Albania’s Collapsing Pyramids

A series of pyramid investment schemes that inevitably collapsed and cost tens of thousands of Albanians their life savings has produced an explosion of outrage that threatens the government of President Sali Berisha. Albania’s neighbors are nervously wondering if they might soon be facing a new Balkan crisis.

Anti-government demonstrations have been growing in violence. Berisha’s Democratic Party has close ties to a number of the promoters of the pyramid schemes, which pulled in hundreds of millions of dollars from gullible Albanians by offering interest rates of up to 50% a month. In time, the pool of new investors dried up and promoters were unable to make the promised payouts or return any of the principal.

The protestors blame the government for not warning them of the folly they were committing. They are demanding that the regime make good on their losses. But Albania remains, as it was under decades of harsh communist rule, Europe’s poorest country. A rising budget deficit already threatens to accelerate inflation and deepen Albanian misery. The chances of a bailout for victimized investors seems slim indeed.

Berisha seeks reelection in April in a vote cast by the single-chamber National Assembly, where his party controls 92 of the 140 seats. If anti-government demonstrations continue, however, he could face a revolt from within his party.

The United States has been among those countries pressuring Berisha toward greater democratization and cleaner government. The concern of Washington and the European democracies is that a descent into chaos by Albania would have repercussions well beyond its borders, if only through the flight of refugees. The Balkans have a long and tragically deserved reputation as a political tinderbox. Events in Albania offer a reminder why.