Hari Kostov: Decentralisation a Step Towards Stronger Democracy and Euro-Atlantic Integration

18/10/2004

Macedonia's constitution is the basis for the country's new decentralisation law, says Macedonian Prime Minister Hari Kostov, adding that citizens are aware of the issues at stake in the upcoming referendum, and that the vote will not lead to destabilisation, but will instead be an exercise in democracy. In an exclusive interview with Southeast European Times correspondent Marija Lazarova, Kostov also discusses the security situation in Macedonia, progress in judicial and defence reforms, the dispute over the northern border with Kosovo, and the economic issues facing the country.

By Marija Lazarova for Southeast European Times in Skopje -- 18/10/04

Prime Minister Hari Kostov. [AFP]

Southeast European Times: In your opinion, will the referendum announced for 7 November influence the security situation in the country?

Prime Minister Hari Kostov: The security situation in Macedonia should not be connected with the referendum despite individual -- I would say, unserious -- statements by some political parties. The security situation is stable, and this is also the opinion given by responsible international institutions. The government and responsible ministries will provide the conditions for citizens to cast their votes in a democratic and safe atmosphere.

SE Times: How greatly will the referendum affect the process of Macedonia's European integration?

Kostov: The Macedonian government is meeting constitutional obligations for further implementation of the Framework Agreement. It is the constitution that is the basis for new laws on decentralisation aimed at creating ethnically diverse, financially stronger and politically more powerful municipalities. Decentralisation is seen as a significant step toward a stronger democracy and the Euro-Atlantic integration of Macedonia. I believe all the citizens in Macedonia are aware of these processes, which should not have a destabilising effect on the country. Instead, they emphasise the democratic approach to solving problems, which we have already proved by signing the Framework Agreement and having it implemented in the constitution and laws.

SE Times: How do you see the security situation in the country?

Kostov: Macedonia is undergoing a significant stabilising phase, despite some incidents which do not have the capacity to undermine the security situation. Conditions in the former crisis regions have significantly improved and normalised compared to the previous period. This has been done by intensifying the activities of the police -- in collaboration with other responsible state institutions and international organisations -- towards establishing control in those areas, as part of a continuing process of returning displaced people to their homes. Another confirmation of the stabilised security situation is the replacement of the NATO military mission, in late 2003, with the European police mission, Proxima, whose basic role is counseling, mentoring and monitoring in the process of developing police services in line with European standards. The fact that the security unit of Proxima has left the mission further demonstrates the normalised security situation. The latest report by the head of the OSCE mission in Skopje, Ambassador Carlos Pais, expressed optimism about the future of the country. Final implementation of the Framework Agreement will mean a positive course toward European integration.

SE Times: In your report, you announced a strategy for reform of the judiciary. What particular changes are planned?

The Macedonian Parliament adopted decentralisation legislation on 12 August. All 17 deputies of minority communities in Macedonia voted in favour of the law. [Tomislav Georgiev]

Kostov: The general goal of the strategy is to construct an effective judiciary system based on international standards, and the particular goal is to strengthen independence of the judiciary. Reform of the judiciary includes reform of material legislation, reform of trial legislation and structural reform. Structural reform encompasses the relations between institutions of the judiciary and their interior organisation and competences.

SE Times: Do you expect the demarcation of Macedonia's northern border with Kosovo to be resolved before 2005, when the issue of Kosovo's status is expected to be addressed?

Kostov: Demarcation of the northern border with Kosovo should be completed during 2005, but in any case will be done before the decision on the final status of Kosovo is made. The latest talks with international representatives in Kosovo and with Kosovo authorities have confirmed the desire on all sides to resolve the problem, which has a political dimension since, realistically, a dispute over a minimum area of insignificant importance has been provoked.

SE Times: Are you satisfied with defence reforms aimed at meeting NATO standards?

Kostov: Macedonia remains fully committed to completion of intensive reform processes in the area of defence and complete fulfillment of the criteria for NATO membership. The Istanbul Summit acknowledged the progress made in implementation of reforms and the transformation of security and defence.

The strategic guidelines included in the National Concept for Security and Defence and the political framework of the Strategic Defence Review adopted by the Macedonian government in October 2003 remain the basis for defence reform. In May 2004, parliament approved a resolution on transformation of security and defence, approving the guidelines derived from the second phase of the Strategic Defense Review and their implementation.

Transfer of responsibilities for state border security from the defence ministry to the interior ministry is going ahead according to plan and should be completed by the end of 2005.

SE Times: Macedonia is facing economic difficulties, including a decline in industrial production and high unemployment rates. Does the government have an efficient plan for solving these economic problems?

Kostov: The planned industrial growth and revival of production have not been achieved at the expected pace because of the incomplete sale and failed restart of the so-called ‘loser’ enterprises (above all, the mines and smeltery in Veles) and bankrupt enterprises. The physical scope of industrial production declined by 10 per cent, expected investments did not materialise, and a number of business partners were lost in 2001. As a result of improved economic ambience, industrial production recorded a 3.5 per cent increase in 2003. This year, Macedonia is recording again a decline in industrial production because of inactive significant capacities which are in the sales phase.

Activities are being directed at improving competitiveness, developing the base sectors in the industrial branches, improving the economic environment and creating conditions for improved economic activity and exports. Implementation of the National Programme for restructuring and conversion of the steel industry is of special importance. Industrial production is expected to achieve a significant increase.

As for the issue of high unemployment rates, a trend of constant increases in the number of job seekers ceased in the first seven months of this year, according to data. Moreover, a gradual decrease in the number of jobless people has already been noticed in the past months.

SE Times: Lack of foreign direct investment (FDI) is an ongoing problem. How much in the way of resources is expected to flow into the budget from such investments?

Prime Minister Hari Kostov (centre) holds a meeting with the managers of the UK-based firm Glendor Estate Limited. Foreign Direct Investment in Macedonia has increased by $17m this year. [Tomislav Georgiev]

Kostov: The government has changed its approach to attracting FDI, emphasising the importance of a stable economic environment, targeting and selecting specific investors and enabling private sector leadership to contribute to the development of the Macedonian economy. A programme for stimulating investments in Macedonia has been drafted. It outlines the existing investment climate and existing economic, legal and political barriers that hamper investment. An action plan aimed at influencing the investment climate and increasing Macedonia's competitive position as a location for investment has been developed. Other measures, including promotional and informational activities, have been taken.

In 2003, FDI in Macedonia amounted to 77.6m euros, an increase of 13.8m euros compared to 2002. The first six months of 2004 have seen FDI totaling 68.6m euros, and we have realistic prospects of increasing this amount by the end of the year.