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
executive chauffeured services Bradford .. Madison to Airport carMost citizens agree that we need the Federal Trade Commission... Read More
Sodomy is against the law, yet goes on every day... Read More
Throughout all recorded history on our lovely little planet, Earth's... Read More
Conor MacDari was a Mason but his Masonry deplored the... Read More
As global warming continues to escalate the concerns of today's... Read More
The CBR taxes the Pakistani source income of nonresident individuals... Read More
Currently the United States has weapons, which can shoot around... Read More
The news media will regularly present views from Democratic (liberal),... Read More
In the fields of juvenile justice policy and programming, there... Read More
A War on Terrorism? Conventional war being brought on an... Read More
In the previous article, we described the various methods developed... Read More
The end of another election once again brings into focus... Read More
I have to be honest. It is time to come... Read More
When Pennsylvania Senator Arlen Spector exercised his right to free... Read More
The notion that local governments should have almost total monopoly... Read More
Most government agencies cannot pass an audit of their expenses.... Read More
According to a postulate made by Ignacio Ramonet ecological resources... Read More
I would like to pose a question. I am unsure... Read More
Well the title is absolute Bull Crap, but this article... Read More
We are currently seeing a build up in China of... Read More
The most damaging factor to our economy today is the... Read More
THE ROSICRUCIAN COUNCIL OF THREE:A Thelema/OTO leader who became a... Read More
Indonesia's Energy Minister, Purnomo Yusgiantoro, is unhappy with the modest... Read More
The filibuster as a political delaying tactic has been a... Read More
Environmentalists say GM Seeds are bad for the environment, dangerous... Read More
O'Hare Chicago prom limo ..The US Dollar has been falling continuously in last year.... Read More
With the recent threats from Bin Laden and Al Queda... Read More
Streamlining Homeland Security with a Free market flair? An idea... Read More
An interesting conversation that I thought I must share with... Read More
North Korea and diplomatic games; something has to give and... Read More
In the event of that a threatening nation to the... Read More
Currently when we transport troops we use large cargo planes... Read More
Airlines do not allow cell phones on board, but they... Read More
Without the flow of fuel our very mobile society comes... Read More
Why is it that every single thing government does; it... Read More
1) IS HAVING A DEMOCRACY MORE EFFECTIVE IN ADDRESSING POLITICAL... Read More
Do you ever wonder how everything gets to the super... Read More
The plight of whistleblowers ? those employees who sound the... Read More
The end of another election once again brings into focus... Read More
Continued thoughts while driving down the road in a huge... Read More
The recent first round of the Iranian elections somewhat resembled... Read More
Last week, the media coverage called the airplane crash in... Read More
Many had made mention of the problems of business opportunities... Read More
1. United States of America (USA)In the United States, legislation... Read More
Recently on C-SPAN, there were two gentlemen debating free trade... Read More
As you know Delta Airlines is close to bankruptcy. Their... Read More
The Iranian elections are certainly interesting indeed. The ruling party... Read More
Heavens, what are we up against? It seems these days... Read More
While many Pennsylvanians are struggling to figure out how they... Read More
Proposed changes to the Sex Discrimination Act ("SDA") 1975 and... Read More
Political |