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ALBANIA
>> Regional Overview >> Albania Overview
Development Challenge FY2001 Program /
Activity & Budget InformationSummary Tables
Program Summary
Previous Years' Activities
2000, 1999, 1998, 199705
Introduction
The importance of supporting Albania’s economic prosperity and strengthening the country’s governing systems and democratic institutions was demonstrated during the North Atlantic Treaty Organization’s (NATO’s) recent conflict with Serbia in Kosovo. Albania played an important role in preventing complete destabilization of the Balkan region by supporting NATO in the conflict, and hosting hundreds of thousands of refugees fleeing Serb atrocities in Kosovo. Albania’s participation during the crisis signaled its interest in integration with the West – and at the same time, spotlighted the obstacles to its full integration, including weak infrastructure networks, weak public and civil society institutions, fragile government authority, crime, and corruption. U.S. interests lie in helping Albania to address these weaknesses and consolidate its transition to a stable, market-oriented democracy – one able to enhance its contributions to stability in this volatile region. A stable, prosperous Albania will be in a good position to help U.S. efforts to combat terrorism, arms proliferation, narcotics trafficking, and international organized crime. The USAID-implemented, Support for East European Democracy (SEED) program in Albania pursues economic restructuring and growth, democratic development and social stability – objectives that coincide with interests identified in the U.S. Strategic Plan for International Affairs. Notably, promoting broad-based economic growth; opening foreign markets to free the flow of goods, services, and capital; increasing foreign governments’ adherence to democratic practices and respect for human rights; and ensuring that local and regional instabilities do not threaten the security and well-being of the U.S. and its allies.
The Development Challenge
In 1999, Albania posted encouraging economic indicators despite spillover from the Kosovo conflict. The inflation rate continued to decline – from 10% in 1998 to about 4% for the last half of 1999. Official statistics showed a gross domestic product (GDP) increase of about 8%. Official unemployment increased only 1% -- from 17% to 18%. However, Albania continued to run a high fiscal deficit – fueled in part by the burden of hosting Kosovo’s refugees, but indicative also of Albania’s need to strengthen fragile regulatory and administrative systems. For instance, a considerable amount of income from criminal and unlicensed, non-criminal activities probably goes unreported and thus untaxed. The health of Albania’s economy in 1999 continued to rely heavily on remittances from Albanian workers abroad, foreign assistance from international donors, and mostly subsistence level output from the agricultural sector which generates 52% of official GDP and employs about 70% of the workforce.
Albania remains behind most other Eastern European countries in the pace of economic reform (Bosnia and Yugoslavia excepted). SEED assistance funded technical support to help in Albania’s fairly successful implementation of first-round economic policy reforms such as implementation of macro-economic stabilization measures, small-scale privatization, and promulgation of land market laws and regulations, and bankruptcy and collateral laws. However, the U.S. Government evacuation of Americans in August 1998 due to security concerns, and subsequent restriction of American presence in country impeded efforts to support Albania’s consolidation of critical second-stage reforms. Albania will need continued U.S. assistance to accelerate transfer of state assets to the private sector, particularly key strategic industries; establish and effectively administer laws, regulations and institutions that improve corporate governance; and establish a disciplined financial system that attracts and mobilizes outside capital for private sector growth. Probably the most severe obstacle to Albania’s achievement of strategic economic restructuring and sustained economic growth are the pervasiveness of crime and corruption, and lack of internal security, that have retarded the growth of foreign direct investment in Albania’s economy.
Albanians need to institutionalize essential democratic concepts and practices. U.S. assistance has contributed to some of Albania’s democratization successes; e.g., passage of a constitution (1998); devolution of authority for municipalities’ control of local property revenue (1998); Government efforts to improve the treatment of ethnic minorities (1999); and steps to improve the judiciary and court administration (1999). However, gains have been overshadowed by continued political conflict and alleged political repression – with the opposition Democratic Party (DP) charging the Government with responsibility for murders of DP members in 1998 and 1999. Violence and discrimination against women, trafficking in women and children, and child abuse are largely unrestrained. The judiciary continues to be inefficient, often unqualified, and subject to bribery, corruption and executive pressure. Albania’s government is viewed as largely passive in its approach to law enforcement, and its efforts to restore civil order are too often undermined by crime, corruption, and vigilantism.
Albania is the poorest country in Europe with the least developed system of social infrastructure among East European nations. Social welfare indicators such as average income and poverty rates, infant and maternal mortality and education suggest that the quality of life for Albanians has declined since transition started. Most of Albania’s urban health care facilities are seriously dilapidated and outdated, and adequate health care in rural areas is not readily available. The influx of refugees from Kosovo strained already fragile health care delivery systems. Despite its evacuation status through most of 1999, USAID continued to provide assistance to improve the sustainability of health benefits and services in Albania with some progress. Through partnership arrangements, USAID has helped to improve women’s reproductive health services; train healthcare providers; increase public awareness of the availability of health and family planning services; and improve health care policy, health care management systems, and the planning capacity of the ministry of health. Humanitarian assistance provided during the Kosovo refugee crisis is expected to support communities, enabling target municipalities to better meet their needs.
Economically, politically, and socially, Albania faces some fairly intractable and complex challenges to transition. Given current conditions in Albania, additional time and effort will be needed to help Albania meet transition objectives. Planning parameters of the U.S. assistance program in Albania are being reviewed consistent with Southeast Europe initiatives, including plans for regional security and integration outlined the Stability Pact for Southeastern Europe.
FY 1999 Kosovo Supplemental
SEED resources, totaling $14 million were provided in FY 1999 to address crisis-related requirements for major clean-up, rehabilitation of physical and social infrastructure, and community development in areas stressed by the refugee populations. The FY 1999 SEED supplemental funds were programmed as special initiatives, and assigned to two municipal development activities: the Municipal Infrastructure Support Program; and the Social Sector Rehabilitation and Support Program. These programs are designed for short duration (up to 12 months). Activities stress rapid restoration infrastructure, services, and the environment in crisis-affected communities, complementing the programs of other donors, such as the World Bank, European Union, and UN Development Program. In addition to SEED supplemental funding in FY 1999, Economic Support Funds totaling $12 million were budgeted for budget support to the Government of Albania.
Humanitarian Assistance
With the influx of 465,000 Kosovar refugees into Albania, the international community struggled to help Albania meet refugees’ needs for shelter, food, clothing, medical services, and psychosocial assistance. USAID, through the Office of Foreign Disaster Assistance (OFDA) and the Office of Food for Peace (FFP), responded quickly, obligating about $11,890,000 million for programs, commodities, transportation and disaster assistance and relief team support in Albania. Programs funded by OFDA focused on non-food distributions, psychosocial counseling, baby hygiene and health. The USAID Office of Transition Initiatives (OTI) implemented a community improvement program to relieve the strain of refugees on Albanian communities. OTI provided a $3 million grant in FY 1999 to implement a program that combined community development, small-scale infrastructure rehabilitation, and media work in communities around the country. The OTI program is closely coordinated with two municipal development programs in USAID’s regular, country assistance strategy.
Other Donors
In FY 1999, the United States was Albania's second largest bilateral donor. By far the most substantial financial assistance is provided by a group of major multilateral institutions, including the World Bank, the International Monetary Fund, the European Union, the European Investment Bank, the European Bank for Reconstruction and Development, and the International Fund for Agricultural Development. The donor community continues to be very committed to Albania’s development as demonstrated in the Stability Pact for Southeastern Europe.
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State Dept. Country Information
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Last Updated on: December 12, 2000 |
