Nikola Gruevski, 35, leader of the VMRO-DPMNE party, defeated Vlado Buckovski, the incumbent Prime Minister, who conceded defeat today in the fourth elections since the country broke away from Yugoslavia in 1991.

The preservation of a stable, multi-ethnic Macedonia next door to the UN-run province of Kosovo, whose Albanian majority is expected to win independence soon, is crucial to lasting peace in the Balkans.

The last time the VMRO-DPMNE party was in power in 2001, its hardline nationalist policies provoked an insurgency among ethnic Albanians, almost plunging the country into a civil war that was averted only by Western diplomacy.

The party has since moderated its stance, and Mr Gruevski now looks set to form a government by entering into an unlikely coalition with one of the former Albania rebel leaders.

The new Prime Minister told a rally in Skopje, the capital, that “the citizens of Macedonia showed their maturity and made the right decision”.

Although the election campaign was marred by gunfire and a grenade attacks, the actual election day passed off peacefully, and the international community has declared the results valid. The Organisation for Security and Co-operation in Europe, which helped to monitor the elections, said that the polls had been “largely democratic”, noting that the “election day was calm, with isolated cases of serious irregularities”.

The country remains on course to join Nato in 2008 and the European Union in 2012. The EU accepted Macedonia as an official candidate last December, but refused to set a date to start entry talks because of concern over democracy and the slow pace of reform. Brussels is to review the situation in October.

The VMRO-DPMNE derives its name from the revolutionary and nationalist groups founded in the 19th century to fight occupation by the Ottoman Empire.

The elections were also a test of the 2001 Ohrid peace deal, which ended the seven-month conflict between the Slav majority and Albania minority, who make up a quarter of the two million population.

Peace between Slavs and Albanians in Macedonia is likely to make it easier for Albanian-dominated Kosovo to succeed in achieving peaceful independence from Serbia later this year, when the UN starts talks on its future. British and other international troops are keeping the peace in the province after the US-led war stopped Serbian atrocities against ethnic Albanians, who are mainly Muslim.

Kosovo’s independence is being resisted by Serbia, which was forced to grant independence to Montenegro in May. Montenegrins voted narrowly for independence, marking the final break-up of the erstwhile Yugoslavia into its six federal republics. Serbia, which in effect had a land empire covering much of the Balkans, has been left a landlocked rump of its former self.

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