Albania Essay, Research Paper

Introduction

Today, Albania is a real mess. What is currently occurring in the region complicates the situation even further. I’m not sure what Albania should do for the next ten days, let alone ten years. But, I will try to discuss economics and resources. Second, past and current military and diplomatic policy. Finally, I want to tie all of this to the idea of adopting the policies and philosophies of the Western democracies. Only through the aid, encouragement and protection of the West, can Albania hope to make progress for itself and it’s citizens.

Economics

Albania is the poorest country in Europe. Years of dependence on the Soviet Union and China, followed by virtually complete isolation led to economic collapse in 1991 (Colliers Encyclopedia CD-Rom, 1998). Government control of all areas of the economy resulted in manufacturing plants that lacked the freedom to adapt to changes. The lack of competition also created a lack of innovation. Collective agriculture produced less and less from harvests (European Forum, June 1997).

In 1992, the Albanian government realized drastic change was necessary;

Albania made very rapid progress in stabilizing the economy

following the substantial political and social changes that

accompanied the demise of Communism and the shift to a

market economy in the period between 1990 and 1992.

During that period, overall GDP fell by 41%, industrial pro-

duction fell by 74%, and inflation rose to 237% in 1992.

By 1993, output had started to rise, inflation reduced to 31%,

and the currency had been stabilized, as a result of tight

fiscal policies (Poole p.2).

In the early 1990’s Albania’s government abandoned most of its communist policies relating to the economy. In essence, leadership decided it could no longer deal with the problems, so why not lets its people try. A new privatization plan was enacted. “Within several months about 30,000 people found themselves employed by the non-agricultural private sector.” The government privatized 25,000 retail businesses in the first year through direct sales to workers (Colliers).

The government has also relinquished title to much of the country’s farmland. Eighty percent of farmland was in private hands as of 1995 (European Forum).

Larger firms have been harder to privatize due to a lack of capital in the private sector. However, the government did introduce reforms in the larger manufacturing plants, allowing for managers to set wages, prices, and allowance of employee incentives through bonuses (Colliers). As of 1995, the few manufacturing firms that were not privatized were not economically viable and were in the process of being closed, although this may take a long time for fear of creating unemployment problems (Poole p.3).

All of these moves and others has resulted in many economic gains for Albania. Inflation dropped to 5% in 1995. “The drop in production levels of 40% in 1991-1992 have been reversed into growth (over 10% per year since 1993).” Industrial production grew for the first time in several years, real wages are up, and foreign investment is increasing (Poole p.4-6).

Resources

“With its significant petroleum and natural gas reserves, coal deposits, and hydroelectric power capacity, Albania has the potential to produce enough energy for domestic consumption while also exporting fuels and electric power” (Colliers). Under the communist system, these potentials were rarely realized. Known petroleum reserves are 200 million tons. During the 1970’s, Albania produced between 1.5 and 2.1 million tons. By the late ’80s it had dropped to 1.2 (Colliers).

Albania is blessed to have many rivers with strong currents. The country has numerous hydroelectric plants. In normal times, water provides 80% of the country’s electric needs. During a two year drought in the late ’80s, there was not enough water to keep the turbines running. The poor quality of coal facilities, and obsolete oil drilling equipment could not make up for the power loss. Albania suffered brownouts, and blackouts. During times of regular precipitation, Albania actually sells excess power to neighboring states (Colliers).

Albania ranks behind on South Africa and Russia in the production of chromium. It accounts for 5% of the GDP, and 35% of exports. The country also has enough bitumen, asphalt, and limestone to handle any immediate road building and construction needs (Compton’s Encyclopedia CD-Rom, 1994).

Human capital, through education, is an asset that can be exploited. One benefit of communism is the insistence on education. Formerly a country where very few people were literate, the government confidently announced that everyone under 40 was literate in 1960. During the ’60s, many technical schools were opened to enable students to move into the economy with marketable skills (Compton’s).

Foreign Policy

Albanias’ foreign policy is complicated by having some three to four million ethnics living outside of Albania. The government is disgusted and angered by the treatment of Albanians in Kosovo. They don’t have the military or economic resources to do much about it. They have publicly endorsed Kosovon independence. Tensions with Macedonia heightened when the government closed the Albanian University. In Greece, thousands of Albanians were deported following Albania’s expulsion of a Greek Orthodox cleric. Another incident got five Greeks in an Albanian prison, thousands more Albanians shipped out of Greece, and a small border skirmish. The two countries did sign a friendship treaty in 1995. Italy had had problems with migrant Albanian workers. After thousands came in 1997, Italy considered military action, but declined (European Forum).

Albania has greatly improved relations with the West. Albania is considered to be of great strategic importance to NATO. Albania has tried to use their geographic location to their advantage. “Albania concentrates on military integration into NATO and the EU and it was the first post-communist country to apply for NATO membership.” They were denied, but allowed to join the Partnership for Peace. Albania was admitted to the Council of Europe in 1995. Deemed to be too financially unstable to join the EU, EU does give economic assistance through PHARE program (European Forum).

Future

I like a lot of what I’ve read about Albania and heard in the last couple of weeks. The country has real possibilities within it own land. Governments of the past, with the assistance and backing of communist superpowers have put the country further behind than it should be. Capitalist ideals and democratic elections point to a bright future.

My first and most important recommendation is to keep backing the West. They are at the moment bombing another country to protect your people. If you cooperate with the West, they will, in turn, take care of you.

You must insist upon assistance to care for and integrate Kosovo refugees. Massive assistance cannot only provide for dislocated brother, but can be a boon to Albania itself. Would the Swedes, Norwegians, and Germans rather have Albanians living with them, or in Albania?

It could also be suggested that if NATO eventually takes back Kosho and returns refugees to their own land, that a militarily strong Albania would be a deterrant to Milosevic trying this type of action again.

In economics, the government must make it as easy as possible for foreign investment.

The most critical issue will be to increase investment

in productive industry and relation services which

will lead to a increase in export revenues, permanent

employment and increased tax revenues. Investment

is urgently needed to make better use of Albania’s

natural resources and harness the skills of Albania’s

labor force. In many instances, the high levels if

investment required will require greater participation

from foreign investors (Poole p.9).

Much of this foreign investment will come from the private sector. Open it up, let the capital flow in. Some of the funds need to come from foreign aid. Many times, foreign aid comes with not only economic, but human and civil strings attached. Albania currently had problems with press freedoms and free speech problems with government critics. These things must eventually cease, and some progress should be made immediately. Money is needed to repair, create, and update a pitiful infrastructure and telecommunications system. Remind the West that their businesses will profit here only if there are roads, rails, and communications to move the country’s products and resources.

Resist the temptation to get too close with all your Islamic brothers. It is important to discriminate between Turkey/Saudi Arabia and Libya/Iran. You will not anger the West, and will make your diplomacy less complicated.

Conclusion

Albania has had a bleak past and an uncertain present. But there are bright spots and finally it appears that leadership is on the right track. To survive as a small country in the Balkans, it helps to have friends in high places. The Albanians not only have that now, but friends who have a whole lot of resources. Albania has a vast amount of natural resources and a fairly well trained and educated work force. After communism, they need help in order to take advantage of this. If Albania stays the course of free markets, and free speech, the country’s best days could be ahead of them.