Home
>
Political
>
The Second Coming in Albania

The Second Coming in Albania

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

move in cleaning service Glencoe ..

In The News:

New TikTok malware campaign tricks users into running PowerShell commands that download Aura Stealer, which steals credentials and authentication tokens.

Gaia Family offers fixed upfront pricing for IVF cycles with unlimited embryo transfers and financial protection, partnering with over 100 U.S. fertility clinics.

The Jetsons Act aims to position Pennsylvania as a leader in advanced air mobility by establishing regulations for hybrid ground-air vehicles.

Fake Geek Squad invoice emails are targeting users with convincing charges and urgent phone numbers to steal personal information and money.

Fox News Digital's artificial intelligence newsletter digs into a robot in Russia that faceplanted, George Clooney's alarm and OpenAI's rivalry with the New York Times.

Major data breach at Conduent exposes personal information of 10+ million people. Government contractor hit by cyberattack affecting Medicaid, child support systems.

Texas startup Janta Power raises $5.5M for innovative vertical solar towers that generate 50% more energy than traditional panels while using just one-third the land.

NASA's twin ESCAPADE spacecraft launched aboard Blue Origin's New Glenn rocket Thursday afternoon from Cape Canaveral, beginning their journey to Mars with arrival expected in 2027.

Learn how to set email reminders on iPhone and Android so you never forget to reply again. Simple built-in features help you stay organized and on top of messages.

Discover how Apple's passkeys revolutionize Mac security by replacing vulnerable passwords with biometric authentication and encryption for ultimate protection.

New survey reveals 78% of parents fear AI scams targeting their kids, yet nearly half haven't discussed these threats. Learn why this dangerous gap exists.

Chrome now autofills passport and driver's license info automatically. Google's latest browser update adds official document support with encryption and user control.

Scammers impersonate Department of Veterans Affairs employees claiming veterans owe money, but real VA communications only direct to VA.gov or official channels.

The AltoVolo Sigma hybrid-electric aircraft flies 500 miles at 220 mph while operating 80% quieter than helicopters, featuring safety systems and compact design.

Google search scam alert: fake customer service numbers can give scammers remote control of your phone. Learn how to spot these traps and protect yourself.

Electric vehicles overtake gas cars in total CO2 savings after just two years of driving, with emissions benefits growing over time as power grids get cleaner.

Louvre Museum reportedly used "Louvre" as password for surveillance system during $100M jewel heist. Learn how weak passwords put even famous institutions at risk.

Bipartisan AI jobs bill from Sens. Hawley and Warner would require companies to report AI-related layoffs and hiring to Department of Labor quarterly.

Joe A. from Shelton, Connecticut, lost $228,000 to a ZAP Solutions cryptocurrency investment scam after his divorce, highlighting rising online fraud.

AI-powered autonomous trucks from Waabi and Volvo target U.S. freight driver shortage with Level 4 self-driving technology and NVIDIA computing platform integration.

Survive flight disruptions with expert travel tips: Book early morning flights, download airline apps and know your refund rights during service cuts.

Apple's iOS 26.1 update delivers major security fixes, performance boosts and enhanced privacy controls for your iPhone. Discover why updating now protects your data.

Russian hackers use fake CAPTCHA tests to spread dangerous malware targeting governments and journalists. Learn how to protect yourself from these deceptive attacks.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

Miami-Dade debuts America's first autonomous police SUV with AI cameras, drone deployment and real-time crime detection in groundbreaking law enforcement pilot.

The Second Coming in Albania

Political