ALB-DORADO - COUNTRY WHERE IT IS POSSIBLE TO LIVE

WITHOUT WORK

AIM Tirana, 28 November, 1996

If you have one thousand American dollars, for them you can get eight per cent of monthly interest rate or 80 dollars, that is - the average monthly income of an Albanian. It is sufficient to invest this money in one of the pyramidal systems which have overflowed the poorest country in Europe, and you need not work at all.

According to unofficial data, almost one third of Albanian families live on income obtained from interest rates. "Empire of interest rates" is formed by a large number of companies such as VEFA, Gjalica, Kamberi, Sudja, Xhaferri, Populli, and others, which all apply the pyramidal systems, offering monthly interest rates to 200 thousand of their clients which range between eight and 25 per cent a month.

"The interest rate has acquired civil rights in the life of the Albanians. It provides sustenance for thousand of families, may be even a significant portion of the population in this coutry", says Dr Zef Preci, Director of the Albanian Centre for Economic Research.

The Albanian press has on several occasions written about cases of citizens who had sold their homes, livestock and land even, in order to invest the thus obtained money into the pyramidal systems. On the other hand, the Albanian economic emigrants employed in neighbouring countries, Greece and Italy, have in great numbers withdrawn their deposits from banks of these states in order to transfer them to their home country where they can get several times more money from interest rates in pyramidal systems. As the press informs, Italian and Greek citizens have become clients of these "magic" Albanian pyramids, too, and even some foreign diplomats stationed in Tirana. The poorest country in Europe is living in an amok of per cents and interest rates. Long queues, forgotten ever since the fall of communism, reappeared, this time not in front of shops, but in front of 1,243 windows of these companies, where hundreds of people are waiting every day for their interest rates for deposits or in order to invest their money. The pyramidal systems, which also exist in other post-communist countries, operate by the principle "the last depositor pays the one in front of him". However, foreign experts suspect that these high percentages of the pyramidal systems conceal money laundring, narcotics trade, sales of weapons and other illegal actions. According to some unofficial data, more than 800 million dollars is in circulation in these companies.

International financial institutions, the International Monetary Fund and the World Bank have expressed their concern because of the number of Albanian citizens who are investing in these pyramidal systems. These organizations warned the Albanian Government to dissolve these systems or they would be forced to revise their relations with Albania.

"We have expressed our discontent to the Albanian Government and now we are expecting that they will take specific steps", said Helena Tongue, economist of the World Bank in Washington. Forced by the pressure exerted by the IMF and the World Bank, the Albanian Minister of finance, Ridvan Bode, having returned from Washington, appeared on Albanian Television in order to warn the Albanians about dangers of the "unofficial market". In the style of "glassnost" unusual for Albanian officials, Bode admitted that the IMF and the World Bank have asked that these companies be closed in order to avoid "the inevitable harm" they would do later. "High interest rates cause suspicion concerning pyramidal companies", said Bode who also hinted that the Government would initiate investigation of some of the pyramidal systems.

"High interests are not stable, because money does not grow on trees", said the representative of the World Bank in Albania, Karoc Ebirt. However, the warning of the Minister and suggestions of international institutions were followed by provocative gestures of the pyramidal systems which hurried to guarantee to their clients that everything was safe, some of them even raised interest rates. The President of the largest business company, VEFA, with branch offices in Macedonia, stated that he was planning to transform his company into a privately-owned bank as soon as the Government issued him a licence for it. In Albania there are still no privately-owned banks although the law on their operation was adopted a year ago. Percentages of interest rates has become the main topic of conversation among the Albanians, like at the time of Balsac. Nobody can predict what can happen in the poorest country of Europe, where it is still, after all, possible to live without working, if these pyramids tumble down.

"What does the IMF have to do with our worries. The owner himself knows best where his roof leaks", says visibly nervous, a 55-year old woman who is queueing in front of one of the windows of VEFA. "After all, this is the only way to survive", she adds.

It seems that the need and wish of the Albanians to become rich has conquered the fear of risk. Although not a small number of them has already lost their money, since some of the systems went bankrupt in the course of the year, and their organizers then disappeared from the country, the number of those who are investing deposits is every day twice as big as that of those who are withdrawing their money.

"When evebody is losing, let me lose too. Life is a lottery anyhow", continues the woman who, like many Albanians, is seeking comfort in this collectivist psychology which seems like a sacred formula in this El Dorado, or rather in the new Alb Dorado.

Between Scylla and Charibdis, or more precisely between the IMF and its own citizens, between meeting the daily needs and risk of major bankruptcy, the Albanian Government is indecisive in its actions. In the past few days, however, during the visit to Tirana of a delegation of the IMF, the Albanian Parliament was forced to nominate an independent commission of citizens which would control the activities of these companies and which would inform the public about the results. Whether this gesture marks a wish of the Government to wash hands concerning one of the most delicate problems in the country, or if it is a gesture in the direction of international financial institutions, it is hard to tell with certainty. Both arguments have some truth in them, although everybody knows that the high percentages of interest rates offered by these firms have created conditions for a peaceful and comfortable life of the Albanian Government, without protests, without pressure, although the shock therapy of reform applied in the country was quick and severe. In the cold war between the bankers and the Albanian "interest rate" companies, it seems that the latter are the winners, if nothing else at least temporarily. "Only the Albanian money lenders have menaged to grab the trend of economic development of the country", says pro-government daily Albania which does not hesitate to criticize Albanian banks which have remained dependent on envelopes coming from the IMF. The Government of Meksi, once believed to be the "Government of the IMF" does not seem to be ready as before to apply their recipes. The Albanians do not seem to be disturbed by bumpy roads, it makes them happy just to take their magic percentages at the windows of these pyramids.

Remzi LANI AIM Tirana