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.

Skopje/Brussels, 14 August 2002