| | Brussels, 9.11.2005

SEC (2005) 1425

ANALYTICAL REPORT

for the Opinion on the application

from the former Yugoslav Republic of Macedonia

for EU membership

{COM (2005) 562 final}{COM(2005) 557 final}

Table of Contents

A. Introduction 4

a) Preface 4

b) Relations between the EU and the former Yugoslav Republic of Macedonia 6

B. Criteria for Membership 11

1. Political Criteria 11

1.1. Democracy and the rule of law 11

1.1.1. The Parliament 13

1.1.2. The Executive 15

1.1.3. The Judiciary 20

1.1.4. Anti-corruption policy 22

1.2. Human rights and the protection of minorities 24

1.3. Regional issues and other obligations defined by the EU Council conclusions of

29 April 1997 31

1.4. General evaluation 34

2. Economic Criteria 36

2.1. Economic developments 36

2.2. Assessment in terms of the Copenhagen Criteria 40

2.3. General evaluation 50

3. Ability to Assume the Obligations of Membership 52

3.1. Chapters of the acquis 52

Chapter 1: Free movement of goods 52

Chapter 2: Freedom of movement for workers 56

Chapter 3: Right of establishment and freedom to provide services 57

Chapter 4: Free movement of capital 59

Chapter 5: Public procurement 61

Chapter 6: Company law 62

Chapter 7: Intellectual property law 64

Chapter 8: Competition policy 66

Chapter 9: Financial services 69

Chapter 10: Information society and media 71

Chapter 11: Agriculture and rural development 74

Chapter 12: Food safety, veterinary and phytosanitary policy 79

Chapter 13: Fisheries 82

Chapter 14: Transport policy 83

Chapter 15: Energy 85

Chapter 16: Taxation 87

Chapter 17: Economic and monetary policy 91

Chapter 18: Statistics 92

Chapter 19: Social policy and employment 94

Chapter 20: Enterprise and industrial policy 97

Chapter 21: Trans-European networks 102

Chapter 22: Regional policy and co-ordination of structural instruments 103

Chapter 23: Judiciary and fundamental rights 105

Chapter 24: Justice, freedom and security 113

Chapter 25: Science and research 118

Chapter 26: Education and culture 119

Chapter 27: Environment 120

Chapter 28: Consumer and health protection 125

Chapter 29: Customs union 127

Chapter 30: External relations 130

Chapter 31: Foreign, security and defence policy 132

Chapter 32: Financial control 134

Chapter 33: Financial and budgetary provisions 136

3.2. General evaluation 137

C. European Partnership: Global Assessment 139

Annex: Statistical Data 141

A. INTRODUCTION

a) Preface

Application for membership

The former Yugoslav Republic of Macedonia presented its application for membership of the European Union on 22 March 2004 and the Council of Ministers decided on 17 May 2004 to implement the procedure laid down in Article 49 of the Treaty on the European Union, which states: “Any European State which respects the principles set out in Article 6(1) may apply to become a member of the Union. It shall address its application to the Council, which shall act unanimously after consulting the Commission and after receiving the assent of the European Parliament, which shall act by an absolute majority of its component members.”

Article 6(1) states “The Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law, principles which are common to the Member States.”

That is the legal framework within which the Commission submits the Opinion and the present Analytical Report.

Context of the Opinion

The application from the former Yugoslav Republic of Macedonia for membership is part of an historic process, in which the Western Balkan countries are overcoming the political crisis in their region and orienting themselves to join the area of peace, stability and prosperity created by the Union. In the “Thessaloniki Agenda for the Western Balkans”, adopted by the June 2003 European Council, the EU stressed “ that the pace of further movement of the Western Balkans countries towards the EU lies in their own hands and will depend on each country’s performance in implementing reforms, thus respecting the criteria set by the Copenhagen European Council of 1993 and the Stabilisation and Association Process conditionality. ”

The European Council in Copenhagen in June 1993 concluded that:

“The associated countries in Central and Eastern Europe that so desire shall become members of the Union. Accession will take place as soon as a country is able to assume the obligations of membership by satisfying the economic and political conditions.

Membership requires:

- that the candidate country has achieved stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities;

- the existence of a functioning market economy, as well as the capacity to cope with competitive pressure and market forces within the Union;

- the ability to take on the obligations of membership, including adherence to the aims of political, economic and monetary union.

The Union’s capacity to absorb new members, while maintaining the momentum of European integration, is also an important consideration in the general interest of both the Union and the candidate countries.”

The European Council in Madrid in December 1995 referred to the need, “to create the conditions for the gradual, harmonious integration of the application countries, particularly through the development of the market economy, the adjustment of their administrative structure, the creation of a stable economic and monetary environment.”

The Stabilisation and Association Process (SAP) conditionalities were defined by the Council on 29 April 1997 and included co-operation with the International Criminal Tribunal for the Former Yugoslavia (ICTY) and regional co-operation. These conditions are a fundamental element of the SAP and are integrated into the Stabilisation and Association Agreement (SAA) with the former Yugoslav Republic of Macedonia, which entered into force in April 2004.

In the Opinion and this Analytical Report, the Commission therefore analyses the application from the former Yugoslav Republic of Macedonia on the basis of the country’s capacity to meet the criteria set by the Copenhagen European Council of 1993 and the conditions set for the SAP, notably the conditions defined by the Council in its conclusions of 29 April 1997.

Contents of the Analytical Report

The structure of the Analytical Report takes account of the conclusions of the European Council in Copenhagen. It:

- describes the relations between the former Yugoslav Republic of Macedonia and the Union up to now, particularly in the framework of the existing Stabilisation and Association Agreement;

- analyses the situation in respect of the political conditions mentioned by the European Council (democracy, rule of law, human rights, protection of minorities), including compliance with the SAP conditionalities;

- assesses the country’s situation and prospects in respect of the economic conditions mentioned by the European Council (market economy, capacity to cope with competitive pressure);

- addresses the question of the capacity of the country to adopt the obligations of membership, i.e. the acquis of the Union as expressed in the Treaty, the secondary legislation, and the policies of the Union;

- assesses briefly the overall extent to which the priorities of the 2004 European Partnership have been met.

In assessing the former Yugoslav Republic of Macedonia in respect of the economic criteria and its capacity to assume the acquis , the Commission has also attempted to evaluate the progress which could reasonably be expected in the years ahead, before accession, taking account of the fact that the acquis itself will continue to develop. For this purpose, and without prejudging the actual date of accession, this Analytical Report and the Opinion are based on a medium-term horizon of approximately five years.

During the preparation of the Analytical Report and the Opinion, the Commission obtained a wealth of information on the situation in the former Yugoslav Republic of Macedonia from the authorities and drew on many other sources of information, including the Member States, the European Union Special Representative, international organisations (Council of Europe, OSCE, NATO, UNHCR, ICTY, Stability Pact, IMF, World Bank, EBRD, EIB, etc.) and NGOs.

b) Relations between the EU and the former Yugoslav Republic of Macedonia

After a referendum in September 1991, the former Yugoslav Republic of Macedonia became independent in November 1991.

Between February and August 2001 the country endured a very serious political and security crisis when incidents escalated between the State security forces and ethnic Albanian armed groups. The signature of the Ohrid Framework Agreement in August 2001, in the presence of the representatives of the European Union, NATO and the United States of America, put an end to the hostilities. Under the terms of the Framework Agreement the parties rejected completely and unconditionally the use of violence in pursuit of political aims and emphasised that there was no territorial solution to ethnic issues. The Agreement also aimed at building a multi-ethnic state. It guaranteed its unity and territorial integrity, notably through changes in the Constitution, recognition of further rights for the non-majority communities (especially in the area of equitable representation and use of their languages) and decentralisation of a number of competences to the municipal level.

The European Union (together with its partners in the OSCE as well as with NATO and the United States of America) has consistently been supporting this process. The EU commitment to peace and stability in the country was further illustrated by the EU military mission “Concordia”, which took over from the NATO missions[1], from March to December 2003. After the decision taken in September 2003 at the invitation of the government, in December 2003 the EU deployed a police mission, “EUPOL Proxima”. It has a mandate to support the consolidation of law and order and the reform of the police. EUPOL Proxima’s current mandate runs until 15 December 2005. The European Union Monitoring Mission has also been present in the country since 2001 under an agreement concluded in August 2001.

A declaration adopted in February 2004 by all political parties in the Parliament underlined that the country’s accession to the EU is a strategic national goal and supported the government’s intention to submit an application for EU membership. This application was submitted by the government in March 2004. Membership of the European Union and NATO, the return of peace and stability, the establishment of the rule of law, full and consistent implementation of the Ohrid Framework Agreement and economic development are the main priorities announced by the government under its current term.

Contractual relations

The former Yugoslav Republic of Macedonia has maintained contractual relations with the European Communities since 1996 when it signed an agreement making it eligible for assistance from the EC PHARE programme. In 1997 it signed a Co-operation Agreement as well as Trade and Textile Agreements which entered into force in 1998.

Following the conclusion of the negotiations at the Zagreb Summit of November 2000, a Stabilisation and Association Agreement (SAA) was signed in Luxembourg in April 2001 and entered into force on 1 April 2004.

The SAA is the legal framework for relations with the European Union; it provides a framework for political dialogue and enhanced regional co-operation, promotes the expansion of trade and economic relations between the parties and establishes a basis for Community technical and financial assistance. The institutional framework of the SAA provides a mechanism for implementing, managing and monitoring relations in all areas. Subcommittees examine questions at technical level. The Stabilisation and Association Committee provides a forum for discussions at senior officials level with the aim of finding solutions to problems arising under the SAA. The Stabilisation and Association Council examines the overall status of and prospects for relations and provides an opportunity to review the progress made by the former Yugoslav Republic of Macedonia in the Stabilisation and Association Process. The Stabilisation and Association Parliamentary Committee is the venue for regular meetings between Members of the European Parliament and of the national Parliament.

Pending the entry into force of the SAA, an Interim Agreement (IA) was applied from June 2001, covering the SAA provisions related to trade in goods, competition and intellectual, industrial and commercial property rights. The trade provisions of the SAA are asymmetrical in favour of the former Yugoslav Republic of Macedonia. This means that the EU has granted the country unlimited duty-free access to the market of the enlarged Union for virtually all products. This is important for exporters from the former Yugoslav Republic of Macedonia. The former Yugoslav Republic of Macedonia is gradually reducing its customs duties for industrial products (with different timetables, depending on the sensitivity of the products for the country). Tariffs for agricultural and processed agricultural products and fisheries products are also being reduced but remain for a number of sensitive items.

The Stabilisation and Association Committee met for the first time in June 2004 and decided to set up seven subcommittees to cover the different chapters of the SAA. The first meeting of the Stabilisation and Association Council was held in September 2004. The Joint Parliamentary Committee met for the first time in March 2005 in Skopje. In 2005 the Stabilisation and Association Committee and Council met in June and July respectively.

An additional protocol to the Interim Agreement/SAA on wine entered into force in January 2002, covering reciprocal preferential trade concessions for certain wines, reciprocal recognition, protection and control of wine names/designations for spirits and aromatised drinks.

A Protocol amending the SAA in view of the accession of ten new Member States to the EU was concluded in February 2005. This also provided for further liberalisation of trade in agricultural and fisheries products.

A Protocol to the SAA on a Framework Agreement regarding the general principles for the participation of the former Yugoslav Republic of Macedonia in Community Programmes was concluded in June 2005.

A Protocol to the SAA on trade in sugar was initialled in May 2005.

A Transport Agreement has been in force since November 1997 and still covers relations with the former Yugoslav Republic of Macedonia in the field of inland transport.

Generally, there have been no major problems regarding the implementation of the SAA/IA by the former Yugoslav Republic of Macedonia and questions arising have normally been solved at a technical level. However, from 2001 to 2003 the country infringed the IA regarding imports of petroleum products. The matter was finally settled at the Co-operation Council in 2003. More recently, the former Yugoslav Republic of Macedonia has failed to meet the deadline set in the SAA for liberalisation of the telecommunications market and harmonisation of its legislation with the relevant acquis . The Commission has raised this issue, notably at the latest meeting of the Stabilisation and Association Committee, and is closely monitoring progress to remedy this situation ( see also Part B.3, Chapter 10 – Information society and media ). On the same occasion the Commission also asked the former Yugoslav Republic of Macedonia to abolish certain customs fees incompatible with the SAA ( see also Part B.3, Chapter 29 – Customs union ).

The Sector for European Integration has been co-ordinating the implementation of the SAA in an efficient and professional way. It became a government secretariat in July 2005. European integration co-ordinators have been designated in all state administrations and a number of inter-ministerial working groups have been set up for the harmonisation of legislation.

In 2001 the former Yugoslav Republic of Macedonia adopted a National Action Plan, which set the strategic priorities guiding medium- to long-term action, and prepared a National Plan for Approximation of Legislation (NPAL) to steer the process of approximation of the country’s legislation with the acquis . This Plan has been revised annually. In 2003 an action plan was adopted to implement the recommendations made by the European Commission in its Stabilisation and Association Report.

In September 2004 a National Strategy for European Integration was adopted, as well as a draft Action Plan for implementation of the European Partnership. This followed the adoption in June 2004 of the Council Decision on the Principles, Priorities and Conditions contained in the European Partnership for the former Yugoslav Republic of Macedonia. In the European Partnership short- and medium-term priorities were identified for the country’s preparations for further integration with the European Union. The European Partnership could therefore serve as a checklist against which to measure progress and also provides a basis for programming EC financial assistance.

In March 2005 the Government adopted a revised version of the Action Plan for the implementation of the European Partnership. It presented reports on the implementation of the Action Plan in May and September 2005.

Since 2002 the European Commission has adopted annual reports on the Stabilisation and Association Process in the former Yugosla v Republic of Macedonia which have included an evaluation of the implementation of the SAA by the country. The latest report was adopted in March 2004.

Trade relations

The EU is the main trading partner of the former Yugoslav Republic of Macedonia. After a decrease in trade between the EU and the country between 2001 and 2003, in 2004 trade started increasing substantially. Thus, in 2004 imports into the EU from the former Yugoslav Republic of Macedonia increased by 14.7% to € 777 million, and exports from the EU by 8.8% to € 1,253 million. The trade deficit of the former Yugoslav Republic of Macedonia with the EU remained stable at € 476 million. Approximately 53% of the external trade of the former Yugoslav Republic of Macedonia was with the EU in 2004. The country’s share of the EU’s external trade amounted to 0.1% in 2004.

In 2004 exports from the former Yugoslav Republic of Macedonia to the EU consisted mainly of various manufactured goods and agro-food products. The EU exported manufactured goods and machinery and transport equipment in particular.

The former Yugoslav Republic of Macedonia has been a member of the World Trade Organisation since April 2003. It participates in the Trade Working Group under the Stability Pact for South-East Europe. In this context, the former Yugoslav Republic of Macedonia has signed bilateral free trade agreements with all neighbouring countries and territories.

Community assistance

Between 1992 and 2005 the former Yugoslav Republic of Macedonia received EC assistance totalling approximately € 767 million. Until 1996 the country benefited from “Critical Aid”, between 1996 and 2001 from the OBNOVA and PHARE programmes and from the Rapid Reaction Mechanism, and since 2001 from the CARDS programme. The global portfolio of total commitments of CARDS assistance amounts to € 280.7 million for 2001-2006.

At the end of 2001 the Commission adopted a Country Strategy Paper for the former Yugoslav Republic of Macedonia covering the period 2002-2006 which sets the long-term objectives and the priority fields of action for Community assistance. Assistance is focused on institutional reform and development in order to favour the gradual integration of the country into EU structures while also taking into account the needs arising from the implementation of the Ohrid Framework Agreement.

A Multi-Annual Indicative Programme (MIP) covering the period 2002-2004 identifies specific programmes to be implemented and the indicative amounts. Based on this programme, the European Commission adopted National Annual Programmes worth € 41.5 million in 2002, € 43.5 million in 2003, and € 51 million (including an additional post-Thessaloniki allocation of € 5.5 million) in 2004. The Commission also adopted a new Multi-Annual Indicative Programme covering a two-year period (2005-2006) and a National Annual Programme worth € 39 million in 2005. The identification of the priorities to be supported is based on the Country Strategy Paper and, above all, on the European Partnership. The main aim is to foster the process of stabilisation of the country through the full implementation of the Framework Agreement and to support the country’s progress in the process of European integration.

The former Yugoslav Republic of Macedonia is directly involved in CARDS programming, including discussions on current strategies and agreement on the MIP. These discussions involve not only the National Aid Co-ordinator but also the relevant ministries, potential beneficiaries, international financial institutions and the non-governmental sector.

In addition, the former Yugoslav Republic of Macedonia benefits from the CARDS Regional Programme. The Commission also continues to provide funding under specific budget lines in the fields of the environment, justice and home affairs, and the 6th Framework Programme for research and technological development, under which the country is eligible for funding for indirect action on all thematic priorities of the Programme as well as for complementary activities as part of the Programme’s co-operation with third countries and international organisations.

The CARDS national programme has been implemented by the European Agency for Reconstruction since March 2002, with the exception of the funds allocated to the customs sector, to the TEMPUS programme, as well as those allocated through the Regional Programmes which have remained centralised at Commission headquarters.

Several twinning projects are on-going (in the fields of the internal market acquis , competition policy and police reform) and more are planned, notably in the justice and home affairs sector. Under the TEMPUS programme, the Commission has so far supported 89 co-operation projects.

The former Yugoslav Republic of Macedonia needs to continue its efforts to meet the agreed project conditionality (e.g. policy decisions, establishment and strengthening of institutions, allocation of human and financial resources), but some progress can be noted.

A Commission-EU Member State co-ordination mechanism on assistance has been in place since 2001 to maximise the impact of CARDS and of Member States’ bilateral aid. Effective co-operation also exists with other donors. The former Yugoslav Republic of Macedonia has been a member of the World Bank since 1993. Since then, the World Bank has approved US$ 600 million for 25 projects in the country. These projects have provided support for agriculture, health, education, private finance as well as other sectors. By July 2005 the European Bank for Reconstruction and Development (EBRD) had made investments totalling € 384 million. Investment is focusing on the financial sector, SMEs and infrastructure. The European Investment Bank (EIB) has provided loans totalling € 219 million, mainly in the areas of transport and energy.

B. CRITERIA FOR MEMBERSHIP

1. POLITICAL CRITERIA

The European Council in Copenhagen in 1993 decided on a number of political criteria for accession to be met by applicant countries. A country must have achieved “stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities”. In the case of the Western Balkans the conditions defined by the Stabilisation and Association Process are also a fundamental element of EU policy, which will be assessed in this Analytical Report.

In the meantime, with the entry into force of the Treaty of Amsterdam in May 1999, the political criteria defined in Copenhagen have been essentially enshrined as a constitutional principle in the consolidated Treaty on European Union, Article 6(1) of which reads: “ The Union is founded on the principles of liberty, democracy, respect for human rights and fundamental freedoms and the rule of law.” Accordingly, Article 49 of the consolidated Treaty stipulates that “ Any European State which respects the principles set out in Article 6(1) may apply to become a member of the Union.” These principles were emphasised in the Charter of Fundamental Rights of the European Union, which was proclaimed at the Nice European Council in December 2000.

In order to carry out the assessment required in this connection, the European Commission has drawn on a number of sources of information: answers given by the authorities of the former Yugoslav Republic of Macedonia to the questionnaire delivered by the European Commission in October 2004, bilateral follow-up meetings, discussions with Member States' embassies and with the EU Special Representative in Skopje, assessments by international organisations (including the Council of Europe, OSCE, UNHCR and Stability Pact), reports by international and local non-governmental organisations, and representatives of political parties and of civil society.

The assessment set out below systematically examines the main ways in which the public authorities are organised and operate, and the steps they have taken to protect fundamental rights. It does not confine itself to a formal description but seeks to assess the extent to which democracy and the rule of law actually operate. This assessment relates to the situation at the end of September 2005. It does not examine in detail any changes which have taken place in the past or which may come about in the future, though it generally takes account of any stated intention to reform a particular sector.

1.1. Democracy and the rule of law

Parliamentary democracy was established following the November 1990 elections. The Parliamentary Declaration of Sovereignty of 25 January 1991 and the Referendum on a Sovereign State of 8 September 1991 established the former Yugoslav Republic of Macedonia as an independent state.

The Constitution was adopted in November 1991 and has subsequently been amended four times by a two thirds majority vote:

- In 1992 to declare explicitly that the country has no territorial pretensions towards any neighbouring State and will not interfere in the sovereign rights of other States or in their internal affairs (in the context of negotiations with Greece regarding the dispute over the name of the country and its international recognition);

- In 1998 to extend the duration of detention by court decision from 90 to 180 days;

- In 2001 to provide a constitutional framework for implementation of the Ohrid Framework Agreement of 13 August 2001; and

- In 2003 to allow use of special means of investigation by the police under judicial control.

The Constitution established parliamentary democracy. The Social Democratic Union (SDSM) was in power for eight years until the 1998 parliamentary elections were won by a coalition led by the Internal Macedonian Revolutionary Organisation - Democratic Party for Macedonian National Unity (VMRO-DPMNE). During this shift of power the Constitution was respected and institutions functioned normally. In the parliamentary elections in September 2002 a coalition led by the SDSM won the majority of votes and formed a coalition government with the newly established ethnic Albanian party Democratic Union for Integration (DUI, led by the former National Liberation Army leader Ali Ahmeti) and the Liberal Democratic Party. Since independence, ethnic Albanian political parties have participated in all the governments.

Implementation of the Ohrid Framework Agreement signed on 13 August 2001 has been a major achievement for the country. It has opened a process to build an integrated multi-ethnic society and guarantee the stability of the country. The governments and all parties concerned have demonstrated solid commitment to implement the Agreement effectively since 2001. Their very significant efforts have allowed the country to return to stability through key reforms to the State and through social change. Fifteen constitutional amendments have been enacted and the Preamble to the Constitution has been changed. The country has made numerous legislative changes – to approximately 70 laws – which provide a basis for implementing the principles set out in the Agreement. This broad legislative programme was completed with the adoption of the Law on the Use of Flags in July 2005. The remaining task is to ensure continued and effective implementation, thereby further strengthening the climate of confidence and stability. This will consolidate the achievements and foster an increasingly positive environment for integration with the EU.

The President of the Republic is elected by direct universal suffrage for a five-year term of office, renewable once. The President empowers a Prime Minister-designate to form the government; appoints and dismisses ambassadors and other diplomatic representatives; proposes two judges of the Constitutional Court and two members of the Judicial Council; appoints three members of the Security Council; grants pardons in accordance with the law; and performs other duties laid down by the Constitution. The President is Commander-in-Chief of the armed forces and chairs the Security Council which deals with security and defence issues and makes policy proposals to Parliament and the government. The President takes part in the formulation and implementation of foreign policy. The President signs decrees for the promulgation of laws. In case of presidential veto, Parliament can vote on the same law again within 30 days. If the law in question is approved again by a two thirds majority, the President has to sign the decree for its promulgation. The President is held accountable for any violations of the Constitution in exercising his/her duties. The procedure for determining the President’s accountability is initiated by Parliament by a qualified majority of all members and decided by the Constitutional Court by a two thirds majority of its judges.

The current President of the Republic is Mr Branko Crvenkovski, elected in April 2004 after an early election following the tragic death of President Trajkovski in a plane crash.

1.1.1. The Parliament

Role and structure

The Parliament ( Sobranie ) is made up of a single chamber with, under the Constitution, a minimum of 120 and a maximum of 140 members elected by direct, universal suffrage. All the Parliaments until now have had 120 members. The 2002 electoral law provides for proportional representation and six electoral constituencies. There were 31 lists for the parliamentary elections in 2002.

Parliament can dissolve itself by a majority vote of its members. Members enjoy parliamentary immunity. There are 18 permanent working bodies of Parliament. Seven are chaired by Members of Parliament from the opposition. A Committee on EU Affairs was established in November 2003 and has been meeting frequently. The government submits quarterly reports to Parliament on the activities undertaken in the process of EU integration. Parliament also has delegations for cooperation with the parliaments of international organisations.

Each Member of Parliament, like the government, has the right to propose a law for adoption. Legislative proposals or legislative amendments can also be submitted if they are supported by at least 10 000 voters. Laws are usually enacted after two readings by the government and Parliament. However, there are shortened and fast-track procedures for enactment of laws. Laws are adopted by a majority vote of the members attending which may not be less than one third of the total number of Members of Parliament.

After the amendment of the Constitution entailed by the Ohrid Framework Agreement, Parliament’s rules of procedure were modified so that legislation relating to the rights of the communities and to local self-government are voted by the double majority rule. “Double majority” means a majority of the total number of Members of Parliament – which can be a simple or two thirds majority depending on the issue – within which there must be a majority of the total number of votes by Members of Parliament from the minority communities. The same rule also applies to the appointment of the Ombudsman, members of the Judicial Council, judges of the Constitutional Court and members of the Security Council.

A Committee on Inter-ethnic Relations has been established to consider inter-community issues and make proposals for Parliament to examine. It is composed of 19 members appointed by Parliament (seven ethnic Macedonians, seven ethnic Albanians and one from each national minority).

Parliament ratifies international agreements. In cases of emergency the government may adopt decrees with legal force.

A vote of confidence in the government can be initiated by one sixth of the Members of Parliament. An interpellation may be made by a minimum of five MPs concerning the work of any public office holder, the government and any of its members individually, as well as on issues concerning the performance of State bodies. MPs have the right to put questions to the government and the government regularly replies on the last Thursday of every month. The work of Parliament is transparent and since early 2005 a separate national television channel has been regularly broadcasting working parties and plenary sessions with a translation in Albanian.

Under the Constitution and the Law on Referendum and Civil Initiative of 1998, Parliament can call a referendum on specific matters within its sphere of competence by a majority vote of the total number of its members. It is also under an obligation to call a referendum if 150 000 citizens’ signatures are collected. The Law on Referendum was revised in September 2005 to avoid the possibility that legislation might be called into question through a referendum after having been adopted in Parliament in accordance with the double majority principle.

The country has a multiparty system. 75 political parties are registered and 14 are represented in Parliament. There are no obstacles to the establishment of parties. Under the election legislation, they receive State funding for their electoral campaign expenses in proportion to the number of seats they won in the previous parliamentary elections.

Functioning of the Parliament

Since independence, parliamentary elections were held in 1994, 1998 and 2002 and all resulted in the formation of multiethnic coalition governments.

The last parliamentary elections were held in September 2002. The coalition “Together for Macedonia” won 60 out of the 120 seats. It formed a government coalition with the DUI (15 seats).

“Together for Macedonia” includes the SDSM (44 seats), LDP (11), Democratic Party of Turks (2), Democratic League of Bosniaks (1), United Roma Party (1) and Democratic Party of Serbs (1). The opposition parties have the following number of seats: VMRO - People’s Party (13); VMRO - Democratic Party for National Unity of Macedonia (10); Democratic Party of Albanians (7), Liberal Party of Macedonia (6), Farmers Party (4), Party for Democratic Prosperity (2), Socialist Party (1), National Democratic Party (1) and New Democratic Forces (1). More than half of the MPs were elected for the first time, and the number of women elected (twenty, including the first ethnic Albanian woman ever elected) was the biggest ever. Parliament held its constitutive session on 3 October 2002.

The 2002 elections were rated generally free and fair but also drew a number of criticisms from the OSCE-ODIHR International Election Observation Mission. In 2004 the presidential election in April and the referendum on decentralisation in November revealed shortcomings in the electoral process and the OSCE-ODHIR made a number of criticisms and recommendations to address them. The municipal elections held in March 2005, while conducted in accordance with a number of OSCE commitments and in a peaceful manner, again displayed serious irregularities. Observers underlined that the authorities had not taken sufficient action to prevent them, as well as insufficient commitment by most stakeholders to abide by the rule of law. These criticisms and the final report of the OSCE-ODIHR have led the authorities to act. A number of criminal charges have been brought in relation to irregularities and frauds for the first time and the first verdicts have been given. As recommended by the ODIHR, initial measures have been taken to strengthen the State electoral commission, notably by granting its employees civil servant status. Work has also started on revising the law on parliamentary elections. Without timely and appropriate implementation of the recommendations made by the OSCE-ODIHR, and a strong resolution to sanction all irregularities, the full integrity of the next parliamentary elections in 2006 would be at risk. Beyond the measures to be taken by the public authorities, the behaviour and commitment of the political parties will be decisive in ensuring that the rules are effectively applied.

Following the amendment of the Constitution in 2001, Albanian can be used by Members of Parliament in plenary sessions. It can also be spoken during committee sessions.

Parliament receives annual reports from the State Auditor, the Ombudsman and the State Commission for the Prevention of Corruption and debates them in plenary sessions. The Public Prosecutor, the National Bank, the Statistical Office and the Agency for Civil Servants also make annual reports to Parliament. While the current Parliament has paid more attention to these reports than its predecessors, the follow-up to some of the findings or some of the most critical recommendations made by these institutions (in particular, the Ombudsman and the State Auditor) should be improved.

Parliament functions in a satisfactory manner and its powers are respected. While the opposition generally performs its role, the largest opposition ethnic Albanian party (Democratic Party of Albanians) has been abstaining from participating in Parliament’s work since April 2005.

Parliament adopted a declaration on the Parliamentary dimension of the process of EU integration in June 2003 which provides for an annual session devoted to monitoring this process.

1.1.2. The Executive

Role and structure

The decision on appointment of the Prime Minister is taken by the President of the Republic. Parliament gives a vote of confidence on the government and its programme. Ministers are approved by Parliament, upon a proposal by the Prime Minister. The government is answerable to Parliament. The Prime Minister and the members of the government are jointly responsible for government decisions, while each minister is responsible for his/her area.

The current government is led by Prime Minister Buckovski, who presented his government to Parliament in November 2004. It includes the SDSM, DUI and LDP.

It is composed of a Prime Minister, three Deputy Prime Ministers and 14 ministers. It is supported by the General Secretariat, three general committees, two advisory committees (Legal Council and Economic Council) and the Legislative Secretariat. The Legislative Secretariat provides expert opinion on the consistency of draft laws and other legal acts with the Constitution, with other laws already in force, with international agreements ratified by Parliament and with the acquis . The government adopts annual work programmes, mostly of a legislative nature.

The structure and tasks of the State administration were defined by the 2000 Law on the Organisation and Work of the Administrative Bodies which established 14 ministries and other State administration bodies. The government is responsible for the work of all bodies of the State administration which include ministries, other administrative bodies and other offices of the public administration. Ministries and State administration organisations are bodies at central level. Branch offices have been established at municipal or city level for certain tasks.

The Secretariat for European Affairs is responsible for coordination on European integration matters. It is under the responsibility of the Deputy Prime Minister for European Integration.

The Constitution stipulates that the right to local self-government is one of the fundamental values of the organisation of the State. Following the signature of the Ohrid Framework Agreement and the subsequent amendments to the Constitution, a new basis was established for further development of local self-government. In 2002 a new Law on Local Self-Government was adopted to regulate the structures and general powers of the municipalities. Municipalities are members of the Association of Local Self-Government Units. In February 2003 a programme for implementation of the decentralisation process was adopted which envisaged that the decentralisation process should be completed in 2007.

In August 2004 the Laws on Territorial Organisation, on Financing of Local Self-Government Units and on the City of Skopje were adopted to complement the 2002 law. The number of municipalities was reduced from 123 to 84. The city of Skopje has 10 municipalities. The local elections in March-April 2005 were held under the new set-up. The powers transferred to the municipalities relate to public services, urban and rural planning, environmental protection, local economic development, culture, local finances, education, social security and health care.

Under the Constitution, the army and the police are under civilian control. A National Security and Defence Concept was adopted in 2003 and clarifies the coordination needed in cases of crisis. Under the Law on Internal Affairs the Ministry of Interior is responsible for the internal security of the State. The ministry has a Bureau for Public Security which includes the Department for Police, Border Police and the Criminal Police and a Directorate for Security and Counter-Intelligence. The ministry is being reorganised in order to implement the Police Reform Strategy adopted in August 2003 to make the police more effective and build a community-oriented police service.

Reforms are in progress in the Ministry of Defence and in the army, driven by the prospect of membership of NATO. The reform has already led to a reduction of military personnel which will have to be completed. The reform also takes into account the objectives of the Framework Agreement in terms of equitable representation.

Civil control of the intelligence service is ensured by the 1995 Law on the Intelligence Agency.

Functioning of the Executive

The Law on Civil Servants enacted in 2000 regulates the status, rights, duties, responsibilities and salary system for civil servants. As provided for by the Law, a Civil Servants Agency was established to support implementation of the Law. Specific categories of civil servants, such as army staff or uniformed employees in the Ministry of Interior, Customs or the Public Revenue Office, are regulated by specific pieces of legislation. It is noteworthy that civil servants account for only part of the public administration staffing, other public servants being subject to general labour relations law.

Under the Law on Civil Servants, the selection procedure is based on the merit principle. Vacancies are published and, after a vocational examination (except for junior associates and junior officers), applicants are selected by a commission set up in the recruiting administration on the basis of a list prepared by the Civil Servants Agency. The final decision is taken by a senior official in the recruiting administration. Dissatisfied candidates can lodge a complaint against the decision to the Civil Servants Agency. However, in practice the rules governing recruitment and selection of candidates do not prevent political interference and full implementation of the Law remains to be ensured. The system of promotions, mobility and disciplinary measures still has to be fully set in place, as initially provided for by the Law. A Law amending the Law on Civil Servants was adopted in September 2005 to improve the existing provisions on recruitment and mobility and further strengthen the Civil Servants Agency.

A Code of Ethics for civil servants was adopted in November 2001 and amended in 2004, providing for disciplinary accountability in case of violation of the Code. In practice, however, this is still rarely applied and implementation should be enhanced. The Law on Administrative Inspection provides for the National Inspectorate for Administration (within the Ministry of Justice) to supervise application of the procedural rules and the conduct and activities of civil servants, with the aim of securing compliance with the principles of legality, professional integrity, efficiency, accountability and responsibility. Full implementation of the Law will require further capacity and resources.

Implementation of the assessment system for civil servants started in 2005, while a new system of salaries and allowances partially entered into force in 2004 and is scheduled to be fully implemented from January 2006.

Actions and decisions of civil servants on individual citizens’ rights and obligations are based on the Law on General Administrative Procedure. Every administrative decision can be appealed against before a second-degree administrative body. If the appeal is not upheld, the case can then be taken to court. However, the second-degree government appeal bodies can, in practice, be an obstacle to citizens’ effective access to justice and could lead to long delays before any decision is taken by the second-degree administrative body. Revision of the administrative procedures is envisaged in the public administration reform and in the judiciary reform strategy. A first step has been taken with a new Law on General Administrative Procedure adopted in May 2005 aiming at strengthening citizens’ rights. Transparency of the administration would be strengthened if a proper legal framework were adopted on public access to documents. A law is under consideration in Parliament.

Citizens can appeal to the Ombudsman , elected by Parliament for a term of eight years. The Ombudsman was introduced by the Ombudsman Law of 1997. After the constitutional amendments in 2001, a new legal framework was adopted to enhance his role, notably through extending his powers, establishing six regional offices headed by Deputy Ombudsmen, and setting a separate budget for his Office. The changes to the Constitution also introduced the double majority rule for election of the Ombudsman and his deputies. Regional offices were set up in November 2004 and the deputy Ombudsmen were elected in July 2005. The Ombudsman investigates citizens' complaints of bureaucratic abuse and discrimination both by State authorities and by individual public servants. In addition to investigating individual cases, the Ombudsman studies other matters relevant to the protection of constitutional and legal rights brought to his knowledge from other sources (such as mass media) reporting on irregularities in the work of State administration bodies and agencies.

In 2004 the Ombudsman received 1 933 new complaints and initiated 26 investigations. Out of a total of 3 202 complaints processed in 2004, 569 violations were identified and 720 investigations are ongoing. 73% of the violations identified were solved on the basis of the Ombudsman’s recommendations. This demonstrates that while there has been some improvement in the degree of cooperation, the level of responsiveness and cooperation is still a problem. In 2004 only 40% of the reports filed to State bodies were acted upon. In areas touching on politically sensitive issues, the Ombudsman encounters difficulties in investigating complaints. In particular, cooperation from the Ministry of Interior is not yet fully satisfactory. Better follow-up of the Ombudsman’s annual report by Parliament would facilitate his work. The Ombudsman should also make use of his powers to prepare special reports and call for parliamentary action.

As part of the reform of the public administration, a reform of the General Secretariat of the Government has been under way since 2003, aiming at linking strategic planning and budgeting. As a result, the government is preparing a document establishing strategic guidelines and setting clear expenditure ceilings for the various ministries, which will be enforced by the Ministry of Finance. A functional analysis of government activities was launched in almost all ministries but still needs to be completed and converted into actual measures.

European integration matters used to be coordinated by the Sector for European Integration and are now handled by the new Secretariat for European Affairs. One of its tasks is to support the inter-ministerial working committee on EU integration established in 2003 and the sub-committee for harmonisation of legislation established in 2001. It submits quarterly reports to the government on progress made on implementation of the SAA. The sub-committee for harmonisation of legislation prepares the annual National Plans for Approximation of Legislation. All the ministries have units dealing with European integration. Working groups for harmonisation of legislation with the acquis have been set up and a network of European coordinators has been established. Still, many of these units are understaffed and overstretched since they also cover international cooperation. A plan for strengthening their human resources capacity is being implemented.

Amendments to the government’s internal rules have also reinforced the role of the government commissions (on the political system, on the economic system, on human resources and sustainable development) with regard to harmonisation of national policy with EU policies and the acquis . Since October 2003 a statement on compliance with EU legislation must accompany all draft legislation submitted to the government.

In March 2005 the government decided to set up a Council on EU integration, composed of Members of Parliament and representatives of civil society. While it could play a substantial role in promoting consensus on EU-related issues and reviewing the progress made, it has not yet been put in place.

There is no central training institution for civil servants, but in May 2002 the Civil Servants Agency identified basic principles for a training policy (“System for Training of Civil Servants”). In November 2004 rather than creating a Training Centre the government decided to foster the capacity of the Civil Servants Agency to coordinate the training programmes to be developed by the various administrative bodies, at central and local level. In 2000 the Sector for European Integration developed a training strategy on EU-related issues for civil servants, and two-year plans have been developed since then. Since 2003 the State budget has been supporting fellowships for post-graduate EU studies abroad. After graduation, these students have to serve in the administration for three years.

Implementation of the decentralisation process started at operational level in July 2005. It was delayed by the organisation of a referendum in November 2004 on an initiative from opponents of the decentralisation laws adopted in the summer. However, the result of the referendum confirmed these laws and the general public support for the process. A plan for the transfer of powers and resources was adopted in April 2005. The Association of Municipalities was involved by the Ministry of Local Self-Government in preparing for the transfer of powers. Most of the legislative framework for decentralisation was put in place between September 2004 and June 2005. A decree on the methodology for the allocation of VAT was adopted in June 2005. However, the municipalities’ capacity to manage their expenditure and their ability to raise revenue has yet to be demonstrated. The uncertainty about the financial situation is heightened by the level of municipal debts estimated at around € 47 million. This led the government to adopt a plan for resolving the debt in July 2005. Establishing transparent accountable administrations at local level which are able to manage the new powers, and notably the new fiscal competences, will be a very challenging task. At present, no financial control system seems to exist. To prevent misuse of public funds at municipal level, but also to minimise the risk of fraud and corruption, it is essential that internal controls and audits are developed as soon as possible. The arbitration of future contentious issues between the municipalities and the State (in the absence of administrative courts and/or intermediary administrative levels empowered to interpret the distribution of powers between the local and national levels) will also have to be clarified.

As regards the development of a professional local administration, the Law on Civil Servants will apply to newly recruited local officials. Important efforts will be needed to ensure its implementation and prevent politicisation. A training programme has been drawn up for 2005. Information in all municipalities and more generally for civil society and the public should be enhanced to explain the process.

The Ministry of Interior and the police are being progressively restructured, in line with the Police Reform Strategy of August 2003 and the Annex thereto of January 2004. The reform is a medium-term process which, under the Action Plan of December 2004, should be completed in 2007. First steps have been taken, notably on the general organisation of the Ministry of Interior, the transfer of border control from the Ministry of Defence to the Ministry of Interior and the establishment of a border police, but key steps are still needed to improve policing standards and make the police an effective and accountable service. Effective and timely implementation of the police reform, including the relevant provisions of the Ohrid Framework Agreement, remains crucial, also for inter-ethnic trust and further stability in the country, and a strong political impetus will be needed to secure its success. In this respect, adoption of the new Law on Police and allocation of proper budgetary resources are of particular importance ( see also Chapter 24 – Justice, freedom and security ).

The general level of security has gradually improved since 2001. Following the plan on the re-entry of the police in the former crisis areas, completed in 2002, police presence is ensured all over the country. Trust on the part of all communities has improved, notably thanks to the first results achieved in the police reform and, in particular, the establishment of ethnically mixed patrols. This is a significant achievement with credit due to all concerned. There have been no serious incidents since autumn 2003 and there was no impact of the March 2004 incidents in Kosovo. However, there are still parts of the country in the former crisis areas where the police have to refrain from undertaking routine activities to avoid potential escalation. In summer 2005 the government handled well incidents of a criminal nature which could have undermined the credibility and standing of the Ministry of Interior. Special attention will also be required to address the considerable quantity of illegal weapons still circulating within the country.

1.1.3. The Judiciary (see also Chapter 23 – Judiciary and fundamental rights)

Role and structure

The judicial system is organised hierarchically in three instances. Twenty-seven basic courts act as courts of first instance. Since 1996 these basic courts have general jurisdiction, meaning that they do not specialise in civil, criminal, commercial or family law, but each court can in principle hear any type of case. This could have an impact on the efficiency of the court system and consistency of judgements, and ways to reintroduce specific divisions of competence to the courts are being discussed in the context of the reform of the judiciary. Investigative judges are in charge of the pre-trial proceedings in criminal cases. Three appellate courts in Skopje, Bitola and Stip decide on appeals against decisions by basic courts.

The Supreme Court is the highest court which decides on appeals against decisions of the appellate courts, as well as on appeals against decisions of 14 second instance government commissions, thus also playing the role of first instance administrative court. The Supreme Court ensures uniform implementation of the law by the lower courts.

The Constitutional Court is composed of nine judges elected by Parliament for a non-renewable period of nine years. The Constitutional Court decides on the conformity of laws with the Constitution, and on the conformity of other regulations with the Constitution and laws and protects individual freedoms and rights. It also decides on conflicts of competence between the three branches of power, conflicts of competence between State bodies and municipalities, and on the accountability of the President of the Republic. According to the Constitution, the Constitutional Court is not considered to be part of the judiciary.

The Judicial Council of the Republic is the competent body for proposing the appointment, dismissal and disciplinary decisions concerning judges, such decisions being taken by Parliament. It is composed of seven lawyers elected by Parliament.

Judges and prosecutors are appointed and dismissed by the Parliament. There are 635 judges and 193 prosecutors and deputy prosecutors. In addition, 2 301 clerks are employed in the courts (2 127) and in the Public Prosecutor’s Offices (174). Court clerks are civil servants whose status is defined by the Law on Civil Servants.

Functioning of the Judiciary

The independence of the judiciary is a principle laid down in the Constitution and the Law on Courts. However, there are some obstacles to the full independence of judges from political influence in practice. The decisive role of the Judicial Council and of Parliament in the election of the President of the Supreme Court, the presidents of the other courts and of the judges has led to party-political influence. The role of Parliament in disciplinary proceedings is also not in accordance with international standards and opens up the possibility of political interference.

The independence, as well as the quality, of the judiciary is further weakened by the absence of a comprehensive merit-based career system and an appropriate disciplinary system for judges.

Furthermore, the judiciary suffers from serious problems of efficiency, caused by both procedural and practical factors. The lack of management tools and the overloading of courts with administrative tasks, lack of transparency in the working procedures of the courts, abuses of procedural loopholes, delays in final judgements, and failures in the enforcement of rulings due, for instance, to weaknesses in the delivery of summons and orders to appear before courts are among the most serious shortcomings to be addressed.

In combination with these shortcomings, the high number of misdemeanour and enforcement cases which the courts have to deal with results in a huge backlog of cases, which also has an impact on the proper functioning of the judiciary. The same failures appear in the Supreme Court whose tasks are hampered by the heavy burden of administrative cases. Out of a total of about 5 000 cases currently pending before the Supreme Court, the vast majority are administrative cases at first instance (around 10% are civil appeals and 1 to 2% are criminal appeals).

The government adopted a Strategy and an Action Plan on Judicial Reform in November 2004 which mainly aims at increasing the independence and efficiency of the judiciary. The reform affects the structure of the judiciary and will require changes to the Constitution. The strategy identifies a set of measures which includes changes in the selection and training of judges, allowing a professional and merit-based system of selection and career development (eliminating the role of Parliament in appointments and dismissals of judges and prosecutors). It includes a reform of the Judicial Council and the creation of a special supervisory body to monitor the performance of judges. The reform also includes ways to alleviate the workload of courts, through changes in the courts’ internal organisation (a dual system of first instance courts and higher courts, and the establishment of specialised chambers in the basic courts), the transfer of competence in administrative cases from the Supreme Court to lower court(s), and the transfer of competence for misdemeanours to administrative bodies. The law establishing an academy for the training of judges and prosecutors is under discussion in Parliament. The main principles presented by the government for changes to the Constitution were approved by Parliament in May 2005 by a broad majority. Draft amendments were presented by the government in June, and in August Parliament adopted 15 draft amendments which have been debated publicly.

Some changes in the legal framework are already being implemented. Changes were made to the Criminal Code and the Law on Criminal Procedure in autumn 2004 to shorten the court procedure and limit the scope for abuse of the rights of parties and their attorneys. A new law on enforcement of civil judgements was adopted in May 2005 to abolish the separate motion for execution of judgements and create a privatised bailiff system under the control of the Ministry of Justice. It will apply from 2006, subject to the adoption of secondary legislation and the necessary preparatory measures to put the new system in place. A new Law on Civil Procedure was adopted in September 2005 to introduce changes which should make the court procedures more efficient. A new secondary legal framework will be needed to allow those changes to be implemented. The use of alternative dispute resolution methods for commercial cases is progressively increasing.

Implementation of the measures set out in the Strategy on Judicial Reform, once adopted, will require considerable efforts on the part of the authorities. This must include a substantial increase in the budgetary resources allocated (about € 20 100 000 for the judiciary and € 3 200 000 for the Public Prosecutor’s Office). The financial situation of the courts is difficult and in some cases does not allow them to meet their most basic needs, which can weaken the independence of the judiciary. Infrastructure and equipment are additional serious problems.

1.1.4. Anti-corruption policy (see also Chapter 23 – Judiciary and fundamental rights)

International reports and surveys indicate that corruption is a serious and widespread problem which affects many aspects of social, political and economic life despite the intensification of efforts to fight it and increased awareness of its negative impact on the country’s successful transition.

The causes of corruption are manifold. They include the often arcane administrative procedures for various dealings of citizens and enterprises with the State administration, the lack of transparency and compliance with these procedures, the extensive and non-transparent system of issuing licences and permits for various activities, the discretionary rights of certain government officials, the lack of well-defined rules on conflicts of interest and the still opaque management of State assets (including State-owned land, concessions and public procurement).

The former Yugoslav Republic of Macedonia has ratified the Council of Europe Criminal and Civil Law Conventions on Corruption and the Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime. The Additional Protocol to the Criminal Law Convention on Corruption has been signed and ratified. The UN Convention against Corruption has been signed but not yet ratified and the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions has yet to be signed. The country has been a member of the Group of States against Corruption (GRECO) since October 2000. Out of the 17 recommendations made by GRECO in 2002, 15 have been implemented or partly implemented. Efforts have to be made to implement the remaining two. Current proposals by the government provide for the necessary constitutional changes.

The former Yugoslav Republic of Macedonia has adopted various anti-corruption measures. In addition to indirect incrimination of corruption through a number of related criminal offences in the Criminal Code, a Law on Prevention of Corruption was adopted in 2002. Under this Law, a State Commission for the Prevention of Corruption was established in November 2002 as a consultative and preventive body. The Commission adopted a National Programme for Prevention and Repression of Corruption in 2003 and an annex on measures to prevent corruption at local level in June 2005. Under this Law, a large number of officials and elected representatives are under an obligation to submit a declaration of assets to the State Commission when they are nominated or elected. The Law was amended in 2004 to extend this obligation to civil servants in the State administration. This obligation has been partly implemented and a few charges have been brought for failure to submit the declaration of assets.

In the Ministry of Interior a professional standards unit was created in 2003 to investigate, among other things, corruption cases in the police. It has produced its first results: police officers have been dismissed, disciplinary measures have been imposed and some criminal charges have been brought against police officers, as well as against judges and court officers. In 2005 new departments were established in the Ministry of Interior and in the Public Prosecutor’s Office to combat organised crime and corruption. Cooperation between them is gradually being established. In the last two years three judges have been convicted and several others, including a former president of court, are currently under investigation or pre-trial procedures. The overall coordination and cooperation between law enforcement agencies (including the Public Prosecutor’s Office, the Police, the Financial Police, the Directorate for the Prevention of Money Laundering and the judiciary) needs to be strengthened and the existing memoranda of understanding must be fully implemented. There is still confusion over competence and weaknesses in the collection and investigation of relevant evidence.

While progress has been made on implementation of the National Programme for Prevention and Repression of Corruption, much remains to be done. Beyond formal implementation of the programme, further efforts are needed to ensure effective enforcement of the provisions adopted. Implementation of the public procurement rules will have to be enhanced to detect fraud and corruption better. The legislative provisions on the financing on political parties, in particular the Law on the funding of political parties which entered into force in January 2005, will have to be fully implemented. This will require tightening up control by the State Audit Office.

In addition, the effectiveness of the State Commission for the Prevention of Corruption depends on an appropriate level of cooperation by the State bodies. The guidelines adopted in 2004 to facilitate this cooperation have contributed to improving the situation. Better cooperation with the Public Prosecutor would also enhance the effectiveness of the action against corruption.

Certain high-profile corruption cases have been prosecuted over the last two years and recently a number of pyramid tax evasion cases have been prosecuted. However, overall, the outcomes of the judicial proceedings have been slow. A number of old cases of corruption (especially in the context of privatisation, disposal of particularly important State assets, companies and land, tax evasion and fraud) have remained unsettled. The independence of the officials in charge of investigations and of the judges needs to be enhanced.

Progress on implementation of the State Programme for the Fight Against Corruption, on the follow-up given to the recommendations by the State Commission for the Prevention of Corruption and by the State Audit Office, including by Parliament, as well as on addressing the weaknesses of the institutions and the lack of transparency in public decisions would further demonstrate the political will to address the corruption phenomena. The fight against corruption would also benefit from progress on strengthening the independence and efficiency of the judiciary as well as overall administrative reform, including the de-politicisation of the public administration.

1.2. Human rights and the protection of minorities ( see also Chapter 23 – Judiciary and fundamental rights )

Observance of international human rights law

The former Yugoslav Republic of Macedonia has a number of legislative provisions to guarantee the respect of human rights and the rights of minorities. The Constitution deals with fundamental freedoms and rights. These rights are also underpinned by certain international conventions, the foremost of which is the European Convention for the Protection of Human Rights and Fundamental Freedoms and its main additional protocols. Taken as a whole, this constitutes - pursuant to Article 6 of the Treaty on European Union - part of the acquis that any State wishing to join the EU must first have ratified.

The former Yugoslav Republic of Macedonia has been a member of the Council of Europe since November 1995 and ratified the European Convention for the Protection of Human Rights and Fundamental Freedoms and its additional protocols in April 1997. Individuals may take their case to the European Court if they consider that their rights under this Convention have been violated.

Among other international instruments protecting human rights and minorities , the former Yugoslav Republic of Macedonia has ratified the European Convention on the Prevention of Torture, the European Charter for Regional and Minority Languages and the 1996 European Social Charter. It has ratified the key existing UN conventions in the field of human rights and their Protocols.

In accordance with Article 118 of the Constitution, ratified international treaties are part of the internal legal order of the former Yugoslav Republic of Macedonia and take precedence over ordinary national legislation.

Since November 1998 the European Court of Human Rights has delivered three judgements concerning the former Yugoslav Republic of Macedonia, and there has been one friendly settlement. On two occasions the Court found that there had been a violation of the Convention and in one case no violation was found. The violations concerned the protection of property under Protocol 1, Article 1 of the European Convention for the Protection of Human Rights. There are currently 300 applications against the former Yugoslav Republic of Macedonia pending before a decision-making body of the Court.

Civil and political rights

Access to justice is guaranteed by the Constitution. By law, legal aid is available in criminal and civil cases, from the Bar Association, but the level of implementation of this provision, particularly in civil cases, is weak and would need to be enhanced. The Law on Criminal Procedure stipulates that in certain criminal proceedings a defence attorney is appointed. The death penalty was abolished in 1990 and prohibited under the Constitution in 1991. The former Yugoslav Republic of Macedonia has signed Protocol 13 to the Convention for the Protection of Human Rights and Fundamental Freedoms concerning the abolition of the death penalty in all circumstances, which entered into force in November 2004. Torture and inhumane and degrading treatment are forbidden by the Constitution, as are forced or obligatory labour .

The former Yugoslav Republic of Macedonia has ratified the 1987 European Convention for the Prevention of Torture and Inhuman or Degrading Treatment or Punishment which entered into force in October 1997, and has adopted a comprehensive legislative framework to fight torture and inhumane or degrading treatment or punishment in State institutions. Improvement has been noted in the investigation of complaints of mistreatment but the investigation mechanisms are not yet fully implemented and there are indications that many cases go unpunished. A number of problem areas still need to be addressed.

Arbitrary arrest is forbidden by the Constitution. Nobody can be arrested or put into custody without a written judicial order. Any person arrested has the right to appeal to the court, which decides on the legality of the deprivation of liberty and must be immediately informed of the reasons for the arrest. In addition, the Constitution provides for compensation to be paid to any person unjustly arrested. The length of pre-trial detention is defined precisely by law, with guarantees for the person deprived of liberty that are in line with international standards. Current procedural legislation provides for cases in which pre-trial detention is mandatory, thus contradicting the case law established by the European Court of Human Rights. There is a lack of clarity on the use of “informative talks” by the police even though the Supreme Court has ruled that they cannot be mandatory.

Efforts to combat trafficking in human beings have been supported by the adoption of a National Programme for the Fight against Trafficking in Human Beings and Illegal Migration in 2002, in line with international standards, and the setting-up of a National Commission in 2001. An Action Plan to combat trafficking in children has been drafted but not yet adopted. The Criminal Code was amended in 2004 to criminalise the trafficking of human beings and the smuggling of migrants ( see also Chapter 24 - Justice, freedom and security ).

Privacy is guaranteed. Several constitutional provisions refer to the privacy of personal and family life, the freedom and confidentiality of correspondence and other forms of communication, the privacy of personal information and the inviolability of the home. That right may be restricted only by a court decision and a motivated search warrant. The Constitution was amended to regulate special investigative techniques in the fight against organised crime. However, telecommunication tapping takes place despite the absence of a proper legal framework. This legal vacuum has to be addressed quickly and proper judicial control will have to be ensured.

Freedom of thought, conscience and religion are guaranteed by the Constitution. Conscientious objection on religious grounds is allowed by the Law on Defence. The right of citizens to establish private educational institutions is guaranteed by the Constitution for all levels except primary education. The Constitution recognises the Macedonian Orthodox Church (MOC), the Islamic Religious Community in Macedonia, the Catholic Church, the Evangelical-Methodist Church and the Jewish Community as religious communities. Other religious groups can be established under the conditions provided for by the Law on Religious Communities and Religious Groups which is currently being revised. However, according to international experts, the draft revisions are not fully in line with the requirements of the European Convention for the Protection of Human Rights. The legislation proposed will have to be harmonised with international law in this field. Moreover, a number of observers have referred to problems for smaller religious groups and communities linked to property issues and lack of worship facilities, as well as to the particular difficulties encountered by members of the “Ohrid Archbishopric” set up in 2004 under the authority of the Serbian Orthodox Church (SOC) which does not recognise the autonomy of the Macedonian Orthodox Church (MOC). They are also linked to Article 8 in the current Law on Religious Communities and Religious Groups which stipulates that there can be only one religious community per religious confession. The issue has taken a new turn after the failure of the negotiations between the two churches, and the sentencing in August 2005 of a former bishop of the MOC, designated as exarch by the SOC, for “incitement of national, racial and religious hatred”, pursuant to the Penal Code. It is essential to intensify dialogue between the MOC and the SOC in good faith and based on respect for religious tolerance. In addition, all legal avenues must be pursued to resolve this matter in a manner that reflects the established principle of religious tolerance. The authorities should ensure that effective religious freedom for all believers and denominations is respected.

Freedom of expression is guaranteed by the Constitution. However, there is concern that libel cases, which according to the Criminal Code may lead to fines and prison sentences, could result in the imprisonment of journalists despite the existence of an exemption for “freedom of public expression of thought”. There have been few convictions of journalists, though, and most of them are on appeal before the Supreme Court.

The media feature a high number of electronic media with 30 public and 123 commercial broadcasters. The press is pluralist and diversified but there is a certain degree of concentration of ownership. Another characteristic of the media is their political and economic ties, one of the reasons being that broadcasting media cannot rely only on the domestic market but need subsidies/sponsorship from the government, political parties or politically affiliated companies. Proper mechanisms are needed to ensure the independence of the media, in particular a stronger and independent Broadcasting Council. The Law on Broadcasting is under revision in order to address shortcomings in the functioning of the public broadcasting company (MRTV) and the independence of the Broadcasting Body, and the comments made by the Council of Europe and the Commission should be fully taken into account ( see also Chapter 10 – Information society and media ).

Professionalism in the media would be substantially improved if training programmes were further developed and if education for journalists were reformed. Investigative journalism could also be enhanced if a proper legal framework for access to information were adopted. The role of the media in informing the public on EU-related issues is essential and will have to be enhanced. The media are still frequently adopting views where ethnic ties prevail. Although progress has been made in this respect, the media could play a much greater role in promoting social cohesion and strengthening interethnic relations.

The right to vote is guaranteed and defined by the Constitution for all citizens who have reached the age of 18 years and elections are organised only in the country (citizens abroad cannot vote).

Freedom of association and assembly are guaranteed by the Constitution. The Law on Association of Citizens and Foundations entered into force in 1998. Associations can be established by at least five nationals. Foreigners resident for more than one year can also establish associations. However, nationals and foreigners cannot found an association together. The Law neither allows legal persons to establish associations nor associations to have political or religious goals. This has had negative consequences for social dialogue, as companies have not been able to create their own employers’ associations, but only to join the Chambers of Commerce.

The Constitution prohibits all forms of discrimination, including on the basis of race, colour and ethnic origin. There is no specific criminal provision forbidding acts of xenophobia, however, and non-discrimination on grounds of sexual orientation is not prescribed as such. Homosexuality was decriminalised in 1996. A new law on labour relations was adopted in July 2005 which explicitly forbids discrimination based on race, colour of skin, gender, age, state of health, religious, political or other beliefs, sexual orientation or on the grounds of any other personal circumstances. Implementation of the existing provisions against discrimination could be further facilitated by the adoption of anti-discrimination legislation ( see also Chapter 19 – Social policy and employment ).

The right to property is guaranteed by the Constitution. However, foreigners are still subject to certain limitations defined by law, notably regarding ownership of agricultural land (foreigners may only hold a concession or a long-term lease with consent by the Minister of Justice subject to a prior opinion from the Ministry of Agriculture, Forestry and Water Economy). Foreign physical and legal persons may become owners of real estate on condition of reciprocity. In the case of inheritance, foreigners must meet the condition of reciprocity. Foreigners cannot own construction land except on long-term lease for the purpose of erecting business buildings and premises, upon consent by the Minister of Justice. The cadastre covers only 45% of the national territory. A reform is being prepared to modernise it with the aim of covering 100% of the territory by 2010.

The process of restitution of property expropriated during the Yugoslav communist regime is regulated by a law adopted in 1998 and amended in 2000. The process has started. However, since 2002 implementation of the decisions taken where properties could not be handed back and owners are compensated by bonds has been encountering difficulties, due to delays in the committee deciding in second instance on administrative denationalisation matters.

More active involvement of NGOs in public policymaking and reforms is observed, whether on fighting corruption, social care and services, environmental issues or on the protection of human and minority rights, gender equality, refugees and humanitarian activities and supporting the decentralisation process. The number of registered NGOs and foundations is approximately 5 700. Progress has been made on building networks of organisations. Since 2002 the government has provided financial support to some NGOs, albeit without clear and transparent criteria. The development of professional organisations and civic associations is still hampered by the lack of financial resources and remains predominantly dependent on external resources, public or foreign. Government initiatives, such as tax incentives and better coordination between the public authorities and NGOs, remain necessary to further facilitate and support the development of civil society.

Economic and social rights

In December 2004 the former Yugoslav Republic of Macedonia ratified the 1961 European Social Charter and Protocol No 2 reforming the control mechanism, which entered into force in March 2005. It has signed but not yet ratified Protocol No 1.

The Government adopted a National Plan for Gender Equality in 2002. A number of policies have been defined to enhance equal opportunities, including the 2004 National Action Plan for Employment, the 2002 National Strategy for Reducing Poverty, the 2004 Strategy for the Development of Education and the 2003 National Programme for the Development of Culture. Positive discrimination is also an aspect of implementation of the Ohrid Framework Agreement.

Primary education is compulsory and free. Private schools can be established except for primary education. Higher education institutions can be State-owned or private. The education budget remains limited, however. The impact of the current decentralisation process on the education system remains to be assessed.

As a successor of the former Federal Republic of Yugoslavia, the former Yugoslav Republic of Macedonia acceded to the UN Convention on the Rights of the Child . A National Action Plan for Children and a National Youth Strategy have been adopted, while a National Plan on the Fight against Trafficking in Children is being prepared. A special department for protection of children’s rights has been set up in the Ombudsman’s Office. It is a member of the European Network of Ombudsmen for Children. The Law on Family and the Criminal Code were amended in 2004 in order to prevent domestic violence more effectively but implementation of the new provisions and their impact remain to be demonstrated. Domestic violence, sexual harassment and rape are issues which would require more active measures, including revision of the definition of rape in criminal law.

A National Strategy for the Rights of Persons with Disabilities was adopted in 2001. Its implementation is monitored by a coordination body which, however, suffers from a lack of resources. Only limited progress could be made. Legal incentives are provided to promote the employment of persons with disabilities and the Law on Employment of Persons with Disabilities introduces affirmative action.

There are no obstacles to establishing trade unions . The right to strike is guaranteed, with some restrictions. There are two main trade union federations, the Federation of Independent Trade Unions and the Union of Trade Unions, and a third has been established (Federation of Free Unions).

Social dialogue remains very formal due to the weaknesses of the social partners and needs to be developed. Bipartite social dialogue and sectoral social dialogue are practically non-existent. Development of employers’ organisations has been difficult because of the legislation on associations and the monopoly position inherited by the Chamber of Commerce from the previous system. (S ee also Freedom of association and assembly (above) and Chapter 19 – Social policy and employment. )

Minority rights, protection of minorities and cultural rights

The former Yugoslav Republic of Macedonia has signed and ratified the Framework Convention for the Protection of National Minorities (which entered into force in February 1998) as well as the UN Convention on Civil and Political Rights. The European Charter for Regional and Minority Languages has been signed and is awaiting ratification. The country has concluded a bilateral agreement on protection of national minorities with Serbia and Montenegro.

According to the internationally monitored census of population, households and dwellings, carried out in November 2002, 64.2% of the population are ethnic Macedonians, 25.2% are ethnic Albanians, 3.9% Turks, 2.7% Roma, 1.8% Serbs, 0.8% Bosniaks, 0.5% Vlachs and 1.0% belong to the other ethnic communities. The six national minorities within the meaning of the Framework Convention for the Protection of National Minorities (Albanians, Turks, Roma, Vlachs, Serbs and Bosniaks) make up 35.8% of the population.

Beside obligations under the European Conventions, the basic framework for the policy towards minorities in the former Yugoslav Republic of Macedonia has been the 2001 Ohrid Framework Agreement. The Constitution sets the legal framework for minority rights and has been considerably influenced by implementation of the Framework Agreement, which required a number of constitutional and legislative changes providing a high level of protection of the rights of minorities.

Implementation of the Framework Agreement has had a significant impact on improving ethnic relations. This has been a major undertaking. Building trust between the ethnic groups remains a condition for achieving sustainable progress, while further efforts to encourage the sense of ownership of the process and bringing communities together are essential. In this respect, in addition to continuous implementation of the main principles set out in the Agreement, implementation of the decentralisation process has become crucial as it encourages participation by citizens in democratic life and promotes the identity of the communities. Committees for inter-community relations are gradually being established in municipalities where at least 20% of the population belong to minorities (20 out of the 84 municipalities), as provided for by the Framework Agreement and the 2002 Law on Local Self-Government. Their role should be promoted so that they contribute significantly to further initiatives at local level.

The level of participation of minorities in the public administration and public enterprises, at central and local level, has substantially improved. Considerable efforts have been made to address the key principle of “equitable representation of non-majority communities” in the Framework Agreement. Strategic measures were adopted in 2003 and training programmes were specifically designed. The overall representation of members of minorities in the administration rose from 16.7% in December 2002 to 20.5% in July 2005. For instance, representation of ethnic Albanians rose from 11.6% to 15.3% during the same period. Progress has been most significant in the security sector. In the Ministry of Interior, representation of members of non-majority communities climbed from 12.1% in December 2002 to 19.5% in July 2005. More specifically, the proportion of uniformed police officers belonging to non-majority communities is higher. There are detailed plans for more equitable representation in the armed forces where the representation of minorities rose from 8.5% in December 2002 to 16% in December 2004. Ethnic Albanians rose from 3% of the armed forces in 2002 to 10.2% in 2004, and the other minorities made up 5.8%.

No such planning exists in the rest of the public sector, however, including in the judiciary where better representation would contribute to greater confidence in the judicial system on the part of minorities.

Improving participation by minorities in the public sector is an effort which has to be sustained in the medium term. Sensitive arbitration is needed from the government and only a strong political will can sustain the process. A medium-term strategy for equitable representation of all minorities would facilitate that process.

The Constitution grants members of the minority communities the right to primary and secondary education in their language. That right is implemented. However, incidents at some schools underlined that the various communities concerned should ensure that this contributes to promoting cultural identities and, at the same time, social cohesion. Access to higher education is another area where substantial improvements have been made in recent years and was another consideration in the Framework Agreement. In 2001 the South East European University became the first private university using Albanian, Macedonian and English as working languages to open, with the support of the international community. The Law on Higher Education was amended to provide for affirmative action in the enrolment process at State universities (Skopje, Bitola) and in 2004 a third State university was founded in Tetovo. In practice, this new university was based on the so-called “University of Tetovo” which had no legal status. It started its first academic year in 2004/2005.

As a result of these efforts, the number of students belonging to minorities increased from 12.6% of the total number of students enrolled in 2001/2002 to 20.6% in 2004/2005. In particular, the number of ethnic Albanians rose from 6.7% to 15.5%. In 2004/2005 students from the Serbian community represented 1.5%, the Turk community 1.3%, the Vlach community 0.8% and the Roma community 0.3%.

Any language spoken by more than 20% of the population is an official language following the amendment of the Constitution in 2001. After the 2002 census, Albanian was therefore recognised as an official language. It can be used in communications with the central administration and with the local administration in municipalities where the ethnic Albanian community makes up at least 20% of the population. Personal registers have to be maintained in both languages in those municipalities. Other languages can also be used at municipal level if so decided by the municipalities. The use of Albanian is also recognised in Parliament and in court proceedings. Implementation of these provisions has started and further progress will require heavy investments. The Broadcasting Law imposes an obligation on public national broadcasters to broadcast programmes in the languages of all communities and Macedonian Radio and Television has allocated its third channel to such programmes. A package of legislation has been adopted so that ID cards and passports can be issued in both Macedonian and Albanian. This has been implemented since May 2003 for ID cards and since December 2004 for passports. The same principle is about to be implemented for driving licences.

Furthermore, the coalition partners have agreed that, although not formally required by the Framework Agreement, a law on the use of languages should be adopted to complement the substantial number of existing sectoral laws specifying use of the Albanian language.

The Ombudsman also has a role to play in ensuring that there is no discrimination against minorities. In line with the Framework Agreement, he should pay particular attention to safeguarding the principles of non-discrimination and equitable representation at all levels in public bodies and other areas of public life. The new Ombudsman elected in 2004 has undertaken to be more active in this area but it is still too early to judge his effectiveness properly.

Since independence the Roma have been participating in political life by establishing political parties. One Roma party has a Member of Parliament. However, the Roma community suffers from a very difficult economic and social situation, high unemployment, a low level of education, dependence on welfare and a lack of health care protection. With a view to closer integration of the Roma in society, in January 2005 the government adopted a National Strategy for Roma. All ministries concerned have been invited to plan funds and activities in their budgets for its implementation and a national working group has been set up to coordinate the activities of the government aiming at implementing the objectives of the Strategy and of the Roma Decade (2005-2015).

The number of internally displaced persons (IDPs) has been reduced from a peak of 76 000 after the crisis in 2001 to about 1 420 in 2005. The Ohrid Framework Agreement provided for arrangements for the return of IDPs, including security conditions, reconstruction and the “revitalisation” of the former crisis areas. The plan for the return of the police was implemented, notably through the creation of mixed police to facilitate their work in the field and the reconstruction of police stations and construction of new police stations in areas needing tighter security. An extensive reconstruction programme has almost been completed (more than 6 000 houses reconstructed). The conditions for the return of those still wishing to do so include resolution of the outstanding issues for the completion of the reconstruction programme (around 200 houses), but mainly an improved economic situation and further consolidation of the rule of law.

There are still 2 200 refugees from Kosovo in the country. In September 2003 temporary protection for refugees from Kosovo was abolished. A new Law on Asylum and Temporary Protection entered into force in August 2003 which, overall, meets the European and international standards in a satisfactory manner. Refugees were allowed to file individual applications for recognition of the right to asylum. It is notable, however, that so far very few have been recognised as refugees, and most applicants have been granted humanitarian protection which is a status with limited entitlements and duration. Asylum-seekers and refugees are encountering difficulties with regard to their capacity to exercise their rights, and adequate reception facilities are missing. The Ministry of Labour, in charge of providing advice to refugees and ensuring inter-ministerial and inter-agency coordination on implementation of the Law, lacks the necessary resources. The government commission which is the competent body for hearing appeals against first instance decisions on refugee status remains untransparent and lacks independence ( see also Chapter 24 - Justice, freedom and security ).

1.3. Regional issues and other obligations defined by the EU Council conclusions of 29 April 1997

Regional cooperation

The former Yugoslav Republic of Macedonia is an active member of several regional and sub-regional initiatives, such as the Stability Pact, the South-East European Cooperation Process (SEECP), the Central European Initiative (CEI) and the South-East European Cooperation Initiative (SECI). It is, in particular, actively participating in the initiatives related to the SEE Core Transport Network and the establishment of an Energy Community for South-East Europe. It is also participating in activities under the Adriatic-Ionian Initiative and participated in the Danube and Szeged processes.

The former Yugoslav Republic of Macedonia signed and ratified the Succession Agreement on the distribution of the assets of the former Federal Republic of Yugoslavia.

The country has signed free trade agreements with all countries in the region, as provided for in the Memorandum of Understanding on Trade Facilitation and Liberalisation, signed in June 2001 in the framework of the Stability Pact.

Relations with Albania are good. A Memorandum for Cooperation in their European integration process has given an impetus to bilateral relations, and an agreement on good neighbourly relations is under consideration. Common objectives as regards NATO membership and participation in the Adriatic Charter have also intensified relations between the two countries. A number of bilateral agreements provide a legal framework for the development of this cooperation, including agreements on border cooperation, on cooperation between the ministries of justice in the area of mutual legal assistance, signed in April 2005, and on cooperation on combating terrorism, organised crime and illicit trafficking. A readmission agreement and an agreement for the protection and sustainable development of Lake Ohrid were signed in July 2005. A Free Trade Agreement was signed in March 2002 and entered into force in July 2002.

Relations with Bulgaria have developed in many fields and substantially improved since the beginning of the 1990s. The two countries are engaged in a number of cooperation agreements. Their cooperation focuses on trade, regional development, infrastructure, judicial cooperation, and joint efforts to achieve their common European aspirations. A Memorandum of Cooperation for supporting the country’s efforts on European integration was signed in August 2004. A Free Trade Agreement was signed in 1999 and entered into force in January 2000.

Relations with Serbia and Montenegro were normalised in 1996. Since then the two countries have engaged in developing their cooperation and signed a number of bilateral