American Hellenic Institute


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Ethnocracy Instead of Democracy in Macedonia

Volume 3, Issue 5

September 2011—No. 05 (202) 785-8430


AHI President’s Note: The American Hellenic Institute presents AHI’s Capital Report which is a timely synopsis of recent policy discussions in Washington to help keep you abreast of the latest developments. As a service to our membership and constituency, and to gain an understanding of the position of other entities on our issues, the American Hellenic Institute attends and participates at policy forums or roundtable discussions to ensure the policy positions of the Greek-American community are represented.

The content provided in AHI’s Capital Report is for informational purposes only, and does not necessarily reflect the position or opinion of AHI.

Ethnocracy Instead of Democracy in Macedonia

AHI attended Ethnocracy instead of Democracy in Macedonia, hosted by the Wilson Center on September 12, 2011. Mr. Naum Panovski, an independent scholar spoke on this issue.

Mr. Panovski opened the discussion with a brief history of FYROM since the Ochrid Agreement, an agreement between FYROM and the ethnic Albanian minorities that was signed in 2001, and which aimed at unifying the different ethnic groups in the country. He then proceeded to an evaluation of the agreement and its implementation. Specifically, Mr. Panovski argued that the agreement itself was an “excellent document”, but that its implementation by the government was problematic. He drew attention to criticisms regarding the agreement’s effects on national unity, as these could include ethnic federalization and disintegration. 

Panovski then went on to discuss two potential directions to which FYROM could head in the future. The first presents a more optimistic view of the country’s future characterized by a strong civil society with equal rights for all its members. Panovski envisioned a society where the people would identify themselves first and foremost as citizens of the Republic and then as members of different ethnic backgrounds. The second, negative, view points towards the possibility of a country divided by ethnocracy and with the threat of federalization and dissolution of FYROM becoming reality. This potential outcome would undoubtedly affect the stability of the entire Balkan region. 

The event allowed for a brief question and answer period at the conclusion of the presentation, during which the name issue was touched upon. Although he mentioned it was separate to the subject of his discussion, he admitted the issue is central to enhancing Democracy in FYROM. Panovski quoted the Greek Minister of Foreign Affairs, Mr. Lambrinidis stating, “Stop talking history, start making history,” and suggested that for a solution to be found, both parties have to approach the subject from an “intelligent and thoughtful” perspective rather than from an emotional standpoint.


AHI attended The Arab Uprisings and the United Nations, hosted by the Project on Middle East Democracy and the National Security Network at the Center for American Progress on September 13th, 2011. The panelists were Dr. James Zogby, founder and president of the Arab American Institute, Mrs. Geneive Abdo, a fellow and Iran analyst at the Century foundation, and Mr. Ted Piccone, senior fellow and deputy director for Foreign Policy at the Brookings institution.

Dr. Zogby opened the discussion on how Arab attitudes towards the US have changed in the two years that have passed since President Obama’s speech in Cairo in June 2009. In 2009 the opinion of the Arab world on the US and its foreign policy was record high, especially in comparison to its 2006 level. However the figures in 2011 appear to be even lower than those in 2006, something that Dr. Zogby attributed to the high expectations that were formed after Obama’s Cairo speech, which weren’t met in the two years that have passed since then. The killing of Osama Bin Laden worsened the figures, since “it was seen [in the Arab world] as a display of power coming from a country that is thought to be abusive of power”. In contrast to the US, Turkey’s numbers have steadily risen. This is explained by the fact that Turkey is perceived in the Arab world as a democracy, a country that is representing its people, and furthermore as a country that tries to act as a democratic leader in the region, exercising soft rather than military power, to stand up to Israel and Iran and by constructively trying to make peace in the region. He then proceeded to an analysis of the situations in Egypt, Syria and Libya.

The floor was then given to Mrs. Abdo, who moved on to talk about Iran and its attitude towards the Arab Spring. In particular, she argued that Iran’s attitude was very positive, thinking that the uprisings in the Middle East were a sign for an Islamic revival, characterized by anti-Americanism and were a product of the success of the great Islamic revolution of 1979, which she argued is not the case. With regards to how the Arab Spring has affected Turkish-Iranian relations, she argued that these have undoubtedly worsened since the time that Turkey was hopeful in undertaking the role of an interlocutor between the US and Iran, hopeful in that it would bring Iran to negotiating on its nuclear programme and trying to create a more favourable profile for Iran within the region. In contrast to this Turkey seems to be very frustrated now (especially after its relations with Syria have also gotten worse), as it finds it hard to negotiate on behalf of a country whose policy might be changing from the one day to the next so abruptly if it falls victim of the general trend of democratization in the region (Ahmadinejad one of the last autocratic leaders standing). From Iran’s side, the government is also frustrated with Turkey’s anti-Syrian attitude and statements, showing that, after all, Turkey’s zero-problems with neighbours policy might be harder to implement than one thought.

Finally, Mr. Piccone spoke on the institutional aspect of dealing with the Arab uprisings in the Middle East and in particular on what dealing with the Arab uprisings has revealed about the UN’s progress on improving its capacity to respond to such events. He argued that the case has shifted on to what constitutes a thread to international peace and stability. With regards to how the Middle East can change the UN, he referred to Turkey saying that it is now more subject to public (domestic) pressures on forming its foreign policy, even though this might not be fully realized as Turkey is still anchored by its NATO membership. He also referred to Turkey’s strong voting record on Human Rights issues within the UN (unlike countries such as South Africa or India, who claim to have a strong HR record without their UN votes records to match it).


AHI attended Christine Lagarde’s first public address in Washington DC since her appointment as Managing Director of the IMF. The event, entitled Global Economic Challenges and Solutions, took place on September 15th, 2011 and was hosted by the Woodrow Wilson Center for International Scholars.

This address, coming just a week before the annual meeting of the IMF, was a chance for the Managing Director of the Fund to provide a preview of the issues the IMF will be dealing with at the meetings in Washington next week. This will take place amid a time of great economic anxiety, when “exactly three years after the collapse of Lehman Brothers, the economic skies look troubled and turbulent as global activity slows and downside risks increase”.

She began by briefly providing a description of the current global economic outlook. This is characterized by gloomy broad trends such as global growth continuing at an ever slowing pace, with debt problems in advanced countries having put financial stability at risk and with “unacceptably high unemployment” at many advanced countries.

Despite this gloomy description, Lagarde appeared optimistic. “I believe there is a path to sustained recovery”, the Director said, but continued with reservations, “much narrower than before, and getting narrower. To navigate it, we need strong political will across the world-leadership over brinkmanship, cooperation over competition, action over reaction.”

She focused on three main issues. Firstly, there are balance sheet pressures sapping growth, which is a short-term issue affecting the advanced economies of Europe and the US. She characterized the situation of weak growth and weak balance sheets as “a vicious circle” that “is gaining momentum and, frankly, has been exacerbated by policy indecision and political dysfunction”. A second, more long-term issue is instability in the core of the global economic system. Lingering debt problems have caused the rise of such risks to financial stability. Finally, she referred to social tensions that are “bubbling below the surface”, mainly among young people due to unacceptably high unemployment rates and rumors of a “lost generation”.

To respond to these she suggested the “strategy of the four Rs: Repair, Reform, Rebalance, Rebuild”:

Repair: “We must relieve the balance sheet pressures that risk smothering the recovery”, Lagarde noted. She also expressed support of President Obama’s recent job creation plan at a time of a “jobs crisis in the United States”.

Reform: This refers to long-term reform so that economic stability is ensured for the future. It includes financial sector reform, which is a priority, as well as the fine-tuning of macro-prudential tools and reform in the way growth occurs, so that it is inclusive and benefiting the whole society in order for problems such as unemployment not to cause crises in the social dimension.

Rebalance: This has a dual meaning: Firstly, there needs to be a move from public support to private investment. Secondly, there needs to be a rebalance of global economic imbalances, with both deficit and surplus countries to start operating differently so that there is a global demand switch from external deficit to external surplus countries. Currency appreciation by certain key emerging markets was mentioned as the main factor holding back rebalancing. This needs to change as “rebalancing is in the global interest”.

Rebuild: There is a need for low-income countries to rebuild their economic policy buffers and to protect themselves against future storms.

Finally, the Director spoke on the role that the IMF has to play in providing global solutions to global economic challenges. She noted that the Fund is in a unique position to foster multilateral, collective action among its 187 members.

The event allowed for a short Questions and Answers session.

To a question on Greece, inquiring the Director to answer how can we have confidence in statements by the EU that they will not let Greece default, the Director replied that she was very reassured by the statements of Merkel and Sarkozy that the future of Greece is within the Eurozone and also referred positively to the July 21 meeting decision by the Eurozone to continue to support Greece (or any other country in need), as long as it performs its obligations.

When asked if her comments on “policy indecisions and political dysfunction” implied a view of current politicians being incompetent, Lagarde referred to yesterday’s talks among Merkel, Sarkozy and Papandreou as a good example of collective action.


AHI attended the BBC World Debate—Global Economy: A tipping point?, hosted at the International Monetary Fund’s Headquarters in Washington DC on September 22, 2011. The event was part of the Fund’s 2011 Annual meetings-Program of Seminars. The panel consisted of Christine Lagarde, the Fund’s Managing Director, Mr. Mohamed El-Erian (CEO, PIMCO), Mr. Austan Goolsbee (Professor, University of Chicago Booth School of Business and former Chairman of the Council of Economic Advisors at the White House) and Mr. Olli Rehn, European Commissioner for Economic and Monetary Affairs. Mr. Nik Gowing from BBC World moderated the debate.

The debate covered a broad range of issues and problems the global economy is facing at the moment, ranging from the sovereign debt and banking crises of the Eurozone to the risk of overheating concerning the emerging economies to the rise of unemployment in the US. However, as Mrs. Lagarde noted, in an interconnected world these issues cannot be seen as separate from each other and thus the panel focused on how policymakers and politicians across the world could foster global cooperation and collaboration in order for global recovery to regain momentum and tackle global fiscal imbalances that were seen to be at the core.

In response to whether there is enough of much needed political commitment in Europe Mrs. Lagarde said that there is a sense of urgency at the political level, both at the level of Heads of State and at the level of Finance Ministers and that there is a sense of a collective destiny and collective responsibility, which leaders have chosen to support even if that comes at a very high price, which involves the creation of a crisis management mechanism as well as answering the need to observe commitments through sanctions and other disciplinary measures. Mr. Rehn stressed the importance of tackling the root causes of problems in the Eurozone and spoke of a need to restore fiscal sustainability in order to restore confidence as well as for a need to recapitalize Banks in the Eurozone.

With regards to Greece and the Southern European economies in general, Mr. Goolsbee advocated that the narrative about Southern Europe having “acted irresponsibly by being profligate and having spent too much” needs to be abandoned as Germans need to realize that having a paid currency while their productivity was and is rising has constituted them great beneficiaries of the shared currency regime. Mrs. Lagarde pointed to the case of Latvia as an example of success for the IMF that could be used as a model for Greece. Having a constant dialogue with (workers) unions was a central feature of Latvia’s success which Greece could and should incorporate in its own strategies. The Director argued that there is no inconsistency in strengthening the banking sector and caring for jobs creation, as the first is a priority in order for the second to happen at this stage. Mr. Rehn however noted that we need to find a balance between constraint and job creation/fostering growth in order to restore confidence. The financial system plays a crucial role in providing credit for households but Southern European Economies have no fiscal space to go ahead and prioritize jobs creation. Mr. El-Erian also stressed the need to put public finance in order to support jobs creation and tackle unemployment.


AHI attended the Charting a new Growth Plan for the Eurozone, hosted at the International Monetary Fund’s Headquarters in Washington DC on September 24th, 2011. The event was part of the Fund’s 2011 Annual meetings—Program of Seminars. The panel consisted of Mr. Vitor Gaspar, Portugal’s Minister of Finance, Mr. George Soros, Chairman of Soros Fund Management, Mrs. Nemat Shafik, Deputy Managing Director of the IMF, Mr. Gao Xiqing from the China Investment Corporation and Mr. Olli Rehn, European Commissioner for Economic and Monetary Affairs. Mr. Wolfgang Münchau (Associate Editor, FT) served as moderator for the panel.

The Panel addressed issues concerning Europe and the future of the European Monetary Union. Olli Rehn characterized the current crisis as a “crisis of confidence” with root causes in the combination of a sovereign debt crisis and a crisis of the banking sector. Solutions should thus be in two stages, “immediate firefighting” followed by short to medium term reform of the economic architecture of the Eurozone. With regards to this Mr. Gaspar outlined three things that need to be incorporated, namely budgetary consolidation, financial deleveraging and structural transformation. Mrs. Shafik proposed a four-parts-solution along the same lines: 1. policy reforms for countries under market pressure, 2. to ensure that there is a firewall so that countries have access to finance when they need it, 3. support banks so to help finance investment projects and 4. enhance economic governance and fiscal integration in Europe.

With regards to Greece, Olli Rehn declared that “Greece should not and will not default”, as it moves into a primary structural surplus and meets the conditions set regarding fiscal targets. The next phase includes the private sector’s involvement with debt. However George Soros disagreed in saying that “Greece realistically may not be able to” [avoid default], and put the blame partly on the ECB for giving Greece a penal penalty interest rate in the first year. This, in combination with a debt growing to be almost 200 percent indicates that it may not be possible for Greece to avoid some sort of reorganization of its debt, in the form of a voluntary reorganization and an orderly default. Even if not, it is important that the “possibility of default is taken into account”, said Soros, in order to reassure the markets. On the point of Germany’s support for keeping Greece in the Eurozone, Mr. Rehn stressed the importance of “what terms the question is set”. It is not the question of “would you like to bail out another country”, but rather the question of “would you like to see your currency appreciate at 100 percent—which would have important employment consequences”, that Germans are facing, and they should realize that sooner rather than later.

Gao then moved the discussion to the cultural sphere by saying that “Culturally, you need to change your way of living and change your way of spending.” (referring to Southern European economies. This was followed up by a comment from the audience that Greece and the rest of the Southern European economies will not manage to meet their targets and grow their way out of the crisis due to cultural reasons. Mr. Rehn responded to this by referring to the example of the Nordic countries, which in the 1980s faced declining growth rates, the growing size of their public sectors, and problems of budgetary imbalances, and as a result experienced a consecutive period of large swings in credit, asset prices and economic activity. These macroeconomic imbalances were accompanied by a sharply increasing number of bankruptcies in the non-financial sector as well as severe banking crises. “The culture argument won’t get you very far”, Mrs. Shafik proceeded to agree with Mr. Rehn by citing Arab historian Khaldun who noted that Northern Europe would never manage to grow because of low productivity due to the cold weather. In both of these cases history proved predictions wrong, and so it seems that in the case of Greece talks of profligacy and over-spending have not much to do with culture and we should look at reforming the economic system in order for the economy to be brought back in order.


AHI Meets with Legislative Personel of Representative Niki Tsongas (MA-05)

Demetra Atsaloglou, director, Media Relations, met with Nathan Bell, legislative assistant, Congresswoman Niki Tsongas (MA-05) on Friday, September 30, 2011. The meeting highlighted the current geopolitical developments in Cyprus and the U.S. interests in the region as projected through the natural gas investments in part of Texas based company, Noble Energy. Bell affirmed the strong U.S. interests in the region and how Cyprus is important for the projection of U.S. foreign policy in the region. The close ties of Israel-Cyprus were also addressed. In the current context of political developments in the region, H.R. 2597 was also brought to the table and Bell expressed the interest of Congresswoman Tsongas to consider being a co-signatory.