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balkans
May 2007 
The End of Violence in the Balkans?
Posted on Aug 25th, 2006
by 
Michael
Michael
How Macedonia is imitating Estonia. If they can succeed in passing the proposed reforms, this may be the beginning of the end of violence in the Balkans:
Balkan Tiger
Meelis Kitsing
The late 1990s saw some economic reforms under the center-right government, but the onslaught of violence between ethnic Albanians and Macedonians forced any type of economic reforms to the backseat, where they remained until just last month. The outcome of elections held on July 5 gives reason to believe in the rebirth. . . .
The Macedonian Internal Revolutionary Organization (VMRO-DPMNE) has learned the right lessons. The party, headed by the youthful Nikola Gruevski, a former trade minister and finance minister in the government headed by the VMRO-DPMNE in 1998-2002, emphasized economic reform in its campaign, not Macedonian nationalism. "We believe that Macedonians want to do more than just survive -- they want to succeed. And to succeed we need a stronger, healthier economy -- one that delivers jobs and growth, that frees individuals to pursue their God-given potential with a minimum of government interference and that opens up the creative spirit in people," wrote Gruevski in the Washington Times on July 4. VMRO-DPMNE's election platform was based on a comprehensive and detailed study of reforms by other countries in the Central and Eastern Europe. Radical reformers of Central and Eastern Europe are seen as examples to be followed.
The VMRO-DPMNE promises to cut public expenditure by 2 percent of the GDP by 2010. It plans to cut red-tape by 2007, thereby enabling registration of new companies to be completed within three days. The party plans to implement a flat personal tax rate of 10 percent by 2008 - a turnaround from the current progressive income tax rates of 15, 18 and 24 percent. The tax rate on corporate profits will be reduced from 15 percent to 10 percent and, following the example of Estonia, the tax on reinvested profits will be scrapped altogether. . . .
Judging from the recent history of reform in former socialist countries as well as conventional expectations, nobody would have suspected Estonia to become a wunderkind of economic reform. Comparing Estonia (a country constantly given as an example in VMRO-DPMNE's election program) with Macedonia, it becomes obvious that 20 years ago one would have expected Macedonia to do better than Estonia. The quality of life was better in socialist Macedonia than in socialist Estonia. Yugoslavia offered more economic freedom than the Soviet Union, to which Estonia had been incorporated. Macedonians were able to travel and work abroad - even the thought alone was out of the question in socialist Estonia.
In the early 1990s the collapse of the Soviet Union and Yugoslavia meant uncertainty for both Estonia and Macedonia. Both were new and unknown countries on the periphery of Europe. Many Westerners confused the Baltics with the Balkans. Estonia had a sizeable Russian-speaking minority that made up 35 percent of the population. Macedonia had an Albanian minority which was 20 percent of population in 1990 and has now increased to 25 percent. The confusion was not simply due to sheer ignorance. There were as many experts predicting doom for Estonia as there were "sovietologists" failing to predict the collapse of the USSR in the 1980s. A possible ethnic conflict or even a war with Russia was seen as likely. Despite the disadvantaged starting position and ethnic mix, combined with post-socialist politicking, Estonia emerged as a phoenix.
The reasons for Estonia's success remained invisible to the casual observer for years. While Macedonia chose a gradual, stop-and-go economic reform path, Estonia chose a radical and rapid approach by relying on the invisible hand of the market instead of on government intervention. The rapid economic development of Estonia is not just economic achievement: having benefited the Russian-speaking population in Estonia - it has contributed to social peace, as well. Good economic circumstances are less likely to feed social unrest. Indeed, Estonia has not had any large-scale ethnic conflicts, even if relations between the various ethnic groups are far from perfect.
The fact that thinking along those lines has reached the Balkans is a major improvement. Economic reforms do not offer absolute guarantees against potential ethnic conflicts but they will certainly reduce the likelihood of such conflicts. . . . .
http://www.tcsdaily.com/article.aspx?id=082406A
Balkan Tiger
Meelis Kitsing
The late 1990s saw some economic reforms under the center-right government, but the onslaught of violence between ethnic Albanians and Macedonians forced any type of economic reforms to the backseat, where they remained until just last month. The outcome of elections held on July 5 gives reason to believe in the rebirth. . . .
The Macedonian Internal Revolutionary Organization (VMRO-DPMNE) has learned the right lessons. The party, headed by the youthful Nikola Gruevski, a former trade minister and finance minister in the government headed by the VMRO-DPMNE in 1998-2002, emphasized economic reform in its campaign, not Macedonian nationalism. "We believe that Macedonians want to do more than just survive -- they want to succeed. And to succeed we need a stronger, healthier economy -- one that delivers jobs and growth, that frees individuals to pursue their God-given potential with a minimum of government interference and that opens up the creative spirit in people," wrote Gruevski in the Washington Times on July 4. VMRO-DPMNE's election platform was based on a comprehensive and detailed study of reforms by other countries in the Central and Eastern Europe. Radical reformers of Central and Eastern Europe are seen as examples to be followed.
The VMRO-DPMNE promises to cut public expenditure by 2 percent of the GDP by 2010. It plans to cut red-tape by 2007, thereby enabling registration of new companies to be completed within three days. The party plans to implement a flat personal tax rate of 10 percent by 2008 - a turnaround from the current progressive income tax rates of 15, 18 and 24 percent. The tax rate on corporate profits will be reduced from 15 percent to 10 percent and, following the example of Estonia, the tax on reinvested profits will be scrapped altogether. . . .
Judging from the recent history of reform in former socialist countries as well as conventional expectations, nobody would have suspected Estonia to become a wunderkind of economic reform. Comparing Estonia (a country constantly given as an example in VMRO-DPMNE's election program) with Macedonia, it becomes obvious that 20 years ago one would have expected Macedonia to do better than Estonia. The quality of life was better in socialist Macedonia than in socialist Estonia. Yugoslavia offered more economic freedom than the Soviet Union, to which Estonia had been incorporated. Macedonians were able to travel and work abroad - even the thought alone was out of the question in socialist Estonia.
In the early 1990s the collapse of the Soviet Union and Yugoslavia meant uncertainty for both Estonia and Macedonia. Both were new and unknown countries on the periphery of Europe. Many Westerners confused the Baltics with the Balkans. Estonia had a sizeable Russian-speaking minority that made up 35 percent of the population. Macedonia had an Albanian minority which was 20 percent of population in 1990 and has now increased to 25 percent. The confusion was not simply due to sheer ignorance. There were as many experts predicting doom for Estonia as there were "sovietologists" failing to predict the collapse of the USSR in the 1980s. A possible ethnic conflict or even a war with Russia was seen as likely. Despite the disadvantaged starting position and ethnic mix, combined with post-socialist politicking, Estonia emerged as a phoenix.
The reasons for Estonia's success remained invisible to the casual observer for years. While Macedonia chose a gradual, stop-and-go economic reform path, Estonia chose a radical and rapid approach by relying on the invisible hand of the market instead of on government intervention. The rapid economic development of Estonia is not just economic achievement: having benefited the Russian-speaking population in Estonia - it has contributed to social peace, as well. Good economic circumstances are less likely to feed social unrest. Indeed, Estonia has not had any large-scale ethnic conflicts, even if relations between the various ethnic groups are far from perfect.
The fact that thinking along those lines has reached the Balkans is a major improvement. Economic reforms do not offer absolute guarantees against potential ethnic conflicts but they will certainly reduce the likelihood of such conflicts. . . . .
http://www.tcsdaily.com/article.aspx?id=082406A
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