ALBANIA DEMOCRACY AND GOVERNANCE ASSESSMENT Revised Version Submitted to: The U.S. Agency for International Development DCHA/DG Under USAID Contract No. DFD-I-00-04-00229-00 Democracy and Governance Analytical Services Prepared by: Democracy International, Inc. 4802 Montgomery Lane, Suite 200 Bethesda, Maryland 20814 February 2006 Disclaimer The views expressed in this report do not necessarily reflect the views of the United States Agency for International Development or the United States Government. TABLE OF CONTENTS EXECUTIVE SUMMARY........................................................................................................1 I. INTRODUCTION.................................................................................................................3 A. ASSESSMENT OBJECTIVES.......................................................................................3 Organization of Report.....................................................................................................3 B. HISTORICAL BACKGROUND....................................................................................4 The Legacy of Communism..............................................................................................4 Early Years of Transition..................................................................................................4 Elections and Change of Government in 2005.................................................................5 C. EUROPEAN INTEGRATION.......................................................................................6 II. DEMOCRACY AND GOVERNANCE IN ALBANIA..........................................................8 A. STATUS OF DEMOCRACY.........................................................................................8 Consensus.........................................................................................................................8 Inclusion............................................................................................................................8 Competition.......................................................................................................................9 Rule of Law.......................................................................................................................9 Good Governance.............................................................................................................9 B. STATUS OF TRANSITION.........................................................................................10 C. PRINCIPAL DEMOCRACY AND GOVERNANCE CHALLENGES......................10 III. ACTORS AND INSTITUTIONAL ARENAS....................................................................12 A. RULE OF LAW AND THE LEGAL ARENA.............................................................12 1. Legal Sector and Judiciary..........................................................................................12 2. Prosecutors and Police................................................................................................13 3. Respect for Human Rights.........................................................................................14 B. COMPETITIVE ARENA: ELECTIONS AND POLITICAL PROCESSES...............14 1. Election Process..........................................................................................................14 2. Political Parties..........................................................................................................18 3. Political and Campaign Finance................................................................................20 4. Domestic Election Monitoring...................................................................................20 C. GOVERNANCE...........................................................................................................20 Issues for Analysis..........................................................................................................20 1. National Government/Executive Branch....................................................................21 2. Decentralization and Local Governance.....................................................................22 3. Parliament..................................................................................................................24 D. CIVIL SOCIETY..........................................................................................................26 Civil Society and Government........................................................................................27 Civil Society and Anticorruption....................................................................................27 Other Civil Society Institutions......................................................................................28 IV. CROSS-CUTTING ISSUES AND CONSTRAINTS........................................................30 A. ANTICORRUPTION....................................................................................................30 B. OTHER CROSS-CUTTING ISSUES...........................................................................31 C. ROLE OF DONORS.....................................................................................................32 Goal of European Integration..........................................................................................32 Influence of the United States.........................................................................................32 Donor Coordination........................................................................................................33 Role of International Community in Elections...............................................................33 Role of the International Community in Parliamentary Affairs.....................................33 Constraints on USAID....................................................................................................34 V. TOWARD A NEW STRATEGY.......................................................................................35 A. GOVERNANCE............................................................................................................35 Parliament.......................................................................................................................37 Local Government and Decentralization........................................................................38 B. THE RULE OF LAW AND THE LEGAL ARENA....................................................39 C. ELECTIONS AND POLITICAL PARTIES.................................................................43 Elections..........................................................................................................................43 Political Parties...............................................................................................................44 D. CIVIL SOCIETY...........................................................................................................45 Existing Civil Society Programs.....................................................................................45 Media..............................................................................................................................47 CLOSING OBSERVATION..............................................................................................47 ENDNOTES..........................................................................................................................48 Appendix: INDIVIDUALS AND ORGANIZATIONS CONSULTED.....................................49 Albania Democracy and Governance Assessment EXECUTIVE SUMMARY Despite its shortcomings, Albania qualifies as a democracy, even if that democracy remains to be consolidated. The transition from communism to democracy and a market economy has made great progress in 15 years. The risk of relapse into authoritarianism has receded, especially as the country looks toward integration into the European Union. Consensus and inclusion are not significant prob- lems. Although unnecessarily partisan and contentious, reasonable competition exists, in politics as well as in the economy and the larger society. Despite a number of problems, the 2005 elections marked an improvement over previous ones, and the opposition, notwithstanding its criticisms of the new government’s policies, does not contest the legitimacy of the ruling majority. But it is not entirely clear that Albania is still “in transition”—or in the process of democratic con- solidation. Rather the transition appears in many ways to have stalled. Notwithstanding reasonably successful elections and a transfer of power, Albanian democracy faces a number of persistent chal- lenges. These include corruption, the threat of state capture, the small size and weaknesses of the formal economy, the absence of the rule of law, and weak governance in general. Accordingly, the democracy and governance assessment team posits that the principal challenges to the consolidation of democracy in Albania are weak compliance with the law and poor governance. The rule of law in Albania is seriously lacking. The government, executive branch agencies, local governments, and politically powerful organizations and individuals often fail to follow or respect applicable laws and prescribed processes. Corruption, at all levels of society, is endemic. There are serious questions about the extent to which private interests have captured the state. Collusion of pri- vate and government interests remains a critical problem, and serious conflicts of interest are com- mon. In addition, organized crime is strong and allegedly has or has had patrons and protectors within the government. Government performance in Albania is poor and state institutions are often ineffective. Their failure to deliver health, education, electricity, and other basic services dampens public support and further weakens the already fragile legitimacy of state institutions, public officials and political parties. The lack of transparency and accountability further compounds the problem. Corruption, widely per- ceived as the root cause of Albania’s problems, is principally a symptom of these failures of govern- ance. These needs come together in the context of Albania’s process of accession to the European Union. It is in the justice sector that institutional weaknesses and corruption most affecting governance need to be addressed. In its negotiations with Albania, the European Union has identified the rule of law, im- proved governance (meaning institutional reform) and the fight against corruption as the critical prob- lem areas. Put differently, this means that the legal arena should have the highest priority for re- sources to improve governance of state institutions, combat corruption and, ultimately, establish the rule of law on a sustainable basis. Accordingly, democracy and governance efforts in Albania should focus mainly on implementation of reforms within state institutions—not on new laws or institutions—and improving administrative procedures and government efficiency. Further democratization also requires reducing barriers to political participation and economic competition and formalizing the economic system. This includes efforts to open the process, for example by making lawmaking, policymaking and budget formulation in the parliament and within the executive branch more accessible to the public. It also includes bet- ter oversight of government decisions and a more effective role for civil society organizations. At the sub-national level, these governance improvements can apply as well to local government. Given the extent of donor interest in and influence on democratization in Albania, effective donor coordination is essential. In addition, donors need to take care to avoid supplanting Albanian owner- ship of the democratic reform effort. 1 Albania Democracy and Governance Assessment In short, the assessment team has concluded the principal challenge to further democratization and good governance in Albania is the lack of the rule of law and effective governance, manifested by the weakness of state institutions. Accordingly, USAID and other outside actors seeking to support de- mocracy and good governance in Albania should continue to help the country to build modern, ac- countable, democratic institutions. 2 Albania Democracy and Governance Assessment I. INTRODUCTION A. ASSESSMENT OBJECTIVES USAID decided to conduct a democracy and governance assessment in Albania at this time as part of its process of developing a new long-term strategy for encouraging democracy, good governance and rule of law. Within the next year, the Mission in Tirana will prepare a new five-year democracy and governance strategy. Some parts of the previous and existing portfolio have been or are likely to be phased out, in some cases because those projects have come to a natural end. The Mission is looking for advice in setting long-term priorities and also will consider whether it should make any interim adjustments in current programming in light of the priorities suggested by the assessment. Democracy International (DI) fielded a team to conduct this assessment under the firm’s Indefinite Quantity Contract with USAID for Democracy and Governance Analytical Services. The team con- sisted of Eric Bjornlund, president of Democracy International, as team leader; Charles Costello, for- mer USAID Deputy Assistant Administrator, Director of the Office of Democracy and Governance, and Mission Director in three countries; William Schoux, former USAID Director of the LAC Office of Democratic Initiatives and former advisor to the USAID Mission in Albania; and Blendi Kajsiu, an independent Albanian political analyst. The team gathered information for the assessment from in- terviews conducted during a three-week stay in Albania in November 2005 and from readily available documents and published reports. The team has conducted the assessment in accordance with the methodology and framework of the USAID Office of Democracy and Governance, as laid out in Conducting a DG Assessment: A Framework for Strategy Development. This framework prescribes a four-step process and a standard set of questions and issues. The steps are: 1. Analysis of the status of democracy and governance in the country using five analytical “lenses” (consensus, rule of law, competition, inclusion and good governance) for the pur- pose of identifying the principal DG challenge(s) facing the country; 2. Consideration of the country’s political actors, interests, resources and strategies, leading to an understanding of how the political game is played; 3. Analysis of the institutional arenas in which political actors operate for the purpose of under- standing their relevance to the principal DG problem and identifying opportunities for de- mocratic advancement and constraints to change; 4. Consideration of the interests and resources of donors, including USAID, and other strategic considerations important to USAID, leading to identification of recommended areas for DG programs. The framework is designed to lead to a document and discussion that lays out problems and possible solutions, suggests priorities and provides a basis for subsequent program choices and more specific program design. Following the assessment, it is expected that the USAID Mission will carry out the detailed sector analysis and consultation with prospective partners needed to select specific program activities and design program interventions. Organization of Report This assessment report is organized as follows. The next parts of this Introduction provide historical background and consideration of the prospects for European integration. Section II first considers the status of democracy by analyzing the five key elements of democracy. It then reviews the stalled status of the democratic transition in Albania and states the assessment team’s view of the country’s principal democracy and governance challenges. Section III, which constitutes the bulk of the report, 3 Albania Democracy and Governance Assessment discusses Actors and Institutional Arenas. Combining the analysis of Steps 2 and 3 of the assessment process, this section considers four institutional arenas: (1) the legal arena and the rule of law; (2) the competitive arena, especially elections and political processes; (3) the governance arena, including the executive, the parliament and local government; and (4) the civil society arena. Section IV con- siders cross-cutting issues and constraints. Finally, Section V proposes a new strategic architecture and summarizes the report’s conclusions and recommendations. B. HISTORICAL BACKGROUND The Legacy of Communism Albania experienced one of the harshest communist regimes in Eastern Europe. The government ruthlessly imprisoned or murdered all political dissidents. The Communist Party, later named the La- bor Party, controlled all means of communication and propaganda. Its notorious secret services in- truded everywhere in society. The regime banned private property and religion, and farmers were forced to join cooperatives and collectivize their livestock. Many major public works, such as rail- ways, irrigation systems or plantations, were built by forced “voluntary” work by the population or youth, which is why the idea of volunteerism remains tainted to this day. By abolishing private prop- erty, through forced collectivization and voluntary work, the state radically extended its domain at the expense of the individual, who was placed almost completely under the state’s control. Communism in Albania was extreme. While there was at least modest liberalization in many com- munist countries in the Eastern Bloc in the 1960s, in Albania the regime grew increasingly totalitar- ian, severely punishing any real or alleged opposition. Thus, by the1980s there were no underground movements, informal organized opposition or even individuals expressing mild dissent. The sever- ance of relations with China in the 1970s compounded the situation. Until the fall of communism in 1991, Albanians were completely cut of from developments in the rest of the world. In fact, the end of the communist system in Albania came primarily from a combination of internal economic col- lapse and developments in the Eastern Bloc in general rather than from any organized resistance in- side the country. Early Years of Transition The high degree of repression of the communist regime, the total isolation from the rest of the world, the abolition of individual liberties and the absence of a social or intellectual dissident movement combined to produce a unique and at times painful transition in Albania. Democratization took place more as a reaction to past political experience than as a systematic effort to build a liberal democratic regime. The absence of any genuine experience with political or economic liberalism further hin- dered the process. When the opposition Democratic Party came to power after the first truly multi- party elections on March 22, 1992, democracy was primarily understood as anti-communism. The Democratic Party itself brought together individuals and social groups from very different walks of life lacking any real ideological or interest-based cohesion beyond a resounding cry against commu- nism. At the time the path to democracy was clear: the expansion of personal freedom and the de- struction of any remnants of communism. That former communists would carry out these tasks, since the political and intellectual elite that existed in Albania at the time had been formed under the aegis of the Communist Party, only served to complicate the situation. Freedom in this context was defined in opposition to the state and the spirit of collectivism that had usurped every aspect of life under communism. Unfortunately, this produced a wave of hostility to the state and destruction of state property. It also weakened communities and their ability to fill the vacuum left by a receding state, because of their aversion to collective action. At the same time, huge and rapid demographic changes shook and reshaped traditional communities. Many Albanians emi- grated to neighboring countries and beyond. Others moved from remote and rural areas into urban 4 Albania Democracy and Governance Assessment centers, often settling in the uninhabited outskirts of urban centers, taking over private or state-owned land. The state began to withdraw from most aspects of the lives of citizens, often leaving them ill prepared to cope with the complexity of a mysterious and often dysfunctional market economy. En- tire segments of society experienced social trauma, feeling abandoned by the state on whose resources they had depended and frustrated by their inability to succeed in the new economic system. Because of this peculiar combination of factors and legacies, the excesses of freedom after the collapse of communism approached anarchy. State officials and ordinary citizens alike lamented the apparent absence of the state, but many Albanians remained suspicious or even hostile toward anything that recalled the harsh legacy of communist rule. Despite this legacy, the country held great promise in the early years of transition. Between 1992 and 1996, economic growth was dramatic as the private sector grew and market economy emerged, though this was partly due to the very low starting base. The government enacted sweeping reforms, and Albania’s scale of privatization and progress toward a market economy outpaced its neighbors. Independent media and civil society organizations began to emerge in an important role as they voiced criticisms of the government and the ruling party, especially the concentration of power in the hands of President Sali Berisha and his control of the judiciary and other institutions that were sup- posed to be independent. President Berisha and the Democratic Party soon began to show undemocratic tendencies. Hostile to criticism, authorities put strong pressure on journalists, up to and including prosecution and impris- onment. Civil society organizations remained weak and almost entirely dependent on international donors. Under the banner of the war against communism, the ruling party began to restrict some key civil liberties of its opponents, such as the right to run for office. The authoritarian tendencies of the government became more apparent and disturbing in the 1996 parliamentary election, which were manipulated to favor of the Democrats. The government crushed opposition protests of the elections. The 1996 elections were followed by the collapse of pyramid schemes in which huge numbers of people lost their life savings. A frustrated opposition and an angry population combined to rebel against the government and produce a violent uprising that started in the southern city of Vlora and soon spread throughout most of the country. This ended with the collapse of the entire state apparatus in 1997. The resulting chaos almost entirely wiped out the progress that had been made up to that point. After parliamentary elections in 1997, the Socialist Party came to power and the country began to recover. The new government made progress in rebuilding state institutions and establishing the rule of law. Media grew rapidly and civil society became stronger. Although the opposition was bitter and the political climate polarized, including persistent problems with elections, the Socialist ap- proach to governance was generally less confrontational and more inclusive. In practice, this meant that the government tended to co-opt rather than repress civil society, media and businesses. Thus, Albanian governance in many aspects became less authoritarian, but it was also less transparent and accountable. It was now beset by increasing corruption and state capture, until these problems themselves began to produce tension among competing factions within the ruling Socialist Party. The economy suffered as state officials abused their power for personal economic gain and the distinc- tions between politicians, businesses and media blurred. As the ruling Socialist Party focused more on its internal clashes than on governance, Albania came to be viewed as the most corrupt country in the region. Elections and Change of Government in 2005 These factors, combined with an aggressive new image and a clear anticorruption platform from the opposition Democratic Party, contributed to the electoral defeat of the Socialist Party in parliamentary 5 Albania Democracy and Governance Assessment elections on July 3, 2005. The Democratic Party and its allies received a majority of votes and gained the right to form a new government. After a protracted post-election process, the new government finally took office in September. New Prime Minister Sali Berisha seems determined to fight corruption, which he cites as his top priority. Most analysts say the new cabinet so far appears free from obvious conflicts of interest and seems generally committed to eradicating corruption. But it remains to be seen how successful the govern- ment will be in taking on such a challenging task. C. EUROPEAN INTEGRATION Albania is a European country long cut off from Europe, not only Western Europe but even Central and Eastern Europe. The Communist government of Envir Hoxha that seized power after the end of World War II broke first with the Soviet Union, then later with China, to pursue a policy of internal self-sufficiency and isolation from the rest of the world. For hundreds of years, until the early 20th century, Albania was under the control of the Turkish Ot- toman Empire and thus out of the mainstream of European development. Albania achieved full inter- national recognition as an independent state only after World War I. In the 1920s its parliamentary system was supplanted by a monarchy that steadily came under the control of the fascist Italian gov- ernment of Benito Mussolini. Albanians are descended from the ancient Ilyrians, and before the Ottoman conquest Albania was a part of medieval Christian Europe. Its national hero, Skanderbeg, was a Christian knight from that era. Today, most Albanians are Muslims, but religion does not have a prominent place in public af- fairs. With the fall of Communism in 1991, the door to Europe opened. With freedom of movement for the first time in more than 40 years, nearly a million Albanians, almost a third of the population, emi- grated in search of better employment opportunities. Most of them went to Western Europe, and their remittances to families back home power the Albanian economy. This labor migration, both legal and illegal, shows that the Albanian people, if not the country as a political entity, have rejoined Europe quickly in the last 15 years. Trade with Italy and Greece makes up the bulk of both imports and ex- ports, so it also can be said that Albania has rejoined Europe in an economic sense as well. To fulfill its “European destiny,” though, Albania needs to successfully complete the process of ac- cession to the European Union. This is an overriding goal of successive Albanian governments and of the overwhelming majority of Albanians. EU accession is valued not only for the huge economic benefits it would bring but also for the sense of larger self-identity as a long-lost member of the Euro- pean family returning home. The overriding objective of EU accession is relevant to this Democracy and Governance Assessment because of the pre-conditions to accession the Union sets for aspiring member countries. The Euro- pean Union has set standards that any potential member country must meet, including democratic governance, a market economy, the rule of law and the protection of fundamental liberties, among other things. Albania, still at the earliest stage of the process, literally receives an annual inspection followed by a report card on its progress. The 2005 EU report indicated progress in most areas, especially as to free elections and an uncon- tested, peaceful transfer of power to the winning former opposition party.1 Negotiations will likely be completed in 2006 on a Stabilization and Association Agreement, a major early benchmark in the accession process, with signature expected mid-year. 6 Albania Democracy and Governance Assessment The accession process not only provides a template for democratic governance, it offers a powerful incentive to countries to meet European democratic standards of governance. The EU has expressed strong reservations about the rule of law, the independence and integrity of the judicial system, and corruption in government, among other things. Albania is on public notice that it has to make gov- ernance improvements and strengthen its democratic institutions if it is to see its candidacy prosper, and the Albanian government of the day knows that the EU and its own citizens will hold it account- able for its performance. The EU accession process relentlessly pushes Albania to generate the internal political will necessary to undertake difficult reform efforts. In fact, Albania is lagging behind its neighbors, as Bulgaria, Romania and Slovenia have already become member states, Croatia is close to accession, and Mace- donia next door has formally received candidate status. Pressure is mounting on Albania to accelerate its process in order not to be left behind. The Albanian government’s need to show continued progress gives the donor community, with the EU itself at the head, much greater leverage than normally would be the case in setting conditionality with assistance programs. As the U.S. has clearly stated that its own interests in Albania are defined by “full integration into Euro-Atlantic structures,” which means membership in NATO as well as in the EU, the goals of USAID, the European Union and Albanian government and society should be fully compatible. Yet, Albania is a long way off from achieving accession, and some observers feel that the pace of progress will be too slow to continue to motivate needed democratic governance reforms. Neverthe- less, the process is hugely important to the future of democratic governance in Albania. More than any other factor, the EU accession process helps to guarantee and stabilize democracy in Albania and gives grounds for optimism about Albania’s democratic future. In that same sense, it increases the chances for long-term success of USAID investments in democracy and governance if wise choices are made about program interventions. The areas of greatest EU concern are the same ones given highest priority in this assessment: stronger rule of law and healthier, less corrupt, more functional state institutions. These institutionalized proc- esses associated with the larger accession process, particularly with respect to rule of law issues, rep- resent the focal points for donor assistance to improve governance. Europe is Albania’s destiny; be- ing a member of the European Union and—as a democratic nation— the larger European family is the way, the only way, Albania can generate the political will needed to carryout reforms that will strengthen democratic governance. Therefore, linking USAID’s strategy in providing assistance for democracy and governance to that accession pathway gives a clear, practical guide to the future direc- tion and priorities for USAID. 7