Identifier
Created
Classification
Origin
08TIRANA862
2008-12-05 15:28:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Tirana
Cable title:
REMITTANCES TO ALBANIA HOLDING STEADY
how-toVZCZCXRO9688 PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG DE RUEHTI #0862 3401528 ZNR UUUUU ZZH P 051528Z DEC 08 FM AMEMBASSY TIRANA TO RUEHC/SECSTATE WASHDC 7663 INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
UNCLAS TIRANA 000862
SIPDIS
SENSITIVE
DEPT FOR EUR/SCE J.ISMAIL
TREASURY FOR V.ATUKORALA
E.O. 12958:N/A
TAGS: EFIN ECON PGOV AL
SUBJECT: REMITTANCES TO ALBANIA HOLDING STEADY
REF: TIRANA 811
Summary
-------
UNCLAS TIRANA 000862
SIPDIS
SENSITIVE
DEPT FOR EUR/SCE J.ISMAIL
TREASURY FOR V.ATUKORALA
E.O. 12958:N/A
TAGS: EFIN ECON PGOV AL
SUBJECT: REMITTANCES TO ALBANIA HOLDING STEADY
REF: TIRANA 811
Summary
--------------
1. (SBU) Fears of Albania's economy hitting the skids due to a fall
in remittances may be overblown according to Western Union owner
Edmund Leka. Leka told Embassy personnel that WU has not seen a
noticeable decline in remittances, particularly from Italy and
Greece, which remain the two largest sources of remittances. He
added that Albanians abroad have a reputation as hard workers,
generally in construction and the hospitality industry, and would
probably be among the last ones to lose their jobs in Western
countries. Also, many Albanians are very entrepreneurial, owning
their own small businesses abroad, and have pretty good survival
instincts. End summary.
2. (U) Although international and Albanian financial institutions
generally agree that Albania will weather the global financial
storms, they are concerned that a fall in remittances, which make up
between ten and 14 percent of GDP (these are estimates since up to
half of the remittances coming in to Albania enter the country as
undeclared cash),could have a domino effect on the Albanian economy
(reftel). One scenario considers that if Albanians working in
Western countries begin to lose their jobs, they could send less
money home, resulting in smaller bank deposits, a reduction in
construction spending and subsequent loss of jobs in Albania. Even
the overly optimistic Prime Minister is beginning to express concern
publicly about the effects of a fall in remittances.
3. (SBU) However, according to Edmund Leka, owner of the Albanian
Union Bank and Western Union (WU) franchises in Albania, Macedonia,
Kosovo, and Switzerland, remittances have not yet begun to slow, nor
does he expect a substantial reduction in the foreseeable future.
Leka told Embassy personnel that WU handles about 30 percent of
Albania's remittance income, but he estimates that almost twice as
much enters the country unreported as cash carried by travelers.
WU's remittances to Albania come from (in decreasing order of
volume) Italy, Greece, the UK, and the U.S. WU's average
transaction size is 300 euro, but most transactions are between 50
and 100 euro.
4. (SBU) Leka believes that Albanian workers are in demand in
construction, restaurants, and hotels since they are hard workers
and good entrepreneurs. Many emigrants have taken low-paying,
unskilled jobs, and then worked their way up to management or even
ownership. Others have started their own businesses, particularly
in construction and as restaurant owners. Leka thinks that since
Albanians abroad work well for lower wages than locals, they will
probably be among the last to be let go in the event of a downturn.
Philip Bay, AmCham Albania President and regional CEO of real estate
firm Colliers, agrees with Leka, saying that in his experience,
Greek businesses have more readily fired Greeks than Albanians when
business softened.
5. (SBU) Another element that may keep remittances from falling is
the sense of allegiance Albanians feel for their family and clan.
UNDP international migration expert Abdul-Ghaffar Mughal, who has
studied remittance flows in many countries, told Econoff that he
believes there will be little falloff in remittances to Albania,
Kosovo, and Western Macedonia because family members living abroad
feel a deep sense of obligation to their relatives, and would deny
themselves whatever is necessary to continue sending money back
home.
Comment
--------------
6. (SBU) With over one million Albanians living abroad, Albania, as
many other countries, has an important lifeline in case of financial
need - support from its huge diaspora. So far, attitudes among
Albanians seem to be positive, with little noticeable effect from
the global economic slowdown. However, the next six months will be
crucial - if demand for Albanian textile products (60 percent of
exports) drops and remittances fall at the same time, Albania's
economic situation could change quickly. Much will depend on the
economies of neighboring Italy and Greece, which remain Albania's
largest export markets as well as main sources for remittances.
WITHERS
SIPDIS
SENSITIVE
DEPT FOR EUR/SCE J.ISMAIL
TREASURY FOR V.ATUKORALA
E.O. 12958:N/A
TAGS: EFIN ECON PGOV AL
SUBJECT: REMITTANCES TO ALBANIA HOLDING STEADY
REF: TIRANA 811
Summary
--------------
1. (SBU) Fears of Albania's economy hitting the skids due to a fall
in remittances may be overblown according to Western Union owner
Edmund Leka. Leka told Embassy personnel that WU has not seen a
noticeable decline in remittances, particularly from Italy and
Greece, which remain the two largest sources of remittances. He
added that Albanians abroad have a reputation as hard workers,
generally in construction and the hospitality industry, and would
probably be among the last ones to lose their jobs in Western
countries. Also, many Albanians are very entrepreneurial, owning
their own small businesses abroad, and have pretty good survival
instincts. End summary.
2. (U) Although international and Albanian financial institutions
generally agree that Albania will weather the global financial
storms, they are concerned that a fall in remittances, which make up
between ten and 14 percent of GDP (these are estimates since up to
half of the remittances coming in to Albania enter the country as
undeclared cash),could have a domino effect on the Albanian economy
(reftel). One scenario considers that if Albanians working in
Western countries begin to lose their jobs, they could send less
money home, resulting in smaller bank deposits, a reduction in
construction spending and subsequent loss of jobs in Albania. Even
the overly optimistic Prime Minister is beginning to express concern
publicly about the effects of a fall in remittances.
3. (SBU) However, according to Edmund Leka, owner of the Albanian
Union Bank and Western Union (WU) franchises in Albania, Macedonia,
Kosovo, and Switzerland, remittances have not yet begun to slow, nor
does he expect a substantial reduction in the foreseeable future.
Leka told Embassy personnel that WU handles about 30 percent of
Albania's remittance income, but he estimates that almost twice as
much enters the country unreported as cash carried by travelers.
WU's remittances to Albania come from (in decreasing order of
volume) Italy, Greece, the UK, and the U.S. WU's average
transaction size is 300 euro, but most transactions are between 50
and 100 euro.
4. (SBU) Leka believes that Albanian workers are in demand in
construction, restaurants, and hotels since they are hard workers
and good entrepreneurs. Many emigrants have taken low-paying,
unskilled jobs, and then worked their way up to management or even
ownership. Others have started their own businesses, particularly
in construction and as restaurant owners. Leka thinks that since
Albanians abroad work well for lower wages than locals, they will
probably be among the last to be let go in the event of a downturn.
Philip Bay, AmCham Albania President and regional CEO of real estate
firm Colliers, agrees with Leka, saying that in his experience,
Greek businesses have more readily fired Greeks than Albanians when
business softened.
5. (SBU) Another element that may keep remittances from falling is
the sense of allegiance Albanians feel for their family and clan.
UNDP international migration expert Abdul-Ghaffar Mughal, who has
studied remittance flows in many countries, told Econoff that he
believes there will be little falloff in remittances to Albania,
Kosovo, and Western Macedonia because family members living abroad
feel a deep sense of obligation to their relatives, and would deny
themselves whatever is necessary to continue sending money back
home.
Comment
--------------
6. (SBU) With over one million Albanians living abroad, Albania, as
many other countries, has an important lifeline in case of financial
need - support from its huge diaspora. So far, attitudes among
Albanians seem to be positive, with little noticeable effect from
the global economic slowdown. However, the next six months will be
crucial - if demand for Albanian textile products (60 percent of
exports) drops and remittances fall at the same time, Albania's
economic situation could change quickly. Much will depend on the
economies of neighboring Italy and Greece, which remain Albania's
largest export markets as well as main sources for remittances.
WITHERS