Political feuding virtually paralysed the Albanian government in the first half of 2002, until the European Parliament brokered an agreement between the main political parties which led to the election of retired army general Alfred Moisiu as the consensus choice for president. Although the 73-year-old Moisiu leans to the right, he has pledged to represent all Albanians equally. After a long period of confrontation, the country entered a phase of political dialogue. The opposition Democratic Party (DP) ended its boycott of local government institutions and began to work with the ruling Socialist Party (SP). In August 2002 parliament voted in a new Socialist-led government with the SP chairman, Fatos Nano, as Prime Minister for a third time. By early 2003, however, this unusual consensus appeared to have unravelled, returning politics to its more normal fractiousness. Political tensions are expected to rise as October local elections approach.

Albania’s key foreign policy goal remains membership in the European Union and NATO. Preliminary negotiations with the EU on a Stabilisation and Association Agreement began in February 2003. Albania is trying to play as neutral a role as possible in the ethnic problems in Kosovo, Southern Serbia and Macedonia, and is seeking to establish normal relations with its Slav neighbours.

In June 2002 the pretender to the royal throne, Leka Zog returned to Albania after 63 years in exile. With no political role, Leka is keeping a low profile. Albanians appear largely indifferent to his presence and his desire for a referendum on restoration of the monarchy.

Although the political climate is calmer, and stability has been restored to most of the country, grave social and economic problems could become tomorrow’s political problems if left un-addressed. Albania’s institutions are weakened and the reform process greatly hindered by endemic corruption and an inefficient public administration. Other negative factors include an increase in organised crime, a weak judiciary, high unemployment, low production, severe environmental problems, and an ongoing energy crisis. The government shows no signs of seriously tackling corruption or backing down in its confrontational stance with the media.

While a degree of political, economic and social progress is clearly evident in Tirana and the major central and southern towns, the North remains largely unaffected. There the lack of infrastructure and investment, combined with extreme poverty, is producing a constant migration, which in turn fuels the trade in human trafficking and contributes to the lagging social and economic development.

Tirana/Brussels, 11 March 2003