Area: 28,748 sq km, slightly smaller than Maryland
Population: 3,582,205 (2004 est.)
Annual Inflation: 2.3% (2004 est.)
Population Growth Rate: 1.03% (2004 est.)
Gross Domestic Product (GDP): $15.69 billion (purchasing power parity, 2004 est.)
Life Expectancy: Male: 69.53 years; Female: 75.42 years; (2004 est.)
GDP Per Capita: $4,400 (purchasing power parity, 2004 est.)
Infant Mortality: 37.28 deaths/1,000 live births (2004 est.)
Real Annual GDP Growth: 7.3% (2004 est.)
U.S. STRATEGIC INTERESTS
Albania has been a valuable ally of the United States in the Global War on Terrorism, deploying troops in Iraq, Afghanistan, and Bosnia-Herzegovina. In the Balkans, one of the greatest remaining threats to regional stability emanates from disputes between ethnic Albanians in Kosovo and Macedonia and their Serb and Macedonian counterparts. Albania has played a vital, moderating role, encouraging ethnic integration and promoting peace in the region. Nevertheless, Albania's own stability remains precarious and highly dependent on its ability to overcome its tumultuous history of isolation and deep poverty. Carefully targeted U.S. Government (USG) and international support remain fundamental to preserving and enhancing Albania's positive role in this volatile part of the Balkans during this crucial period.
USG assistance to Albania serves to complement the U.S. interest in supporting Albania's efforts to make the reforms necessary for it to integrate into Euro-Atlantic institutions. All assistance donors agree that the pace of such integration will depend, in part, on the success of Albania's parliamentary elections in 2005, the proper conduct of which will require special attention from the entire international community. SEED-funded programs and related USG activities are at the center of donor efforts to stabilize and integrate the Balkans.
OVERVIEW OF U.S. GOVERNMENT ASSISTANCE
Since FY 1991, the USG has provided almost $500 million in assistance, not counting U.S. Department of Agriculture (USDA) food aid, to Albania to facilitate its transition from the most isolated and repressive communist state in Europe to a modern democracy with a market-oriented economy, and to support long-term development.
In FY 2004, the USG provided an estimated $50.48 million in assistance to Albania:
In FY 2004, a total of 59 Albanians traveled to the United States on USG-funded exchange programs. Also, 913 Albanians received training, and another 1,249 participated in in-country conferences with USG support.
U.S. ASSISTANCE PRIORITIES
Democratic Reform Programs
USG assistance focused on strengthening civil society; fostering citizen involvement in economic and political processes and decision making; increasing the flow and transparency of information and citizen confidence in the government and in the accuracy of news and information; increasing independence of local administration from the central government; and strengthening representative government institutions. Rule-of-law programs aimed at improving legal institutions and promoting/fostering transparency and accountability in the government. USG programs supported non-governmental organizations (NGOs) and other civil society institutions to increase awareness of and involvement in legal and regulatory reforms.
USG training programs helped create more professional media through on-site training, internships with U.S. media organizations, and study visits. Training in management, appropriate program selection, and sales improved the economic viability of media outlets. The USG sponsored programs to raise the quality of investigative journalism on issues important to the public. Support was also directed at boosting university-level journalism branches, creating a regional TV network, and improving media legislation to protect journalistic freedoms, regulate the media market, and enhance copyright regulations.
Economic Reform Programs
USG programs advanced economic reform by providing technical and financial assistance to promote sustained growth of micro-, small- and medium-sized enterprises. Programs promoted broader economic reform by increasing the competitiveness of Albania's private sector; improving customs clearance procedures; developing farmer and agribusiness associations; supporting the completion of the first registration of rural real estate -- a key step toward a full land registration system; and improving financial services, with a specific focus on central bank operations, bank supervision, deposit insurance, and Government of Albania (GOA) debt management. Other USG programs to strengthen GOA trade policy and improve the labor force (through training for high school and vocational college students in business and technical skills) helped establish a footing for Albania's eventual integration into the EU economy.
Social-Sector Reform Programs
The primary health care system was strengthened through training programs to improve technical competencies of providers in a wide range of areas, including family planning, HIV/AIDS/STIs, and prenatal care and breastfeeding. Public access to integrated services was improved by expanding the scope of primary health care and establishing key quality and management tools within the primary health care system to plan for and meet demand in a sustainable manner. Health information systems and regional quality boards were formed, and a pilot program was established to test efficient health care models in tandem with GOA efforts. Programs also addressed financial reforms at the primary health care level to encourage health sector decentralization; establish transparent financing mechanisms to reduce corruption; and improve coordination and collaboration among all public and private sector health care providers and donors.
Cross-Sectoral and Other Programs
Anti-Corruption: Nearly all USG programs contained prominent elements emphasizing the benefits of transparency and the reduction of corruption. USG direct anti-corruption efforts focused on two key areas: promoting the role of individuals, NGOs, and the media as "watchdogs," and creating structures for internal governmental checks and balances. The USG-assisted Albanian Coalition Against Corruption, a network of NGOs and individuals, and the Citizens Advocacy Office gave voice to citizens' concerns and grievances over corrupt activities. Local NGO initiatives supported by USG grants stressed increasing citizen participation in public decision-making processes and improving legal and administrative standards and practices. USG technical assistance created governmental inspectorates on asset disclosures of public officials and corrupt practices of judges and prosecutors. Significant USG resources were dedicated to projects aimed at creating and enforcing anti-corruption laws.
Anti-Trafficking: The prevention of trafficking in persons and the protection and reintegration of trafficked victims received special attention. USG assistance centered on the implementation of two comprehensive anti-trafficking initiatives -- one focused specifically on child trafficking, and the other aimed to coordinate, integrate, and financially support NGO, GOA, and civil society efforts to reduce the trafficking of women and girls and improve the reintegration of trafficking victims. These activities were buttressed by programs to strengthen women's legal rights. USG assistance to the interdiction component of trafficking continued through the Three-Port Strategy to strengthen controls and security at the principal points of entry/departure and to improve law enforcement capabilities to combat trafficking.
Energy: Technical assistance, training, and reform advocacy programs supported GOA efforts to make the power sector financially self-sustainable and put it on an environmentally sound footing. Programs focused on restructuring the power sector through the introduction of legislation that adopted a Transitional Market Model in compliance with EU directives to achieve Albania's integration into the South East European Regional Energy Market and, ultimately, the European Community's Energy Market. This integration will facilitate the stabilization of the national electrical system and Albania's overall energy security through a least-cost approach that will link Albania more closely to the EU. Programs also helped establish a new transmission system company and transmission system operator as a step toward the unbundling of Albania's state-owned power company and continuation of support to Albania's Energy Regulatory Agency.
Security, Regional Stability, and Law Enforcement Programs
A range of USG programs and outreach efforts -- speaker programs, support for civil society organizations engaged in regional issues, media and public information campaigns, inter-faith councils, weapons destruction, de-mining activities and defense reform -- have served to promote security and regional stability. Speakers from leading U.S. think tanks also provided varied Albanian audiences (students, lecturers, media analysts, intellectuals, and religious leaders) with detailed explanations of USG views on terrorism and the global war against it.
Foreign Military Financing (FMF) contributed greatly to Albania's interoperability and ability to deploy troops to Iraq (73 troops), Afghanistan (22), and Bosnia (68), as well as to lay the groundwork for eventual NATO membership through defense reform. USG programs have been instrumental in reforming training, pay, and other sectors of Albania's defense establishment, which in turn has allowed the GOA to recruit, train, and equip special forces for U.S.- and NATO-led missions. Equipment provided through this assistance includes: body armor, Kevlar helmets, clothing, tactical communications, vehicular transceivers, vehicular test equipment, reactivation support and spare parts, publications, computers, mapping equipment, medical equipment, patrol boats, and search-and-rescue equipment. The USG also has several programs to destroy weapons stockpiles and conduct demining activities.
Law Enforcement and Criminal Justice: The USG helped GOA institutions to improve their performance and capabilities in law enforcement, public security, and criminal justice. Expertise, training, and equipment were provided to the newly elevated Directorate of Organized Crime of the State Police, as well as to the new Organized Crime Task Force, established in five major cities with close USG support.
Law enforcement and criminal justice capabilities and accountability were further strengthened through training, equipment, and technical assistance provided to GOA investigators of internal corruption, and to prosecutors, both independently and through Albania's School of Magistrates. The USG assisted the State Police by supporting the development of merit-based personnel management procedures and structures. Comprehensive support for the ongoing development of the information management resources throughout the country was provided to improve the effectiveness and capabilities of the police and prosecutors.
The USG led in legislative reform efforts, providing expertise on several key legislative packages targeting organized crime, witness protection, and terrorist financing.
SECTORAL ASSESSMENTS
Democratic Reform
In 2004, progress on democratic reforms was disappointing. While the nation's capacity to conduct elections improved, the overall electoral agenda remained frustratingly incomplete. The October 2003 local elections could be viewed as steps forward in Albanian democracy, especially as bipartisan accords in advance of those elections generated expectations of fairness and transparency. There were noticeable improvements over the 2001 elections in terms of election administration -- few observers doubted the ultimate validity of the 2003 results -- but inaccuracies in the voter lists and isolated disputes prompted significant post-election partisan bickering and undermined the legitimacy of results that international observers had pronounced valid. Pressured to bring the process up to par before the 2005 parliamentary elections, political leaders wrangled for several months over the partisan makeup of the Central Election Commission. Under international pressure, Parliament finally passed a temporary electoral law, in October 2004, designed to address the flaws of the last elections and which requires Albanian authorities to comply with an extraordinarily ambitious pre-electoral revision of the voter lists.
USG election assistance has been and will be critical to completing the the voter lists task. In 2004, the USG funded the development of polling unit maps for each of Albania's 33 major urban centers. Maps include polling boundaries, building code numbers, voting center locations, and local landmarks such as parks, police stations, schools, and places of worship. Once complete, this work will serve as an objective foundation for correcting the biggest impediment to free and fair elections -- inaccurate voter lists.
Despite marginal improvements in governance, much more is needed. Conflict between the Socialist Party (SP) and Democratic Party (DP) continued to stymie public-sector reform attempts and impede public administration, while disputes among factions of the ruling SP undermined efforts to implement laws. Lack of progress on reforms continues to result in low levels of public trust in institutions and high perceptions of corruption. Transparency International's global Corruption Perceptions Index, released in October 2004, showed Albania's corruption score as unchanged (2.5 out of 10) but its global rank deteriorating, from 81 to 108. "Capture" of state institutions by monopolistic private-sector interests worsened, reflected by a one-year decline in the Nations in Transit Corruption score. Customs and tax officials, along with judges and ministers, remain among Albania's least trusted officials, according to a recent survey.
Progress in the development of civil society, helped significantly by U.S. assistance, has countered some of the effects of political stagnation. Although the NGO sector remains highly dependent on donor funding, a few NGOs achieved tangible results this year, especially in their advocacy of public-sector reform and anticorruption issues. These efforts resulted in more vigilance over local government budget decisions, an unprecedented degree of oversight over the central government, and the enactment of such potentially important anti-corruption tools as the assets disclosure law. Watchdog groups like the USG-supported Albanian Coalition against Corruption launched mobilization and public awareness campaigns concerning controversial GOA policies. Paradoxically, the success in raising public awareness of corruption combined with the GOA's slow pace of reform may have contributed to heightened perceptions of corruption.
The USG-sponsored Citizens' Advocacy Office (CAO) began this year to monitor assets disclosure by prominent officials, setting the stage for audits carried out by the new High Inspectorate for Declaration and Audit of Assets. Although the assets disclosure law has yet to yield prosecutions for fraudulent disclosure, the potential for a positive effect on anti-corruption efforts remains high. In a new partnership with Transparency International, CAO is poised to play a more forceful watchdog role.
There were modest improvements in local governance. The fiscal autonomy of local government units vis-�-vis the central government continued to increase, consolidating a four-year trend. Local governments gained discretion over half of their revenue stream, in contrast to 10 percent in 2001. Still, local resources pale in comparison with those of the central government, which accounts for roughly 90 percent of spending - making Albania among the region's most fiscally centralized countries. With continued improvement in local capacity and spending discretion, local government services, particularly sanitation, water services, and street repair, improved modestly in quality and coverage. Surveys indicated that perceptions of service quality and responsiveness of authorities were higher for municipalities that received USG assistance than for non-recipient areas.
The USG also assisted several local initiatives to support decentralization by ensuring better citizen participation in local decision-making processes. Projects in cities such as Tirana, Kukes, Pogradec, Bulqize, and others improved legal/administrative standards and practices. Public administration training for municipal employees has raised the professionalism of staff at the local government level. The USG funded the drafting of legislation on the Regulatory Impact Assessment Procedure, which helps to guarantee the promotion of equal opportunity to participate in the public decision-making process.
USG assistance raised public awareness of the rule of law and strengthened public pressure against corrupt practices in the government. Through advocacy campaigns, non-transparent proposed price increases for public utilities were modified. The new High Inspectorate for the Declaration and Audit of Assets investigated the first assets disclosures of public officials, while watchdog NGOs monitored the process. The USG has placed a forensic accountant within the High Inspectorate, providing expertise in implementation. Following a successful pilot program in Tirana, transparent and accessible court models were replicated in three more cities. New systems and techniques increased considerably the speed and accuracy of record keeping in the Tirana District Court. Programs to publish a "Guide to Licensing" (which explains the steps for business registration or professional licensing) and a "City Taxes Guide" (information on fiscal management and laws) helped make the relevant processes more transparent. Training for lawyers updated them on the requirements of a new law governing the legal profession. Judges received legal education on trafficking, domestic violence, copyright protection, and telecom regulation issues. Publication of a Family Law Bench Book gave judges a practical manual to assist them in implementing the new Family Law properly. Training complemented this effort for lawyers and notaries on the same law. The USG played an advisory role in the drafting of the conflict of interest law and the law governing the organization and functioning of the National Judicial Conference (a forum of all Albanian judges).
To buttress the rule of law, the USG conducted professional training, provided modern law enforcement equipment, and fostered inter-organizational cooperation. The U.S. has played a critical role as a coordinating member of the steering committee of the International Consortium, an organization dedicated to coordinating the assistance the international community has offered to the GOA in law enforcement and the rule of law. The Consortium has achieved results in improving border control, coordinating anti-trafficking strategies, court reform, legislative reform, community policing, and the implementation of information management systems.
Independent Media: Albanian media are slowly increasing their professionalism, as they attempt to make themselves more consumer oriented. Media companies are not yet moneymaking enterprises and need significant help to increase their independence from financial backers with political (and possibly criminal) motives. Although direct GOB interference has decreased, advertising by state-owned industries still accounts for about 40 percent of total income for most media outlets and is sometimes used as leverage by the GOA. New media outlets are still cropping up in an already over-saturated market, with over 16 news dailies in circulation and 14 TV stations airing in the capital city, many with national coverage. The media are in dire need of accurate audience polls and surveys to make them more responsive to consumers' needs.
On-site training, internships with U.S. media organizations, study visits, and exchanges have built on previous USG-sponsored programs to develop a professional cadre of journalists and editors. Other training and exchanges focused on improving the quality of investigative journalism on issues important to the general public -- corruption, crime, police and court activity, health, and local issues. The USG also directed in-kind and technical support at boosting university-level journalism branches, through the Professional-in-Residence program, under which several U.S. media outlets advised Albanian journalism professors and university administrators on curriculum development and teaching methods.
The thrust of recent media programs was on improving the economic viability and financial independence of media outlets through on-site training in business management and administration, staff development, appropriate program selection, program promotion, and sales techniques to garner more and better advertising. USG legal and technical support to create a regional television "network" was essential in ensuring the survival of the smaller TV stations outside of Tirana -- the only source of local news for over 60 percent of the population. USG technical assistance improved media legislation to protect journalistic freedoms, regulate the media market, and enhance copyright regulations.
Economic Reform
In 2003, Albania's continued macroeconomic stabilization led to significant economic growth, a low level of inflation, a decrease in the budget deficit and external debt, and higher foreign currency reserves. Gross Domestic Product grew by 6 percent in real terms (compared to 4.7 percent in 2002) and 9.9 percent in nominal terms. Real GDP in 2003 was 121.4 percent of its 1989 level, and per capita GDP was $1,950, an increase of 25.2 percent compared with 12.3 percent in 2002. Average annual inflation, measured by the consumer price index, decreased to 2.37 percent in 2003, as compared to 5.3 percent in 2002, and 3.1 percent in 2001. Unemployment estimates range from 10-22 percent, with the official GOB figure being 15 percent in 2003, as against 15.8 percent in 2002. Surveys indicate that 25.4 percent of all Albanians fall below the accepted poverty line, with poverty in rural areas reaching almost 30 percent.
Public revenue decreased slightly, to 22.4 percent of GDP in 2003, from 22.5 percent in 2002. Despite revenue shortfalls, the budget deficit declined to 5.6 percent of GDP in 2003, from 6.2 percent in 2002. External debt was 23.3 percent of GDP, compared with 24.4 percent in 2002. Domestic debt decreased slightly, to 38 percent of GDP in 2003 from 38.8 percent in 2002. Albania's trade deficit grew to $1.421 billion in 2003, compared to $1.160 billion in 2002, and $1.028 billion in 2001. However, the current account balance actually improved, due to continued high private remittances. The current account deficit decreased from 9.5 percent in 2002, to 6.7 percent in 2003. Foreign reserves rose by $186.6 million, or nearly 22 percent compared to 2002, and reached $1.025 billion by the end of 2003 (equivalent to nearly 4.7 months of imports).
The private sector accounts for over 75 percent of GDP and over 80 percent of employment. Since the 1997 crisis, foreign investor confidence has been growing, albeit slowly in comparison to other countries in the region. Albania attracted $192 million of foreign direct investment (FDI) in 2003, compared to $153 million in 2002. Beset by a poor image abroad, the lack of a reliable property registration system in urban areas, and concerns over corruption, energy, and transportation, Albania remains among the lowest recipients of FDI in the region.
USG economic growth programs addressed the problems of poverty, unemployment, the trade deficit, and low FDI. Based on the participatory, demand-driven, and market-oriented approach, these programs support the sustained growth of private small and medium-sized enterprises (SMEs) through: 1) developing and strengthening competitive capacity; 2) increasing access to financial resources; and 3) improving the business climate. In addition to assisting businesses to capture a fair share of domestic markets and penetrate foreign markets, these programs facilitate the attraction of FDI. Competitiveness initiatives have targeted three sub-sectors with export potential: specialty tourism, meat processing, and herbs and spices.
Direct assistance to more than 8,000 SMEs in 2004 improved technical, marketing, and managerial skills and provided better access to credit. The micro-loan program, serving over 4,200 poor Albanians with a total disbursement of $9.62 million in FY 2004, has achieved operational self-sufficiency and received an A+ rating for a microfinance institution for two consecutive years. The SME loan program helped businesses obtain $10.61 million in loans from commercial banks through a direct lending and loan guarantee scheme. Repayment rates were about 99 percent for micro-loans and 100 percent for SME loans.
Monetary Policy/Financial Services: The Bank of Albania (BOA) has been the backbone of GOA efforts to bring macroeconomic stability to the country. The BOA's weakest area, however, is in banking supervision. USG programs will help the BOA meet a number of qualitative targets set by the World Bank under a Financial Sector Adjustment Credit. The key results of this program include: 1) stricter examination standards; 2) the adoption of a concrete resolution strategy for troubled commercial banks; and 3) the implementation of new procedures to ensure the thoroughness of inspections, including procedures for valuing and accounting for bank investment portfolios. The USG also provided a comprehensive assistance program to improve the quality and consistency of bank supervision. A long-term bank supervision advisor provided periodic on-the-job training to bank examiners. In addition, technical assistance was extended to the Albanian Deposit Insurance Agency to develop its fundamental operational capacity.
Fiscal Debt Management: The USG provided financial expertise to the Ministry of Finance and the BOA by funding an intermittent Treasury advisor on debt management. This issue took on additional importance in 2004 because the state-owned savings bank was privatized, thus increasing the need to develop reliable primary and secondary government securities markets. A technical team was brought in to install software and provide training for the Ministry to develop a cash-forecasting database and created a framework for reorganizing the Albanian treasury into separate debt and treasury departments. These actions, designed to assist in the creation of an efficient government securities market, will improve the GOA's ability to raise funds for much-needed poverty reduction and infrastructure upgrade projects.
Trade Policy: As a WTO member, Albania has committed to applying a maximum tariff of no more than 20 percent, while undertaking initiatives toward gradual trade liberalization. These include transition to a trade regime with zero tariffs for a specific category of products. However, Albania has not completed its WTO obligations and has started renegotiations to postpone liberalization deadlines for a number of sectors. The USG also provided training and assistance to the Ministry of Economy on negotiating and implementing free trade agreements with its neighboring countries (required as part of Albania's Stability Pact commitments) and meeting WTO commitments. The USG continued to strengthen the Albanian Agribusiness Council's role in serving the interests of farmer associations and agribusinesses on trade issues by assisting in their participation in negotiations on free trade agreements with neighboring countries.
Energy Sector Reform: Frequent electricity blackouts have posed one the largest barriers to economic growth, quality of life, and political stability. The sector continued to be a drain on GOA budget resources due to the need to import energy on an ad hoc basis at higher cost. Capital improvements are desperately needed - there has been no investment in generation capacity in over 15 years. Transmission and distribution facilities are still suffering from years of deferred maintenance. Until new generation, transmission, and distribution facilities are built (est. cost through 2015 -- $1.1 billion), reliance on hydropower and physical limits on the ability to transmit imported electricity will continue to hinder the reliability and security of the power sector.
To improve the sector's efficiency, the USG has provided technical assistance to the GOA to become a partner in the creation of the South East European Regional Energy Market and to adopt a Transitional Market Model as a first step toward integration into the European Community's Energy Market. This program also helped state-owned utility KESH to restructure in anticipation of privatization by creating a transmission subsidiary company that, among other things, will function as the Albanian market's transmission system operator. The USG has provided financial management assistance to KESH, developing its two-year Action Plan, evaluating its accounting hardware and software systems and needs analysis, and preparing its compliance reports to major financial lenders like the World Bank.
USG assistance and financing of partnership programs with the National Association of Regulated Utility Commissioners and ERE membership in European Regulators Regional Association strengthened the managerial and technical capacities of Albania's regulatory agency (ERE).
Property Rights: Deficiencies in land registration capacity have discouraged FDI and hindered access to domestic credit through collateral arrangements. USG assistance has supported implementation of the first registration of property in Albania's land titling process. Firms and individuals now can make transparent purchase, sale, mortgage, and other legally valid property transfers for over 212,000 properties. From a technical viewpoint, the data assembled during the process of first registration have achieved the highest level of accuracy and legal sufficiency yet seen in Albania. The GOA's Central Property Registration Agency was also assisted in creating and strengthening the technical regulations and standards related to First Registration. The USG awarded a grant to the OSCE to implement a technical assistance program for enacting and implementing a comprehensive Law on Property Restitution and Compensation. The law -- which remains a divisive political issue -- went into effect in September, and the program now focuses on technical assistance to strengthen the capacity of state institutions responsible for implementing the law.
Labor Force: With high unemployment and the competitive challenges posed by the opening of markets to global forces, Albania's workforce needs to modernize. USG education efforts improved important skills of the local labor force. A community college program focused on the formation of a highly skilled work force to respond quickly to new and emerging market needs. Training courses for 776 students (36 percent female) included English, information technology, graphic design, and computer-aided design. A Junior Achievement program assisted 25,779 students in practical business and economics training activities.
Social Sector Reform
Almost half of Albania's population is under the age of 25. Significant emigration has contributed to a decrease in the rate of population growth. Since 1992, it is estimated more than 600,000 people have emigrated, including 40 percent of the population aged 19-40. Urbanization is increasing rapidly. In 1989, 35.7 percent of the population were urban dwellers, but by 2009, 55 percent will be urbanized. Rapid internal migration is producing environmental problems and additional strains on the already problematic availability of health services, water, sewage, and other public utilities.
The most common causes of death in Albania are cardiovascular disease, respiratory diseases, cancer, and trauma. The incidence of cancer and respiratory diseases is increasing, as tobacco consumption continues to rise. Viral hepatitis and tuberculosis are the most important communicable diseases. Although Albania has only about 150 confirmed cases of HIV-infected persons, many experts believe that the actual infection rate is up to 10 times higher than that.
Abortion remains a primary means of birth control, but its incidence is decreasing. In 2003, there were 32 abortions per 100 live births, down from 41.9 abortions per 100 live births in 2000. Maternal mortality for 2003 was about 17 per 100,000 live births, while the infant mortality rate was 28 per 1,000 live births.
Shortages of clean water and electricity have undermined delivery of health services. About 90 percent of all health care workers are employed in the public sector. While the number of private facilities is thought to be growing rapidly, few are licensed and monitored by public authorities. Surveys indicate that the poor are twice as likely to lack access to key public and private health services.
USG programs strengthened the primary health care system through training programs for family planning, HIV/AIDS/STIs, and prenatal care and breastfeeding. Public access to integrated services was improved by expanding the scope of primary health care (PHC) and established key quality and management tools within the primary health care system to plan for and meet demand in a sustainable manner.
USG assistance in the primary health care sector has also mitigated the lack of capacity at the local and central levels to manage the sector, and to improve the quality of and access to PHC services. Moving from component-based interventions to more comprehensive but small-scale health reform activities in pilot areas has produced positive results. A rollout of the tested models from the pilot region to five other regions that include 15 out of 36 health districts of Albania is imminent.
Cross-Sectoral and Other Programs
Anti-Corruption: Corruption remains a major obstacle to political and economic reform in Albania. Public awareness of what constitutes corruption is growing, though it has yet to reach the point of forcing the GOA to take concrete, punitive actions against those engaging in corrupt practices. The GOA has created a special ministerial post to deal with corruption issues, enacted new legislation, and ostensibly increased law enforcement efforts directed at corruption both by police and public officials, but actual results have been spotty. Recently, the GOA announced the dismissal of hundreds of customs agents, but these dismissals, as with previous dismissals of allegedly corrupt judges, have not led to any prosecutions.
Increasing public awareness of corruption is an important U.S. assistance priority. USG assistance has strengthened the Albanian Coalition against Corruption, a network of individuals and NGOs committed to fighting corruption. The USG-supported Citizens Advocacy Office investigates corruption complaints by citizens, provides legal services to victims of trafficking, and conducts a popular, weekly, one-hour call-in TV program on corruption on a local station. More aggressive investigative journalism training programs and information campaigns targeting transparency in public administration have also raised public awareness about corruption and civic responsibility.
With USG technical assistance, the GOA enacted an assets disclosure law for the country's top 3,500 public officials. The new High Inspectorate first implemented this in 2004 for the Declaration and Audit of Assets, to which the USG provides direct technical assistance. In addition, the USG assists the Ministry of Justice Inspectorate and the Inspectorate of the High Council of Justices. USG anticorruption programs focus on the enforcement of laws that have anticorruption consequences, such as the Code of Administrative procedures and the Freedom of Information Law. The USG is also working with anti-corruption watchdog NGOs to draft and enact key legislation that will complement existing efforts to bring consequences for corrupt practices.
USG grants to NGOs helped to raise public awareness of civic responsibility in fighting corruption; provide legal support to aggrieved citizens and victims of corruption and abuse of power; increase civic participation in public decision-making; improve professionalism and ethics of public administration staff; and strengthen cooperation among law enforcement, government, and citizens' advocacy groups working against corruption.
Anti-Trafficking: Albania is a source country primarily for women and girls trafficked to EU countries for sexual exploitation. In the State Department's 2004 Trafficking in Persons Report, Albania was categorized for the third consecutive year as a Tier 2 country, meeting minimum standards and making significant efforts to bring itself into compliance with the standards of the Trafficking Victims Protection Act 2000. The USG's Three Port Strategy, initiated in 2003, placed law enforcement advisors in each of the country's principal points of entry -- Mother Teresa International Airport and the seaports of Durres and Vlora. The strategy also offers equipment and training to support the enhanced control and screening of people, luggage, and goods. The result has been a significant increase in interdiction of traffickers and victims and the disruption of trafficking networks. A U.S. advisor was also placed in the Minister of State's office to assist the GOA to draft and implement its anti-trafficking strategy and supporting action plans, and to facilitate government cooperation with NGOs working to combat trafficking in humans. The USG supported the establishment of an Organized Crime Task Force (OCTF), which had some of its greatest successes in the human trafficking area. Through September, the five OCTF offices had opened 14 formal investigations for trafficking in children or women, and 21 for exploiting women through prostitution. About 85 percent of the defendants in those cases are incarcerated pending trial or following conviction. The OCTF also initiated 120 formal investigations in other organized crime cases, with similar success.
USG programs assist in the initial protection and reintegration of trafficked victims. The USG supported development of a systematic national referral mechanism and tested models for a sustainable reintegration and shelter mechanism for victims. This activity, which ended in 2004, helped in the reconstruction of a GOA-run shelter for women, children, and illegal migrants. The USG sponsored training programs to develop economic opportunities for women and cultural activities depicting the dangers of trafficking.
The USG also assisted the Women's Advocacy Office to improve the responsiveness of the police, the prosecutor's office, and the courts regarding penal cases against human trafficking via the monitoring of decisions made by these institutions and by offering appropriate conclusions and recommendations. The Adviser to the Minister of State on Anti-trafficking participated in an IV Program focused on the strategies employed in the U.S. to combat human trafficking.
The USG has been engaged in a bilateral anti-trafficking initiative focusing on children, co-funded by five international organizations. Specific areas of focus include: prevention, protection (education/sensitization), assisted voluntary return, and reintegration of trafficked children into Albania. Unique to this program is its transnational approach, where anti-trafficking efforts are coordinated, not only within Albania, but also among Albania, Greece, and Italy. In addition, a larger anti-trafficking umbrella activity was launched to build the capacity of local NGOs and the GOA to address the vulnerability of Albanian women and girls to trafficking and re-trafficking effectively.
Security, Regional Stability, and Law Enforcement
SEED-funded efforts focused on combating organized crime; enhancing police integrity and accountability; fighting trafficking in persons, narcotics, and other contraband; and raising the professionalism and effectiveness of the Albanian State Police by developing its information management capabilities. With USG support, the Ministry of Public Order (MoPO), as part of a larger restructuring of the State Police, created the Directorate for Organized Crime (a significant elevation of this function and its importance in the police force) to address more effectively the critical problem of organized criminal groups. Training, equipment support, and full-time technical assistance have been offered to the Directorate and its five sectors: Financial Crimes, Anti-Narcotics, Anti-Trafficking, Criminal Analysis, and Special Operations.
The USG also supported the creation and successful launch of the Organized Crime Task Force (OCTF) in the five cities most affected by organized crime. After close advisory support by the USG in establishing structures, training, and selecting and vetting personnel, the GOA officially launched the OCTF in February 2004. Since then, the USG has continued to provide training, technical expertise, and investigative equipment. The USG maintained advisory support, training, and equipment to MoPO's Office of Internal Control, responsible for investigating corruption and incompetence within MoPO, resulting in a sharp increase in the number of cases investigated and prosecuted in the past year.
The Three Port Strategy, mentioned above, is a key part of USG assistance in security and law enforcement. Significant support has been offered to bring the airport and the port of Durres into compliance with international security standards. The USG developed a comprehensive action plan, with other international donors, to bring the airport closer to international standards of security. In Durres, the USG is working with the GOA to support conformity with international security regulations.
The Total Information Management System (TIMS), installed and implemented by the USG in cooperation with the EU, supports a broad spectrum of USG law enforcement objectives. Still very much under construction, TIMS has already resulted in the interdiction of criminals crossing the border. It will ultimately provide national coverage and greatly enhance case management, criminal analysis, border control, investigative support, and access to data. TIMS played an important role in Albanian-Greek cooperation to control their common border effectively for the 2004 Olympic Games.
The USG also supported NGO initiatives to address issues of security and regional cooperation, such as a project to build demilitarization and peace education capacities by retraining former military officers. Another project encouraged Albania's religious schools to become active in developing and maintaining a spirit of acceptance, harmony, and peace in inter-faith relations in Albania and the region.
In legislative reform, USG efforts aided in several important achievements this year, including a new Witness Relocation Program Law, a Terror Financing Freeze Law, an Anti-Organized Crime Law with potent asset-forfeiture and witness-protection provisions, and a series of amendments to the Criminal Procedure Code strengthening law enforcement authority to use surveillance and covert investigation, undercover operations, and cooperating witnesses. The USG continues to provide expert assistance in drafting implementing regulations and structures, intended to insure that these important new laws are fully implemented.
Weapons Proliferation: The Albanian Armed Forces have a dangerous and ill-managed stockpile of about 100,000 tons of weapons and ammunition, 90 percent of which is 30 to 60-plus years old. The ammunition is stored at about 64 sites throughout the country, sometimes in residential areas, and storage and security practices are often primitive. Thousands of tons of ammunition and large numbers of weapons were looted from military depots during civil unrest in 1997.
With UK and GOA support, the USG is currently undertaking destruction of 25,000 small arms/light weapons and 3,000 tons of ammunition. The USG also sponsored destruction of 79 Bulgarian-origin Man Portable Air Defense Systems (MANPADS) -- items much desired by terrorists -- and improved storage of Albania's remaining MANPAD stocks. In another project, 352 tons of ammunition were destroyed.
NATO's NAMSA Ammunition Incineration Project received $250,000 in SEED funding and $250,000 from the State Department's Political-Military Affairs Bureau. The four-year project is designed to develop an indigenous ammunition demilitarization facility to eliminate 11,665 tons of excess ammunition, including 80 million rounds of small arms ammunition.
Landmines: Anti-personnel landmines laid by the Serbian Army during the Kosovo conflict have contaminated about 3,500 acres of Albania's northeastern border. There are no maps of minefields in Albania. The mines have had a serious impact on village life in this impoverished region. Through assistance provided under the Nonproliferation, Antiterrorism, Demining and Related Programs (NADR) account, the USG is the largest donor to the Albanian mine-action program to rid the country of the effects of landmines by 2006. The USG also provides substantial assistance for mine victims and mine risk education.
Foreign Military Financing (FMF): Albania isone of America's most loyal allies in the Global War on Terrorism, contributing troops to efforts in Afghanistan, Bosnia-Herzegovina, and Iraq. It is an important player in assisting U.S. regional security efforts. By promoting interoperability, FMF has helped facilitate these Albanian contributions.
International Military Education and Training (IMET): In FY 2004, the IMET program had a number of positive results. The USG trained 46 students in U.S. schools; funded two Mobile Training Teams in Albania; trained 30 Albanian Coast Guard Officers; brought two 20-position audio active and seven portable labs to Albania; and provided $64,000 worth of English books and learning materials for the Albanian Armed Forces. An IMET English Language Program is supporting an English Detachment In-Country Team and in 2004 sent six students to the Defense Language Institute for the language instructor basic course. Three Mobile Training Teams in-country trained 76 Albanian officers in 2004.
ECONOMIC & DEMOCRATIC REFORMS, 1991-2004
The above data are drawn from EBRD, Transition Report (November 2004) & Freedom House, Nations in Transit, 2004 & Freedom in the World, 2004. Ratings are based on a 1-to-5 scale, with 5 representing the most advanced. Latest year observation refers to 2004 economic reform data and 2003 democratic reform data; i.e., 2004 data for democratic reforms are not yet available.
ECONOMIC STRUCTURE AND HUMAN DEVELOPMENT, 1990-2004
World Bank, World Development Indicators 2004 (2004); UNICEF, Social Monitor 2004 (2004); EBRD, Transition Report (November 2004); and UNDP, Human Development Report (2004).
MEASURES OF PROGRAM EFFECTIVENESS IN FY 2004
DEMOCRATIC REFORM
Performance Indicator: Corruption, Drawing from Freedom House, Nations in Transit 2004 as modified by "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, #9 January 6, 2005. (1-lowest, 5-highest; data based on previous calendar year)
|
FY 2002 Baseline |
FY 2003 Actual |
FY 2004 Target |
FY 2004 Actual |
|
2.17 |
2.33 |
2.33 |
2.17 |
FY 2004 Results: The Albanian Coalition Against Corruption raised public awareness and public pressure against corrupt practices in the government. Through a major advocacy campaign, non-transparent proposed price increases for public utilities were rolled back. The High Inspectorate on the Declaration and Audit of Assets got started, and watchdog NGOs monitored the first asset disclosures of public officials. The Citizens Advocacy Office handled citizen complaints about government transparency, in promoting e-government and local government transparency, and aided the implementation of the Freedom of Information Law. The biweekly "60 Minutes"-style television program on corruption now totals more than 24 episodes. A "Guide to Licensing" explaining the steps for business registration or professional licensing and a "City Taxes Guide" were published to make the relevant processes more transparent. Transparent and accessible court models were introduced to facilitate business and citizen access to judicial systems. The U.S. Justice Department's International Criminal Investigative Training Assistance Program (ICITAP) helped establish the Office of Internal Control with the police, charged with investigating internal corruption, and this office made a number of high-profile arrests. Arrests and prosecutions of senior government officials also increased, including that of a deputy minister and the deputy central bank governor. However, owing to the increased prevalence of state capture, Albania's corruption rating worsened from 2003.
Performance Indicator: NGO Development/Civil Society, Drawing from Freedom House, Nations in Transit 2004 as modified by "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, #9 January 6, 2005. (1-lowest, 5-highest; data based on previous calendar year)
|
FY 2002 Baseline |
FY 2003 Actual |
FY 2004 Target |
FY 2004 Actual |
|
3.17 |
3.17 |
3.17 |
3.33 |
FY 2004 Results: The current legal environment is generally favorable to the development of the NGO sector. The law allows NGOs to provide both goods and services. Positive change in organizational capacity and issue advocacy continues, but fundamental problems exist. The NGO sector is best characterized as an "industry" with too many NGOs to sustain the competition for dwindling donor resources. It remains highly dependent on the donor community for grants and customers for their services. There was an increase of issue-based advocacy efforts by NGOs and NGO coalitions during the year. Collectively, the multiplication of these civil society activities in FY 2004 affected such measures as the Freedom House Nations in Transit civil society score (which increased from 3.75 to 3.5) and the NGO Sustainability Index, which registered a significant one-year jump in an otherwise sluggish but upward trend over the last five years. The public image of NGOs continues to improve, though slowly and unevenly. NGO influence on public policy, while still relatively weak, is expanding gradually.
ECONOMIC AND SOCIAL REFORM
Performance Indicator: Private-sector share of GDP, Drawing from European Bank for Reconstruction and Development, Transition Report 2004, as found in "Monitoring Country Progress in Eastern Europe and Eurasia" USAID/E&E/PO, #9 January 6, 2005. (data based on previous calendar year)
|
FY 2002 Baseline |
FY 2003 Actual |
FY 2004 Target |
FY 2004 Actual |
|
75% |
75% |
77% (Embassy estimate) |
75% |
FY 2004 Results: The privatization of SMEs has largely been completed. However, delays have been encountered in the GOA's privatization of the few remaining large public properties (strategic assets), such as the Albanian Electric Corporation (KESH) and the Albanian Telephone Company (Albtelecom). The GOA, with donor community support, is moving (albeit slowly) toward privatizing these few remaining state enterprises. The relatively stable macro-economic situation, together with the GOA's efforts to create a more favorable business climate, is encouraging domestic and foreign private investments. However, the lack of reliable property registration systems in urban areas, high levels of corruption, the lack of streamlined administrative and tax/customs regulations, and inconsistent and unfair regulatory enforcement continue to hinder private sector development and growth.
Performance Indicator: Per Capita Income in purchasing power parity (PPP$) -- (Sources: World Bank and EBRD, August 2003)
|
FY 2002 Baseline |
FY 2003 Actual |
FY 2004 Target |
FY 2004 Actual |
|
$3,865 |
N/A |
$4,000 (Embassy estimate) |
$4,400 |
FY 2004 Results: There has been a steady increase in per capita GDP, from $673 in 1997 to $1,950 in 2003. However, the rate of the real growth of GDP has slowed since 1999. The rapid liberalization of the market following Albania's WTO membership, combined with a growing demand for imports, significantly increased Albania's trade deficit. As a result, manufacturing and agricultural sector production has been adversely affected, and the growing trade deficit has weakened the local economy. With the assistance of the donor community, the GOA is taking some steps to help local private enterprises improve their competitiveness in order to recapture domestic markets and penetrate new export markets. These actions are necessary to reduce the country's trade deficit, stimulate SME growth, create more employment, and increase per capita income.
Performance Indicator: SME Employment -- Employment in small and medium-sized enterprises (SMEs) as a percentage of total employment (Source: World Bank, August 2003)
|
FY 2002 Baseline |
FY 2003 Actual |
FY 2004 Target |
FY 2004 Actual |
|
9.49% |
N/A |
11.5% (Embassy estimate) |
6.49% |
FY 2004 Results: Rapid growth of SMEs is the primary hope for providing jobs and income to hundreds of thousands of unemployed and underemployed Albanians. The GOA has made special efforts to improve this sector's performance. Parliament passed an SME law to create a favorable legal environment for this sector to develop. In addition to the Export Promotion Agency and the Business Advisory Council, the Ministry of Economy has established the SME Development Agency to create and implement an SME development strategy and an action plan to remove administrative barriers. Albania also adopted the European Charter of SMEs.
SECURITY, REGIONAL STABILITY, AND LAW ENFORCEMENT
Performance Indicator: Trafficking in Persons -- U.S. State Department 2003 Trafficking in Persons Report (Tier I = highest; Tier III = lowest)
|
FY 2002 Baseline |
FY 2003 Actual |
FY 2004 Target |
FY 2004 Actual |
|
Tier II |
Tier II |
Tier II |
Tier II |
FY 2004 Results:
Albania first received a Tier II TIP ranking in 2002. Although the GOA did not meet the necessary criteria to move up to Tier I status in the 2004 reporting year, the State Department recognized it as having made significant progress in combating trafficking. Examples include the near-total curtailment of trafficking by speedboat across the Adriatic; improved interdiction capabilities at Albania's three major ports; expanded national and regional anti-trafficking sting operations; increased arrests and prosecutions; and the opening of a new shelter/re-integration center for trafficking victims. As a result of these efforts, trafficking in persons in Albania has decreased significantly.
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