The crisis in Macedonia raises the issue of its possible impact on Bulgaria and the rest of the region. Though it is difficult to make a clear-cut judgment, I think it is important to highlight some probable further developments. I do not think that the August 13, 2001 Framework Agreement will secure the hoped-for stability. The conflict has been "internalized" and it is already a domestic affair. Supplies and logistic support were never cut off from the National Liberation Army (NLA), which has not stopped using violence to negotiate constitutional and human rights matters. In addition: there has been a further fragmentation of the Albanian troops as well as attempts to unify its command and logistics (such as the Albanian National Army, which flashed in dispatches a week before the Agreement was signed). Meanwhile, actions taken to restrict outside supplies to the troops have been both sporadic and late. In June 2001 US companies and citizens were banned from trading with Albanian "extremists", and the first week of August saw the detention of seventeen alleged ALA aides in Kosovo. The impression is that EU and US envoys, though successful in moderating animosities and bringing about the signing ceremony, have no coordinated support for further policies and actions. These findings have given rise to a bitter feeling of unfairness in the minds of ethnic Macedonians and under the circumstances there is a risk that the dominant opinion (on both Macedonian and Albanian sides) is that the deployment of NATO troops will amount to a partition of the country. Remote benefits of EU accession and association agreements for Macedonia and Albania are unlikely to curb fighting sparked by the vacuum of positive expectations for the future. Trade conditions and outbreaks of fighting 2. In terms of trade to GDP, there is a significant difference between the high ratios of trade to GDP in Bulgaria, Bosnia and Herzegovina (BiH), and Macedonia, the medium ratios in Croatia and Romania, and the smaller international exchanges of Albania, and FR Yugoslavia (FRY). In Albania, the reasons for this lie in the size of its industries, productivity levels and the widespread informality. In FRY the ratio reflects distortions resulting from embargoes, sanctions, and military conflicts. In 2000, the ratio for Bulgaria was 95%, and the forecasted ratio for Macedonia is 81%. The greater openness of Bulgaria and Macedonia shows that they are getting some fundamentals right, such as established trade directions and contracts, cooperation links and routes with a probability to cluster internationally. Even these countries, however, saw less trade during the Kosovo crisis, while their 1999 GDP registered a fair level of growth. The data for 2000 is not complete, but I suspect that after Kosovo the trade/GDP ratios returned to their previous levels. 3. The EU is the largest trading partner for all the SEE economies. On the other hand, in 1998 the transitional Balkan countries together accounted for a mere 1.6% of EU imports and 4.4% of exports. It is no major market for the EU. Excluding Bulgaria and Romania, these countries account for less than 1% of EU imports. The alternative Balkan market has its own peculiarities. Tables below show the main trading partners in 1998, which is taken as an example of a normal year. (There have been no signs of change in the partners' ranking since then).
For Bulgaria, proximity and EU membership matters to its trade with Greece, which is its third partner since 1994. Bosnia and Herzegovina, FR Yugoslavia, and Macedonia have around 1/5 or a higher portion of trade with a neighboring country from the Balkans. The exports picture is basically the same. But it is obvious that Croatia exports rather extensively to its neighboring countries. Again Bosnia and Herzegovina, FR Yugoslavia and Macedonia sell a relatively high share of its exports to the neighbouring countries. Data for other years do not suggest a different picture. The Balkan countries do over 60% of their trade with the EU and the industrialized West, but not with one another. This fact might be explained by the following: a) The regional integration of a low-income economy with low-income countries usually makes an economy poorer; b) The demand is weak and relatively unsophisticated, and competitive companies choose more complex markets; c) The countries in the region have relatively similar product and quality structures; d) The instability of the regional markets in monetary and political terms; e) The inefficient contract enforcement and dispute resolution, and tariff and non-tariff barriers. Companies also avoid risks related to civil conflicts and insurgencies. 4. At the same time it is obvious that the three countries with the largest amount of trade in the region, Bosnia and Herzegovina, FR Yugoslavia and Macedonia, simultaneously experienced civil conflict and violence. A possible explanation for this coincidence between larger regional exposures to trade and conflict is that the greater the trade, the greater too the temptation to resort to physical (direct) control over trade roots and territories, in order to extort taxes.
The peculiarities of the registered flows are interesting. For instance, there is a 2.6 fold difference between Macedonia`s exports to Yugoslavia (USD 333.3 million) and official Yugoslavian figures for imports from Macedonia (USD 130 million). This is a reflection of the trade between Kosovo and Macedonia, and gives a hint as to the size of the stake of those who would eventually control this exchange.
"Circumstances" 5. While economic and political links between Balkan countries and the international community improved in the second half of 1999 and 2000, in 2001 the attempts of the UN and the NATO to contain the conflict within the borders of Kosovo failed. The aggression into Macedonia "seeped" through from a neighboring UN-protected territory. Originally Macedonia had no formal involvement with the conflict in the province. In light of the prospects for economic cooperation and prosperity, it matters little whether the territory is merely perceived as a "logistics base" for the politically dissatisfied Albanian minority in Macedonia or it is considered a home base for "terrorist raids" of armed troops. The fact of the matter is that the undecided status of Kosovo and the failure to organize a representative democracy is reproducing the chetnik (i.e. guerilla) model of tactics familiar from late nineteenth - early twentieth century national movements of the Balkans. These tactics have revitalized the political rhetoric and inter-ethnic attitudes of the past, jeopardizing the fragile trust that business and trade opportunities were beginning to make and scaring away private sector and foreign investment in the region. § Arben Xhaferi put these points more bluntly: "I explain [the outbreak of violence in Macedonia] as ethnic competition: to whom does the state belong?" (An interview for IWPR) 6. International initiatives, like, for example the Stability Pact, assume that economic freedom, prosperity and rooted democracy would integrate and return normality to the region. There is a tacit belief that if economies are more interdependent, governments and people are less likely to resort to violence, since companies and citizens have much to loose. At the same time it is obvious from the trade statistics that in those countries where the regional trade was higher there was also civil war, conflict and violence. A possible explanation for this coincidence of larger regional trade exposure and internal conflict is that the greater the trade, the greater too the temptation to resort to physical control over trade roots and territories, in order to extort taxes. Labyrinths of illegitimate attitudes 7. In Kosovo the war was an internal affair linked to the formation of a parallel government (with its own police, army etc.) by Albanians once autonomy was discontinued. In fact, Kosovo under Serbian rule can be thought of as one big NGO! but the struggle remained an internal affair even during the NATO air-strikes. The Kosovars were rightly considered to be victims of Milosevic's regime but the KLA/UCK was misinterpreted. The irony is that the introduction of the more stable authority of the UNMIK laid a foundation for use of armed focus on the neighboring territories of Southern Serbia and North West Macedonia. In the 1990's, the struggle remained one of paramilitary against paramilitary (combined with a silent use of force by Yugoslav military police) but the UCK was the real tax collector. Now, after the authority of the UNMIK has been established, the position of the UCK has been shaken. The effect has been for it to enlarge its taxpayer constituency in neighboring Macedonia. The only usable rhetoric at hand is that of human and constitutional rights, and thus we witness an explosive mixture, which, again in Veton Surroi's words, contributes to the fact that " the war is a catalyst for change". However, this time it has become an international affair, even as it is still being treated as a domestic one, this time of Macedonia. At least, it should be clear that the solutions being suggested are still purely within a Macedonian framework, as if the basic problem were that this framework lacks legitimacy and that the status quo in the country had changed. Strangely enough, this approach is justified by the fact that there is no legitimate rule in Kosovo where the parallel government is still a key factor. Background and conclusions 8. If there is some underpinning rationale to the points raised above, there are several obvious conclusions: A. Organized crime is not an independent variable, although there is typically, and I would even say theoretically boring, competition between the official and parallel tax-collectors, between the official (in this case international, working under the financial and legal umbrella of the international bodies) economy and the informal domestic marketers. In addition, the parallel tax collector retains its dominant position vis-a-vis the rivals. B. In other countries torn by organized crime - such as Columbia - the parallel economy and power structures are still engaging the competition while the official government slowly crumbles, despite occasional breakthroughs. This very competition remains predominantly a domestic phenomenon while international bodies and foreign governments cooperate for the sake of crime containment and, if possible, eradication. In Kosovo, the UNMIK still seems dysfunctional. C. It is also obvious that coordinated international action against organized crime in Kosovo is virtually impossible. It requires a reversed (compared to Columbia) pattern of activities on three different levels: 1) In Western Europe (except perhaps Spain, Scandinavia, and UK) this is needed in order to stop or diminish international (presumably ethnic-Albanian) financing of UCK-remnants or allowing Kosovo to function as an ALA logistics site; 2) In Kosovo it needs to involve the indigeneous population to accept responsibility at their own expense and make better use of remittances from abroad 3) In Macedonia it needs to ensure the military and political containment of NLA aspirations. What comes after the agreement in the region? 9. There are very few facts to support the optimism regarding organized crime in the Balkans and its impact for state building in the region. One of these impacts, however, is the fact that crime and economic informality appears to be spreading into the neighboring countries, from my point of view, at a slower pace than it did during the time of the UN embargo on Yugoslavia and the Greece embargo on Macedonia (before 1995). This is because of the ethnic Albanian cause of the ALA, and the ethnic structure of their businesses, parallel credit markets, links and families. Another important factor is the incremental shift towards prosperity brought about by legitimate markets and agents in most of the countries in the region. Such prospects are still bleak for FR Yugoslavia (Serbia and Montenegro) and Albania where the risk of spill-over from economic crime is very high. This does not necessarily mean that the UCK/NLA/ANA would use the same tactics as in Southern Serbia and Macedonia. But in my view it is obvious that the "procedures" that led to the negotiation and signing of the Albanian/Macedonian Agreement do not discourage further attempts to use the same pattern to enlarge their territories and spread their control to other countries One of the key factors of the situation is the deep lack of understanding of what is happening on the spot in Kosovo. I think there is room for cooperation with the Serbian police and other people with some knowledge of the Kosovars. Irrespective of the formalization of such cooperation, the Serbian police and military commanders from time to time give interviews in which they offer their support to Macedonia counterparts. It is obviously better to have this expertise within the framework of the international mitigation efforts than outside it. Equally important is the lack of cultural understanding. As far as I can judge, the first sizable exhibition of Albanian art has just been opened in the Munich Museum. Academia and anthropologists are rarely consulted. There is one, British, non-partisan history of Kosovo. The writings of unbiased Bulgarian anthropologists who are the only ones doing fieldwork in all the Albanian lands are relatively unknown. It may take The Agreement some time to compensate for this lack of channels of cooperation and knowledge. Other countries in the region - Greece, Croatia, FR Yugoslavia Bosnia and Herzegovina, - would be affected to a lesser extent by very different impacts. Greece would benefit as a logistics and knowledge base for NATO and EU. Croatia would probably remain virtually untouched while events in Macedonia would only influence the religious and political feelings in Bosnia and Herzegovina. I think that in the case of Yugoslavia, the political messages and impact are more important than economic ones. The agreement would feed anti-Western, nationalistic and rent-seeking attitudes. Impacts on Bulgaria As a result of the first embargoes (on FR Yugoslavia and the Greek embargo on Macedonia in the early 1990's), Bulgaria and Albania failed to establish an extended social capital, i.e. impersonal, reliable and trustworthy sources in the economy. This is the kind of trust that helps one to sign contracts in a society based on impersonal, institutional and uniform information. What we witnessed in Bulgaria and other countries in the region was a lack of financial discipline, a high level of corruption, poor contract enforcement and a lack of responsibility on the side of the government, high-level corruption in the customs, as in other countries neighboring Yugoslavia. Obviously, the embargoes were not an independent factor but their impact was essential. There is a very low risk of similar effects to the Bulgarian economy this time. Direct economic impacts should be fairly limited: a) The crisis might involve a loss of 3-3.5% exports, if we take into account re-exports to Serbia; b) The transnational pipeline and other infrastructure projects, upon which a sequence of Bulgarian governments have relied to boost the domestic and regional economy would, most likely, remain on hold. Refugees are unlikely to constitute a problem: the country is not an attractive destination for immigrants. The current number of refugees is more than modest - three thousand five hundred. Most of these come from Afghanistan, Central Asia and Africa (and give more to the country than they take). Refugees from Macedonia would also be more welcome than those here at present. More significant would be the indirect impact on foreign investment. Even informed international opinion perceives Bulgaria as not only emotionally biased in favor of Macedonia (Macedonians) but also as virtually ready to embark on a military adventure on behalf of its national memoirs. Such a perception would raise the risk assessment. Also, Bulgaria would suffer less foreign investment due to plans to use it as a penetration and logistics base for the regional market. It is virtually impossible for now to estimate the cost of these impacts. The above-mentioned perception is far from realistic. Bulgarians have enough of their own challenges. They believe they have paid a high price for the transition and would be reluctant to cover the costs of a military campaign. The army itself is under reform and is, as far as I know, too dysfunctional for any sizable action. The politicians are less chauvinistically minded than in any other country in the region. The patriots failed to cross the 4-percent threshold in the last elections. Some of them are now calling for volunteers to fight against Albanians but the enrolment of die-hard believers that "Macedonia is Bulgarian" is virtually zero. Politically, feelings about Macedonia are theatrical rather than challenging. The ex-government believed it would be a factor in the elections and tried to demonstrate involvement - an attempt, which, along with other issues, was punished by the electorate. The new prime minister, because of his royal background (and the negative results of his ancestors' Macedonian endeavors), will not be trusted even if he were to try to ride a revenge-horse. The newly appointed minister of foreign affairs and his team is pragmatic and adopting a "wait and see" attitude. Bulgaria may have inadequate emotions and explanations about Macedonia but it is putting its own skin first; it doesn't seem to want to expose it too much risk. |
