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Albania
>> Regional Overview >> Albania Overview
Program Summary
Previous Years' Activities
2001, 2000, 1999, 1998, 1997
Last updated: 00
Introduction
Albania began the transition to a democratic, open market society later than most other nations in the region. Its communist regime from 1947 to 1991 was more isolationist and authoritarian than most, making this transition especially difficult. The country made substantial progress between 1992 and 1996 until widespread civil disorder led to the collapse of the Government and international intervention in early 1997. The catalyst of the civil disorder in 1997 was the collapse of a number of fraudulent pyramid savings institutions, during which many Albanians lost their life savings. The result was widespread civil unrest, extensive material destruction, and the fall of the Government. In 1998, there was an aborted coup attempt. In early 1999, when the economy and the Government had stabilized, 465,000 Kosovar refugees sought shelter in Albania during the NATO military action, straining the infrastructure and social institutions. The Albanian people demonstrated a remarkable resiliency to hardships imposed by the influx of refugees.
Albania has been an exemplary partner in regional initiatives, including the Stability Pact, created after the Kosovo crisis to achieve peace and prosperity and reinforce democracy and human rights in the Balkans. Albania continues to work closely with international financial institutions and has reached agreement with the International Monetary Fund (IMF) on needed facilities. It achieved World Trade Organization (WTO) membership in 2000. Albania has signaled its interest in regional economic integration by signing bilateral agreements with Macedonia, Greece, Italy, Croatia, and Montenegro.
It is in the U. S. national interest to help Albania address weaknesses in infrastructure networks, public and civil institutions, fragile government authority, crime, and corruption. This will enhance Albania's internal stability and facilitate its political and economic integration into the Balkans, thus contributing to stability in this volatile region. A stable, prosperous Albania will be in good position to help U.S. efforts to combat terrorism, arms proliferation, narcotics trafficking, and international organized crime. The USAID program in Albania pursues economic restructuring and growth, democratic development and social stability. These objectives 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 United States and its allies.
Development Challenge
Albania, with a population of about 3.4 million, has a small but growing economy that is simultaneously making the transition to a free market while recovering from civil insurrection. The Government of Albania (GOA) has reversed the negative economic trends that originated from the crisis of 1997-1998, and the country has enjoyed significant growth and macroeconomic stability. The economy remains largely agricultural, with agriculture accounting for 53% of the GDP, and industry and services contributing 25% and 22%, respectively. Albania is completing the transition from a centralized planned economy to a free market. The State's role in the economy is shrinking as this process continues. The Government has privatized nearly all of its small and medium-sized enterprises, and plans to sell significant strategic assets over the next three years.
Albania's macroeconomic policies under IMF guidelines are contributing to substantial economic growth (7.3% GDP growth in 1999 and 7.5% estimated through the first three quarters of 2000), inflation close to zero, and a comfortable level of foreign reserves. Economic growth is predicted to continue in the 7-8% range through 2003. The fiscal deficit for 1999 was 11.5% of GDP, compared with 12.4% in 1997. IMF cited the Government's cautious fiscal and monetary policies, improvements in tax collection, the struggle against fraud, and progress in privatization as actions that led to the overall favorable assessment.
Adespite this progress, continued economic growth is threatened by poor infrastructure and a nearly crippled electric power system. Financing from the EU, the World Bank, and the European Investment Bank has been made available to improve the road system. USAID's participation in the Regional Infrastructure Support Program, developed to support the Stability Pact objectives, is providing technical assistance for infrastructure programs. This will open up two important international road routes in Albania (Durres-Kukes, and East-West Corridor VIII). Other internal roads are also being improved. Upgrading Durres port is receiving donor attention, including a loan from the World Bank and assistance from USTDA. The country is dependent upon hydroelectricity. A prolonged drought, reduced water catchment capacity due to silting, and an uneconomic pricing structure are immediate causes of blackouts affecting most of the country. USAID is assisting Albania in developing a national strategic plan for the electricity sector aimed at reducing inefficiency, strengthening profitability, and integrating into the Balkan regional grid.
In the last few years, Albania has made substantial progress in democracy and governance. Albania has revised and republished its anticorruption plan, which sets forth a variety of measures to improve governance and the rule of law. In its Nations in Transit 2001, Freedom House noted major accomplishments in Albanian legal reform. In an open and transparent process, Albania drafted and adopted by national referendum in late 1998 its first post-communist Constitution. The Constitution secures and elaborates a wide range of freedoms and democratic institutions, and international experts have commented on it favorably. Still, Albania's transition to democracy still has far to go. Citizens have little faith in Government. This attitude has been exacerbated by Government services that are interrupted or non-existent. Many Albanians leave the country as soon as they can obtain a visa. Although a semblance of normalcy has returned to the country's political life, Albanian politics remains highly polarized and, to some degree, violent. USAID's programs focus on increasing citizen participation in governance, local governments' independence from central control, and the accuracy of the media. USAID is also assisting in the strengthening and reform of legal institutions.
The October 2000 local elections were declared "mostly" free and fair by international observers. They marked significant progress towards meeting international standards and signified increasing stability. Parliamentary elections are scheduled for June 2001, and USAID will participate in a multi-nation effort to support them.
Similar to other countries in the region, Albania's health care system needs to be restructured in order to improve the allocation of resources for primary care and provide satisfactory care for its citizens. The health delivery and public health systems were severely strained by the chaos in 1997 and the influx of Kosovar refugees in 1999. On the other hand, the refugee presence, which put specific strains on the health care system, stimulated international attention to the need for rehabilitating the primary care and hospital infrastructures. USAID's efforts will strengthen primary health care in support of the Government's new health strategy. Activities will target reproductive and maternal child care health.
The final P.L.-480 Title II program was implemented during FY 2000. During FY 2001-2002, the USAID program is designed to support the development of Albanian institutions, assist Albania's transition to a market-oriented democracy and, in turn, contribute to stability in a volatile region. While modest, there are also mutual trade and investment gains to be made as Albania develops. USAID's activities are closely linked with the U.S. Embassy's Mission Performance Plan, 2000-2002. USAID and the Embassy jointly support programs intended to strengthen regional stability through the mitigation of poverty and disorder, assisted by building democratic political institutions, strengthening health services, and providing necessary humanitarian assistance.
Other Donors
The United States is Albania's third largest bilateral partner, behind Italy and Greece. Other major contributors include Germany, 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. Key elements of donor support focus on democratization and institutional development, with an emphasis on the judiciary, political cooperation, media, local government, and civil service reform. Fighting crime and corruption and furthering economic stabilization and development are high priorities for donors. Through the Friends of Albania, which is convened by the Organization for Security and Cooperation in Europe (OSCE), the international community is coordinating its support for democratic reform and improved security. The donor community has started to respond to the need for infrastructure rehabilitation, which was exacerbated by the massive influx of refugees. Institutional weaknesses and corruption impede donor efforts in reconstruction.
FY 2002 Program
Many of the Mission's programs are developmental in nature and have fairly long time horizons, focussing on institutional strengthening and capacity building.
Under the economic growth area, Albania continues to make progress in moving to a market economy. The Albanian economy, based largely on agriculture, grew in 2000 by approximately 8 percent. The Government has privatized agricultural land and, with some donor assistance, disposed of most of its state-owned small and in medium enterprises. Sale of strategic companies has not proceeded as quickly. U.S. assistance in FY 2002 will continue to focus on the private sector and agriculture. USAID will carry on its work with agribusiness associations and assist agriculture producers, the majority of whom are women-owned and operated enterprises. The program links with USAID's democratization efforts. Next year, activities will expand the focus on private association building and integration of micro-credit programs in the private sector. USAID will foster the development of a viable land market through support for land registration, a countrywide effort.
Under the democracy and governance area, U.S. assistance in FY 2002 will help the GOA to solidify the rule of law, including its fight against corruption and its need to reestablish control over its borders. USAID will continue to support the development of basic democratic concepts, practices, and institutions. USAID's interventions will focus on the media, local government, and NGOs in order to promote citizen awareness of and participation in the democratic process. In the fight against corruption, USAID will work with selected NGOs to help citizens realize they have a right to information on government operations, to mobilize public concern about corruption, and to press government to take corrective action. This civil society effort will complement activities in other areas to strengthen the rule of law, upgrade law enforcement bodies and regulate financial institutions. Support to local government will encourage the decentralization of governance and the development of new civic intermediaries for the people of Albania.
Albania's social infrastructure is the least developed in Europe. Urban health care facilities are seriously dilapidated while rural health care is neither adequate nor readily available. USAID activities will emphasize improved maternal and child and reproductive healthcare through training, public awareness, and increasing the number of service delivery points in the country. Hospital partnerships, which link programs between U.S. and Albanian hospitals, have established training to improve financial management, policy analysis, and health care management. FY 2002 funding will complete assessments of health care financing and pharmaceutical supply and distribution.
Activity Data Sheets
- 182-013 Growth In Number of Self-Sustaining Private Enterprises
- 182-014 A More Competitive and Market-Responsive Private Financial Sector
- 182-021 Increased Involvement of Civil Society in Economic and Political Decision Making
- 182-022 Legal Institutions that Better Support Democratic Process and Market Reforms
- 182-023 More Effective, Responsive, and Accountable Local Government
- 182-032 Improved Selected Primary Health Care Services in Targeted Sites
- 182-041 Special Initiatives
- 182-042 Cross-Cutting Programs
Country Background Information Resources
CIA Factbook
Library of CongressNational Geographic Country Maps
State Dept. Country Information
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Last Updated on: May 29, 2002 |
