Macedonia's Public Secret: How Corruption Drags the Country Down
Europe Report N°133
14 Aug 2002
EXECUTIVE SUMMARY AND RECOMMENDATIONS
Corruption in Macedonia, especially at high levels of government, is endemic. It has evolved from passive exploitation to active coercion and acquired the capacity not only to retard economic progress but also to feed organised crime and, in turn, political and communal instability. In effect, the state has come to function in important respects as a “racket”, while the racketeers thrive in a culture of impunity.
The disease has infected the banking system as well as the structures of government, making Macedonia both a source and a transit point for contraband and criminality. The system encourages autocratic administration while coexisting comfortably with inefficiency and politicisation of the judiciary. It saps Macedonian morale, leaving civil society enervated and the population at large cynical.
The Framework Agreement concluded at Ohrid in August 2001 cut short a rapidly evolving civil war but the agreement depends for its viability on the development of democratic institutions and a market economy. The corruption that eats away at the country is in many ways a cross-community, shared enterprise. At a minimum, it is highly damaging to the economy and increases the scope for social instability. However, it also invites outright collusion between ethnic leaders to heighten tensions and plays a substantial role in making the country ripe for conflict. Left to fester and spread, it will continue to erode Macedonia’s tenuous unity and send dangerous ripple effects throughout the Western Balkans.
Unfortunately, the international community gives few indications that it recognises how powerfully corruption works against its fundamental objectives in Macedonia. Officials typically excuse Macedonia with the empty phrase “corruption is a problem in all transition countries”. Occasionally, senior international officials issue high-minded demands for Macedonia to clean up its act, but these have never been seriously followed through. Opportunistic foreign investors sometimes exacerbate the problem.
The too frail international strategy emphasises “process” and “capacity building” – the passing of laws and the training of officials to, as one official says, “reduce the opportunities for corruption”. In the meantime, there is little effort to analyse why this approach has not produced meaningful results, why, for example, prosecutors do not act on ample evidence of corruption or precisely where criminal procedure loopholes allow corrupt officials to run free and keep their ill-gotten gains.
The international community insists that Macedonians take “ownership” of the problem, yet it is the “owners” themselves – those in powerful government positions – who continue to dominate, exploit and subvert its institutions. In current circumstances, it is both naïve and negligent to rely on weak indigenous watchdogs like the Ombudsman, the forthcoming Anti-Corruption Commission, or the media and civil society, to stand up alone to the corrupt elite. By pouring money into Macedonia without insisting on a serious anti-corruption effort, the international community is merely filling sink-holes in the budget and inadvertently acting as one of the system’s enablers.
The argument is often made that “if we push them on corruption, the government won’t cooperate on implementing Ohrid”. But failure to do so undermines the very agreement on which diplomats have concentrated their energies.
A dramatically different mind-set is needed. Macedonia is not “just another transition country” but an inherently weak state with external and internal challenges to its very existence. This means that corruption inflicts special damage and that, in effect, Macedonia can have either great corruption or stability but not both. Unconventional prescriptions are needed. To complement existing “capacity building” programs, the international community must incorporate fundamental changes in its approach. It must play the role of catalyst rather than simple adviser, unabashedly demanding reform if its financial assistance is to continue, and it must adopt a retrospective and punitive, not merely prospective and instructive, focus in its anti-corruption efforts.
Although this report contains specific examples, it has been written with care to respect the rights of individuals. ICG is prepared, however, to discuss a number of these matters in greater detail if requested to do so by appropriate, duly authorised governmental and legislative bodies.
Also, while this report deals with the present and recent past and so may seem to concentrate on the parties now in power, corruption is an aspect of the country’s political culture, not the exclusive preserve of any particular group. For an attack on it to be effective, all political parties need to join in the effort, along with civil society and the international donor community. Corruption is emphatically not an issue that belongs to or should be misused for partisan political purposes, and it would be a major mistake to believe that a change of government after the September 2002 elections will automatically sweep away the problem.
To the Macedonian government and political parties:
1. Commit to fighting corruption as a major priority that extends beyond the life of the present government and the September 2002 elections and give concrete form to that commitment by accepting international proposals and strategies including those recommended below and those presented by civil society.
To the major international donors, including the European Union and its member states and the U.S., and international financial institutions:
2. Recognise the role of corruption in perpetuating instability in Macedonia and accept the need to play a leadership role in fighting it.
3. Develop programs and policy positions that deal with past corruption, not only preventing future episodes.
4. Identify as priority areas for corrective action those sectors that are especially susceptible to corruption because of the lucrative opportunities they offer or sensitive for the punishment and deterrence of corruption; in particular, urge the Macedonian government to agree to the appointment of international “watchdogs” to work inside the Health Insurance Fund, the Customs Service, the Prosecutor’s Office and the Judiciary.
5. Condition financial aid to the government, in particular all balance of payments and budget support, on serious anti-corruption reform, and work with the government to develop realistic benchmarks to assess both good faith and effectiveness.
6. Make convictions and confiscations the express goals of a results-oriented anti-corruption strategy, as a complement to the existing approach that emphasises improving the “capacity” of Macedonian institutions and strengthening the legal framework.
7. Incorporate specific “follow-up” elements in all anti-corruption training programs.
8. Provide financial support for the newly formed governmental Anti-Corruption Commission so it can operate effectively as soon as it is launched in October 2002, and to Transparency International Macedonia’s civil society effort to develop an anti-corruption strategy and build an “anti-corruption coalition”.
9. Urge passage of legislation to limit the scope of parties when in power to make appointments on the basis of political patronage rather than competence.
10. Engage Albanian political parties and civil society more actively in the anti-corruption effort.
To the European Union (EU):
11. Appoint an EU Anti-Corruption Adviser in Macedonia to complement the work of the EU Special Envoy.
To the International Monetary Fund (IMF):
12. Relax restrictions on hiring additional personnel in the State Auditor’s Office and related agencies.
13. Set targets of increased revenue for ministries where corruption is depleting revenue.
Skopje/Brussels, 14 August 2002