Blessed with Chinese GDP growth rates (7-8% annually in each of the last 3 years) and German inflation (4%, down from 32% in 1997, mostly attributable to increases in energy and housing costs), it is easy to forget Albania's Somali recent past.
In 1997, following the collapse of a series of politically-sanctioned pyramid schemes in which one third of the impoverished population lost its meager life savings, Albania imploded. The mob looted 700,000 guns from the armories of the army and the police and went on a rampage, in bloody scenes replete with warlords, crime, and 1500 dead. It took 5% of GDP to recapitalize Albania's tottering banks and overall GDP dropped by 7% that year. During the two preceding years, Albania has been the IMF's poster boy (as it is again nowadays). Since October 1991, the World Bank has approved 43 projects in the country, committed close to $570 million and disbursed two thirds of its commitments. This, excluding $100 million after the 1999 Kosovo crisis and $50 million for agricultural development.
The European Investment Bank (EIB), the EBRD, the EU, and the Stability Pact have committed billions to the region for infrastructure, crime fighting, and institution building projects. Albania stood to benefit from this infusion and from a future Stabilization and Association Agreement with the EU (similar to Macedonia's and Croatia's). Yet, as Chris Patten (the Commissioner in charge of aid) himself admitted to "The Economist": "The EU'S capacity for making political promises is more impressive than our past record of delivering financial assistance". The aid was bungled and mired in pernicious bureaucratic infighting. The EU's delegation in Tirana was recently implicated in "serious financial irregularities".
The economic picture (if notoriously unreliable official statistics are to be trusted) has been mixed ever since.
The budget deficit hovers around 9% (similar to Macedonia's, Albania's war ravaged neighbor). The (very soft and very long term) external debt is at a nadir of 28% of GDP (though still 150% of exports) and foreign exchange reserves cover more than 4 months of imports. This is reflected in the (export averse) stable exchange rate of the lek. But the overall public debt is much higher (70%) and the domestic component may well be unsustainable. Money supply is still roaring (+12%), interest rates are punishingly high (8% p.a.) though in steep decline, and GDP per capita is less than $1000. It is still one of Europe's poorest countries (especially its rural north). Most of its GDP growth is in construction and trade. Health and education are decrepit and deteriorating. And people vote with their feet (emigrate in droves) and wallets (the economy is effectively dollarized).
Privatization receipts which were supposed to amortize public debt did not materialize (though there were some notable successes in 2000, including the completion of the privatization of land and of the important mining sector). Negative sentiment towards emerging economies, Albania's proximity to the Kosovo and Macedonia killing fields, and global recession make this prospect even more elusive. Had it not been for the $500 million in remittances from 20% of the workforce who are employed in Greece and Italy - Albania would have been in dire straits. Money from Albanian drug dealers, immigrant smugglers, and other unsavory characters still filters in from Prague, Zurich, and the USA. These illicit - but economically crucial - funds may explain the government's foot dragging on the privatization of the omnipresent Savings Bank (83% of all deposits, no loans, owns 85% of all treasury bills, 2% net return on equity) and its reluctance to overhaul the moribund banking system and enact anti money laundering measures. It took crushing pressure by IFI's to force the government to hive off the Savings Bank's pension plan business into Albapost, the local Post Office.
In the intervening years, Albania got its fiscal act together (though its tax base is still minimal) and made meaningful inroads into the informal economy (read: organized crime), not least by dramatically improving its hitherto venal and smuggler-infested customs service. A collateral registry has been introduced and much debated bankruptcy and mediation laws may be enacted next year. Everything, from the operations of the Central Bank to the executive branches is being revamped. Those who remained in Albania are much more invigorated than they have been in a long time.
But the problems are structural. Albania is among the few countries in our post-modern world which rely on agriculture (55%) rather than industry (24%), or services (21%). Only 40% of the population live in cities and female illiteracy is still at 24%. Tourism (especially of the archeological kind) is promising. But there are less than 6 computers and 40 phones per 1000 citizens and less than 40% of the roads are paved (Albanians were forbidden to own private cars until 1985). FDI amounts to a measly $50 million a year and aid per capita has tripled to c. $160 since 1997. Pervasive electricity shortages (despite budget draining subsidies of imported energy) hamper economic activity. Albania was rated 100th (out of 174) in the UNDP's Human Development Index and 90th (out of 175) in UNICEF's Report on the State of the World's Children (under-five mortality). Its neighbors ranked 55-73.
The isolationist legacy of the demented and paranoid Enver Hoxha is only partly to blame. Mismanagement, corruption, the criminalization of society, and tribalism are equally at fault in post-Communist Albania. Everyone takes bribes - not surprising when a senior Minister earns less than $1000 a month (ten times the average salary). A well developed, though fast eroded, social (extended family, village, tribe) safety net ensures that only 20% of the population are under the official poverty line. But these extended ties are one of the reasons for local unemployment (almost 20% of the workforce) - immigrant workers (mostly family members) constitute more than 25% of those employed.
With a youthful (32) Prime Minister (Ilir Meta, overwhelmingly re-elected this year) who is an economist by profession, Albania is reaching out to its neighbours. As early as 1992 it joined the improbable (and hitherto ineffective) Black Sea Economic Cooperation Pact (with Greece, Turkey and ... Azerbaijan and Armenia!) - which currently lobbies for the re-opening of the Danube River. Albanian cheap exports are competitive only if transported via river. Albania signed recently a series of bilateral agreements with Montenegro regarding transportation on the Bojana river and the Skadar Lake, use of harbors, the extension of railways and roads, and the regulation of aviation rights. Despite the fact that Macedonia is (abnormally for geographical neighbors) not an important trading partner, Albania has responded positively to all the Macedonian initiatives for economic and political integration of the region. It is here, in regional collaboration and synergy, that Albania's future rests. Should the region deteriorate once more into mayhem and worse, Albania would be amongst the first and foremost to suffer. Hence its surprisingly conciliatory stance in the recent crisis in Macedonia. It seems that Albanian politicians have wisely decided to move from a "Great Albania" to a prosperous one.
About The Author
Sam Vaknin is the author of "Malignant Self Love - Narcissism Revisited" and "After the Rain - How the West Lost the East". He is a columnist in "Central Europe Review", United Press International (UPI) and ebookweb.org and the editor of mental health and Central East Europe categories in The Open Directory, Suite101 and searcheurope.com. Until recently, he served as the Economic Advisor to the Government of Macedonia.
His web site: http://samvak.tripod.com
tidy up service Glenview ..Why are we over regulating the franchising industry? What are... Read More
Federal Regulations on Business Destroy America, these regulations are a... Read More
Wealth Distribution is often discussed at length in periodicals such... Read More
We know we can cloak a giant airship from those... Read More
INTRODUCTIONThe aim of writing this article is to encourage the... Read More
"The only time I open my mouth is when I... Read More
Most modern day media stories containing fear, controversy and chaos... Read More
Former Senator, Daniel Moynihan, accurately summed up the situation when... Read More
I heard on the news this week how America continues... Read More
The No Child Left Behind can work if the Federal... Read More
If slavery has not worked well, then cloning if it... Read More
I always have to remember to take a deep breath... Read More
Clint Eastwood recently plunged into the murky political pond with... Read More
Rush is right! The government's stepped up bid to regulate... Read More
Fifteen hours is a tremendous barrier. It is the obstacle... Read More
An article in Information Week in January 14, 2002 discussed... Read More
With new environmental technologies and modern efficiency methods in mining... Read More
We are currently seeing a build up in China of... Read More
A coffee shop conversation about a Great Country in Historic... Read More
In the last two weeks, two non-senior US officials indirectly... Read More
IN A DAY AND AGE where one voice screaming among... Read More
As pictures and videos surface showing young American soldiers humiliating... Read More
Forest Vegetation Simulations for Fire Prevention, Healthy Forest and Saving... Read More
Recently scientists have been watching the exponential growth of marine... Read More
Many folks who are pro-NASA and Pro-Space Colonies say that... Read More
full-service cleaning Mundelein ..Well many have complained that the FBI and CIA dropped... Read More
Conor MacDari was a Mason but his Masonry deplored the... Read More
Recently I met a man in a coffee shop, a... Read More
30 years ago, California, later followed by other states, decided... Read More
Presently Universities and Private Enterprise are working to build more... Read More
The gun control debate in America is a battle between... Read More
User BaseThe non-US and non-English Web segments have been boosted... Read More
Please read through this quick thought and discussion as if... Read More
Legislation was introduced into Congress this week that would establish... Read More
One question not addressed in GM Crops and Monsanto Terminator... Read More
UNAUTHORIZED HACKINGThe term "computer hacking" traditionally describes the penetration into... Read More
The great people of the United States of America deserve... Read More
The Palestinian Fatah Movement is doing whatever it can to... Read More
When Boris Yeltsin spoke about an experiment that 'they' wrought... Read More
There are so many problems with our perceived perfect checks... Read More
In response to Douglas Bower's article; Logic Class 101 Applied... Read More
This, of course, is a political decision. There is no... Read More
United Liberation Front of Assam (ULFA), one of the most... Read More
Michael Moore asserts the following in his political film Fahrenheit... Read More
Why President Bush should have his second term? The arguments... Read More
Government budgets represent between 25% and 50% of he Gross... Read More
Well having studying the need for decreasing America's dependence on... Read More
I. OVERVIEWIn the wake of the September 11 terrorist attacks... Read More
Submiting the Criminals to The ICC!Everybody concerns about justice in... Read More
"It is the duty of every citizen according to his... Read More
Political |