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Yugoslav War Spoils Economy in Republic of Macedonia

RIGHT after night, the banquet room of Macedonia's largest hotel, the Grand, fills up with wealthy Macedonians who have come to hear sales pitches on time-share apartments in Spain. For these executives, the residences are a hedge in uncertain times. But for this fledgling country, the capital flight adds to a shortage of investment and grim economic conditions. Despite Macedonia's recognition by the United Nations last month as "The Former Yugoslav Republic of Macedonia," (a name arrived at to avoid con fusion with the Greek province of Macedonia) there is virtually no foreign investment here. Economy in transition

"Our economic problems result from the disintegration of Yugoslavia and the war in Bosnia," says Aco Spasovski, an economist with Macedonia's Chamber of Commerce. "We respect the [UN] sanctions against Yugoslavia.... But our economy is suffering a lot."

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Meanwhile, about 700 United Nations troops are guarding the country's border with Serbia to prevent the war from spreading to Macedonia.

The loss of trading partners in Serbia and, to a lesser extent, Slovenia and Croatia, has already caused this landlocked nation to lose 70 percent of its export market. Shipments of wine, metal products, textiles, electronics, meat, and vegetables have been devastated.

Real wages have fallen 30 percent, and as many as a tenth of Macedonia's 2 million people have left the country in the last two years.

One electronics company, MZT Oprema, lost 80 percent of its market in the Yugoslav breakup, says engineer Zdravko Sami. The company makes a variety of equipment including satellite dishes.

"The reorientation from a planned economy to a market economy is too difficult for a big company in such a short time," Mr. Sami says. With the sanctions against Serbia, "there's not going to be enough work to continue."

The cigarette industry has been one of the economy's few strengths. Last year its exports were $106 million, helped by strong sales to the former Soviet Union. In return for the cigarettes, Macedonia received Russian oil to help it get through the winter. Macedonia had faced a potential crisis because of Greece's blockade of the country's southern border, a nationalistic move rooted in Greek resentment over the name of the new republic.

Despite the shipments to Russia, the tobacco industry here is struggling. Vidosav Tatomir, chief engineer at the Tuturski Kombinat cigarette factory near Skopje, says a third of the plant's workers have been laid off.

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The economic crisis is also affecting health care in the former Yugoslav republic. "We had one of the best medical systems in the world. Now it's impossible [to maintain] because of the economy," laments Health Minister Jovan Tofoski. Of the former Yugoslavia's 16 pharmaceutical factories, "we only have two, ... and they cover only 15 percent of our needs." Telecommunications investment needed

Even making phone calls in or out of Macedonia is a challenge. The country's main international telecommunications circuits went through Zagreb and Belgrade; those links were interrupted when Croatia and Serbia went to war. The country now depends on a satellite link donated by the Swiss government.

Maksim Angelevski, deputy director of Macedonia's state-owned telephone authority, says his biggest challenge is "connecting ... with European and international networks."

"Now that Macedonia is a member of the United Nations, we hope international financial institutions such as the World Bank and the IMF [International Monetary Fund] will offer us some favorable loans for development, part of which will be directed toward telecommunications," he says.

Several European countries including Britain have recognized Macedonia, and observers expect the European Community and United States to follow suit. The US Agency for International Development now has a full-time representative in Skopje, the capital.

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