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02 11 2006 Prime minister's plan to lure foreign investment with rock-bottom land prices draws criticism from opposition and public alike.
By Enkeleid Llanaj in Tirana (Balkan Insight, 2 Nov 06)
More than two months have passed since Sali Berisha, the Albanian prime minister, unveiled "Albania One Euro" - his ambitious price-slashing initiative to lure foreign investors to the southern Balkan country.
With land on offer to companies at a lease price of one euro per square metre, unlimited utilities access for one euro, training schemes and a host of other benefits at the same symbolic price, the plan is anything but timid.
Some 130,000 hectares of public land and supporting facilities are to be rolled into a scheme that, by the prime minister's own admission, smacks of desperation.
"Albania will be attractive only when it becomes the easiest and the cheapest at the same time. We must not delude ourselves: no other nation or country has a more desperate need for investments than Albania," he said.
This sense of urgency is real. Foreign direct investment, FDI, in Albania remains the lowest per capita in Europe. Albania's peak year for FDI was 2003, when inflows reached 300 million US dollars. Other Balkan countries of a similar size are meanwhile growing accustomed to counting annual FDI in the billions.
The prime minister's mix of market-stimulating mechanisms previously employed by reform governments in new European Union member states such as Hungary and Slovakia envisages a string of industrial parks across the country. Government officials describe the parks as future hives of activity, to be fueled by foreign cash at the invitation of the state.
No one in Albania doubts that Berisha and his team have hit upon something important. However, the initiative also strikes a raw nerve.
Two months on after the announcement, the plan has stirred up as much public ire as it has catalyzed interest among foreign investors and prospective local beneficiaries. A marked lack of detailed information about how the initiative will actually work, accompanied by domestic concern that Albanian investors may be deprived of similar benefits, is firing political debate.
The government team tasked with crafting the draft law spelling out details of the offer in September missed its own deadline. Undaunted, Berisha has launched himself on a promotional tour, visiting Italy, Turkey and Greece to "ignite the engines of business interest".
From each junket he has returned to a storm of derision from political rivals. Although the prime minister emphasises a need for transparency, legality and even-handedness, opposition Socialists in parliament choose these as their points of attack.
Dritan Prifti, a parliamentary deputy from the Socialist Movement for Integration, a left-wing party led by Ilir Meta, a former Socialist prime minister, describes Albania One Euro as "a tool in the hands of the government to reward some entrepreneurs and not others, lacking any legal basis and so far seeming very personalised".
Well they may know. Emin Barci, a former advisor of Fatos Nano, the Socialist prime minister whose term expired last year, says the initiative is stolen from the Socialists. The Nano government offered public land for tourism construction, through 99-year leases priced at 1 dollar per square metre. This and other schemes brought in some 100 million dollars across a range of sectors, creating thousands of jobs.
Responding to Socialists' criticism, Suzana Guxholli, the current prime minister's economic advisor, admits that the opposition did try an Albania One Euro type of programme when they were in power, but claims they used it to enrich allies. "Our initiative will be based on laws and better defined criteria. Investors will compete, and more than one request will be submitted for the same property," she said.
But the initiative also faces more substantive criticism.
While World Bank analysts agree with Berisha that FDI shortfalls hold Albania down, they say the key factors hindering FDI in Albania are corruption, inadequate infrastructure and electricity shortages. The key to Albania One Euro - price, being low already, does not make the list.
Citizens groups still clamouring for restitution of illegally seized lands, a perennial hornets' nest, grumble that their interests are being overlooked, yet again, even in the planned giveaway.
Local business leaders say that barriers to their own success should take precedence over that of prospective foreign investors. Edmond Leka, vice president of the American Chamber of Commerce in Albania and CEO of the local affiliate of Western Union, the payments and communications company, says local business needs "more space".
Mjaft, a well-regarded activists' group whose name means "Enough", offers a raft of examples in which the government has made life difficult for private business. The group accuses Albania's political class of applying "double standards", with private business interests influencing the work of government.
For example, the indebtedness of a private air carrier, Albatros, soured into a political affair after the company entered negotiations on repayment, with the country's president and prime minister ultimately siding against each other in a public feud.
Top Channel, a popular private television broadcaster, could find itself evicted from state-owned offices it held under a valid lease after the station fell out of favour with politicians. There also has been damaging dithering over the privatisation of Albtelecom, initially voided, then controversially allowed.
"All these events, coming within a short period of time, contradict the idea behind Albania One Euro. Berisha on one hand invites businesses, and on the other hand he attacks them," said Erion Veliaj, Mjaft's executive director.
If the prime minister's reports of enthusiastic receptions during his foreign visits are to be believed, then new investors may not mind. Albania could yet capitalise on the wave of foreign investment increasingly pouring into the Balkan region - a prospect few Albanians dislike.
But Istvan P Szekely, the International Monetary Fund official in charge of supervising Albanian public expenditure, is among those reserving judgement. "The devil is in the details, and we still need to know more details about this initiative," he said.
One risk, says Ilir Ciko of the Institute of Contemporary Studies, a Tirana think tank, is that Albania One Euro could prove little more than a diversion for policymakers wary of addressing the real reasons foreign investors stay away.
A greater risk may be that Albanians, having seen previous initiatives founder on the rocks of public disillusionment and partisan rivalry, force this one to fail on similarly unedifying grounds.
The prime minister is staking his political future on success. On the performance of this initiative, he says, the government's "destiny" will be determined.
Enkeleid Llanaj is journalist with Top Channel TV. Balkan Insight is BIRN's online publication.
At the beginning of 2010 BIRN network published Digging Deeper - A Guide for Investigative Journalists in the Balkans, written in cooperation with Sheila Coronel, Director of the Stabile Center for Investigative Journalism and professor of professional practice at Columbia University, New York.
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