More Italian youngsters, pensioners turn to Albania for a living

More Italian youngsters, pensioners turn to Albania for a living

TIRANA, Feb. 15 – It is now the Italians who are looking for a job in Albania, Italian media have noted in the past few years as the neighbouring country’s economy, also host to some 500,000 Albanian migrants, continues to

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Editorial: The tax of shame starts at 6.5 percent

Editorial: The tax of shame starts at 6.5 percent

Another week, another breathtaking scandal as a armoured vehicle transporting large amounts of money was stopped and robbed on its way to the airport. None of the security measures which are mandatory had been followed. Yet again the security of

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Walking through the chaotic Tirana – Thoughts of a citizen from abroad

Walking through the chaotic Tirana – Thoughts of a citizen from abroad

By Baldur Baldoni* With the beginning of spring I start spending more time on the streets of Tirana. By walking to meetings or for shopping one gains many impressions and this stimulates some bitter thoughts about the recent situation. Imagine

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Nine more elected representatives could lose jobs over suspected criminal records

Nine more elected representatives could lose jobs over suspected criminal records

TIRANA, Feb. 15 – The General Prosecutor’s Office is seeking further information on nine elected representatives — members of parliament and mayors — it suspects of hiding brushes with the law in their decriminalization declarations. If the prosecutors’ suspicions are

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Business climate rated as unfavorable by two-thirds of investors

Business climate rated as unfavorable by two-thirds of investors

TIRANA, Feb. 16 – Two-thirds of businesses in Albania consider the business climate unfavorable with courts, corruption and frequent changes in legislation and tax procedures as the top concerns, according to a survey conducted on behalf of the Foreign Investors

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News analysis: Already in campaign mode, political leaders pin hopes on promises of public spending, tax cuts

News analysis: Already in campaign mode, political leaders pin hopes on promises of public spending, tax cuts

By Urita Dokle TIRANA, Feb. 16 – The electoral campaign period officially starts one month ahead of the June 18 parliamentary elections, but most political leaders are already on the campaign trail with a steady flow of promises, mostly having

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Albania loses ground in global economic freedom index

Albania loses ground in global economic freedom index

TIRANA, Feb. 15 – Albania lost six places to rank 65th among 180 world economies in the 2017 Index of Economic Freedom, maintaining its rating as a moderately free economy, but remaining among the best performing regional EU aspirants, according

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Op-ed: Show-off early campaign promises spell trouble for taxpayers

Op-ed: Show-off early campaign promises spell trouble for taxpayers

Albania’s ruling Socialist Party is opening taxpayer-funded state coffers for large show-off projects ahead of the parliamentary elections in June, leading to concerns among taxpayer advocates and opposition representatives who say the funds could be put to better use. The

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Uncertainties over upcoming June elections pose threats to economy, EU report warns

Uncertainties over upcoming June elections pose threats to economy, EU report warns

TIRANA, Feb. 14 – Increased uncertainties over the upcoming June 2017 elections, a longer than expected credit recovery and the conclusion  of a three-year deal with the International Monetary Fund could put Albania’s fiscal consolidation efforts at risk, the European

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June 18 elections: Opposition Democrats appeal to voters through lower taxes

June 18 elections: Opposition Democrats appeal to voters through lower taxes

TIRANA, Feb. 13 – With only three months to go before the official launch of the electoral campaign for the June 18 general elections, the main opposition Democratic Party and its leader Lulzim Basha are appealing to voters through a

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                    [post_content] => TIRANA, Feb. 15 – It is now the Italians who are looking for a job in Albania, Italian media have noted in the past few years as the neighbouring country’s economy, also host to some 500,000 Albanian migrants, continues to struggle with the crisis effects.

With a youth unemployment rate of 40 percent and minimum pensions not enough to make ends meet, more and more Italians youngsters and pensioners are discovering Albania as a land of hope and low cost.

Back in his native Rome, 25-year-old Fabio managed to earn about €1,000 euros but spent €800 on his house rent compared to only €270 in Albania where €60 are enough for entertainment and food for about a week.

He is one of an estimated thousands of Italians who live, work or study in Albania.

“Even though I am far away from home, I am always there with my heart. I had a job in Rome but I was made redundant because the company went bankrupt. I tried to find another job in Rome but it wasn't easy,” Fabio, who works in Tirana at an Italian-run call center company offering marketing services for Italy-based companies, tells Italy’s Mediaset.

Alex from Palermo, southern Italy, is another Italian youngster who has chosen to work in Tirana at the same company.

Call centers have emerged as the key employer for Albanian young men and women in the past few years including newly graduates whose university degrees do not match labor market needs, employing about 25,000 people.

"We have 20,000 customers who trust their online growth to us. There are 150 youngsters who work here with the average age at 23,” says Katerina Bojaxhiu, a product manager at Italian-run LocalWeb company.

“Considering the average cost of living in Albania we pay pretty well, at an average of €500 month, without including bonuses if operators achieve their monthly targets,” she adds.

Students, mainly studying medicine at an Italian-run university in Tirana, business managers, entrepreneurs and pensioners make up the rest of the Italian community in Albania.

The Albanian government says there is community of some 20,000 Italians in Albania but Italy’s La Repubblica has earlier estimated there are some 3,000 Italians living in Albania, of whom 500 are resident workers and around 1,000 are students mostly studying medicine at the Zoja e Keshillit te Mire University which has a twinning deal with the University of Rome Tor Vergata.

In a recent article, La Repubblica dubbed Tirana as the “Las Vegas of Call Centers.”

The expansion of the booming call center industry in Albania, mainly providing services for neighbouring Italy, has recently received a blow after the Italian Parliament approved last December some changes making the supply of services from non-EU countries such as Albania tighter.

Pensioners 

pensionIt is also Italian pensioners who have decided to spend the rest of their lives in Albania. A RAI TV documentary has shown dozens of Italian pensioners have settled in Tirana and Durres because of considerably lower prices.

“Now the land of eagles has turned into a land of hope for Italians and a symbol of living at a low cost. Carmine, Giuseppe, Giancarlo and Vincenzo are some of the Italian pensioners who live between Tirana and Durres,” the documentary noted.

Comparing the cost of living the Italian journalist said “in Albania a coffee costs only 40 cents while the house rent is at only €150. If you also put the average electricity and water supply bills at about €50, this is an extra reason for Italians to come and live in Albania.”

“This way a minimum pension of €500 that can hardly make ends meet in Italy, becomes a small treasure that you can manage without worrying too much in Albania,” said the Italian reporter.

 ‘Separated by the sea, united through mentality’

In the early 1990s when the communist regime collapsed it was the Albanians who left the country in a mass exodus to Italy. Twenty years on, a wave of Italians is coming to Albania as Italy faces its worst recession since World War II.

“The country which twenty years ago sparked despair, is now hosting Italian immigrants. At the beginning there were entrepreneurs thirsty for low-cost labor force, but today there are also workers, craftsmen, electricians, plumbers, welders, mechanics, marble workers but even lawyers, doctors, architects and students,” says Italian daily La Repubblica in a 2013 article titled “Italians in Albania: We are the migrants now.”

Italy is the country's main trading partner and one of the top investors in Albania with key enterprises mainly operating in the banking, energy and the 'garment and 'footwear sectors but also in the booming call center industry.

Italian companies, mostly focused on the services sector, dominate the list of foreign companies operating in Albania with an estimated 2,750 at the end of 2015, according to state statistical institute, INSTAT.

More and more Albanians who have been living for a long time in Italy have decided to permanently return home and invest their savings in Albania following the 2009 recession.

The neighboring country across the Adriatic can be reached daily through only a one-hour flight or six-hour trip through sea by several operators.

Italian photographers often post clear pictures of Albanian snow-capped peaks viewed from southern Italy through the Otranto Strait which is only 45 miles from Albania.

Italian coach Gianni De Biasi who led Albania to a historic first ever major competition debut such as the Euro 2016 and turned into a national hero, recently said upon receiving an Italian presidential order of merit, he was proud to have created a linking bridge between the two countries “separated by the sea, but united through the same mentality.”

 
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                    [post_content] => Another week, another breathtaking scandal as a armoured vehicle transporting large amounts of money was stopped and robbed on its way to the airport. None of the security measures which are mandatory had been followed. 

Yet again the security of citizens trying to reach the only airport in the country was compromised. Time after time banks and private security firms have shown irresponsibility, complicity with crime and a head bashing inability to learn from their mistakes. Time after time police have suffered blows to their credibility. 

It does not help that political actors jump in the debate immediately taking sides, considering the institution of the police as a political tool for maneuvering. The success of the police in catching the culprits in short time is laudable. Their initiatives to take over the money transfers to the airport on the other side shows the deep flaws that exist in the strategically important financial sector when it comes to their security.

On the larger scale the episode highlights the additional cost of doing business in Albania. What is the cost of crime and insecurity, fear and lack of protection? The European Bank for Reconstruction and Development (EBRD) has actually measured and quantified it. It is 6.5 percent of the gross annual revenues and for business who are more exposed to risk it goes up from there. This is how much business have to pay, this is their loss to criminals, to incidents like this, to kidnappings, thefts, bribes and racketeering.

For those who pretend to struggle why FDI doesn’t increase in Albania, the answer was made a bit more clear this week. There is an additional tax of 6.5 percent. Of course Albania is not the only country in the region or for that in the world to have this. In Serbia the tax is 4 percent, the average regional figure is at 5.9 percent. This hidden cost is of course more than numbers. It is a cost that often determines the decision of investors whether to start at all an economic activity, it keeps large companies away. Combined with the unfortunate heinous attacks on foreign business people such as the beatings last year it puts quite a few things in perspective.

Negative developments like this dismantle achievements in other fronts with incredible speed. Once again, they can happen everywhere, even in countries where public safety and order are much better preserved. Yet, the re-occurrence of such a similar theft of the money from a bank, at the vicinities of the airport, largely due to fault sin private security firms is a sad repetition. Many people have written tons of sound advice after it had happened. Yet much of it was not taken by the relevant stakeholders. The incident only adds to a series of thefts near and inside the airport, adds to the already forgotten dark saga of the money stolen from the treasury department of the very Central Bank for which the Governor was sacked yet declared innocent in court. And so on.

Hence it seems only a matter of time until the next thing strikes. In the meantime cross fingers that the 6 percent tax of shame does not jump higher.  

 
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                    [post_content] => By Baldur Baldoni* 

With the beginning of spring I start spending more time on the streets of Tirana. By walking to meetings or for shopping one gains many impressions and this stimulates some bitter thoughts about the recent situation.

Imagine you were somebody else in your society – you would be shocked

Sometimes I imagine to be somebody else – for example a disabled person or a mother with a child, one in a buggy. While I am sometimes scrambling on bad pedestrian zones (if available and not blocked by cars or hoardings) I start to realize the situation of a mother with a buggy: No way! It would be even worse if I were a disabled person in a wheelchair: absolutely no way! Back on some sidewalks that are possible to walk on (at least for some meters) I think of my Albanian friends who are so polite and helpful – why isn’t society like that as well? Is there such a big difference between Albanians and the structures they have to live within? A visitor once came to Tirana and mentioned publicly that the city or even the country gave her the impression that there were no disabled people in it. This is an understandable glimpse since one nearly never sees them. They are imprisoned at home due to an infrastructure that has totally forgotten them! And mothers with buggies need to have a car and mostly a nice husband, understanding parents, good friends and so on in order to reach the central playground by car – buses are not very helpful too. Unfortunately they don’t find playgrounds around their houses and flats. Why not? So Tirana doesn’t seem to have children either; children that would like to play outside, to do sport or playing games on a little piece of nature. Either they seem to be used playing with computers or mobiles at home, or they have to be carried like packages by car somewhere else to find what they are looking for. It is a bitter finding that this city – for a third of all Albanians – is only made for healthy people between 16 and 60! This is the contrary of the impressions a foreigner gets when he or she is lucky to meet his or her first friends in Albania. They personally are so careful, helpful and polite – society is just the opposite!

Highest pollution ever – without industry or coal-fired power station etc.

Talking about healthy people – are they really living in a healthy town? Of course not! While the Bashkia is praising car-free Sundays for better air in the city, it is only realizing dreams of some who obviously don’t have to live in the center of the city. The Skanderbeg Place shall become the new “heaven” of the citizens, a pedestrian zone with a nice outfit and modern looking. But it is a nightmare for all normal people who cannot have these nice dreams since they have to struggle for energy or water! And also the new football-stadium will not make forget the daily problems that most of the citizens have. A lot of money is spent for the sake of only a few, that was my first thought when I realized the plans and later saw the mass. Yes, pollution might shrink on the Skanderbeg-Place but it doubled and more around it, because you get the most dangerous exhaust gases of cars which are standing, not driving but with running engines. They are standing longer than in many other cities in the region where we have much more cars per capita than in Tirana. So one has to find out who could really start blocking the main streets and even roads before managing alternatives. Is it because things have to be ready before elections (like every four years) or only because the main political actors and their planning teams simply are not capable enough? Whatever the answer may be, I still don’t understand why people are not protesting more. In other countries there are for example Motor Clubs with a membership of car-drivers. Most of these interest organisations are really big and have a strong influence. I only imagine how they would act against the daily stupidity of traffic planning and traffic regulation of policemen who even don’t know what every beginner in car driving has to learn.

It is still your country – but one has to fight for a livable country

Coming back to my office I try to understand why things can happen here which were impossible in other neighbor countries in Europe. Following polls etc. people are not really satisfied with all responsible actors and organizations – in contrary. But why are they always voting for them again only few months later without any question or demand for better policies? Unfortunately you only get to know about other people’s thoughts in cafeterias but not in public political debates. Have the Albanians already given up their dreams of the 90ies? They shouldn’t! The city of Tirana and the whole country are really worth fighting for in order to achieve positive changes and better living conditions.

*Baldur Baldoni is a German living in Tirana
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                    [post_content] => [caption id="attachment_130019" align="alignright" width="300"]Albania's parliament (Photo: PoA Handout) Albania's parliament (Photo: PoA Handout)[/caption]

TIRANA, Feb. 15 – The General Prosecutor’s Office is seeking further information on nine elected representatives -- members of parliament and mayors -- it suspects of hiding brushes with the law in their decriminalization declarations.

If the prosecutors' suspicions are proven true, the representatives would be sacked and replaced.

The list published by several media outlets includes the name of six members of parliament -- Artan Gaci, Armando Prenga, Gledion Rehovica, Aqif Rakipi, Omer Mamo and Mhill Fufi -- as well as the mayors of Polican, Tepelena and Pogradec. 

Five MPs represent the ruling majority whereas Fufi has been expelled from the Democratic Party after he broke with party orders over votes in parliament. Among the mayors, two are from the leftist coalition and one from the center-right one.

Prosecutors have called for the assistance of the Central Election Commission to provide more information on the self-declaration forms of these officials done as required by the country's decriminalization law, which aims to get people with criminal convictions out of elected office.

In December 2016, the Decriminalization Unit at the General Prosecutor’s Office called for the suspension of two parliamentarians and a city mayor over non-disclosure of information in the framework of the decriminalization process. 

The unit is chaired by Prosecutor Rovena Gashi, who recently made headlines after her name was mentioned among many other judges and prosecutors whose visas were revoked by the U.S. Embassy. 

The most affected political party by the prosecution’s fight against officials with criminal records is the Party for Justice, Integration and Unity.  

MP Dashamir Tahiri was in the first representative of this party to have his mandate suspended after he was accused of having criminal records.  

MP Artan Gaci responded to accusations saying that if “prosecutors would have any evidence on his alleged wrongdoing, they would have made it public already.”

The CEC has been collecting forms from all MPs and mayors, however, the chief prosecutor’s office is the only body that can investigate and do background checks on the past of these officials to find any criminal record registered in the country or abroad. 

After the files are delivered to the CEC, the electoral watchdog will rule on the suspension of their mandates. 

The verification process done by the prosecutors is carried in the framework of the decriminalization bill that entered into force in 2015. 

The law forced 1,836 politicians and 5,000 senior officials in Albania to declare their criminal past and obliged authorities to check their statements. 

According to provisions, anyone with convictions requiring jail terms of up to two years will be banned for 10 years, but a government official found guilty of corruption would be banned from public office for 20 years.

At least 30 MPs have resigned or been replaced in the last two years, with several being accused of being involved in criminal activities. 

 

 
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                    [post_content] => survey

TIRANA, Feb. 16 – Two-thirds of businesses in Albania consider the business climate unfavorable with courts, corruption and frequent changes in legislation and tax procedures as the top concerns, according to a survey conducted on behalf of the Foreign Investors Association of Albania, representing the country’s top investors.

Expectations for 2017 remain grim with only 10 percent of the 70 surveyed foreign investors describing the business environment as favorable and more than a third as unfavorable.

Courts and corruption became a tougher issue for about three-quarters of foreign investors in 2016 as the country struggled to approve a long-awaited justice reform that is expected to overhaul the highly corrupt perceived judiciary by vetting all prosecutors and judges over their professional proficiency, moral integrity and independence from the influence of the organized crime, corruption and political power.

Courts were rated as a severe problem by 78 percent of the surveyed businesses, followed by corruption with 72 percent. Both ratings registered a 10 to 12 percent increase compared to 2015.

Interestingly enough, the poor efficiency of administrative courts became a severe problem for more than two-thirds of the surveyed businesses compared to only about half in 2015.

Three years after their establishment, administrative courts are failing to examine business appeals in time and about three-quarters of their decisions are in favour of the public administration, according to an earlier report by the Albanian Investment Council, an institution with the goal of enhancing public private dialogue.

Frequent changes in legislation and tax procedures are also an issue for 67 percent of surveyed businesses.

One year after a rather aggressive nationwide campaign against informality that formalized thousands of businesses previously operating informally, informal or illegal competition remains a top concern for 66 percent of foreign investors compared to 65 percent in the previous year after the campaign was launched in Sept. 2015.

The predictability of policies and the clarity and understanding of the tax framework and procedures also remain a concern for two-thirds of businesses.

The long-standing issue of clear property titles was a concern for about 60 percent of the respondents while the tax burden remained a concern for 55 percent of investors.

Violence against an American-Lebanese executive last August led to a Dubai-based company withdrawing from a major tourist resort investment worth $450 million that was supposed to create 1,200 jobs by 2018 at the Gjiri i Lalzit Bay, just outside Durres, some 35 km from Tirana.

Businesses have often voiced concern over high taxes as a barrier curbing foreign direct investment considering tough competition from neighboring countries applying lower tax rates.

Since 2014, 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 Albania one of the region’s highest and the key concern for the business community in the country.

Labor regulations, access to electricity, finance and skilled labor as well as the crime and theft situation are rated as Albania’s best performing indicator but yet are considered an issue by more than a third of surveyed businesses.

Silvio Pedrazzi, the president of the Foreign Investors Association in Albania and the CEO of one of the country’s leading commercial banks, said the implementation of reforms and rule of law were the biggest concerns for doing business in Albania.

“Businesses are moving through a complicated path. The level of expectations goes hand in hand with the level of the implementation of reforms. The business environment is becoming more demanding as competition gets tougher,” Pedrazzi was quoted as saying.

Dietlof Mare, the CEO of Vodafone Albania which has been operating in the country for the past 15 years, singled out the issue of corrupt judges as the top concern affecting businesses in Albania, demanding transparency, consistency and rule of law.

Finance Minister Arben Ahmetaj, who has been repeatedly praising progress with the country’s economy, described the survey findings as not representative of the business climate due to the small sample of only 70 companies taken into account, citing progress in the latest Doing Business report.

Albania climbed 32 steps to rank 58th among 190 global economies in the latest Doing Business report to score its best ever ranking, but yet lagged behind some of its key regional competitors offering lower taxes and easier procedures.

Albania’s foreign direct investment is set to register a considerable boost in the next few years boosted by some major energy-related projects and a pickup in commodity prices but face headwinds by 2020 when key investments such as the Trans Adriatic Pipeline have been completed.

The Devoll hydropower plant and TAP have been the main sources of FDI in Albania in the past couple of years following the mid-2014 slump in commodity prices paralyzing investment in the key oil and mining sectors and considerably affecting the country’s poorly diversified exports.

Albania has been the second largest FDI recipient among five EU aspirant SEE economies for the past six years lagging behind only Serbia which is a much bigger economy. Thanks to huge investment in energy-related projects such as oil and hydropower plants, Albania has managed to attract about $1 billion in FDI annually in the past few years.
                    [post_title] => Business climate rated as unfavorable by two-thirds of investors 
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                    [post_content] => [caption id="attachment_131193" align="alignright" width="300"]Prime Minister Edi Rama and Tirana Mayor Erion Veliaj walk in a construction area. (Photo: GoA/Facebook) Prime Minister Edi Rama and Tirana Mayor Erion Veliaj walk in a construction area. (Photo: GoA/Facebook)[/caption]

By Urita Dokle

TIRANA, Feb. 16 - The electoral campaign period officially starts one month ahead of the June 18 parliamentary elections, but most political leaders are already on the campaign trail with a steady flow of promises, mostly having to do with public spending or tax cuts.

Central and local government officials are attending many openings and inauguration of projects, while promising many more to come. This week, there was a presentation of the plan for the construction of 17 new schools in Tirana, part of the government’s ambitious 1 billion dollars plan, which aims to revive the country’s infrastructure, education and health sector if the ruling coalition gets a second mandate. 

Mayor Erion Veliaj was accompanied by Prime Minister Edi Rama who described Tirana’s municipality as “the swallow that foretells the arrival of a new season of transformations in infrastructure and economy.” 

According to Prime Minister Rama, the 1 billion dollars plan to be implemented through public private partnerships has already begun with the construction of 17 new schools in Tirana, which will be available for use starting next year. 

Rama said that there are about 53 new schools that will be constructed, and 97 other schools that will be reconstructed all over Albania as a result of the government’s plan.

Rama made another electoral promise and said that in the next two to three years, Albania’s economic growth rate would increase to 6 percent. 

“Today’s economic growth is significant, considering where we started. However, this growth is not visible in the homes of our citizens. We will go towards a growth that is higher than 6 percent,” Rama said. 

The meeting held at Fan Noli School in Tirana was also used to call on citizens to vote for the ruling coalition in the upcoming elections of June 18. 

“If we want to continue working with this pace, as we are doing something new every day, the answer is simple: On 18th of June, Prime Minister Rama should continue to be the country’s prime minister,” Major Veliaj said. 

[caption id="attachment_131194" align="alignright" width="300"]The chairman of the Democratic Party, Lulzim Basha, promised businesses that they will get lower taxes and fiscal ease if they choose to support the DP program. (Photo: DP/Facebook)  The chairman of the Democratic Party, Lulzim Basha, promised businesses that they will get lower taxes and fiscal ease if they choose to support the DP program. (Photo: DP/Facebook)[/caption]

Meanwhile, the opposition parties have launched several meetings with supporters and business representatives, issuing its first electoral promises. 

The chairman of the Democratic Party, Lulzim Basha, promised businesses that they will get lower taxes and fiscal ease if they choose to support the DP program. 

“Taxes have increased by 1.5 billion dollars in the last four years. Every Albanian citizen has paid an additional 500 dollars in taxes. We will reinstate a flat tax of 9 percent, and businesses will pay a fixed tax of 1.5 percent of their turnover,” Basha said in a meeting earlier last week.

He added, “If the Democrats come to power, we will end the monopolies of public private partnerships.”

Albanian politicians have made a habit of fighting their official and unofficial campaigns on infrastructure, education, health and economy, but history has shown that the incumbents have the upper hand on electioneering with public funds.

Last year, the government proudly unveiled a generous pre-election financial amnesty that delighted hundreds of businesses but did little good to the economy, some economy experts say. 

The fiscal amnesty for all unpaid liabilities since 2008 to 2011 aimed to provide a fiscal relief worth 400 million dollars. 

Over 50 percent of these debts belong to a small group of businesses such as Bankers Petroleum, ARMO and Belle Air that together hold 200 million dollars in unpaid taxes. 

While these big companies got their taxes pardoned, hundreds of citizens among the poorest in the country were imprisoned in the past two years over electricity theft for hooking up to the net illegally to avoid electricity bills. 

Companies such as ARMO, Bankers Petroleum or the bankrupt Belle Air have been under fire for misusing the country’s assets and tax legislation.

Experts on the other hand believe that the government’s 1 billion dollars project and last year’s decision to wipe off bills is being done based on electoral purposes.  

The road to elections will be a long one -- 122 days, to be exact. On the way, long before the race even begins officially, as Albania’s electoral history reveals, there will be countless inaugurations and appearances by the government leaders, a wave of online and TV shows  from the parties and interest groups, and unprecedented promises of economic recovery. 

The use of state events and resources of campaign purposes by the country’s largest governing parties was highly criticized by OSCE-ODIHR, the main international elections standards monitoring body. 

In its latest report on Albania’s local elections held in 2015, OSCE-ODIHR expressed concern over the “blurred separation between state and party.” 

“Senior figures from the Socialist Party and Socialist Movement for Integration handed out property legalization certificates at campaign events and a number of [Socialist coalition] candidates used state events and resources for campaign purposes,” the report stated. “These events blurred the separation between state and party and breached paragraph 5.4 of the c1990 OSCE Copenhagen Document, which provides for ‘a clear separation between State and political parties.'” 

Five months to the parliamentary elections, the level of trust in the Albanian government has plummeted. The latest survey showed that trust in the Albanian government fell to 35 points by the start of 2017, a record low. 

During the unofficial and official campaign for the parliamentary elections each of the political parties will claim to be the best option to improve Albania’s economy. But it remains to be seen if the country’s struggling economy will be powerful in determining the results of the country’s elections.

 

 

 
                    [post_title] => News analysis: Already in campaign mode, political leaders pin hopes on promises of public spending, tax cuts
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                    [post_content] => heritage

TIRANA, Feb. 15 – Albania lost six places to rank 65th among 180 world economies in the 2017 Index of Economic Freedom, maintaining its rating as a moderately free economy, but remaining among the best performing regional EU aspirants, according to a report published by Heritage Foundation, one of the top think tanks in the U.S.

The report that evaluates countries in four broad policy areas that affect economic freedom shows Albania made steps backwards in the rule of law, government size, regulatory efficiency and open market.

Albania still outperformed most of its regional EU aspirant competitors, except for neighbouring Macedonia which ranked 31st as a mostly free economy and Kosovo as moderately free but 46th. Serbia ranked 99th as mostly unfree, while Montenegro and Bosnia and Herzegovina 83rd and 92nd respectively as moderately free economies.

Albania achieved its best ever result in the Index of Economic Freedom in 2010 when the country ranked 53rd.

The Heritage Foundation report notes more reform in needed to ensure the growth of economic freedom and encourage vibrant economic development.

“Albania continues on a path of gradual economic recovery, confronting challenging external conditions, but more reform is needed to ensure the growth of economic freedom and encourage vibrant economic development,” says the report.

“The judicial system remains inefficient and vulnerable to political interference, and corruption is still perceived as widespread. Expansionary government spending has led to budget deficits and growing public debt in recent years, but the deficits have been narrowing,” it adds.

Rule of law

“Development of property legislation has been piecemeal and uncoordinated. Real estate registration procedures are cumbersome. The judiciary, although constitutionally independent, is subject to political pressure and intimidation and has limited resources. A 2015 law bars convicted criminals from holding public office, but public administration continues to be plagued by inefficiency, incompetence, and widespread corruption,” says the report.

 Government size

“The top individual income tax rate is 23 percent, and the top corporate tax rate is 15 percent. Other taxes include a value-added tax and an inheritance tax. The overall tax burden equals 23.6 percent of total domestic income. Government spending has amounted to 30.3 percent of total output (GDP) over the past three years, and budget deficits have averaged 4.9 percent of GDP. Public debt is equivalent to 71.9 percent of GDP.”

 Regulatory efficiency

“Business start-up procedures have become less costly, and there is no longer a minimum capital requirement for setting up a company. Labor demand in the formal economy, which has a high level of self-employment, is significantly influenced by the public sector. The government is on course to phase out many subsidies and price controls for electricity, water, agricultural products, and railroad transportation.”

Open markets

“Trade is important to Albania’s economy; the value of exports and imports taken together equals 71 percent of GDP. The average applied tariff rate is 1.1 percent, and bureaucratic barriers deter international trade and investment. Most banks are foreign-owned. The banking system has benefited from increased competition and remains stable, but the number of nonperforming loans hinders credit growth.”

 

Opposition concerned

Reacting to the findings of the report, the opposition Democratic Party said losing 11 places in the past four years of the Socialist Party-led government was an indicator of deteriorating business climate.

“The Heritage Foundation report unfortunately places Albania 11 places below 2013. As businesses already know, even international reports express concern over the regress that is taking place with economic policies in Albania where high public debt, high fiscal pressure and inefficient public spending remain concerning,” said Besart Kadia, the Secretary for Entrepreneurship at the opposition Democratic Party.

The opposition Democrats say the Heritage Foundation report, which in 2014 received praise by Prime Minister Edi Rama for ranking the country’s 54th, is an indicator showing doing business is becoming more difficult.

“The only thing a government can do is offer businesses an efficient and professional administration. But, for Heritage Foundation, the most authoritative institution in the Republican administration policies in the U.S., Albania has ended up with an administration that has become a burden to do business because ‘the administration is plagued by inefficiency, incompetence and corruption,'” said Kadia.

The opposition Democrats pledge to introduce a 9 percent flat tax should they win the upcoming June 18 elections “to ease Albanian businesses from the complicated progressive taxation and promote employment and economic growth.”
                    [post_title] => Albania loses ground in global economic freedom index
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                    [post_content] => Albania’s ruling Socialist Party is opening taxpayer-funded state coffers for large show-off projects ahead of the parliamentary elections in June, leading to concerns among taxpayer advocates and opposition representatives who say the funds could be put to better use.

The official campaign period begins a month ahead of the parliamentary elections of June 18, however, both the ruling and opposition parties have already hit the campaign trail. 

This week, there was a presentation of the plan for the construction of 17 new schools in Tirana, part of the government’s ambitious $1 billion project, which aims to revive the country’s infrastructure, education and health sector through private-public-partnerships should the the ruling coalition get a second mandate.

Mayor Erion Veliaj was accompanied by Prime Minister Edi Rama. Rama said that there are about 53 new schools that will be constructed and 97 other schools that will be reconstructed all over Albania as a result of the $1 billion project.

But schools and parks are the face of the PPPs the government wants to showcase, the much larger projects will be healthcare and infrastructure, and it is yet unknown who will directly benefit from taxpayer funds. The record so far has been spotty.

Rama made another electoral promise and said that in the next 2-3 years, Albania’s economy would grow up to 6 percent, which economy experts doubt is an achievable goal.  

Rama had four years ago promised to create 300,000 jobs, a number that the government has not proven it has come even close to making a reality. After winning the elections, Rama said he meant these would include jobs that already existed but were not part of the formal economy. In addition, more than 100,000 Albanians left the country to seek a better life elsewhere since Rama came to power.

This week’s meeting was held at Fan Noli School in Tirana and was also used to call on citizens to vote for the ruling coalition in the upcoming elections of June 18. Civil society representatives have expressed concern that using public works as an electoral tool is unethical, as is using schools to campaign. There has been previous international condemnation of both.

Opposition representatives have said PPPs are a way for the government to recycle money gained from crime and drug trafficking. 

Central and local government officials have increased the frequency of inaugurations and start of public works, especially in Tirana, where every stage of every project is accompanied by a blitz of polished public relations campaign produced in government offices, which is then often carried on with little vetting or editing on mainstream media outlets as news. It led the Albanian section of Voice of America to aptly dub the method as “creating a virtual reality.”

In addition to reconstructing Skanderbeg Square in Tirana for the third time in a decade and tearing up the tourist area in Durres to spend millions and potentially damage a major archeological site just ahead the elections, the government has been caught up in major controversies in lack of proper public healthcare and suspicious public-private partnerships.

On the other hand, the main opposition Democratic Party, which holds a very weak executive position as it does not rule any major local or central institutions, is resorting to promises of deep tax cuts to attract voters.

Opposition leader Lulzim Basha has said he will lower most taxes to a flat rate of 9 percent from the current 15 percent and will cut the VAT to 15 percent from 20 percent should he be elected as prime minister. 

The opposition parties have launched several meetings with supporters and business representatives, issuing its first electoral promises. 

“Taxes have increased by $1.5 billion in the last four years. Every Albanian citizen has paid an additional $500 in taxes. We will reinstate a flat tax of 9 percent and businesses will pay a fixed fee of 1.5 percent of their turnover,” Basha said in a meeting earlier last week.

The promises of such deep tax cuts might not be realistic and come at a time when international advisers tell Albanian governments to increase rather than lower taxes to meet budget targets.

Albanian politicians have made a habit of fighting their official and unofficial campaigns on infrastructure, education, health and economy, but history has shown that the government has the upper hand on electioneering.

On the way, long before the race even begins officially, as Albania’s electoral history reveals, there will be countless inaugurations and appearances by the government leaders, a wave of online and TV ads from the parties and interest groups, and unprecedented promises of economic recovery.

It won't change the fact that five months to the parliamentary elections, the level of trust in the Albanian government and the political system in general has plummeted.

 
                    [post_title] => Op-ed: Show-off early campaign promises spell trouble for taxpayers
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                    [post_content] => TIRANA, Feb. 14 – Increased uncertainties over the upcoming June 2017 elections, a longer than expected credit recovery and the conclusion  of a three-year deal with the International Monetary Fund could put Albania’s fiscal consolidation efforts at risk, the European Commission warns in its latest Winter European economic forecast.

The warning comes as the run-up to general elections has always been accompanied by threats to public finances in Albania in the past 25 years of transition with incumbent governments sharply increasing public investments and putting at risk budget deficit and public debt targets, apparently to gain an electoral advantage.

“Increased political uncertainty related to the parliamentary election in June 2017 might dampen consumption and investment. Credit recovery might take longer than expected in the context of persistently high non-performing loans. The elevated level of sovereign debt provides little room for countercyclical policies in case of need,” says the Commission.

Albania’s credit has struggled to recover in the past year as non-performing loans stand at 20 percent contributing to tighter lending standards by banks while demand by both households and businesses remains poor despite loan rates having considerably reduced.

The report also notes Albania’s fiscal consolidation efforts are associated with two major risks such as the upcoming June 18 elections and the conclusion of a binding 3-year deal supported by a €331 million loan with the IMF in early 2017.

“The fiscal projection is associated with two significant risks. One is that the government may relax its fiscal policy stance in the context of the upcoming elections. The other is the scheduled termination of the IMF’s Extended Fund Facility Arrangement for Albania in February 2017 which means that the government’s consolidation strategy will lose an important anchor,” adds the Commission.

The European Commission expects the Albanian economy to slightly pick up to 3.5 percent and 3.6 percent respectively for 2017 and 2018 in forecasts which are 0.3 to 0.6 percent lower compared to the Albanian government’s more optimistic forecasts. Public debt, currently hovering at a record high of 71 percent of the GDP, is expected to only slightly reduce to 68.7 percent of the GDP, compared to the Albanian government’s more optimistic forecast of 65.7 percent by 2018.

“Economic growth is picking up gradually based on household spending and private investment. An accommodative monetary policy stance, an improving labour market, and strong FDI inflows are set to support consumer spending and business investment over the next two years. The fiscal deficit and the public debt ratio are projected to decline, but the government’s commitment to fiscal consolidation may be tested by the end of the IMF programme and the upcoming elections,” says the Commission.

On the upside, the Commission expects the implementation of structural reforms, such as the recently started comprehensive overhaul of the justice system, to improve the business environment and, in the longer run, the economy’s growth potential.

The EU also expects Albania’s upward investment trend to continue, mainly thanks to some major energy-related projects such as the Trans Adriatic Pipeline bringing Caspian gas to Europe and the Devoll hydropower plant.

Investment in the extraction sector is also expected to pick up as commodity prices recover with a positive impact on Albania’s oil and mining industry, producing the country’s second largest exports.

 Italy, Greece’s recovery to help

The moderate economic recovery in Italy and Greece, Albania’s top trading partners and investors, is also expected to have a positive impact through higher demand for Albanian exports and potentially higher migrant remittances from an estimated 1 million migrants who live and work there.

The recession in the two neighboring countries following the 2008 global crisis significantly affected the Albanian economy through lower trade, investment and remittances.

The European Commission expects Italy, the country’s top trading partner accounting for half of total exports and 30 percent of imports, to grow by about 1 percent in 2017 and 2018 supported by low real interest rates and stronger external demand. The Italian economy has been growing by sluggish rates of slightly above zero since 2014 after overcoming a three-year recession.

Meanwhile, neighbouring Greece, the host of about half a million Albanian migrants and whose economy contracted by about a quarter since 2008 in its worst ever recession is expected to return to moderate growth rates of 2.7 percent to 3.1 percent in 2017-2018.

While Greece has maintained its top investor position in Albania in the past crisis years, its position as Albania’s traditional second largest trading partner has considerably waned.

The Commission report notes the European economy is set to continue at a moderate pace but the forecast is surrounded by uncertainty.

“There is a high degree of uncertainty surrounding the global economic outlook at present. This comes after an already difficult 2016, in which the European economy had to cope with numerous international and domestic challenges including the lowest pace of global and trade growth since 2009, geopolitical tensions, terrorist attacks in several member states, stressed banking sectors, the UK’s vote to leave the EU and a mounting backlash against globalization,” the report says.

Albania, an EU candidate since mid-2014 is hopeful of launching accession negotiations with the EU by late 2017 pending results from the implementation of a long-awaited justice reform and the conduct of fair elections next June when a new government will come out.

 

 

 
                    [post_title] => Uncertainties over upcoming June elections pose threats to economy, EU report warns
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                    [post_content] => TIRANA, Feb. 13 – With only three months to go before the official launch of the electoral campaign for the June 18 general elections, the main opposition Democratic Party and its leader Lulzim Basha are appealing to voters through a program mainly focused on lower taxes which they say will lift the country out of crisis by creating new jobs and reducing poverty.

Speaking last weekend at a meeting with business representatives, Basha pledged a 9 percent flat tax and a zero rate on dividends, compared to a current 15 percent rate on the corporate income tax and the withholding tax on dividends, rents and capital gains. He also promised a reduction in the key value added tax, levied at a fixed 20 percent on almost all goods and services and accounting for a third of government revenue, by 5 percent to 15 percent.

“We will apply a 9 percent flat tax, 9 percent on personal income by preserving the tax-free 30,000 lek (€218) monthly wage threshold, 9 percent on the corporate income, 9 percent on social security contributions on both employers and employees, the dividend tax will be zeroed out while the value added tax will be applied at 15 percent. Small businesses will be taxes at a fixed rate equal to 1.5 percent of the turnover that will replace income tax and VAT,” said Basha, a former foreign, interior and transport minister as well as Tirana Mayor who in 2013 succeeded Sali Berisha as Democratic Party leader following his resignation from the party he founded in the early 1990s as the communist regime was collapsing.

Business representatives have rated increased taxes as one of the top concerns, reducing Albania’s competitiveness to other regional countries applying lower flat tax regimes of about 10 percent.

“In these four years, taxes have increased by a total of $1.5 billion, collected as a result of a tax hike and not the system upgrade. Every Albanian, from newborns to the most elderly have paid an extra $500 in taxes as a result of the tax hike. The figures are clear. We support a low tax policy and this is the gist of our fiscal policy. We will encourage enterprises that the money they currently spend on taxes and tariffs, is tomorrow spent in creating new jobs, increasing salaries and expanding and improving their production capacities,” said Basha.

“The Democratic Party has compiled an ambitious and realistic program which brings economic recovery, establishes the appropriate business climate and boosts confidence among consumers, citizens and youth. We will offer fiscal incentives on priority development sectors, businesses that create jobs with decent salaries in key economy sectors such as tourism, technology and innovation,” he added.

PPP, spending review

 The opposition Democratic Party leader also pledged a review of what he called “clientelistic and monopoly concession contracts” that the Socialist Party-led government has signed in the past four years, putting a huge burden on taxpayers.

“Concessions and PPPs will be thoroughly reviewed. They will be transparent and with a zero cost to the state budget. Payments through state coffers on 6 concession contracts until 2025 are forecast at Euro 500 million, of which $71 million will be paid out only this year. The amount is eight times higher compared to the whole 2017 payments on unemployment benefits. This situation has to come to an end. We will not allow any concession or PPP operating under monopoly conditions,” says Basha.

The opposition leader pledged increased benefits for households receiving social assistance who will also have a monthly 200 kV of electricity, their water supply bill and children’s textbooks covered through the state budget.

Basha says the Democrats plan to increase the minimum wage to 32,000 lek (€232), up from a current 22,000 lek (€159) and reduce retirement age, currently at 60 for women and 65 for men.

The main opposition party says it will also put an end to “luxury spending on facades, cars, furniture and travel allowances which have cost taxpayers $310 million” and use the money in investments bringing development, welfare and employment through internships and vocational training education of thousands of jobless people, especially youngsters.

Walter Glos, the head of the Albanian office of the Konrad Adenauer Foundation, which supported the Democratic Party in its electoral platform along with German experts of Angela Merkel’s Christian Democratic Union, says the rule of law, an accessible education system and reliable and friendly environment for domestic and foreign investment are key for the Albanian economy and the country’s EU integration bid.

Florion Mima, an opposition Democratic Party MP and head of the party’s economy department, is optimistic reducing VAT by 5 percentage points will trigger a decline in product and service prices and fuel a sharp increase in consumption.

Upcoming elections

 The opposition takes to the upcoming mid-2017 elections after two consecutive heavy defeats in the 2013 general elections and 2015 locals and most recently in the by-elections for the Dibra and Kolonja municipalities.

The center right opposition Democrats, who have ruled the country from 1992 to 1997, soon after the country’s communist regime collapsed and from 2015 to 2013, currently occupy only about a third of the 140 seat Parliament dominated by the Socialist Party and its junior ally, the Socialist Movement for Integration (SMI). The latter’s running on its own outside an apparent unified left coalition in next June’s elections following ongoing frictions with the Socialists would make the race for the new government tougher. The SMI, which currently has some 20 MPs, has emerged as a kingmaker in the past two general elections, ruling with the Democrats from 2009 to 2013 and with the Socialists for the past four years.

The opposition which insists on the introduction of electronic voting to prevent vote rigging has announced a rally for Feb. 18, seen as a test for its support ahead of the upcoming elections.

Back in the 2013 general elections, the then-opposition Socialists also focused their electoral campaign on promises of lower taxes and fighting corruption. However, almost four years on, they have failed to deliver on several key promises and some of the key taxes such as the corporate income and the withholding tax on dividends rents and capital gains have increased by 5 percent to 15 percent, making Albania’s tax burden one of the region’s highest and ranking taxes as the top concern for the business community.

At 36.5 percent of profit, Albania’s total tax rate is slightly lower only compared to Serbia’s 39.7 percent among EU aspirant Western Balkans countries, according to the latest World Bank’s Doing Business report.

The ruling Socialist Party and Prime Minister Edi Rama have not offered any tax cuts for 2017 but pledged to continue reforms and offered some pre-electoral tax amnesties that benefit both households and businesses.

 

 

 
                    [post_title] => June 18 elections: Opposition Democrats appeal to voters through lower taxes 
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            [post_content] => TIRANA, Feb. 15 – It is now the Italians who are looking for a job in Albania, Italian media have noted in the past few years as the neighbouring country’s economy, also host to some 500,000 Albanian migrants, continues to struggle with the crisis effects.

With a youth unemployment rate of 40 percent and minimum pensions not enough to make ends meet, more and more Italians youngsters and pensioners are discovering Albania as a land of hope and low cost.

Back in his native Rome, 25-year-old Fabio managed to earn about €1,000 euros but spent €800 on his house rent compared to only €270 in Albania where €60 are enough for entertainment and food for about a week.

He is one of an estimated thousands of Italians who live, work or study in Albania.

“Even though I am far away from home, I am always there with my heart. I had a job in Rome but I was made redundant because the company went bankrupt. I tried to find another job in Rome but it wasn't easy,” Fabio, who works in Tirana at an Italian-run call center company offering marketing services for Italy-based companies, tells Italy’s Mediaset.

Alex from Palermo, southern Italy, is another Italian youngster who has chosen to work in Tirana at the same company.

Call centers have emerged as the key employer for Albanian young men and women in the past few years including newly graduates whose university degrees do not match labor market needs, employing about 25,000 people.

"We have 20,000 customers who trust their online growth to us. There are 150 youngsters who work here with the average age at 23,” says Katerina Bojaxhiu, a product manager at Italian-run LocalWeb company.

“Considering the average cost of living in Albania we pay pretty well, at an average of €500 month, without including bonuses if operators achieve their monthly targets,” she adds.

Students, mainly studying medicine at an Italian-run university in Tirana, business managers, entrepreneurs and pensioners make up the rest of the Italian community in Albania.

The Albanian government says there is community of some 20,000 Italians in Albania but Italy’s La Repubblica has earlier estimated there are some 3,000 Italians living in Albania, of whom 500 are resident workers and around 1,000 are students mostly studying medicine at the Zoja e Keshillit te Mire University which has a twinning deal with the University of Rome Tor Vergata.

In a recent article, La Repubblica dubbed Tirana as the “Las Vegas of Call Centers.”

The expansion of the booming call center industry in Albania, mainly providing services for neighbouring Italy, has recently received a blow after the Italian Parliament approved last December some changes making the supply of services from non-EU countries such as Albania tighter.

Pensioners 

pensionIt is also Italian pensioners who have decided to spend the rest of their lives in Albania. A RAI TV documentary has shown dozens of Italian pensioners have settled in Tirana and Durres because of considerably lower prices.

“Now the land of eagles has turned into a land of hope for Italians and a symbol of living at a low cost. Carmine, Giuseppe, Giancarlo and Vincenzo are some of the Italian pensioners who live between Tirana and Durres,” the documentary noted.

Comparing the cost of living the Italian journalist said “in Albania a coffee costs only 40 cents while the house rent is at only €150. If you also put the average electricity and water supply bills at about €50, this is an extra reason for Italians to come and live in Albania.”

“This way a minimum pension of €500 that can hardly make ends meet in Italy, becomes a small treasure that you can manage without worrying too much in Albania,” said the Italian reporter.

 ‘Separated by the sea, united through mentality’

In the early 1990s when the communist regime collapsed it was the Albanians who left the country in a mass exodus to Italy. Twenty years on, a wave of Italians is coming to Albania as Italy faces its worst recession since World War II.

“The country which twenty years ago sparked despair, is now hosting Italian immigrants. At the beginning there were entrepreneurs thirsty for low-cost labor force, but today there are also workers, craftsmen, electricians, plumbers, welders, mechanics, marble workers but even lawyers, doctors, architects and students,” says Italian daily La Repubblica in a 2013 article titled “Italians in Albania: We are the migrants now.”

Italy is the country's main trading partner and one of the top investors in Albania with key enterprises mainly operating in the banking, energy and the 'garment and 'footwear sectors but also in the booming call center industry.

Italian companies, mostly focused on the services sector, dominate the list of foreign companies operating in Albania with an estimated 2,750 at the end of 2015, according to state statistical institute, INSTAT.

More and more Albanians who have been living for a long time in Italy have decided to permanently return home and invest their savings in Albania following the 2009 recession.

The neighboring country across the Adriatic can be reached daily through only a one-hour flight or six-hour trip through sea by several operators.

Italian photographers often post clear pictures of Albanian snow-capped peaks viewed from southern Italy through the Otranto Strait which is only 45 miles from Albania.

Italian coach Gianni De Biasi who led Albania to a historic first ever major competition debut such as the Euro 2016 and turned into a national hero, recently said upon receiving an Italian presidential order of merit, he was proud to have created a linking bridge between the two countries “separated by the sea, but united through the same mentality.”

 
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