While Macedonia has had a reasonably good year,  the survival of the state in its present form -- a key element of stability in the fragile Western Balkans -- is still not completely assured. The country overcame political tragedy to demonstrate it could elect a new president peacefully and fairly, and it has remained calm and focused on its own issues rather than being distracted by troubles in neighbouring Kosovo, but it faces an immediate test of its commitment to the inter-ethnic compromise that cut off the incipient  civil war in 2001. And both Skopje and  Brussels must do better at answering questions about whether it really has a future within the European Union.

President Boris Trajkovski's tragic death on 26 February 2004, six months before the end of his term, raised a real prospect of political crisis. Growing tensions in Kosovo after the 17-19 March riots in that province added to the risk of instability. The decision of Prime Minister Branko Crvenkovski to run for the vacant presidency raised the political stakes still further.

However, the presidential election (in two stages, on 14 and 28 April) indicated that Macedonia has attained a certain level of democratic maturity and stability. The exercise was not perfect, but even if all allegations of irregularities were accurate, the result would not have changed -- Crvenkovski was elected in the second round, with over 60 per cent  of the votes. No major candidate openly opposed the Ohrid Agreement, which ended the 2001 ethnic Albanian insurgency. The dominant issues related to the country's future rather than fear of spillover from Kosovo.

With a new president and a new prime minister (Hari Kostov), installed, attention is now focused on the sole remaining substantive issue from Ohrid: devolution of power to local government units. This is a decisive matter for the survival of the  Macedonian state, however. After lengthy negotiations within its coalition, the government proposed on 14 July to reduce municipalities from the current 123 to 80. Criticisms of the Albanian and Macedonian opposition parties have concentrated on proposed  changes  to the municipal boundaries of the capital, Skopje, and the south western town of Struga, both cases where  it is perceived that ethnic Albanians would gain.

If the coalition can ride out the devolution controversy, significant challenges remain on reforming the economy and stimulating employment. The government has underperformed in these areas, preferring to pursue those responsible for shady privatisation deals under the previous administration. Deep concerns also remain about  the effectiveness of the rule of law.

Macedonia's political parties remain a weak link in the democratic system. The internal struggles of the major opposition party, VMRO-DPMNE1 and the leadership vacuum following Social Democratic Union of Macedonia (SDSM) leader Crvenkovski's elevation to the presidency illustrate that they remain more mechanisms for distribution of patronage and running election campaigns than real engines of democratic inclusion.

The application Macedonia submitted for European Union membership on 22 March is of tremendous importance for stability. The prospect of EU integration gives politicians their main motivation for pursuing reform policies and helps guarantee peaceful coexistence of the main ethnic groups. If Macedonians perceive that the EU does not really want them, they will again question their national future. Europe has made a considerable political investment in the Ohrid process and Macedonian stability; it now has the opportunity to capitalise on that investment by securing the country's future.

Skopje/Brussels, 3 August 2004