The month of May was marked by two events, being the death of 8 Macedonian policemen and 10 Albanian militants during a battle in the northern town of Kumanovo (9 May) and protests against the government and Prime Minister Nikola Gruevski (17 May) that followed wire-tap revelations. PM Gruevski –who has been in power since 2006 and has been increasingly perceived as authoritarian - leads a multi-ethnic coalition elected in April 2014. Opposition Social Democrat leader Zoran Zaev accused the PM of mass surveillance of allies and opponents. Allegation denied by Nikola Gruevski. In the context of annoying wire-tap revelations, it is not clear whether the raid against Albanian militants in Kumanovo was aimed to divert public opinion from this political scandal. However, the raid highlights that ethnic division could be exploited by politicians. This is dangerous as it could result in heightened tensions.

Impact on country risk

Tensions between political parties are frequent in Macedonia as shown by past opposition’s parliamentary boycotts and protests. In this context, a solution to the current political crisis would reduce the threat of political instability. It is important for Macedonia to be perceived as a stable country by foreign investors. Indeed, over the past years the government has successfully attracted foreign direct investments by building infrastructure, granting tax breaks, streamlining red tape and ensuring direct access to high-level decision-makers to help address potential problems. If the country loses investors’ confidence, it could have important consequences in terms of FDI prospects. Credendo Group’s MLT political risk category – currently in 5 - is unlikely to be revised as it already takes into account the frequent political tensions.

Analyst: Pascaline della Faille, p.dellafaille@credendogroup.com