Albanians build free market in corruption

"Look at this," said my guide as our car sloshed and bumped through a particularly treacherous stretch of central Tirana road flooded out by a burst drain. "Six months ago this street was good as new, but the repair company had to pay such a high kickback that they didn't have enough money left to do the job properly. And this is the result."

This was the strangest kind of guided tour I had ever been on, an excursion around the visible signs of corruption in the Albanian capital, a travelogue of the crazy, looking-glass world created by four years of free and not- so-free market economics after half a century of Stalinist dictatorship. As the country prepares for new elections, starting next Sunday, it seemed an apposite way of taking the pulse of local life.

A few blocks away from the flooded street was a spanking new villa built with the finest materials available to Albania, all of them imported from Italy. "It belongs to a high court judge and must have cost at least $200,000 [pounds 132,000]," my guide explained. "How on earth did he find the money when his official salary is no more than $300 a month? It doesn't take a genius to figure that something funny's going on."

Most of the land in Tirana has been privatised, but a few choice slices of real estate in the centre of town have remained in state hands. Officially, this state property is reserved for government buildings, but in fact some of it has been sold off to senior public officials for their own private use. The land beneath the judge's villa would be worth between $200 and $300 a square metre on the open market, but as state property would have been sold for no more than $16 a square metre.

There are property scams going on all over town. President Sali Berisha's own father-in-law mysteriously acquired a plum site for a symbolic sum last year, but had to halt his building project when the affair blew up into a major public scandal. On a smaller scale, the streets, pavements and parks of central Tirana are dotted with thousands of new bars, restaurants and small shops that have sprouted without any semblance of urban planning. "Three-quarters of them are illegal," said my guide, "but you can be sure someone in authority is collecting handsomely on every one of them."

Officially corruption does not exist in Albania, but in a country where the average state wage fails to cover the basic living costs of a small family, it is inevitable. Drive around with a wing-mirror missing and the police will inevitably stop you - not because they really think a wing-mirror is going to make you safer on the dilapidated roads, but because they need to pocket the fines they invariably impose to bump up their salaries.

Those are the rules of the game right up the social scale. The chief of the ruling Democratic Party in Tirana, Albert Brojke, came out with a rather unconvincing lament about the difficulties of living on his deputy's salary of $300 a month. "It's very tough being in power. I have to work morning, noon and night for a fraction of what I could earn in the private sector," he said.

And yet all over town you see tell-tale yellow number plates (assigned to the vehicles of government or state officials) attached to brand-new Mercedes, BMWs and Toyota four-wheel drives. The Democratic Party claims to be poor, but its members don't seem to be having any financial trouble hosting fashion shows and hotel receptions as part of their election campaign.

Want to know why petrol-smuggling to Serbia and Montenegro went on in violation of the UN embargo last year? Maybe it is not entirely coincidental that the company then enjoying a monopoly on petrol distribution in Albania, Shqiponja, was run by Party chairman, Tritan Shehu.

Want to know why Albanian police have made plenty of marijuana seizures, but failed to net any significant quantities of the cocaine and heroin that is known to flood through the country en route from Turkey to western Europe? According to one Western intelligence expert, it is because the traffic in hard drugs is being organised with the help of a figure within the inner circle of the Albanian government.

Many Albanians do not believe they are living in a free-market society at all, but one carefully regulated and groomed by the government for the short-term advantage of its members and its chosen clients. One European ambassador politely calls the situation "laissez-faire gone mad".

The country's privatisation scheme is a case in point. President Berisha's government gave every Albanian citizen a voucher worth $1,000 which was theoretically to be used to buy shares in public companies as they came on to the market. But in practice the vouchers have been traded for cash at a heavy discount, and then scooped up en masse by individuals awarded company franchises by the government.

Individuals lucky enough to win a franchise (and the opposition charges that they are all good friends of the ruling party) have thus been able to buy a company for a fraction of its true value - the vouchers are trading at $120-$130 on the open market.

The prevailing mood in Albania is one of anger towards the ruling party for appearing to look after its own interests while failing to guarantee such basic services as water and electricity, even in Tirana, despite four years in power and $2.7bn received in foreign aid. The opposition Socialists are thus widely tipped to win, if only because they represent something different from the ruling party. It remains to be seen if they can run the country any better.