Friday, October 27, 2006

Albanian economy: Good times, at last

Oct 26th 2006 | TIRANA
From The Economist print edition
An unexpected boom in Albania will benefit the Balkans

IT IS not hard to find bad news in Albania: the country is corrupt, the state is weak and organised crime is strong. Yet over the past five years the country has undergone a little-noticed but remarkable transformation. The chaos and violence of 1997, precipitated by the collapse of pyramid schemes that wiped out many people's savings, seems unthinkable today.

Brightly coloured blocks of flats and offices have sprouted all over Tirana, the capital. Roads across the country are being rapidly repaired and extended. Even Vlore, once a wretched, pot-holed, crumbling coastal town crammed with Kurds, other foreigners and Albanians—all waiting to be smuggled to Italy—is enjoying a share of the renaissance.
A campaign against people trafficking, including a ban on speedboats, has largely choked off that trade. Some of its proceeds have gone into construction and legitimate businesses. With a reduction in lawlessness, hotels and restaurants now cater to ethnic Albanian holidaymakers from neighbouring Kosovo and Macedonia.

The relative stability of the past few years has helped Albania attract foreign banks. These have introduced such novelties as mortgages, which in turn have helped fuel the construction boom.

When politicians from the European Union talk of halting enlargement, or announce restrictions on workers from prospective new members, Albanians don't worry much. Although there are few reliable statistics, about a third of its population of just over 3m is thought to be living abroad, mainly in the EU: at least 600,000 in Greece, more than 200,000 in Italy and probably another 200,000 elsewhere. Expatriates are believed to be sending home some €1 billion ($1.25 billion) a year, and their cash has financed construction as well as consumer spending. So have the proceeds from organised crime, though police sources say education campaigns have sharply reduced the number of girls sold into prostitution abroad, having been duped into believing they would work as cleaners or nannies.

Unemployment officially hovers around an uncomfortable-sounding 15%; but joblessness is twice as high in Macedonia, and even higher in Kosovo.

Today the big worries are the future of the economy—remittances may not create many sustainable jobs—and the behaviour of Sali Berisha, the prime minister. Critics complain that, since his return to power last year, he has been attempting to control public life, for instance by trying to sack the prosecutor-general. “Berisha does not care about either the law or democracy,” argues Mustafa Nano, an influential Albanian columnist. But some of Albania's institutions seem more capable of withstanding the pressure these days.

Tensions in the Balkans will rise in coming months as Kosovo, inhabited mostly by ethnic Albanians, moves towards independence. But in Albania itself there is little interest in the notion of a Greater Albanian state. Given that the collapse of 1997 had a direct effect in igniting war in Kosovo, greater wealth and stability in Albania is important for everybody in the Balkans.

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