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Albania: Kosovo Refugee Influx Harms Economic Development

Prague/Tirana; 18 June 1999 (RFE/RL) - In the last three months, nearly half a million Kosovar refugees poured into Albania -- virtually equaling the number of Albanians who during the 1990's have left Albania in search of work in Italy, Greece and Germany.

The recent influx of Kosovars, over three quarters of whom have been housed by families rather than in refugee camps, has created economic difficulties not only for the short term but also for the country's future economic development as Tirana shifted the country's meager resources to serve the refugees.

The refugees this week started flowing back out of Albania into Kosovo, but it will be many months at least until they have all returned to their shattered homeland.

Albanian economist and world bank consultant Zef Preci characterizes the Albanian economy as suffering from a minimum level of economic production, high unemployment and broad tax evasion. The refugee influx, he says, also brought on the collapse of some businesses.

"You can see now many Albanian entrepreneurs who are changing their liquidities into hard currencies and looking to transfer them abroad in a legal or illegal way. You can see many private enterprises which reduced capacities and so unemployment is expected to be higher in the near future. And in long-run terms, the worst consequence of this crisis is a shifting of intention of the government from privatization and other basic steps of our transition to serving refugees. So the Albanian economy cannot be considered a free market economy."

Preci says the economy can now instead be considered "a survival economy" that is highly dependent on western countries. Albania currently imports more than 80 percent of its food requirements.

Preci is a co-author of a World Bank study on government and corruption in Albania. He says corruption has broadened still further in recent months as a result of the influx of refugees.

Preci says the need to feed, house and care for the refugees has shifted public attention away from the need to clamp down on corruption. In some rural zones of Albania state control, already weak, has largely disintegrated. Worst affected has been the Tropoja district in the northeast near the border with Kosovo. Local police admit to working hand in hand with local clans, boasting that state administrative controls are only a third of what they are elsewhere.

The Kosovo Liberation Army (UCK) was able to take advantage of the relative anarchy prevalent in Tropoja district to set up training camps and staging camps for channeling insurgents and weapons into Kosovo.

One thing that strikes virtually every visitor to Albania in recent years is the extraordinarily large percentage of luxury cars, primarily Mercedes Benzes, that jam the roads of Europe's only third world country. The large numbers of these cars is a reflection of the need to move people in a vehicle that will not experience frequent breakdowns on Albania's notoriously bad road system. But Zef Preci says the prevalence of Mercedes limousines is also a reflection of what he terms "the bad functioning of government organizations, especially customs".

"You can see in Tirana more Mercedes Benzes than in Berlin. But most are second hand and most are stolen in western countries. Perhaps this is an example, where the local mafia is connected closely to the western mafia.

Preci says the recent influx of western peace keepers, humanitarian aid workers and experts into Albania has injected some money into the Albanian economy, but not enough to help over the long term. Rather, as he puts it, it is just enough for survival.

"If you see progress made in Albania's transition, you can find some features of the Russian case and some features of the Colombian case. If you see how the middle class has been created or recreated here, except for the entrepreneurial spirit which is really strong in this country, you face clientelism, efforts made by the political circles to decide who will be made owner of state-owned assets inherited from the past. The mafia is another way of being an entrepreneur. This middle class is not yet consolidated. It is not yet responsible for the fate of the country. This is part of the Russian model."

Preci notes that state-owned monopolies have been replaced by private monopolies, or in some cases by organized crime. The public remains largely unresponsive and apathetic. He says only five to ten percent of Albanians have changed their mentality, working conditions, and living conditions since the end of communist rule. Only this small minority, he says, can really enjoy the free market and free society.

Some 15 to 20 percent of the population has changed its mentality, mainly by having gained experience working abroad, but still lack sufficient financial resources to put their recently acquired western ideas into practice.

The remainder -- the majority as Preci puts it, still spend their time "reading newspapers, listening to the radio, watching television, engaging in gossip and waiting for parliament, government, and the president to come up with solutions". In Preci's words, "there is a very strong state-mentality, which does not offer prospects in the near future of development and greater individual responsibility".

"If we do not succeed in improving the business environment, the general economic environment here, they will continue to work in Italy, Greece and Germany and [there will be] nothing for Albania. If you see what is happening with remittances from emigration, there are some phases -- first of all our compatriots abroad, working outside of Albania, brought in second-hand domestic equipment, cars and so on. Later they brought in money. Still later, this is the current stage, they are taking their families and looking to be incorporated into local societies there [in other countries]. It means that if the situation does not improve in the near future, we will lose them forever. They will continue to work in Greece, for instance and send their kids to school there."

When that happens, Preci says, the remittances these guest workers send their families in Albania, currently estimated by the IMF at between $300 and $400 million a year, will dry up. And that will represent one more blow to the battered Albanian economy.