At the end of April, demonstrators invaded parliament and attacked lawmakers, a move condemned by the EU and the US, while Russia accused the West of backing the Social Democrats (SDSM) in their attempt to seize power. Demonstrators – mainly supporters of the VMRO-DPMNE party, led by the former Prime Minister Nikola Gruevski – protest against the election of Talat Xhaferi, an ethnic Albanian politician, as parliamentary speaker, a step towards electing a new government. The SDSM attempts to form a coalition between the SDSM and minority ethnic Albanian parties; a threat to sovereignty according to protesters.
Impact on country risk
The invasion of parliament happened as the country is in a deep political crisis. It started more than 2 years ago with the wiretapping scandal when Zoran Zaev from SDSM released tapes that showed mass surveillance by the government led by Gruevski. The inconclusive elections held in December last year didn’t help to solve the political crisis. Indeed, the VMRO-DPMNE party won 51 seats; not enough to claim the majority of the 120-seat parliament, while the Social Democrats won 49 seats. Following the election, the parties were unable to form a ruling coalition. The VMRO-DPMNE refused to form a coalition with the ethnic Albanian parties who demand to recognise Albanian as the second official language. Zoran Zaev from SDSM agreed to consider the requirement but President Ivanov – an ally of Gruevski – refused him the mandate to govern. Given the mistrust between the two main political parties, a resolution of the current political deadlock seems a distant prospect. This could affect GDP growth which has so far been resilient as the economy benefited from lower commodity prices, improving labour market conditions, resilient foreign direct investment and accommodating policies. Moreover, the current political stalemate is likely to further delay Macedonia EU membership talks. This along with fear of renewed ethnic strife could also erode foreign investors’ perception of Macedonia and therefore could damage years of successful government policies which have been able to attract foreign direct investments by building infrastructure, granting tax breaks and streamlining red tape. In this context, Credendo’s ST and MLT political risk classifications – in category 3 and 5 respectively – remain stable as they already incorporate the current political deadlock and its impact on the economy.
Analyst: Pascaline della Faille, email@example.com