MACEDONIA
struggling with reforms,
and offering a new vision for Europe


V.I.P. INTERVIEWS
Mr. Risto Penov, Mayor of Skopje
 
Interview with:

Mr. Risto Penov
Mayor of Skopje

28 February 2001

Contact:
91000 Skopje, Uindeska bb - MACEDONIA
Tel: +389 91/11 00 53
       +389 91/11 96 05
Fax: +389 91/23 54 45
E-mail: penov@lotus.mpt.com.mk
Could you give us a brief outline of what have been the main development steps within this town, until you became its Mayor in 1996?

Skopje is a very new town. It was basically built after the earthquake in 1963, when two thirds of the town was destroyed, and more than one thousand inhabitants have died as a consequence of that. After that, thanks to the aid that has been given by many countries of the world, Skopje has been reconstructed, and became a modern town, which has gone through a remarkable process of development until 1980. During that period of time, Skopje and Macedonia have been a part of Yugoslavia, but since Yugoslavia entered in an economical crisis, all of the investments stopped and according that, in some ways the development of Skopje was disrupted. After the independence of Macedonia, in 1990, Skopje has become the capital of the state, and due to the problems of the transition process, an evident development of the town has not occurred. I am the first mayor of this town, that has been elected by the citizens in 1996, and along with the assistance of the new City government, we have proved that Skopje is a real capital and truly attractive historical town. Skopje has a very large history, and some artifacts are witnesses of its existence since 6000 years ago, but most of them have been destroyed during several of the wars and earthquakes. Although all of those events have taken place, many historical monuments, such as buildings, churches, monasteries, the Old town fortress, the Old bazaar, the Stone bridge, and many other attractive places, still exist in Skopje. The only disadvantage is that they are not organized yet, to be closer to the tourists, or to attract customers. The main project that we have to fulfill is that we have to organize Skopje as an attractive town, because its geographical position is very good. We have not been able to realize this, due to the situation in the region in the past 10 years, we have always been under various blockades, transport and economical links have been obstructed, the wars, have made Macedonia unattractive to foreign investors. Although our system is changing, and the conditions in Macedonia are very different than the ones in Serbia, Bulgaria, Albania, we have not recorded many investments yet.

But you have still been able to improve the infrastructure…

Yes, my main job has been to repair the infrastructure, because for a 20 year period, there has not been a real investment in that area. I have started to repair the streets, to modernize them, not like you are doing in the USA, because we do not have enough money to do so, but I think that we have done a lot of things, in order to resolve the problems of the citizens. Unfortunately, these kinds of activities have not been followed by the necessary businessmen actions, such as repairing their shops, building new hotels, and maybe that, is the main problem of Skopje - we do not have enough of those facilities, which will attract tourist as our main goal.

There seems to be two different strategies. The first one is maybe to implement a strategy here, towards putting into light the historical assets of the region of Skopje, and on the other side, putting into light the fact that Skopje is becoming part of an open economy.

That is right, and we are facing a lot of difficulties to improve that, but we are still searching for a way to resolve this problem. This is my second election term, and I am working now on making this project more significant than the infrastructure project I have been working on, during my first election term.

What do you need to implement faster those projects you have had in mind?

Right now I am building a big sports hall, due to the fact that a hall for events with a larger audience, like the one I am building for 7 000-10 000 visitors, does not exist at the moment. I am trying to construct a new bus station, because the old bus station is still positioned in the center of the town, and the new one will be placed under the railroad station. I have directed my efforts towards building new parking lots, because the parking problem in the town is large. Also I am looking for private investors to approach, and implement certain necessary and profitable projects.

In which fields, for example?

Probably in the traffic area. Buses do our public transportation, which is not ecological, there is a traffic problem, and that is why we are having a tram system construction project. I am looking for a private operator from anyplace of the world, to make a joint venture, or some other solution, because that is a very expensive project, to be realized only by ourselves.

It seems that trams are becoming the new fashion of European countries, right?

Yes, we are not like the Americans, who do not have the subway, 640 000 inhabitants are not enough to make the underground system affordable. For the current level of inhabitants, the tram system is the most convenient one. There are certain areas in the town, which can be offered to investors to build. As you may have seen, there are areas in the central zone of the town, that nothing is build on, and in those areas, investors may be interested in constructing various centers. I hope that the situation in the next few years will be completely resolved, and Skopje will become a center, not only for Macedonia, but also for the south of Serbia. I think that Skopje may be attractive to Albania, because I believe that we are way ahead of them. Also there are big industrial capacities, that are not working at the moment, as a result of the crisis. They have been projected to produce for the size of a market as the former Yugoslavian one, and since Macedonia became independent, all of those factories have been closed. Nowadays the factories are beginning to be re-opened, one by one, but not with their full capacity. Of course, an old technology is evident, time is passing by, the equipment is maybe old, but I still think that those capacities are attractive to some investors.

When do you believe Skopje will manage to become a center of the sub region? What do you think you need to achieve that goal?

That does not depend on us, that has been a problem of the whole region. I am happy that the democratic changes have taken place in Croatia, in Serbia. We are also happy about the fact that Mr. Rugova and his political party won the elections in Kosovo, because he is known in the public as a person, who wants to resolve the problems by negotiations, and not through war. The international community support is needed too, for these difficulties to be solved, and in order to begin functioning, because everything in this region has been altered now. The summits that were held in Skopje, few months ago and right now, are the first steps towards opening the way of a solution. Our aim must be opening our borders, it may be difficult to open them completely, but in economical terms, we may do so, without the presence of the customs taxes etc. This is important, because previously, this region has been one market. Very interesting is the fact, that all these seven countries, in the Balkan region, Croatia, Yugoslavia, Romania, Bulgaria, Albania, Macedonia and Bosnia, are ten times bigger than Greece, and all of them together, have been producing smaller gross domestic product, than Greece is producing by itself. That is due to the membership of Greece in the European Union, NATO, and to the fact that they are enjoying their support, while we are still in the dark, without a real support in our wish to became the country, that we really want to be. We have had a standard of living like the American one comparing to Greece 20-25 years ago, but in the meantime, it has become very rich country, while we are descending. My opinion is that the international community is not giving the actual support to this region, so it could be included in it, to be a part of it, in the real sense of the word.
It seems like they are also waiting the privatization of the major companies to be completed. Do you see the privatization process as a key factor to bring larger dynamics to your development?

Now we cannot talk about the problems in the privatization process, from an outside point of view. We have had inner problems, regarding to the manner of executing the privatization by our government, like the problem with the corruption, but all the companies already have been privatized. We are now involved into the privatization process of our public enterprises, such as the mobile telephone company, which has already been privatized, then the electric power company, the water supply company for the region of Skopje, are going be privatized. All of this has been done by private investors, who are bringing their decisions on their own, and the international community should be informed that we have been going through that process, but if they are waiting for it, to be finished, there will be nothing left. In Macedonia the social problems are large: 320 000 of the citizens are employed, 360 000 are unemployed, and 280 000 are retired, and from these numbers, you can see how difficult this situation is. Many of the officially unemployed, are working on the Grey market, but that is not the right answer of the problem, we need real aid. I would like to compare Skopje and Dresden, because they have had similar past, Dresden has been destroyed during the II World war, and Skopje as a consequence of the earthquake, has also been destroyed. The size of their inhabitants is similar, that is over 500 000 in Skopje, and less than 500 000 in Dresden, and both of them used to belong to the Eastern block. Dresden has become an enormous town, and it has succeeded in that, because it has been given 500 million DM, by the European Union, as assistance in solving its infrastructure and enterprise transformation problems. Parallel to this, Skopje has gained 500 000 US $, and according to the given aid, we cannot follow the improvements, that you are doing in your cities, and you as visitors, will always feel that you are steps ahead, during your stay here. The fact is that if you want to make alternations like that, you need money, and we are completely opened towards any kind of private investment, although certain bureaucracy or administrative obstructions appear, we are ready for mutual projects, but real interest has not occurred. For example, the European Union has financed 50% of the total investment of the Underground transportation system in Athens, and that amount can be expressed in billions, but when we are talking about our tram system, which costs millions, then that presents a problem.

How do you really explain this attitude from the European Union?

There are few things. The first one is that they are not really prepared to purpose a real project, because our employees in the City government are not enough educated to realize them effectively, but I think that, that is not the essence of the problem. Our contacts with the European Union, with the International Funds are on a very low level, due to the fact that until 1990, all of those contacts went through Belgrade, and Skopje has not been a part of that process. On the other side is the bureaucratic way of functioning of these organizations, for example, the Stability Pact has been spending 850 million DM, per year. This has been the second year of their presence, and at the same time there has not been a project established anywhere in this region. They have approached us, with certain projects, but they do that differently. They have offered a project to solve the ecological problems of Skopje, and have decided to spend one million-DM for that purpose. I only need 100 000 DM, from that amount to create solutions of real problems, such as to converse the petrol derived fuel used for industry production into gas, in order to decrease the pollution. The point is that we need money to invest in it, because there is not an economic interest for the companies to change it. That is why we need smaller projects, that will resolve the important problems, and we will of course prove that the money would be spent in the mentioned direction.

What could you say to any potential investors such as our readers in order to convince them that coming and investing in Skopje will be the right choice?

If you are talking about economic projects, which are not the city responsibility, we can offer them the space, the easiest way towards good conditions. The labor force is very cheap in comparison with the western countries, and very well educated, more than 10% of the population has a university degree, and they still are unemployed. This is a very attractive, calm, welcoming area, where investors may perform their business.

What is your personal feeling about being the main person responsible for the development of Skopje? What do you believe has been your best personal achievement, and what would be your wish before handing this town over to someone else?

The everyday problems may not be intriguing for you, but I must solve the garbage problem of the town, the hygiene problems, etc. I know that it is not possible to change the town in four years time, but I will be happy if I could see Skopje to be like Prague, or any other European city, which have been entirely altered. I have been in the USA for a study trip, and I have seen that American cities are managing their similar difficulties differently than we do. I have visited Buffalo and Baltimore, two cities that have been facing the identical troubles of conversion of their downtown into criminal actions area, although that has not been going on at the same time in both of the cases. There, they have companies that are working on these problems, and while I have had a conversation with them and with the families I have visited. All of them have asked me what are the attractive points of the town, and why should they visit Skopje. Among the above mentioned things, as interesting information, I have stated that Mother Teresa was born in Skopje, Justinian, the greatest Vizantian imperialist was born here, but we are not quite sure of that. Then a ski resort center is 20 km away from Skopje, the lake Ohrid is 120 km away from here, Greece is about 200-km away etc. In the monastery in Nerezi, on the Vodno Mountain, there is a fresco, which is older than Joto's paintings in Europe, in the Museum of contemporary arts, we have a large painting collection, Picasso is present too, but they are not exhibited, because the Museum building needs repairs. Our vine is very famous, and we have high quality agricultural products, although we are not exporting them as finalized ones, and also we have many cuisine specialties. We have not been functioning in the right direction, because we are primarily focused on urban planning activities, in order to solve the citizen's environmental problems, instead of emphasizing the most attractive points, and promoting them, and if investors came here, there are easy ways to improve this. I must mention that we have taken steps towards building new hotels, of famous names, new shopping centers, and few other similar activities, which will positively effect the situation, because in addition, Skopje has all the opportunities to become the center of the region.

This means that now is the right time to invest, and make value added in the public sector?

Yes it is, and that is my general idea. Skopje is very close to Europe, the airport is functioning well, an industrial zone is in the construction process right now, and this is a central position towards anywhere.

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© World INvestment NEws, 2001.
This is the electronic edition of the special country report on Macedonia published in Forbes Global Magazine.
August 20th, 2001 Issue
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