Although concerns stemming from the 2001 conflict linger, all constitutional
changes and legislation mandated by the internationally mediated Framework
Agreement have been implemented, and Macedonia's political and security
situation is stable. This has allowed the government to refocus energies on
domestic reforms, boosting economic growth, and attracting increased levels
of foreign investment. In 2004, the government passed a progressive Trade
Companies Law aimed at easing impediments to foreign investment, providing
tax and investment incentives, and guaranteeing shareholder rights. The
government's progress on structural economic reforms slowed in 2004 as the
country faced another series of challenges--the death of President
Trajkovski, resulting early presidential elections, a contentious debate over
Framework Agreement-mandated decentralization legislation, and a polarizing
referendum on new municipal boundaries, which took place November 7, 2004.

Macroeconomy
Real GDP in the first half of 2005 grew by 3.7%, following 2.9% growth in
2004. That growth was mainly driven by the re-opening of a few loss-making
companies and by strong exports of primary metals. Industrial output rose
dramatically in the first half of 2005, increasing by 9.3%. The annualized
consumer price index (CPI) at the end-year rose by 0.2%. The official
unemployment rate climbed to 37.4%. A conservative fiscal policy maintained a
budget deficit of -0.1% during the first half of 2005; the government's
target is -0.6% for 2005. Monetary policy also remained conservative, which
provided little room for credit expansion. Exports grew faster than imports
in the first half of 2005, narrowing the trade deficit to 10.6% of GDP, and
reducing the current account deficit to about 2.1% of GDP. External debt
remained stable at 35.2% of GDP.

In late 2005, Macedonian authorities concluded a new Stand-By Arrangement
with the IMF and a Programmatic Development Policy Loan (PDPL) with the World
Bank.

Trade
Macedonia remains committed to pursuing membership in European and global
economic structures. It became a full World Trade Organization (WTO) member
in April 2003. Following a 1997 cooperation agreement with the European Union
(EU), Macedonia signed a Stabilization and Association Agreement with the EU
in April 2001, giving Macedonia duty-free access to European markets.
Macedonia has had a foreign trade deficit since 1994, which reached a record
high of $1,229 million in 2004. Total 2004 trade (imports plus exports of
goods and services) was $4.58 billion, or 90.2% of GDP. Macedonia's major
trading partners are Serbia and Montenegro, Germany, and Greece. The United
States is Macedonia's eleventh-largest trading partner. In 2004,
U.S.-Macedonia trade in goods totaled $119.8 million. According to Macedonian
trade data, U.S. exports accounted for 1.6% of Macedonia's total imports.
U.S. meat, mainly poultry, and electrical machinery have been particularly
attractive to Macedonian importers. Principal Macedonian exports to the
United States are tobacco, apparel, footwear, and iron and steel.

Macedonia has signed Free Trade Agreements with Albania, Bosnia and
Herzegovina, Serbia and Montenegro, Bulgaria, Croatia, Ukraine, Slovenia,
Turkey, Romania, and the European Free Trade Association countries. It also
has signed an Interim Free Trade Agreement with the UN Mission in Kosovo.

DEFENSE
Macedonia established its armed forces following independence and the
complete withdrawal of the Yugoslav National Army (JNA) in March 1992. The
Macedonian Armed Forces consist of an army, navy, air and air defense force,
and a police force (under the Ministry of Interior). Under its North Atlantic
Treaty Organization (NATO) Membership Action Plan, Macedonia has launched a
major effort to reform and reconstruct its armed forces with the goal of
building and sustaining a modern, professional defense force of about 12,000
troops.

Since its independence in 1991, Macedonia has worked toward increased ties
with the transatlantic community. Despite the fragile political, economic,
and military situation in the region over the past decade, Macedonia has
provided consistent support for NATO. Macedonia is engaged in military,
economic, and political reforms to enhance its security and NATO candidacy,
although the security crisis of 2001 represented a setback to those efforts.
The Government of Macedonia plans to assume greater responsibility for its
share of ensuring the security of the region without reliance on an
international military presence. Successive Macedonian governments have
viewed integration into Euro-Atlantic political, economic, and security
institutions as the country's primary foreign policy goal. In pursuit of
these goals, Macedonia is restructuring its military to be smaller, more
affordable, defensively oriented, and interoperable with NATO. The Macedonian
Government has welcomed close cooperation with the U.S. military and seeks to
deepen this relationship as it restructures its forces.

The UN Preventive Deployment Force (UNPREDEP) in Macedonia patrolled the
borders with Serbia and Albania from 1992 to November 1998, enhancing
Macedonian stability. In early December 1998, the Macedonian Government
approved local basing of the NATO Extraction Force (XFOR) and the Kosovo
Verification Coordination Cell (KVCC), in anticipation of a political
resolution of the Kosovo crisis, also contributing to Macedonia's safety and
stability. Prior to the bombing campaign in Yugoslavia in March 1999, the
number of NATO troops in Macedonia peaked at 17,000.

In the wake of the 2001 insurgency in Macedonia, at the government's request,
NATO deployed Task Forces "Essential Harvest," then "Amber Fox," and later
"Allied Harmony" in Macedonia in confidence-building tasks and protection for
Organization for Security and Cooperation in Europe (OSCE) monitors in the
former conflict area. Task Force Essential Harvest collected more than 4,000
weapons from the National Liberation Army (NLA) in a confidence-building
effort to restore stability within Macedonia. "Amber Fox" (June through
December 2002) and its smaller successor "Allied Harmony" (January to March
2003) worked with Macedonian security forces to ensure the safety of
international monitors overseeing Framework Agreement implementation in
Macedonia. On March 31, 2003, the EU (EUFOR) took over this role from NATO
with the launch of "Operation Concordia," which ended December 15, 2003. At
the Macedonian Government's request, the EU established a Police Advisory
Mission in Macedonia in December 2003 to assist the country's police reforms.
The mission, Proxima, has been extended through December 2005.

Macedonia continues to play an indispensable role as the Kosovo Force's
(KFOR) rear area, hosting the logistical supply line for KFOR troops in
Kosovo. As part of these efforts, Macedonia hosts about 150 NATO troops,
including U.S. troops, in support of NATO operations in Kosovo and assisting
Macedonia's efforts to reform its military to meet NATO standards. Due to
improvements in the security situation and U.S. KFOR drawdowns in Kosovo, the
United States closed its Camp Able Sentry base in Macedonia in December 2002.
Close U.S.-Macedonian bilateral defense cooperation continues. Macedonia also
contributes troops to coalition operations in Iraq and Afghanistan.

FOREIGN RELATIONS
In February 1994, Greece imposed a trade embargo on Macedonia due to disputes
over the use of the name "Macedonia" and other issues. Greece and Macedonia
signed an interim accord in October 1995 ending the embargo and opening the
way to diplomatic recognition and increased trade. After signing the
agreement with Greece, Macedonia joined the Council of Europe, the
Organization for Security and Cooperation in Europe (OSCE), and NATO's
Partnership for Peace (PfP). Athens and Skopje began talks on the name issue
in New York under UN auspices in December 1995, opening liaison offices in
respective capitals January 1996. These talks continue.

The stability of the young state was gravely tested during the 1999 Kosovo
crisis, when Macedonia temporarily hosted about 360,000 refugees from the
violence and ethnic cleansing in Kosovo, as Serb atrocities against Kosovar
Albanians and other minority groups caused a mass exodus. The refugee influx
put significant stress on Macedonia's weak social infrastructure. With the
help of NATO and the international community, Macedonia ultimately was able
to accommodate the influx. Following the resolution of the conflict, the
overwhelming majority of refugees returned to Kosovo. The Macedonian
Government demonstrated a strong commitment to regional stability as an
essential partner during the Kosovo crisis.

In addition to improving relations with its neighbors, Macedonia has made
strides toward European and international integration, especially with the EU
and NATO. Macedonia is an active participant in NATO's Partnership for Peace
and Membership Action Plan, the OSCE, and United Nations, and was accepted as
a member of the World Trade Organization (WTO) in October 2002. In 1999, the
EU agreed to develop a Stabilization and Association Agreement (SAA) with
Macedonia; negotiations with Macedonia were launched April 5, 2000. The SAA
was signed April 2001 and came into force in April 2004. Its trade and
trade-related provisions have been in force since June 2001. For Macedonia to
successfully integrate within the global arena, continued efforts to
strengthen its multi-ethnic civil society institutions, to develop measures
to promote economic growth and investment, and to foster strong indigenous
non-governmental organizations are necessary. On November 9, 2005 the
European Commission issued an "avis" on Macedonia's EU membership candidacy
in which it recommended EU candidate status for the country. It recommended
beginning formal accession negotiations after Macedonia has made further
progress on a number of reform fronts, including combating corruption;
enacting judicial, administrative, and economic reforms; and conducting free
and fair parliamentary elections, in accordance with European standards, in
2006.

U.S.-MACEDONIAN RELATIONS
The United States and Macedonia have enjoyed good bilateral relations since
Macedonia gained its independence in 1991. The United States formally
recognized Macedonia on February 8, 1994, and the two countries established
full diplomatic relations on September 13, 1995. The U.S. Liaison Office was
upgraded to an Embassy in February 1996, and the first U.S. Ambassador to
Skopje arrived in July 1996. The development of political relations between
the United States and Macedonia has ushered in a whole host of other contacts
between the two states.

During the 1999 Kosovo crisis, Macedonia played a key role in facilitating
U.S. and international efforts in the region by accepting hundreds of
thousands of refugees, served as a launching pad for allied military efforts,
and functioned as the long-term conduit for humanitarian assistance programs
and military logistics for Kosovo. The United States, together with its
European allies, strongly condemned the initiators of the 2001 insurgency in
Macedonia and closely supported the government and major parties' successful
efforts to forge a peaceful, political solution to the crisis through the
Ohrid Framework Agreement. In partnership with the EU and other international
organizations active in Macedonia, the United States is facilitating the
Macedonian Government's implementation of the Framework Agreement and
fostering long-term peace and stability in the country. Macedonia continues
to make an important contribution to regional stability by facilitating the
logistical supply of NATO (including U.S.) peacekeepers in Kosovo.

Today, Macedonia and the United States enjoy a cooperative relationship
across a broad range of political, economic, cultural, military, and social
issues. The United States supports Macedonia's aspirations to build a
democratically secure and market-oriented society, and has donated large
amounts of foreign assistance for military reform, democracy and economic
reform, and humanitarian relief efforts. The United States pledged $6 million
in debt relief and $22 million in Economic Support Funds to Macedonia in 1999
to help offset the strains of the Kosovo crisis. The United States provided
an estimated $35 million to Macedonia to help host communities cope with
refugee inflows. In addition, the United States helped reduce the refugee
impact on Macedonia by resettling in the United States more than 13,000
persons through the Humanitarian Evacuation Program. Bilateral assistance
budgeted to Macedonia under the Support Europe Economic Development (SEED)
Act totaled over $320 million from 1990 to 2004, including budget support and
other assistance to help Macedonia recover from the 2001 crisis. Macedonia
received approximately $37 million in SEED Act assistance in 2005.

U.S. Agency for International Development's (USAID) programs in Macedonia
promote accelerated growth, support stronger democratic institutions, and
help educate Macedonians for a modern economy. A key focus of U.S. assistance
is helping Macedonia implement the August 2001 Framework Agreement;
implementing the decentralization provision is a priority. USAID is targeting
capacity building for local government officials, who will have more
authority and responsibility devolved from the central government, as well as
providing grants to fund small-scale infrastructure projects.

A further priority of U.S. assistance is to facilitate Macedonia's transition
to a market economy and increase employment and growth levels. USAID has
identified and is now assisting the five most competitive sub-sectors of
Macedonia's economy. USAID also helps Macedonian enterprises through business
resource centers, improved access to credit and equity, trade and investment
facilitation, and training. Programs target improvements in the
business-enabling environment by helping to bring legislative and regulatory
frameworks in line with EU standards and improving the transparency and
efficiency of government services through technology. A resident U.S.
Department of Treasury advisor is assisting the Ministry of Finance improve
strategy, planning and execution, and public expenditure management.

USAID is working to strengthen Macedonia's non-governmental organization
(NGO) and community networks, encourage judicial reform, in particular by
modernizing court administration, and build capacity and transparency of the
parliament and local governments. USAID has helped strengthen the State
Election Commission's capacity to administer elections and supported domestic
NGO election monitoring of the spring 2005 municipal elections. A U.S.
Department of Justice Resident Legal Advisor focuses on strengthening the
independence of the judiciary, efficacy of public prosecution, reform of
criminal codes, and capacity to fight trafficking in persons and organized
crime.

Complementing its assistance in Macedonia's political and economic
transition, USAID programs improve education and human capacity in Macedonia
through projects on the primary, secondary, and post-secondary levels.
Targets include improving teaching techniques, modernizing vocational
education, providing computer labs in all schools, and expanding broadband
Internet service throughout the country using primary and secondary schools
as a platform. Other programs address crosscutting issues, including
interethnic cooperation, assistance to the Roma minority, corruption, HIV/
AIDS, and trafficking.

Principal U.S. Officials
Ambassador--Gillian Milovanovic
Charge d'Affaires--Paul Wohlers
Political Affairs--Steve Hubler
Economic/Commercial Affairs--Michael Latham
Consul--Kimberly McDonald
Management Affairs--Sarah Solberg
Public Affairs--Michael Orlansky
Defense Attaché--Col. Ulises Soto

The U.S. Embassy in Macedonia is located at Bul. Ilinden bb, 91000 Skopje
(tel: [389] (2) 311-6180; fax: [389] (2) 311-7103).