By Neritan Sejamini
“But this year’s budget doesn’t have a fiscal reform!” – the journalist asserted in a critical tone. “How good that there isn’t!” – I replied. “When there are no changes in taxes and regulations, it’s good for business. The unpredictability of the future is an obstacle for businesses to plan and invest. It’s good when taxes don’t change often.”
After I left the studio, I thought about the journalist’s surprise at my opposition to ‘reforms’.
The term ‘reform’ entered our vocabulary rapidly after the fall of communism as a description of the transformations that Albania had to undertake to establish a market economy and democracy. These transitional reforms (transition) were not only necessary, but also meant something good. Thus, from the very beginning, ‘reform’ was equated with ‘good’.
The transition is now over. For every year under communism, we had almost a year in transition to undo the consequences of communism. What could be done, was done—we have now reached the final station, the destination, the home. The political, economic, and social structure we have is what we will have forever.
We do not feel happy in the ‘home’ we have arrived in. Transition was more seductive: when we were unhappy with the situation, we gave ourselves hope by thinking that it was temporary, that once the transition reforms were completed, we would be better off. So, whenever governments announced new reforms, we felt good because we believed that they would accelerate the achievement of happiness at the end of the transition. This could be the reason why the journalist felt that something was missing this time that the budget was not accompanied by fiscal reform.
But the transition reforms so far have often been superficial, not infrequently wrong, and always driven by political pragmatism. Despite the ‘historic’, ‘renascent’, ‘transformative’ reforms that we have undertaken, the country’s fundamental political and economic institutions have not changed much from the form they took immediately after the fall of communism.
For example, we have carried out 9 electoral reforms so far—far more than any other country in the world—and we still have an electoral system that does not guarantee representation and good governance. We have carried out an unparalleled reform in justice, but justice still does not function properly. We have adopted a new Constitution and many amendments to it, but it does not guarantee either the separation of powers or their checks and balances, which is the main task of a constitution.
Paradoxically, after many reforms, Albania still needs to reform its political and economic system. It needs to reform the ‘reform’ of the transition.
But while some insignificant reforms are much discussed, some fundamental, necessary reforms have been left completely silent. I am mentioning the most important ones below.
Financing of political parties.
I have written several times about the lack of democracy of political parties. But the biggest problem of the parties is the fact that they are dubious money launderers and large-scale tax evaders. 43 thousand euros, 18 thousand euros and 11 thousand euros are the donations from businesses that the three main parties declared respectively for the 2021 parliamentary campaign. In reality, they receive millions of euros—all undeclared, both from parties and donors.
Illegal financing and false financial declarations corrupt and compromise parties even before they come to power. Therefore, without reforming their financing, in Albania there will always be corruption and clientelism on a large scale and chronic misgovernment.
Financial management of businesses.
Like parties, businesses massively falsify financial reports, keeping double balances, to avoid taxes. It is no coincidence that Albania has the lowest tax revenue-to-gross domestic product ratio in Europe.
On the other hand, false financial reporting is a major obstacle to the development of entrepreneurship and capitalism in Albania. The emergence, at the beginning of the 17th century, of joint-stock companies—as a break from family businesses—is the innovation that brought about the birth and strengthening of capitalism and the transformation of Western societies. The joint-stock form provided businesses with large sources of financing (from practically every individual in society); it spread the risk of entrepreneurship among many people; it enabled the professional management of businesses; and it gradually enabled the replacement of capital with knowledge as the most strategic factor of production.
Joint stock companies require financial transparency and cannot exist where financial reporting is falsified on a large scale. This is the main reason why Albanian entrepreneurship has developed little in these 35 years: local businesses continue to remain mainly family-based businesses or partnerships of a few individuals; businesses have not separated ownership from management—they continue to be controlled and managed by their owners; and they are mainly limited to trade and sectors that require little knowledge and technological progress.
Without solving the problem of double-entry bookkeeping (false reporting), Albanian entrepreneurship will remain equally underdeveloped and the country’s economy anemic.
3. Media financing.
A critical case of financial informality is that of the media. In a democratic system, the media has a mission to serve the public interest by informing citizens about public decision-making and by holding the government accountable. But in our country, the media serves the government and other economic interests, to the detriment of the public interest.
The reason is financing—media are generally financed informally, directly or indirectly, by the government and economic groups connected to the government. Worse, recently blackmail and fines have become an important source of financing for many media.
The informality (often criminalization) of financing and the falsification of finances leads to the capture of the media by the government and private interests. Therefore, if the problem of financial transparency is not solved, the media will not assume the necessary and irreplaceable role they have in a democratic society.
Professional public administration.
Without professional public administration, there can be neither good governance nor democracy. But in Albania, the administration mostly serves the interests of the party in power. Political parties are, first and foremost, structures for employment in the state and the distribution of government favors to their members, activists, and financiers.
People support the party to win elections to become or remain directors, chiefs, inspectors and employees in the administration. Police officers, teachers, doctors, lawyers, experts, specialists must collect votes for the party instead of protecting, educating, healing, helping, enforcing the law, drafting sound public policies.
The consequences are devastating: widespread corruption and clientelism; mediocre civil servants without integrity; illegal influence on elections. In this way, politics ceases to be a competition of legitimate programs and interests and turns into a preliminary auction for the loot that will be stolen later.
This is perhaps the most difficult and important challenge of all: creating a professional administration that serves the law and the public interest and not the party.
Non-partisan electoral administration.
35 years after the fall of communism, elections at all levels are still administered in a partisan manner. This increases the cost of elections, creates space for party maneuvers and manipulations, and disadvantages small and new parties. In particular, centralized vote counting creates delays in the release of results and multiplies the opportunities for party maneuvers.
The result of this system is problematic elections, opposition to the election results, and political unrest. Therefore, non-partisan election administration, at least at the lower levels, is a necessity to improve elections and remove one of the main causes of the lack of political stability in the country.
This reform will enable the reduction of clientelism and the pressure of party pressures, freeing parties from the ‘need’ to reward thousands of commissioners and vote tellers with employment and favors.
Others could be added to the above list of unspoken reforms, but it would be a longer article. The bottom line is that none of these fundamental problems will be touched by any of the parties in these elections either.
All parties seem to prefer no change, despite many talking about major changes and deep reforms. But the changes they have made so far do not touch the essence of the country’s political-economic system. These changes resemble the statement ‘the more it changes, the more it remains the same’.
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