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The Republic of Macedonia
Please note: All linked documents are in PDF format
| Objective |
SO Number |
FY 2004 |
FY 2005 |
FY 2006 |
| Economic Growth |
165-0130 |
10,350 |
12,050 |
13,248 |
| Democracy and Governance Reform |
165-0200 |
11,750 |
11,780 |
10,931 |
| Social Transition |
165-0340 |
8,200 |
7,275 |
8,345 |
| Cross-Cutting Programs |
165-0420 |
4,320 |
3,720 |
3,980 |
| Transfers |
|
4,150 |
2,175 |
2,496 |
| Total (in thousands of dollars) |
38,770 |
37,000 |
39,000 |
|
The Development Challenge:
Macedonia continues the transition to a free market-based, multiethnic democracy, with good governance and social equity. While political will exists, the process has proven difficult and prolonged. As with other former socialist states, the political and economic institutional structures supporting democracy and economic freedom require time to foster and flourish. Weak governmental institutions, ethnic division, high unemployment, and regional instability slow the process. Nonetheless, progress is being made. A political modus vivendi, the Framework Agreement (FWA), halted open ethnic conflict in 2001. Adherence to the framework provides the basis for a stable, multi-ethnic society. In the aftermath of the tragic death of President Boris Trajkovski in an airplane crash, constitutional process was followed and a successor elected in what international observers declared free and fair elections. Inefficiency and corruption remain serious problems in all three branches of government. The checks and balances on all branches of government need to be reinforced. The decentralization plan to devolve power to local government is central to many other reforms and had been stalled by a referendum but is now back on track. The governance process and regulatory framework are being strengthened - incrementally but continuously. Over the longer term, the Macedonian economic outlook is positive; however, it remains the poorest of the former Yugoslav republics. The unemployment rate is over 30%; the gross domestic product has risen at an average rate of only 1% since independence; and the volume of foreign direct investment averaged $451 per capita, one of the lowest in Southeast Europe.
A Europe whole, free, and at peace is the overriding U.S. strategic interest in the Balkan region, 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. The relatively well-educated population, strategic location as a Balkan crossroads, rich farmland, and mineral resources also make Macedonia a potential force for economic growth and stability in the Southern Balkan region. Moreover, Macedonia is working hard to overcome a legacy as the transit route for smugglers, traffickers, and money-launderers. Macedonia supports Operation Enduring Freedom and has troops serving in Iraq and Afghanistan.
The USAID Program:
USAID programs target Macedonia's critical economic, social, and democratic needs and are interrelated and mutually supportive. As a result of USAID assistance, better financial market regulation and integrity is creating investor confidence and better capital allocation. Working with the private sector, USAID has identified the five sectors with the highest growth potential and will increase competitiveness as well as add value to agriculture, food processing, artisan enterprises, and small business. The credit programs targeted to small and medium enterprises have helped create and retain jobs in this critical segment of the economy. For larger firms, better corporate governance and raising accounting standards are the goals. USAID programs are supporting the Ministry of Education to improve quality in primary and secondary schools, modernize curricula and teaching methods as well as offering special programs to attract and retain Roma, the most marginalized ethnic group in Macedonia. Systemic improvements in education will boost productivity and improve economic opportunity in all sectors of the economy. The support to the first private multiethnic university in Macedonia has prompted changes in the state-run university system. More effective, responsive, and transparent government, with increased devolution of authority to local government, is helping move government closer to the citizens. Parliamentary skills, procedures, and constituent responsiveness are continuing to improve. Court reform -- reducing backlogs, streamlining procedures, providing greater independence for the judiciary and better trained court personnel - is furthering social justice and facilitating commerce and investment. USAID and non-governmental organizations (NGOs) are helping communities to work together on small-scale infrastructure improvement projects as well as building capacity to lobby for needed reforms. The introduction and expansion of information, communication, and technology in business, government, and schools is a crosscutting theme.
Other Program Elements:
The Europe and Eurasia Bureau funds several regional projects. Eight grants were made to Macedonian NGOs in 2004 to strengthen democratic governance and promote political, social, and economic development. The Strengthening the Youth Sector Program builds youth NGOs in South Eastern European countries through grants, coaching, mentoring and workshops. So far Macedonia has received 11 grants for youth NGOs, and 27 NGOs have participated in training and workshops. A regional property tax policy forum was co-hosted in Skopje. This was the first time that local mayor associations, government officials, and experts from the former Yugoslavia came together to share fiscal decentralization experiences and challenges with a focus on property valuation and tax systems. The Hungarian American Partnership Initiative organized two study tours for Macedonian representatives to learn from Hungary's transition to European Union (EU) membership. The Federation of Trade Unions of Macedonia is participating in the Balkan Regional Labor Education's Network program, implemented by the American Center for International Labor Solidarity, which promotes multi-national cooperation among Balkan labor unions.
Three projects relate to Stability Pact objectives. The American Bar Association's Central and East European Law Institute provides technical and financial assistance to Macedonia and six other Southeastern European states under the Anti-Corruption Initiative, organizing training programs and public awareness campaigns. Cross-Border Cooperation and Reconciliation implemented by Catholic Relief Services promotes inter-ethnic reconciliation and local democracy through sub-grant activities responding to common concerns among ethnically diverse border communities. The communities from Kumanovo, Macedonia and Gnjilane, Kosovo are among the first pilot sub-grants. Lastly, the History and Reconciliation in Southeast Europe Project, being implemented by the Center for Democracy and Reconciliation in South East Europe, is developing modern English language teaching materials for history teachers at primary and secondary school levels in the Balkans.
Other Donors: Coordination with other donors is especially important as integration into the European Union is essential to the long term political development and economic prosperity of Macedonia. The national institutions must ultimately be EU-compatible. Accordingly, USAID closely collaborates with European donors in helping to shape these institutions. The EU and the United States are the two largest donors in Macedonia. EU assistance is largely provided through the European Agency for Reconstruction (EAR). The EAR program focus is court reform, local government, and trade liberalization. The Dutch government is the third largest donor and supports primarily education modernization. The World Bank is active in education and financial sector reforms. The German, British, Swiss, and Swedish governments are also active donors. Donor coordination is excellent and programs are consistent and complementary. Several sector specific donor coordination groups have been established in addition to regular meetings hosted by the European Union for donor agencies.
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