| Blessed with Chinese GDP growth rates (7-8% | | | | banking system and enact anti money laundering |
| annually in each of the last 3 years) and German | | | | measures. It took crushing pressure by IFI's to force |
| inflation (4%, down from 32% in 1997, mostly | | | | the government to hive off the Savings Bank's pension |
| attributable to increases in energy and housing costs), it | | | | plan business into Albapost, the local Post Office.In the |
| is easy to forget Albania's Somali recent past.In 1997, | | | | intervening years, Albania got its fiscal act together |
| following the collapse of a series of | | | | (though its tax base is still minimal) and made |
| politically-sanctioned pyramid schemes in which one | | | | meaningful inroads into the informal economy (read: |
| third of the impoverished population lost its meager life | | | | organized crime), not least by dramatically improving its |
| savings, Albania imploded. The mob looted 700,000 | | | | hitherto venal and smuggler-infested customs service. |
| guns from the armories of the army and the police | | | | A collateral registry has been introduced and much |
| and went on a rampage, in bloody scenes replete with | | | | debated bankruptcy and mediation laws may be |
| warlords, crime, and 1500 dead. It took 5% of GDP to | | | | enacted next year. Everything, from the operations of |
| recapitalize Albania's tottering banks and overall GDP | | | | the Central Bank to the executive branches is being |
| dropped by 7% that year. During the two preceding | | | | revamped. Those who remained in Albania are much |
| years, Albania has been the IMF's poster boy (as it is | | | | more invigorated than they have been in a long |
| again nowadays). Since October 1991, the World Bank | | | | time.But the problems are structural. Albania is among |
| has approved 43 projects in the country, committed | | | | the few countries in our post-modern world which rely |
| close to $570 million and disbursed two thirds of its | | | | on agriculture (55%) rather than industry (24%), or |
| commitments. This, excluding $100 million after the 1999 | | | | services (21%). Only 40% of the population live in cities |
| Kosovo crisis and $50 million for agricultural | | | | and female illiteracy is still at 24%. Tourism (especially |
| development.The European Investment Bank (EIB), the | | | | of the archeological kind) is promising. But there are |
| EBRD, the EU, and the Stability Pact have committed | | | | less than 6 computers and 40 phones per 1000 |
| billions to the region for infrastructure, crime fighting, and | | | | citizens and less than 40% of the roads are paved |
| institution building projects. Albania stood to benefit | | | | (Albanians were forbidden to own private cars until |
| from this infusion and from a future Stabilization and | | | | 1985). FDI amounts to a measly $50 million a year and |
| Association Agreement with the EU (similar to | | | | aid per capita has tripled to c. $160 since 1997. |
| Macedonia's and Croatia's). Yet, as Chris Patten (the | | | | Pervasive electricity shortages (despite budget draining |
| Commissioner in charge of aid) himself admitted to | | | | subsidies of imported energy) hamper economic |
| "The Economist": "The EU'S capacity for making | | | | activity. Albania was rated 100th (out of 174) in the |
| political promises is more impressive than our past | | | | UNDP's Human Development Index and 90th (out of |
| record of delivering financial assistance". The aid was | | | | 175) in UNICEF's Report on the State of the World's |
| bungled and mired in pernicious bureaucratic infighting. | | | | Children (under-five mortality). Its neighbors ranked |
| The EU's delegation in Tirana was recently implicated | | | | 55-73.The isolationist legacy of the demented and |
| in "serious financial irregularities".The economic picture | | | | paranoid Enver Hoxha is only partly to blame. |
| (if notoriously unreliable official statistics are to be | | | | Mismanagement, corruption, the criminalization of |
| trusted) has been mixed ever since.The budget deficit | | | | society, and tribalism are equally at fault in |
| hovers around 9% (similar to Macedonia's, Albania's | | | | post-Communist Albania. Everyone takes bribes - not |
| war ravaged neighbor). The (very soft and very long | | | | surprising when a senior Minister earns less than $1000 |
| term) external debt is at a nadir of 28% of GDP | | | | a month (ten times the average salary). A well |
| (though still 150% of exports) and foreign exchange | | | | developed, though fast eroded, social (extended family, |
| reserves cover more than 4 months of imports. This is | | | | village, tribe) safety net ensures that only 20% of the |
| reflected in the (export averse) stable exchange rate | | | | population are under the official poverty line. But these |
| of the lek. But the overall public debt is much higher | | | | extended ties are one of the reasons for local |
| (70%) and the domestic component may well be | | | | unemployment (almost 20% of the workforce) - |
| unsustainable. Money supply is still roaring (+12%), | | | | immigrant workers (mostly family members) constitute |
| interest rates are punishingly high (8% p.a.) though in | | | | more than 25% of those employed.With a youthful |
| steep decline, and GDP per capita is less than $1000. It | | | | (32) Prime Minister (Ilir Meta, overwhelmingly re-elected |
| is still one of Europe's poorest countries (especially its | | | | this year) who is an economist by profession, Albania |
| rural north). Most of its GDP growth is in construction | | | | is reaching out to its neighbours. As early as 1992 it |
| and trade. Health and education are decrepit and | | | | joined the improbable (and hitherto ineffective) Black |
| deteriorating. And people vote with their feet (emigrate | | | | Sea Economic Cooperation Pact (with Greece, Turkey |
| in droves) and wallets (the economy is effectively | | | | and ... Azerbaijan and Armenia!) - which currently |
| dollarized).Privatization receipts which were supposed | | | | lobbies for the re-opening of the Danube River. |
| to amortize public debt did not materialize (though | | | | Albanian cheap exports are competitive only if |
| there were some notable successes in 2000, including | | | | transported via river. Albania signed recently a series |
| the completion of the privatization of land and of the | | | | of bilateral agreements with Montenegro regarding |
| important mining sector). Negative sentiment towards | | | | transportation on the Bojana river and the Skadar |
| emerging economies, Albania's proximity to the | | | | Lake, use of harbors, the extension of railways and |
| Kosovo and Macedonia killing fields, and global | | | | roads, and the regulation of aviation rights. Despite the |
| recession make this prospect even more elusive. Had | | | | fact that Macedonia is (abnormally for geographical |
| it not been for the $500 million in remittances from | | | | neighbors) not an important trading partner, Albania has |
| 20% of the workforce who are employed in Greece | | | | responded positively to all the Macedonian initiatives for |
| and Italy - Albania would have been in dire straits. | | | | economic and political integration of the region. It is |
| Money from Albanian drug dealers, immigrant | | | | here, in regional collaboration and synergy, that |
| smugglers, and other unsavory characters still filters in | | | | Albania's future rests. Should the region deteriorate |
| from Prague, Zurich, and the USA. These illicit - but | | | | once more into mayhem and worse, Albania would be |
| economically crucial - funds may explain the | | | | amongst the first and foremost to suffer. Hence its |
| government's foot dragging on the privatization of the | | | | surprisingly conciliatory stance in the recent crisis in |
| omnipresent Savings Bank (83% of all deposits, no | | | | Macedonia. It seems that Albanian politicians have |
| loans, owns 85% of all treasury bills, 2% net return on | | | | wisely decided to move from a "Great Albania" to a |
| equity) and its reluctance to overhaul the moribund | | | | prosperous one. |