With the region now feeling the full effects of the European economic crisis, Albanian, Greek and German experts discuss options at hand in Tirana conference.
Tirana Times
Tirana, March 27 – Pressures on the regional economy will continue in 2012, as the aftermath of the European crisis continues to affect the growth of small Balkan economies, consumer behavior and remittances, regional experts say.
Albania is already feeling the pinch, and things could get worse, economists warned at an international conference in Tirana last week. The fall of remittances has caused decline in spending, as Albanians hold off on purchases. That has had a negative impact on economic growth, freezing real estate markets and lowering import-export rates, the experts noted.
In addition, economists believe that the statistics available so far don’t tell the full story, as it might take some time for the full picture to reveal itself.
Those were just a few of the conclusions drawn at a March 27 conference organized by the Albanian Institute for International Studies, the Greek Embassy, Friedrich Ebert Stiftung and ELIAMEP.
The Regional Consequences of the European Economic Crisis Conference brought together economic and political experts, researchers, as well as a host of domestic and foreign political representatives, who acknowledged that the years-long crisis is not merely a matter of economy, but one of bilateral relations and regional policy.
The conference was part of a series of events the Greek Embassy in Tirana organized for Greek Cultural Spring honoring the country’s March 25 national day.
Albania feeling the pinch
Albaniahas a host of questions on which it must focus when dealing with the economic crisis, saysSelami Xhepa, a top economist and Democratic member of parliament. Consumption has declined and thecoming year will be difficult, asthe he decrease in workers’ remittances continues. That money would have normally gone on things like construction, services and tourism – which are all now facing a hard time, he says.
“There has been a drop in consumption in this country, and this is due to the Šfragile state of the economy in the region,” says Mr. Xhepa. “2012 will be a year in which the intensity the European crisis is felt will be stronger than previous years.”
He adds that a large part of the labor market in Greece is illegal and cash-based, which explains why emigrants’ earning often do not appear in statistics.
The opposition’s economy critic in parliament and a former finance minister, Arben Malaj, says the decline in economic growth from 6 to 3 percent is only one aspect of the crisis. He says Albania is seeing a decrease of exports and imports – an indication of the drop in consumption and lower commercial ties to traditional partners like Italy and Greece.
Mr. Malaj says countries like Albania need to focus more in solving internal shortcomings and not look solely outside for solutions. “The EU is not a magic formula that solves structural problems our countries have, like the flexibility of the labor market and the budget costs of social policies,” he said at the conference. “Productivity and ability to compete are also tied to things like the quality of governance, corruption and the function of rule of law.”
As difficult at it may seem,thiseconomic hardship can also serve as a lesson of cooperation, rather than stumbling blockfor political forces.Indeed, Gjergj Filipi of the Agenda Institute noted that the potential to learn lessons and improve is one of the few positive aspects of any crisis. “Although this doesn’t happen on its own. All parties must actively study the issuesand seek change,” he says.
Dr. Filipi also adds that although Albania is not technically in a recession, the figures indicate it wouldn’t take much to bring the country into negative growth. “Economic growth is 1 percent, and that’s very close to zero,” he said “If there are any errors in measurement, it could easily already be below zero.”
A regional crisis
Franz-Lothar Altmann, arenowned scholar of the Balkans andformer senior research fellow at the Alexander S. Onassis Foundation, says the economic crisis won’t be an easy affair in the Balkans because of the region’s past.
“The[Balkan]region has inherited a history of political challenges and disputes that do not make things any easier,” Professor Altmann says. “In addition,Iran, the Arab Spring, and all of the global challenges that are arising imply a new and uncertain world order in which the Western Balkansislosing attention.”
Thissidelining of the Balkans is compounded by the prospective uncertainty which the European Union will have to face as well, Professor Altmann added. Whileregional politics have been absorbed bythe economictroubles, the general current fragility of the EUas a wholehas left room for a stronger Turkish presence and calls for help from Serbia to Russia.Shifts in power and influence remain a question for the future.
Analyzing Albanian-Greek relations
In addition tosuchdomestic change, the crisisneeds to beusedas a foundation for regional integration and better relations. In fact, asAlbaniamarks its 100thanniversary of independence this year, it has also marked some of its lowest levels of political collaboration and consultation with Greecein years.
“Communication amongthe high levels of politicshas been at an ultimate low in the past few years; and most contact is conducted sporadically at the outskirts of large summits,” says the former Ambassador of Greece toAlbania, Alexandros Mallias.
Is there a lack of interest? Is there a lack of will? The retired ambassador regretfully noted that doubt and perceptions among both states have prevailed over reality. At this point, “GreeceandAlbanianeed a psychiatrist, not a diplomat. Even if it is not popular among the people and some political figures, both sides must make compromises to find common ground. Political forces must displayleadership,” he added.
It’s a message that has not been lost in Tirana.
“Unfortunately, there is an evident preference by the political forces for the status quo. However, there can be no change without reconciliation,” says Albert Rakipi, executive director of the Albanian Institute for International Studies.
Indeed, any sense of blocked relations between Greece – Albania’s only regional neighbor which is an EU and NATO member, and also one of the country’s most important trade partners – would only serve to erode the future progress and success of bilateral relations,and the potential example thatthe twocould be set for the region, the experts note.
EU progress in focus
In addition, such displays of genuine goodwill among Balkan neighbors will be needed if the region is to progress along its EU path. With the increase of EU intergovernmentalism that has been ushered in by the European crisis, it will take significantly more convincing to keep EU doors open.
“The accession ball must be kept rolling despite economic and institutional crises in the EU and its consequent divisions,” noted Ioannis Armakolas, a Stavros Costopoulos research fellow at ELIAMEP.
Therefore, whether the crisis is economic or political, Greek or European, or a combination of them all, it is essential that each regional player takes the current uncertainties as a warning of an overall illness that can only be addressed with domestic healing and progressive foreign policy.
“We need a new deal,” says Mr. Mallias.
