Travel Report - March 2011, Macedonia

Skopje, the capital of Macedonia, looks terrific. Along the Vardar River, the government is building a three-story-high monument to Aleksander Macedon (Aleksander the Great); a museum to commemorate VMRO (Internal Macedonian Revolutionary Organization), its ruling party; another museum to memorialize the victims of Communism; a very impressive court building designed in classical Greek style; and an imposing multi-story building for the Ministry of Culture. In addition, it is erecting numerous sculptures in the city’s center.Altogether the government has budgeted about $300 million for these projects.Wonderful, no?NO!!Macedonia has a 37 percent unemployment rate. Thirty percent of the population lives below the poverty line.Politicians claim the unemployment rate is exaggerated; they say many of those who are listed as technically unemployed do in fact work part-time jobs for cash.How cynical. The truth is that those “part-time workers” stand on street corners hoping someone will hire them for an hour or two of physical labor. They are paid very low wages, and of course such jobs are not guaranteed or even steady.Picking up a few bucks from time to time is not, to my mind, being employed.Why is the government fiddling as Macedonia burns?According to one government official I spoke with, the projects were started at a time when the economy was doing well. The financial crisis arrived unexpectedly, when it was too late to stop the projects.Hmm. I challenge that.Another politician told me that the projects are creating jobs, thus battling unemployment.This explanation is based on Keynesian economic that in economic hard times, governments should create jobs even if those jobs involve digging ditches and then filling them up again. In addition to providing employment, it will pump money into the market.I hope Keynes did not mean it literally. Those ditches are non-productive. It makes far more sense to build up a business base, by giving credit to start-up enterprises. Foreign investments which could have dealt with the unemployment problem are not pouring in.I have advised the Macedonian government that investors are unlikely to be drawn to a market where there is a high rate of unemployment, and 30 percent live below the poverty line––even if that market comprises two million people. There simply is not enough purchasing power, not enough of a market.If there is any foreign investment at all, it will be attracted by the prospect of cheap labor. And those investors will want to maintain the societal conditions in which cheap labor remains cheap, rather than work to improve the workers’ quality of life. Eventually, the labor situation will become more and more unstable, until eventually workers start to stage strikes. In China, this is happening already.The best strategy is to create a vibrant local market by building up the citizens’ purchasing power. For that, credit is necessary.There is no shortage of entrepreneurial spirit in Macedonia. The problem is finding enough capital to put that spirit to work.But instead of plowing every available dollar into funding start-up businesses, the government has chosen to spend its limited resources on showpiece buildings. (I will discuss what might be the reasons for this behavior in more detail below.)And the government’s conspicuous investments are not the only problem. Much more serious is that the ruling party is imposing what I call an “economic dictatorship” on the country.Let me explain.Because of its large government bureaucracy and numerous government projects, the government is a very large employer. And the government plays politics with its hiring practices: You cannot bid for any project, or get a job in any government bureaucracy, unless you are a registered member of the ruling party.Moreover, mid-size to large enterprises get audited automatically. The government inspectors invariably find something, but the government does not prosecute. The case is filed––but it is never closed. If the business owner or manager ever dares to criticize the ruling party or the government, the file is activated. The result, inevitably, is lawsuits and endless red tape.The government has deep pockets and can afford these long and complicated entanglements. But businesses can ill afford it. Defending oneself in court takes a tremendous amount of money and time. Even if they prevail in the case, some businesses are forced to close, because their funds are gone.Under these circumstances, no one––including the newspapers––dares to criticize the government.I call that: economic dictatorship,The country’s vulnerability is deepened even further by ethnic divisions. A large percentage of the population is of Albanian descent––western Macedonia, for example, is mostly populated by Albanians––who refuse to even speak Macedonian. They have their own educational institutions in their own language, from nursery schools to universities; their own enterprises; and their own political parties.If Albania eventually joins the European Union (it is currently a candidate) and Macedonia cannot, the Albanians in Macedonia might try to secede and become part of Albania. I would not even rule out the possibility of a civil war. There was already a preview few years back.Why can’t Macedonia join the European Union? Because Greece has vetoed Macedonia’s application to join, and it will continue to veto Macedonia’s applications until the country changes its name.Greece claims that the name Macedonia is actually Greek, that in fact Aleksander the Great was Macedonian and thus actually Greek. Greeks believe that Macedonia appropriated its own cultural heritage and history––in short, its identity.Obviously, calling the Skopje airport “Aleksander the Great Airport” and erecting a three–story monument to him, not to mention designing its government offices in a classically Greek style, is infuriating to the Greeks. That is why they refuse to recognize Macedonia by its name, instead calling it FYROM (the Former Yugoslav Republic of Macedonia).This conflict between the two countries has been in bitter dispute for twenty years. Why doesn’t Macedonia simply change its name? (I believe it may be getting close to doing just that: in consideration is that the current Macedonia will be called Upper Macedonia, which implies that there is also a Lower Macedonia––in Greece.)But a new problem has emerged: The United Nations has a rule requiring every country to register an official language. Macedonians claim they speak the Macedonian language which has its roots in the Slavic language. The Greeks claim there is no Macedonian language. That the Macedonian language is Greek.Macedonia’s inability to join the EU has caused economic hardship in the country, while the feud has robbed Greece of the time, energy, and attention span it needs to attend to its more serious problems.What is the reason for this long, bitter fight?Pride. This part of the world puts enormous emphasis on national pride. The people in the Balkans fought the Ottoman Empire for 500 years. Their ethos glorifies love for their country beyond anything we would recognize in the United States, for instance. In fact, the citizens of countries in this region often elect their leaders based on their perception of how nationalistic they are. And I assume that is why the ruling party in Macedonia has felt it necessary to build all those monuments, museums, and government buildings.But this particular nationalistic, pride-based contest––over a name––reminds me of two fighting cats who chased each other up a tree and now can’t get down. It will take a firefighter to rescue them.Who is that firefighter? The United States and/or the European Union. Both must exert economic and political pressure to compromise on the two feuding governments.This is not yet happening.The United States has bigger fish to fry: Afghanistan, Iraq, Iran, the Middle East … Macedonia is not even on its radar screen.And The European Union has proven itself to be impotent at leading change, and its envoy to Macedonia is seen as almost irrelevant. But this benevolence is a big mistake: The Balkans have been a ticking bomb for generations. The First World War started in the Balkans, and there are numerous recent examples of bloody confrontations in the region, including the wars in Kosovo, Bosnia, and Croatia, so it is imperative that the name issue be solved, Macedonia joins the European Union and the problem with the Albanian minority is ameliorated.Sincerely,Dr. Ichak Kalderon Adizes

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Dr. Ichak Adizes