Finland's presidency of the Council of the EU: 1 July - 31 December 2019

"Sustainable Europe - Sustainable Future". 

The presidency programme focuses on four main priorities: 

• strengthen common values and the rule of law
• make the EU more competitive and socially inclusive
• strengthen the EU's position as a global leader in climate action
• protect the security of citizens comprehensively

Finland will be the first presidency to integrate the new priorities of the Strategic Agenda 2019-2024 into the Council's work.

https://eu2019.fi/en/frontpage

The good European House

How can the EU be transformed into
"The good European House"?
- on the long term, mechanical, basic agenda of the EU-process for the period 1986 - 2030 and how to handle it

On the 29th of March two years ago, the IGC 96 was opened in Turin. The conference has now reviewed how the Maastricht Treaty on the European union (TEU) has functioned in relation to the goals set out in the articles A and B of the TEU and agreed on a new treaty; the Amsterdam Treaty.
The conference was prepared by different countries, by groups in the member-countries, by the "European Parliament" (EP), "The European Council", "The Commission" and a special "Reflection
Group", the last of which left its report to the European Council in December 1995.
The TEU, The European Council, the Commission, the EP and the Council stated, or had agreed on a number of specific areas to be reviewed during the conference, summarized in the report of the Commission on the conference.
But none of these reports deal with some important questions, that concern the development of EU in a longer perspective.

THE BUILDING OF "THE EUROPEAN HOUSE"
What is the EU?
It is, of course, on one level possible to argue for it as the expression of an effort to weave together the economies of Europe in such a way that it makes it impossible for "unreliable power hungry national politicians" to start wars against one another in the future.
The EC/EU works in that direction.
But the EC/EU also has deeper roots and levels.
The TEU has some of its roots in the Coal and Steel Community of 1951 and the Treaty of Rome from 1957. And like "Rome", the EU too is not built in only one day, or in one step.
After preparatory work for decades, the EU has been built in two steps since its dynamic new start during the mid 80-s, and the long-range, very conscious work by Mr Jacques Delors and others.
During the first phase; from 1986 to 1992, the "Single Market" was built, by first transforming the "European Economical Communities" to the "European Communities" and finally to "The European Community". Thereby, what later - with the TEU - explicitly came to be called the "first pillar", was brought to a preliminary end.
Facing the second 6-year-phase, that took its start in 1992, the ground was laid also for that which normally constitutes the "state functions" as such of normal states, with the efforts - formulated with TEU in Maastricht - to realize a "Common Foreign and Security Policy" and a cooperation in the fields of justice and home affairs, termed the "second" and the "third pillar" of the "European house" .
This second phase is meant to come to an end in 1998, with the completion of the "first pillar" in the form of an Economical and Monetary Union (EMU), a single currency and a completely autonomous European Central Bank (ECB), with the minimal inflation and the stable currency as the central goals.
This intensification of the work to develop the cooperation in Europe has evoked enthusiasm in a number of people, while it has evoked apprehension in other people, who feel ever more pressed and awkward in the face of the dreams of Europe as a "Great Power" they feel thereby come to expression.

THE GENERAL "HOUSE BUILDING PROCESS"
Is it possible to understand what this process is the expression of, from an anthroposophical perspective?
Yes. With the realization of the basis for the "first pillar" - the "Single Market" during the first 6-year period after 1986, and the effort to realize the "second" and the "third pillar" in their present form as expressions for the "state functions" as such during the second 6-year period after 1986 with EU - a process has been started, that implicates five more phases, not yet described, but implicit in the "building-process".
These stages it is possible to describe, as the seven stages constitute the classical stages of the basic building of "houses" into living, functioning "bodies", filled with life, soul and spirit.
During the first stage of the "EU-process" a legal "body" has been built for "economical life" in all its aspects proper of the social organism in the form of the Single market.
During the second stage of EU, a "body" has now also been built for the social and legal life between humans as a basic legal order, in the form of the European Union.
During the third stage in the building of social "houses" a "body" is built for the soul, for cultural life for the future of the house, of the organism.
And during the fourth stage in the building of social "houses", a "body" is built in some form for the "spirit" - for the "I" - of the house, of the organism.
This "I" that lives in this "egobody" of the organism then penetrates and transforms that which has been built during the first three stages.
During the fifth stage, this "I" penetrates and transforms that which has been built during the third stage as a "body" for the soul, and tries to develop it into something new as a free cultural life for the future.
During the sixth stage, this "I" penetrates the social order that has been built as a "body" for the social and legal life during the second stage as the "Old Law " and tries to democratize and christianize it into something new for the future as the "New Law".
And during the seventh stage finally, this "I" penetrates what has been built as a "body" for economy during the first stage and tries to transform it into something new for the future as an ever more "brotherly", altruistic economical life.
This is the general pattern of the building process for social houses, social organisms - described in very short and principal terms.

The Ur-drama of the first seven mythical Roman Kings
You find it described already by Livy in his picture of the first seven mythical Roman Kings, as the founders of the Roman Empire.
The first was Romulus, who was raised to heaven as the god "Quirinius" (not completely unlike Jacques Delors).
The second king; Numa Pompilius embodied social order, he brought laws for ordinary living.
The third king, Tullus Hostilius, represented the passions. Under him, the attacks against divine nature began, causing discord, struggle and war, through which Rome became great.
The fourth king, Ancus Martius, developed the arts.
The fifth Roman king however; Tarquinius Priscus, was not engendered out of the Roman organism, but was introduced into Roman culture from the Etruscan culture, as also the last two.
The sixth king; Servius Tullus, transformed the social order founded by the second king; Numa Pompilius, and represents the canon of the law.
The seventh king; Tarquinius Superbus, the "most exalted" one, however was overthrown, as he was not able to maintain the high level of the social system.
The seven mythical kings of the first phase of the Roman Empire represent the Ur-drama of the building of social "organisms", that also now comes to expression in the building of Europe into a "house" - during a special phase of its development - out of the economical sphere since 1985.

THE WAY FORWARD
The three "pillars" - seeds to a differentiated European development
Is it possible to come to a picture of a possible proper continuation of this house-building process?
How can the EU-process be transformed in a "proper" way into something good?
Many people already try to come to different conceptions of what a humanised Europe within the frame of EU should look like.
One possible starting point is the "three pillars" in the work of classical house building tradition, that constitutes the roots of "the system of three pillars" of EU.
In the EU-process they stand out in a form, strongly directed towards the development of Europe into a federal, unified superstate.
In their original form, they are described already by among other Pherekydes during the 6th century BC. He describes them as "Chronos" - as an expression of "moral strength" to do the good, "Zeus" - as an expression of "inner beauty", and "Chton" - as an expression of "wisdom".
In the human being, these qualities are connected with the possible goals for her will, her life of feelings and her thinking.
In society, they are connected with and an expression of the possible future goals for the economical life, the legal and social life and for cultural life.
One later finds them described again by Plato, but now in a reduced form, in his picture of the groups of the ideal society as he sees it and describes it in his work "The Republic". He there describes how these groups are - not three but - two main groups; "craftsmen" and "the guardians" - those who take care of the state functions proper.
This second main group; the "guardians", however - according to Plato - consists of two subgroups; "the warriors", who protect the state against hostile powers and "the philosophers", who are the real rulers in his ideal "state". These "philosophers" constitute the elite in his ideal state, and to the questions that Plato treats in "The Republic" belong how this elite is to be educated to fill its functions to rule society "in the best way" out of their insights.
Another starting point is the actual separation of the work of EU between the so far allembracing Commission in Brussels, and the work of a Parliament that has so far been reduced to a an instancy of remitment, in another city; Strasbourg; two organs in a clear imbalance with one another in a way that has euphemistically been termed the "democratic deficit" .
A third starting point is the so far "wandering cultural city of Europe" - the election by the Commission of a city in Europe to be "The cultural capital of Europe" for one year.

THE "FIRST PILLAR" AND THE EU-COMMISSION
With these starting points, one sees that one of the problems with the EU, the first and central, basic task, is to transform the Commission to what it is in its essence and bears in itself as a seed to become; an actual, factual organ of cooperation on a European level for the main parties of economy on an equal basis, concentrated on and limiting its work to the initiation and implementation of legislation in the field of economy.
At present, the Commission, with its construction and direction, its 24 General Directorats (26 as DG I is divided into I A, I B and I C) and its monopoly in initiating and implementing legistlation for the first pillar of EC/EU, is almost completely characterised by the perspectives and interests that flow from the leaders of the great industries and capital interests through ERT; "European Round Table of industrialists" and CEPS; "the Centre for European Policy Studies" .
ERT consists of 45 leaders for European industries with totally three million employees and a turnover of about 500 billion "Euros" per year. It constitutes one of the most influential lobby groups of the EU.
CEPS was founded in 1993 by about 40 transnational companies and banks in Western Europe in cooperation with different foundations. Later, American and Japanese interests have also joined CEPS. CEPS is a part of the political establishment of Europe through its history, through being economically independent and through having strong personal bonds with the top level of the Commission, of NATO and of WEU.
If one looks at the Commission, it is clear that it contains many wefts of a "Round Table" -character and dialogues with representatives of many more or less transnational groups in Europe, before different propositions for legistlation are put forth in different areas.
But its work is also based on "the four freedoms" for a producer-oriented economy. These are what the builders of EU - from their perspective - view as the proper expression for the "tools" , with which one in the classical house-building tradition builds the "first pillar" of "houses" .
This "Mars"-character of the economy still corresponds to and is an expression of the development of the human being up to the present time.
But if you look forward, you also see that this one-sided and strong orientation towards the interests of the producers and bankers belongs to the past. In the future we have to develop much more of the "Mercurial" cooperation in the field of economy, "brotherly" directed as much, if not more towards the interests and needs of not ourself, but of all our fellows.
For this the EU stands before the long term task to step by step deconstruct the remaining "hierarchical" character of the Commission, still dominated by the interests of banking, industry and business through ERT, CEPS and other well financed and powerful lobby groups, and develop it in its essence into an ever more "brotherly" "Round table"-organisation that in an institutionalised way and on an equal, "brotherly" basis comprises all parties that in different ways take part in the production and circulation of goods.
Is this possible?
Yes, if you take your start in an understanding of the essence of all "economy"; the circulation of goods. If you look at it, you see that the circulation of goods in human society comprises four stages.

THE FOUR MAIN STAGES OF THE CIRCULATION OF GOODS
The first stage is the "production" of goods out of matter taken from the earth. The counterpole to this production of goods is the "consumption" of them. To the consumer some of the main interests are the quality, the availability and the price of the goods.
Between these two interests the different "business"-actors mediate, from the wholesale dealers to the shop at the corner, who transport the goods from producers to consumers, helping the producers to find markets and the consumers to find the right goods and getting them at a reasonable, fair price.
But there is also a fourth stage of the circulation. It consists of the way of the used rests of the goods, the residues, back to and through a new stage of "nature". The feeling of the responsibility for not taking out more from the Earth than it can give and not to poison it in such a way that it will die "before its time has come" also has its main representatives who can be found in the enviromental movements and the green parties around the world.
Together, the producers, the traders, the consumers and the green movements and parties represent the responsibilities for the four basic stages of the process of circulation of goods;

to make things out of nature that we need to build our lives on Earth,
to distribute them,
to build our culture through and by using and and consuming goods, and
not to take out too much of the Earth or poison it with the left-overs of our culture.

Different representatives for groups representing all these parties, that are responsible for different parts of the circulation of goods, can be found in the work of the Commission, but some mainly in a subordinated role.
Here one finds among other ETUC; the European Trade Union Confederation, an association of the 50 greatest main labor unions within EU, except for the French CGT, and representing 47 million members. ETUC is consulted when the Commission formulates its suggestions for legislation.
Another organ is BEUC; European Bureau of Consumer´s Unions, an umbrella-association for 23 national European consumer organisations that represent the consumer interests in some 20 committees participating in the legislative process of EU and in the Committee of Consumers of the EU-Commission; CCC.
According to a decision in the Council of Ministers in 1990, a European Enviromental Agency was to be erected with its seat in Copenhagen and the task of making studies and summarizing information that can constitute the basis for decisions in the environmental field. This has also been done.
It was however not meant to get and also has not - as little as the European Environmental Bureau in Brussels, behind which stands non-governmental environmental organisations - got any controlling authority, which the EU-Parliament demanded.
Of the 24 General Directorats only one (DG V) is directly dealing with questions of employment (and unemployment), one with consumer questions (DG XXIV) and one directly with "Environment, Nuclear Safety and Civil Protection" (DG XI) (two other Directorats however also support it in questions of research on enviromental technique and energy; DG XII and XVII).

TRANSFORM AND DEVELOP THE COMMISSION!
To the most important questions and tasks in the work to reform the EU in a longer perspective belongs the task to rebalance the work of the Commission.
If the EU shall be able to develop in a proper, timely, human, socially and ecologically responsible way, the EU faces as the main, central task to decide on an enlargment of the Commission, in pace with the East- and South-enlargement of EU.
To meet the needs of the near future, the Commission will have to institutionalise new General Directorats, except for those that exist for questions of economy, production, transport and trade, for also workers, consumers and "environmental interests" on an equal, brotherly level with the economy-production and transport-trade parties.
The 10-15 new necessary General Directorats that should in time be instituted to deal more actively with the problems of unemployment, for small scale business on a cooperative basis, for consumer-, and not least the many important environmental problems, correspond well to the number of expected new member-countries of Eastern and Southern Europe, and could also be institutionalised in a natural way one at a time with a new Commissioner from every new country that becomes a member.
At present, the "Commission" is slowly, but steadily developing into ever more of an also formal "Government" for the whole of the EU.
This development is understandable and has deep roots, but is - today - completely wrong and untimely. It would be totally wrong finally to institutionalise the Commission as a sort of also formal government for the whole of EU, with the Council of Ministers as a sort of "senate" and "first chamber", superior to the the EU-Parliament as a sort of "second chamber" for the populase.
The Commission should be rebalanced to include General Directorats for all the four stages of the circulation of goods on an equal and brotherly basis in its structure - including coworkers, consumers and environmental interests - and thereafter stick to and cultivate its task as a legislating-initiating and -implementing organ in the field of the the "first pillar"; the economy. Doing such an objective thing would make it into something really good in the face of the future development of Europe and a source of inspiration for also other parts of the world.
To the tasks for the Commission also belongs the further development of the "brotherly" relation to Eastern Europe, that strong forces are already trying to realize. An important measure in this direction would also be to fuse DG IV ("Competition") with the mixed DG XXIII to a new Directorate dealing as much with questions of cooperation and of Cooperatives as with competition into the near future in the field of economy.

"1998", EMU AND A "EUROPEAN CENTRAL BANK"
In this context, the forced work to establish a single currency for the whole of Europe in 1998 and the establishment of a European Central Bank as an independant instrument for the steering of the economy of all of Europe feels very troubling.
In its present planned form the bank is meant to be essentially totally separated from, independant of and retracted from all and every external influence and regulation from organs like the EU-Commission, the EU-Parliament and the Council of Ministers, even though its in the beginning of May 1998 appointed Dutch chief Wim Duisenberg has promised to keep up a regular dialogue with the European Parliament. It is also meant to have as its primal goal the minimal inflation and the stable currency, a goal to be put before every other consideration and problem, like the enviromental, human or social concerns, or the comprehensive unemployment.
Developed in this way, the economical life will not only get a to a certain extent necessary independence, but will also finally be given the absolute superiority over every other social process in a potentially disastrous way in the face of the further development of Europe.
How important different quarters consider this central steering organ to be for the total further development of Europe, is shown by the fact that it, facing its third and last "fixation stage" - like the "Federal Reserve Act" when it was taken by only three senators on the Christmas Eve in 1913 and signed by President Wilson the same night, and like the TEU when it was formed in 1991 - was "protected" from the "danger" of having to be discussed during the IGC 96 and thereby included and subordinated under a somewhat more democratically steered part of the EU.
The pushing through of the third stage of the EMU before the "Sacred" date of "the 1st of January 1999", that is "1998", is the last "necessary" to necessitate the transformation of The Commission into an also formal, but improper "Government" over all of EU. As such, it is the "eye of the needle" for the possibility to either steer the development towards the by some wished for, powerful "(American-)European Empire", or away from this Dinosauric/Tyrannosauric dream, towards the necessary differentiation that the "pillar system" has laid the foundation for.

THE ROLE OF THE EUROPEAN PARLIAMENT AND THE TWO SIDES PROPER OF THE "SECOND PILLAR"
- "FOREIGN POLICY" AND "HOME POLICY"
To the second main task in the reformation of EU belongs the decision to strongly limit the tasks for the Directorat on "External Political Relations" (DG IA).
The work under the present "second pillar" for questions of Foreign and Security policy should be strictly limited to the "Petersberg tasks" and completely transferred to a very much strengtened and developed OSCE; the Organisation for Security and Cooperation in Europe, as its proper forum. "The work under the "second pillar" proper of EU should instead be reduced to the work that has so far been carried out under the "third pillar" and be kept on an "inter-national"; confederative level, suggestibly in the following direction.
The European Parliament and the Council of ministers should develop an ever more intimate cooperation with the corresponding organs of the Council of Europe.
The present right for the Commission to initiate legistlation in other fields than those that directly concern economy and the circulation of goods should be liquidated and transferred out of the work of the Commission.
The right to initiate legistlation in some fields should be transferred over to the EU-Parliament, the national Parliaments and the Council of Ministers and the corresponding organs of The Council of Europe, for which procedures will have to be developed - and the implementation of the legistlation should be transferred to the Council of Ministers and the national Governments.
To the questions the joint organs of EU and The Council of Europe should cooperate around on a confederative level belong especially all questions that have to do with the purely social life between humans and the coordination and cooperation on questions concerning home policy (like part of DG V: "Social Affairs" ).
The Council of Ministers and the EU-Parliament must also, as more democratically chosen organs, retain respectively get the possibility to review and reformulate the frames for the work of the Commission and the European Central Bank, and have as the main task to defend and secure the right of every human to live a humanly dignified life in peace with his or her fellow humans, regardless of his or her nationality, gender or possibility to contribute to the production and distribution of goods and services. Here the parliamentarian democracy still stands out as a model for the work.
The present system of jurisdiction, with the forms of decision reduced to the planned three for legistlation under the "first pillar" of EU also stands out as something good for the time being.
With time, the Commission and the EU-Parliament/Council of Ministers could also be more clearly separated from one another, by moving the EU-Parliament clearly more into Central Europe.

THE BUILDING OF THE "THIRD PILLAR" PROPER FROM 1998; THE "CULTURAL PILLAR"
At present, the picture of the three pillars of the European house depicts the "third pillar" as the pillar for questions of Home Policy.
This picture corresponds to the "reduced" and "ruler-oriented" picture of society described by Plato in his "Republic". But it also depicts the reduced picture of man that was "decided" to be the "proper" one at the Ecumenical Council of Constantinopel in 869.
Before this meeting, in Christianity one had viewed man as composed of "body", "soul" and "spirit". At this church meeting it was however decided to view the spiritual in man, not as something independent and existing in itself, but only as a quality of the soul. Thereby, man was reduced to a "body", and a "soul" even if with some spiritual qualities.
This reduced picture of man reflects Plato´s reduced picture of the "ideal state" and today appears again in the present picture of the "three pillars of EU".
The "Ur-picture" for all good building work of the Temple tradition is the building of the Temple of Solomon, according to the legend built as a three part drama between Hiram, Solomon and Balkis, the queen of Sheeba. Viewed as a "social house construction" in this perspective, the EEA-phase between 1986 and 1992 stands out as the phase of Hiram, the Master of the Craft. The second; EU-phase between 1992 and 1998 stands out as the phase of Solomon, the Architect.
Against this background, the third phase in the building proper of Europe as a "house" between 1998 and 2005 stands out as the phase of Balkis proper, "the woman of star wisdom".
A mirror of this picture can also be found in the symbol of EU with its 12 stars, with its roots in the picture of the "heavenly woman", dressed in the sun, with the moon under her feet and her head surrounded by twelve star, ready to bear her child, mediated by the Apocalypse (12:1-3). This will undoubtedly constitute the basis for some drama around the turn of the Millennium.
As a counterweight to these dramas and the third main task for the EU - and in the longer perspective - one can see the choice and institutionalisation of a more permanent European cultural Capital in the Western Slavic area - Prague is a very good one - except the wandering and free one, as a seed and forum for the development of a free, spiritualised European cultural life for the future and as an important bridge to Russia and the Eastern Slavic area.
Here belongs also the transfer of all questions concerning the multicultural life of Europe out of the EU and over to a from EU totally independent, European cultural organ, with its centre in Prague (like the present DG X for "Information, Communication, Culture and Audiovisual" and DG XXII for "Education, Training and Youth" ).
This has been meant only as some short indications. But they stand out as some of the things that have to take place and will take place sooner or later, and our only possibility to do them peacefully is to do them consciously now, if they shall not in 15-20 years begin forcing their way by more uncontrolled, violent means, as the disastrous 100 years war between England and France of the 14th century, the long and many European wars of the 17th century and the two World wars during this 20th century, resulting from immature - if understandable - ways of handling other, related problems.

A "counter-threefoldment"
One counter form to this necessary differentiation of Europe is however also already developing (Brzezinski, Int Herald Tribune 2.5.94, Kolankiewicz, Int Affairs 3.7.94). It consists in the formation of an axis, comprised of the three states of France, Germany and Poland, with France and Poland as wings holding a strong and central Germany in place and fixed in the function as the economic "motor" of the development of Europe into the future, as a "mechanical heart", instead of as part of the "spiritual heart" of Europe that it bears as a task to be.
This development in every way misses the central points in the task of Central Europe, but will undoubtedly be more or less carried through.
With the Single European Act, the Maastricht Treaty and the Amsterdam Treaty, a constitution for EU is now developing, that will put its mark on the whole future of the present "European/West-European" cultural epoch, starting with the Renaissance, in its development of a free, spiritualised cultural life as an expression of the conscious and responsible human being, and for which the central European idealistic tradition and the cultural impulses and life of Eastern Europe are crucial and absolutely necessary.
We are now heading for the next crucial act/treaty of the EC/EU-process around 2004/5, concerned with the questions of the fourth phase of the process, its turning point.

TURNING POINT ...
The time between about 2005 and 2011 during the EU-process that is being developed between 1986 and 2030, will probably display the culmination of the forces and strivings that want to make Europe into a federation, with the strife to finally institutionalise the "Presidency" of the Union on top of the pyramid.
This "Precidency" will then constitute a form of "Ego-organisation" for Europe. For what "I" for Europe do those, that are now developing it in stages, build it as a "body" to incarnate in?
The "I" of Europe can not be materialised as authority for power for a "president" in one human being. It lives and weaves in the social life between the peoples of Europe, in the conscious warm interest we show our fellow humans, independently of who they are and where they come from.
The attempt to build an external symbol as a social and legal "body" in the form of the "Presidency" for EU is a potentially bad omen, if it is not being handled in the proper way.
The forth basic problem of the EU-process consists in handling this problem, having to do with the relation between the "economic" life of Europe and its organ (the Ecosoc, the Commission and its "President" ), the common "legal" life of the countries of Europe and its organs (the national parliaments, EU-Parliament and the Council of Ministers and the corresponding organs of the Council of Europe) and the "cultural" life of Europe and its organs (with their center in the future European cultural capital of Prague).
The problem is dealt with among other already in the story by Goethe of "The green snake and the lily". An elementary model for the solution of this problem will possibly be the presidency of Bosnia, with three "presidents", the President of the Commission, the President of the Parliament and the President of the Council of Europe working together as a council.

... AND TRANSFORMATION
Between about 2011 and 2030 we will then - viewed from the "mechanical" historical perspective of the leading Western groups described in the beginning - be facing three difficult tasks, as a possibility, "fighting" against or supported by the new constitution for EU.

The first of these tasks; the cultural task
"2011 - 2018"
will be to transform the not yet visible "humanistic power impulse" for Europe - in the spirit of Lyndon LaRouche, and Sorat, the second monster of the Apocalypse as one inspirational and challenging quality also behind the EMU - as well as the "spiritual power impulse" for Europe - in the spirit of the "Catholic Church" - that one can intuit will come to expression during the coming years, into further possibilites for a free, timely cultural life, that trancends both that which is "technically necessary" as well as that which is "spiritually necessary" into that which is truly humanly freedom creating.

The second task; the democratic task
"2018 - 2024"
to transform the external "Presidency" of EU, "lift out" the remains of "governmental power" in other fields than economy from the Commission, and transform the "European State" that has been impulsated as a "Union" into a true, democratic, equal legal life, built on social justice and human compassion.

And the third task, the economic task
"2024 - 2030"
the most difficult one; will be to transform that which has been impulsated as a "Single market", built on competition between strong producers, into an ever more altruistic economy, built on brotherhood, in all our common responsibility for the future of the Earth.

THE LONG TERM TASK FOR EUROPE
The different "Architects" and constructors of EU are now building a "legal body" as a "house" for the future Europe out of the perspective of economy, in a way that they think is right.
Above, I have tried to show how this process looks in a somewhat wider perspective.
The house is very consciously built. But it must not remain the tool for power of the benevolent elite, that it has very much been, even if understandable, so far.
It must be transformed out of that element which is good in it, so that it becomes a house for all the peoples of Europe, also those that today, mostly in Eastern Europe and Russia, have been put on the street as a result of "economical necessities" .
The role of Europe in world history has been central since the Renaissance - for better and worse - and it will surely continue to be important far into the future. But it must into this future consist in dissolving all striving for external power and all external power instruments, as also many have expressed in their struggle against the nuclear tests, that one member of EU has considered necessary to be able to develop nuclear arms further into the future.
Europe should instead cultivate its task as a mediating factor and a bridge between "East" and "West" and as a possible cultural inspirator "with a heart" - with not only the culture of Western Europe but also of Eastern Europe, and into the future ever more also of Russia, as a great inspirational well, but with a great respect for the role of all cultural groups of humanity.
In that work we are all responsible to form and build the "European house" to an inspiration for a humanly dignified life, as a part of all our common responsibility for the future of mankind and for the earth.
Only such a "good house" can also be generous and open to those that do not live in it, to visit freely and take part in.

BIBLIOGRAPHY

BAIGENT M, LEIGH R, LINCOLN H: The Holy Blood and the Holy Grail. London: Corgi Books 1982
- The Messianic Legacy. London: Corgi Books 1987
- The Temple and The Lodge. London: Corgi 1996
BOWLE J: A history of Europe. London: Pan Books 1982
BORCKARDT K-D: European integration. The origins and growth of the European Union. Luxembourg: Office for the European Communities 1995
BOULANGER J-L, MARTIN D: ''Resolution on how the Treaty on European Union is functioning - implementation and development of the Union''. Luxembourg: European Parliament (A4-0102/95) 1995
BRZEZINSKI Z: Between Two Ages: America´s Role In The Technetronic Era. New York: Viking Press 1970
ECKHOFF H (ed): Europa und sein Genius (Europe and its spirit). Dornach: Verlag am Goetheanum 1984
ERNST J W: Das Schicksal unserer Zivilisation und die kommende Kultur des 21. Jahrhunderts (The destiny of our civilisation and the coming culture of the next century). Freiburg: Die Kommenden 1977
HALL M P: America´s Assignment With Destiny. The Adepts In The Western Esoteric Tradition, Part Five. Los Angeles: The Philosophical Research Society 1979
HARTVEIT K M: De skjulte brödre (The hidden brothers). Oslo: Ex Libris 1994
HEISTERKAMP J: Weltgeschichte als Menschenkunde (World history as knowledge of Man). Dornach: Gideon Spicker 1989
HEYER K: Geschichtsimpulse des Rosenkreutzertums (Historical impulses of Rocicrucianism). Kressbronn (Bodensee): Private printing by the author in 1959
ICKE D: ... and the truth shall set you free. Cambridge: Pendragon Press 1995
ISSACSON W, T E: The Wise Men: Six Friends And The World They Made. New York: Simon and Schuster 1986
LIEVEGOED B: Mysterienströmungen in Europa und die Neuen Mysterien (Mystery streams in Europe and the new mysteries). Stuttgart: Freies Geistesleben c. 1978
MORIZOT P: The Templars. London: Anthroposophical Company 1960
Preparing Europe for the 21th Century. Report by the Commission of the European Union on the functioning of the Treaty on European Union. Brussels/Luxembourg: ECSC -EC-EAEC 1995
QUIGLEY C: The Anglo-American Establishment. NewYork: Books in Focus 1981
Report on the functioning of the Treaty on European Union. Brussels: Council of the European Union, General Secretariat 14 March 1995 (SN 1821/95)
RIEMECK R: Mitteleuropa. Bilanz einer Jahrhunderts (Central Europe. Summing up a century). Freiburg: Die Kommenden 1977?
SCHMUNDT W: Der soziale Organismus in seiner Freiheitsgestalt (The social organism in its freedomform). Dornach: Phil-Anthr Verlag am Goetheanum 1977
SOLOVIEV V: The Antichrist. Edinburgh: Floris Books 1982
STEGMAN C: Das andere Amerika (The other America). Dornach: Verlag am Goetheanum 1991
STEINER R: Die Tempellegende und die Goldene Legende als symbolischer Ausdruck vergangener und zukünftiger Entwickelungsgeheimnisse des Menschen (The Temple Legend and the Golden Legend as symbolic expressions of past and future evolutionary secrets of man). GA 93. 1904-14.
- Die Apokalypse des Johannes (The apocalypse of St John). GA 104. 1908.
- Lecture held on the 7th of March 1914 in Stuttgart on the Temple impulse in relation to every Millenienum.
- Towards Social Renewal. London: Rudolf Steiner Press 1977
- The inner aspect of the social question (Lectures held the 4th and the 11th of February and the 9th of March in Zürich 1919. In: GA 193). London: Rudolf Steiner Press 1974
STUMCKE I, KLOCKENBRING G: Der Impuls von Lérins. Spuren eines johanneisschen Christentum im 4. Jahrhunderts (The impulse of Lérins. Traces of a Johannite Christianity in the 4th century). Stuttgart: Freies Geistesleben 1977
WESTENDORP C: Progress report by the reflection group on the 1996 InterGovernmental Conference 1996, BC-TEXT-IGC-REPORT August 24, 1995
VIERECK G S: The Strangest Friendship In History: Woodrow Wilson And Colonel House. New York: Liveright 1932

YATES F A: The Rosicrucian Enlightenment. London: Paladin 1975

Macedonia – a forgotten country?

 

IVAN TOROV

That’s how it is. Life isn’t fair, and reality demands a compromise. These are the words that Erwen Fouréré, the long-standing EU ambassador to Skopje, a witness and occasional actor in Macedonia’s troubles, addressed to his hosts, warning them that the time to reach a deal with Greece over Macedonia’s name was fast running out.

A month from now the EU will decide whether Macedonia, after five years of candidate status, will be given the date for starting negotiations on finally joining the EU. In Macedonia itself, however, there is a gloomy atmosphere of unfulfilled expectations. It is as if the Macedonian government and public have come to accept that Macedonia will draw the short straw in the ‘wrestling match’ at the EU summit in June.

It is most likely, indeed, that the setting of the date will again be postponed, hopefully until the end of the year, less optimistically for an indeterminate period. The formal explanation will be the slowing down, indeed end of reforms; but in reality it is the failure to reach an agreement with Greece over the country’s name. The conflict with which Greece has burdened Macedonia, and which until quite recently was merely a ‘technical problem’ that did not affect Macedonia’s progress towards EU and NATO membership, has in the meantime grown into an ‘unavoidable obstacle’. Or rather, into Brussels’s political ultimatum. It is true that the issue of the name does not appear as a formal condition; but when it comes to choosing between a state that already is a member (Greece) and a state that wishes to become one (Macedonia), there will be no dilemma. Despite sympathy for Macedonia and irritation with the Greek economic assault on EU stability, Macedonia will get short shrift. The offence will be chalked up against the weaker side, although everyone knows full well that the stronger one, which sets the rules, has been playing a highly destructive game.

Though Brussels officials hope for some turnaround by mid-June, its chances are nil. The Macedonian-Greek negotiations on Macedonia’s name reached a dead end several months ago, so that a change in the coming weeks would be truly miraculous. The long-standing American UN mediator in this conflict, Matthew Nimetz, does not believe in a sudden change either, and has been postponing the restart of negotiations. For sure, at the beginning of the this year there was a hope that ‘Republic of Northern Macedonia’ might, under certain conditions, be acceptable to both sides. But it vanished the moment the Greeks ‘explained’ that the change of name from Macedonia to Northern Macedonia would oblige the country to change also its national identity, its language, its constitution, its national anthem and its state emblem and flag – a recasting in fact of the whole of its history and culture.

The Macedonians interpreted this Greek ‘shopping-list’ in the only possible way – as the introduction of a Greek protectorate. The idea consequently, and logically, died even before it had been officially endorsed. A section of Macedonian public opinion, and certain political circles in Skopje, were initially positively inclined towards the name ‘Northern Macedonia’. But when the Greeks upped their demands, the Macedonians responded by reviving the old idea of a referendum on the name, the negative outcome of which is beyond doubt.

Greece responded to the idea of ‘letting the people decide’ by accusing Macedonia of blocking its ‘cooperation’ and ‘good will’ in the search for a ‘mutually acceptable compromise’. In fact, Greece is in no hurry (though one might think differently, given the seriousness of its crisis), all the more so because it has finally and without much effort won the support of EU leaders for its irrational national campaign, despite the fact that its economic and financial policy has brought into question the very survival of the euro and of the European Union. Athens can allow itself the luxury of simultaneously relaxing its chronic inter-state tensions with Turkey, thus winning the sympathy of Brussels and Washington, and assuaging European frustrations with the consequences of the Greek economic collapse. Turkey is more important to the international community than Macedonia, and the Greek prime minister can therefore afford to risk the wrath of Greek nationalists at his dialogue with Turkey. The tightening of the screw on its ‘unreasonable’ Macedonian neighbour comes as a recompense to the nationalists, at a time of real danger that the domestic crisis might unite the social and nationalist revolts into a powerful anti-government and anti-EU movement. This is why the so-called red line of Greek national interests is being maintained against the small and weak Macedonia, a line that Prime Minister Papandreas will not dare to cross.

But whereas Greece, therefore, may be in no hurry to reach a settlement with Skopje (not least because the very maintenance of mutual tensions causes serious internal trouble for Macedonia), one would expect Macedonia itself to be keen to arrive at a settlement that would unfreeze its current status as a forgotten country, and put it on the path to membership of the EU and NATO. This, however, does not appear to be the case.

The long and exhausting ‘war’ with Greece has created a situation of near-complete lethargy, with elements of indifference. The economic crisis is deepening, investors are avoiding the country as too risky, the social situation is increasingly hopeless, reforms have practically ceased, the prospects for Euro-Atlantic integration are receding – all this is creating anew a deep political crisis characterised by growing tensions between the country’s Macedonian majority and Albanian minority.

Instead of intensifying diplomatic activity, the government headed by Nikola Gruevski (VMRO- DPMNE) seems to have opted instead for a tactic of silence combined with anticipation, guided by a strange logic that time is in fact on Macedonia’s side. The idea being, it seems, that Europe will in time tire of Greek nationalist belligerence and arrogance, if not because of the Greek tactic of systematically undermining Macedonia, then because of the catastrophic effect of Greek economic mismanagement on European stability. Pursuing a tactic of ‘mutual attrition’, Macedonian nationalism in the form of a ‘return to antiquity’ has been offered as a response to Greek nationalism (though the intensity of the search for a new ancient Macedonian identity has somewhat diminished). Convinced that truth and justice is on its side, the government appears no longer interested in finding friends and allies abroad, and it is here that the main reason for the current near-total marginalisation of the country’s international position should be sought.

An ideological war is instead being waged against internal critics, with the government using its media to indict ‘traitors’, those who ‘favour selling the national spirit and dignity’ (i.e. argue for continuation of dialogue with Greece), and this is turning the Macedonian political scene into an arena of permanent confrontation. There is a real danger that, in the absence of a speedy internal political agreement, Macedonia could easily revert to the situation that pertained on the eve of the armed conflict between the authorities and mutinous Albanians in 2001.

Prime Minister Gruevski is no longer preoccupied with Athens, Brussels and Washington, but with the fanning of domestic conflict in order to hold off the Macedonian and Albanian political opposition and to create a suitably nationalist atmosphere for winning a new mandate at the increasingly likely early elections. With this in mind, the critics of the Macedonian government agree that it is, in fact, not in its interest to reach a compromise with Greece. Gruevski’s coalition government, involving the leader of the Albanian national community Ali Ahmeti, is on the point of collapse, as both sides contest the Ohrid Agreement that ended the war in 2001, the ruling party arguing that it gave too much to the Albanians while the Albanians believe that federalisation of the state offers the only way out of the crisis. The situation has become so confused that no one in Skopje can confidently predict what will come first: early elections with a new political configuration, or a new conflict between Macedonian and Albanian nationalists.

Macedonia, which back in the 1990s was a bright spot in the sea of Balkan troubles, appears today to be losing a sense of orientation, having been left to itself through its own but primarily through international fault.

In a situation of growing external pressure on Macedonia to capitulate on the name issue, with Greece sticking to its maximalist demands, and with Brussels irresponsibly willing to sacrifice Macedonia by letting it drown in internal troubles and using it as small change in Balkan trade-offs, few in Skopje can argue with any degree of confidence that the European idea retains its earlier dominant appeal. The growing impression is rather that the Euro-Atlantic enthusiasm is being slowly and steadily exhausted.

 
Translated from Peščanik website by Bosnian Institute,

Republic of Macedonia - Accession partnership

The Council adopted a regulation amending regulation 533/2004 on the establishment of
partnerships in the framework of the stabilisation and association process for the Western Balkans
(6686/08).
The regulation is amended following the decision of the European Council in December 2005 to
grant the status of candidate country to the Republic of Macedonia.
Consequently, the name of the partnership with Republic of Macedonia will be changed from "European partnership" to "accession partnership".

The Republic of Macedonia must accelerate the pace of reform

Internal political tensions in 2007 have diverted the Republic of Macedonia's political institutions away from the priorities of European integration and delayed reform, according to EU foreign affairs ministers at their December 10 General Affairs and External Relations Council. The Council encouraged all political parties to deepen political dialogue and cooperation, especially on interethnic relations, so as to be able to move ahead in the EU accession process.
Reforms should be speeded up in judicial and public administration and in the fight against corruption, and police reform should be implemented faster. Unemployment and the general business environment also needed attention, said EU ministers. The Council also issued an appeal to the Government to "make renewed efforts, with a constructive approach, to find a negotiated and mutually acceptable solution on the name issue with Greece, under the auspices of the UN, thereby contributing to regional cooperation and good neighbourly relations."
The EU-the Republic of Macedonia Joint Parliamentary Committee, meeting in Brussels on 26-27 November called for accession negotiations to start as soon as possible, and encouraged the government, the opposition and all the stakeholders in the Republic of Macedonia to do their utmost to carry out the necessary reforms to fulfil the necessary criteria. Among its other conclusions, it noted "the difficulties faced by citizens of the Macedonia due to the non-recognition by Greece of its passports, and the situation linked with the name issue; calls on both parties to honour commitments as outlined in the Joint Declaration annexed to the text of the EC-the Macedonia Visa Facilitation Agreement to re-assess the issue, as a matter of priority".
The EU is to abolish as from 1 January 2008 a double-checking system on imports of steel products from the Republic of Macedonia.

Тhe Report of the European Commission оn the progress of Macedonia Published

Today in Brussels, the European Commission published the Report on the Progress of the Republic of Macedonia achieved in 2007. In addition to the report two more documents have been published, as well - Accession Partnership (previously – European Partnership) and Enlargement Strategy 2007.
Through the Report, the European Commission monitors and assesses the progress made by the Republic of Macedonia in the previous year. In the Accession Partnership, the European Commission gives recommendations for the upcoming reforms. The Enlargement Strategy is a document which EU enlargement policy is explained.
On the following links you can find the declared documents:
European Commission Progress report on the Republic of Macedonia 2007
Council decision on the principles, priorities and conditions contained in the Accession Partnership with the Republic of Macedonia and repealing Decision 2006/57/EC
Enlargement Strategy and Main Challenges 2007-2008

Eastern Europe risks never catching up with western states

Central and Eastern Europe states are in danger of never catching up with Western Europe, as the long term economic growth potential in the region is undermined by a widening human capital gap with the west of the continent, a report has warned.

The report – called the European Human Capital Index – ranked eastern EU members and candidates on their ability to develop and sustain their human capital, and was released by the Brussels-based Lisbon Council think tank on Monday (15 October).
Since the collapse of communism, economic growth in the former communist states is far above growth seen elsewhere on the continent, narrowing the difference in economic wealth between the two halves of the continent.

But researchers now fear that a continuation of this performance is unlikely, unless certain problems are urgently addressed.

"The entire study shows a closing of the gap in the last 15 years, but now it could widen again," Peer Ederer, the lead author of the study warned during the report's presentation.

"An economy does no longer only have to be efficiency-driven. If you want to be able to compete with Western Europe and Asia, you have to become an innovation-driven economy," he said later on.

In particular, the report highlights the region's shrinking population, continuous brain-drain, chronically high unemployment and inadequate investment in education and skills - especially in workers aged 45 or more – as the main problems.

"Stop early retirement schemes, reduce unemployment, stimulate part-time employment. Keep them in the job, get them in the job, in every way possible," Dr Ederer said.

"The demographic outlook is [also] not good," he added. "In Eastern Europe, you can find the lowest birth rates, basically in each of these countries. (...) Combine the demographic data with the brain-drain that continues to happen, and you have a very bleak picture."

The report also criticises Eastern European policy makers for failing to invest in people older than 45 years – about one-thirds of the population, thereby creating a "lost generation".

Examining the school systems, the report praised central and eastern European countries, but warned that they are still far away from the best.

"Secondary schooling systems are more or less on par with Western Europe, but when compared to [South] Korea and Finland, most Western European countries should also perform better."

Still a chance
The EU members that are doing well – Slovenia, the Czech Republic, Estonia and Lithuania – still have a small chance of achieving Western standards of living within the next two decades, according to the report.

Slovenia is roughly on a par with Greece, Italy and Portugal, which were measured in a similar report last year.

But the members that trail the index' ranking – Slovakia, Bulgaria and Poland – are likely to remain stuck in relative poverty for a very long time when compared to the EU average.

Turkey, a candidate member, is the only country with a young and growing population, something which could, according to the authors, play a key role in addressing Europe's human capital needs.

They mentioned that by 2050, an estimated 19% of the European active workforce would be Turkish, almost equal to the working population of all other Mediterranean countries taken together.

Croatia, another candidate member, trails the list, just behind Bulgaria and Poland.

Human capital is considered an important factor in determining whether the EU will become a knowledge-based economy, an economic goal it has set itself.

Small Business Ideas

Small Business Ideas You Can Run From Home
If you have a desire to start a home-based business, you’re part of a growing trend. As a matter of fact, one commonly cited statistic is that a home-based business is started every 11 seconds. As of the year 2000, there were 28.3 million home based businesses in the United States, up 2.1 million over 1999. Home-based businesses tend to have a higher than average survival rate as well, and of course, nothing beats the convenience of working from home.
You’re convinced—so where do you start?
What is the best home-based business?
The answer, of course, is that it depends. What are your particular talents and strengths? Many home-based small business owners got their start by leveraging an existing hobby into a business.
This is probably the best approach, so you would do well at the start to take stock of your talents, abilities and resources, and ask if there some way you can profit from these. With a slew of “home-based business ideas”, you will find that most of them generally break down into three categories: craft, professional and service.

Do you like working with your hands?
If so, you might like craft type businesses where you can create products or services that people can use. Some examples would be chimney sweeps or upholstery services, both of which are easily operated from home.

Janitorial services can be run from home as well, and a few corporate clients can get you enough monthly business to net you a decent income. Another lucrative line of work would be a home inspection service. You would need to study to obtain credentials as a home inspector, but you could earn a lot of money, and the overhead is fairly minimal.
Professional businesses run the gamut from computer programmer, desktop publisher, graphic designer, video service, etc. In short, anything that demands the use of a computer to deliver an informational product or service to the end user.
This would certainly include income tax preparation, resume writing and public relations as well. If you’re more of the intellectual and creative type, and you have good computer skills, this might be up your alley. You might even want to pursue one popular business nowadays—set up your own online Ebay store. You could, for example, set up an export business in this manner.
By having a presence on Ebay, you’ll have truckloads of eager buyers who will be willing to bid on your goods. You won’t need to worry about how to attract “traffic” to your online shop—as you would if you had your own separate web site. With Ebay, the traffic is there, from all over the world! It’s just a matter of having the right goods to sell.
Do you like working with people, and helping them out any way that you can? You might want to consider service businesses. These would include popular staples in this variety like a food catering service, which you could easily begin and advertise by word of mouth. You might also consider childcare services if you enjoy taking care of children.
To do so, you should first contact state and local governments to find out the requirements in your area. Another good source to consult is the National Association for Family Childcare. If you fancy yourself good at sales, you might want to consider becoming a sales representative. Selling is not for everyone, but sales reps are one of the most popular home-based businesses in the United States.
You will be working to sell on behalf of a manufacturer or wholesaler. Begin by examining your current list of contacts. If you know professionals in a certain industry, you can find out what products or services they need and then help them obtain them. Again, selling is not for everyone, but if you’re serious, begin by reading some good books on sales.
For further information on becoming a sales representative, contact the Manufacturers Agents National Association.
Do what you love, and the money will follow. This adage is as true as ever when it comes to a home-based business. Technology has made starting your own home-based businesses more convenient and lucrative than ever. Honestly appraise your strengths and personal qualities, and you will be sure to find your perfect niche.
Small Business Ideas For Cash
Most budding entrepreneurs who want to start their own business find it hard if not impossible to get a government grant (United Kingdom) or (Small business loan (USA), however, if you live in Moscow chances are you'll be paid for your small business ideas.
Apparently Moscow's ageing small business entrepreneurs is a concern to City Hall and to address the problem they have approved a program to give 20,000 young entrepreneurs the opportunity to start their own businesses. This will be supported by sponsorship events.
Moscow's City Hall has set aside $4.7 million over three years to fund the small business ideas initiative.
If your have a business idea and you happen to live in Moscow consider yourself lucky to be in a position to be paid to start your own business – this opportunity is rare in the UK and USA.
See this small business idea article for more information.
UK Entrepreneurs With Flair Are USA Bound To Develop Their Business Ideas
tudents that exhibit entrepreneurial flair are to be sent to the USA to make the most of their business ideas at the expense of British taxpayers.
Under the plan that was announced by the Chancellor Gordon Brown, the government wants to add summer schools for budding entrepreneurs to the requirement that children should receive five days a year of education that promotes entrepreneurialism.
Enterprise teaching in schools, which is backed with £60m of funding from the department of Education, was introduced to encourage young people to act on their business ideas. However, head teachers are concerned because they cannot see how they can fit the subject of entrepreneurialism into an already busy curriculum. They are also concerned about the lack entrepreneurial skills among teachers to adequately teach the subject.
How Do You Teach Students To Be Entrepreneurs?
Teaching students to be entrepreneurs in a traditional school setting that is more concerned about teaching to pass exams and working for an organization instead of working for yourself poses many challenges.
Heads, Teachers and Industry, an organization that builds business links with education, said many schools lacked the skills and knowledge to put the plan into action. HTI is launching a scheme for business people to be seconded for five days to help with enterprise programmers in schools.
Anne Evans, chief executive of HTI, said: "young people can be put off by business as they see it as boring but at the same time they think IPods are exciting. We need to demonstrate to young people that business is not just about figures but also the products and services they use everyday. It's about motivation rather than teaching them about profit and loss."
It is crystal clear that neither the government nor teachers have the slightest notion about what it takes to be an entrepreneur. For a start, let's forget the term entrepreneurialism because it's meaning is not helpful to the nuts and bolts of starting a business and successfully steering that business through the ups and downs of real life challenges where you learn to survive on a daily basis.
Learning to be an entrepreneur by reading books written by academics who have never been in business, who have never sold anything "door-to-door, nose-to-nose and toes-to-toes" is completely useless; a complete waste of time and good taxpayer's money.
So How Can You Teach Students To Be Take Risks And Be Entrepreneurs?
Learning from books written by entrepreneurs who have been successful at starting and running their own business can help as well being mentored by these same entrepreneurs. Encouraging and assisting entrepreneurs with their ideas can also help as this puts the onus of success on the budding entrepreneur. This is where the seeds of business ideas can germinate and with some watering, can develop into viable businesses.
Networking with other entrepreneurs is a MUST if you want to leverage your time and resource. This is an area that entrepreneurs cannot learn is the classroom. Yet, this area alone can make a massive difference to anyone in business, particularly small businesses.
Finally, we get down to the heart of what drives entrepreneurs and individuals wanting to be in business for themselves rather that opting for the safer less stressful option of working for a company in a paid job. What motivates some people to take risk and start their own business is a question that has different answers, depending on the entrepreneur you pose the question to.
If the government and schools want to really encourage young people to be entrepreneurs then they should first seek out entrepreneurs of all colours and backgrounds and get then to set the curriculum and provide the framework. That's what I would do if I wanted to foster entrepreneurialism among young British students.
What do you think?

Stress Management As A Small Business Idea
Stress management or stress relief is a highly searched keyword and therefore presents opportunities for small business entrepreneurs who are looking for small business ideas.
Search any of the major search engines and you'll find many searches around the keyword "stress management", "stress relief" and hundreds of other keywords, all related to people who are searching for information and ultimately solutions that are stress related.
Also consider this article on "Fear of stress discourages would-be entrepreneurs" . Based on a survey carried out in London, the majority of young Londoners would rather work at a paid job than start a business because of their fear of stress.
Imagine, if stress is such a major concern, it also offers opportunities for small business entrepreneurs who are savvy enough to spot an opportunity. Instead of reinventing the wheel in coming up with products and services that have not been tried and tested, here we have a ready market with tons of potential customers who are already looking for information on stress management and stress relief, plus going by the survey carried out by YouGov of young Londoners, the market can be segmented into different niches.
All it takes is to carry out research into the causes of stress, how to relieve and prevent the causes stress and to develop products (home study courses, videos, CDs, stress relieving music and audio, etc) that solves the needs of an already hungry market.

I hope this brief article will act as a stimulus and that you can see the possibilities of starting a business with this one small business idea.
Small Business Ideas For The Future
Two small business ideas based on new trends that small business entrepreneurs can profit from.

Small Business Idea #1
I was interested to read a survey by the research company DBM who were asked to look at which professional jobs or small businesses ideas are likely to be in greatest demand in the next ten years.
The survey appeared in Fortune magazine in March 2005 and here are the conclusions:
1. The greatest increase in demand by far will be for people who know how to clean up 'spaceship earth'. This is because an increasingly healthy-conscious public is eager to find environmental engineers who can prevent problems rather than simply control those that already exist. Indeed, it is anticipated that over the demand for environmental engineers will grow by at least 50%.
2. The next key area of growth is anticipated to be network systems and data com analysts followed by personal financial advisors.
3. Number eight on the list was PR Specialists.
If you are trying to decide what small business to start, it might well be worth your while to have a look at this survey. If there's going to be a demand for environmental engineers, there is also going to be demand for the businesses that employ them.

Small Business Idea #2
Starting A Business Based On New Trends
Speaking of new trends, when you get a moment why not check out a company called NatureWorks based in Nebraska?
The company runs a factory that can produce 300 million pounds of a polymer called Gylatic acid, derived from bacteria that feed on corn kernels. What is so big about this? Poly-lactic acid is basically a biodegradable corn plastic that degrades, within weeks, into water and carbon dioxide in the humid, 140 degrees heat of a compressed landfill site.
With escalating oil prices, corn plastic is much cheaper alternative. Also, with growing concern about the damage being caused to the environment, biodegradable corn plastic is better for the environment.
Corn plastic is going to be a giant thing in the years ahead. Furthermore, it is clearly going to offer eco-entrepreneurs some extremely exciting opportunities.
Looking for a Good Business Idea?
For an almost-can't lose chance for success, combine two fundamental rules for making a small business work:
1. Discover something you can do better than anyone else.
2. Figure out how to sell your product or service cheaper than anyone else.
Start by asking yourself, "What product or service am I unhappy with?"
If something is bothering you, chances are others feel the same way. If the feeling is widespread enough - and you have a way to solve your own problem - you may have a multi-million-dollar business idea.
Then ask yourself, "How can I provide my better product or service for less than the competition?"
That's what the founder of Save-A-Lot supermarkets did. He noticed that stores like Wal-Mart and Kroger had no interest in going into blighted (see Word to the Wise, below) urban neighborhoods. So, by taking on a market that the bigger chains ignore, The Wall Street Journal says, Save-A-Lot has "quietly become one of the nation's most successful grocery chains."
Save-A-Lot is part of a boom in low-frills supermarkets known as "hard discounters" that are undercutting the Wal-Marts and Krogers by stocking mostly their own brands and focusing on high-inventory items. (A typical Wal-Mart, for example, might stock 30,000 items, while a Save-A-Lot might stock 3,000.) The stores are sold as franchises. (75% of them are run by licensees.) Already, Save-A-Lot has 1,229 stores in 39 states and is adding more than 65 stores this year alone.
Over the weekend, see if you can come up with an small business idea for your million-dollar business. Start by thinking about all the products and services you regularly use. Have you ever said something like, "If only that widget had a _____, it would be so much easier to use"? Or "If only that company would _____ instead of _____, it would make my life so much easier"? That could be your breakthrough idea. And if you can figure out how to provide your better product or service at a better price than the competition, you're ready to leap into the wonderful world of entrepreneurship.

Could Copywriting Be the Business Idea of Your Dreams?
Have you ever dreamed of owning a lucrative small business that lets you work anywhere you want - anytime you want - and gives you plenty of time off to travel, spend time with family and friends, or to pursue your hobbies?
If so, direct-response copywriting could very well be the business of your dreams.
Why does copywriting pay so well? It's simple supply and demand.
Thousands of direct-response marketers across America and around the world are desperate for strong advertising copy. But there are so few writers to meet that demand that the good ones can pretty much write their own tickets.
If you can read, write, use a computer, and dial a telephone, you can learn this lucrative skill and make a very healthy living at it.
I'm living proof that it's true.
In the 1970's, I was a 20-something high-school dropout. I had a wife, a two-year-old daughter, and a baby on the way. My 12-hour-a-day job paid minimum wage, and we were struggling to pay the bills and put groceries on the table.
One day, as I was scouring the local paper for better job opportunities, I spied a tiny "help wanted" ad that intrigued me. A small-business owner needed someone to write ads for him.
"What do I have to lose?" I asked myself. "I can write. How hard can this be?"
My prospective employer wasn't exactly blown away by my experience and credentials. In fact, I expected the guy to have me thrown out of his office. Instead, he gave me an opportunity to prove my skills by writing a short sales letter. I poured my heart and soul into it, and a week later I had a new job - as a copywriter.
That's when everything changed for me. In the months and years that followed, my income soared to $100,000, then to $250,000, to $500,000, to $1 million ... and ultimately to nearly $3 million in a single year.
I'm not telling you this to brag - only to show you that if a high-school dropout like me can do it, you can too.
Even if you believe you have no natural talent for writing, you can still do very well. Good copywriting sounds like natural conversation - so if you can talk, you already have all the innate knowledge needed to be a successful copywriter.
Here's how you can get started on a profitable copywriting career:
1. Purchase a good home-study program. Really study it. Complete all of the exercises and become fully immersed in the skill of copywriting. This is how you learn the basics of what is considered good direct-response copy - the simple techniques that move people to action.
2. Get a deeper understanding of the basics of direct-response marketing by reading books such as Bob Bly's The Complete Idiot's Guide to Direct Marketing. Learn the industry lingo and understand the nuts and bolts of the direct-marketing business. You must understand the inner workings of the business so you fully understand how your copy fits into the equation. And it doesn't hurt to speak the language.
3. Study the masters. Study sales copy written by pros like Gary Bencivenga, Dan Kennedy, Gary Halbert, John Carlton, and others. Sign up for and read their e-newsletters, visit and read the archives on their websites. Learn from the best.
And after you have done all of the above and are ready for your first assignments (and for the cash to start rolling in) ...
4. Pick a niche in which you have some interest and knowledge and start looking for clients. My niche has always been health and financial publications. Your niche might be business opportunities or real estate.
Whatever your interests, I'll bet there is a product or publication just waiting for your newfound copywriting skill to sell it.
Narrowing your focus on a niche market will insure that you meet your goals faster. It's a huge direct-marketing world out there; don't waste your time running around trying to be everything to everyone. Write what you know.
There's one more thing you must do to make your sales copy successful.
Good ad writers simply explain all the benefits a product will bring to the customer's life - and they make a great living by doing that.
But great ad writers know that the vast majority of purchases are made for emotional reasons. So they identify the strongest emotions the customer already has concerning the benefits the product offers - or the lack of them ... and then they speak directly to those emotions.
If you can do this one thing, you can be one of the great ones - and a life of high-paying assignments and amazing freedom will be yours!
By Clayton Makepeace
NB: Clayton Makepeace is a copywriter and direct-marketing consultant with over 33 years of experience and more than $1 billion in sales generated for his clients.
Small Business Ideas To Generate More Good Ideas
Small business Innovation and the generation of ideas is currently all the rave. But this is not confined to small US businesses. In the UK the government and big companies are also searching for ways to establish a corporate 'ideas culture'.
Small business innovation conjures up images of entrepreneurs taking existing products and tweaking them for a ready market of customers who are looking for just that solution not currently being met.
Contrast this image with corporate innovation that conjures up images of white-coated boffins in laboratories and driven young things in the creative media industries. But some large companies, together with the government, are keen to sell a different image. Innovation they argue is about piecemeal improvements to processes and work organization, a culture of democratic tweaks.
While small business ideas and innovation is entrepreneurial driven and tend not to reinvent the wheel but instead address gaps in established and proven customer demand, large corporate innovation depends on how creative is the workforce.
New research commissioned by Vodafone, the telecommunications company, paints a mix picture. There's good news and bad news. The good news is of 2,000 employees interviewed, 28% say they generate an idea every week. That translates to 27m productive ideas into circulation for companies; based on just three serviceable in any year. More than two-thirds of respondents believe their managers are likely to listen to new business ideas.
Another striking finding is that micro or small businesses (companies with up to five employees) workers are three times more likely to originate an idea every day than in companies with more than 250 staff. Sectors such as media and marketing are much better at generating ideas than others such as transport, manufacturing and utilities.
The bad news is that employers' attitude for creativity is low. More than half of employees say they are not encouraged to come up with new business ideas, while 49% believe they work for organizations that are just no good with new business ideas.
It does appear that the traditional techniques of managing innovation - notable suggestion schemes, brainstorming and away days are regarded with suspicion. Consequently employees keep business ideas locked up in their heads. Furthermore, 79% are offered no financial incentives to generate business ideas, and 60% are given no time.
So while the government and big companies struggle with encouraging innovation and ideas from within, smaller companies are thriving in these areas. The Internet has created a treasure chest of information and successful prototypes to model, copy and enhance. Small Business ideas can be tested on the cheap. If one does not work, move on the the next one at speed. No committee or board decision is required.
There are successful small companies that have built products on the 'coat tail of success' of large companies by researching markets and developing in demand solutions. Why reinvent the wheel and spend vast sums in creating a market when a large company with fat budgets has done all the hard work for you?
So the advice to large companies when it comes to generating business ideas include:
1. It is vital to offer incentives for generating ideas
2. It is important to have a way of capturing and implementing good business ideas
3. It is necessary to realize that creativity cannot b e planned
May 19, 2005

UK Small Business Ideas are all Around You
UK small business ideas form as a result of many different life experiences. Some individuals were born with the entrepreneurial spirit and their drive towards self-employment began at a very young age. Some people come up with UK small business ideas because they’re tired of working for others. Sometimes, owning their own businesses makes sense for those who have specialized talents. And there is a growing group who make this type of move after being laid off from their jobs or as a result of not being able to find suitable employment.
The explosion of the Internet is making it possible for UK small business ideas to take root right from home. With more and more global business being transacted on the Internet every day, more and more people are trying to get their own piece of this action.
Perhaps even you are considering this type of move towards self independence. Striking out on your own is both exciting and stressful. It’s definitely not something for the faint of heart. You’ve got to be willing to invest double the amount of time and effort into your business to get it off the ground and to keep your UK small business ideas generating income. If you’re working on your own, especially in the beginning, you’ll have to play all roles: sales and marketing manager, negotiator, bookkeeper, administrative assistant and any other position required by your business.
Oftentimes, your ideas will actually result in a UK small business where you’ll need to hire others. That’s a major accomplishment but one that doesn’t necessarily mean your life will get easier. Employees expect to be paid on a regular basis. It’s up to you to ensure they do or they will move on. It may make sense for you to hire contractors whom you can pay by the hour or the project.
If you know you want to be your own boss, and you’re ready to explore UK small business ideas, there are several sources available to help with your search. The press lists business opportunities currently for sale in a particular area. To look at businesses for sale throughout the UK visit Daltons weekly . Here you’ll find pubs, guest houses, catering companies, shops and many other business opportunities.
If you feel you need a bit of assistance when starting out on your own, other viable UK small business ideas are franchises. Take a look around you – there are some 600 different businesses in the UK that actually are franchised. The costs of owning a franchise and the services you get from the franchise in return for those costs does vary between franchises, so you need to do your research. To begin your search for a franchise opportunity in the UK visit www.british-franchise.org.
Hopefully this information has got you thinking of ways you can turn your ideas into a successful UK small business venture. When you’re ready to turn your ideas into reality, you’ll find plenty of companies and branches of government ready to assist you in your pursuit!

Small Business Ideas You Can Start Today
Many visitors to Small Business Resource web site are looking for small business ideas. I know that because of the number of searches with the words "small business idea". Also the tracking software tells me key information. It’s no coincidence that we currently rank very highly in www.google.com for the keyword "small business ideas".
So, here are some business ideas you can start and run from home:

1.Backyard / Garden Ponds/ Water Gardens
These are increasing in demand. Homeowners love the sound of splashing and cascading water and having fishes in the garden. These ponds are very easy to build. There are kits that can help with easy construction. Pumps keep the water going and lights are available to keep them looking their best at night. Water gardens are very much in demand.

2.Market Your Arts And Crafts
If you have jewellery, art, photography, distress furniture, make baskets, etc, there are several books available that can help you learn how to market your art and crafts. Sell them at fairs, or sell them directly to stores or even to catalogue-owners.

3.Handyman
Are you handy around the house? Wouldn’t be nice to get paid for it? There are probably plenty of people in your neighbourhood or own town that would love to pay for your handyman services. You might think it’s simple to install a light socket, put up moulding, change a doorknob, patch a screen, repair a broken door hinge or put up some bookshelves, but most people do not. Promote your small business via word of mouth, fliers or a small advertisement in your local newspaper.

4.Special Events Video
Do you enjoy making videos of special gatherings for your family and friends? Why not get paid for it? Take your video camera and start a small business recording special events around town for your neighbours and business associates. Your jobs could range from a corporate retirement dinner, a school picnic, a wedding, a special town club event, a marathon, a local band’s gig, and you name-it. You might need to pick up a tripod or some special light to start this business, so save the receipts. These supplies are tax deductible.

5.Resume Service
If you have a good computer and a laser printer, consider your own resume service, there are lots of people who don’t know how to prepare a resume. You can prepare nice-looking resumes to land a new job. If you already have a computer, you can start straight away. Place ads and post fliers on your new service. Go to your local bookstore and check out the books and software on resume preparation. Contact businesses in your area that might be making people redundant. Ask if you can work with the personnel department to provide resumes to these individuals.

Next week I’ll briefly cover other small business ideas you can easily start from home like, teach your craft, newsletter, knife sharpening, birdhouse building and hometown guide.
So, here are some business ideas you can start and run from home:

Doing Business In Macedonia

• Chapter 1: Doing Business In Macedonia
• Chapter 2: Seling Products and Services
• Chapter 3: Leading Sectors for Export and Investment
• Chapter 4: Trade Regulations and Standards
• Chapter 5: Investment Climate
• Chapter 6: Trade and Project Financing
• Chapter 7: Business Travel
• Chapter 8: Contacts, Market Research and Trade Events

Chapter 1: Doing Business In Macedonia

• Market Overview
• Market Challenges
• Market Opportunities
• Market Entry Strategy

Market Overview

Macedonia, a small, centrally located Balkan country, is undertaking substantial reforms in its economic, legal and political systems, which should improve its attractiveness to foreign investors.

• In December 2005 the European Union granted Macedonia candidate status. No date was set for the start of negotiations or entry into the EU. Macedonia made significant legal reforms to attain candidate status, and will have to implement substantial additional reforms to meet the requirements of EU membership.

• Implementation of the internationally mediated Framework Agreement (FWA), which ended the 2001 civil conflict between ethnic Albanians and the Government, was completed in 2005, and Macedonia’s political and security situation are stable.

• The World Bank and the International Monetary Fund (IMF) signed agreements with the Government for three-year programs in 2005. The World Bank program includes numerous administrative reforms of the Government bureaucracy to improve the business climate.

• Macedonia has achieved macroeconomic stability. Inflation is low (1.5% estimated for 2005), the Government budget deficits are targeted to be only 0.6% of GDP, the currency is stable and pegged to the euro, and economic growth was 3.6% in 2005 and projected to be 4% in 2006.

• Macedonia received country credit ratings of “BB+” in foreign currency and “BBB-“ in local currency from Standard and Poor’s, and “BB” from Fitch Ratings.

• Macedonia is relatively open to international trade; with total 2004 trade (imports plus exports of goods and services) reaching $4.58 billion, or 90.2% of GDP. Macedonia's major trading partners are Russia, Germany, Greece, and Serbia and Montenegro.

Market Challenges

• The most significant market challenge is the country’s weak judicial system and high levels of corruption. While significant reforms of the legal system are underway, the courts are slow, inefficient, and subject to political pressures and corruption. This makes it difficult in some instances to enforce contracts.

Market Opportunities

• Food and Beverages -- The food and beverage industry is one of Macedonia's most promising sectors, based on previous performance and potential. Macedonia’s fertile soil and a climate that allows for more than one seasonal harvest contribute to the strength of the country’s food production. Future investment opportunities lie in marketing specialty and organic foods, as well as adding more value to those already being offered. In addition, the Government is concluding the privatization of the few remaining state-owned agricultural consortia, which will present further opportunities.

• Construction -- The construction industry is recognized for its skilled personnel and use of modern technology, especially in the area of civil engineering and hydro-construction. For this reason, Macedonia has been a major supplier of construction labor, with small- and large-scale projects in Central and Western Europe, the Middle East and Russia.

• Tourism -- The country’s geographic location, seasonal climate, and historic and religious sites provide favorable conditions for the development of the tourism industry. Macedonia has 90 hotels, 10 campgrounds, 2 tourist settlements and an additional 27,000 private beds. The total number of beds in all facilities exceeds 80,000. Currently, the most popular tourist destinations include Lake Ohrid, Lake Prespa, Bistra Mountain and Pelister Mountain. More than 80 percent of tourist revenues are generated in these locations. The town of Ohrid, an area of great natural beauty, also enjoys protection by UNESCO as a historical/cultural heritage site.

Market Entry Strategy
The decision on how to enter the Macedonian market can have a significant impact on the results. Depending on product, services, and long-term strategy, companies may choose direct exports to an end-user, various distribution models, licensing, joint ventures, or direct investment.


Chapter 2: Selling Products and Services

• Using an Agent or Distributor
• Establishing an Office
• Franchising
• Direct Marketing
• Joint Ventures/Licensing
• Selling to the Government
• Distribution and Sales Channels
• Selling Factors/Techniques
• Electronic Commerce
• Trade Promotion and Advertising
• Pricing
• Sales Service/Customer Support
• Protecting Your Intellectual Property
• Local Professional Services
• Web Resources

Using an Agent or Distributor

Companies seeking to market and distribute their goods will find a considerable number of merchants, agents, middlemen, wholesalers and retailers available in Macedonia. In fact, all of the typical distribution channels are available, although they often lack the sophistication of distribution networks found in western markets. The most significant marketing area in Macedonia is its capital, Skopje (population over 600,000), where the primary business activity is based. Other major business centers include Bitola (population 75,000), Prilep (population 67,000) and Tetovo (population 51,000).

Macedonia's retail sector is dominated by small shops. Retail outlets vary from roadside shops and open air markets to city storefronts and shopping centers. A few department stores can be found in the larger cities. While many stores specialize in goods such as shoes, leather, or handbags, it is still common to find stores with an unusual mix of merchandise (bicycles sold next to paper products and small appliances, for example.) Retail is now dominated by private companies such as Tinex, Tediko, Alkaloid, Replek and others. Foreign retailers Gorenje, Candy, Ariston, Samsung, LG, Franck, and others are already present in the market. Fruits and vegetables are typically sold at open-air public markets.

The main shopping mall in Skopje stood half-empty only a decade ago. Now it is teeming with merchandise and shops. Many of the shops carry Western goods. Some western outlets have also opened in Skopje. The Greek supermarket chain Veropulos (“Vero”), which entered the market in 1998 with two stores in Skopje and one in Tetovo, has since added two more in Skopje and one in Bitola, and has plans for expansion into other parts of the country. The Turkish owned “RamStore” supermarket and up-scale shopping mall opened in 2005. “Germanos Telecom Skopje," a subsidiary of the Greek GERMANOS Group, has been operating in the country since February 2002. It is now a leading supplier of telecommunications goods and services, with over 30 stores.

Consumer-oriented trade shows are an important part of the retail scene. Frequent sector-specific shows such as food shows and consumer electronics shows attract regional and local participants and exhibitors.

Establishing an Office
As specified by the Company Law (Official Gazette No. 28/2004) the following forms of business can be established in Macedonia: general partnership, limited partnership, limited liability company, joint-stock company, and limited partnership by shares. We strongly suggest that anyone interested in opening a business in Macedonia review the Company Law (http://www.economy.gov.mk/WBStorage/Files/Macedonian%20Company%20Law_Fin_Ver_2004.pdf ) and work with a reputable local business consultant or attorney.

As of January 2006, the “one-stop-shop” system for registering business activities has started, operated by the Central Registry. This is allowing registration within 5 days, eliminating the previous long, bureaucratic registration process.

Franchising
While franchises of Western European companies are still uncommon in Macedonia, there are now several franchises operating in Skopje. McDonald’s opened three successful restaurants in Skopje between 1997 and 1999. Holiday Inn opened a popular hotel in downtown Skopje in 2000, and the Best Western Plaza opened in 2002. Radisson SAS Hotels & Resorts has signed an agreement to manage its first hotel in Macedonia. Some European companies such as Big Star, Diesel, Benetton and Mango have established outlets in the market.

The best prospects for franchising opportunities are in restaurants, hardware stores, specialty retail stores, printing and photocopying services, and equipment rental centers. Consumers in Macedonia are looking for retailers who can provide a consistent selection of quality products at reasonable prices. Entrepreneurs in Macedonia are also eager to obtain technology and management expertise.

Although franchising is a new concept for the business community in Macedonia, the legal system in Macedonia accommodates franchise agreements. In the beginning of 2003, the Macedonian Franchise Association (E-mail: skopje@talk21.com) was established to help domestic and foreign companies. Franchises have some advantages over domestic companies due to certain tax breaks and incentives.

Laws on labor relations are clearly spelled out, leases can be freely negotiated, and there are laws to protect trademarks, patents and copyrights. However, lack of capacity in the judicial system keeps these laws from being properly enforced. The primary challenge in establishing franchises is in obtaining favorable sites.

Direct Marketing

Direct marketing is not well developed in Macedonia. Direct marketing techniques need to be created and legislation for consumer protection strengthened. A style of mail-order catalogs unique to Macedonia has begun to enter the market. Currently, at least one business is using the television home shopping channel, “Teleshop,” to sell sports equipment, kitchen tools, household cleaning products and health and beauty supplies. Internet marketing is insignificant.

Telemarketing has not caught on in Macedonia. Rural mail deliveries are sometimes unreliable, and rural people generally prefer to deal with local vendors.

Joint Ventures/Licensing
Existing legislation permits joint ventures, mixed ownership investment, and both foreign and domestic investment. Because many large firms are undergoing privatization, joint ventures are becoming more common. Often, a local company teams with a foreign company that provides equipment and merchandise, while the local company provides buildings, warehouses, office space and personnel. An example of a U.S. firm that has made a significant investment in the local production of pharmaceuticals is ICN Pharmaceuticals, Inc., in partnership with the local chemical producer OHIS.

Selling to the Government
Government procurement is regulated by the Law on Public Procurement (Official Gazette 19/2004 – http://www.finance.gov.mk/gb/laws/public_procurement.pdf), which establishes the terms and procedures for public procurement in Macedonia. However, in practice, government purchases often are not open and transparent. Some tenders are restricted to domestic companies and foreign companies are ineligible to participate (especially in the areas of defense). By law, both local and foreign potential providers are supposed to be treated equally. However, it is clear that the tendering process is not consistently transparent.
The central government, municipal institutions or agencies, or any entity receiving budgetary funds must use public procurement procedures. The intended contract can be for the purchase, supply, transportation, rent, lease, manufacturing, assembly or maintenance of personal property or real estate. It can also be for the provision of services, or for the study, design, construction, or improvement of property. A simple tender, a two-phase tender, a silent auction, or negotiations with three or more potential contractors (one in exceptional cases) must precede the contract to ensure competitiveness, equal opportunity and fairness.

Tenders financed by the World Bank and the EBRD must be conducted pursuant to the respective organization’s procurement guidelines. This means that the tendering process is conducted in an open and transparent manner, with the emphasis on meeting tender specifications and price competitiveness. Companies should review tender specifications closely to ensure that they are not written to limit competition ("lockout" specifications).

Distribution and Sales Channels Since Macedonia is a small market, there are no major distribution or warehousing operations. Efforts to establish free-trade zones to serve a larger Balkan market have not yet materialized.

Selling Factors/Techniques
Disposable income in Macedonia remains relatively low when compared with Western European countries. Most consumers purchase goods primarily based on price. The focus on price is reflected in the relatively poor quality of merchandise in traditional shops. Also evident in shops are many counterfeit brands, which indicates the importance of image. The importance placed on quality is growing, however, and more and more people are willing to pay a higher price for quality goods.

Many consumers prefer monthly installment payments for purchases. Financing and payment terms play a key role in successfully achieving sales. Local firms are also beginning to focus on quality and support services to attract customers. Domestically produced products sometimes offer exceptional quality.

Market size statistics are unreliable in predicting market responses. While low official disposable income statistics might initially discourage market entry, the size of the unofficial economy and inferences from observing actual sales activity paint a brighter picture. First-hand observation on the streets and in the shops is essential for gauging the amount of actual economic activity in Macedonia.

Strong local contacts are important for success in Macedonia. Companies pursuing the market should be prepared to spend time cultivating relationships and find a local representative to provide product support. Typically, one agent or distributor can cover the entire country effectively. When selecting an agent, companies are encouraged to consider the potential partner’s marketing reach, contact base, and ability to do business with the entire country and in surrounding countries.

Selling to state entities depends on cultivating relationships. Companies sometimes complain that they are pressured for some form of kickback, which would violate the Foreign Corrupt Practices Act. Internationally financed public procurements offer the best opportunity for transparent purchasing decisions. Tenders financed by the World Bank, European Bank for Reconstruction and Development (EBRD) and similar institutions follow rigid rules of transparency.

Electronic Commerce
eCommerce transaction volume in Macedonia is extremely low, both for internet merchants, who sell products online, and consumers who shop online. According to best estimates, in 2004, only three Macedonian merchants accepted online credit card payments, and Macedonian consumers used credit cards for online transactions fewer than 400 times. ECommerce activity did not increase significantly in 2005.

There are several reasons for the small size of the market. On the merchant side, the main obstacle to eCommerce growth is the fact that no Macedonian bank offers merchant services for eCommerce. The root cause is the small size of the market. With relatively few merchants interested in eCommerce, none of the banks see a return sufficient to justify fixed infrastructure investments. Without domestic merchant accounts, online merchants must set up an offshore company or use an offshore payment gateway, which can charge as much as 10% of the transaction. Either option discourages merchants from entering the market.

On the consumer side, the biggest issues are low internet penetration and the low penetration of eCommerce-enabled credit cards. Also significant is the apparently high incidence of internet credit card fraud in Macedonia, which has caused many major eCommerce sites to limit access from Macedonia.

Internet penetration in Macedonia is low by international standards, with an internet-connected PC in only 16.5% of households. Most users subscribe to slower dial-up services. Broadband ADSL and wireless connections (now available country-wide) are still not widely used. Of those Macedonians using the internet, only 6.5% said they used the internet for shopping.

Credit card use is increasing, but is still considered low according to western standards. Major Macedonian banks had issued approximately 150,000 credit and debit cards by the end of 2005. However, the largest credit card issuer, Stopanska Banka, which accounts for about 100,000 of the total credit cards issued, does not authorize online transactions with their Visa cards because they have not implemented Visa International’s on-line authentication system. Stopanska Banka offers customers a vehicle for charging on-line purchases, but since this requires customers to transfer funds and obtain a charge number for each transaction, it is rarely used.

The percentage of internet fraud is high (though the low volume of total transactions means that the absolute number of fraudulent cases is also small). According to Verisign, an international leader in electronic security, during the third quarter of 2004, Macedonia ranked first among all countries surveyed in the perception of fraudulent transactions as a percentage of total transactions. Consequently, several major international eCommerce sites blocked or restricted transactions from Macedonia, retarding the development of eCommerce.

Trade Promotion and Advertising
Advertising is one of the fastest growing industries in Macedonia, despite the fact that (or because) the concept of advertising is relatively new here. Both consumers and companies are beginning to understand the effectiveness of advertising and the importance of marketing products. All forms of media are widely used: newspapers, magazines, television, radio, outdoor billboards and other signs. The following advertising media are preferred by companies in Macedonia (in descending order): printed media, both newspapers and magazines, radio, outdoor billboards/signs, trade shows, sales promotion literature, event sponsorship, and television. Commercial airtime is too expensive for many Macedonian companies and the cost is rising. As a result, the leading users of television advertising are mainly foreign-affiliated companies, especially those specializing in consumer products. It may be necessary for a supplier to assist its agent or distributor in Macedonia to cover the cost of television commercials.

Broadcast Media - There is growing competition between state-owned, “national” stations and numerous small, local independent stations. In Macedonia, over 100 radio and television stations are currently broadcasting. Satellite TV is also popular.

Print Media - Newspaper advertising continues to dominate local markets. The market is characterized by a large choice of newspapers and magazines. Magazines are generally considered costly given the low standard of living and therefore lack wide public readership. There are about ten national daily newspapers in Macedonia. The most popular publications are “Dnevnik”, “Fakti”, "Utrinski Vesnik", and “Koha Ditore”.

Dnevnik (Macedonian language)
(Marketing Services)
Tel: 389-2-316-6606 and 313-0204
Fax: 389-2-329-7554
Website: www.dnevnik.com.mk

Fakti (Albanian language)
(Marketing Services)
Tel: 389-2-324-5031 and/or 324-5028
Fax: 389-2-324-5029
E-mail: fakti@mol.com.mk
Website: www.fakti.com.mk

Utrinski Vesnik (Macedonian language)
(Marketing Services)
Tel: 389-2-323-6900
Fax: 389-2-323-6901
E-mail: marketing@utrinski.com.mk
Website: www.utrinskivesnik.com.mk

Koha Ditore (Albanian language)
(Marketing Services)
Tel: 389-2-322-4958
Fax: 389-2-329-0076
E-mail: marketing@kohaditore.com
Website: www.koha.net


Business Directories, or “yellow pages,” have been introduced to the market. Their popularity and usage is increasing and they are becoming more effective.

- www.yellowpages.com.mk
- www.zlatnakniga.com.mk

Outdoor Advertising - Quality outdoor advertising as an organized marketing effort is new to Macedonia and limited to larger cities and main roads/highways. Most outdoor advertising is limited to billboards, buses, large signs and some electronic displays.

Direct Mail - With improved postal service, direct mail advertising is slowly increasing.

Retail/Point-of-Sale Advertising - Point of purchase promotions are not common, but are growing in popularity. Retail stores often treat retail and/or point-of-purchase advertising as a secondary activity. Likewise, merchandise is stocked on shelves with little consideration of appearance. Unless there is assistance from a producer or distributor, retailers will rarely make an effort to enhance point-of-sale advertising. Coca-Cola, for example, has pursued a visible point-of-sale (shops, bars, restaurants, hotels, gas stations) marketing campaign that involves posters and coolers with company logos. The campaign has won Coca Cola significant market share here.

Trade Events/Fairs - Trade fairs are particularly good promotion channels for industrial products in Macedonia. Local and foreign firms rely on trade fairs to build business connections, gain market visibility, and learn about new technology. A list of upcoming fairs and events appears in the appendices. An updated list can be found at www.skopjefair.com.mk.

Sponsorships and Special Promotions – Special events offer an excellent avenue to launch new products. Because event promotion is new to the country, they offer an opportunity for a company’s products or services to stand out.

Advertising Agencies - Advertising and marketing agencies have developed over the past several years and offer a full range of services. Read under: Local Professional Services.


Pricing
Officially, per capita monthly income in Macedonia is 12,685 denars (according to official September 2005 data - approximately $250). Since consumers are extremely price sensitive and consistently seek bargains for their purchases, companies must pay close attention to price. Imported products are priced substantially higher than locally produced goods. As mentioned earlier, favorable financing may be a critical selling factor for big-ticket items.

Sales Service/Customer Support
Although service and customer support are relatively undeveloped as marketing tools, local distributors are attempting to provide quality service to their customers. In the past, customers often have cited price as the determining factor in the purchase of a particular product. Customer service and support have been secondary considerations. Firms selling capital equipment or technology should emphasize customer service and product quality.

Companies seeking to operate in Macedonia may want to consider providing training to their distributors/agents to communicate the firm's distinctive corporate policies, behavior and standards.

Protecting Your Intellectual Property

Macedonian law protects copyrights, patents, trademarks, stamps, mark of origin, and industrial designs. Protection is provided through the registration process with the Industrial Property Protection Office (phone +389-2-311-6379). In practice, IPR rules are poorly enforced. Consumer goods manufacturers, CD producers and video vendors report the most serious infringements.

Local Professional Services
Law Association:

Macedonian Business Lawyers Association
Bul. Krste Misirkov, BB
1000 Skopje, Republic of Macedonia
Phone: 389-2-313-1084
Fax: 389-2-321-4088

Consulting:

ETTEA Consulting
Mrs. Elizabeta Kocovska – Iceva, BEc
Lermontova Str.3/4
1000 Skopje, Republic of Macedonia
Phone: 389-2-311-4862
Fax: 389-2-311-8825
E-mail: ettea@unet.com.mk

Accounting:

Grant Thornton
Ms. Ruzhica Filipcheva, Managing Partner
Dame Gruev, 14/a
1000 Skopje, Former Yugoslav Republic of Macedonia
Phone: 389-2-321-4700
Fax: 389-2-321-4710
E-mail: grant-thornton@grant-thornton.com.mk

Deloitte & Touche
Mrs. Lidija Nanush, Director
St. "27 Mart", 5/3
1000 Skopje, Former Yugoslav Republic of Macedonia
Phone: 389-2-311-1300
Fax: 389-2-311-9544


Ernst & Young
Mrs. Verica Hadzivasileva – Markovska, Manager
Marshal Tito 19
1000 Skopje, Former Yugoslav Republic of Macedonia
Phone: 389-2-311-1637
Fax: 389-2-311-3438
E-mail: eyskopje@mt.net.mk


KPMG
Mr. Georgi Chuchuk
28 Dame Gruev, 4 sprat
1000 Skopje, Former Yugoslav Republic of Macedonia
Phone: 389-2-313-5220
Fax: 389-2-311-1811


PriceWaterHouse Coopers
M. Tito, 12
1000 Skopje, Republic of Macedonia
Phone: 389-2-311-6638
Fax: 389-2-311-6525

Advertising:

Studio Marketing
J. Walter Thompson
Skopje, d.o.o.
Ul. 27 Mart, 14
1000, Skopje, Republic of Macedonia
Phone: 389-2-321-7101
Fax: 389-2-321-7102
E-mail: main@smjwt.com.mk

McCann Erickson Skopje
Ul. Ruzveltova, 33
1000, Skopje, Republic of Macedonia
Phone: 389-2-306-0093
Fax: 389-2-306-0373
E-mail: Irena_apelgren@mccann.com.mk

Saatchi & Saatchi
Ul. 11 Oktomvri, 3/6
1000, Skopje, Republic of Macedonia
Phone: 389-2-329-7688
Fax: 389-2-329-7689
E-mail: Zoran.Kardula@saatchi.com.mk


Web Resources
http://www.mbla.org.mk

http://www.gti.org

http://www.deloitte.com/macedonia

http://www.ey.com

http://www.kpmg.com.mk

http://www.pwc.com.mk

Chapter 4: Leading Sectors for Export and Investment

• ENERGY
• TRANSPORTATION
• COMPUTERS AND INFORMATION TECHNOLOGY EQUIPMENT
• CONSTRUCTION AND BUILDING MATERIALS
• HOTEL & RESTAURANT EQUIPMENT/TOURISM
• AGRICULTURE


ENERGY

Overview
The upcoming privatization of Macedonia’s state-owned electricity monopoly offers significant export and investment opportunities for Companies. Elektrostopanstvo na Makedonija (ESM - The Electric Power Company of Macedonia) (www.esmak.com.mk) is Macedonia's state-owned electricity monopoly and is responsible for generation, transmission, and distribution of electric power. ESM has three thermo-electric power plants that have a combined capacity of 1,010 MW and are powered by lignite coal and oil. The main thermal plant at Bitola supplies approximately 70 percent of Macedonia's electricity and is in good condition. ESM also runs 14 hydro-power stations - the four largest supply approximately 400 MW of electricity, and 10 smaller plants supply approximately 36 MW. In 2005, ESM generated 6,271 GWh, and 1,662 GWh were imported to fulfill the total demand of 7,933 GWh. ESM is a full member of the Union for the Coordination of Production and Transmission of Electricity European Interconnection (UCPTE), which ensures interconnect compatibility with European electric power systems. ESM has transmission lines on 400 kV connecting to Greece, Serbia and Montenegro, and Bulgaria, and will be constructing new lines to export and import electricity.

In an effort to upgrade the existing power generation capacities of ESM, as the winner of a World Bank funded tender, Westinghouse Process Control in July 2000 signed a contract to upgrade six hydropower plant facilities and supply a new dispatching system to monitor electricity production.

In June 2004, ESM put into operation the first unit of a 1,560 MW hydro power plant, Kozjak, the first new hydro plant in 30 years. The second unit came on line in September 2004. Kozjak is ESM's largest investment in recent years, and doubles as part of Macedonia's irrigation system development plan. Over 90 percent of the plant's equipment was imported from China. The construction of Kozjak started in 1995 with Chinese financing totaling USD 175 million.

Several infrastructure projects are in advanced phases of preparations, including the St. Petka hydropower plant on the Treska river, and the gas-fired cogeneration power plant for electricity and heating in Skopje.

In spring 2002, the government signed an agreement with an Austrian private investment and merchant bank, Meinl Bank AG from Vienna, to manage the restructuring and privatization of ESM, according to the terms and principals set up in the EU Electricity Directive and the Athens Memorandum for establishment of a regional electricity market among the Southeast European countries. This process simultaneously resulted in creation of the Energy Regulatory Commission (ERC), founded by Parliament in June 2003. ERC is creating energy tariffs and pricing methodology, and is ultimately responsible for regulating the energy market.

With adoption of the Law on Transformation in March 2005, ESM was divided in to two new state-owned companies, one for distribution and one for generation. In December 2005, the Government announced the international public tender for privatization of the national electricity distribution company. This tender is to be finalized by March 2006.

Macedonia and Greece have already completed the construction of an oil pipeline connecting oil storage facilities at the port of Thessaloniki with Skopje’s OKTA refinery. The pipeline began full operation in September 2002. OKTA has begun construction of a pipeline to Kosovo and Serbia. Macedonia’s sole oil refinery, OKTA was originally created to meet the needs of all of southern Yugoslavia. Therefore, OKTA has the capacity to meet not only the country’s needs of 1.25 million tons of refined products, but to export refined products to neighboring areas as well.

In addition to the Skopje-Thessaloniki pipeline, which follows European Transport Corridor 10, the U.S. consortium AMBO (Albanian-Macedonian-Bulgarian-Oil) has proposed a pipeline that would follow the east-west Corridor 8 route, linking the port of Burgas, on the Black Sea coast of Bulgaria, with the port of Vlore, on the Adriatic coast of Albania. The pipeline would transport oil from the Caspian region to markets in Western Europe and the United States. If this project is implemented, there could be substantial export and subcontracting opportunities for U.S. companies.

A natural gas transportation pipeline has been constructed to carry Russian gas from the Bulgarian border to Skopje. Besides the construction of an industrial gas supplying ring around Skopje that is now under way, several pilot projects are promoted for gasification of urban settlements.


Opportunities

Besides the privatization of the electricity distribution company, to be finalized in March 2006, the Government plans to liberalize 30 percent of the electricity market during 2006 and the rest in subsequent years. The privatization will offer investment opportunities to companies interested in accessing a regional electricity market in Southeast Europe. As the price of electricity increases, there will be opportunities to use electricity more efficiently, such as by insulating homes and installing more efficient heaters and electromechanical devices. Also, liberal legislation provides opportunities for small projects and Individual Power Plant (IPP) construction and operation.


TRANSPORTATION

Overview

Macedonia is situated in the center of the Balkan Peninsula at the intersection of several key road and railway links. Macedonia has 8,200 kilometers of roadways (60 percent are paved and well maintained) and 700 kilometers of railways. Two Pan-European Transportation Corridors, Corridor 8 (east-west) and Corridor 10 (north-south) pass through Macedonia. Corridor 8 consists of the E-65 highway from Durres, Albania to Varna, Bulgaria via Skopje and Sofia, Bulgaria. Corridor 10 consists of the E-75 south-north road from Athens, Greece via Skopje, Macedonia, Belgrade, Serbia and Montenegro, and Zagreb, Croatia to Munich, Germany.

Improvements in the past few years have been focused primarily on the elimination of “bottle necks” and the completion of the infrastructure in Corridor 8. U.S. TDA has facilitated $30 million of feasibility studies and exports, through its South Balkan Development Initiative (SBDI), which was completed in 2002. Greece recently invested in developing Corridor 10 in both Macedonia and Greece, with the aim of encouraging last summer’s Olympic - 2004 visitors to drive to Athens from northern Europe.


Opportunities

Companies can participate in infrastructure development in the areas of construction equipment and materials, tollbooth equipment, electronic data processing equipment, traffic monitoring, project management services and telecommunications equipment.

Several foreign airline companies (Austrian Airlines, Swiss, Malev, Cirrus Airlines, JAT, Adria Airways, Croatia Airlines, Turkish Airlines) fly into Macedonia’s main airport near Skopje. Foreign carriers fly to Skopje from Vienna, Zurich, Budapest, Frankfurt, Belgrade, Ljubljana, Zagreb, and Istanbul. Companies have bid for contracts in the field of air transportation services, airport equipment and construction, and air navigation and control systems.


COMPUTERS AND INFORMATION TECHNOLOGY EQUIPMENT

Overview

The computer and information technology (IT) sector in Macedonia is a promising area for IT companies. The IT sector includes assembly, sales and maintenance of personal computers and main frames, as well as networking, systems integration, software development, Internet Service Providers, web design, multimedia, consulting, and training. In June 2002, Parliament passed the “e-Declaration,” a statement of commitment by the government to fast-track electronic commerce. For 2004, the total market was assessed at approximately $80 million, a 70 percent increase since 2000. IT revenues for 2005 are estimated to grow to $ 100 million.

Most of the world’s largest IT companies, such as Microsoft, Cisco, IBM, Compaq, Hewlett Packard, Dell, Sun Microsystems, Apple, and Lotus, are present in Macedonia via branch offices, distributors, dealers, resellers, solution providers, and business partners.

In early 2004, the Macedonian Government signed an agreement with Microsoft to legalize Microsoft products used by the government. In addition, Microsoft has offered amnesty to large business users and has signed about 400 legalization agreements. Microsoft is now working with educational institutions and small businesses to legalize their software.


Opportunities

Several software development companies are creating applications for Western markets. These include banking, air traffic control, and website development.

With the liberalization of the telecom industry in February 2005 (the new Law on Electronic Communications; http://www.aec.mk), many opportunities exist to sell products and services.

CONSTRUCTION AND BUILDING MATERIALS

Overview

The construction industry is recognized for its skilled personnel and use of modern technology, especially in the area of civil engineering and hydro-construction. For this reason, Macedonia has been a major supplier of construction services, with local firms working on small and large-scale projects in Central Europe, the Middle East and Russia. Macedonian firms have good access to Russian markets and also have won contracts for EU projects in Germany and Italy.

According to data compiled from building materials manufacturers, building construction continues to grow rapidly. Macedonia also exports building materials, primarily to Kosovo and Albania. The construction industry has a turnover of 400 million US dollars annually, 20 – 25 % of which is spent on imported products, equipment and fixtures. In 2001, the Macedonian Development Bank began providing export insurance covering commercial risks for Macedonian exporters of building materials.

The construction industry has accounted for between five and eight percent of annual GDP over the last decade. Construction companies in Macedonia are versatile and skilled, designing and building roads, civil and military airports, bridges, high-rise buildings, industrial facilities, dams, tunnels, irrigation systems, water-supply systems, waste-treatment systems and purification facilities. Macedonian construction companies also provide expert studies, investment programs, and engineering and expert technical supervision of domestic projects.


Opportunities

There are both export and investment opportunities available for Companies in the construction and building materials sector. Buildings in Macedonia are energy inefficient and heavy, and take a relatively long time to build. Wood and steel frame buildings are almost unknown, though builders in Macedonia are starting to examine platform-frame wood construction and prefabricated housing. Building products that may have good market prospects include wood and vinyl window frames, doors, flooring and kitchen cabinets, suspended ceilings, insulation, adhesives, cements, roofing shingles, heating and ventilation equipment, air conditioning, refrigeration and cooling systems. The domestic market in Macedonia consists primarily of cement and cement products, and gypsum products.


HOTEL & RESTAURANT EQUIPMENT/TOURISM

Overview

The tourism sector offers export and investment opportunities and has significant potential for future development. The country’s geographic location, mild climate, and historic and religious sites provide favorable conditions for the development of the tourism industry. Macedonia has 90 hotels, 10 campgrounds, 2 tourist settlements and, in total, over 80,000 tourist beds. Macedonia has many tourist attractions, including three natural lakes (Lake Ohrid, Lake Prespa and Lake Dojran), and high mountains suitable for camping, hiking, and winter sports. The most popular tourist destination is Lake Ohrid. Almost 80 percent of Macedonia's tourist revenues are generated at Ohrid. The town of Ohrid, in an area of great natural beauty, also enjoys the protection of UNESCO as an historical/cultural heritage site. Numerous hotels need major repair and modernization, especially along the coast of Lake Ohrid, in Skopje, and at the winter ski resorts of Mavrovo, Mt. Shara, and Mt. Pelister. Tourists mainly come from the countries of the former Yugoslavia, Bulgaria, Greece, Germany, Holland, and Italy.

Radisson SAS Hotels & Resorts has signed an agreement to manage its first hotel in Macedonia. The Radisson SAS Palace Hotel will be located in the city center of Ohrid. The hotel will offer 140 guest rooms, including 12 penthouse suites. The conference center will offer a business center as well as six meeting rooms. Other facilities include indoor and outdoor swimming pools, a health & fitness center, a spa with treatment rooms, and several shops.

The new Kozjak dam (see - Energy) has created the largest artificial lake in Macedonia. While access to the area is still very limited, new roads are being built that could open tourism opportunities in one of the most beautiful valleys in Macedonia.


Opportunities

Since there has been very little investment in tourism, legacy hotels need repair and upgrading. There has been an increase in construction of smaller hotels, more suitable to the Macedonian market, in areas around Lake Ohrid. There are no golf courses in Macedonia, nor do the three largest lakes, Ohrid, Doijran and Prespa, have any significant watersport centers. The Treska reservoir behind the new Kozjak dam mentioned above offers many opportunities for the development of tourism and real estate.

Agricultural Sectors
Agricultural Machinery and Equipment
The food and beverage industry is one of Macedonia's most promising sectors, based on previous performance and potential. Most of the food-processing facilities are in private hands. The industry nearly doubled in size between 1989 and 1995, relative to the rest of the economy. Agribusiness in Macedonia, including agriculture and food processing, accounts for 13 per cent of GDP and employs 30 per cent of the workforce. Food and beverage processing are significant industries, and companies in Macedonia produce canned and bottled fruits and vegetables, and wine for export. There are about 30 food-processing companies in Macedonia; 10 have facilities for canning, 10 have fruit juice production and bottling equipment, and 14 have facilities for drying. Most food processing companies have storage and cooling facilities, and eleven have deep freezing equipment that is more than adequate to meet the domestic demand. Processed foods are dominated by two major sectors, semi-finished products (including frozen, dried, and concentrate) and finished products (canned and preserved). Processed frozen foods are mostly exported to Germany, Holland, and other European countries. Processed dried foods are mainly exported to France, Germany, Austria, and Switzerland. Preserved fruits and vegetables are sold to neighboring countries, Australia, and Western European markets.

Opportunities

Macedonia needs agricultural machinery and equipment, meat and dairy equipment, and veterinary equipment and supplies to expand the quality and quantity of its production. The Fund for Agriculture in Macedonia is promoting the introduction of new agricultural technologies and products. Macedonia exports approximately 20% of its agricultural products. Domestic production of agricultural machinery is minimal, and the market relies on imports. There are substantial opportunities for companies in the agribusiness area for equipment that will add value to the food processing sector, such as bottling, packaging, and refining equipment.

Macedonia produces approximately 1 million hectoliters of beer every year, mostly for domestic consumption, and 1.3-1.4 million hectoliters of wine per year. The wine sector needs investment if it is to remain competitive and reach its full potential. Currently, Macedonia exports most of its wine in bulk to be bottled in other countries and then sold. Export opportunities exist for U.S. companies for equipment that will increase the volume of wine bottled in Macedonia, and technology and supplies that will stimulate grape production. The government considers agriculture a target area for future growth and development, including increased foreign direct investment (FDI).

Agricultural products

Frozen chicken: Large open markets sell U.S. chicken leg quarters and liver for retail consumption. Preferred packing is in frozen flats of up to 20 kilos. These products are popular with lower-income consumers. Buyers are usually wholesaler/importers, and price is paramount.
Soybean meal: Some layer and broiler operations have their own feed mills, but most soybean meal is purchased directly from Greek crushers by large farms and concentrate producers. Higher protein meal is in demand, but the market is price sensitive.

Red meat: Sausage and variety meat processors are increasing demand for frozen pork, and especially beef offal, for use in local manufacturing.
Raw cotton: There are several spinners and weavers in Macedonia that have used U.S. cotton in the past (medium to short staple). The main competitors are Greek and Turkish cotton.

Specialty flour: The larger bakeries and mills have purchased specialty flours (high quality, high gluten) for use in blending. Small quantity lots are generally preferred.

Import Tariffs
Macedonia became the 146th member of the World Trade Organization (WTO) in April 2003 and is liberalizing its customs regime in accordance with WTO guidelines. As a WTO member, Macedonia has committed itself to the three basic rules of trade conduct: transparency in laws, equal rights and privileges for foreign and domestic firms and citizens, and most-favored nation treatment.

The customs legislation of Macedonia, which entered into force on January 1, 2000, set the ground for Macedonia’s compliance with European Union standards. Since then the legislation has been amended in accordance with EU regulations and WTO standards and recommendations.

Customs duties generally apply to most products imported into Macedonia. Special tariffs apply to countries with which Macedonia has signed a Free Trade Agreement. In 2005, tariffs ranged from 0-30 percent, with an average rate on agricultural products of 18.02 percent and on industrial products of 7.66 percent. The only category to which a maximum rate of 60 percent is levied is cigarettes, while the rates on fruits and vegetables, cereals, alcoholic and non-alcoholic beverages have decreased from the maximum rate. The average rate of all products decreased to 10.05 percent in 2005, due to reduction of tariffs on over 4,000 raw materials. In accordance with WTO regulations, further reduction of tariffs is expected in 2006, and the average rate will drop to 9.49 percent. There is no duty on raw materials for the textile and apparel industry. Excise taxes apply to wine, beer, coffee, cigarettes, mineral oils, tobacco, and vehicles. Excise taxes are determined by the type and quantity of the product and are levied in addition to the customs tariff. From end-2004, new custom tariffs of 8 percent on European and US automobiles and 10 percent on Japanese automobiles have been applied. The new excise tax for automobiles is progressive, based on engine capacity. There are variable levies for agricultural and food products as well. Other products, like tobacco, wine, and various fruits are subject to import quotas. Import as well as export quotas are provided on a first-come-first-serve basis.

A Value Added Tax (VAT) of 18 percent is applied on all products and services. Only food, potable water and some printed materials such as newspapers, magazines and educational books are taxed at the preferential rate of 5 percent. For imports into Macedonia, the VAT is assessed on the CIF value of the goods plus the duty.


Trade Barriers
A number of products are subject to quality control by market inspection officials at customs offices. These officials are employed by the Ministry of Economy to ensure that imported goods are in compliance with domestic standards. The products subject to quality control include most agricultural products, cars, electrical appliances, or products in which poor quality may pose a health risk to consumers. When applicable, products also must pass sanitary, phytopathologic or veterinary control. (Additional information on sanitary requirements can be obtained from the Ministry of Health, and phytopathologic and veterinary requirements can be obtained from the Ministry of Agriculture, Forestry and Water Resource Management.)

Import regulations are generally numerous and not always available in English. In order to learn about customs duties, taxes and quality requirements for a specific product, exporters can consult the Customs Administration web page: http://www.customs.gov.mk, or contact freight forwarders or business consultants in Macedonia.

Import Requirements and Documentation
An importer/exporter in Macedonia is responsible for providing the required import/export documentation, which consists of common trade, transport and customs documentation, as well as certificates of origin and certificates of quality control and licenses. Service providers are not subject to the customs regulations, but foreign trade transactions are subject to a documentation fee of one percent.

Temporary Entry
Products may be imported into Macedonia on a temporary basis. The rules on temporary imports are contained in the Regulation for Application of the new Law on Customs starting application on January 1, 2006 (Official Gazette No.39/2005).

Products allowed temporary import status include raw materials processed in Macedonia and re-exported, infrastructure equipment produced by foreign contractors, and office equipment for foreign firms.

Macedonia is a party to the Customs Convention on Carnet (ATA) for Temporary Import of Goods. Presentation of an ATA carnet, or TIR carnet, facilitates the process. An entry carnet may be obtained from a local chamber of commerce in the United States. Carnets are usually valid for 1 year and list the products to be imported on a duty-free basis. The carnet must be presented upon entry into Macedonia. Customs will stamp the carnet, thereby validating it. Upon departure, the carnet must again be presented for validation, confirming that the product is being transported out of Macedonia. Failure to re-export the goods results in application of the duties.

Labeling and Marking Requirements
Labels must contain the following information: quality, ingredients, quantity, manner of storage, transport, use, maintenance, country of origin and a “best before” date. The above information must be in Macedonian.

Prohibited and Restricted Imports
Chemicals, weapons, ammunition, pesticides, and some other categories of products may require import licenses from the responsible ministry. See the Customs Administration website for details.

Customs Contact Information
Macedonian Customs Administration
Lazar Licenoski 13, 1000 Skopje
Republic of Macedonia
Phone: +389 2 322 4342
Fax: +389 2 323 7832
www.customs.gov.mk


Standards
• Overview
• Standards Organizations
• Conformity Assessment
• Product Certification
• Accreditation
• Publication of Technical Regulations
• Labeling and Marking

Overview

Standards are regulated and developed by the following institutions:

1. Regulatory functions:

- Ministry of Economy acting as a coordinator;
- Other Ministries for specific topic areas.

2. Controlling functions:

- Customs Administration;
- Market controlling inspections.

3. Preventive functions:

- Standardization Institute of the Republic of Macedonia;
- Bureau of Metrology;
- Accreditation Institute of the Republic of Macedonia;
- Laboratories, certification and controlling offices.



Standards Organizations

The Law on the Protection and Improvement of the Environment and Nature (official Gazette No. 69/1996) regulates safety standards for import/export purposes.


Conformity Assessment

Macedonia's main testing and conformity assessment bodies are:

- Standardization Institute;
- Accreditation Institute;
- Bureau of Metrology.


Product Certification

Product certification requirements are specified in the laws listed in section Overview.

The Law on Accreditation and the Law on Specifying Technical Regulations are being amended. The Law on General Safety of Products should be adopted in mid-2006.


Accreditation

The Parliament of the Republic of Macedonia adopted the Law on Accreditation in July 2002, prepared on the basis of European Law. Based on that, the Government has established the Accreditation Institute (AI) as an independent legal entity. AI performs the accreditation of:

1. Laboratories for testing and calibration;
2. Organizations issuing product certifications;
3. Organizations issuing certificates for systems for quality;
4. Organizations issuing certificates for systems for protecting the environment;
5. Organizations issuing certificates for persons;
6. Organizations conducting supervisions.

AI participates at meetings with European and other international organizations for accreditation, and also acts as an advisory body to the Government on issues of accreditation.

The Accreditation Institute can be contacted at the following address:

Accreditation Institute of the Republic of Macedonia
Vasil Glavinov, bb, Blok X, Mezanin
Tel/Fax: 389-2-329-6685
1000, Skopje, Macedonia

Publication of Technical Regulations

Each of the standardization and accreditation organizations issues bulletins on its procedures. Also, sector-regulating laws are published in the Official Gazette as adopted or amended.

Labeling and Marking

Labels must contain the following information: quality, ingredients, quantity, manner of storage, transport, use, maintenance, country of origin and a “best before” date. The above information must be in Macedonian.

Trade Agreements
Macedonia is a member of the European Free Trade Association (EFTA). Currently, Macedonia has Free Trade Agreements (FTA) with Croatia; Bosnia and Herzegovina; Serbia and Montenegro; Slovenia; Turkey; Bulgaria; Romania; Albania; and Ukraine. To encourage trade, customs duties are set at minimal rates of one to two percent. In February 2001, Macedonia signed a Stabilization and Association Agreement (SAA) with the European Union, and in December 2005 the European Union granted candidate status to the country. A critical component of the SAA is a preferential trade agreement that allows products from Macedonia to enter the European Union duty free. The agreement also provides for a gradual (10 to 12 years) reduction of duty rates for European Union products entering Macedonia.
Web Resources
Ministry of Economy - http://www.economy.gov.mk

Ministry of Finance - http://www.finance.gov.mk

Ministry of Internal Affairs - http://www.mvr.gov.mk

Macedonian Customs Authority - http://www.customs.gov.mk


Chapter 5: Investment Climate

• Openness to Foreign Investment
• Conversion and Transfer Policies
• Expropriation and Compensation
• Dispute Settlement
• Performance Requirements and Incentives
• Right to Private Ownership and Establishment
• Protection of Property Rights
• Transparency of Regulatory System
• Efficient Capital Markets and Portfolio Investment
• Political Violence
• Corruption
• Bilateral Investment Agreements
• OPIC and Other Investment Insurance Programs
• Labor
• Foreign-Trade Zones/Free Ports
• Foreign Direct Investment Statistics
• Web Resources


Openness to Foreign Investment
As a small, relatively open economy, Macedonia continues to take steps to attract foreign direct investment (FDI). The country has enacted legislation that not only ensures an equal footing for foreign investors vis-à-vis their domestic counterparts, but also provides numerous incentives to attract such investment. Even before gaining full membership to the World Trade Organization (WTO) in April 2003, Macedonia consistently provided national treatment to foreign investors. The country also concluded a number of bilateral investment protection treaties and other multilateral conventions that impose stricter protection standards for foreign investors.

The Constitution of Macedonia, as the supreme law of the land, guarantees the equal position of all entities in the market, and provides free transfer and repatriation of investment capital and profits for foreign investors. Macedonia's privatization process is almost complete. Under Macedonian law, foreign and domestic investors have equal opportunities to participate in the privatization of the remaining state-owned capital. There is no one law regulating foreign investments. Rather, the legal framework is comprised of several laws, including: the Trade Companies Law; Securities Law; Profit Tax Law; Customs Law; the VAT Law; Foreign Trade Law, the Law on Acquiring Shareholding Companies, the Foreign Exchange Operations Law; the Law on Foreign Loan Relations; the Law on Privatization of State-owned Capital; the Law on Investment Funds; and the Banking Law.

The legal system in Macedonia is undergoing substantial reform, however it is still often slow, inefficient, lacking in adequate resources, and sometimes subject to political pressures and corruption. Enforcement of the laws, and the upholding of contracts, is therefore inconsistent and not always impartial.

- The Trade Companies Law

This is the primary law regulating business activity in Macedonia. It defines the types of companies allowed to operate in Macedonia, as well as procedures and regulations for their establishment and operation. As all foreign investors are granted national treatment, they are entitled to establish and operate all types of private or joint-stock companies. Foreign investors are not required to obtain special permission from state-authorized institutions other than what is customarily required by law.

- Law on Privatization of State-owned Capital

According to this law, foreign investors are guaranteed equal rights with domestic investors when bidding on tenders for company share packages owned by the government. There are no impediments to foreign investors to participate in the privatization process of domestic companies.

- Foreign Loan Relations Law

This law regulates the credit relations of domestic entities with those abroad. Specifically, it regulates the terms by which foreign investors can convert their claims into deposits, shares or equity investment with the debtor company or bank. The Foreign Loan Relations Law also enables rescheduled debt to be converted into foreign investment in certain sectors or in secondary capital markets.

- Law on Investment Funds

This law governs the conditions for incorporation of investment funds and investment fund management companies, the manner and supervisory control of their operations and the process of selection of a depository bank. The law does not discriminate against foreign investors in establishing open-ended or closed investment funds.

- Law on Foreign Exchange Operations

This law establishes the terms for further liberalization of capital transactions. It regulates current and capital transactions between residents and non-residents, the transfer of funds across borders, as well as all foreign exchange operations. All current transactions of foreign entities are allowed. There are no restrictions for non-residents to invest in Macedonia. Foreign investors may repatriate both profits and funds acquired by selling shares after paying regular taxes and social contributions. In case of expropriation, foreign investors have the right to choose their preferred form of reimbursement. While they cannot own land, foreign investors may invest in or own fixed assets and real estate.

- Other Legal Considerations

Foreign investment may be in the form of money, equipment, or raw materials. To guarantee that the investment will not be nationalized, the investor can reserve the right to withdraw the deposit in the form effectuated with the investment. This regulation offers an additional incentive to foreign investors, since it is not offered to national investors.

The privatization process is governed by the Law on Transformation of Enterprises with Social Capital (Official Gazette 38/93) and the Law on Privatization of State-owned Capital (Official Gazette 37/96). To quickly finish the privatization of its remaining shares in companies, the government has offered large discounts on the nominal value of the shares and no longer imposes stringent employment and investment requirements.

Foreign investors are allowed to invest directly in all industry and business sectors except those limited by law. Investment in the production of weaponry and narcotics is prohibited without government approval. Investors in some sectors, such as banking, financial services, and insurance, must meet certain licensing requirements that apply equally to domestic and foreign investors.

Conversion and Transfer Policies
Macedonia’s national currency, the denar (MKD), while fully convertible within the domestic market, is not convertible on foreign exchange markets. Conversion of most foreign currencies is possible on the official foreign exchange market. In addition to banks and savings institutions, numerous authorized exchange offices also provide exchange services. The National Bank operates the foreign exchange market, but participates on an equal basis with other entities. Sufficient foreign currency reserves are spelled out in the banking law. There are no restrictions on the purchase of foreign currency by residents.

Parallel foreign exchange markets do not exist in Macedonia due to the long-term stability of the denar. The National Bank's strategy is to maintain a stable exchange rate by pegging the denar to the Euro, keeping inflation low.

The Constitution of Macedonia guarantees the free transfer and repatriation of investment capital and profits. By law, foreign investors are entitled to transfer profits and income without being subject to a transfer tax. Investment returns are generally remitted within the international standards of three working days.

Expropriation and Compensation
According to the Constitution of Macedonia and the Law on Expropriation (Official Gazette 33/95, amended Official Gazette 20/98, and 40/99), foreign ownership is exempt from expropriation except during instances of war or natural disaster, or for reasons of public interest. Public Interest, as defined by this Law, includes the following:

- Construction of infrastructure;
- Construction of power stations, waterworks, water supply systems, postal and communication systems and all accompanying and supporting infrastructure;
- Construction of buildings for defense and civil protection and regulation of border crossings;
- Buildings and equipment for research of natural resources, education, science, health, culture, social security, athletics or activities;
- Building settlements following extreme natural disasters and relocation settlements.

The beneficiary of expropriation is the state, especially when it allocates finances for public service, public enterprise, public funding and local government units. Under the Law on Expropriation, the state is obliged to pay market value for any property expropriated. If the payment is not made within 15 days of the decision brought for expropriation, default interest will be calculated.

There have been no expropriation measures taken since the 1950s, nor is there any reason to believe the government will take such action in the future. The government does not impose confiscation taxes of any kind.

In 2002, under the Law on Denationalization, the government pursued an ambitious plan for returning or compensating nationalized property to claimants. Although many claims were resolved in 2002, much remains to be done as the current government slowed down its efforts at denationalization.

Dispute Settlement
Under Macedonian law, arbitration of international disputes is distinct from that of domestic disputes. The parties involved in an international dispute may agree to settle through a domestic or foreign arbitration tribunal. Ratified international agreements trump domestic legislation.

International arbitration is recognized and accepted as valid by government regulation. The government accepts binding international arbitration on investment disputes and has over 40 internationally accredited arbiters on the country’s arbitration list. The arbitration court applies the appropriate law based on issues determined by the parties. In the event that the parties cannot agree on the issues involved in the case, the court then makes its own assessment of the merits of the case.

International sources of arbitration law consist of bilateral and multilateral conventions, which Macedonia has signed or inherited from the former Yugoslavia on the basis of succession. Macedonia has signed the Convention Establishing the Multilateral Investment Guarantee Agency (MIGA), the New York Convention of 1958 (governing the recognition and enforcement of foreign arbitral awards), and the Geneva Convention on the Execution of Foreign Arbitral Awards. Macedonia is also a party to the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States and the European Convention on International Commercial Arbitration.
Furthermore, Parliament has instituted legislative changes to administer laws related to foreign investment. With the 1995 enactment of the Law on Courts, the judicial body evolved into a three-tiered court system: the Basic Court (or Court of the First Instance), the Appellate Court and the Supreme Court.
Performance Requirements and Incentives
Both the Law on Customs and Law on Profit Taxes offer incentives to foreign investors. Foreign investors are eligible for profit tax exemptions in four areas:

-Profits generated during the first three years of operation, in proportion to the amount of foreign investment;
-All profits reinvested in the company (maximum 25 percent of the tax base);
-Profits invested in environmental protection; and
-Profits invested in "underdeveloped" regions (maximum 50 percent of the tax base).

In 2003, the government amended the profit tax law to allow a tax base deduction of one euro for each euro of investment in fixed assets up to 100,000 euros, and 0.30 euros for each euro of investment over 100,000. The Ministry of Finance will also introduce this year a new profit tax law addressing EU and Western business standards while offering enhanced incentives to both domestic businesses and foreign direct investment.

Companies with at least 20 percent foreign capital are exempt from customs duties for the first three years after registration.

Foreign investors are not required to purchase from local sources or to export.
There are also no requirements for the government to be a partner in the enterprise. Commercial agreements determine which entity retains control over the investment revenue. Further, there are no requirements for reducing foreign equity over time or for transferring technology.

Geography plays an important role in determining investment incentives. The government places an emphasis on building in underdeveloped regions, and offers tax deductions as an incentive to develop, for example, in mountainous territory, border zones or rural regions.

Macedonia’s government has no objections to accepting international monetary assistance or counsel from leading experts in sectors such as the economy, law, and education. When Macedonia receives foreign credit, the government is required to inform the parliament. Once informed, members of parliament decide whether the credit will be accepted. The government may, however, accept donations and irrevocable assistance without consulting with the parliament.

The Law on Residency of Foreign Citizens sets requirements for both working and resident visas. There are some non-discriminatory limitations on obtaining a visa. A foreign citizen working in Macedonia can be issued a multiple entry visa. An employer should apply to the Employment Bureau to obtain a work permit for any foreign employees working in Macedonia on a temporary or permanent basis.
There is no discriminatory export or import policy affecting foreign investors. Almost 96 percent of total trade (export/import) is unrestricted, with some exceptions for textile products. There are also quotas based on preferential agreements signed with the former Yugoslav countries. Current tariffs and other customs-related information are published on the Customs website, http://www.customs.gov.mk.

Right to Private Ownership and Establishment
Under Article 30 of the Constitution of Macedonia, the investor's right to own property is guaranteed. Foreign investors may acquire property rights for buildings and rights for other fixed assets to be used for their business activities. They may acquire residential property, but not ownership rights over construction land. Foreign investors are permitted to have only land-use rights, not land ownership rights. Ownership of property requires preservation of specific rights that serve both the individual and the community. For example, no person may be deprived of his/her property or the rights deriving from it unless the use of that property affects the general welfare of the public. If the property is expropriated or restricted, rightful compensation of its market value is guaranteed.

Macedonia has two laws governing competition, a law on restricted competition and an anti-monopoly law. Macedonia still lacks a fair competition law however. Under current law, state enterprises enjoy special privileges vis-à-vis their private counterparts. This is a new area of concern for the country’s judicial system; and it is not yet clear how Macedonia will address this issue.

In May 2004, Parliament enacted a new law for trade companies to establish a legal environment for the development of domestic commercial entities and to encourage foreign investment. Under the Law on Trade Companies, trade companies are formed as separate legal entities that operate independently and are distinct from their founders, shareholders and managers. Depending on the type, trade companies have their own rights, liabilities, names and managerial offices. Under this law, there are five forms of trade companies: public trade (general partnership), limited partnership, limited liability company, joint stock company and limited partnership by shares.

This law gives shareholders important rights, guarantees greater transparency in all operations of publicly-held companies, and attempts to reduce obstacles to registration and permitting.

Protection of Property Rights
The Industrial Property Law, enacted in 1993, amended in 1998, and renamed the Law for Protection of Intellectual Property, governs the acquisition of intellectual property. The Industrial Property Bureau governs patents, trademarks, service marks, designs, models and samples. The protection of author's rights, software, CD and other intellectual property is administered by the Inspection Service within the Ministry of Culture, established in 1999.

Macedonia joined the World Intellectual Property Organization (WIPO) in 1993, and in 1994 became a member of the Permanent Committee of Industrial Property Protection Information of WIPO. As a successor to the former Socialist Federal Republic of Yugoslavia, Macedonia has adhered to international conventions and agreements that govern these rights.

Macedonia’s accession to the WTO in April 2003 underscored the urgent need for the government to prevent copyright infringement. The first step in that direction was taken in 2002 when the Government reached an agreement with Microsoft to legalize all government software. Joint action taken by the Inspectors from the Ministry of Culture and Interior has shown some results in combating piracy in the production and sale of items such as CDs, DVDs, movies, and software. However, pirated items remain common.

With the new Customs Law, in force begining January 1, 2006, Customs has increased authorities for investigation and seizure of pirated goods. With an order from the Public prosecutor, Customs also has the right to search private property and seize pirated and illegally imported goods.
Transparency of Regulatory System
In Macedonia, there are no laws, policies, or legal regulations that impede foreign investments. On the contrary, the government seeks to increase the level of foreign investment by enacting legal provisions (i.e. tax incentives) favorable to investors. Such provisions notwithstanding, excessive bureaucratic ‘red tape’ still poses difficulties in all spheres of government administration, providing opportunities for corruption. Some foreign investors are also dissuaded from pursuing business activities by irregular or severely delinquent payment by Macedonian clients for goods and/or services.

Efficient Capital Markets and Portfolio Investment
There are no legal barriers to the free flow of financial resources and portfolio investments. Financial resources are almost entirely managed through the Macedonian banking system. At the end of the first half of 2005, foreign investors owed roughly 52 percent of total banking assets, and foreign capital was present in 16 out of total of 20 banks. According to the Central Bank data, at the end of June 2005 the percentage of non-performing loans in the total credit portfolio was 11.8 percent. Supervisory monitoring has been strengthened, restoring depositors' confidence. Banks have high liquidity but a relatively low intermediation rate. Credit is available on the local market and allocated on market terms. Retail interest rates declined in 2005, ranging from between 8 and 17 percent, depending on the type of loan.

Domestic companies are financed primarily from cash flow, due to lack of corporate bonds or securities as alternative credit instruments. Because of the scarcity of private financing, the need for financial assets creates increased credit demand.

Macedonia’s securities markets are limited in turnover and capitalization. The establishment of a Stock Exchange in 1995 made it possible for portfolio investments to be regulated. On March 28, 1996, the commencement of trading operations created a central market place for securities trading. This was also the first organized stock exchange in the history of the country. Until recently, activity on the stock market was extremely limited, but the offer of shares from well-established companies in 2005 attracted both domestic and foreign investors. The Securities and Exchange Commission adopted legislation that regulates Macedonia’s securities market. Only a handful of companies are listed on the First Market and a small number of shares are traded. Most of the activity takes place on the Second and Third Markets, where less transparency and disclosure are required. In January 2004, the government started issuing treasury bills and in December 2005 it issued eurobonds worth 150 million euros. Both instruments proved to be attractive to investors. Other government-issued bonds are for frozen foreign currency deposits and denationalization. Despite an open and fully convertible current account, there is little portfolio investment in the form of short-term capital inflows.

Macedonia has no regulatory defense measures directed against foreign investment. Similarly, there are no private or governmental efforts directed toward restricting foreign entities from investment, participation, or control of domestic enterprises, consortia or industrial organizations. With the inflow of international aid, experts and projects, Macedonia is in the process of harmonizing its legal and regulatory systems with international standards.

Political Violence
Ethnic Albanian insurgents and government forces engaged in an armed conflict in 2001. The Ohrid Framework Agreement, signed in August 2001, ended the conflict by granting greater legal and political rights to Macedonia's ethnic Albanian and other minority communities. Since then, political violence has diminished dramatically, and the country has shifted its focus from security and stability to economic development and integration into the EU and NATO. There was some violence related to organized crime activities. Citing political grievances, an armed ethnic-Albanian paramilitary/criminal group briefly occupied a village a few kilometers outside of Skopje in late 2004 and again in early 2005. The group lacked the support of local citizens and ethnic Albanian political leaders, however, and the stand-off was resolved peacefully. There have been no instances of violence directed specifically at foreign businesspeople or investors.
Corruption
Like its Eastern and Central European neighbors, after the fall of communism, Macedonia inherited a government system rife with corruption. By establishing an Anti-corruption Commission, the government made a commitment to combat corruption and bribery in public administration, focusing also on senior-level officials. A series of laws have been drafted and amended to control vices ranging from drug abuse to money laundering, and to create a legal firewall against corrupt practices, but enforcement has been anemic. In addition to the Laws on Criminal Procedure that criminalize acts of bribery, illegal mediation and the abuse of official position, two major laws for combating corruption were adopted in 2002: the Law on Money Laundering Prevention, establishing a directorate to monitor and report money laundering, and the Law on Corruption Prevention, which provides jail terms of up to 10 years for corruption and allows confiscation of illegally-obtained property.

Macedonia has signed the Organization for Economic Cooperation and Development's (OECD) Convention on Combating Bribery. Though the necessary laws are in place, enforcement is weak, and the public is still skeptical of the government's willingness to prosecute corrupt officials within its ranks. The public generally views the police, courts, customs agency and the healthcare sector as the most corrupt public institutions. Transparency International operates in Macedonia and gave Macedonia a score of 2.7 (on a 1 to 10 scale where 10 is least corrupt) on the Corruption Perception Index.

Bilateral Investment Agreements
Macedonia has concluded an "Agreement For Promotion And Protection Of Foreign Direct Investments" with the following countries: Albania, Austria, Bosnia and Herzegovina, Bulgaria, Belarus, Belgium and Luxemburg, Germany, Arab Republic of Egypt, Iran, Italy, Serbia and Montenegro, People's Republic of China, Republic of Korea, Malaysia, Poland, Republic of Romania, Russia, Republic of China, Slovenia, Turkey, Ukraine, Hungary, Finland, France, Netherlands, Croatia, Czech Republic, Switzerland, and Sweden.


OPIC and Other Investment Insurance Programs
Financing and insurance for exports, investment and development projects are made possible through agencies. Trade and Development Agency (TDA); the U.S. Export-Import Bank (EXIM); the Overseas Private Investment Corporation (OPIC); the European Bank for Reconstruction and Development (EBRD); the International Bank for Reconstruction and Development (World Bank); the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the Southeast Europe Equity Fund (SEEF). Most of the funding for major projects is achieved through co-financing agreements, especially in the transportation, telecommunications and energy infrastructure development fields.

OPIC and MIGA are the country’s chief investment insurance providers. OPIC insurance and project financing have been available to investors in Macedonia since 1996. OPIC's three main activities are risk insurance, project finance and investment funding. MIGA provides investment guarantees against certain non-commercial risks (i.e., political risk insurance) to eligible foreign investors making qualified investments in developing member countries. MIGA covers investors against the risks of currency transfer restrictions, expropriation, breach of contract, and war or civil disturbance.

Though its primary focus is investment assistance - including direct loans and capital guarantees aimed at the export of non-military items - EXIM also provides some insurance policies to protect against both political and commercial risks. TDA, SEEF, World Bank and EBRD focus more directly on financing agreements.

Labor
Relations between employee and employer are regulated by an individual employment contract pursuant to Section II, Articles 13-21 of the Employment Relations Law. Both citizens of Macedonia and foreign nationals are subject to the law. The employment contract, which must be in writing and kept on the premises, should address the following provisions: description of the employee's duties, duration of the contract (finite or not), effective and termination date, location of the work place, hours of work, rest and vacation periods, qualifications and training, salary and payday.

The law is flexible with regard to working hours. Normal working hours for an employee are eight hours per day, five days per week. According to labor regulations, an employee is entitled to a minimum of 20 working days and a maximum of 26 working days paid annual leave during the course of a calendar year. Work permits are required for foreign nationals. There is, however, no limitation on the number of employed foreign nationals or the duration of their stay.

There are two main associations of trade unions. The Union of Trade Unions, the country’s largest, is comprised of independent unions, and encompasses about 14 separate unions organized by industry sector. The newly formed Confederation of Free Trade Unions was established by unions that were formerly members of the Union of Trade Unions.

Trade unions have become interest-based, autonomous labor organizations. Membership is voluntary and activities are financed by membership dues, and, in the case of the Union of Trade Unions, by Government grants. Almost 75 percent of employed workers are dues-paying union members. Due to the difficult economic climate and political infighting, the unions as a rule have not exercised much leverage vis-à-vis employers in recent years.

National collective bargaining agreements are negotiated between the labor unions, representing the employees, the Ministry of Labor and Social Welfare, representing the Government, and the Economic Chamber, representing the employers. There are two main agreements for public and private sector on the national level, and separate contracts are negotiated by the branch unions, or at the industry or company level. The primary pressures that unions face are related to high levels of unemployment and the privatization of inefficient state companies.

Foreign-Trade Zones/Free Ports
There are no active Free Trade Zones in Macedonia, although locations for such zones have been designated (Bunardzik - an area north of Skopje; an area at the town of Gevgelija near the border with Greece; and an area between the town of Bitola and the border with Greece). Amended legislation (http://www.finance.gov.mk/gb/laws/freezone.pdf) has been prepared for permitting and regulating such zones, and a Directorate of a Free Economic Zone was established in order to conduct activities regarding the development, establishment and supervision of activities in the free economic zones.
Foreign Direct Investment Statistics
1. Net Annual Foreign Direct Investment by Year:

Year $ Millions
1998 127.7
1999 32.7
2000 174.5
2001 441.5
2002 77.2
2003 94.6
2004 151.3

Q1-Q3 2005 88.8

(Source: National Bank of Macedonia.)

2. Foreign Direct Investment by Country ($ millions) (for selected countries):

Country 2001 2002 2003 2004 Q1-Q3 2005
Germany 186.2 0.8 4.9 6.2 0.7
Greece 67.2 44.3 6.6 30.1 4.9
Hungary 92.2 0.02 0.01 0.02 0.0
U.S.A. 64.1 4.3 3.5 0.5 1.5
Switzerland 8.7 2.5 13.6 8.0 13.9
Cyprus 1.4 4.9 0.2 1.7 1.6
Slovenia 3.7 3.9 6.1 4.4 4.8
Italy 2.7 0.5 0.7 7.4 12.8
Great Britain 1.2 2.3 6.8 0.6 0.3
Austria 2.8 0.3 2.63 3.5 11.7

(Source: National Bank of Macedonia; Macedonian Telekom investment in 2001 split among individual countries in consortium.)

3. Top Foreign Investments through Privatization and Post-Privatization

Name Country Investment Size(US$m)
Stonebridge (various) Makedonski Telekom 346.5
National Bank Greece Stopanska Banka 46.4
Balkanbrew Holding Greece Skopje Brewery 34.0
Hellenic Petroleum Greece OKTA refinery 32.0
Titan, Holderbank Greece, Switz. Usje Cement Factory 30.0
Balkan Steel Liecht. Ladna Valalnica 21.0
QBE Insurance UK ADOR Makedonija 14.8
Duferco Switz. Makstil 11.5
East West Trade Austria Centro 11.0
KuppBall- Transthandel Germany FZC Kumanovo 3.4
SCMM France Feni-Kavadarci 2.3

(Source: EBRD Investment Profile for Macedonia)

Web Resources

National Bank of the Republic of Macedonia - http://www.nbrm.gov.mk

European Bank for Reconstruction and Development - http://www.ebrd.com

Organization for Economic Co-operation and Development - http://www.oecd.org

Website of the Government of Macedonia - http://www.gov.mk

Ministry of Economy - http://www.economy.gov.mk

Ministry of Finance - http://www.finance.gov.mk

Ministry of Culture - http://www.culture.in.mk

Ministry of Internal Affairs - http://www.mvr.gov.mk

Industrial Property Protection Office - http://www.ippo.gov.mk

Free Trade Zone "Bunardzik" - http://www.bunardzik.com.mk

Macedonian Customs Authority - http://www.customs.gov.mk

Macedonian Statistical Office - http://www.stat.gov.mk


Return to table of contents
Chapter 6: Trade and Project Financing
• How Do I Get Paid (Methods of Payment)
• How Does the Banking System Operate
• Foreign-Exchange Controls
• Local Correspondent Banks
• Project Financing
• Web Resources

How Do I Get Paid (Methods of Payment)
Trade financing options for Macedonian importers are limited. A considerable number of large importers regularly receive goods under a short-term supplier credit agreement. Importers are free to arrange payments through long-term supplier loans when they make larger purchases. For transactions abroad, the most preferred forms of payment are letters of credit or payments made in advance. The Macedonian Development Bank does provide some loans to companies seeking to purchase technology and equipment from overseas.

A USAID sponsored project – The Commercial Finance Fund, targets established Macedonian companies that need short-term financing to fill a large order. The project offers companies competitive interest rates for working capital against a purchase order.

How Does the Banking System Operate
The financial system in Macedonia consists of the National Bank of the Republic of Macedonia (Central Bank), commercial banks, savings houses, exchange offices, money market, the Deposit Insurance Fund, as well as insurance companies and a stock exchange. The banking system itself is two-tiered, based on the Banking Law and the National Bank Law. The Central Bank is the independent money-issuing institution responsible for the stability of the national currency (denar), general liquidity of payments within the country and abroad, and the conduct of monetary policy. The Central Bank also serves as the main regulatory body responsible for the supervision of all banking institutions.

In cooperation with the International Monetary Fund (IMF) and the World Bank, the Central Bank is implementing a monetary program whose main goal is to maintain price stability. This objective is being achieved by an exchange rate targeting strategy, whereby the denar is pegged against the euro as a nominal anchor for the economy. The Central Bank prepares annual monetary and foreign exchange projections and reports, which are subject to approval by the Parliament.

The banking system in Macedonia consists of 20 private banks, 15 savings houses and the state-owned Macedonian Bank for Development Promotion. According to the Banking Law, banks observe the principles of profit maximization, liquidity, safety and profitability. A foreign bank can establish a branch either as a legal entity or as a representative office. Savings houses are limited in their banking activities to savings-related services for individuals. They may neither undertake other banking operations nor directly offer services to companies.

The group of large banks, consisting of Komercijalna Banka, Stopanska Banka Skopje and Tutunska Banka, dominate the banking system. In 2005, these banks had 68.1 percent of the total net assets of the banking system, market share of 69.1 percent, 43.9 percent of the banking capital, 69.2 percent of the total credits and 76.2 percent of the total deposits.

The banking sector in 2002 enjoyed a deposit increase with the changeover of 12 European currencies into the euro, since banks offered their customers lower or no commissions to convert to the euro. Most of the deposits stayed inside these banks after the conversion. Moreover, there is a constant increasing trend of deposits in banks reflecting higher trust in the banking system. Loans are also increasing, but still not enough for a serious boost to the enterprise sector. Due to the short maturity of the deposits, banks are reluctant to lend on a longer-term and tend to keep most of their liquidity safe in accounts abroad or purchasing treasury bills.

Few banks in Macedonia face liquidity or solvency problems. The Macedonian bank Ex-Im was placed into the Central Bank's receivership at the beginning of 2003 and underwent bankruptcy procedure in 2004. In 2005, another bank, Rado Banka, had its operating license revoked by the Central Bank, and a bankruptcy procedure was opened. Also, due to liquidity and ownership structure problems, Makedonska Banka lost its license for international financial activities, and now operates only within the country. A joint IMF and World Bank team, in their Financial Sector Assessment Program conducted in 2003, assessed the banking system as stable and resistant to various risks (interest rates, foreign exchange, credit risk etc.). They also gave recommendations for further improvement of banking supervision.

The banking sector at the end of June 2005 had net profit of US$ 18.6 million: 18 banks with a market share of 97.3 percent realized total net profit of US$ 19.9 million, and only two banks, which had market share of 2.7 percent, have shown losses totaling US$ 1.3 million. The banking system in Macedonia employs about 4,600 people.

The financial system is relatively weak based on western standards, but has improved considerably over the past several years. In most cases, commercial banks have offered new banking services and products for private businesses. With the reform of the payments system, banks have taken over all payment transactions from the former Payment Operations Bureau. The use of credit cards, however, is still not widespread. Although credit is available, it is expensive and difficult to access without large collateral security. Customer service is still poor according to western standards and needs improvement.

The relatively low level of domestic savings in the banking system, high and rigid demand for financial assets, as well as high operational costs, have led to high nominal and real interest rates in the commercial banking sector over the past several years. With more disciplined fiscal policy, interest rates started to come down a bit in 2004, maintaining the same trend during 2005. Availability of credit to the private sector is constrained by requirements for high levels of collateral in the form of real estate, which often is appraised by the banks at lower than the market value.

Foreign-Exchange Controls

Domestic and foreign entities are treated equally when opening bank accounts in Macedonia. Foreign exchange operations are regulated by the Law on Foreign Exchange Operations (Official Gazette No. 49/2001 and Official Gazette No. 103/2001), which became effective on October 15, 2002. The main objectives of this law are to:

1.regulate resident and non-resident foreign transfers to and from Macedonia;
2.supervise and control foreign exchange.

This law also regulates the operations of exchange offices. Foreign currency accounts and foreign currency deposits of domestic and foreign individuals are regulated by the Banking Law (Official Gazette No. 63/2000). The Macedonian Parliament in July 2003 adopted changes to the Banking Law, the National Bank Law and the Law on Foreign Exchange Operations. Currently, experts from the Ministry of Finance and the National Bank are preparing new changes in the National Bank Law, which are expected to pass the Parliament in 2006 and will strengthen the authorities of the Central Bank.

- Major Macedonian banks:

Komercijalna Banka AD
Kej. D. Vlahov, 4
1000 Skopje, Republic of Macedonia
Tel: 389-2-310-7107
Fax: 389-2-311-1780
http://www.kb.com.mk

Stopanska Banka AD (majority owned by Greek National Bank – GNB)
Ul. 11 Oktomvri, 7
1000 Skopje, Republic of Macedonia
Tel: 389-2-329-5295
Fax: 389-2-311-4503
http://www.stb.com.mk

Tutunska Banka
Ul. 12-ta udarna Brigada, BB
1000 Skopje, Republic of Macedonia
Tel: 389-2-316-1114
Fax: 389-2-310-5600
http://www.tb.com.mk

ProCredit Bank
Ul. Jane Sandanski, 109 A
1000 Skopje, Republic of Macedonia
Tel: 389-2-321-9900
Fax: 389-2-321-9901
http://www.pbb.com.mk

Macedonian Bank for Development Promotion
Ul. Veljko Vlahovic, 26
1000 Skopje, Republic of Macedonia
Tel: 389-2-311-5844
Fax: 389-2-323-9688
http://www.mbdp.com.mk


Project Financing
Financing and insurance for exports, investment and development projects are possible through. Trade and Development Agency (TDA), the U.S. Export-Import Bank (EXIM), the Overseas Private Investment Corporation (OPIC), the European Bank for Reconstruction and Development (EBRD), the International Bank for Reconstruction and Development (World Bank), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA), and the Southeast Europe Equity Fund (SEEF).

Most major project funding is achieved through co-financing agreements, especially for transportation, telecommunication and energy projects.


Chapter 7: Business Travel

• Business Customs
• Travel Advisory
• Telecomunications
• Transportation
• Language
• Health
• Local Time, Business Hours and Holidays
• Temporary Entry of Materials and Personal Belongings
• Web Resources

Business Customs
There are no specific customary business practices that are distinct to Macedonia. The process of economic transition has led to the adoption of many Western business codes of conduct in this country.

The more traditional businesses operate from 8 AM until 4 PM, but an increasing number of businesses are adopting Western working hours.

Crime in Macedonia is relatively low, but precautionary measures should be taken at all times.

Telecommunications
Fixed telephony is available in all towns, but visitors will usually rent a cell phone on arrival. European GSM phones will work in Macedonia. There is cell phone coverage in all populated areas and in most unpopulated areas as well.

Fixed line services are provided by Macedonian Telecommunications (MacTel). There are two cell phone service providers – Mobimak, wholly owned by MacTel, and Greek-owned OTE - Cosmofon.

There are several Internet access service providers. See Web Resources.

Transportation

Airports:

Skopje Airport – Petrovec (20km east from Skopje)
Tel: 389-2-323-5156
http://www.airports.com.mk

Ohrid Airport (12km north-west from Ohrid)
Tel: 389-46-262-503
http://www.airports.com.mk


Airlines:

Macedonian Airlines – MAT
Tel: 389-2-329-2300
http://www.mat.com.mk

Adria Airways
Tel: 389-2-311-7009
http://www.adria-airways.com

Alitalia
Tel: 389-2-311-8602
http://www.alitalia.com

Austrian Airlines
Tel: 389-2-312-8177
http://www.austrian.airlines.com.mk

Croatia Airlines
Tel: 389-2-311-5858
http://www.croatiairlines.com

Cirrus Airlines
Tel: 389-2-321-6100
http://www.cirrus-airlines.de

JAT
Tel: 389-2-311-8306
http://www.jat.com

Lufthansa
Tel: 389-2-312-8177
http://www.lufthansa.com

Malev Hungarian Airlines
Tel: 389-2-311-1214
http://www.malev.hu

SWISS Airlines
Tel: 389-2-322-6813
http://www.swiss.com

Turkish Airlines
Tel: 389-2-311-7214
http://www.turkishairlines.com

Rent a Car agencies:

AVIS Rent a Car
Tel: 389-2-322-2046
http://www.avis.com.mk

BUDGET Rent a Car
Tel: 389-2-329-0222
http://www.budget.com.mk


Language
Many of the citizens speak foreign languages. English is the predominant foreign language, followed by German and French. Although many companies in Macedonia have English speakers among their managers, business representatives should be prepared to do business through locally hired interpreters.

Health

Health facilities are limited, and are rarely up to Western standards, though lately there is a trend of opening more of a well furnished and equipped private hospitals. Medicines may be in short supply. Hepatitis A, Brucellosis and Tuberculosis are endemic in Macedonia. Travelers to the region may wish to consult their physicians about the advisability of getting a Hepatitis A vaccination.
Local Time, Business Hours, and Holidays
Time: GMT + 1 hour

Business Hours: 08:00 – 16:00

2006 Holidays:

January 1-3 - New Year’s Day
January 7 - Orthodox Christmas
January 10* - Kurban Bajram
April 23* - Orthodox Easter
May 1-2 - Labor Day
August 2 - Ilinden Uprising Day
September 8 - Independence Day
October 11 - People’s Uprising Against Fascism
October 23* - Ramadan Bajram
December 31* - Kurban Bajram

*changes every year

If a holiday falls on a weekend, the government will generally issue a decision shortly before the holiday declaring the preceding Friday or following Monday an official holiday. In some cases, the government may declare an extended holiday. For instance, because of the alignment of New Year’s Day and Orthodox Christmas in 2005, the government declared the entire week of January 3rd a holiday.

Consistent with European practices, business activity in Macedonia slows during late July and August, when many people take their extended summer holidays.

Temporary Entry of Materials and Personal Belongings
http://www.customs.gov.mk/EN/DesktopDefault.aspx?tabindex=0&tabid=22

Web Resources

Macedonian Telecom
Tel: 389-2-314-1411
http://www.mt.net.mk

Mobimak
Tel: 389-70-6622
http://www.mobimak.com.mk

Cosmofon
Tel: 389-2-244-1000
http://www.cosmofon.com.mk

MT Net
Tel: 389-2-311-4454
http://www.mt.net.mk

ON Net
Tel: 389-2-310-0800
http://www.on.net.mk

Unet
Tel: 389-2-306-6505
http://www.unet.mk

Chapter 9: Contacts

• Contacts


Contacts

Government of Macedonia

Website: www.gov.mk

Embassy of the Republic of Macedonia
Mr. Nikola Dimitrov, Ambassador
1101 30th Street NW, #502, Suite 302
Washington, D.C. 20007
Phone: 202-337-3063 or Fax: 202-337-3093

Ministry of Transport and Communications
Mr. Xhemali Mehazi, Minister
Plostad Crvena Skopska Opstina, 4
1000 Skopje, Republic of Macedonia
Phone: 389-2-312-3292 or Fax: 389-2-312-6228
http://www.dtk.gov.mk

Ministry of Economy
Mr. Fatmir Besimi, Minister
Jurij Gagarin, 15
1000 Skopje, Republic of Macedonia
Phone: 389-2-309-3470 or Fax: 389-2-308-4472
http://www.economy.gov.mk

Ministry of Finance
Mr. Nikola Popovski, Minister
Dame Gruev, 14
1000 Skopje, Republic of Macedonia
Phone: 389-2-311-6012 or Fax: 389-2-311-7280
http://www.finance.gov.mk

Ministry of Agriculture, Forestry and Water Resource Management
Mr. Sadula Duraku, Minister
Leninova, 2
1000 Skopje, Republic of Macedonia
Phone: 389-2-311-3045 or Fax: 389-2-321-1997
http://www.mzsv.gov.mk

Ministry of Foreign Affairs
Mrs. Ilinka Mitreva, Minister
Dame Gruev, 6
1000 Skopje, Republic of Macedonia
Phone: 389-2-311-9190 or Fax: 389-2-311-5790
http://www.mnr.gov.mk

Ministry of Defense
Mr. Jovan Manasievski, Minister
Orce Nikolov, bb
1000, Skopje, Republic of Macedonia
Phone: 389-2-311-2872 or Fax: 389-2-322-7835
http://www.morm.gov.mk

Ministry of Health
Mr. Vladimir Dimov, Minister
Vodnjanska,bb
1000 Skopje, Republic of Macedonia
Phone: 389-2-311-3429 or Fax: 389-2-311-3014
http://www.zdravstvo.gov.mk

Ministry of Labor and Social Policy
Mr.Stevco Jakimovski, Minister,
Dame Gruev, 14
1000 Skopje, Republic of Macedonia
Phone: 389-2-311-7787 or Fax: 389-2-311-8242
http://www.mtsp.gov.mk

Ministry of Education and Science
Mr. Azis Pollozhani, Minister
Dimitrija Cupovski, bb
1000 Skopje, Republic of Macedonia
Phone: 389-2-311-7896 or Fax: 389-2-311-8414
http://www.mon.gov.mk

Ministry of Culture
Mr. Blagoja Stefanovski, Minister
Bulevar Ilinden, bb
1000 Skopje, Republic of Macedonia
Phone: 389-2-312-7163 or Fax: 389-2-312-7112
http://www.culture.in.mk

Ministry of Justice
Mrs. Meri Mladenovska - Gjorgjievska, Minister
Dimitrija Cupovski, bb
1000 Skopje, Republic of Macedonia
Phone: 389-2-323-0732 or Fax: 389-2-322-6975
http://www.covekovi-prava.gov.mk

Ministry of Internal Affairs
Mr. Ljubomir Mihajlovski, Minister
Dimce Mircev, bb
1000 Skopje, Republic of Macedonia
Phone: 389-2-322-1972 or Fax: 389-2-311-2468
http://www.mvr.gov.mk

Ministry of Environment and Physical Planning
Mr.Zoran Shapuric, Minister
Drezdenska, 52
1000 Skopje, Republic of Macedonia
Phone: 389-2-306-6930 or Fax: 389-2-306-6931
http://www.moe.gov.mk

Ministry of Local Self - Government
Mr. Rizvan Sulejmani, Minister
Dimitrija Cupovski, 9
1000 Skopje, Republic of Macedonia
Phone: 389-2-321-1829 or Fax: 389-2-321-1764
http://www.mls.gov.mk

Agency of Information
Mr. Vele Mitanoski, Director
Guro Gakovic, 64
1000 Skopje, Republic of Macedonia
Phone: 389-2-311-8038 or Fax: 389-2-311-4695
http://www.mia.com.mk

Agency for Foreign Investments
Viktor Delov, Director
Nikola Vapcarov 7
1000 Skopje, Republic of Macedonia
Phone: 389-2-312-6059 or Fax: 389-2-312-2098
Email: v.delov@macinvest.org.mk
www.macinvest.org.mk

Customs Administration
Mr. Ilija Ilovski, Director
Lazar Licenovski, 13
1000 Skopje, Republic of Macedonia
Phone: 389-2-311-6188; 322-4342 or Fax: 389-2-323-7832
http://www.customs.com.mk

National Bank (Central Bank)
Mr. Petar Goshev, Governor
Kompleks Banki, bb
PO Box 401
1000 Skopje, Republic of Macedonia
Phone: 389-2-311-2177 or Fax: 389-2-311-1161
http://www.nbrm.com.mk

Statistical Office
Mr. Apostol Simovski, Director
Dame Gruev, 4
1000 Skopje, Republic of Macedonia
Phone: 389-2-329-5600 or Fax: 389-2-311-1336
http://www.stat.gov.mk

Industrial Property Protection Office
Mr. Xhemail Elmazi, Director
Bulevar Ilinden, bb
1000 Skopje, Republic of Macedonia
Phone: 389-2-311-6379 or Fax: 389-2-311-6041
http://www.ippo.gov.mk

The Skopje Trade Fair schedule is at:

http://www.skopjefair.com.mk/index_en.htm