Crisis turns Macedonia from stable investment bet to risky frontier
Damian Martinovich
Crisis turns Macedonia from stable investment bet to risky frontier
The Associated Press
SKOPJE, Macedonia (AP) They're only dots on a map.
But for backers of a proposed pan-Balkan oil pipeline, the sketched out
route represents something huge and historic: a chance to bring major
foreign investment to one of Europe's most economically stagnant regions.
The trouble is the pipeline plans and other projects spanning the southern
Balkans pass through the heart of tormented Macedonia.
Macedonia was once regarded as the stable centerpiece for dreams of a modern
communications, transportation and energy corridor stretching from
Bulgaria's Black Sea coast to Albanian ports on the Adriatic.
Now it's the weak link. And few investors seem willing to assume the risks
until a solid truce is reached between Macedonians and ethnic Albanians
seeking greater minority rights.
"My phone hasn't rang for months with anyone interested in a project in
Macedonia," said Ned Cabot, the regional director for the U.S. Trade and
Development Agency, which helps American companies seeking overseas deals.
Not too long ago, it was quite different. In 1995 as war roared in other
parts of former Yugoslavia the United States and other nations excitedly
promoted the so-called Corridor 8.
Its backers envisioned transport links that would speed goods and fuel from
the Black Sea region and central Asia to Albania, just across from Italy and
the rest of wealthy western Europe.
A few stretches of Corridor 8 road and rail have been completed, but it
still takes at least 30 hours by truck to make the 450-mile drive from the
Black Sea to the Adriatic. Rail connections are hopelessly indirect. Plans
for fiber optics and pipelines are gathering dust.
"Everything is basically on hold now," said Cabot.
It's something Macedonia cannot afford. It emerged from the break-up of
Yugoslavia as the poorest new nation landlocked and dependent on neighbors
for trade. Its economic footing has continually been undercut first by a
1991-95 economic embargo by neighboring Greece, then by international
sanctions and NATO warfare against Yugoslavia, a key trading partner.
Unemployment now approaches 40 percent. Per capita income stands at $3,800 a
year double Albania's but slightly lower than in Bulgaria.
The economic worry is so acute that Macedonia alienated giant China by
forging diplomatic relations with Taiwan in 1999 in exchange for aid pledges
of up to $130 million. Macedonia reversed the decision in June, leaving the
Vatican as Taiwan's sole diplomatic foothold in Europe.
Last week, Prime Minister Ljubco Georgievski warned parliament that
rejection of a peace agreement designed to end six months of ethnic conflict
in Macedonia could completely choke off Western capital.
After the accord cleared its first test in parliament, the European Union
immediately rewarded Macedonia with a $65 million reconstruction package.
The United States, too, has held out the promise of more cash as the prize
for stability. In 1999, Macedonia received $1.27 million in U.S. funds to
improve its creaky railways as part of the Corridor 8 strategy.
But government largesse is easier than sealing deals with nervous private
firms.
Proposals to privatize the Skopje airport operations and parts of the
electricity sector interested U.S. firms, but plans are now on hold, Western
officials said. In the EU, some food and retail companies have entered the
small Macedonian market.
But the big deals have been limited.
In 1999, Greece's state-run Hellenic Petroleum began efforts to buy a
majority stake in Macedonia's oil refinery OKTA. Last December, a consortium
headed by Hungarian telecommunications firm Matav bought 51 percent of
Macedonia's mobile telephone network.
Now, the prospect of greater ethnic Albanian political autonomy could add
another wrinkle.
"Deals made with the central government may not fully apply to the ethnic
Albanian zones. This means double the dealmaking and, possibly, double the
corruption and kickbacks," said James Ker-Lindsay, a regional analyst at Syn
SA, an Athens, Greece-based company that advises corporate clients on
investment risks.
Still, there are those already looking past the turmoil.
Gligor Tashkovich, executive vice president of AMBO LLC, which is seeking to
build the trans-Balkan oil pipeline, said he has met with "both sides" in
Macedonia and is confident of the prospects for the $1.1 billion project.
AMBO's president, Ted Furguson, was formerly an executive for a subsidiary
of Halliburton Co., which was led until last year by Vice President Dick
Cheney.
"Oil companies work in far more unstable areas of the world than Macedonia,"
said Tashkovich. "You think of Angola. You think of Indonesia. You think of
Chechnya. What's going on in Macedonia is nothing compared with what these
places have experienced."
--
"Nato is now playing with fire. These Albanians know from
experience how to win friends in the West. They terrorise
the ruling power and provoke it into retaliatory suppression
and atrocity. They raise the tempo of this atrocity
until it is noticed by the Western media, which is
the catalyst to panicking politicians into "something
must be done". Then they sit tight and await the
bombs and aid. "
The Times March 2001