Macedonia looks to coalition, EU pleased with vote

SKOPJE, July 6 (Reuters) - Macedonia faced a period of coalition building on Thursday following a national election that sank the ruling coalition and went some way to assuaging European Union concerns over the country's democratic maturity.

Projected results from the non-governmental group MOST gave the conservative opposition VMRO-DPMNE around 43 seats in the 120-seat parliament, against 30 for the ruling Social Democrats.

VMRO-DPMNE, which was last in power when an ethnic Albanian insurgency threatened civil war in 2001, must enter coalition with one of the main Albanian parties, possibly the ex-rebels.

Full official results were expected on Friday. The prime minister-elect has two months to form a government.

European observers said the vote "largely met international standards" and demonstrated growing political maturity.

They noted some serious, isolated irregularities -- ballot box stuffing and intimidation -- but said they "should not be allowed to overshadow the democratic progress made".

EU Enlargement Commissioner Olli Rehn said he was "pleased" with the observers' report and called for the incidents to be investigated and the perpetrators punished.

"I welcome the orderly electoral process, marking a further step in the consolidation of the country's democracy," he said.

The United States and NATO also welcomed the vote, but noted some irregularities. "These cases should be fully investigated and dealt with in accordance with Macedonian law," U.S. State Department spokesman Sean McCormack said in a statement.

There was tangible relief in Skopje that the vote passed off peacefully, after a sometimes violent campaign that drew warnings from the EU and NATO that Macedonia's bid to join both blocs was on the line.

The EU made Macedonia an official candidate for membership in December 2005, but stopped short of setting a date for accession talks, citing election flaws and the slow pace of reform. An EU review is due in late October, but diplomats say Macedonia will still have to wait for a date for talks.

"Ahead of us is a small celebration, and in the morning we'll start creating a government," VMRO-DPMNE leader Nikola Gruevski, a former finance minister, said early on Thursday.

CRUCIAL TO STABILITY

Social Democrat Prime Minister Vlado Buckovski acknowledged defeat in a televised address within five hours of polls closing, a quick, clean concession by Balkan standards.

Depending on the final results, VMRO-DPMNE might have to convince Buckovski's Albanian partner in government, former rebel leader Ali Ahmeti, to switch allegiance.

Buckovski called on Gruevski to form a government as soon as possible. "If he can't, we are here," he said.

Macedonia split from Yugoslavia peacefully in 1991 but ethnic conflict caught up with the republic of two million in 2001 when a six-month Albanian guerrilla insurgency drove it close to civil war, until Western diplomacy intervened.

The preservation of a stable, multiethnic Macedonia next door to the U.N.-run province of Kosovo, whose Albanian majority is expected to win independence from Serbia soon, is crucial to EU policy for stability in the Balkans.

The Social Democrats have formed three of the country's four governments since independence. But they are widely criticised for failing to improve a formerly Socialist economy crippled by high unemployment, low wages and little investment.

VMRO-DPMNE lost power in 2002 after the insurgency. In opposition, VMRO-DPMNE shed its nationalist image. Partial results showed Ahmeti's Democratic Union for Integration holding its majority in Albanian constituencies. (Additional reporting by Kole Casule and Mark John in Brussels)