Possible economic ramifications of the name settlement

The agreement that was signed between Macedonia and Greece in the Prespa village of Nivici will be very important for Macedonia, whatever it may happen to it in the next 12-18 months. It will cause tectonic ethnic, political, sociological, economic, security and other movements in Macedonia, which will be much smaller in Greece. Although it is still early, this text intends to give the first views on the possible economic consequences of the agreement on Macedonia.

The situation with its fate is quite exact – the government signed it, the Parliament with 69 votes (an important indicator due to the anticipated constitutional changes) was expressly ratified by law, and the president of the state has publicly declared that he refuses to accept it and it is certain that he will not sign the decree for its publication, ie will return it back to the Assembly for reconsideration.
From the point of view of the political entities, the situation in Macedonia is as follows: the SDSM-led left-wing bloc supports the agreement, but with 90% of the forces; the bloc of Albanian political parties fully supports it; the same is with the smaller parties of the smaller ethnic communities in the country; and the right led by the VMRO-DPMNE rejects the agreement, but quite shyly with about 20 percent of its forces, which creates doubt that it wants to give the impression that it is against, and in fact, nothing will make it not be accepted “at a smaller door” to make a compromise with, as they call it, “the new reality”. Certain smaller groups of citizens are likely to be very persistent in the more or less tense protests in Skopje without the intention of extending them to other parts of the country.
The danger that even after the second adoption of the Law on Ratification of the Agreement in the Parliament, the President of the Republic will unconstitutionally refuse to sign a decree on the law is grave and certain. This can bring the country in a period of new tensions with a formalized request to revoke Ivanov or initiate a criminal procedure for abuse of office. Maybe both.
In such circumstances, the referendum regarding the name change and the country’s Constitution will have enormous significance. But, unfortunately, it cannot make big strategies and spins – its result will have to be simple: YES or NO. Nothing more.

In such circumstances, it is necessary to make at least initial observations about the direction of the movement of the Macedonian economy before and after the referendum, that is, what economists call the expectations in the economy. It is known that business people, but also workers and citizens are constantly working in the present, but constantly think about the short-term and long-term future from which they have their expectations. If their expectations are favorable, they will intensify their economic activities and vice versa. It is very likely that by the time of the referendum, the above mentioned economic entities will be in anticipation. Their activities will be cautious and, unfortunately, in the short term, it can keep the economic activity in the country on standby, ie at a relatively low level, which could cause low economic growth this year. But this is now of secondary importance, because the medium-term and especially long-term expectations are becoming more important, and they depend on the referendum declaration.

Hence, taking other uses and damages into account from the decision of the referendum, economic ones can be quite diametric. The referendum “NO” could mean the beginning of a kind of economic isolationism of Macedonia (reduced foreign direct investment, reduced assistance from the EU, reduced trade cooperation with some stable partners, reduced funding prospects and increased interest on new borrowing, etc.), which due to the undertaken and unresolved obligations of the agreement will be found in an extremely unfavorable situation to be declared “guilty” and therefore once permanently marginalized by NATO and the EU with all the catastrophic consequences of it. In such an environment, the economy could sink into new types of deficits that will have no place to cover, except to reduce already the low living standard of the population, which is now about 37 percent of the EU average measured by the GDP per capita indicator according to the parity of purchasing power. It is probably clear that Macedonia will have better economic conditions in the future cooperation with the EU in conditions of a long-term “road position” in the negotiations with Greece, as before, rather than being signed, and due to unrealized agreement with this country.
Normally, without the EU (and NATO) nothing has been completed forever. After all, although it is not nearly comparable, the two most developed European economies (without Luxembourg) are outside the EU – Switzerland and Norway. But it does not seem to matter for Macedonia. After everything we got involved with the agreement now the next steps of the country as a whole can be even more catastrophic. The expectations in the economy after a possible unsuccessful referendum would simply be very unpleasant, and this will unambiguously and directly affect the future development.
Probably, it would be quite different if the referendum succeeded. Expectations in the economy, both from the internal and external economic actors, would be very high, and this would have a great impact on investment, production, trade, consumption and other economic aggregates. However, two doubts remain. The first is the answer to the question of what would happen if the referendum “brought” unexpected and long-term political and social instability of Macedonia in the future in the form of intolerance and tensions between the protagonists and opponents of the change of the state name and because of its expectations in the economy to decrease?

The second is that if in conditions of open integration of Macedonia into NATO and the EU in the next 5-10 years, the economy simply cannot manage the new circumstances and fails to get the best out of itself, for example, the neighboring economies that after entering the NATO and / or the EU have not shown signs of a clear and significant economic recovery amid mass emigration of the working and educated population in other, far more developed EU economies.
A recent survey by the non-governmental sector, simply called “Children’s Diseases of Democracy”, shows, for example, that Macedonia today fails to “increase government accountability and transparency in reform processes” or “reduce public influence from any campaigns to defocus the public from the reforms.” In that sense, it is quite clear that the activities for the implementation of the agreement by all (Macedonia, Greece, EU, NATO, UN and others) will create more favorable economic expectations and chances, but they will not be effectuated without great and productive effort from everyone in society. We will still need a lot of great effort. Maybe greater than ever.

Nikola Popovski