VZCZCXRO0193
RR RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHTI #0287/01 1021622
ZNR UUUUU ZZH
R 111622Z APR 08
FM AMEMBASSY TIRANA
TO RUEHC/SECSTATE WASHDC 6967
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEAWJA/DEPT OF JUSTICE WASHDC

UNCLAS SECTION 01 OF 02 TIRANA 000287 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
DEPT FOR EUR/SCE 
DEPT OF JUSTICE FOR OPDAT, ICITAP 
 
E.O. 12958: N/A 
TAGS: PGOV PREL ECON AL
 
SUBJECT: THIS WEEK IN ALBANIA, APRIL 5-11, 2008 
 
 
¶1.  (U) The following is a weekly report prepared by Embassy 
Tirana's local staff to provide political and economic context and 
insight into developments in Albania. 
 
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POLITICAL DEVELOPMENTS 
---------------------- 
 
¶2.  (SBU) TIME FOR A CHANGE: The Albanian Parliamentary Commission 
on Laws discussed this week proposed changes to the Constitution 
that, if approved, would fundamentally change the country's 
political system.  These would be the first major changes since its 
1998 inception.  Long-awaited electoral reform is on the table, 
including the move to a regional-proportional system from the 
current majority-based system.  This action continues to be strongly 
opposed by the smaller political parties, the majority of which have 
no hope of reaching the new threshold of support such a system would 
introduce for parliamentary representation.  These small parties 
have survived to date through the political patronage of the two 
major parties as they have no independent base of support.  The two 
larger parties have reportedly agreed to reduce the number of 
political parties, currently 12, to around four to six, claiming it 
would increase political stability and improve the professionalism 
and capability of the Albanian Parliament.  Proposed reforms also 
aim to introduce a non-political electoral administration agency 
since the work of the current Central Elections Committee has often 
been bogged down by political disagreements. 
 
¶3.  (U) In addition to amendments on electoral reform, however, 
which have been coordinated with the largest opposition Socialist 
Party (SP), the ruling Democratic Party (DP) has put forward other 
proposals that would streamline the parliamentary election of the 
president, including rules that would make it more likely that a 
president would be chosen without dissolution of Parliament or early 
elections.  (The Parliament only narrowly avoided early elections 
last July, successfully appointing Topi in the fifth round of 
voting.)  Another amendment would change the provisions regulating 
the parliamentary vote of confidence, requiring early elections if 
the Prime Minister fails the motion.  In this way MPs would have to 
think twice before deciding to bring a government down, as doing so 
would increase the risk they could lose their own seats.  A third 
proposal, under which Presidential decrees would only take effect 
with a counter signature from the Prime Minister, has already met 
significant opposition as it would further curb the President's 
already limited powers.  All of these proposals will be debated 
further, but it seems clear that significant constitutional changes 
are in the offing. 
 
¶4.  (U) KEEPING GERDEC IN THE PUBLIC EYE: Rumors continued to swirl 
through Tirana regarding alleged government involvement in the 
explosion at Gerdec ammunition depot on March 15, which killed 24 
and wounded 300.  Albania's second largest television station, 
pro-government TV Klan, aired an episode called "They Knew," 
presenting what it claims are classified official documents which, 
if authentic, would contradict PM Berisha's previous statement to 
Parliament that he had "no knowledge of Gerdec."  Several newspapers 
picked up the story later in the week, keeping the issue alive and 
in the public forum.  A game of subtle finger pointing ensued as the 
Ministry of Defense issued a press release refuting the PM's 
knowledge of evidence presented in the media, while not exonerating 
the office of the President.  The opposition also continues to keep 
the Gerdec tragedy in the public eye, with leader Edi Rama calling 
for a "clarification" this week from the PM on these allegations. 
The media and the opposition have kept the issue alive as the 
official government investigation remains ongoing. 
 
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ECONOMIC DEVELOPMENTS 
--------------------- 
 
¶5.  (U) INFLATION RISING: Albania's inflation rate hit 4.6 percent 
year in March, up from 3.6 percent in February and just 2.7 percent 
one year ago in March 2007, according to the state statistics 
office, INSTAT.  This leap, the highest in the last six years, is 
largely due to surging food and fuel prices.  Another major factor 
is the rise in electricity price, which took effect March 1.  This 
is the second time in six months that the inflation rate exceeded 
the Central Bank's limit of 4 percent; however, the IMF predicts an 
average inflation rate of 4.2 percent in 2008 for Albania. 
 
¶6.  (U) Albania has not been immune to the effects of the recent 
global economic downturn, beginning in particular last summer, with 
a spike in food prices that caught the attention of policymakers and 
civil society in addition to average citizens.  Since then, the free 
float exchange rate and the recent valuation of the domestic 
currency against the dollar has partially absorbed rising prices. 
 
TIRANA 00000287  002 OF 002 
 
 
The government has downplayed current inflation rates claiming the 
effects are a boomerang of international economic problems rather 
than a result of this government's fiscal policy.  There are, 
however, possible domestic causes for higher prices, including the 
rapid increase in the number of consumer and business loans and the 
expansion of publicly funded projects.  The Central Bank is engaged 
in an inflation targeting regime, raising the interest rate twice 
last year, a fiscal instrument expected to be used again.  As 
pressure increases on the domestic economy, the government should 
react more promptly to assist the most vulnerable strata of the 
population, whose most immediate problem is the price of putting 
food on the table. 
 
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THIS WEEK IN ARTS AND CULTURE 
----------------------------- 
 
¶7.  (U) ICON EXHIBIT IN TIRANA: The National Gallery of Art opened 
an exhibition this week on the restoration of icons from the Museum 
of Art in Korca.  The Gallery features photos of some of the 80 
icons recently restored at the Museum of Byzantine Culture in 
Thessaloniki, Greece, a project funded by the European Center for 
Byzantine and Post-Byzantine Cultural Monuments, along with an 
exhibit explaining the restoration process.  This supplements the 
Gallery's substantial permanent collection of icons by painters such 
as Onufer Qiprioti, Joan Cetiri, and Konstandin Jermonaku to name a 
few.  Albania's icons are among the finest of the Byzantine era, 
including not only the collections in Tirana and Korca, but also the 
Onufri Museum in the ancient city of Berat. 
 
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QUOTE OF THE WEEK 
----------------- 
 
¶8.  (U) "Without [NATO membership], Macedonia will remain an 
unintegrated island -- and that does not benefit anyone.  But I am 
optimistic that a solution will be found."  PM Berisha, in an April 
10 interview with BBC's Hard Talk. 
 
WITHERS