THIS WEEK IN ALBANIA, JANUARY 11-17, 2008

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TAGS: ECON PGOV PREL AL
SUBJECT: THIS WEEK IN ALBANIA, JANUARY 11-17, 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. These updates will supplement
post's DAR reports and reporting cables.

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POLITICAL DEVELOPMENTS
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2. (U) WHERE ARE THE FRESH FACES?: The Euro-Socialist Youth Forum
of Albania, which goes by the acronym FRESH, celebrated its 16th
anniversary on January 15. FRESH has nurtured future left-wing
politicians since 1992, including former Prime Ministers Ilir Meta
and Pandeli Majko. At the recent anniversary meeting, the
charismatic Majko recalled the first days of FRESH, "the European
passport" of its time, and the democratic ideals that defined it in
the aftermath of communist rule. Majko saluted the armada of tens
of thousands of young men and women who have given their best over
the years to transform Albanian democracy.


3. (U) Socialist Party (SP) Chairman Edi Rama also took the stage
with a group of teenagers in colorful t-shirts to deliver a
typically populist and poetic speech. "I am not a politician!" Rama
said. "I want to say this aloud and directly. I am a citizen. I am
a citizen like you, like many others" whose "dream" is to rid the
Albanian government of communist-era politicians who still hold
power in the new democracy. Despite this fairly well-received
speech, Rama initially clashed with FRESH, firing its former
chairman and replacing him with a relative unknown. Rama was never
a member, living for years abroad after the fall of communism. Upon
ascension to the party chairmanship, he revamped the structure of
the youth organization. Many within the SP accuse Rama of
transforming FRESH into an NGO without relevance, and charge that
through his changes it has lost its ability to nurture the party's
future leaders.

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ECONOMIC DEVELOPMENTS
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4. (U) SEASON OF PRIVATIZATION: Seventeen years of privatization in
Albania could end this year with final opportunities in the
strategic sectors of energy, oil and gas, insurance, and
telecommunications. The state-owned distribution arm of the
Albanian Power Corporation (KESH),a 76% stake in the state-owned
oil refiner ARMO, a 61% stake in insurance company INSIG and 15% of
state-owned mobile operator AMC are all scheduled for privatization
in 2008.


5. (U) Privatization deals represented a major source of foreign
direct investment (FDI) from 1995-2005, at 60% of total FDI
revenues. The expected shrinking of these revenues after 2008,
coupled with the fact that Albania has one of the lowest levels of
FDI per capita in the region, has become a driving force for the GOA
to aggressively create new opportunities for foreign investors.
Over the last two years, the GOA has developed a range of incentives
for investors, including the yet-to-be-implemented "Albania 1 Euro"
initiative, reduction of corporate tax by 10%, new laws on
concessions and public procurement, streamlining of business
registration and licensing procedures, and large capital investments
in infrastructure (particularly roads),all aimed to improve the
business and investment climates.


6. (U) The GOA's projection for 2008 FDI revenues is an optimistic
$700 million, accounting for privatizations scheduled for completion
in 2008 and foreign investors' interest in strategic sectors like
energy generation, oil, cement production, mining, and tourism. The
latter is fueled by the GOA's recent reforms in the legal and fiscal
systems, particularly a new law on concessions that paved the way
for interested parties to submit unsolicited proposals, resulting in
a record number of such proposals in 2007. Albania is entering
another stage in its economic development and has put itself firmly
on the map as an attractive investment. However, proper enforcement
of laws, corruption and lack of reliable energy supply remain its
Achilles heel.


7. (U) PUBLIC REVENUES FOR 2007: Albania's tax and customs
agencies announced revenues of $2.4 billion, almost 100% of
projections, for 2007. This represents about 82% of Albania's
public revenues. While customs reached 102% of projections, the tax
administration met about 97% of its collection goals. However, the
administration's major success in 2007 was the legal registration of
about 40,000 new employees who had previously been working in the
gray market.


8. (U) These positive results are due in large part to the
government's fulfillment of electoral promises, with IMF blessing,
to reduce taxes and increase salaries and pensions. Still, both
agencies have a long way to go to achieve complete public
acquiescence to their mandates, as the revenue measures projected
intake rather than 100 percent compliance with tax and customs laws;

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on the latter, Albania still falls short. In addition to the need
to continue to increase compliance with tax and customs laws, the
government faces the additional challenge of efficient spending of
public revenues. The GOA needs to develop the necessary
infrastructure to obligate and disburse collected revenue to public
works.

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Quote of the Week
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9 (U) "The youth can change politics and they can change Albania.
I am not a politician. I am a citizen, a citizen who never gives
up." Tirana Mayor and Opposition Leader Edi Rama addressing a
gathering of the Socialist Youth Forum FRESH.

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PERSON OF THE WEEK
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10. (U) Jozefina Topalli, the first female Speaker of Parliament:
Not just the Speaker, Topalli is also one of the most influential
members of the ruling Democratic Party. During her tenure as
Speaker, she has raised the profile of this previously drab role as
she highlights her own causes and the work of Parliament. Topalli
has become a central figure in the ruling coalition, assuming a
starring role in the country's public campaign for Euro-Atlantic
integration and speaking out strongly on gender equality and
domestic violence issues. She has traveled to more countries than
any other government official, most recently to lobby members of the
Organization of Islamic Countries in support of Kosovar
independence. Her assertive style can catch the opposition off
guard, or provoke anger, and there are some in her own party and
outside that resent her influence with the Prime Minister. With the
PM's career likely entering its political twilight, Topalli's
growing activism is understood by many as positioning herself as his
successor, well ahead of any overt power struggle for chairmanship
of the party.


11. (U) Topalli hails from the northwestern town of Shkodra, a
Democratic Party stronghold. Born to an influential Catholic family
in this dissident, anticommunist region, Topalli first came to
public prominence in 1997 as a Member of Parliament and Deputy
Speaker. She is one of few parliamentary Q Q am=Biography
CRISTINA