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COUNTRY BRIEFS


BILATERAL RELATIONS

Australia recognised the former Yugoslav Republic of Macedonia on 15 February 1994, using the nomenclature the former Yugoslav Republic of Macedonia in accordance with the terminology used by the United Nations. Australia established diplomatic relations with the former Yugoslav Republic of Macedonia on 20 October 1995 and maintains relations through the non-resident accreditation of the Australian Ambassador in Belgrade and an Honorary Consul in Skopje.

Australia and the former Yugoslav Republic of Macedonia have concluded a social security agreement in 2008 (entered into force on 1 April 2011) and an agreement on the more effective exchange of financial intelligence on 16 January 2012.

At the 2006 Census, 83,978 people in the Australian community identified themselves as Macedonian. A large dual-national community also lives in the former Yugoslav Republic of Macedonia, predominantly in the town of Bitola.

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BILATERAL TRADE AND INVESTMENT

Australian trade and investment with the former Yugoslav Republic of Macedonia is negligible. In 2010-11 total two-way trade between our countries was valued at A$5.353 million, in favour of the former Yugoslav Republic of Macedonia by 4 to 1. Medical electrodiagnostic apparatus is Australia's largest export commodity, while imports mainly comprise clothing and a range of food products, in particular prepared or preserved vegetables and cereal preparations. Though investment levels are minimal, there has been some interest by Australian companies in investing in education services and mining.

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HIGH-LEVEL VISITS

In October 2009, Prime Minister Gruevski accompanied by then Foreign Minister Milososki visited Australia as a Guest of Government. During the visit, Prime Minister Gruevski and then Prime Minister Rudd concluded a social security agreement which entered into force on 1 April 2011.

Then Speaker of the House of Representatives, Mr Harry Jenkins, visited Skopje in December 2009.

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GENERAL BACKGROUND

The former Yugoslav Republic of Macedonia is a landlocked and mountainous country with an area of 25,713 square kilometres (less than half the size of Tasmania). Of the population of 2.1 million, approximately two-thirds are ethnic Macedonians, one-quarter Albanians (concentrated in the north-western parts of the country) and there are significant minorities of Turks, Serbs and Roma. Located in the centre of the Balkan Peninsula, the former Yugoslav Republic of Macedonia has borders with Albania in the west, Greece in the south, Bulgaria in the east and Serbia (including Kosovo) in the north.

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POLITICAL OVERVIEW

The former Yugoslav Republic of Macedonia declared its independence from the former Socialist Federal Republic of Yugoslavia (SFRY) on 17 September 1991.

The former Yugoslav Republic of Macedonia is a parliamentary democracy with an executive government composed of a coalition of parties from the unicameral legislature and an independent judicial branch with a constitutional court. The Assembly 'Sobranje' is made up of 120 seats and the members are elected every four years. The role of the President of the Republic is mostly ceremonial, with the real power resting in the hands of the Prime Minister as President of the Government. The President of the Republic is the Head of State, the Commander-in-Chief of Armed Forces and Chair of the National Security Council. The President is elected by majority vote in direct elections, for a term of five years, and may serve no more than two terms as President. The current President Gjorge Ivanov was elected President of the former Yugoslav Republic of Macedonia on 5 April 2009 in the Republic's fourth Presidential elections since 1991.

The Cabinet or Council of Ministers is elected by majority vote in the Sobranje which comprises 85 members elected by direct popular vote, and 35 from lists of candidates submitted by the parties based on the percentage gained from the overall vote. All members serve four-year terms. The Assembly sits in Skopje and its powers include amending the constitution, passing laws and resolutions and ratifying international agreements.

The June 2011 elections saw the centre-right Internal Macedonian Revolutionary Organisation – Democratic Party of Macedonia National Unity (VMRO-DPMNE) led by Prime Minister Nikola Gruevski returned to power with 56 seats. His two-party coalition with the Democratic Union for Integration (DUI), one of the country's two main ethnic Albanian parties, remains in place. The new Ministry was inaugurated on 28 July. The Government's priorities remain joining NATO and the EU and resolving the name issue with Greece.

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INTERNAL RELATIONS

In January 2001, tension between the ethnic Macedonian and ethnic Albanian communities led to a civil conflict between the hitherto unknown Albanian NLA (National Liberation Army) - which had strong ties with the Kosovo KLA/UCK (Kosovo Liberation Army / Ushtria Clirimtare E Kosoves) - and the former Yugoslav Republic of Macedonia security forces. The political crisis led to several outbreaks of armed fighting, particularly in the northwest, and the internal displacement of thousands of citizens.

Agreement on the issues of minority rights and representation was reached in August 2001 under the 'Ohrid Agreement'. Following the necessary legislative changes, the former Yugoslav Republic of Macedonia government devised an action plan over the years has seen a steady increase in the employment of Albanian and other minorities in the public sector.

NATO maintains headquarters in Skopje, and advises the former Yugoslav Republic of Macedonia Government on security sector reform.

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RELATIONS WITH ITS NEIGHBOURS

Relations with the EU and NATO

A key foreign policy objective for the former Yugoslav Republic of Macedonia is to become fully integrated in Euro-Atlantic structures through membership of the EU and NATO.

Negotiations commenced in March 2000 with the EU to conclude a Stabilisation and Association Agreement (SAA), the first major step towards membership of the EU. The SAA was signed in April the following year and Skopje is working closely with the EU to develop and strengthen the former Yugoslav Republic of Macedonia's institutions and capacity to meet the requirements for accession. The former Yugoslav Republic of Macedonia became an official EU candidate country in late 2005, but has not commenced accession negotiations due to the ongoing dispute with Greece on the name issue.

The former Yugoslav Republic of Macedonia has also sought membership of NATO, signing the Partnership for Peace (PfP) Framework Document in November 1995. Through the PfP, partner countries develop individual programmes of practical cooperation with NATO. The basic aims of PfP are to promote transparency in national defence planning and military budgeting; promote the democratic control of national armed forces; and develop the capacity for joint action between forces from Partner countries and those of NATO member countries, for example, in peacekeeping or disaster-response operations. The former Yugoslav Republic of Macedonia has contributed military support to allied efforts in Afghanistan and post-conflict Iraq.

Relations with Greece

The former Yugoslav Republic of Macedonia and Greece continue to disagree over the 'name issue'. The former Yugoslav Republic of Macedonia refers to itself by it constitutional name of 'Republic of Macedonia' but Greece considers this implies territorial aspirations to northern parts of Greece. The former Yugoslav Republic of Macedonia was admitted to the UN in 1993 under the provisional name of the former Yugoslav Republic of Macedonia. This was reluctantly agreed to by both sides pending their final resolution of the name issue. Negotiations have been ongoing under the auspices of the UN Secretary-General following the conclusion of the UN-brokered interim accord of 1995. The dispute is yet to be resolved, however, and has resulted in Greece blocking the former Yugoslav Republic of Macedonia's accession to the EU and NATO. On 5 December 2011 the International Court of Justice ruled that Greece violated the 1995 Interim Accord between the two countries by vetoing the former Yugoslav Republic of Macedonia's NATO membership. The first UN–mediated talks in a year were held in New York on 16 and 17 January 2012 and focused on moving the process forward in a constructive manner.

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ECONOMIC OVERVIEW

The former Yugoslav Republic of Macedonia's small, open economy makes it vulnerable to economic developments in Europe and dependent on regional integration and progress toward EU membership for continued economic growth. At independence in September 1991, the former Yugoslav Republic of Macedonia was the least developed of the Yugoslav republics. It remains one of the poorest countries in Europe. Its economy has been essentially dependent on the markets of the other republics of the former Socialist Federal Republic of Yugoslavia, the disruption of which dealt a heavy blow to economic activity in all countries in the region. These problems were exacerbated in the first half of the nineties by the impact of other markets in Eastern Europe undergoing restructuring, the difficulties of economic transition, UN sanctions, and a Greek embargo. The end of the Greek embargo in October 1995 and the lifting of UN sanctions created a more normal economic environment. However, the 2001 conflict seriously affected production, foreign investment and the pace of economic reform.

The collapse of Yugoslavia ended transfer payments from the central government and eliminated advantages from inclusion in a de facto free trade area. Real GDP growth averaged 4 per cent during 2004-06, reaching 5 per cent in 2008. While maintaining macroeconomic stability with relatively low inflation, the former Yugoslav Republic of Macedonia lagged in attracting foreign investment and creating jobs, despite making extensive fiscal and business sector reforms.

In the wake of the global economic downturn, the former Yugoslav Republic of Macedonia experienced a further decrease in foreign direct investment, lowered credit, and a slowdown of export growth, but the financial system remained sound. Macroeconomic stability was maintained by a prudent monetary policy, which kept the domestic currency at the pegged level against the euro, at the expense of raising interest rates. GDP fell to -0.9 per cent in 2009 and inflation dropped from 8.3 to -0.8 per cent.

Consumer price inflation rose again in 2010-11 to 5.2 per cent in March 2011. GDP growth recovered to 3 per cent in 2011, boosted by strong export growth and investment spending, particularly in the construction sector. Unemployment remains high at 35 per cent.

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Last Updated: February 2012

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