[NYC-L] [Albanians-Today] Albania: Investors Concerned at Protests

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Albania: Investors Concerned at Protests

Alarm at political protests masks underlying questions about how foreign
investors are treated.

By Dalina Buzi in Tirana (BCR No 483, 04-Mar-04)

A week after street protests turned violent in Tirana on February 7,
Albania's most famous singer was praying that his Italian band would show
up so that a concert could go ahead.

Ardit Gjebrea had a struggle to convince his band that the wave of protests
organised by the right-wing opposition had not made Albania unsafe.

That first protest march ended in violence when police broke up thousands
of demonstrators marching towards the government building and calling for
the resignation of prime minister Fatos Nano. A further demonstration on
February 20 - involving up 20,000 people - passed off peacefully.

As political stability remains uncertain, Italian musicians are not the
only foreigners threatening to stay away.

Investors planning to invest in the Balkans' most impoverished state are
also warning that their patience is running out.

Luan Bregasi, head of Albania's Chamber of Commerce, says foreign
businesses feel threatened by a "possible repetition of the violent acts of
February 7".

Bregasi was speaking on February 17, three days before the second, larger
demonstration that went off without incident. But as long as the atmosphere
remains tense - opposition leader Sali Berisha has promised new protests on
March 20 - foreign businesses cannot relax.

Albania's economy had been slowly recovering from the anarchy of the late
Nineties. Investors' reports rated Albania higher in 2003 than they did in
2002. America's Exim Bank, for example, upgraded the country's risk rating
by one point in its annual assessment.

The biggest injections of money into the economy still come from foreign
donors and lenders rather than commercial investors. The World Bank, the
European Union, Italy and Germany lead the way, targeting the country's
dilapidated infrastructure.

Much of the foreign funding goes into telecommunications, banking and
manufacturing - although the lack of electricity and water supplies deters
many potential investors in the latter area.

Albania has recently begun attracting more interest from other west
European countries and the United States. At the end of 2003, Austria's
Raiffeisen Zentralbank Oesterreich bought Albania's largest bank, the
Savings Bank of Albania, for 126 million US dollars in one of the largest
deals of this kind.

Last year, two American corporations, General Electric and Lockheed Martin,
negotiated agreements to work in the energy sector and Albanian ports.
Meanwhile, the government has granted a concession to a German-American
consortium, Airport Partners, to invest 80 million dollars and build a new
international air terminal within three years.

But the recent political turmoil and a more general sense of instability
leaves some investors feeling jittery.

Zenel Hoxha, head of the British Chamber of Commerce in Albania, says
British investors feel "asphyxiated" by the current political impasse, and
if they encounter more hurdles, there is a danger they will pull out.

Floreta Faber, director of the American Chamber of Commerce, told IWPR that
at least one major investor from the United States is putting a key
investment decision on hold, although she would not name the firm for
reasons of confidentiality.

"Protests create destabilisation, and destabilisation is not good news,"
said Faber.

But it is far from clear whether opposition protests are solely to blame
for the lack of investor confidence. All the signs are that underlying
problems with the way foreign investors are treated by the government are
also a factor.

Artan Hoxha, an independent economist and vice-president of the Institute
for Contemporary Studies, ICS, says the government is using the protests as
an excuse to cover up for its own failings.

"Every country has protests, but investments still continue under a new
government," he said.

According to Hoxha, the real problem lies in over-centralisation of
government, which creates a culture in which no decision can be made
without it being referred up to ministerial level.

"The administration cannot act or decide anything without the approval of a
government minister," he said.

A 2003 report from the German foreign ministry appears to support Hoxha's
claim, saying that investors "have difficulties in finding responsible
persons in the administration" to grant them the licenses they need to
work.

Even after contracts have been signed, business agreements remain so
dependent on the individual ministers concerned that foreign investors fear
they could be at risk if there is a change of administration. "[They] worry
that they might have to repeat all their procedures if the government gets
a new face," said Hoxha.

As Faber explained, "When a minister or government changes, every director
and every chief in every office of every ministry is replaced by someone
else, who wants to start afresh."

Dalina Buzi is a journalist with the Albanian private TV station Top
Channel.
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