Debate organized by the Albanian Institute for International Studies and Friedrich Ebert Stiftung Foundation held Thursday a public lecture entitled “The Greek economic crisis: Possible implications for Albania,” as part of its new initiative on a research of the social, economic and, why not, political consequences of the Greek crisis on Albania.
TIRANA, July 21 – Greece’s financial crisis has recently attracted everyone’s attention, from scholars and policymakers to politicians and simple people around Europe and beyond. This crisis doesn’t begin and end in Greece. It brings what economists call the contagion effect.
The impacts of Greece’s financial crisis are not limited to the European market and Euro zone, but it has widespread effects on its neighbors, the world markets and Southern Europe. The latter is seen by the difficulties facing Spain, Portugal and Italy, which altogether comprise a danger to the European economic integration.
Keeping in mind the wider world recession that started in 2008 in the US, it is important for all the actors at the international and local level, to talk about economic issues in this context.
Acknowledging the situation in the neighboring Greece and worldwide, the Albanian Institute for International Studies, with the support of Friedrich Ebert Stiftung Foundation, had the incentive of holding a public lecture titled: “Greek Economic Crisis: Possible implications for Albania”.
This public lecture held in Tirana was only the beginning of a larger initiative of a round of public lectures called: “Talking Economics in Times of Crises” with greater implications for the society and stakeholders.
The aim of this initiative is to discuss possible lessons we can learn from the current crisis, especially in Greece and Italy, considering close relations and the economic interdependency. It also aims at developing recommendations and valuable advices for policymakers in Albania in order to avoid or facilitate the effects of this crisis in our country.
“It is unimaginable that a crisis as large and widespread as the Greek crisis will not have effects on our economy,” said in his opening remarks AIIS Executive Director Dr. Albert Rakipi.
“The 21st of July is an extraordinary day for many reasons. Today the large government meeting of the EU is taking place on this very issueƇreek crisis is not just a crisis in Greece but a crisis of all of Europe,” said Michael Weichert, director of the Friedrich Ebert Stiftung Foundation’ office in Albania.
“Not everything can be resolved or taken care of quickly, regardless of the decisions Brussels takes today. Not everything that shines is an achievement,” said Dr. Jens Bastian, the key note speaker of the public lecture, in his presentation regarding the topic.
He went on explaining that South Eastern Europe countries are lagging behind in economic recovery and growth. Most of them have reflected two years of negative growth, except Albania. But, according to him, this Albania’s positive growth reflects more risks than achievements.
He went on identifying several areas where Albania might be the most at risk by Greek financial crisis.
The first area is the banking system.
The National Bank of Greece, according to him, is the most exposed bank to the Greek sovereign debt crisis. A potential default of Greece will bring immediate consequences in the banking system across the region, including Albania, where many Greek banks operate. From the figures he presented NBG had 50 percent of the public debt, Alpha Bank 11 percent, Piraeus 21 percent etc. It is important to note, nevertheless, that according to him Greek and Italian banks are not withdrawing- but there will be negative feedback loop, spillover effects on the credit supply capacity of parent banks and challenges for central bank’s monetary policy.
“The region is not immune to developments in Euro zone,” he stated.
It is to be noted that the remittances of the Albanian immigrants in Greece have significantly fallen this year.
Another sector Dr. Bastian identified was regional markets. According to him these markets “remain resilient, although Albania’s growth remained in track we can see the first signs of concern because: 1- Reverse labor migration is starting, 2- Remittances are stagnating and 3- Region’s risk perception is quickly changing”.
“Albania finds herself in the risk of getting squeezed by the Greek and Italian economic crisis,” he said.
There are no official figures but it is true that many Albanians are turning back home following months of unemployment in neighboring Greece. Some of them have also tried to open a small business in their homeland.
Last but not least, the Greek financial crisis might affect Albania’s aspirations towards the EU accession process. The debt crisis in the Euro zone reinforces EU enlargement fatigue, so there is a risk of slowdown in the EU integration process. He also explained that Greece is as Balkan as European and serves as a great promoter of the region’s integration.
One should also take note of Albania’s difficult transition problems and its political stalemate that, at least in the last two years, has prohibited or hampered many required steps for the European integration.
Albania is expecting to get the candidate status from Brussels. But it has yet to start fulfilling 12 key recommendations from last year’s annual progress report prepared by the European Commission. There is little time for the next one and unsure if Tirana can please Brussels to give the go-ahead for the candidate status.
Despite the pessimistic assessments on future developments, Bastian also recognized that there is progress made and there are also challenges ahead.
For instance, “Albania is not Greece. Trade, FDI and labor migration matter is not the same. Pooling resources, sharing experiences and Central Bank cooperation in South Eastern Europe are challenges ahead of Albania,” he said.
There were more comments and opinions from other participants at the lecture, including those of Albanian experts on economy.
Zef Pre詬 one of the local contributors to this panel, emphasized the need to take seriously this crisis, especially from decision-makers and politicians.
“There is an effect varying from moderate to strong, of this crisis in the Albanian economy, which has experienced an economic growth. But this is an indicator that on the future it will slow down considerably, so the growth is endangered,” he said.
Preci also highlighted the fact that “the country’s exposure to foreign investment is diminishing”.
Luljeta Minxhozi, an economic professor as the other local contributor of the panel, emphasized some interesting elements of the possible effects this crisis might have in Albania.
“We can learn a lot from this crisis. First of all, we must hold a realistic attitude towards macroeconomic and microeconomic indicators. We should take into consideration the fact that Albania has passed two times the cross line of budget deficit. Public finances show there is a worrying situation. therefore the crisis must serve as a sign of alarm to them in order to reformulate their fiscal policies,” she said.
“We must be very careful not to repeat Greece’s mistakes of hiding real numbers, considering that problems might be hided but they are there and will come to surface at a certain time,” she added.
The lecture continued with many comments and questions addressing issues discussed by the panel of speakers.
The public lecture was the beginning of a series of meetings to discuss further, not only the economic implications of this crisis, but also other social, political and cultural implications, thus composing a series of contributions to the development of the Albanian society.
