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DE RUEHSQ #0105/01 0330714
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P 020714Z FEB 06
FM AMEMBASSY SKOPJE
TO RUEHC/SECSTATE WASHDC PRIORITY 4185
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEAIIA/CIA WASHINGTON DC
RUEKDIA/DIA WASHINGTON DC
RHMFISS/HQ USEUCOM VAIHINGEN GE
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RUESEN/SKOPJE BETA
RUEHSQ/USDAO SKOPJE MK
RHEHNSC/WHITE HOUSE NATIONAL SECURITY COUNCIL

C O N F I D E N T I A L SECTION 01 OF 07 SKOPJE 000105 

SIPDIS 

SIPDIS 

DEPT FOR EUR/SCE, EUR/RPM 
NSC FOR BRAUN 
DEFENSE FOR OSD/POLICY:WINTERNITZ 

E.O. 12958: DECL: 01/31/2016 
TAGS: NATO PREL MARR MASS MK
SUBJECT: MACEDONIA & NATO MEMBERSHIP: DEFENSE REFORMS ON 
TRACK; POLITICAL & ECONOMIC REFORMS KEY OBSTACLES 

REF: STATE 7173 

Classified By: P/E CHIEF SHUBLER, REASONS 1.4 (b) & (d). 

¶1. (C/REL NATO) SUMMARY: Macedonia is in its 7th MAP cycle 
and has made significant progress in meeting its defense 
reform goals, but still falls short in terms of meeting 
political and economic MAP criteria. To be considered a 
strong candidate for NATO membership by mid-2007, with a view 
to receiving an invitation in 2008, we believe Macedonia 
should meet the following key criteria: 

Strengthen democracy and the rule of law, and combat 
corruption by : 

--conducting free and fair parliamentary elections in 2006 
that meet internationally-accepted standards; 

--fully implementing the judicial reforms package to 
strengthen the independence and efficiency of the judiciary; 
and, 

--showing significant progress in aggressively prosecuting 
high-profile corruption cases. 

Create a better business environment by: 

--meeting the milestones established for World Bank-financed 
projects on real estate and cadastre registration, and 
implementing judicial reforms regarding contract enforcement; 
and, 

--completing in a transparent manner the privatization of the 
state energy distribution and generation companies, with full 
accountability for the use of funds derived from that action. 

Continue defense reforms by: 

--pursuing defense personnel downsizing while ensuring 
equitable representation of ethnic minorities in the Armed 
Forces, but in a manner that ensures qualified personnel are 
selected and that training and promotion standards are not 
lowered. 

This message develops these key criteria further and 
addresses additional political, economic, and defense issues 
and goals. 

End Summary. 

KEY POLITICAL CRITERIA: 

¶2. (SBU/REL NATO) Electoral Reform: The 2005 local elections, 
as noted by OSCE and other international and domestic 
observers, were marred by serious electoral irregularities in 
some areas, including ballot-stuffing, group voting, and some 
election-day violence. Since then, the GOM has worked with 
OSCE experts to draft an electoral code that addresses 
electoral system concerns raised by the International 
Community (IC) in relation to the 2005 and other past 
elections. The electoral code is in the parliamentary review 
process, and Parliament is expected to pass it by mid-March. 

--Electoral Bodies: In addition to revising the electoral 
code to strengthen administration of upcoming parliamentary 
elections in summer 2006, the government recently addressed 
long-held IC concerns regarding inadequate funding, housing, 
equipment, and staffing for the State Electoral 
Administration (SEC), which is responsible for administering 
the elections. The SEC now has an adequate budget; initial 
staffing; new offices; and sufficient equipment to allow it 
to perform its core functions. The SEC Secretariat already 
is undertaking planning and initial steps to prepare for the 
2006 parliamentary elections. 

--Parliamentary Elections: The key test of the strength of 
Macedonia,s democratic system will be the 2006 parliamentary 
elections. The IC is working with the government, political 
party leaders and party cadres, and the state electoral 

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bodies to help ensure free and fair elections, as judged by 
OSCE/ODIHR and other international and domestic monitors. 
Key Message: Should Macedonia fail this task, it would call 
into question the country,s readiness to present itself as a 
strong candidate for a NATO membership invitation in 2008. 

¶3. (C/REL NATO) Judicial Reform: The Parliament in December 
2005 passed a package of 11 constitutional amendments 
strengthening the independence and efficiency of the 
judiciary. The amendments sharply curtail the role of 
Parliament in selecting judges, who will now be selected and 
dismissed by an independent State Judicial Council. The 
Parliament is expected to pass bylaws to implement the 
amendments in the first half of 2006. Key Message: By 
mid-2007, the government should have passed and implemented 
the draft Law on Courts to allow trials of serious crimes and 
organized crime cases, and should implement a court case 
management system assigning cases to judges on a random 
basis; implement and use the Law on Witness Protection as 
appropriate in prosecuting organized crime cases; and enforce 
asset forfeitures in money-laundering or other serious crime 
cases. 

¶4. (C/REL NATO) Corruption: Macedonia was ranked 104 of 159 
countries in the 2005 Transparency International annual 
corruption perception index (CPI) report. It dropped several 
places compared to 2004, although its overall score remained 
the same, at 2.7 out of a possible 10 (10 being least 
corrupt.). Combating corruption is one of the government,s 
most daunting challenges; very few high-profile corruption 
cases have been successfully prosecuted, with even fewer 
cases involving a significant sentence as a sanction. Key 
Message: To enhance Macedonia,s competitiveness as a NATO 
candidate, the Macedonian Public Prosecutor,s office should 
successfully prosecute 3-5 high-profile corruption cases by 
mid-2007. In addition, the Macedonian courts should 
demonstrate that they can try those high-profile corruption 
cases in a fair and transparent fashion, as judged by 
independent observers (local NGOs, OSCE Rule of Law experts), 
and any guilty verdicts should be accompanied by sanctions 
that will have a deterrent effect. 

OTHER POLITICAL ISSUES AND GOALS 

¶5. (C/REL NATO) Rule of Law: General rule of law weaknesses 
hamper Macedonia,s ability to demonstrate progress in 
meeting the political criteria of the NATO MAP process. The 
Ministry of Interior,s Professional Standards Unit (PSU) has 
investigated a number of allegations of police abuse, and has 
sanctioned such abuse when it occurred. However, the PSU,s 
record is inconsistent, and systems to ensure transparency in 
the MOI are inadequate. Similarly, Macedonia,s fall from 
Tier 1 to Tier 2 in the State Department,s annual 
Trafficking in Persons (TIP) report for 2005 reflected lack 
of political commitment to combat aggressively lucrative 
organized crime activities, which was also reflected in the 
GOM,s continuing lack of a National Action Plan for 
combating TIP. The ability of defendants in civil lawsuits 
to file interminable, frivolous appeals prevents the 
Macedonian courts from enforcing valid judgments -- for 
example, ordering the owner of Macedonian TV station &A-18 
to repay debts owed to the U.S.-based non-profit Media Loan 
Development Fund. By mid-2007, the MOI,s PSU should have 
fully investigated and pressed charges, as applicable, in the 
majority of alleged police abuse cases alleged to have 
occurred in 2006; Macedonian authorities should ensure the 
anti-TIP National Action Plan has been approved and 
implemented, and Macedonia should demonstrate progress in 
moving toward a Tier 1 rating in the annual TIP report for 
¶2006. 

¶6. (SBU/REL NATO) Minority Rights: The final legislative 
requirement of the 2001 Ohrid Framework Agreement (FWA) was 
met in 2005, but implementation of FWA-mandated measures to 
improve minority rights has been uneven. The government needs 
to continue steady efforts to implement equitable 
representation of minorities in public administration. At 
the same time, the government (across ethnic lines) should 
guard against fulfilling quotas at the expense of individual 

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capacity to perform a job. The GOM also should continue to 
implement decentralization that empowers minorities at the 
local level, and in a manner that presents Macedonia as a 
regional model for consolidating stability through 
strengthening inter-ethnic cooperation. 

¶7. (C/REL NATO) Neighborly Relations: Macedonia collaborates 
actively with its neighbors and other countries in the 
region, and should strive to export its experience as a 
positive example of best practices in that regard. It is 
working on resolving several outstanding bilateral issues, 
including the name dispute with Greece (through talks under 
UN auspices), and the question of demarcating its border with 
Kosovo. The dispute between the Serbian Orthodox Church 
(SOC) and the Macedonian Orthodox Church (MOC) over which 
should enjoy primacy among orthodox Christian believers in 
Macedonia remains a challenge for the government, which is 
working on a draft law on religious communities that would 
make it possible for the SOC to officially register as a 
religious group in Macedonia. The imprisonment last year of 
a SOC Bishop (&Bishop Jovan8) on grounds of inciting 
religious hatred for publishing a calendar was roundly 
criticized by the international community and many human 
rights NGOs. The government should work to ensure passage of 
the draft Law on Religious Communities that would help ease 
tensions between the MOC and the SOC by allowing an 
SOC-affiliated group to receive legal protection as a 
recognized religious group in Macedonia. The government also 
should continue to work on resolving the name dispute with 
Greece through the talks being held under UN auspices. 

¶8. (SBU/REL NATO) Border Issues: The only remaining 
contentious border issue is, as mentioned above, the 
unresolved demarcation of Macedonia,s boundary with Kosovo, 
which was delineated in a 2001 agreement between Belgrade and 
Skopje. Pristina does not recognize the 2001 agreement, and 
is unwilling to consider demarcating the border with 
Macedonia until after final status is resolved. 

¶9. (C/REL NATO) POW and Holocaust Issues: There are no 
unresolved POW issues. The government receives high marks 
from the Israeli government and in the State Department,s 
International Religious Freedom report for handling Jewish 
community restitution issues. Ground-breaking for a 
Holocaust memorial site in downtown Skopje took place in 
2005, and Jewish community representatives generally express 
satisfaction with the government,s actions to resolve 
outstanding property claims. 

KEY ECONOMIC CRITERIA: 

¶10. (SBU/REL NATO) Business Climate: The government has made 
significant economic reform progress in a number of areas, 
including recent implementation of a &one-stop shop window8 
that has significantly reduced the time required for 
registering a new business. However, more needs to be done 
to create an economic climate that will attract increased 
investment (FDI was slightly lower in 2005 than in the 
previous year) and bring official unemployment figures down 
from their current high of 37 percent (taking the grey 
economy into account, the actual rate is closer to 25 
percent). 

¶11. (SBU/REL NATO) Macro-Economic Achievements: The 
government,s most significant economic achievement has been 
the maintenance of fiscal discipline, combined with 
consistent macroeconomic stability. The economy has grown at 
a consistent rate of 2 to 4 percent from 2002 to 2005. The 
government budget deficit is low (-0.6% in 2005), inflation 
minimal (0.5% in 2005), the currency is stable, and the level 
of debt-to-GDP (40%) is manageable. In 2005, the Government 
signed agreements for three-year programs with both the 
International Monetary Fund (IMF) and World Bank. Both 
Standard & Poor,s and Fitch Rating Service rated Macedonia 
at or near investment grade for sovereign debt. In December 
2005, Macedonia successfully sold 150 million euros worth of 
euro bonds and used the proceeds to purchase its London Club 
debt in order to lower its debt servicing costs. 


SKOPJE 00000105 004 OF 007 


¶12. (SBU/REL NATO) Foreign Investment & Economic Freedom: 
Despite significant progress, business investment, both 
domestic and foreign, is low; the current account deficit is 
relatively high; and GDP growth rate is not strong enough to 
significantly lower unemployment or the poverty rate. 
Macedonia ranks 57th in the Heritage Foundation,s 2005 Index 
of Economic Freedom, behind A-3 partners Albania (52nd) and 
Croatia (55th). If the government fails to take the 
following steps, among others, to enhance the business 
climate, FDI levels and economic growth will remain anemic: 

--Key Message: Business environment ) the government should 
meet the milestones for World Bank-financed project on real 
estate and cadastre registration, and implement judicial 
reforms regarding contract enforcement. 

--Key Message: Privatization ) the GOM should privatize the 
energy distribution (ESM) and generation (ELEM) companies in 
a transparent manner and should fully account for the use of 
funds derived from that action. It also should sell its 
remaining shares in the privatized Macedonian 
Telecommunication company. 

KEY DEFENSE CRITERIA: 

¶13. (C/REL NATO) Overall Progress. Macedonia continues to 
progress well on defense reforms. In 2005, Macedonia met its 
goal of restructuring 60% of the Army of the Republic of 
Macedonia's (ARM's) units in accordance with their Strategic 
Defense Review (SDR). By the end of 2006, the GOM expects 
90% of the ARM,s units will have been restructured. 

¶14. (C/REL NATO) Additional defense reform milestones 
completed under a dynamic and proactive CHOD include: 
reorganization of the General Staff and 1st Mechanized 
Infantry Brigade; transfer of the Air Force to the ARM's Air 
Wing; and establishment of the Joint Operations Command as 
the ARM's Maneuver Force Headquarters. The ARM also took the 
first steps in 2005 toward assuming full host nation support 
responsibilities by assigning officers and Non-Commissioned 
Officers (NCOs) to NATO Headquarters-Skopje. The MOD will 
establish a Host Nation Coordination Center by mid-2006. 

¶15. (C/REL NATO) Personnel Reductions: The Ministry of 
Defense (MOD) and ARM have been less successful in carrying 
out the personnel reductions called for in the SDR. To date, 
they have made the easy cuts, mostly personnel transfers. 
For example, the MOD gave up the border security mission to 
the new Border Police. It also divested itself of the people 
and offices that are now independent governmental agencies, 
such as the Rescue and Protection Directorate and the Crisis 
Management Center. The MOD must cut approximately 1,200 
military and civilian personnel to complete its personnel 
reductions plan. The new draft Law on Defense will open up 
the possibility of retiring excess officers with 25 years of 
service, but that measure does not apply to the civilians at 
the Ministry. 

¶16. (C/REL NATO) Equitable Representation: Equitable 
representation of minorities in the armed forces continues to 
increase. Ethnic Albanians, for example, now constitute 
nearly 12 percent of the total force; the percentage is 
higher among the NCOs (15 percent) and soldiers (16 percent). 
However, there is clear evidence that the coalition ethnic 
Albanian governing party (DUI) is pressuring the military to 
accelerate the pace of integration, especially within the 
officer and NCO ranks, even if that means lowering standards 
for promotions and professional development courses. Key 
Message: The government, including its ethnic Albanian 
coalition partners, should be reminded that equitable 
representation, which we support, nevertheless must not be 
implemented by placing unqualified personnel in positions of 
responsibility. 

¶17. (C/REL NATO) Defense Spending. Macedonia continues to 
devote between 2.2-2.4 percent of its GDP to defense 
spending. This year the defense budget is 6.201 billion 
Macedonian denars (approximately 124 million USD), about 2.25 
percent of GDP. Although that figure is two million dollars 

SKOPJE 00000105 005 OF 007 


less than in 2005, it represents a net increase, since 
spending on functions such as border security and crisis 
management are no longer part of the MOD 's budget. Defense 
spending is expected to remain consistent in the near to 
mid-term; this predictability is assisting the MOD in 
managing its defense modernization programs for at least the 
next five years. 

¶18. (C/REL NATO) Modernization. Macedonia has offered NATO 
eleven (11) units under the NATO Operational Capabilities 
Concept, ranging from an infantry company to a special forces 
company, helicopter detachment, engineer platoon, and 
demining squad. Some of these units are ready now; others 
will not be fully operational until the end of 2007. The ARM 
is rightly focusing its resources, both domestic and 
international, on getting these units fully operational, both 
in terms of equipment and training. The U.S. will provide $5 
million in Foreign Military Funding in FY06, most of which is 
also being targeted for these "declared" units. One million 
U.S. dollars in Global Peace Operations Initiative funds have 
also become available, which the ARM would like to spend on 
readying their military police battalion for deployment. 
Macedonia also is an active participant in the Partnership 
for Peace (PfP), participating in over 15 different exercises 
in 2005, including hosting NATO's "Cooperative Associate" 
Exercise in Skopje last November. 

¶19. (C/REL NATO) Global War on Terrorism (GWOT). Macedonia 
continues to be a net contributor to security, its armed 
forces earning high marks for their performance in GWOT 
operations. Macedonia,s troop contributions to the GWOT 
demonstrate that it can be a meaningful contributor as a 
future NATO member country as well. In December 2005, 
Macedonia increased its participation in Iraq by deploying 
five more staff officers above its normal 35-man rotation. 
In Afghanistan, it is deploying eleven officers/NCOs with the 
Headquarters of the Southeastern Europe Brigade (SEEBRIG), 
rotating its four medical personnel with the Adriatic 
Charter's Joint Medical Team, and increasing from 19 to 21 
the personnel it has attached to the German Battle Group in 
Kabul. By the end of February, Macedonia will have increased 
its contribution to NATO Operations in Afghanistan from 23 
personnel to 36. Including the personnel assigned to Iraq 
and U.S. Central Command Headquarters, it will soon have a 
total of 78 personnel deployed overseas. That figure 
represents a considerable commitment for Macedonia. While we 
expect the GOM to remain committed to participating in 
international military operations, the ARM will continue in 
the future to have to rely on other countries for strategic 
transport and logistical support in-theater. 

¶20. (C/REL NATO) Interoperability with NATO. The combined 
effect of six ARM rotations in Iraq, eight ARM rotations in 
Afghanistan, PfP exercises, and U.S. FMF/IMET support has 
directly improved the ARM's capabilities and interoperability 
with NATO. Not every unit of the ARM has benefited from this 
exposure, however. Many conscript units focus mainly on 
fulfilling garrison duties. Nevertheless, the performance of 
Macedonian units in Iraq and Afghanistan has been exemplary, 
and should be taken as a demonstration of the ARM's potential 
as a future NATO member. 

¶21. (C/REL NATO) Crisis Management Center: To get the MOD out 
of direct involvement in managing crisis management 
operations, the government created the civilian-run Crisis 
Management Center (CMC) in 2005. The CMC received an 
independent budget in January 2006, but squabbles between the 
ethnic Albanian CMC Director and the government over 
equitable representation in staffing the center have 
prevented it from becoming fully operational. In a region 
plagued by frequent floods and occasional earthquakes, the 
country,s lack of effective crisis management capacity is 
unacceptable. Key Message: The CMC should be adequately 
staffed, fully operational, and capable of responding to 
disasters by mid-2007. Although equitable representation 
should be considered in deciding on personnel, the Center 
should be staffed by qualified personnel. 

LEGAL ISSUES: 

SKOPJE 00000105 006 OF 007 



¶22. (SBU/REL NATO) There are no significant constitutional or 
legal barriers that would prevent Macedonia,s accession to 
NATO or its participation in NATO operations. The Macedonian 
constitution provides that the Parliament can approve 
proposals to join international organizations by a majority 
vote. Participation in peacekeeping operations outside the 
country requires the approval of a majority in Parliament, 
and the government can decide to participate in exercises or 
humanitarian operations without Parliament,s approval. Upon 
ratification of an accession agreement, the Law on Defense 
would have to be amended to harmonize Macedonian law with 
NATO,s collective defense provisions, according to 
Macedonia,s ANP. 

SECURITY/INTELLIGENCE ISSUES: 

¶23. (C/REL NATO) The Law on Classified Information was passed 
in March 2005, expanding the responsibilities of the 
Directorate for Security of Classified Information to include 
all classified information exchanged between the Republic of 
Macedonia and foreign countries or international 
organizations. According to the government, the provisions 
of the Law on Classified Information are consistent with NATO 
Security Policy requirements. In addition, the government is 
drafting guidelines for Security Officers charged by various 
state institutions to ensure the bylaws of the Law on 
Classified Information are implemented within those 
institutions. In practice, however, political control over 
Macedonian intelligence and security agencies results in 
occasional leaks of sensitive information to political 
parties. 

¶24. (C/REL NATO) Macedonia,s three intelligence services 
(Macedonian Intelligence Agency, subordinate to the 
President; military intelligence; and the MOI,s 
counter-intelligence agency) do not cooperate closely and are 
hampered by outmoded missions. 

PUBLIC SUPPORT: 

¶25. (SBU/REL NATO) Public support for NATO membership is 
strong ) 90 percent in a poll conducted in January (among 
ethnic Albanians, that figure reaches 96 percent.) No 
government or opposition Member of Parliament has voted 
against a deployment of Macedonian troops overseas to support 
alliance operations in Iraq or Afghanistan. Prudent 
expectations management -- on the part of the government, 
USG, and NATO -- will help ensure strong public support 
through the Riga Summit and well into 2007. 

WATCH OUT FORS: 

¶26. (C) The case of Khalid el-Masri, a German citizen of 
Lebanese descent who claims he was flow by the CIA from 
Macedonia to Afghanistan for interrogation, has generated 
intense press commentary here, most of it negative, over the 
past several months. Opposition parties and opinion-shapers 
accuse the government of jeopardizing Macedonia,s EU 
accession chances by refusing to comprehensively answer 
Council of Europe and European Parliament requests for a full 
accounting in the case. Relevant government authorities have 
responded carefully to COE and EU requests for information, 
consistently explaining that they have little information to 
provide on el-Masri and his allegations. There has been some 
mention in the press of alleged secret CIA prisons on 
Macedonian soil, but those stories have not had the same 
staying power as the el-Masri case. 

¶27. (C/NOFORN) Macedonia signed an Article 98 agreement with 
us in 2003, and the government has expressed concern that it 
eventually will come under strong EU pressure to abrogate 
that agreement as it works on bring its legislation into 
compliance with the EU acquis communautaire. The matter is 
treated as a mid-to-long term issue in Macedonia,s EU 
membership action plan, but could come up in the course of 
future discussions. 

¶28. (C/REL NATO) The government will press for a positive 

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statement at the Riga Summit, possibly singling out Macedonia 
as a leading NATO membership candidate due to its defense and 
political reform achievements, and assuring aspirants that 
enlargement will be on the agenda in 2008. 
MILOVANOVIC