Albanian political row to hit tourism, growth

Wed Feb 2, 2011

* Political crisis may harm economic growth, investments

* Tourism to suffer in what was expected to be boom year

* Solution of crisis could lessen economic impact

By Benet Koleka

TIRANA, Feb 2 (Reuters) - The recent political violence and deep hostility between Albania's main parties are damaging investors' confidence and tourism prospects and could hit the growth of the economy, analysts and officials said.

The Albanian economy was one of the few in Europe to grow during the global crisis, but the prolonged dispute over the 2009 election result, which led to three anti-government protesters being shot dead in January, risks causing serious economic damage.

The political situation in Tirana remains fragile with the goverment on a possible collision course not only with the opposition but also the president and the prosecutor general, though a mass opposition rally last week remained peaceful. [ID:nLDE70R1VF] [ID:nLDE70N0N2]

Though picked as the number one destination of 2011 by travel guide publisher Lonely Planet, Albania has already seen tour operators cancel bookings because of the violence in a year that was expected to increase tourism revenues.

Shots fired from the courtyard of the prime minister's office killed three opposition protesters at a Jan. 21 rally against alleged corruption and electoral fraud. Police, backed by the prime minister, refused to arrest six chiefs of the republican guard over the deaths. [ID:nLDE70K23A]

"It has first hurt (Albania's) image because the bad memory of 1997 has made a comeback. The most affected industries are exports and retail," said Ornela Liperi, editor of the economic magazine Monitor, referring to widespread violence in 1997.

In the longer term, it affects potential investors, analysts said. Albania has the opportunity to attract Italian textile investors pulling out of Tunisia.

The shootings prompted the European Union to tell the Albanian government and opposition they must act urgently to end their row and restore order if they wanted to achieve their goal or joining the bloc. [ID:nLDE70P2DH]

After the unrest in the late 1990s, the Albanian economy grew steadily at an average of 6 percent a year until 2008, when it suffered from the global crisis but still kept growing, recording 4.1 percent GDP growth in 2010.

Anastas Angjeli, a former Socialist economy and finance minister, said the long-running political crisis that led to the protesters' deaths was also damaging the economy.

"... economic growth will be lower not only because of ... the global economy but now also because of the effects of this (political) crisis," said Angjeli, now a private university rector.