% of GDP
In 1990 Albania ended 44 years of xenophobic communist rule and established a multiparty democracy. The transition has proven difficult, as corrupt governments have tried to deal with high unemployment, a dilapidated infrastructure, widespread gangsterism, and disruptive political opponents.
Albania has long been thought of as a freak country. Actually it is one of the most beautiful in Europe, with a magnificent climate, warm but never getting too hot, given its mountainous and hilly topography. It is merely a matter of time before it becomes a great tourist attraction.
That has been prevented of late by its well-deserved reputation for gangsterism and kidnapping. It is worth giving a historical survey to see why things may shortly change.
The country was ruled in the interwar period by highland chieftains with resonant names like King Zog and his son, Leka. The last reigned as an infant for a few months in 1939 before Italy under Mussolini invaded and occupied the country. He is still alive and attempted a comeback in an election in 1997. But he made the mistake of standing as a prospective premier, clearly wanting to be a king. Despite his pedigree and majestic height of 6ft 9ins, he failed to impress his subjects-to-be with his hereditary right to rule. He came nowhere in the election.
In the interim between the infant Leka and the events of 1989, the Albanians were ruled for fifty years by the communists. This meant in effect the personal dictatorship
of Enver Hoxha, an extraordinary character, perhaps the most extraordinary the communist world threw up. He kept his country in virtually complete isolation. It became the poorest in Europe.
Albania had a severe crisis in the 1990s, with a financial crash in mid-decade. The population took a while to understand the rules of the capitalist market-place. Thousands lost their savings in pyramid investment schemes. But from the turn of the millennium it has done well, compared with its bleak past. GDP has been rising by 7-8% per year, albeit from a very low base. The Albanians are no longer the poorest people in Europe. That dubious distinction now belongs to the Moldovans. The Socialist Party is benefiting, in power since 1997, and was re-elected comfortably in 2001. Tirana is 100% behind the US anti-terrorist campaign, having no truck with ethnic Albanian secessionists next door in Macedonia and Kosovo. The last thing the Albanians want is a war of any sort. With Milosevic gone there is no reason to quarrel with the Serbs.
The Albanians blotted their copybook, however, with the French and the EU by supporting the US over Iraq. Indeed they have even agreed with the US not to extradite Americans to the International Criminal Court.
The two leading premiers of the PS government have been Pandeli Majco (now defence minister) and Fatos Nano, the current holder of the post. Both are very highly regarded in Washington, which sees Albania as its closest ally in the region, now that the Turks have refused cooperation over Iraq. The grimness of the Hoxha years have made the Albanians no friends of dictators.
Update No: 081 - (01/02/04)
Dissension at the top
The figures at the top of the ruling Socialist Party of Albania are at loggerheads most of the time, jostling each other for power and position. There have been three premiers in as many years and there is as yet no stable rule. The leaders can afford this internecine strife because the economy is doing well and re-election has been assured.
The foreign minister, Ilir Meta, accused the premier, Fatos Nano, last summer of becoming "someone who represents only his own interests and those of the dangerous clans behind him." No proof was offered and no charges brought.
Meta's relationship with Nano began to show signs of strain soon after the Socialists won a second term of office in the June 24, 2001, general elections. Meta at the time was the premier and Nano not even in the cabinet, but holding the key post of party chairman. Nano, whose position gave him virtually no formal authority in the government, but did make him an indispensable power broker, actively sought Meta's support in his bid for the presidency, made vacant at the time. Meta refused and Nano failed to obtain the post, a miscalculation on the younger man's part because Nano then focused on Meta's job once more in his sights.
Perhaps he calculated that Nano-who had twice been prime minister-would be an unpopular choice in either capacity.
In any case, Meta miscalculated. Without the support of the party chairman, Meta's government was crippled. Though he did restore order and improve Albania's neglected roads, without the support of his party, he found he could get little else accomplished and resigned in February 2002. After the short premiership of another party stalwart, Pandeli Majko, Nano assumed the burdens of office himself and is now premier again.
President a conciliatory influence
The man who was elected president in place of Nano in June 2002 has proved to be a peace-maker among the warring factions of the governing Socialists. He is 73-year-old Alfred Moisiu, elected as the country's first coalition president in hopes that he would curb the country's ruinous political squabbling. Moisiu, a retired general, was the only name submitted to the 140-member chamber by a group of 40 MPs from four of the biggest parliamentary parties, but mainly from the ruling Socialists.
The agreement between the ruling Socialists and the opposition Democratic Party, reached after long and intensive talks, and climaxing with the election of the new president, raised hopes that a period of divisive and sometimes violent politics would be ending.
Security threats an ideal bogy for Nano
A new unity has recently been forged in an unusual way. The bombing outrages in Istanbul in November have given certain people ideas. Police have stepped up security measures in the Albanian capital city of Tirana following the receipt of a threatening letter by the head of the European Commission delegation Ambassador, Lutz Salzmann. The measures included the deployment of secret agents and cameras around the European Commission offices and increased protection for the ambassador and his staff.
According to the police, a letter sent to the ambassador's office contained insults and threats against the European Union and the United States, including the threat of a bomb attack against the EU delegation. "We have taken the threats very seriously and have set up a group of our best experts to investigate the case," police sources said. There have been no attacks against Western targets in Albania, a predominantly Muslim country. Authorities have however recently increased security measures around Western embassy buildings.
Some newspapers speculate that the threats against Salzmann are linked with his recent statements calling on the Albanian government to intensify its fight against organised crime. It is notable that the ambassadors of western nations tend to work as a group to represent certain truths about unacceptable aspects of governance, to relevant ministers. A threat to one is a threat to all! Others say the warning is related to the recent capture of Iraqi leader Saddam Hussein. "All possible motives" are under investigation, police said.
The scare suits the government down to the ground, distracting attention from domestic problems to outside threats emanating from foreign terrorists. Although Albania is 70% Moslem in formal religious affiliation, the population after fifty years of godless communism is not at all devout. Extremism is not a home-grown affair, but imported from fellow Muslim countries, where terrorists see Albania as the European entry port for their operations.
Western stance is given a boost
The Albanians are doing reasonably well. They no longer attract the obloquy of being cast as the poorest nation in Europe. That unenviable sobriquet is now the possession of Moldova.
The war in Kosovo in 1999 was the turning point. They have the Serbs to thank for their opportunity to shine, which they assuredly did in the receipt of aid and credit to look after the refugees, some 260,000 of them at its peak.
Growth of GDP has been spectacular at 7% on average for the 2000s. The provisional figure for 2003, indeed, is 7%.
The Western orientation of the country was given a boost late last year by the government's permission for its largest bank, The Savings Bank of Albania, to be taken over by Raiffeissen Zentralbank (RZB) of Austria. This is the largest privatisation project in the country since it was opened up to market reforms in 1992. Premier Nano described it as "one of the most important economic developments in Albania in the last ten years."
Nano expressed his satisfaction that the buyer was RZB, adding; "it is a big name, which is a guarantee for the depositors." RZB won the bid by offering 126m, which was better than the offer of the other contender, Hungary's OTP bank. The Savings Bank is responsible for more than 70% of bank deposits nd an even higher proportion of banking activity. It is certainly a major catch for RZB and a prime move towards a Western-style economy by Albania.
Economy with rough edges
There is a problem with the economy for all that and it is that one half or so of economic activity is black, that is linked to crime. The authorities can do little about it because corruption is widespread and reaches to the top of the state bureaucracy.
Albania was a bandit-infested country before the war and fifty years of communism left it with an abiding sense of the indelible association of capitalism and crime. The gangs have bounced back and dominate the countryside outside Tirana. Smuggling and trafficking in humans are rife.
Albanian gangs are prominent in rackets across the EU. They are adept at exploiting porous borders. They traffic in human beings and drugs, while they are linked to the vice industry in the UK and to the Turkish heroin trade and are very active in Italy.
Even the director of the government's own statistical institute, Milva Ikonomi, is caustic about the situation. He says that the high proportion of black money means that investments are made in visible ventures like restaurants rather then in infrastructure or industry. So the process of reform "is growing more slowly here than in other countries."
Says another analyst, Sokol Bella, on a weekly magazine published in Tirana, "this is a society of two speeds. You have some people here who go and do weekly shopping in Greece and Italy, and then you have thousands of young people heading to Tirana to look for work." Says a pensioner on the outskirts of Tirana, Mymvera Cecollari, speaking of the new-found wealth - half of it controlled by one fifth of the 3 million population - "If you don't have any of that in your area, who cares about those things in the city centre."
The dynamic mayor of Tirana, Edi Rama, has refurbished the capital. The notoriously unsafe roads outside Tirana, which date from the wartime occupation by Italy, have been partly replaced by new highways, funded largely by the EU. But there are water shortages and power cuts. The Third World character of the society remains.
Balla sums up the predicament of this backwater of a country thus; " What scares me is not how fast we are growing - the question is, in which direction?"
Albania's 2004 budget gets boost from sale of bank
At its meeting on 20th December, the government said that the new owner of the Savings Bank would be Austria's Raiffeisen Bank. The Austrian bank has agreed to pay US$126m in cash. It had earlier proposed to make this payment in two instalments, Gazeta Shqiptare has reported.
"The prime minister and the finance minister were engaged in intensive negotiations, which resulted in this high price and the introduction into our financial market of a name with a great reputation among global markets," Prime Minister Fatos Nano told the meeting of the Council of Ministers. The state budget would also collect the total 2003 annual dividend of the Savings Bank. The dividend totals US$21m.
As a result of this privatisation the 2004 state budget will have an additional US$147m, which represents an increase for the budget of about eight per cent. According to the prime minister, all this money will be used for public investments.
Nano also expressed his appreciation for the interest and participation of OTP [National Commercial and Savings Bank], a Hungarian bank, in the race. However, he rejected the claims made by this bank. He said that the process for the privatisation of the Savings Bank should be considered as the most transparent and successful in the history of the privatisations inAlbania.
The Savings Bank is the biggest bank in the country, accounting for 50 per cent of the savings and deposits of private individuals and companies, with total assets of US$1.3bn. "Through the budgetary collection of US$147m as a result of the fantastic success of this strategic privatisation the overall 2004 state budget revenues will be increased by 8 per cent, which will allow us to make a further expansion in our public investments for development and integration," Nano said.
Finance Minister Kastriot Islami said that the US$126m (16.5bn leks) is the biggest so far from the privatisation of any of the country's strategic enterprise. He said that this figure ranges from 80 per cent above the minimum value to 26 per cent over the maximum value identified by international auditing firms. According to the latter's assessments, the minimum value of the Savings Bank should be 8.6bn leks, while its maximum value should be 11.2bn leks.
Prime Minister Nano stressed that the 141-year experience of the Raiffeisen Bank is a guarantee for the introduction of contemporary models for the administration of savings and, in particular, the credit for private firms. He said that this would also lead to the consolidation of international standards in Albanian financial markets
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