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After Apple Spat, North Macedonia Eyes Bulgaria to Replace Russian Market

Russia’s war in Ukraine has hurt North Macedonia’s agricultural exports, which hope to find a new home in Bulgaria.

Ljube Pampulevski has been growing apples all his life, like his ancestors before him and his children now.

“I grew up in an orchard,” he said on his farm in Debar, in the west of North Macedonia. But, “now our livelihood is in danger and we’re worried.”

Pampulevski, like other apple growers in Debar, exports more than half his crop to Russia, but the Kremlin’s war in Ukraine has sent relations with Skopje into a tailspin, and exporters are hurting.

Ljube Pampulevski and his family have been growing apples all his life. Photo: Ljube Pampulevski/private

A NATO member and candidate for European Union accession, North Macedonia has signed up in full to the Western sanctions slapped on Moscow and expelled 11 Russian diplomats. But Russia hit back in December with temporary restrictions on all plant products from North Macedonia, citing the discovery of a “highly dangerous” stink bug on imported apples.

There is growing alarm in landlocked North Macedonia about the potential impact on the agricultural sector, a mainstay of the country’s economy.

“At the moment, apple growers who sell a large percentage of their product on the Russian market are severely affected by the temporary ban on imports of Macedonian products, specifically fresh fruit and vegetables,” said Dejan Beshliev, executive director of the Macedonian-Russian Chamber of Commerce. 

“Keeping a market is painstaking work, and the Russian one is no exception. It is very complicated to replace in the short term.”

Pampulevski, who is president of the Fruit Growers’ Association ‘Blagoj Kotlarovski’, said that after Russia comes Bulgaria, the second biggest market for North Macedonia agriculture.

“The Bulgarian market is next on the list,” he said. “They need apples, especially because their domestic production has decreased recently.”

Indeed, trade between the two countries – otherwise at odds in a row over identity, language and Skopje’s EU ambitions – has picked up since Russia’s invasion of Ukraine in February 2022.

Trade with Bulgaria pushing 1 bln euros

Vancho Uzunov, professor of economics at Cyril and Methodius University in Skopje, said the potential loss of a market like Russia’s would undoubtedly hurt a small economy like North Macedonia’s. But Skopje had to take a side.

“North Macedonia still had no choice but to join the sanctions against Russia because our ‘Western partners’ demanded this and we could not sit on two chairs,” Uzunov told BIRN. “We have to find a way to deal with it.”

One way has been to develop trade with Bulgaria, which Foreign Minister Bujar Osmani said in November last year had reached a record high, just as North Macedonia’s trade deficit with Russia soared by nearly 330 per cent.

In the first eight months of 2022, trade with Bulgaria amounted to more than 710 million euros, Osmani said. A billion euros over the course of the year would represent a 51 per cent increase in 2020. Part of that was due to a deal struck in April last year to import wheat from Bulgaria.

The trend puts Bulgaria on track to become North Macedonia’s fifth biggest trading partner, after Greece, Germany, Serbia and the UK.

Speaking to BIRN, Osmani said North Macedonia was looking forward to the formation of a new Bulgarian government following a fifth parliamentary election in two years, though the inconclusive nature of the result on April 2 raises the spectre of drawn-out coalition talks.

He said that a business event in November to celebrate the billion-euro mark underscored that relations “are not based only on political relations between leaders, but that there is infrastructure in place and apparently resistant to the varying levels of relations between politicians of the two countries.”

“We hope that the Republic of Bulgaria will finally form a government so we can sit down and seriously discuss the future of the region and the European process,” Osmani said.

Positive noises on diplomatic front

Although trade with Bulgaria is developing at the national level, Bulgarian companies operating in North Macedonia say they are not faring so well.

“Generally speaking, the situation got worse after the Ukrainian war started,” said Darko, who owns two Bulgarian companies in Skopje and spoke on condition his surname not be published.

“People were afraid, and they had no money. Everything, including electricity, became more expensive; our companies worked less, our business suffered and we’re on the verge of collapse.”

The most profitable Bulgarian businesses in the country are in the mining sector and the wholesale and retail trade, particularly vehicle repairs. 

When Osmani met his Bulgarian counterpart, Nikolay Milkov, in November, both sides spoke of positive bilateral relations, underlining their burgeoning trade relations and economic cooperation after a period of tension over Sofia’s blocking of Skopje’s EU accession bid.

“We have an interest in restoring the positive agenda in our relations, which both sides feel has been lost,” Milkov said.

Photo: Simona Srbinoska

Russian companies staying put

Russia, even though it notes a small number of companies in North Macedonia that did not see a significant change in their capital after the sanctions, decided to maintain the trade relationship. 

Uzunov, the professor of economics, said that whatever the tensions, Russia still has an interest in North Macedonia.

“Although it is a small market, the Republic of North Macedonia could be interesting for Russia because it is in Europe and is a potential EU member state,” he said. 

“On the other hand, since Russia has no major direct damage from the sanctions against Macedonia, why would it not seek to maintain its position in the Republic of North Macedonia market and economy? What does Russia have to lose from sanctions in North Macedonia, and what would it gain by withdrawing from this market? Nothing.”

“And in the future, in some hypothetical other constellation of relations, it may be useful to have a presence in Macedonia’s economy. The difference in the size of the states makes such a decision by Russia logical.”

At stake is the roughly $35-45 million in annual revenues North Macedonia counts on from trade with Russia, mainly from agricultural exports.

“I hope that no one in our country is thinking about breaking up with Russia,” said Beshliev of the Macedonian-Russian Chamber of Commerce. He cited the sanctions exemptions that a number of European countries have sought to protect certain industries.

Pampulevski said the state should tread carefully.

“Strategic steps in agriculture, specifically fruit growing as a long-term crop, require extensive analysis, market research, and professionalism for those steps to yield real results, because we’re talking about longer periods of five,10 and even more than 20 years,” he said.

Source: Balkan Insight