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| >> Regional Overview >> Albania Overview | ||||||||||||||||||||||||||
(text taken from the FY 2003 Congressional Budget Justification) 
THE DEVELOPMENT CHALLENGE: Albania, with a population of about 3.1 million, has a small but growing economy that is simultaneously making the transition to a free market while recovering from civil strife. The structure of Albania's economy is rudimentary. Agriculture accounts for more than half of output and about 70% of the workforce. Much of the rural population still survives on subsistence agriculture, with little surplus to sell on domestic or foreign markets. Most farms are small and fragmented and thus lack the economies of scale and technology to produce for export. Remittances and a large informal sector mask an undiversified and vulnerable economic foundation. The trade deficit amounted to 22% of GDP in 2001, illustrating the lack of international competitiveness of Albanian industry. The enterprise sector is dominated by very small businesses, many of which operate extra-legally and have no access to formal sources of finance. Legitimate enterprises encounter unfair competition from this informal sector. All enterprises continue to face problems of poor infrastructure, energy shortages, delays with property registration and a judicial system that is sometimes corrupt and slow to resolve commercial disputes.
Albania's transition to democracy is incomplete. The interface between the citizenry and government is weak and remote. The public perceives the police, prosecutors and judiciary as corrupt. Both central and local governments are assumed to be corrupt as well. Such corruption is perceived to aid and abet organized criminal activities in the trafficking of contraband, drugs and humans. While the parliamentary elections of 2001 were the best to date since the collapse of communism, much remains to be improved to ensure impartial, free and fair election processes in the future. The political process and parties remain captured by the communist mentality of the dominant elite. Women are woefully under-represented throughout all levels of government, and the concerns of the average citizen are largely ignored. The NGO sector, while improving, continues to hold little capacity for long-term effort and remains donor-driven. Although technically free of state interference, most print and television media are politically dominated and do not provide fact-based, objective reporting. Albania faces problems in its health sector similar to other countries in the region. Its health care system requires significant restructuring to improve primary care resource allocation and provide satisfactory care for its citizens. The limited capacity of the health delivery and public health systems was severely strained by the civil unrest in 1997 and the influx of Kosovar refugees in 1999. Although real GDP is estimated to be about 50% higher in 1999 than in 1992, public funding for social programs, including health, has failed to keep pace. Much work remains to prepare Albania to take an active role in the global political-economy. Improvement of the country's public infrastructure, particularly the electricity sector, remains a key consideration. The Government of Albania (GOA) must also intensify its efforts to fight corruption, improve the legal framework for credit provisioning, and reduce bureaucratic hurdles in order to foster domestic and foreign investment.
It is in the U. S. national interest to help Albania address weaknesses in infrastructure networks, public and civil institutions, fragile government authority, crime, and corruption. This will enhance Albania's internal stability and facilitate its political and economic integration into the Balkans, thus contributing to regional stability. Albania is likely to enter into negotiations in late 2002 with the European Union (EU) for a Stabilization and Association Agreement, which would set the stage for preparations for the demands of becoming a candidate for EU membership sometime in the future. A stable, prosperous Albania will be in a good position to help U.S. efforts to combat terrorism, arms proliferation, narcotics and human trafficking, and international organized crime. THE USAID PROGRAM:
The USAID program in Albania supports economic growth and agricultural development, democratic development and social stability. These objectives support the U.S. interests identified in the U.S. Strategic Plan for International Affairs. These interests are: promoting broad-based economic growth; increasing foreign governments' adherence to democratic practices and respect for human rights; protecting human health; and ensuring that local and regional instabilities do not threaten the security and well-being of the United States and its allies. The Program Data Sheets provided below cover the six strategic objectives for which USAID is requesting funds. These strategic objectives concentrate on the following three general development topics: 1) economic growth and agricultural development to improve productivity in the agricultural sector, encourage growth of private enterprises, improve availability of credit to entrepreneurs, and strengthen the banking system; 2) democratic reform to support civil society by increasing citizen awareness of public issues, assisting in elections, strengthening legal institutions, and supporting the GOA decentralization program; and 3) health reform to improve primary health care by developing and implementing quality primary health care models, strengthening management capacity at the primary health care level, and encouraging community participation to ensure better health care for Albanians. FY 2002 funds will be used to implement ongoing programs. The specific activities to be funded by FY 2002 and FY 2003 appropriations are described in more detail in the following Program Data Sheets. OTHER PROGRAM ELEMENTS: USAID provides assistance for Albania through numerous programs that do not draw on bilateral funding. For example, regionally-funded activities in Albania include: support for NGOs which monitor government accountability; support for NGOs working on anti-corruption, advocacy and information sharing via the Organization for Economic Cooperation and Development's Anti-Corruption Network; provision of training for journalists, labor leaders, health professionals, bankers, and other professionals; and a group of energy activities that seek greater efficiency in power generation and distribution, as well as management of energy resources.
OTHER DONORS: Cooperation between USAID and other donor organizations active in Albania is strong and growing. The United States is Albania's third largest bilateral donor, after Italy and Greece. Other major contributors include Germany, the World Bank, International Monetary Fund, European Union, European Investment Bank, European Bank for Reconstruction and Development, Open Society Foundation, United Nations Development Program, Food and Agriculture Organization, and International Fund for Agricultural Development. Key elements of donor support focus on democratization and institutional development, with an emphasis on the judiciary, political cooperation, media, local government, and civil service reform. Program Data Sheets
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