Uncertainties over election result, tax policy likely to hold back new investment

Uncertainties over election result, tax policy likely to hold back new investment

 TIRANA, May 24 – Albania’s business climate got a real boost from the overcome of a tense political deadlock that undermined business and consumer confidence for several months, but uncertainties over the result of next June’s general elections until a

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Caretaker ministers take office, justice reform moves forward

Caretaker ministers take office, justice reform moves forward

TIRANA, May 23 – Albania’s parliament held an extraordinary session Monday afternoon to approve a government reshuffle based on a deal signed between Prime Minister Edi Rama and opposition leader Lulzim Basha ahead of the June 25 parliamentary elections. The

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Editorial: Better late than never: A late night agreement to the rescue

Editorial: Better late than never: A late night agreement to the rescue

Last night, the leaders of the two major parties in Albania, Edi Rama, Prime Minister and Head of the Socialist Party, and Lulzim Basha, Head of the Democratic Party and head of the Albanian opposition coalition, seemed to have reached

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Op-Ed: The French saved Europe – to strengthen it, bring the focus back to the Balkans

Op-Ed: The French saved Europe – to strengthen it, bring the focus back to the Balkans

If France was the battleground that saved Europe’s soul, the Western Balkans is where the continent can save its united future in peace and stability. By ANDI BALLA If 2017 was the make-or-break year for a united Europe, then the

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Basha-Rama deal ends Albania’s political crisis ahead of the elections

Basha-Rama deal ends Albania’s political crisis ahead of the elections

TIRANA, May 18 – Albania’s political crisis ended early Thursday morning following an agreement by Prime Minister Edi Rama and main opposition Democratic Party leader Lulzim Basha based on proposals by U.S. and EU officials that stipulate the participation of

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Seeking PM’s resignation, opposition set for ‘the largest rally ever’

Seeking PM’s resignation, opposition set for ‘the largest rally ever’

TIRANA, May 11 – Albania’s main opposition Democratic Party is to hold a large show-of-force protest rally on Saturday, expected to be “the largest ever,” according the DP’s leader Lulzim Basha. He denied there would be any violence, despite tensions,

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Editorial: Worrying scenarios on the horizon for Albania

Editorial: Worrying scenarios on the horizon for Albania

Looking to solve the ongoing political crisis in Albania, some high level international representatives visiting from both European members states and the United States are making last resort attempts to find a compromise between the two sides, keeping a flicker

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Minister admits to potential ties between police and organized crime

Minister admits to potential ties between police and organized crime

TIRANA, May 9 – Minister of Interior Affairs Fatmir Xhafaj said this week several police officials were likely bribed to cooperate or stay silent in order to help organized crime manage its marijuana cultivation and trafficking. “Particular individuals from the

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€24 mln seized in suspected money laundering accounts, assets

€24 mln seized in suspected money laundering accounts, assets

TIRANA, May 11 – Albanian law enforcement authorities seized more than €8 million in suspected money laundering transfers and accounts in 2016, a considerable part of which originating from narcotics trafficking and cultivation, according to an annual report by the

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Arrest of author who threatened EU ambassador sparks debate on media ethics

Arrest of author who threatened EU ambassador sparks debate on media ethics

TIRANA, May 10 – Kastriot Myftaraj, a controversial author and conspiracy theorist, has spent the night under arrest after publishing an article in which he appeared to call for the assassination of the EU ambassador in Albania, Romana Vlahutin. He

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                    [post_content] =>  TIRANA, May 24 - Albania’s business climate got a real boost from the overcome of a tense political deadlock that undermined business and consumer confidence for several months, but uncertainties over the result of next June’s general elections until a new government takes over next September are expected to continue holding back new foreign and domestic investment.

The uncertainties are related to the new government that will take over after the June 25 general elections and the tax policies it will apply.

Unlike previous elections, no pre-electoral coalitions have been formed ahead of the elections, and all major three parties, the ruling Socialist Party, the opposition Democratic Party and the Socialist Movement for Integration, the third largest Party which has emerged as a kingmaker since 2009, will be running alone, making the winning coalition a bid difficult to predict, at a time when a grand coalition between the two biggest parties is also possible following the recent last minute deal between the two main political forces over a caretaker government to handle elections and a series of major reforms.

The tax policy, a key concern for business representatives after Albania’s tax burden became one of the region’s highest after abandoning its 10 percent flat tax in 2013, is expected to be one of the key pillars of the main opposition Democratic Party’s electoral platform.

The opposition Democrats, who staged a three-month protest over free and fair elections and decided to enter the June 25 elections only following a foreign-mediated last-minute deal, are offering a shift back to a flat tax and lower value added tax.

Democratic Party leader Lulzim Basha says the opposition’s electoral program offers a 9 percent flat tax on personal and corporate income, compared to a current 15 percent rate on the corporate income tax and the withholding tax on dividends, rents and capital gains, and a reduction in the key value added tax by 5 percent to 15 percent.

Back in the 2013 general elections, the then-opposition Socialists also focused their electoral campaign on promises of lower taxes, fighting corruption and creating hundreds of thousands of new jobs.

The ruling Socialists are not promising tax cuts for the upcoming elections, but say easier procedures and stronger rule of law following the implementation of the long-awaited justice reform will create hundreds of thousands of new jobs and bring the economy to normality.

The uncertain situation about the new government and the tax policy it will apply is expected to remain a barrier for new foreign direct investment as some multi-year energy-related investment, the Trans Adriatic Pipeline and some big hydropower plants, remain the biggest FDI in the past three years when a slump in commodity prices significantly cut investment in the key oil and mining sector.

Albania's FDI hit a record of about 1 billion euros in 2016, mainly because of some major energy-related projects such as the TAP pipeline and two big hydropower plants by Norway's Statkraft, raising concerns about the progress of FDI in the post-2020 period when these projects are completed.

The tourism sector, where some big investment have been undertaken by Albanian and foreign investors, is expected to somehow compensate, while a pickup in commodity prices could reinvigorate oil and mining investment following the mid-2014 slump.

The high tax burden, the frequent changes in tax policies and the inefficiency of the justice system are some of the main concerns for foreign investors in Albania.

Investors complain Albania’s high tax burden makes it less competitive compared to other regional countries applying flat tax regimes of about 10 percent despite the country’s geographical advantage, while unclear property titles and inefficient and corrupt judiciary hold back key investment and know-how.

Since 2014, when Albania abandoned its 10 percent flat tax regime, the corporate income tax and the withholding tax on dividends, rents and capital gains have increased by 5 percent to 15 percent, making the tax burden in the country one of the region’s highest.

 

New growth agenda

Having almost exhausted its traditional sources of growth, Albania has been trying to promote new drivers of growth to handle the declining construction and remittance-fuelled growth in the pre-crisis era. Albania’s economy has been growing by 1 to 3 percent since 2009 compared to a pre-crisis decade of 6 percent annually, the ideal growth rate estimated to bring welfare to one of Europe’s poorest countries.

Experts say the government should focus on the rapidly growing tourism sector and agriculture, a traditional sector employing about half of the country’s population but providing only a fifth of the GDP, unveiling the huge inefficiency and underdevelopment of this key sector.

“I think the traditional sources of growth have already been exhausted and Albania needs to find other sources that accelerate economic growth at a time when agriculture and tourism remain largely untapped potentials,” says Zef Preçi, the director of the Albanian Center for Economic Research.

“Unfortunately, there is much rhetoric on these sectors, and little investment and few policies supporting domestic employment and promoting exports which as a result would increase the country's competitiveness," he says.

"The increased impact of business lobbying on decision-making, also known as oligarchy, is very sophisticated which means collegial decision-making or other forms are used to pre-determine the beneficiaries of the taxpayer income in the future," he adds, hinting a series of concession contracts that have been awarded to some of the country's leading businesses in key public sectors, in which the government will either pay the cost of the investment in installments or guarantee the revenue of concessionaires.

 

Businesses hail crisis overcome

Business representatives have hailed the end of the three-month political stalemate ahead of the upcoming general elections, as a solution paving the way for restoring confidence among investors and households.

"In the past 27 years, Albanian entrepreneurship has been a regular consumer of political crises in the country and has continuously suffered a decline in its capacities, lagging behind consolidation and standardization to be competitive in the region," says Arben Shkodra, the deputy chair of the Tirana Chamber of Commerce and Industry.

"For four months in a row, the blockage of political dialogue and the parliamentary boycott, created a concerning situation for Albanian entrepreneurship,” he says.

"We demand political forces to shift their attention to the economy and entrepreneurship to immediately establish communication and constructive dialogue so that our demands and recommendations become part of their economic agendas,” he adds.

Tour operators have also hailed the political deal ahead of the elections as the country gears up for its peak tourism season.

"We are hopeful of an efficient tourism this summer. The political situation is improving and of course this has a huge impact," says Zak Topuzi of the Hotels and Tourism Association.
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                    [post_content] => TIRANA, May 23 – Albania’s parliament held an extraordinary session Monday afternoon to approve a government reshuffle based on a deal signed between Prime Minister Edi Rama and opposition leader Lulzim Basha ahead of the June 25 parliamentary elections.

The reshuffle means the opposition Democratic Party was able to nominate the deputy prime minister and several ministers as caretakers to make sure the public administration does not give the ruling Socialist Party an unfair edge in the elections. These replacements included the ministers of interior, finance, justice, education, health and social welfare. 

Following the deal between Rama and Basha, the parliament also approved the remaining laws and regulations for the vetting process of judges and prosecutors that are part of the justice reform, one of the main conditions of the Socialists in the deal.

Several other parts of the Rama-Basha deal were also approved by the lawmakers, including handing the leadership of the Central Elections Commission to the opposition.

The session marked the return of the Democrats to assembly, three months after their anti-government protests that kicked off in February.

The parliament was summoned following the decrees of President Bujar Nishani to appoint the new deputy prime minister and six ministers.

The Democratic Party recommended Ledina Mandia as Albania’s new deputy prime minister. Mandia has held the post of State Advocate and advisor to President Nishani in the past.

The former commander of the Special Army Units, Col. Dritan Demiraj, has been appointed interior minister while the director general of the Court of Audit, Helga Vukaj will be Albania’s new minister of finances, replacing Arben Ahmetaj.

Gazmend Bardhi will be minister of justice, Mirela Karabino will be Minister of Education, Arben Beqiri will be minister of Health, while Xhulieta Kertusha will be the minister of social welfare.

The Central Election Commission will be chaired by Klement Zguri while Erinda Ballanca will be the country’s new Ombudsman.

Lawmakers also approved the establishment of the vetting commissions and legal amendments to electoral reform

The government reshuffle was the result of an agreement signed by the country's two key political leaders which saw the postponement of elections by one week to June 25.

Prime Minister Rama said that the new ministers will be “the custodians of Albania’s electoral ethics,” and will make sure that “the administration will not be misused during elections.”

Having the caretaker ministers avoided a further deepening of the political crisis as the opposition had threatened it would not participate in the elections as it said they would not be free and fair under a full Socialist administration.

This is Albania’s third provisional caretaker government with representatives of both left and right wing parties.

Back in 1991, the country’s first caretaker government was headed by Vilson Ahmeti while the second was established in 1997, as Albania was engulfed by popular unrest as a result of electoral fraud and Ponzi schemes.

 

 
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                    [post_content] => Last night, the leaders of the two major parties in Albania, Edi Rama, Prime Minister and Head of the Socialist Party, and Lulzim Basha, Head of the Democratic Party and head of the Albanian opposition coalition, seemed to have reached a final agreement after a protracted political crises that risked the boycott of general elections by the opposition.

Details of the agreement are yet to be made public. A sigh of relief on being rescued from dark potential scenarios, which this paper has outlined in previous editorials, was palpable almost all over. Many people watched on their screens, with mixed feelings of disappointment, that their life is still hostage to these political games, and of joy that the worst had been avoided.

As the two key politicians were leaving the parliament, they stopped for a moment at the gate to talk to the waiting journalists. It was exactly these journalists, camped there and waiting patiently to do their jobs, exhausted and yet excited to see the two key figures come out together, that insisted to ask them to please shake hands. A swift handshake with a very casual movement followed. It was unfelt yet the journalists applauded and laughed with relief.  Their exasperated joy was so symbolic of the popular sentiment of the times of the ordinary citizens that do not count themselves among party activists in this deeply politicized society.  

The agreement feels still vulnerable, feeble, and delicate. It feels like things could go wrong again, easily, quickly. Details have still to be ironed out.  A lot of water has gone under the bridge, much of the trust and basic ethics has been violated between sides. People on both camps have been polarized to the extreme in these tough days. Many others have joined the ranks of cynics giving up all hope in the political development of the country, abstaining, refusing to participate. The recovery will be tough.

However, if the agreement truly falls in line with the proposals of European and American envoys, it will provide some key open opportunities for the development of democracy in Albania, for the strengthening of accountability, the progress in implementing the decriminalization process as well as invest new positive energy into the country’s European integration process which is sorely stuck.

The elections shall be so much better, more representative and with a real potential of pushing forward a good agenda for Albanian citizens of all sides.

Good news from Albania’- tweeted European MPs today in reaction to the agreement. In comparison to their enthusiasm, the feeling in Albania is more cautious. In spite of this there is room for optimism. We might really be, finally, out of the woods.

 
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                    [post_content] => If France was the battleground that saved Europe's soul, the Western Balkans is where the continent can save its united future in peace and stability.

By ANDI BALLA

franceIf 2017 was the make-or-break year for a united Europe, then the French presidential election marked the decisive moment on whether a trend of nationalism and populism that swiped around the world in 2016 would be able to create a large enough tsunami to wipe away the European Union. Luckily, French voters decided that an anti-establishment vote need not be an anti-EU vote, saving not only the European Union in the process, but also the positive sense of a shared destiny and belonging for Europeans around the continent. Most experts could see that while the European Union could survive Brexit – the departure of a member state that was not a founding member and due to its history and location always kept the union at arms length – it would not survive without France, one of the main pillars of the union.

So when the French elected the pro-EU Emmanuel Macron over Marine Le Pen, the French version of extremist nationalists and populists, pro-EU people everywhere breathed a sigh of relief. A united Europe had been saved.

And perhaps nowhere was that relief deeper than in Southwestern Europe, and the Western Balkans in particular, where the strength of European Union had been for more than a decade the best guarantor of peace and stability, even-though most of the countries of the region are not yet members of the European Union.

Albania, Bosnia-Herzegovina, Kosovo, Macedonia, Montenegro and Serbia are all fragile states with a history of conflict and undemocratic rule. They are poor by EU standards, and the people are largely not happy with the their leaders or their economic opportunities. The only thing that kept them for more than a decade stable and away from thoughts of taking over the neighbors was the idea of becoming members of the European Union – what the people of Southeast Europe have seen as a borderless, wealthy utopia unlikely to become a reality for the region for a generation or two, but which is something to aspire to nonetheless.

Then the global economic crisis and the populists came with their us-vs-them rhetoric. The “us” became the wealthy and advanced countries of the European Northwest and the “them” became the unfair image of the backward, conflict-prone peoples of the Southeast. It is no wonder then that the first reaction of the European Union leaders was to make sure to tell European voters enlargement in the Balkans was no longer a priority and would not take place for more than a decade. While the message was technically true, EU experts don't believe that the Western Balkan countries would not be able to meet the criteria to become EU members for another decade or so, the image it created in the Balkans was that an EU in crisis means there is no point of trying any longer, and so old troubles started to resurface.

One after another the states fell into differing modes of crisis, with the worst case scenarios starting to pop up again – a potential civil war in Macedonia, a Serb army intervention in Kosovo, a coup in Montenegro, a break up of Bosnia-Herzegovina and the perpetual deeply divisive political environment that has kept Albania weak since the fall of communism. Without the hope of a European future, what point is there to be stable and good?

To be fair, EU leaders and diplomats kept up a good front. “The EU door is open for the region” was the most repeated talking point. There was only one problem with the rhetoric. The talking points were identical to those spelled out 15 years ago -- there was no real progress. And thus, the idea of waiting forever and frustration started to take root. Many people people in the region no longer believe the European utopia is going to be available to them in their lifetime and thus are increasingly removing the pro-EU pressure from their leaders – many of whom pay lip service to a shared European future but show little interest in abiding by the best values of democracy and fairness EU brings forward. 

To make things worse, the region risks becoming a new football pitch for geopolitical players. The United States, which for decades has played a key stabilizing role and a helpful hand to move Balkan countries toward the European Union has become distracted by its own populist upheaval with the recent presidential elections and their aftermath. Several visits in the region by U.S. officials and lawmakers have not done enough to alleviate regional fears that the United States might not be able to have as strong of a role as it has in the past. On the other hand, the region is clearly seen by Russia as a place where it can have an influence as a counterbalance to those in the region hoping for a Euro-Atlantic future. Nowhere is that influence stronger than in countries like Serbia and other Serb-inhabited areas of the Balkans, where there is a historical affinity with Moscow. 

The good news this month is that the European Union is here to stay and can only grow stronger and better from this point. For the Western Balkans that is paramount. The next should be an immediate and strong focus by the European Union on the Western Balkans, tied to a firm admission date promise for its members. Delaying endlessly is not an option. If France was the battleground that saved Europe's soul, the Western Balkans is where the continent can save its united future in peace and stability.

twitter.com/andiballa
                    [post_title] => Op-Ed: The French saved Europe – to strengthen it, bring the focus back to the Balkans
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                    [post_content] => TIRANA, May 18 – Albania’s political crisis ended early Thursday morning following an agreement by Prime Minister Edi Rama and main opposition Democratic Party leader Lulzim Basha based on proposals by U.S. and EU officials that stipulate the participation of all parties in the parliamentary elections.

At the end of an intense marathon of discussions that lasted over three hours Basha said that the accord is based on the so called “McAllister Plus” package which was offered to parties by the U.S. Deputy Assistant Secretary of State Hoyt Brian Yee and named for an earlier proposal by German MEP David McAllister.

“The agreement will be formalized within 24 hours and then we will make public statements”, Basha said, adding that what was considered impossible in February is now a reality.

"From tomorrow, we will get ready to give Albanians free and fair elections," he said.

Standing next to the opposition leader, Prime Minister Rama said he agreed.

“I agree 100 percent with what Mr. Basha said,” Rama said.

The Democratic Party leader said that the opposition would close its tent erected in front of the Prime Minister’s office building over 90 days ago when the agreement achieved was spelled out and formalized.

As of press time, the agreement is being spelled out, but there is no indication the sides are backing down.

The “McAllister Plus” package includes the parliamentary approval of vetting process, the postponement of the parliamentary election scheduled on June 18, 2017 and several minister posts in charge of the electoral process allocated for the opposition's approval.

The Democrats have reportedly agreed to also participate in the parliamentary commissions which will select the vetting commissions for the country’s 800 judges and prosecutors.

The Democratic Party-led opposition had demanded the resignation of Prime Minister Rama and the formation of a caretaker government for nearly three months. They have also refused to register as electoral entities for the forthcoming elections.

With the new accord, the opposition given up on its quest for a caretaker government and will collaborate with Prime Minister Rama and his ministers in in managing the electoral process.

The accord was welcomed by the international community and foreign embassies in the country.

“Bravo to the Albanian people for their patience and their belief in the strength of Albania’s democracy. Bravo to Edi Rama and Lulzim Basha for their personal leadership and courage in forging this deal. Bravo to colleagues from the European Union, the OSCE and Washington for their steadfast support for Albania. We eagerly look forward to an election with the participation of all of Albania’s political parties,” U.S. Ambassador Donald Lu said in a press release.

The EU Delegation took to Twitter to congratulate Albania on the agreement for free and fair elections saying the accord “is in the best interests of all citizens of the country.”

The new accord means that parliamentary elections will no longer be held on June 18. While it’s up to the parties to detail the modalities of their agreed package, several media outlets report that elections could be set for as late as July 16.

Meanwhile the Electoral College has postponed its ruling on the legitimacy of the electoral rolls submitted by political parties at the CEC, based on a request deposited by the Agrarian Party. Following the latest developments, the Agrarian Party has decided to withdraw its request, saying that June 18 is no longer a legal election date.

Long process led to deal

Political parties had failed many times to reach consensus and resolve the political crisis in the country ahead of the June 18 parliamentary elections. Democratic Party and the Socialist Party held several meetings on Tuesday to discuss about the so called “McAllister Plus” package, tabled by the two European Parliament envoys earlier this month. At first, the main opposition coalition said it had accepted the package.

“Opposition has decided to say ‘Yes’ to the integrated McAllister Plus proposal and it is time for Rama [Prime Minister] also to say ‘Yes’ and pave the way to jointly ensure through dialogue the proposal becomes completely applicable,” the opposition coalition said in its statement.

The Democratic Party said that the McAllister package included the appointment of a deputy PM nominated by the opposition, four caretaker ministers to prevent the misuse of public administration, and the chairmen of Central Election Commission and Ombudsman by the opposition.

The package also included proposals to amend the Electoral Code which would guarantee that elections are free and fair as well as the establishment of a new ministry chaired by the opposition which would enable electronic vote in the future polls.

Some of the proposals include amendments in the bill on transparency for political party financing, tougher penalties for vote rigging and use of public administration in the elections.

Both parties also talked about postponing elections until July 16 and the return of the opposition to parliament to approve the Vetting commissions, part of the judiciary reform.

Postponement of elections was one of the key elements of the package; however, ruling Socialist Party leader and Prime Minister, Edi Rama, had refused to give in and withdrew some of his offers to the opposition and talks failed. He insisted that elections must be held on June 18 and blamed the Democrats of mocking the whole process.

The Socialist Party issued a statement Wednesday, regretting the “opposition’s abuse with the serious and delicate process of talks.”

“The commitment and efforts of our strategic American partners is more than welcomed and is considered as the last chance for the Democratic Party to give up on its blackmail and return to the democratic race,” the statement read.

The Socialist Party said that it strongly supported the last efforts to solve the crisis and awaits the participation of Democratic Party in the elections scheduled for June 18. However, it said that no one is above the Constitution.

“No political party can be bargain with these rules,” the statement read.

 
                    [post_title] => Basha-Rama deal ends Albania's political crisis ahead of the elections
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                    [post_content] => TIRANA, May 11 – Albania's main opposition Democratic Party is to hold a large show-of-force protest rally on Saturday, expected to be “the largest ever,” according the DP's leader Lulzim Basha.

He denied there would be any violence, despite tensions, saying he would bring his own family, including his children, at the rally.       

The large political protest will begin at the Democratic Party headquarters and will end at the Prime Minister’s Office building, with the main demand being that Prime Minister Edi Rama resign to allow a caretaker government to manage the upcoming elections.

The Democratic Party and Basha have been under immense international and domestic pressure to participate in the elections, scheduled for June 18, but they say they won't unless Rama resigns. The Democrats say the Socialist-led government will use money and intimidation from organized crime to rig the elections.

Violence fears dismissed by Basha

The U.S. Embassy has warned its citizens to avoid areas of demonstrations and exercise caution, a common practice ahead of political rallies in Albania.

Last week, former Prime Minister and former Democratic Party leader Sali Berisha did not dismiss the possibility of escalation of the protest and said that the party might face problems to manage the crowds.

“The management of this protest is going to be the biggest problem. Sometimes you can manage the crowd and other times it manages you. This is the problem," Berisha said in an interview for News 24 television.

Basha, on the other hand, has said that the protest would be a “peaceful war to stop crime and drugs from taking the country hostage.”

He said that on May 13, the opposition aims to launch “a new New Republic.”

Appeal at Electoral College to halt elections

Albania's Democratic Party-led opposition has made a last-ditch appeal to the Electoral College to void the decision of the Central Election Commission to accept the list of electoral candidates for 15 political parties, which the opposition says was done in violation of legal deadlines set by the Electoral Code.

The right wing party says that Electoral College must void the CEC decisions and deregister the parties, because the deadline for the submission of electoral rolls was April 28 and not April 29.

The code stipulates that electoral rolls must be submitted 50 days before the elections of June 18.

In his address to the party supporters, Lulzim Basha, the opposition leader said that electoral rolls are illegal and that the whole process is legally collapsed.

Opposition groups led by the Democratic Party have not registered for the parliamentary elections scheduled for June 18. They have accused the ruling majority of trying to rig the elections.

It has been 84 days since the opposition has boycotted parliament and launched an ongoing anti-government rally demanding the resignation of Prime Minister Edi Rama.

Last month, the Democrats staged a nationwide protest blocking main roads for over an hour. They also had plans to organize a rally on May 7 in Kavaja as the city was supposed to elect its mayor. However, the ruling majority canceled the elections over fears of possible acts of violence.
                    [post_title] => Seeking PM’s resignation, opposition set for ‘the largest rally ever’      
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                    [post_date] => 2017-05-12 10:48:24
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                    [post_content] => Looking to solve the ongoing political crisis in Albania, some high level international representatives visiting from both European members states and the United States are making last resort attempts to find a compromise between the two sides, keeping a flicker of hope alive to bring back some semblance of normalcy to the situation. 

The resolve of the internationals to keep pushing is commendable. It comes in the face of the harshest and most vocal rebuttal they have ever witnessed in Albania while attempting to broker dialogue and resolve gridlocks. 

However, most signs would indicate that Albania for the first time after 26 years of democratic elections will enter in an electoral process without the major party of the opposition, in this case the Democratic Party. As the ballots are being printed with a limited number of parties written on them, as the Central Election Committee is distributing public funds for the campaign and exempting the DP from them, all the procedural steps are going onward regardless of the boycott of the opposition. The international community in Tirana including several important western embassies and the mission of the election observers have publicly declared that elections shall be recognized as regular despite the decision of the DP. 

However the scenarios that seem likely for the short and medium term are not very optimistic. The worst case one is the possibility of violence and instability. This scenario foresees violent acts and clashes between opposition militant supporters and other unaffiliated criminal elements with the state police or even worse citizens who will approach voting centers. This seems unlikely given that the boycott of the opposition and the associated rallies have been so far largely peaceful. However, unlikely is not the same as improbable.  Albania is very vulnerable to outburst of violence and would suffer tremendous hazard should this be the case. Politicians who toy with notions of civic disobedience should draw clear red lines and respect them against inciting violence. 

Even if this nightmare does not materialize, the election result will be contested and certainly not representative of the entire fabric of the Albanian citizenry. In this context authoritarianism might find fertile soil to bloom without much concern for check and balances. A grand unconstrained majority will have dangerous leeway to go through with many laws and reforms that will be discussed superficially and passed in a rushed way to use the moment. Elections might need to be repeated sooner than many people think. 

Most importantly, the circular repetition of political gridlock in Albania is more and more resembling a torturous hamster wheel in which the whole society turns exhaustively with no clear perspective in sight. The unstable conditions, the never ending scuffle is an obstacle to economic development as foreign investment as well as strategic projects seek more advantageous conditions present elsewhere.

In addition, given the unfavorable context and the upheaval in the west, both the European Union and in the United States, attention and focus from the international community has been retreating from the entire region. The willingness of the international community to mediate such crisis and tolerate such behavior is on a sharp decline. 

Under these conditions, Albania should forget about receiving a date for the opening of the negotiations and progressing on the path of European integration. 

The aggressive polarization and the lack of consensus over major reforms that are supposed to build the rule of law institutions in Albania are bound to wane support in the ranks of the EU for the country. Even enthusiastic backers of Albania’s candidacy have made this very clear.   

Finally, the Albanian citizens who don’t find themselves in either of the camps are increasingly checking out from the task to determine their political fate, they are turning their back to the television screens and to the ballot box with equal disgust. They are seeking ways to immigrate or live their lives in pursuit of some well being, while pretending that nothing is going on. This rise in disenchantment, apathy and even cynicism will have long term consequences for the democratic development of Albania, far beyond the duration of the current installment of the crisis. 

Given the fact that constitutional and legal time and procedural limits have been exhausted, a compromise regarding this round of elections is farfetched. However, it is not impossible. In the meantime there is much to be done in using opportunities for improving communication, restoring trust and alleviating some of the tension between the political sides. If Albanian politicians don’t want to risk the negative scenario implications they should pay more attention. 

 
                    [post_title] => Editorial: Worrying scenarios on the horizon for Albania
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                    [post_content] => TIRANA, May 9 – Minister of Interior Affairs Fatmir Xhafaj said this week several police officials were likely bribed to cooperate or stay silent in order to help organized crime manage its marijuana cultivation and trafficking.

“Particular individuals from the state police have had ties with marijuana cultivators or traffickers. They have been paid for their silence or collaborated with them. I think that some local police directors have kept silence over the phenomenon on purpose,” Xhafaj said in an interview broadcast by a private television station.

In his first interview since his appointment as Minister of Interior Affairs, Xhafaj admitted that several police directors were sacked and transferred on purpose, driven by the government’s fight against drugs.

About 30 police officials were dismissed from duty earlier in April, few weeks after the discovery of 13 tons of dried cannabis hidden in an abandoned warehouse in the Pagri village, Permet district, 240 kilometers south of the capital, Tirana.

Three people were arrested while police officials claimed that the building had been empty when checked by officers in March.

Minister Xhafaj said that police officials had to be aware of the massive amount of drugs hidden in the area.

In the past three years, Albania has become the epicenter of the European drugs trade, especially marijuana. Organized crime and political corruption in the country has increased while the ruling majority has been repeatedly under fire over alleged ties with drug traffickers.

Minister Xhafaj admitted that there is an increase in drug cultivation in the country but says that organized crime dealing with drug trafficking has expanded.

“There is an expansion of criminal activity on the ground. It has moved from a centralized activity happening in a well determined territory popular with production and trafficking of cannabis. After the site was hit, we witnessed a revival of the other criminal groups which flourished to replace the former drug pins,” Xhafa said.

Opposition parties have accused the Socialist-led government of allegedly using drug money to buy off elections, but Minister Xhafaj dismissed these allegations, drawing comparisons with the lawless village of Lazarat, which rose to fame during the Democratic Party-led government.

“How do explain that Lazarat was the home of Democratic Party in the district of Gjirokastra, and yet the Socialist Party won the elections. How do you explain the fact that Socialists lost the elections in Dukagjin area, considered one of the main marijuana cultivation sites,” Xhafaj said.

Last year as police destroyed 2.5 million cannabis plants and identified over 5,024 plantation sites, some of them protected by armed villagers.

The country faces a geographic spread of marijuana. The fact is that the more police destroy marijuana, the more appears to be grown in the country. Authorities recently launched a national five-year strategy against narcotics which aims to boost joint institutional efforts to engage in a frontal fight against narcotics and organized crime.

In addition, the government has okayed the involvement of military in the fight against drug trafficking.

Minister Xhafaj announced that May 15 will mark the beginning of a new aerial inspection mission and police operations on site.

Albania will receive help from Italian authorities to fight the multi-billion-euro industry which has flourished at an unprecedented rate.

Authorities believe that 2017 will be the peak of the fight against narcotics, a phenomenon which has named Albania as a haven for organized crime and drug traffickers

 
                    [post_title] => Minister admits to potential ties between police and organized crime
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                    [post_content] => TIRANA, May 11 - Albanian law enforcement authorities seized more than €8 million in suspected money laundering transfers and accounts in 2016, a considerable part of which originating from narcotics trafficking and cultivation, according to an annual report by the country's Financial Intelligence Unit. Another €16 million was seized in real estate assets of suspected criminal origin, says the Agency for the Administration of Seized and Confiscated Assets.

The amount of accounts seized by the prosecutor's offices was about three times lower compared to about €28.7 million seized under precautionary police orders.

While the origin of the proceeds remains unknown for about three-quarters of the 411 cases reported to police and prosecution authorities in 2016, financial intelligence officers say they identified 30 suspected cases where the origin of the proceeds is trafficking of narcotics, 17 cases of fraud, 11 cases of cross-border tax evasion and 10 cases of people with criminal records.

Cannabis cultivation and trafficking has seen a sharp increase in the past couple of years, with its crime proceeds estimated to have been invested in real estate and other money laundering activities.

Albanian police say they destroyed 2.5 million of cannabis plants in 2016 spread over a 213 hectare area nationwide, a 3-fold increase compared to the whole of 2015, making Albania Europe's largest cannabis producer.

Authorities also reported 8 cases of suspected terrorism financing transfers. While the country has not faced any act of terrorism so far, authorities have prevented a few suspected cases and there have been no new reported cases of Albanians travelling to Syria or Iraq to join IS fighters as of 2015.

The amount of accounts and transfers seized in 2016 is slightly lower compared to €11.2 million seized in 2015 and about €14 million in 2014. If finally confiscated under a court decision, the amounts shift under the state ownership and a considerable part also goes to support and rehabilitate trafficking victims.

Authorities identified family members of politically exposed individuals, people with criminal records and young men in their twenties involved in money laundering schemes. In one case, authorities seized €1.87 million from a company involved in suspicious transfers to offshore tax havens.

As a rule, banks and other financial institutions have to report on transactions of more than 1 million lek (€7,000) while the Property Registration Office reports on contracts worth more than 6 million lek (€42,000).

Meanwhile, the Agency for the Administration of Seized and Confiscated Assets says another 2.13 billion lek (€15.6) million was seized in real estate assets whose origin is suspected of crime proceeds.

The agency's director Artur Kala says 54 bank accounts worth 1.1 billion lek (€8.1 mln) and 89 real estate assets worth 2.13 billion lek (€15.6) were seized in 2016.

Earlier this year, Albania strengthened its anti-mafia law on third party confiscation, extended confiscation and precautionary freezing of assets.

In its latest country report, the European Commission says only less than half of organized crime cases in Albania lead to confiscation of assets.

"Financial investigations are not systematically and effectively used to target criminal groups. Precautionary freezing of assets is rarely applied during the initial phase of an investigation. Proceeds of crime often disappear, resulting in a poor track record of confiscated assets at the time of the final conviction," says the report.

"Less than 50 percent of organized crime cases lead to confiscation of assets. Leaks to the press, violations of the secrecy of investigations and endangerment of the safety of police officers and prosecutors are still frequent," it adds.

Albania lost $1.2 billion in illicit financial flows from 2004 to 2013 at an average of $123 million annually during the decade which ranks the country 118th among 149 economies, according to a study published by Global Financial Integrity, a U.S.-based research and advocacy organization.

The study shows illicit financial flows, which involves illegal movements of money or capital from one country to another, dropped to $18 million in 2013, down from $36 million in 2012, $255 million in 2011 and a record high of $305 million in 2008.

The illegal capital outflows stem from tax evasion, crime, corruption, and other illicit activity.

Albania has been removed from the list of countries under continuous monitoring on money laundering and financing of terrorism, the Finance Ministry says citing a newly published report by Paris-based Financial Action Task Force (FATF) inter-governmental body.

In 2015 Albania was also removed from the watch list of Moneyval, the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism, a monitoring body of the Council of Europe.
                    [post_title] => €24 mln seized in suspected money laundering accounts, assets
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                    [post_date] => 2017-05-10 14:20:03
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                    [post_content] => TIRANA, May 10 - Kastriot Myftaraj, a controversial author and conspiracy theorist, has spent the night under arrest after publishing an article in which he appeared to call for the assassination of the EU ambassador in Albania, Romana Vlahutin.

He was freed after prosecutors decided not to press charges, but not before his arrest sparked a national debate over media ethics and freedom of speech.

Using lurid language to insult Vlahutin and her career, Myftaraj ended the article first published on his Facebook page on May 7 by writing: "Every Albanian who loves his country can kill Romana, and this is going to be an anti-terrorist attack, not a terrorist one."

Police issued a statement saying Myftaraj's article made “open calls for violent acts against the constitutional order," which is a crime. If his case went to court, he would have faced three years in prison.

In his article, Myftaraj accuses the EU ambassador of working with Prime Minister Edi Rama against the interests of Albania toward the creation of a New Yugoslavia.

Many media outlets published the article titled “The weird adventures of a Croatian w***e” in full or in part following the arrest, leading to a debate over media ethics.

A journalists' union called on authorities not to prosecute Myftaraj, calling the arrest “extreme.” Admitting that the language used by the author was unethical, the Albanian Journalists Union noted that “arrests and imprisonments as a result of the exercise of free speech in Albania are a thing of the past that should not be repeated.”

The union also urged media editors to be more ethical in what they allow to be published.

Albania's most renowned writer, Ismail Kadare, wrote a letter to Vlahutin expressing his sadness for what she had to endure and his full support for her.

"This is not about clarifying what the insult of a non-normal person is and how little connection it has to do with an entire people and society. However, that insult was published by the press of my country and, in one way or another, it made us all responsible," Kadare wrote in the letter, translated into English and published on the EU Delegation's Facebook page. "Although a known writer, I will not take it upon myself to respond about what may happen in this country, for good or for bad. I only wanted to share with you the sorrow that can be felt by a person who, in the country where she comes to help overcome troubles, is faced with such ingratitude."

Kadare's letter, added, "Dear Romana Vlahutin, I would be willing to apologise to you on my knees to assure you that the gratitude for you is and will be intact."

Myftaraj is well known conspiracy theorist who writes provocative articles and books and is no stranger to law suits. He had earlier faced charges of promoting religious hatred for his prolific writings against practicing Muslims and calling for the ban of Islam in Albania.

 
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            [post_content] =>  TIRANA, May 24 - Albania’s business climate got a real boost from the overcome of a tense political deadlock that undermined business and consumer confidence for several months, but uncertainties over the result of next June’s general elections until a new government takes over next September are expected to continue holding back new foreign and domestic investment.

The uncertainties are related to the new government that will take over after the June 25 general elections and the tax policies it will apply.

Unlike previous elections, no pre-electoral coalitions have been formed ahead of the elections, and all major three parties, the ruling Socialist Party, the opposition Democratic Party and the Socialist Movement for Integration, the third largest Party which has emerged as a kingmaker since 2009, will be running alone, making the winning coalition a bid difficult to predict, at a time when a grand coalition between the two biggest parties is also possible following the recent last minute deal between the two main political forces over a caretaker government to handle elections and a series of major reforms.

The tax policy, a key concern for business representatives after Albania’s tax burden became one of the region’s highest after abandoning its 10 percent flat tax in 2013, is expected to be one of the key pillars of the main opposition Democratic Party’s electoral platform.

The opposition Democrats, who staged a three-month protest over free and fair elections and decided to enter the June 25 elections only following a foreign-mediated last-minute deal, are offering a shift back to a flat tax and lower value added tax.

Democratic Party leader Lulzim Basha says the opposition’s electoral program offers a 9 percent flat tax on personal and corporate income, compared to a current 15 percent rate on the corporate income tax and the withholding tax on dividends, rents and capital gains, and a reduction in the key value added tax by 5 percent to 15 percent.

Back in the 2013 general elections, the then-opposition Socialists also focused their electoral campaign on promises of lower taxes, fighting corruption and creating hundreds of thousands of new jobs.

The ruling Socialists are not promising tax cuts for the upcoming elections, but say easier procedures and stronger rule of law following the implementation of the long-awaited justice reform will create hundreds of thousands of new jobs and bring the economy to normality.

The uncertain situation about the new government and the tax policy it will apply is expected to remain a barrier for new foreign direct investment as some multi-year energy-related investment, the Trans Adriatic Pipeline and some big hydropower plants, remain the biggest FDI in the past three years when a slump in commodity prices significantly cut investment in the key oil and mining sector.

Albania's FDI hit a record of about 1 billion euros in 2016, mainly because of some major energy-related projects such as the TAP pipeline and two big hydropower plants by Norway's Statkraft, raising concerns about the progress of FDI in the post-2020 period when these projects are completed.

The tourism sector, where some big investment have been undertaken by Albanian and foreign investors, is expected to somehow compensate, while a pickup in commodity prices could reinvigorate oil and mining investment following the mid-2014 slump.

The high tax burden, the frequent changes in tax policies and the inefficiency of the justice system are some of the main concerns for foreign investors in Albania.

Investors complain Albania’s high tax burden makes it less competitive compared to other regional countries applying flat tax regimes of about 10 percent despite the country’s geographical advantage, while unclear property titles and inefficient and corrupt judiciary hold back key investment and know-how.

Since 2014, when Albania abandoned its 10 percent flat tax regime, the corporate income tax and the withholding tax on dividends, rents and capital gains have increased by 5 percent to 15 percent, making the tax burden in the country one of the region’s highest.

 

New growth agenda

Having almost exhausted its traditional sources of growth, Albania has been trying to promote new drivers of growth to handle the declining construction and remittance-fuelled growth in the pre-crisis era. Albania’s economy has been growing by 1 to 3 percent since 2009 compared to a pre-crisis decade of 6 percent annually, the ideal growth rate estimated to bring welfare to one of Europe’s poorest countries.

Experts say the government should focus on the rapidly growing tourism sector and agriculture, a traditional sector employing about half of the country’s population but providing only a fifth of the GDP, unveiling the huge inefficiency and underdevelopment of this key sector.

“I think the traditional sources of growth have already been exhausted and Albania needs to find other sources that accelerate economic growth at a time when agriculture and tourism remain largely untapped potentials,” says Zef Preçi, the director of the Albanian Center for Economic Research.

“Unfortunately, there is much rhetoric on these sectors, and little investment and few policies supporting domestic employment and promoting exports which as a result would increase the country's competitiveness," he says.

"The increased impact of business lobbying on decision-making, also known as oligarchy, is very sophisticated which means collegial decision-making or other forms are used to pre-determine the beneficiaries of the taxpayer income in the future," he adds, hinting a series of concession contracts that have been awarded to some of the country's leading businesses in key public sectors, in which the government will either pay the cost of the investment in installments or guarantee the revenue of concessionaires.

 

Businesses hail crisis overcome

Business representatives have hailed the end of the three-month political stalemate ahead of the upcoming general elections, as a solution paving the way for restoring confidence among investors and households.

"In the past 27 years, Albanian entrepreneurship has been a regular consumer of political crises in the country and has continuously suffered a decline in its capacities, lagging behind consolidation and standardization to be competitive in the region," says Arben Shkodra, the deputy chair of the Tirana Chamber of Commerce and Industry.

"For four months in a row, the blockage of political dialogue and the parliamentary boycott, created a concerning situation for Albanian entrepreneurship,” he says.

"We demand political forces to shift their attention to the economy and entrepreneurship to immediately establish communication and constructive dialogue so that our demands and recommendations become part of their economic agendas,” he adds.

Tour operators have also hailed the political deal ahead of the elections as the country gears up for its peak tourism season.

"We are hopeful of an efficient tourism this summer. The political situation is improving and of course this has a huge impact," says Zak Topuzi of the Hotels and Tourism Association.
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