Albania braced for fallout from Greek crisis

Tony Barber in Tirana

©AFP

Albanian migrants pick olives in the village of Stimaga, south of Athens

Albania is bracing itself for the risk that turmoil in Greece, its southern neighbour, will force tens of thousands of migrant Albanian workers to return home, cutting off remittances to hard-pressed families in one of post-communist eastern Europe’s poorest states.

Government ministers in Tirana express confidence that Albania’s financial system can ride out the storm, even though three banks in Albania are Greek owned and control almost 16 per cent of all assets in the Albanian banking sector.

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But the concerns about the possible return of migrants underline that Albania and other Balkan states, rather than Greece’s eurozone partners, could be the first to feel the economic and social ripple effects of the crisis in Athens. About 12 per cent of Albania’s 3.2m people live below the World Bank-defined poverty line of $2 a day.
“Albanian migrant workers have been going to Greece since the early 1990s,” Ditmir Bushati, Albania’s foreign minister, told a visiting group of EU reporters in Tirana on Wednesday. “The contributions of Albanians abroad, in Greece and in Italy, too, have been quite instrumental in supporting the Albanian economy. Economically speaking, we’ve felt the effects of the Greek crisis.”
Remittances from Albanians working abroad fell from €952m in 2007 to €544m last year, but even the lower figure represents about 5 per cent of Albania’s gross domestic product. About 180,000 Albanian migrants have returned home over the past five years as Greece’s crisis intensified but several hundred thousand, mostly thought to be there illegally, are estimated to remain — mainly in the Greater Athens area and the northern port city of Thessaloniki.

The danger now is that large numbers of migrants, if they lose their jobs and savings in Greece, will return to Albania. This would push up unemployment — currently standing at 14 per cent of the workforce — in the short term, strain the stretched social security system and pose the challenge of how to integrate migrants’s children educated in Greek into Albanian schools and society.
These problems are considered potentially more serious for Albania than any risk of financial contagion from Greece. Albanian central bank officials say the three Greek-owned banks in the country have capital adequacy ratios of more than 17 per cent, comfortably above the minimum 14 per cent level set for them.
According to Mr Bushati, however, the Greek crisis may have the unfortunate consequence of setting back recent Albanian-Greek efforts to ease tensions in a relationship dogged by territorial, ethnic minority and other disputes, some of which go back to the second world war.

“In times of deep economic and financial crisis, these problems are much more difficult to address. Nationalistic rhetoric comes into fashion, and this doesn’t create an environment conducive to dealing with bilateral issues.”
Nikos Kotzias, Greece’s foreign minister, is due to visit Tirana on July 15, but it remains to be seen if he will arrive with fresh ideas for overcoming a quarrel over how to delineate the continental shelf between the two countries in the Ionian Sea. In 2010, Albania’s constitutional court annulled a territorial agreement signed with Greece a year earlier.
Another point of dispute is that, in Tirana’s view, Albania and Greece, although both Nato members, are still technically at war because the Greek parliament has never repealed a war decree passed when Italian forces based in Albania attacked Greece in 1940. In Albania’s view, this prevents the ethnic Albanian Cham minority, expelled by Greece during the second world war for alleged collaboration with the Nazis, from reclaiming confiscated property