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OO RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
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DE RUEHTI #0408 1740953
ZNR UUUUU ZZH
O 230953Z JUN 09
FM AMEMBASSY TIRANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8234
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEAIIA/CIA WASHDC PRIORITY
RUEHVEN/USMISSION USOSCE PRIORITY 2509
RHEFDIA/DIA WASHINGTON DC PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 0827
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC PRIORITY
RUEKJCS/SECDEF WASHINGTON DC PRIORITY

UNCLAS TIRANA 000408 
 
SIPDIS 
SENSITIVE 
 
DEPT FOR EUR/SCE J.ISMAIL 
TREASURY FOR V.ATUKORALA 
 
E.O. 12958:N/A 
TAGS: EFIN ECON PGOV ELAB AL
SUBJECT: ALBANIA'S REMITTANCES 
 
SUMMARY 
------- 
 
¶1. (SBU) Albania's economy and its domestic population of about 3.2 
million rely on remittances from roughly one million Albanians 
working abroad.  Although remittances have fallen from an estimated 
947 million euro in 2007 to 800 million euro in 2008, there are 
signs the decline is abating and remittances might actually be 
rising again.  (NOTE:  Banking officials estimate that only 50 
percent of remittances come through official channels - the rest are 
carried across borders by individuals and are in most cases 
undeclared.  End note.)  Although some remittances finance 
construction and other business activity, most are used to help poor 
families meet immediate needs.  Since Albanian workers are valued 
for their work ethic and generally occupy low-paid but necessary 
jobs, they have not suffered as much as was expected from the global 
economic crisis, nor have significant numbers returned to Albania. 
End Summary. 
 
Remittances - Albania's Lifeline 
-------------------------------- 
 
¶2. (SBU) Remittances represent the largest influx of foreign capital 
into the Albanian economy, far more than foreign direct investments 
and exports.  However, banking officials estimate that only about 50 
percent of remittances come through official channels such as bank 
transfers and currency forwarders like Western Union. 
 
¶3. (SBU) Remittances play a major role in alleviating poverty in 
Albania and are mainly used for immediate and pressing needs of 
emigrants' families, with little going into bank accounts or 
investments.  Although remittances have been stable over the last 
few years, 2008 saw a decline of 15 percent (mostly in the second 
half) to an estimated 800 million euro (9.2 percent of GDP) compared 
to 947 million euro (12 percent of GDP) in 2007.  During the first 
quarter of 2009, estimated remittances were eight percent below 
first quarter of 2008.  However, Edmund Leka, owner of Union Bank 
and the Western Union franchise for Albania, Macedonia, and Kosovo, 
told econoff that he has begun seeing an uptick in remittances and 
believes the worst is over. 
 
¶4. (U) There are no accurate official data about the number of 
Albanians living abroad because much work-related emigration has 
been illegal.  According to recent studies done in both Albania and 
in host countries, 600,000 Albanians live in Greece, 250,000 in 
Italy, 150,000 in the US, 50,000 in the UK and another 30,000 spread 
throughout the EU.  The studies estimate that half of all immigrants 
do not have legal work status and work in seasonal agricultural, 
construction and tourism jobs. 
 
¶5. (U) Remittances have offset Albania's trade deficit in recent 
years, keeping the lek relatively stable.  However, the global 
economic crisis reduced demand for Albanian exports such as textiles 
and shoes.  The decline of exports and remittances together has 
caused a seven percent decline of the lek against the euro since the 
beginning of 2009.  Surprisingly, imports have actually increased 
slightly, further compounding the problem. 
 
¶6. (U) While there was concern last fall that returning migrant 
workers would put a strain on the Albanian economy, few migrant 
workers have actually been forced to return and there is no evidence 
of any social tension as a result of these returnees.  The Ministry 
of Labor and Social Affairs is organizing an inter-ministerial 
working group to help returnees and is exploring incentives for the 
integration of Albanians returning home. 
 
COMMENT 
------- 
 
¶7. (U) Given the importance of remittances to the Albanian economy, 
we are hopeful that the strong work ethic of Albanians abroad will 
not only soften the effect of the global economic crisis on Albania, 
but also bring prosperity to Albania sooner.  The GOA needs to find 
incentives to harness that work ethic to create businesses, jobs, 
and exportable products at home.  During a visit to Himara, a 
coastal town in southern Albania, econoff noticed vast orange 
groves, but the oranges were rotting on the ground.  The reason, he 
was told, was that the owners of the groves were in Greece picking 
oranges. 
 
WITHERS