THIS WEEK IN ALBANIA, FEBRUARY 23-29, 2008

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SUBJECT: THIS WEEK IN ALBANIA, FEBRUARY 23-29, 2008


1. (U) The following is a weekly report prepared by Embassy
Tirana's local staff to provide political and economic context and
insight into developments in Albania.

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POLITICAL DEVELOPMENTS
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2. (U) The Honeymoon is Over: It was to be expected, but perhaps
not so soon. Chairman of the Socialist Movement for Integration
(LSI) Ilir Meta pulled out of the minority coalition led by
Socialist Party (SP) Chairman Edi Rama in a public declaration this
week. He quickly presented a request to officially register a new
political movement, the left-wing Coalition for Integration, calling
on other minority parties who are dissatisfied with Rama's
leadership to join his new political umbrella.


3. (SBU) In response, Rama called for unity. However, he had
recently refused several of Meta's requests for power sharing,
producing a foe who turned immediately to courting Rama's rival,
former SP Chairman Fatos Nano. Nano, who has maintained a low
profile since being ousted as party chairman in 2005, still commands
a broad base of political support in the SP, including the public
support of several opposition Members of Parliament. (Note: Several
of these MPs broke with the SP last summer to support Nano's
nomination for president over Rama's objections).


4. (SBU) Meta's new coalition could find support from this
disaffected group of MPs and others from smaller parties in the
opposition coaliation, as disenchantment grows with Rama's
leadership style and focus begins to turn to the 2009 national
elections. However, it is too early to predict success for Meta.
What is certain is that Meta's break complicates the current debate
on electoral reform, which Prime Minister Berisha hope conclude
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5. (U) Bad Year, With Mixed Results: This week the Ahbanian Power
Corporation (KESH) announced its 2007 annual performance results.
Despite a difficult year, including a severe drought and prolonged
power shortages, KESH managed to meet and even exceed targets set by
international donors. Results for technical and non-technical
losses (36.4%),as well as the collection rate (90%),marked their
best performance in 10 years. This is an impressive feat for a
company that paid almost $300 million last year for electricity
imports when it couldn't meet domestic demand, a crisis which has
plunged the company into dire financial straits just before the
expected privatization of its distribution arm later this year.


6. (U) While most observers agree that KESH Director Gjergj Bojaxhi
has done the best he can to manage a bad situation at KESH,
Albanians remain frustrated by ongoing electricity problems. Supply
remains a serious issue, with no solution likely in the short term.
Efforts are underway to improve the situation, including
diversification of power generation sources and the installation of
an electricity meter in every household and business to improve
collections. Recent increases in domestic electricity tariff prices
will bring KESH closer to meeting its costs for expensive imports.
Finally, the privatization of the KESH distribution arm within 2008
is expected to further improve management of the distribution
sector, which represents more than 90% of the company's total losses
(both technical and non-technical). In the end, only a solid
commitment by the government to implement comprehensive reform will
upgrade Albania's malfunctioning energy sector.


7. (U) Albania and the Olive Trees: It's unclear if Thomas Friedman,
author of "The Lexus and the Olive Tree" knew about olives in
Albania, though the country is mentioned several times in his famous
bestseller. During the early 1990s, Albanians did their best to
expunge their communist heritage, including demolishing almost 40
percent of the country's then supply of 5 million olive trees, a
legacy of collectivist agriculture.


8. (U) Fifteen years later, the situation is far more optimistic.

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New plantings are taking place, with 200,000 trees planted last year
alone. Encouraged by a government program that subsidizes 50
percent of the cost of the seedling, Albania's olive trees have
rebounded to total 4.5 million. Private investment in processing
plants has increased production, while efforts by the Alimentary Oil
Association have increased quality. Members of this association are
actively looking for new markets, domestic and foreign, while prices
for Albanian olive oil are on the rise in international markets.
Though much remains to be done, the future of olive oil production
in Albania is brighter now than in many years.

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EDUCATION AND CULTURE
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9. (U) Skipping School or Dropping Out?: In the streets of the
capital city, young children sell cigarettes, nuts, and other
knick-knacks to strangers sipping coffee in the sunny outdoor cafes.
These kids are forced or encouraged by their parents or guardians
to cruise the streets during school hours instead of heeding the
government's call for mandatory education. Their families are
usually among the poorest in Albania, and the childrens' income
helps put food on the table. The number of children on the streets
has increased in recent years, while drop-out rates have officially
remained the same.


10. (U) It's not always fun, or comfortable, to attend school in
Albania. Particularly in the rural villages where basic
infrastructure is inadequate and schools lack a reliable electricity
supply, heating and cooling systems, teaching supplies, and
qualified teachers. Without a national network of school buses,
children may have to walk miles to reach the nearest school, only to
be met with overcrowded and irregularly held classes. Without
publicly supplied textbooks, the cost of books and supplies can be
prohibitive for poor families. Lacking economic options, these
families are most vulnerable to making the choice to send their
young boys abroad or find them jobs that pay "better than
schooling." These households are also generally the most
traditional and least likely to enroll their daughters in school,
keeping them at home to help with domestic work, or, particularly
during the teen and pre-teen years, safe from the influence of young
males. Children with disabilities have an even tougher time getting
an education in this system, which is in acute need of resources and
reform.

WITHERS