ALBANIA AND USAID SIGN MCC THRESHOLD PROGRAM

UNCLAS SECTION 01 OF 02 TIRANA 000351

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR EUR/SCE (BENEDICT, SAINZ, RIEHL),EB/IFD/ODF
(LCONNELL)
DEPT PASS TO USAID (SBRENT)
DEPT PASS TO USTR (EBRYANT)
MCC FOR AMBASSADOR DANILOVICH
TREASURY FOR ATUKORALA AND JFRANCO
NSC FOR BRAUN

E.O. 12958: N/A
TAGS: EAID ECON KMCA OTRA AL
SUBJECT: ALBANIA AND USAID SIGN MCC THRESHOLD PROGRAM
AGREEMENT

REF: TIRANA 313


1. (U) SUMMARY: The Millennium Challenge Corporation's CEO
Ambassador Danilovich and VP Bent visited Albania on April 3
to participate in a signing ceremony for a USD 13.8 million
Threshold Program Agreement and to meet with GoA officials.
The program is designed to reduce the opportunities for
corruption in the GoA's tax administration, procurement
system and business registration procedures. Danilovich and
PM Berisha both linked the goals of the program to the GoA's
ongoing efforts to combat corruption. End summary.


2. (U) MCC CEO John Danilovich and Vice President Rodney
Bent and other MCC staff visited Albania on April 3. They
met with PM Berisha, Deputy PM Rusmajli and other GoA
officials to express the USG's high interest in the MCC
threshold program proposal for Albania. The GoA and MCC
co-hosted a highly-publicized signing ceremony for the
agreement before government officials, business leaders,
civil society leaders and the press corps. Following the
ceremony, Rusmajli and Bent gave an interview with Albania's
top-rated TV station to explain the program's details.


3. (SBU) The signing of the agreement follows nearly 18
months of GoA, MCC, USAID, and Embassy efforts to craft a
realistic, but effective program to fight corruption and
improve the business environment. Initiated by the former
Socialist Party (SP)-led government, the proposal went
through a number of changes -- we believe for the better --
at the initiative of the new Democratic Party (DP)-led
government, which took office in September 2005. The
approved program features a three-pronged attack on
corruption. First, MCC funds will be used to reform tax
administration practices in the Tirana tax office through
increased transparency, better access to information on
taxpayer rights, increased IT capacity and, most importantly,
reduction of the interaction with and discretion of
individual tax collectors with taxpayers. Second, the GoA's
procurement system will undergo similar measures, with an
emphasis on non-discretionary decision-making and highly
transparent procedures. The new GoA augmented this part of
the proposal by adding the creation of an Ombudsman's office
to review disPuted decisions. Third, the program provides
funding for the establishment of a "One-stop shop" for
business registration. This component is designed to remove
administrative barriers to business registration and reduce
the opportunities for bribe-taking, as well as to reduce the
number of days to register a business from 47 to 1.


4. (SBU) In a meeting with the PM before the signing
ceremony, Danilovich noted that the GoA had a tremendous
opportunity open to it if the program produced the indicated
measurable results. If successful, then Albania would
potentially be eligible for more extensive funding under the
broader MCC compact funding scheme. Danilovich stressed that
Albania's performance in the program would bring an enormous
amount of attention here. He encouraged PM Berisha to make
the fight against corruption a national issue, rather than
political one.


5. (SBU) PM Berisha thanked Danilovich for the assistance
and began by noting that his government understood the
country's vote in last July's election to be one against
crime and corruption. He said that "we won't stop" the
effort to make the rule of law prevail and described some of

TIRANA 00000351 002 OF 002


his administration's initial efforts to combat crime and
corruption and to improve the business environment -- new
laws addressing conflict of interest and nepotism, arrests of
crime bosses, enforcement of long-unenforced court decisions,
reduction of government expenses, more efficient collection
of revenues, higher salaries for government employees, and
increased spending on education and health care. Berisha
said that the threshold program for Albania focused on "three
fundamental pillars" of corruption and would incidentally
help Albania meet NATO and EU entry requirements. Berisha
expressed concerns over the existence of "state capture" of
certain institutions by corrupt forces, but said he was
determined to "follow legal avenues to solve that problem."


6. (SBU) In a statement before the press during the signing
ceremony, Berisha said that "corruption was a real cancer, an
emergency which must be fought." He expressed hope that
Albania would ultimately qualify for MCC compact funding and
added that "President Bush was right to make corruption a
non-negotiable indicator."


7. (U) USAID will now conduct procurement procedures to
award a contract for implementation of the agreement. The
selected contractor will monitor GoA performance under the
two-year program. Work under the program work will begin
this summer.


8. (U) This cable has been cleared by MCC.
RIES