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