Albania

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We can almost hear you decry our sanity, “Fitz, have you lost your marbles? Albania? You can’t possibly be serious!?” Oh, but we are.

Albania is a chaotic conundrum — lawless, remote, yet strangely cosmopolitan, and parts of it are as beautiful as a major Mediterranean seaside resort. The FBI’s New York City field office lists the Albanian mob as the second most violent organized crime group, just behind the Nigerian “Brothers of Blood.”

We think, however, that Albania is the place for young, hustling entrepreneurs to turn $10,000 into $500,000 in a few years’ time, and we don’t think there’s too many places to do that these days. Burma is another. More on that in a future issue. Where there is chaos, there is opportunity, and Albania is long on both without the needless inconvenience of being engulfed in a civil war or U.S. occupation.

Like our previous article on Beirut in December, we must start with a disclaimer. Fitz has a special affinity for Albania based on a lot of time spent and relationships built there, and if he ever does find FitzroyMcLeanstan, then his first order of business will be to recruit Albanian women from the mountainous north to serve as infantry in his Foreign Legion. They may be the toughest humans on the planet. But alas, that is another story.

We were recently able to spend some time kicking around Albania, visiting state-owned assets that were for sale to anyone who would take them. Of particular interest were several small mining operations with full concessions that the government will literally give away to developers who pay to put them into operation and employ Albanians.

During this trip, we had a most enlightening experience where we were able to sit down with two influential Albanians on the same day. One was the honorable Deputy Minister of Finance (see http://www.mfa.gov.al/english/aktivitete.asp?id=5015), Dr. Sherefedin Shehu.

The other was… well, let’s just call him Seka because he is a prominent leader within the Albanian mafia, and all Albanians have code names that hark back to their tribal ancestry. Most of these tribal warrior names sound like ‘70s female porn stars, but we don’t point that out because we don’t want our throats slit.

We were introduced to the honorable minister by a friend at the U.S. Embassy, and Fitz already knew Seka from his experiences with the Kosovo Liberation Army in the late 1990s (one man’s freedom fighter and all that…) Both interviews ran pretty much along the same lines. We were interested in the situation in Kosovo and if the “Greater Albania” was making progress. Most importantly, we wanted to feel the pulse and determine if Albania is on an upward trend or a downward trend.

On the day of the interview, Albania was sweltering in the midst of a full-blown heat wave that made life uncomfortable for all. This was further compounded by the fact that there were major wildfires in Greece and southern Albania, which shrouded the capital in a thick cloud of ash. The fires were the result of a record drought that, in addition to killing crops and making the majority of the topography excellent kindling, left the country without power because most electricity in Albania is hydroelectric and the rivers were too low to generate power. The capital had seven hours of power a day. Packing your bags yet?

The first interview took place in the shabby but oversized offices of the Ministry of Finance. The minister, clad in his short-sleeved shirt, clip-on tie and shiny polyester suit, chain smoked and all but melted in the heat because the ministry was without power and thus had no air conditioning. We declined the offer of lukewarm coffee.

The second interview took place on a bench under a shade tree outside a small factory in a town an hour from Tirana. Seka was clad in a light-blue polo shirt, linen pants and “Italian” shoes manufactured in said factory. We partook in the proffered ice-cold, genuine Italian beer.

After going back through the transcripts of the interview, we were struck by the stark contrast in opinion and tenor of both responses to the identical or nearly identical questions. So, taking a page from the recently departed William Buckley circa 1959, we decided to write up the interviews as though the two interviewees were both present at the same interview but not privy to the other’s responses. The responses are genuine and in response to the same questions posed only hours apart. Only some of the more colorful expletives used by Seka have been omitted because he has a vivid and colorful imagination and uses the F-word as every part of speech ex-gerund. In a couple of instances, we inserted an extra follow-up question or two, which we hope is obvious and not confusing. This effort is all to show you the extraordinary contrast between leading Albanian minds; for the record, neither one of the participants knew the conversation would wind up in print, and neither has ever heard of Without Borders, so their comments were not framed for the media.

WoB: Thanks for taking the time to get together today. Your English is fantastic. I understand you spent some time in the States?

Minister: Thank you. I studied English at the University of Minnesota. I was there for two years in 1997 and 1998 when things were very bad here in Albania. It was very cold in Minnesota, but still probably better than being in Albania during that time. Now things are much better.

Seka: Yeah thanks, man. Much better than the last time you were here, eh? You need English. I was sent to do some stuff in Calgary, Los Angeles and then a little in New York. Upstate. Not the city. Man, it sucks there. Cold. Really cold. I mean this heat is bad, but at least it is not cold. I cannot believe people live in Buffalo and don’t have to. It’s like Siberia, man.

WoB: I see you are busy. What is atop the agenda today?

Minister: We are preparing for a ceremony with a trade delegation from Italy that is thinking of starting a ferry service between here and Bari [on the Adriatic coast of Italy]. These visits are very important to Albania and we have dinner planned with several government officials as well as members of the Albanian-Italian community.

Seka: Sh** man. This electricity problem is killing me. I am a thousand pairs of shoes behind schedule and we get penalized for being late. The Italians are going to be pissed. Maybe we should have stuck to knock-offs?

WoB Follow-up: What do you mean, the Italians? I thought these were all knock-offs?

Seka: No, man, most of our shoes go to the Italian shoe manufacturers. There is some law that allows them to call them Italian shoes because they were designed and packaged in Italy. They glue a little piece of rubber on the heel there and call them Italian. We used to sell only knock-offs, but we actually make more money this way once you subtract out the cost of smuggling them out. It’s funny, we started when the Italians had big problems with workers going on strike and the truck drivers going on strike. We did deals with several of the big Italian companies. They found us. Some Italian guy who worked for the real manufacturer found our counterfeits and said “These are pretty good. Who makes them?” He found some Albanian guy working in Italy who knew someone who knew someone and now, magic, we are legit. We still do the cheap knock-offs down in Vlore [a city in southern Albania], but those go straight to China and the States. Black business is still much more profitable and less of a pain in the ass, but it makes sense to diversify.

WoB: So how is the business climate in Albania today? Are the opportunities growing?

Minister: Oh, things are looking very strong, many of the formerly state-owned industries are being privatized and foreign direct investment is growing rapidly. We are planning a major infrastructure program that will make Albania a gateway between Eastern Europe and Western Europe. We are in talks with the World Bank on a major loan package and we are hoping your country will renew its economic aid package. We were just able to float our first international bond issue in lek [Albanian currency]. This is a major milestone for Albania and shows we are taken seriously by the international financial community.

Seka: Yeah. Pretty good. If the government ever gets out of the way, this place could really boom. But they are all crooks. They f*** everything up.

WoB Follow-up: Hang on. Are you really calling someone a crook?

Seka: Come on. You know what I mean. They are all crooks. They don’t add any value and they line their pockets. They don’t even make anything anybody wants. At least our shoes cover your feet and our CDs have music on them. These guys do nothing except get in the way. They are very good at making headlines and calling for reform, but they don’t do sh** man.

WoB Follow-up: But within Albania, are there more or fewer legal opportunities than there used to be?

Seka: Oh, definitely more. There is a ton of growth all over the Balkans and we are in between the rest of the Balkans and the West. Also, all the Albanians in Europe and the U.S. are sending money back. Not just “our people.” [Ed note: When referring to “us” or “our people,” he refers to the Albanian mafia, which he is fast to point out existed before the Sicilian mafia.] When you were here the last time, we were the only group that was out there making money and sending it back home. Now with the EU growing, the Poles and the Czechs won’t clean toilets and sweep floors anymore. You know that is a growing business right there — smuggling Albanians into the EU to clean toilets. Forget the sex trade. Anyhow, there are tens of thousands of Albanians sending euros back and they are now in the local economy. They are building houses, buying mobile phones, starting businesses. And because it comes back to real people and not through the banks or the government, it actually counts. Those thieves in Tirana still haven’t built the port with the money they got from the European Development Bank four years ago.

WoB: If a foreigner told you he was interested in investing in Albania, where would you tell him to look?

Minister: Well, here at the ministry we are actively engaged in a program to encourage foreign investment. We can facilitate meetings with other ministries that have opportunities for foreign investors. There is a program with the Ministry of Industry that allows for foreign investors to buy a stake in Albanian companies in exchange for capital investment. We have a program called “1 Euro Albania,” where investors can buy 49% of a state-owned company for 1 EUR if they commit to investing enough money to get the company back in business. We are in the process of unveiling a major roads project that will connect Pristina [the capital of Kosovo] and Tirana. We have just reduced the time it takes to form a company from sixty-five days to just sixteen days.

Seka: You mean to just invest money? Fugeddaboudit.

WoB Follow-up: Did you just say “Fugeddaboudit?”

Seka: Yeah, I love Joe Pesci. But seriously, you can make a ton of money if you have half a brain and are willing to live here. I mean, they are building the road from Tirana to the rest of the Balkans and they need everything — gas stations, strip bars and whore houses for the truckers, hotels, and restaurants all along that corridor. There is nothing there now, and those mountain people in the rural areas don’t have a clue. I mean, you could just show up and get to work. You want a great idea? Start a company that sells generators and propane in Albania. You know, those little tanks like they have in the States outside Wal-Mart for a gas grill? Like those, but bigger. You could make a fortune by installing those tanks in the rural areas. There are a lot of small mines with chromium, lead, zinc and iron ore. You can make a good living there, but there are two problems. One, the government is your partner. That kills the deal for us. Two, you have to truck the stuff out, and it is all bulk ore, not the actual product. There used to be smelters and processing plants here, but not anymore. They were stolen and sold for scrap. Man, we don’t even have electricity.

WoB: Well, obviously there is a basic infrastructure problem. How can someone invest in a factory or any business in the country if they are not sure there will be power?

Minister: Yes. Yes, this is a big problem. We are working on it. We have a plan. There are plans for a public/private partnership with a big Italian company for a thermoelectric plant. We are very proud that Deutsche Bank has taken a 20% equity stake in the project.

WoB Follow-up: When will the project be completed?

Minister: In just a few years. It would have been earlier, but we had a problem with another company that was involved in the project. They were not good partners for us. They were in business just to make money. [Yes, he really said that!]

Seka: You need your own system. Generators. Diesel is more expensive, but still better than relying totally on the grid. Look. See those? (points to two large generators inside a 100 x 100 ft cage) They are what keep us in business. And we are just a shoe factory with mostly manual labor. You can’t really have any real industry in Albania today.

WoB: What about taxation? I read in the newspapers that there is some controversy over a new law that is causing a big fuss.

Minister: I would not say it was a problem. It is simple, really. If the Ministry of Finance believes someone is not paying the full amount of tax, then they must pay what the government says is the proper amount of tax. But there is a system, via the courts, to dispute the government’s findings. It’s all very open and transparent.

WoB Follow-up: You mean if the Ministry says “You, company XYZ, owe one million lek in taxes,” then the company has to pay it, and then fight in the courts to dispute it? How long would that take?

Minister: I am not sure how long, but it is only fair they pay the right amount of tax. The court system is fair and open.

WoB Follow-up: Yes, but that seems arbitrary and you could put a business into bankruptcy if the government makes a mistake. Most companies, especially growing companies, don’t have excess cash to spare, and wouldn’t it hurt their banking relationships if they have a tax dispute with the government?

Minister: Well yes, maybe, but they should pay their taxes and there will not be this problem.

WoB Follow-up: But would it not be better if the government had to first prove through the courts that a business owed the money? You could erroneously ruin a company, create a loss of jobs and cause hardships to families if the government was wrong. It could cripple a business, but it is not as though the lack of that disputed revenue is going to keep the government’s lights on… oh sorry, bad example.

Minister: That’s not funny. The electricity problem is because of the drought. Surely you cannot blame the government for the drought. Do you like baseball? I am a Twins fan. I can now watch the games on satellite.

Seka:Taxes? Who pays taxes?

WoB: What about real estate? Is real estate a good investment for foreigners?

Minister: Yes. Foreigners can own real estate. In some places foreigners cannot own the land but can have a 99-year lease like in England. They can own the improvements. Real estate has been a good investment with the prices increasing rapidly. We have a beautiful seaside. There are many opportunities to develop resorts in the south. In some places in Tirana, apartments are selling for 2,500 euros a square meter, which is as much as property across the Adriatic in Italy. There is now a growing mortgage market that makes prices more stable. Plus, there is the benefit of future EU membership.

Seka: In Tirana? No way. It’s crazy. They are paying more than in Italy now. It is because all of these ignorant communists that have to put money somewhere, and they don’t trust the banks because of what happened in ’97, they just buy property. Plus, “we” buy property to clean money and that makes the property go up. So, for investors? No. Stay away from property in the cities. The same is true for the seaside. We are buying that for “other reasons” and we don’t want to share that. Someday you can stay at my resort. Now, like I said before, along the new road between here and Kosovo, there are bargains. If you know where the road will be, you can do well and you can buy that property for almost nothing.

WoB: Is Albania a candidate for EU membership?

Minister: Naturally we want to be members of the EU. It is a top priority of this government to bring our regulatory standards in line with the directives outlined in Brussels. We are still recovering from the crisis of the late 1990s but hope to be part of the EU as soon as is feasible. [He went on painfully for almost ten minutes with barely a breath taken, clearly in his comfort zone spouting off one EU regulation after another and outlining the Albanian plan to conform. We shall spare you the details.] We have been very careful in our expansion of the banking sector so as to not run afoul of the OECD or the EU. We are very proud of that.

Seka: Who cares? I hope not. I doubt it.

WoB: Many developing countries have successfully started economic citizenship programs to encourage foreigners to immigrate to their country, start businesses, supply expertise and of course generate revenue for the government. Have you considered such a program?

Minister: What do you mean?

WoB Follow-up: Well, there are nations, in the Caribbean for example, who offer citizenship and residency for a fee, or through investment into the local economy. This encourages entrepreneurship and generates income for the government.

Minister: Who would want to be an Albanian?

Seka: Well, I guess it might work if someone from, say, China or India wanted to be closer to the Eurozone and thinks that Albania will eventually be part of the EU. Or maybe if you are from Iran or another place where you are worried about war or something like that. Yeah. It could work. But this government would not get it.

WoB: Thanks for your time.

Well, that about says it all. Albania is wide open and we think a land of opportunity for those willing to roll up their sleeves and give it a go. The road from the deep water ports in Durres and Vlore will make an enormous difference to the Albanian economy and now, with Kosovo independence and EU support, it will likely get done.

The Durres-Prizren-Pristina highway should be completed by the end of next year, and the whole drive should take less than three hours. Today, fewer than 2,000 vehicles cross the border between Kosovo and Albania each day.

The number ought to be in the tens of thousands if you just look at the number of trucks that presently take the long way through Macedonia. It is a natural and historic trade route that makes sense: raw materials going west and finished products going east. Enthusiasm for cross-border travel and trade is high following the declaration of independence and international recognition of Kosovo. Kosovo actually has finished goods for export and they do not want to rely on Serbia’s transportation network to get them out.

At present, the drive between the capitals (Pristina, Kosovo and Tirana, Albania) takes a grueling 10 hours or more, much of it on a bumpy, painful chiropractor’s dream of a road through narrow mountain passes in northern Albania. There is an existing Central European Free Trade Agreement (CEFTA), which makes exporting and importing to the EU relatively easy. Only the geography has kept it from flourishing. We think the road will make a difference and any entrepreneur could flourish with a chain of gas stations, rest areas or hot dog stands along the way.

But it is not just the road, it is the culture and the lack of entrepreneurial expertise, acumen, and drive. We firmly believe that an aggressive foreigner with a modest amount of money in his pockets could make a fortune in Albania… especially an American. Here are some of the ideas we had from our visit:

1. The Albanians love Americans. It is one of the few places left in Europe where being an American is a major plus. People still approach you in the street and want to talk to you. You are actually given the benefit of the doubt. Just by hanging your shingle as the “American Business Consultancy,” you would drum up business overnight. This was true in almost all of Eastern Europe fifteen years ago and we know people who made fortunes this way. One former Kentucky real estate salesman-turned-“management consultant” friend in Romania charged a daily rate of three hundred dollars a day plus 0.5% of the equity in the business per day (up to 25%) of the company for his services, which were mostly sales and marketing advice beginning in 1992, and walked away with about six million dollars in 1998.
2. There is an absolute void in the market for start-up capital. An enterprising entrepreneur could easily start five to ten profitable businesses ranging from courier services for international banks to relocation services for expatriates to import/export businesses for less than two thousand dollars each. Just stay away from nightclubs and bars as Seka’s friends have a corner on those and get touchy about them.
3. There are many multinationals moving into Albania and Kosovo. As a rule, they do not like or trust the Albanians. The chairman of a foreign bank, who worked in Serbia, Croatia, Romania and Bulgaria, said, “Albania is the epicenter of the Balkan mentality. Here they are just as stubborn but twice as lazy.” This may or may not be well deserved, but the reality is expats want to hire other expats. If we had the time and energy, we would start a “fixer” service where we hire a platoon of Albanians that speak passable English (of which there are many) and then offer the collective services to foreign companies. Your fixers then run errands, stand in ridiculous government office lines, pick up people at airports, go shopping for fresh vegetables or anything else, for that matter, for the expat community. You can double if not triple your markup on the labor and have more business than you can handle. Call it a “concierge” service instead of a “fixer” platoon and you can charge even more. The snobby middle-class German lady whose husband’s job transferred them to Albania loves having servants.
4. Go to Kosovo, cozy up to all the ridiculously lazy, overpaid NGO workers and find out what they want but don’t have. Fill up a truck with whatever they need, which can undoubtedly be found in Albania for a fraction of what it costs in Kosovo, and load up a weekly truckload.
   

   Under the Albanian Sun

5. Start a restaurant in Kukes, which is on the Albanian side of the Kosovo-Albania border, and call it the American Trucker’s Club. Sell burgers and sandwiches and fries and Cokes. Have cute little waitresses. Play country music. Yours will be the place to stop, pee and eat on the journey now and even after the big road is built. Odds are you will become the center of deal flow for a good number of transactions in the boomtown. Think Al Swearengen in Deadwood.
6. Buy land in Kukes. It is remote and cold and right now almost deserted. But it is gorgeous, with big mountains and blue lakes. It has power because it is the site of a massive hydroelectric facility. Eventually it will get developed and you will be glad you did. It may take a decade for this to pay off, but it will. How much are you risking? Well, a plot of land of about five acres just outside of town along the main road, which will likely be the route of the new road, is for sale for a whopping $1,400.

So, in summary, Albania is one of the last safe places where chaos reins supreme and opportunity abounds. It is a cheap place to live, and hey, they can’t afford pesticides, so all the food is organic. We like it. It is gritty, pretty with lots of stupidity. For the single hard-working bachelor (or bachelorette) interested in making his/her speculating grubstake, there are few places without bombs, bullets or insidious tropical disease where you can accumulate so much in such a short period of time. And there are five flights a day from Tirana to Italy, so you can get your fix of “culture” on short notice. Try that in Angola. Think we are pulling your leg? We’ll put down startup capital for hardcore entrepreneurs ready to go. We are not kidding.

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