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