Andrea Stefani It is difficult to find in the history of world finance a case like Albania’s, where pyramid schemes risk draining the coffers of the overwhelming majority of Europe’s poorest population. It is difficult to find a bankruptcy that could threaten a state’s finances so completely. Only the banking part of the usury iceberg has become visible, and its scale appears catastrophic. Around 250 million dollars frozen in the bank accounts of the foundations alone are equivalent to more than 50 percent of the money collected through the economy’s non-bank channels. And it is not known what percentage of all the money circulating throughout the country’s economy—worth around 1.5 billion USD—has been swallowed by the still-undiscovered submerged part of the usury schemes. It is not known how much money people lost in the “Sude” firm, or how much they deposited with “Gjalliça”. The Transparency Commission has provided no information so far, not even about the nature of the “Vefa” and “Kamberi” companies, which have for some time advertised themselves as major investors in the country. And it is frightening even to think that these latter companies, too, could one day be denounced as pyramid schemes. The government between the people and inflation Minierizën [?] are large revenues and, at the same time, the looting of the financial world, misused politically for populist purposes. Will people get their money back? Today it is difficult to find even one person among the clients of the usury schemes who will confidently say that they will get back the money paid in at the counters. Nevertheless, the freezing of the money in banks has made it almost certain—regardless of how long the legal proceedings take—that some of this money will be returned to the clients who paid it in at the counters of the foundations. President Berisha has once again urged the Government, without setting any deadlines, to seek ways to return the money to the people concerned. But viewed through the eyes of the state, this would be an unbearable burden on the still-rickety legs of Albanian finances, all the more so if the total bankruptcy of the firms and companies that currently exist hypothetically as usury schemes or pyramid schemes is confirmed. In addition, the enormous scale of the usury business and the resulting depletion of the state budget rule out any governmental generosity toward this “private” collapse. At the end of 1995, Gross Domestic Product (GDP) was around 2 billion dollars and state budget revenues were around 450 million dollars. Meanwhile, this year, the domestic budget deficit alone—that is, excluding the external deficit—reaches 270 million dollars. It seems that resolving the issue of usury-scheme debt will be more complicated than resolving the external debt that Albania inherited from socialism, and to guarantee which it had to purchase around 225 million USD in U.S. Treasury bonds.

Thousands of people have taken to the streets in recent days with a single demand addressed to the Government: “We want our money!” But it seems that even if it had the money, the Government would not dare distribute it immediately without risking an inflationary explosion. Like Ulysses caught between Scylla and Charybdis, the Meksi cabinet is trapped in the vicious grip of the people and inflation. If it gives the money, inflation surges. If it does not, the people surge. It is a problem that only a cunningness like Ulysses’ could solve. And for now, we are talking only about returning around 250 million dollars frozen in banks. It is only clear why repaying the interest would require—since these have gone to foundations promising interest of 1 to 2—another roughly USD 500 million. If this money were returned immediately, the amount of money outside banks would increase by around 50 percent. And we are dealing with the most liquid component of monetary aggregates, with a rapid effect on rising prices. Inflation rising as a result of an increase in the money supply from the banking system is a certainty. Clients would receive unbacked money, and an unforeseeable increase in macroeconomic costs would also harm that part of the population not involved in the pyramid-scheme business. This is what prompted the governor of the Bank of Albania to state, in an interview given to “Voice of America,” a message whose contradictory essence was: The money must be paid, and quickly, but the payment cannot be made quickly. Meanwhile, the inflation risk that comes today from this mass of money withdrawn from banks lessens their contribution—and therefore that of the super-pyramid schemes—to curbing inflation when they were taken out of circulation. But the Government must find a solution at all costs, demonstrating that it is capable of governing. This is the signature

What do the companies “Vefa” holding, “Kamberi,” “Gjallica” and others represent? Will they be able to survive? And the Meksi cabinet has decided, in a move suspected of being a concession, at a special meeting, to establish a government commission that will also investigate the accounts of these giants. Hundreds of thousands of Albanian emigrants and families have tied their fate to them. Their bitterness is held back from erupting by a single hope: that these firms will be saved as “serious companies, with powerful investments,” as their bosses may have advertised them. The threat of catastrophe will be eased. Then, even if pyramid-like structures are found to be integrated into these firms, after the anti-pyramid-scheme operation it may be possible to gradually convert them into normal businesses, with a view to achieving a soft landing. Prime Minister Meksi himself answered “yes” to this possibility in an interview with the newspaper. But in this case, the main thing that must be repaired is the trust of their clients, who will become former clients after January 1. And it is not known whether, in addition to economic and financial mechanisms, full guarantees and total transparency secured through state mediation will be enough. Will the firms be saved? A deceived people, accustomed to feeling dazzled by premature growth and advertisements that light up the sky but do not make it any clearer.

TIRANA - An investigative file has been opened against the opposition. The Tirana Prosecutor’s Office has opened a criminal case and begun investigations into Sunday’s demonstration at “Skënderbej” Square in Tirana. It was the Tirana Police Directorate that filed the complaint about the unlawful rally, where there were also clashes with the police. It is reported that the list of politicians to be investigated as responsible for the incident includes opposition leaders Skënder Gjinushi, Rexhep Mejdani, Luan Hajdaraga, Gaqo Apostoli, Musa Ulqini and Pandeli Majko. The leaders of the opposition parties will be investigated while at liberty and will be questioned from time to time by investigators and prosecutors. Almost the same situation as on May 28, after the parliamentary elections. After the court sentenced the demonstrators who had been arrested, it was almost the same politicians who had been summoned to the prosecutor’s office to answer questions about the rally. But now it seems the consequences for the opposition may be more serious, since a case file has been opened and the offence they are accused of carries a sentence of up to one year in prison. (me.ki)

Those arrested at Sunday’s rally in court (Photo: P. Ilo) On pages 3–5 Those arrested at Sunday’s rally in court (Photo: P. Ilo)

“I have seen the investigators only three times” TIRANA - From the prison cell where he awaits his first trial, Alia issues a statement: “Legal procedures have been violated in my investigation, and the charges have not been fabricated for political reasons to conceal the country’s dire economic and political situation.” The former president is awaiting trial over some of the most notorious events of recent years: the killings at the border, the revolt at the United School and April 2 in Shkodër. “Since February, when I was arrested, I have met with the investigators only three times,” Ramiz Alia writes in his statement. “The last time was to inform me that the investigation had been closed. This is contrary to fundamental human rights.” On page 7

SPORT Ronaldo player of the year The Brazilian was chosen for the title by a jury of 120 coaches. He was followed by Weah, Shearer and Sammer. On page 6

INTERVIEW / Prime Minister Meksi: “Investigations not only into the foundations, but also into the companies”

Albafilm: France, please help us On page 4

Zajedno carried out the attacks in Kosovo On page 2

... clear [measures?] followed and destabilize both the Albanian economy and democracy,” was the appeal made during Fassino’s speech on the situation in the Balkans. According to Italy’s deputy foreign minister, the stability of democracy in Albania required two conditions: “First, [it] should ensure control over dirty money, and [second,] that no tensions be fuelled over the Albanian issue and that there be no external pressure or interference in Kosovo.” Fassino also remembered to mention the issue of the Constitution, on which he dwelt at length with representatives of Albanian politics at the meeting he held in Tirana. “A new constitution is needed, drawn up at a collaborative round table, at which all parties—government and opposition, parliamentary or otherwise—can participate.”