VZCZCXRO4477
PP RUEHLMC
DE RUEHTI #0313/01 0871436
ZNR UUUUU ZZH
P 281436Z MAR 06
FM AMEMBASSY TIRANA
TO RUEHLMC/MILLENNIUM CHALLENGE CORP  PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 4038
INFO RUEHTH/AMEMBASSY ATHENS 2861
RUEHBW/AMEMBASSY BELGRADE 2674
RUEHLO/AMEMBASSY LONDON 1164
RUEHFR/AMEMBASSY PARIS 1054
RUEHRO/AMEMBASSY ROME 5212
RUEHVJ/AMEMBASSY SARAJEVO 0395
RUEHSQ/AMEMBASSY SKOPJE 4066
RUEHVB/AMEMBASSY ZAGREB 2898
RUFNPKB/COMUSNAVEUR NAPLES IT
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
RUEHPS/USOFFICE PRISTINA 3370

UNCLAS SECTION 01 OF 04 TIRANA 000313 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
MCC FOR AMBASSADOR DANILOVICH 
DEPT FOR EUR/SCE (BENEDICT/SAINZ) 
NSC FOR BRAUN 
TREASURY FOR ATUKORALA 
 
E.O. 12958: N/A 
TAGS: EAID ECON KMCA OTRA AL
SUBJECT: SCENESETTER FOR MCC VISIT TO ALBANIA 
 
¶1. (SBU) Summary:  The new Government of Albania (GoA), led 
by Prime Minister Sali Berisha, took office in September 
¶2005.  Berisha's governing coalition, led by his Democratic 
Party, was elected largely on a campaign promise to combat 
endemic organized crime and corruption.  The  new GoA has 
taken some positive steps to follow through on its promise of 
clean government, but ultimate success will depend on the 
government's management skill in crafting and implementing 
its program, including specifically, achieving political 
consensus with the opposition on the major components of its 
program. 
 
¶2. (SBU) Summary (Cont'd) GoA relations with the U.S. are 
excellent. Albania, which has been an eager ally in the GWOT, 
is working to achieve NATO membership, hoping for an 
invitation in 2008.  Albania also is also working towards EU 
accession -- it is close to finalizing a Stability and 
Association Agreement with the European Commission. 
Ultimately, Albania's Euro-Atlantic integration aspirations 
will depend on how well it addresses rule of law issues and 
whether, by doing so, it can improve its business climate to 
attract outside investment to bring Albania on par 
economically with other NATO and EU candidate countries.  End 
Summary. 
 
PERCEPTIONS OF THE U.S. 
 
¶3.  (SBU)  Albania is one of the most U.S.-friendly countries 
in the world -- a recent poll indicated that well over 90 
percent of its populace held a favorable view of the United 
States.  Albanians credit Woodrow Wilson with preserving 
Albania's statehood following WWI and are enormously 
appreciative of the U.S. led military effort in 1999 to 
protect ethnic Albanians in Kosovo.  A popular morning DJ 
here begins his show with the slogan -- "Love Albania like 
you love the United States."  Although the U.S. is neither a 
major trading partner nor a lead donor, our influence here is 
great, and USG actions receive  extraordinary attention from 
the government, media, and citizenry. 
 
POLITICAL OUTLOOK 
 
¶4.  (SBU)  Albania took a major step toward consolidating 
democratic change in 2005 by holding parliamentary elections 
that, though not fully meeting international standards, were 
judged to be a step forward.  After eight years in the 
opposition, a coalition led by the center-right Democratic 
Party (DP) was elected on a campaign in which it promised to 
fight corruption and crime and come to government with "clean 
hands."  The transfer of power in September 2005 occurred 
peacefully and relatively smoothly, a welcome first in 
Albanian political history. 
 
¶5. (SBU)  The new GoA has taken some steps in keeping its 
promises to combat organized crime and corruption.  There 
have been arrests of key organized crime figures, as well as 
indictments against a few former government officials on 
charges of corruption.  The GoA has also proposed a number of 
notable legislative and administrative initiatives  -- a 
stronger conflict of interest law, increased funding for 
witness protection programs, tougher customs enforcement, and 
a very tough anti-nepotism law. 
 
¶6.  (SBU) The DP's handling of some aspects of crime and 
corruption problems, however, has caused a ruckus in 
Parliament, mainly due to the DP's urging for a change of the 
Prosecutor General (who is politically independent from the 
DP government).  The opposition's strategy is now aimed at 
making the "fight against corruption" appear to be a gambit 
by Berisha to settle political scores. 
 
¶7. (SBU) To avoid giving ammunition to either side, we 
 
TIRANA 00000313  002 OF 004 
 
 
suggest you emphasize "respect for the rule of law."  The GOA 
should be urged to focus on demonstrable results and to 
conduct arrests and prosecutions of high-level corrupt 
officials and organized criminals in a tough but fair and 
transparent way.  For the effort against organized crime and 
corruption to be credible, these arrests and prosecutions 
cannot be seen as politically motivated. 
 
BILATERAL ISSUES 
 
¶8. (SBU) Albania was among the first countries to answer our 
calls for support in the GWOT, and its support has been 
unwavering.  The Albanians have a contingent of 120 Commando 
troops in Mosul, Iraq, and 22 Special Operation Forces troops 
in Afghanistan.  In addition, There are 68 soldiers from the 
Rapid Reaction Brigade in Bosnia. Overall, including troops 
in preparation for overseas deployments, Albania has 31 
percent of its elite troops committed to the GWOT. 
 
¶9. (SBU) The desire to join NATO (and the Euro-Atlantic 
community in general, including the EU) is very strong in 
Albania.  Albania wants to receive an invitation to NATO in 
2008, but we have been careful to avoid making commitments, 
stressing that the door is open, and that the U.S. supports 
Albania's aspirations, but it is Albania's achievement of 
necessary political, military, economic and political 
standards that will determine membership. 
 
ECONOMIC ISSUES 
 
¶10. (SBU) The GoA recently canceled a USD 80 million railway 
modernization contract that had been entered into between the 
previous government and General Electric.  The World Bank and 
IMF had opposed the contract, claiming it was too expensive 
and not a spending priority for the government.  The Embassy, 
however, supported GE's position in the matter and has since 
expressed "disappointment" that an important transportation 
infrastructure project will not go ahead. 
 
¶11. (SBU) Albania has enjoyed excellent macroeconomic 
stability in recent years, with low inflation (2 to 3 percent 
annually the last 4 years), solid growth (6 percent 
annually), and a stable currency.  To date, much of Albania's 
growth has been fueled by remittances from abroad, mainly 
from emigrant workers in Greece and Italy.   The main 
economic challenge is to improve the business climate to 
attract badly-needed foreign direct investment.  Without 
substantial increases in the level of FDI, Albania will 
neither sustain its current growth pattern nor will it 
achieve the higher rates of growth needed to bring it on par 
with credible EU-candidate countries within the next decade. 
 
¶12.  (SBU) Although infrastructure deficiencies (especially 
roads and energy) are partially to blame for Albania's 
low-ranking on FDI in the region, the main deterrents appear 
to be strong perceptions of corruption and weak rule of law 
institutions.  Although some of these perceptions are 
outdated and overly negative, real problems of crime and 
corruption remain a major deterrent to foreign investors. 
 
¶13. (SBU) Support of American business is an increasingly 
important function of our mission.  Lockheed Martin is 
undertaking a $47 million project to modernize the air 
traffic system and is negotiating with the GoA for a $17 
million coastal surveillance system installation contract. 
General Electric has sold medical equipment to the government 
and is poised to invest in the energy sector to develop 
hydropower resources.  Other U.S. affiliated firms, like AMBO 
Pipeline and ASG Power are contemplating billion dollar 
projects to increase power production and to make Albania a 
crucial player in the gas and crude oil pipeline network. 
 
 
TIRANA 00000313  003 OF 004 
 
 
REGIONAL ISSUES / KOSOVO 
 
¶14. (SBU) Your interlocutors may mention Kosovo and regional 
issues.  Albania has been a stabilizing presence in the 
Balkans, particularly on Kosovo, by discouraging extremism 
and cooperating with the international community.  The new 
DP-led government has been somewhat more vocal in support of 
Kosovar independence.  Foreign Minister Mustafaj recently 
roiled the waters by suggesting that other borders might 
change if Kosovo were to be divided a comment that was unwise 
at best in the current climate.  Lest there be any doubt, the 
GoA reaffirmed that its Kosovo policy remains unchanged, as 
does it support for the Contact Group and international 
efforts to decide Kosovo's final status.  We therefore 
recommend you express appreciation for Albania's constructive 
role in the region and urge continued moderation. 
 
OTHER USG ASSISTANCE PROGRAMS 
 
¶14.  (U)  Programs administered by USAID, the Department of 
Justice, Department of Treasury and the State Department's 
Public Diplomacy wing are funded under the SEED program. The 
FY06 SEED budget for all countries in the region was cut by 
Congress this year -- the current budget for Albania stands 
at USD 24.75 million (down from USD 28 million last year). 
USDA assistance was terminated in FY 2005. 
 
¶15.  (U)  USAID commands the biggest slice of the SEED budget 
pie  -- roughly USD 19 million -- and focuses its programs on 
four areas:  Economic Development (mainly programs to make 
small and medium size businesses more competitive); 
Democratic Reforms (strengthening civil society and rule of 
law institutions); Health Care Reform (developing a primary 
health care system); and Special Initiatives (an extensive 
anti-trafficking program, religious harmony projects and 
energy sector reform). 
 
¶16. (SBU) U.S. Security Assistance programs include FMF (FY 
06 USD 3.5 million); IMET (FY06 USD 900,000); Coalition 
Solidarity Funding (FY05 USD 6 million); Global Peacekeeping 
Operations Initiative (FY06 USD 3.5 million); Peace Keeping 
Operations funding for operations in Iraq (FY05 USD 750,000, 
FY06 as needed); Humanitarian Assistance, and a number of 
smaller programs. 
 
¶17. (SBU) The U.S. is spending USD 35 million through the 
Nunn-Lugar Cooperative Threat Reduction program to destroy 
Albania's Communist-era chemical weapons stockpile.  The 
Department of State has also provided assistance with 
destruction of small arms/light weapons (including MANPADS) 
and heavy munitions as well as support to humanitarian 
de-mining in Albania. 
 
OTHER DONORS 
 
¶18.  (U) The World Bank and IMF have recently extended their 
agreements with Albania, signing on to a USD 196 million 
four-year package and a USD 24.7 million three year package, 
respectively. The Bank considers Albania to be above normal 
IDA qualifying maximum income figures, but nevertheless is 
extending IDA assistance on a number of projects.  Italy, 
Greece, Germany, EBRD, EIB and EU institutions also provide 
substantial assistance to Albania. 
 
POSSIBLE MESSAGES TO THE GOA 
 
¶19.  (SBU)  Although we anticipate that your discussions with 
the GoA and any dialogue with the press will likely be 
focused entirely on the nature of the Threshold Program 
assistance, we include several of our standard talking points 
below to address other topics which may come up: 
 
 
TIRANA 00000313  004 OF 004 
 
 
--We recognize that Albania is working hard to reform its 
institutions, including by fighting corruption, attracting 
foreign investment, and consolidating democratic institutions. 
 
--How the government tackles rule of law issues is crucial. 
It is essential that the government use the institutional 
framework, good police work, and the judiciary to get the job 
done in a transparent and fair way.  In addition, it is 
imperative that the government reach consensus with the 
opposition that this is a national objective that must be 
implemented and supported by all parties. 
 
--GWOT:  Albania has shown itself to be an excellent partner 
in Iraq and Afghanistan.  The USG is grateful for Albania's 
contribution and we look forward to your continuing support. 
 
--We are pleased that economic growth is a key part of your 
program.  We believe US investment can play an increasingly 
important role in this.  We strongly support investments by 
major US companies like GE, Lockheed Martin, ASG Power and 
AMBO.  Their success will draw additional foreign capital, 
both from the US and the international business community. 
 
--Regional Issues:  Albania has traditionally played a 
positive and moderating role in Kosovo and Macedonia.  The 
U.S. will continue to count on this role, particularly as 
negotiations progress on Kosovo. 
RIES