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18 March 1997 Doc. 7780
ADOC7780
REPORT1
on the state of emergency in Albania
(Rapporteur: Mr René VAN DER LINDEN,
Netherlands, Group of the European People's Party)
_____
Summary:
A state of emergency was declared in Albania on 2 March 1997. This caused the President of the Assembly to consult urgently with political group leaders, with a view to sending an immediate mission of inquiry. All agreed that the declaration of a state of emergency in a member state, with all which that might imply for human rights, required an immediate Council of Europe response.
In its draft recommendation, in addition to other proposals, the Political Affairs Committee calls for an initiative by the Committee of Ministers for a tripartite task force to give immediate international support to the new coalition government.
I. Draft recommendation
1. With the near-total breakdown of law and order in Albania, the Council of Europe is faced by a situation without precedent in a member state.
2. The crisis, following the troubled parliamentary elections of May/June 1996, was caused by the collapse of "pyramid" investment schemes, affecting directly or indirectly up to 80% of the people and causing a loss to the national economy of up to $2 billion.
3. The Assembly notes the conclusions of its mission of inquiry (6-7 March 1997) into the state of emergency in Albania proclaimed on 2 March 1997. It welcomes the subsequent missions undertaken by the European Union and OSCE. It further welcomes the cooperation and agreement between these institutions, together with the Council of Europe, in framing a plan for Albania's recovery.
4. The Assembly recommends that the Committee of Ministers take an initiative to form a tripartite task force (Council of Europe, European Union, OSCE) to give immediate international support to the new coalition government:
i. for restoring order with due regard to Albania's continuing obligations under the European Human Rights Convention, with action under the aegis of OSCE for recovery of weapons from civilians;
ii. through urgent supplies of food and medicines and for restoration of water and electricity;
iii. for restoring the authority of the regularly elected municipal institutions to perform their legal duties;
iv. through an urgent expansion of job creation programmes;
v. through an IMF stabilisation programme and support for the national budget;
vi. through the preparation of an adequate legislative, regulatory and organisational infra-structure for parliamentary elections under the supervision of the Council of Europe and other European organisations, and with abolition or reform of the "genocide" and "verification" laws as required by Assembly Resolution 1114 (1997);
5. The Assembly further calls for:
i. an independent inquiry into the scandal of the "pyramid" investment schemes, with international expertise and immediate publication of the report in order to guarantee transparency and restore confidence, both nationally and internationally;
ii. an inquiry by the international financial institutions into the management of Albania's public finances and budget 1996-97, with publication of the report;
iii. concerted action by governments of member states in support of the Italian and Greek and other national authorities in their humanitarian response to the flow of refugees;
6. The Assembly calls on the Secretary General to review and adjust Council of Europe programmes, with a view to making a significant contribution to the multi-institutional assistance teams for Albania proposed by OSCE;
7. The Assembly requests the leaders of its political groups (or their representatives), with the Rapporteur of the Political Affairs Committee, to make further visits to Albania in support of the reconciliation process between Albania's political parties.
II. Explanatory memorandum
by the Rapporteur
A. BACKGROUND
1. The mission, composed as follows, took place 6-7 March 1997:
SOC Victor Ruffy Switzerland Rapporteur
EPP Rene van der Linden Netherlands Chairman
EDG .................
LDR Hanneke Gelderblom-Lankhout Netherlands
UEL Jaakko Laakso Finland
Secretariat: John Hartland
Francesc Ferrer
2. A state of emergency was declared in Albania on 2 March 1997. This caused the President of the Assembly to consult urgently with political group leaders, with a view to sending an immediate mission of inquiry. All agreed that the declaration of a state of emergency in a Member State, with all which that might imply for human rights, required an immediate Council of Europe response.
3. The Albanian authorities cooperated immediately. Help was received from the Permanent Representations of France and Germany, as also from Tirana representatives of the World Bank and the European Community Monitoring Mission (European Union). Our meeting with representatives of the diplomatic community in Tirana was hosted by the Ambassador of France. The statement issued at the close of our visit (which preceded those of the European Union and OSCE) contained no criticism of the declaration of the state of emergency per se, nor of recourse to force (such as it was at the time) by the Government.
4. Events have continued to move fast since the return of the mission. This report runs the inevitable risk of appearing out-of-date by the time it is tabled. Its centre-piece is Bureau Rapporteur Ruffy's political analysis in section D. Section E contains some additional comments and observations made to us in Tirana, which still appear to have value in giving some insight into the crisis, its proximate and more distant causes, and possible scenarios for Albania's recovery so soon as public order and the authority of the State can be restored.
5. The crisis itself, coming in the aftermath of the greatly troubled parliamentary elections2 of May/June 1996, has its roots in the uncontrolled proliferation and collapse of "pyramid" financial savings schemes, causing a loss to the national economy of up to $2 billion and affecting up to 80% of the people.
B. MISSION STATEMENT / PRESS RELEASE
TIRANA 07.03.97 - At the close of a 2-day programme of talks with government and opposition leaders, and representatives of the World Bank, the European Union and the diplomatic community in Tirana 6-7 March 1997, the COUNCIL OF EUROPE Parliamentary Assembly delegation led by René VAN DER LINDEN (Netherlands, EPP) issued this 7-point statement following a meeting with President Berisha :
1. We are deeply concerned by the violence and civil disorder in the south of the country, by the state of emergency in Albania which this has necessitated, and also by the misery caused to hundreds of thousands of families by the collapse of the "pyramid" financial savings schemes.
2. We welcome the dialogue initiated by President Berisha on 1 and 4 March 1997 with the opposition Socialist Party. We warmly welcome the Declaration of 6 March 1997 by the ruling Democratic Party and all the other political parties on the need for restoring constitutional order, for an amnesty in return for surrender of arms, and for multi-party
consensus on the choice of a new Prime Minister and on the setting-up of a national consensus government having the broadest possible support and a mandate to review the election laws. We call on the people of Albania to accept and act in accordance with this amnesty. The logic of those developments is for the Socialist Party to end its boycott of Parliament : only thus can its voice be heard and its arguments debated in the Parliamentary Assembly of the Council of Europe.
3. In view of the political crisis to be surmounted, a new Government based on the broadest possible support must prepare a new Constitution and a new electoral law. As stated in Assembly Resolution 1095(96) : "The political parties should consider new elections after these changes in legislation".
4. As a Member State of the Council of Europe, Albania must show full respect for human rights in any recourse to force to restore order. Measures taken in derogation of Article 15 of the European Human Rights Convention must not exceed "the extent strictly required by the exigencies of the situation", nor be "inconsistent with (Albania's) other obligations under the rule of law". All political parties should state their condemnation of acts of criminal violence and rebellion in southern Albania, if these should persist despite the 6 March offer of an amnesty. Constraints on the media must be lifted.
5. An independent inquiry should be conducted into the scandal of the "pyramid" financial savings schemes. International experts should be part of this inquiry, in order to guarantee transparency and restore confidence, nationally and internationally.
6. A "rescue package" should be urgently designed and applied by the international financial institutions. The conditions to be negociated with the Albanian authorities should be the subject of a special hearing of the Committee on Economic Affairs & Development of the Council of Europe Parliamentary Assembly.
7. The Council of Europe is ready to provide a frame for further dialogue between the political forces of Albania. It will act, together with the European Union, OSCE and the other international organisations, as a source of international advice and support
for Albania for any problems within its special areas of expertise.
C. PROGRAMME
THURSDAY 6 MARCH
16h00 meeting of ad hoc committee election of rapporteur
approval of programme
Social Democratic Party Skender Gjinushi Chairman
Paskal Milo Vice-Chairman
Democratic Alliance Neritan Ceka Chairman
Prec Zogaj
Arben Demeti
Perikli Teta (former defence minister)
Republican Party Sabri Godo Chairman
Fatimir Medin Vice-Chairman
Social Democratic Union Teodor Laco Chairman
Shaquir Rexhvecay Secretary for Foreign Relations
Ballit Kombetar Hysen Selfo Vice-Chairman
Democratic Party3 Ali Spahia Albanian Parliamentary
Genc Pollo Delegation to the Council
Albina Karamitro of Europe
FRIDAY 7 MARCH
07 h 00 meeting of ad hoc committee: resumption of programme
Socialist Party Namik Dokle Secretary for Organisation
Arta Dade Head of Foreign Relations
World Bank Carlos Elbirt Resident Representative
ECMM4 (European Union) Hans-Joachim Ewe Regional Director
Socialist Party Pandeli Majko Secretary for Public Relations
Etem Ruka Member of Presidency
Jorgji Kote Member of Steering Committee
10 h 30 President Berisha
12h15 representatives of the diplomatic community (French Embassy)5
12h45 President of Parliament, Mr Pjeter Arbnori
13h30 meeting of the ad hoc committee: approval of mission statement
14h00 press conference
D. POLITICAL ANALYSIS OF THE OUTCOME OF THE MISSION
Victor Ruffy, Rapporteur of the Bureau's ad hoc committee
1. The Assembly Bureau's ad hoc committee sent to observe the local elections on 20 October 1996 returned from its visit to Tirana with the impression that the satisfactory conduct of the elections had served to calm political tensions somewhat and that some improvement in the general climate could be looked forward to. We sincerely believed that, in accordance with the choice made, the work of the "round table"6 would resume on the basis of our recommendations.
2. That was reckoning without the imminent collapse of the pyramid companies and its devastating economic and social effects. There had admittedly been rumours about these schemes for some time but no-one could suspect that they had assumed such importance in the Albanian economy. Their collapse at the very beginning of the year is without any doubt the reason for a complete break-down in relations between Albanian society and its institutions, more particularly the party in power in the persons of its representatives in the government who tolerated, if not encouraged, these companies: financial collapse - government responsibility - political exploitation.
3. The pyramid companies did not all have the same structure or the same purposes. Some, such as SUDE, were purely speculative and kept no accounts, others - like VEFA (still in existence with outstanding liabilities of some 400 million dollars and 80 000 savers) - combine financial dealings with productive investment. Some even purported to be involved in charitable works. They appeared at the beginning of the '90s. Despite the presence of a central bank judged satisfactory by international experts, these pyramid companies rapidly succeeded in attracting most if not all the country's savings, not to mention suspect capital and cash attracted by high interest rates, raised by selling off essential goods such as small-holders' farms and private homes.
4. Most western countries have at one time or another in the past experienced the emergence of such companies. However, we now possess the legal means with which to react rapidly to contain the damage caused by this kind of organised fraud. Furthermore, in the West the media are quick to react when such schemes appear. In Albania, advertisements for these companies were regularly to be seen in newspapers close to the government.
5. VEFA is said to be one of the companies close to the Democratic Party. In Tirana it is claimed that savings increased substantially in autumn 1996 just after President Berisha, replying to (international and other) warnings about the dubious nature of these companies, declared that "the money is as clean as can be", indirectly giving these companies the seal of approval and prompting an influx of savings.
6. It is estimated that one Albanian in three deposited money with these finance houses. This largely explains why they met so little resistance and so few people openly denounced them.
7. Two figures suffice to measure the scale of the disaster. Whilst Albania's GDP is about $3 billion , these companies' liabilities are in the region of $1.5 to 2 billion. If a collapse on such a scale were to occur in any of our countries, there would undoubtedly be a popular uprising. In their collapse, the companies swallowed huge sums, plunging into abject poverty a large part of the country's population, at the same time destroying hope for prosperity linked to capitalism and the market economy. President Berisha does not deny the government's responsibility in the crash; he deplores failure to apply the laws, which enabled these companies to develop uncontrolled.
8. Obviously, it will be for international financial institutions such as the IMF, the World Bank and the European Bank for Reconstruction and Development (EBRD) to inform us of their analysis of these occurrences and whatever warnings they gave about the threats these pyramid structures progressively came to represent for the country's economy and the validity of bilateral and multilateral aid.
9. To restore confidence internationally and nationally, we believe that international experts should be part of the commission which the Albanian parties have decided to appoint to illuminate the scandalous conduct of the pyramid companies.
10. During our visit, which was confined to Tirana, we had no means of knowing whether and to what extent the popular uprising triggered by the financial collapse was exploited by particular political groups. However, two points cast doubt on the Democratic Party's line: the first concerns the nature of the uprising, which seems more spontaneous than organised, even if a number of gangs give it some false semblance of structure; the second concerns the armed forces' lack of determination to defend their positions and stop the looting of arms depots, testimony to the profound demoralisation of troops unconvinced of the need to defend the regime against the people.
11. The spread of the crisis from the south coast and fear of the possibility of men in arms marching on the north and especially Tirana prompted President Berisha to decree a state of emergency at an extraordinary session of Parliament convened on Sunday 2 March. The state of emergency was accompanied by a climate of fear and terror: curfew from 8pm to 7am, closing of public establishments by 3pm, ban on meetings of more than 4 people, press censorship, closing of certain newspapers, hurried flight of journalists to escape beating-up, arrest of opponents of the regime.
12. In an attempt to restore order in the country and end the escalation of violence, the President and all the parties met on Wednesday 6 March to agree a joint Declaration (see Appendix G). We arrived on the very day this Declaration was signed by Albania's political parties, marking the resumption of dialogue after the proclamation of the state of emergency: all the parties committed themselves to restoring constitutional order throughout the country; arms were to be surrendered within 48 hours from 6am on 7 March in return for an amnesty for holders of weapons who had committed no crime; all offensive military action was suspended for the same period; the President also undertook to organise consultations prior to appointing a new prime minister on the basis of the widest possible consensus.
13. It was on the basis of this Declaration and the Parliamentary Assembly's appeal of 3 March 1997 "for a government of national consensus" (see Appendix C) that our ad hoc committee chaired by René van der Linden started talks with representatives of the Albanian parties, President Berisha, the Speaker of the Albanian Parliament, representatives of the World Bank, the European Union and the diplomatic representatives of the Council of Europe member states in Tirana.
14. Despite - or rather because of - the deterioration of the situation, we thought it urgent to define and achieve the minimum conditions for continuation and intensification of the dialogue begun the day before as a prerequisite for sufficiently convincing political action. With this in mind, the discussions focussed on four main points:- restraint in any recourse to force by the authorities; how to afford a new prime minister the widest possible support; the composition of the government; the conditions for new elections.
15. All the opposition parties told us they had gone along with the Declaration of 6 March and had signed it in order to avoid the worst, a bloodbath, emphasising that it was quite insufficient and its content of marginal significance in relation to the crucial problems of the moment.
16. No political formation demanded President Berisha's resignation: some simply regretted that he had not chosen to extend his present term by one year rather than seek election for a new term. From the outset, discussion of the choice of prime minister raised the issue of the government. According to the opposition, it was mistaken to think that the appointment of a prime minister, however broad his support, could alone resolve the crisis. It was a matter of tackling the formation of the new government and deciding on it together. The appointment of the prime minister was admittedly important, but the appointment of the Minister of Defence or the Minister of the Interior were just as crucial to restoring calm.
17. Furthermore, after the abandonment of the Democratic Party by the small parties, it was unlikely that a new coalition without the socialists would enjoy any credibility in the eyes of the people. Logically, psychologically, a government of national accord had to be based on a broad-based coalition including the Democratic Party and the Socialist Party. One of the representatives of the Socialist Party, Pandeli Majko, put it in a nutshell: "It makes no sense today to talk of right-wing or left-wing programmes".
18. As regards elections, none of the parties demands immediate elections. All agreed that some time had to be allowed to pass before contemplating fresh elections. The time needed to restore calm sufficiently to guarantee their normal conduct would be between six months and a year. Each of the parties mentioned revision of the electoral law as a possibility and most also wanted a new constitution.
19. Lastly, in view of the abject poverty into which the population had been plunged, two parties at least asked for emergency financial measures by the international community to refloat the economy and to avoid too lengthy suffering due to food shortages and famine.
20. In the face of these fairly precise demands, the position of President Berisha and of the Speaker of Parliament, Pjeter Arbnori, remained firm. They stood strictly by the previous day's Declaration, refusing to yield to the pressure of arms and the south. If the truce offered to the rebels failed, they thought they could put down the rebellion with the army without massive destruction of the towns and did not think the insurrection could reach Tirana. President Berisha persisted in his intention of appointing a prime minister following consultation and if possible agreement with the opposition parties but ruling out the possibility of a coalition of the Democratic and Socialist Parties. If the socialists were ever to win the elections, the Democratic Party would go into constructive opposition and he himself would immediately resign from the presidency, finding cohabitation inconceivable.
21. As regards fresh elections, the President declared that these could not be envisaged for the simple reason that the people would regard them as an insult; having turned out to vote for Parliament in May and June, the electorate would not understand why it was being asked to turn out again.
22. Consequently, our talks ended in deadlock, offering little prospect of successful last-minute political intervention. Our conclusions and proposals are summarised above, in the press release reproduced in Part B of this report.
E. CONCLUDING REMARKS AND OBSERVATIONS
Rene van der Linden, Chairman of the Bureau's ad hoc committee
Rapporteur of the Political Affairs Committee
23. The question today is how to assist Albania to recover. Following is a selection of some observations made to us during the mission and some observations of our own. Although as a basis for action they were overtaken by events, they may yet give some insight into the causes and dynamics of the break-down. Recovery plans for Albania must be based on a strictly realistic appraisal of the forces at work in Albania's polity, society and economy.
24. On the evening of our arrival in Tirana, it was still possible to believe that the real political dialogue which was started on 1 March 1997 by President Berisha with the socialist extra-parliamentary opposition might yet have a calming effect on events in the south. Four forces were said to be in contention in the south: government; opposition; the mass of small investors who had lost their savings and property and were desperate for compensation irrespective of who ran the Government in Tirana; and, lastly, criminal elements ("ex-politburo and mafia clans") seeking to manoeuvre the mass of small investors, thinking to profit from anarchy and de-stabilisation of the State. The concept was that perception of real political dialogue and the prospect of consensus government would permit the criminal elements to be isolated from the mass of small investors and the many young people who were demonstrating. The presumptions were that the State still had the strength to challenge the criminal elements and that these were infiltrated beyond some critical point neither into the Government nor the opposition leadership.
25. By the time we saw President Berisha (from 10 h 30 to 12 h 00 on Friday 7 March) this concept seemed already to have vanished. His first concern was that the Council of Europe should not press him to make further political concessions to an extra-parliamentary opposition at a time when the authority of the State was under challenge from armed rebellion, which he claimed the Socialist Party was fomenting. He urged us not to back calls for fresh elections. He was almost ironically confident that the State had the strength to master the rebellion. He criticized the former government for responding too weakly to IMF warnings about the "pyramid" financial schemes.
26. The World Bank Representative recalled that in early 1996 Albania had failed to reach agreement with the IMF on its budget deficit. The question has to be put whether the absence of official international lines of credit was a factor in the unhealthy growth of the "pyramid" financial schemes. The Democratic Party and the Socialist Party each accuse the other of recourse to them for financing their campaigns for the May 1996 parliamentary elections. No-one in the political arena criticized or denounced these schemes before the elections. World Bank / IMF warnings were reiterated "at high level" as from mid-1996. If action had been taken then, the economy would have suffered a major blow but not the catastrophe as at present. No international aid or assistance programmes were made conditional on a proper response to these warnings by the Government.
27. What was the real nature of the rebellion in the south ? Already on Friday 7 March the Head of the European Community Monitoring Mission (ECMM/EU) was sceptical of the idea of a "north/south divide" as a factor in the crisis. Financial losses in Vlora were higher than elsewhere (including major losses by criminal elements). It was also where the Socialist Party was strongest. These factors were sufficient in themselves to explain the origin of the rebellion, without introducing ideas of geography. The introduction of such ideas were part of the rhetoric of Government to accredit the menace of civil war both as an incentive to the population to calm down and to justify in advance the recourse to force. Also, the rebels were too young and, at the time, too happy-go-lucky for the allegation to be credible that they were mostly ex-army and ex-secret service. Throughout the south, they were friendly to ECMM personnel. They did not seem to have a common structure of command.
Conclusion
28. The dramatic spectacle of total break-down should not blind us to some aspects which differentiate the Albanian crisis from other crises currently or recently on the agenda of the Political Affairs Committee. Political separatism is not a factor, nor is there an ethnic dimension, nor a religious dimension, nor has there been recourse to grossly disproportionate or indiscriminate force by the State authorities. Moreover, at the time of writing, people are not shooting at each other; and the rebellions are multiple and localized with as yet no evident probability of spill-over to neighbouring countries.
29. The question is how to generate a dynamics of recovery. The formula must comprise the following elements:
- an internationally credible government;
- international support for restoring order, with action under the aegis of OSCE to induce the restitution of weapons;
- urgent supplies of food, medicines etc.
- an IMF stabilisation programme and support for the national budget;
- an independent inquiry into the scandal of the collapsed "pyramid" investment schemes (with international experts), and an inquiry into the macro-economic effects of the collapse;
- an immediate expansion of job creation programmes;
- joint OSCE/EU/Council of Europe action to lay a proper legislative, regulatory and organisational infra-structure for parliamentary elections and their international monitoring;
30. The pre-supposition, at the time of writing, is that anarchy will not lead to civil war.
Annexes
A. Resolution 1095 (1996) 26 vi 1997 (parliamentary elections of May/June 1996)
B. CE press release 22 x 1996 (local elections of 20 October 1996)
C. CE press release 3 iii 1997 (President's appeal for consensus government)
D. President Berisha's press release 4 iii 1997 (meeting with Socialist Party) leadership
E. CE press release 5 iii 1997 (Secretary-General's human rights memorandum)
F. Resolution 1114 (1997) 29 i 1997 (monitoring of Albania's commitments)
G. Declaration of Albanian political parties of 6 March 1997
H. EU Presidency Declaration of 7 March 1997
I. Albanian political parties' "platform of national reconciliation" of 9 March 1997
J. Report of OSCE Mission (8 March 1997) of Dr Franz Vranitzky
K. OSCE Chairman-in-Office's statement of 12 March 1997
L. European Parliament Resolution of 13 March 1997
Reporting committee: Political Affairs Committee.
Budgetary implications for the Assembly: to be assessed.
Reference to committee: request for urgent debate, Reference No. 2162 of 19 March 1997
Draft recommendation adopted unanimously by the committee on 18 March 1997.
Members of the committee: Mr Bársony (Chairman), Sir Anthony Durant (Vice-Chairman) (Alternate: Mr Atkinson), Mr van der Linden (Vice-Chairman), Mrs Ojuland (Vice-Chairperson), MM Aloglu, Antretter, Bakke, Baumel, Mrs Belohorska, MM Belyaev, Bergqvist, Bernardini, Björck (Alternate: Mr Hagard), Bloetzer, Bokov, Büchel, Bühler, Cem, Cerqueda Pascuet (Alternate Mr Torres Alis), Chircop (Alternate: Mr de Marco), Chornovil, Deasy (Alternate: Mr Gregory), Diacov, Domljan, Eörsi, Evangelisti, Galanos, Gjellerod, Gotzev, Hardy (Alternate: Mr Davis), Irmer, Iwinski, Kalus, Kaspereit, Kautto, Kuzmickas, Mme Lentz-Cornette, MM Lopez Henares, Lupu, van der Maelen, Maginas, Martínez, Masseret, Medeiros Ferreira, Melescanu (Alternate: Mr Badulescu), Mota Amaral, Mühlemann, Oliynik, Pahor, Popovski, Prusak, Mrs Ragnarsdottir, MM Risari, Schieder, Schwimmer, Selva, Sinka, Sir Dudley Smith, Mr Spahia, Mrs Stepova, Mrs Suchocka, MM Urbain, Vrettos, Woltjer, Ziuganov (Alternate: Mr. Zhebrovsky).
N.B. The names of those members who took part in the meeting are printed in italics.
Secretaries of the committee : Mr Hartland, Mr Kleijssen, Mr Gruden.
1 1by the Political Affairs Committee
2 2 cf. the concept of a "failed" election which (irrespective of imperfections, irregularities etc., of degree of participation or size of majority) is one which fails effectively to transfer legitimate political authority to the newly-elected Parliament or President. Disagreement over the character of the May/June 1996 election, particularly as made manifest within the international community, has had the effect of engendering continuing debate over the legitimacy of the Albanian Parliament and per se (despite appeals and statements to the contrary) of accrediting the justification of a boycott by the Socialist Party.
3 3Working dinner hosted by the Albanian Parliamentary Delegation
4 4European Community Monitoring Mission
5 5France, Austria, Italy, Germany, United Kingdom, Greece, Switzerland, Czech Republic, Poland, Croatia, Macedonia (FYROM), Turkey, Russia, Bulgaria, Hungary and Romania.
6 6See Resolution 1095 (1996), paragraph 5