- By Dr. Abraham Wagner
Albania, on the Adriatic coast of the strategically important Balkan Peninsula, is a small but important nation in Southeast Europe. Despite its size, it is a part of strategic real estate that is integral to the volatile world order. However, economic mismanagement is jeopardizing Albania’s future, including the EU accession. Foreign investors are staying away.
As a NATO member and an aspirant to the EU, Albania is of critical importance to the U.S., Europe and the West. First, because it is a secular Moslem nation in Europe, and second, as a bulwark to Russian expansionism in the Balkans. Therefore, Albania’s success is in the West’s interests.
The nation attracted attention of empires spanning from the ancient Greeks and Romans to the Ottomans. Following World War Two, Albania suffered from a debilitating communist revolution and devastating isolationism under the Stalinist dictator Enver Hoxja. With Stalinists gone from power, Albania has made significant strides toward normalization based on a market economy and democratic elections.
However, beginning three years ago with the election of the Prime Minister Edi Rama, a Socialist, Albania is experiencing a period of unprecedented economic mismanagement. The exports and foreign investment have declined, and unemployment is high. A socialist leader just can’t “deliver” economic growth. History may record this as “Rama-era”, an era of opacity, as Mr. Rama presided over slower economic growth, and mishandled vital reforms.
Once considered a political star, Rama served as mayor of Albania’s capitol of Tirana, and is best known for his urban renewal projects and his ubiquitous use of bright colors to paint over the past despondency of the city. However, his restoration of the city’s façades disregarded the dilapidated infrastructure. And herein lies the metaphor.
Rama has come to be well-known for surrounding himself with,
“…money laundering barons and drug traffickers, whose main escape is the Socialist Party in order to evade justice and prosecution. Mr. Rama’s audacity to appear in public with Europe’s notorious criminals is unparalleled to any other leader in the Western democracies and beyond,” wrote Adam Fairmont in Foreign Policy News.
In a political twist, Lulzim Basha, Albania’s youthful opposition leader, has repeatedly questioned Rama’s leadership and accused him of widespread and extensive financial malfeasance to benefit himself and his cronies, reportedly including many underworld figures.
Thanks to a functioning democracy, Basha regularly and publicly probes Rama’s handling of Albania’s bleak economic outlook:
“…I’m here inquiring about the shocking corruption figures and mechanism by which 2.2 billion euros was taken from Albanians in taxes and public procurements…the country is in total economic crisis. The World Bank confirms that 46% of people are below the poverty threshold…the numbers speak better than us,” said Basha.
The country’s agriculture plays a key role in the national GDP and is a major source of employment. However, under Rama, property rights, ownership, financial support and restructuring of the agricultural sector were mishandled, Professor Magdalena Bergasi of European University of Tirana writes.
Rama has also mismanaged energy reform, failing to diversify from the predominant hydro-electric sector.
Fortunately, Albania is a key participant in the Southern Gas Corridor, a strategic energy project originating in Azerbaijan’s massive Shah Deniz field. Albania will benefit from an additional source of gas-fueled electric power. The Southern Gas Corridor will bring Albania tax revenue and jobs.
In addition, Albania recently has attempted to privatize a good deal of its domestic energy sector to attract foreign investment in the exploration and development of the nation’s proven oil and gas reserves. Reportedly, though, Mr. Rama’s government has mismanaged privatization of energy assets.
However, the Rama-era, although three years old, is not over, and Albanian public opinion and leaders, as well as those of Europe and the U.S., are enquiring what would be the price Albania will pay for its mismanagement. For example, Rama has massively increased the country’s foreign debt – by 14 percent in 2015 alone.
During his April visit to Washington, D.C., politicians and government officials privately expressed concerns about meeting a “tainted” Mr. Rama. This spring, the EU said that Albania is not ready yet for accession talks. The European Parliament has declared that Albania “needs to intensify its reforms in the rule of law, the fight against corruption and organized crime, and public administration.”
Investors are staying away as they do not trust Prime Minister’s inefficient economic policies and his track record. It did not have to be that way, but Rama appears to have brought economic woes to a nation that was showing a major promise.
Given the country’s geopolitical importance, its NATO membership, and its aspirations for the EU accession, it is in the best interests of the EU and the U.S. to pay more attention to Albania. It is also the time to look with greater attention into economic mismanaged of the “Rama-era”.