THIS WEEK IN ALBANIA, JANUARY 11-17, 2008

UNCLAS SECTION 01 OF 02 TIRANA 000050 SIPDIS SIPDIS DEPT FOR EUR/SCE E.O. 12958: N/A 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. -------------- POLITICAL DEVELOPMENTS -------------- ¶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. -------------- ECONOMIC DEVELOPMENTS -------------- ¶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; TIRANA 00000050 002 OF 002 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. -------------- Quote of the Week -------------- 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. -------------- PERSON OF THE WEEK -------------- ¶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