Tirana: A city scarred by money laundering – Exit
The march of diggers, cranes and cement mixers continues as the Albanians find themselves driven out of the city. Those who remain witness the destruction of historical monuments, playgrounds and open spaces and are powerless to prevent it.
For the past three decades, the Albanian capital of Tirana has been in a constant state of flux. The relevance of these changes depends on who you talk to. Many longtime activists and residents will tell you that the city is being stripped of its soul, its precious green spaces and its identity. On the other hand, the Municipality will tell you that it is an ecological crossroads of youth and citizen policies.
A walk through its streets tells the reality. Construction is booming and amid the communist-era blocks, brightly colored apartments and the few remaining historic buildings, concrete is still present and growing. tall towers are erected throughout the center and countless construction sites dominate the landscape.
Drone footage from June-July 2021 showed at least 414 works in progress in the city. Meanwhile, in 2020, a total of 201 building permits were issued, or one every 48 hours. In the first trimester of 2021some 127 million euros in building permits were issued, almost double the same period in 2020.
Of course, progress is needed and investments in infrastructure, housing and amenities such as offices and commercial areas are welcome. But at what cost ?
Rental prices in the capital have risen dramatically, excluding many residents from the market. Whereas four years ago a two-bedroom apartment in a relatively central area rented for around 300 euros per month, today it would cost more than 500 euros. In terms of buying property, the same problem is present.
For new construction in the city center, prices are around 4,000 euros per square meter, falling to 800 euros on the outskirts. The average of 1102 euros is extremely high considering the average monthly salary of around 500 euros in the capital. Tirana is now one of the most expensive places in Europe to buy property, and rental costs are starting to resemble those in Brussels and Rome.
The Bank of Albania announced that housing in the capital had increased by 43% since 2014 and that prices continued to rise, while wages stagnated and foreign investment remained cautious.
Experts say Albania is at risk of an economic crash once the construction bubble bursts and property prices could fall by 50% in the coming years.
Money laundering fears
It is estimated that up to €700 million of illicit funds enter Albania every year. This is channeled into the country through mainly criminal activities, corruption and tax evasion. Over the past three years, it is estimated that approximately €1.6 billion has been laundered in the construction sector in Albania.
In 2020, the Global Initiative Against Transnational Organized Crime (GITOC) Noted that new residential or commercial construction in Albania was a popular way to launder money.
“It starts with financing new residential or commercial construction, continues with financing construction contracts and understating the value of labor in construction, and again with the sale of finished buildings. “
He noted that municipalities often issue building permits but do not monitor what happens afterward. In Albania, construction since the fall of communism has been stimulated by people from the Albanian diaspora who invest in the country with funds whose source of legitimacy is impossible to know.
Then in 2012, Albanian construction slowed to “negligible levels” due to the global recession. But in 2016, the construction sector began to grow strongly, with experts attributing the increase to “criminal investment of the proceeds of crime”.
The report found that of 141 companies that received building permits for high-rise buildings between 2017 and 2019, 59% lacked the financial capacity to complete them. The balance sheets of the companies in question revealed that they had minimal revenues and no assets or loans that could be used to finance the projects.
GITOC estimated that 60% of project value came from illicit money. The report also claims that even when you take into account the value of mortgages, there is a discrepancy of some 600 million euros in 2019 alone. The report’s findings and an anonymous Albanian money laundering expert said that up to 1.6 billion euros of “dirty money” could have been laundered via the Albanian real estate sector between 2016 and 2019.
It was also noted how criminals and those seeking to launder money link up with politicians and officials to obtain their permits. Corruption, influence peddling, brokerage, blackmail and abuse of power are all used to obtain permits and other benefits.
Then, in January 2021, the arrest of dozens of members of the ‘Ndrangheta mafia in Italy laid bare the links with the construction sector in Albania. Italian anti-Mafia forces arrested 50 people, including seven Albanians.
Wiretaps collected as part of the investigation revealed that those involved claimed they could use an Albanian businessman with alleged access to the prime minister and mayor of Tirana to invest in the construction. They also discussed construction in the center of Tirana and high property prices. One of the suspects even said: “In new skyscrapers, they cost 3,800 to 4,000 € per square meter. Do you know the real cost? €510.
Lack of responsibility
Tirana Mayor Erion Veliaj rebutted all linksclaiming that the whole investigation, which has lasted for years, was created by the opposition parties with the aim of manipulating the public before the general elections in April 2021. He claimed that no building permits was influenced by criminals or illicit activities.
The prosecutor’s office specializing in corruption opened a preliminary investigation in February 2021, but nothing has been heard since.
A few months later, the Italian Financial Intelligence Unit reported that Albania was the top destination for “suspicious transactions” from the country in the first half of 2020. Albania beat Morocco, Romania and Senegal in first place, with almost half of the 70,157 suspicious reports made during the period. Most of the transfers came from mafia hotspots such as Lombardy, Lazio, Sicily and Emilia-Romagna.
The Council of Europe MONEYVAL noted that the authorities have not taken any significant measures to combat money laundering and the financing of terrorism. They found that some positive steps had been taken, but that there remained a significant number of limitations, including a lack of prosecutions, convictions and deterrents.
“Limited steps have been taken to improve compliance with the other recommendations, but gaps remain. Albania is encouraged to continue its efforts to address the remaining shortcomings.
the US State Department had similar conclusions in its International Narcotics Control Strategy Report released this year and find that Albania was a “major money laundering destination” in 2020. The State Department said the Albanian government had made “no significant progress in thwarting money laundering and financial crimes in 2020 “.
And yet, the march of diggers, cranes and cement mixers continues as the Albanians find themselves driven out of the city. Those who remain witness the destruction of historical monuments, playgrounds and open spaces and are powerless to prevent it.
The city that loses its charm
In recent years, civil society has tried to fight back, but in the face of state power and the money that feeds it, its efforts have so far been in vain. A two years protest against the demolition of the National Theatre, resulted in activists being evicted from the building at 3am by armed special forces, with demolition beginning while they were still inside. They didn’t even have a chance to retrieve their belongings from the wreckage.
Those protesting against the demolition of their homes to room for private projects also met similar fates. Police intervene in the early morning wielding tear gas and batons, leaving citizens homeless and clutching their belongings as the dust settles.
Civil society opposition to the changes underway in Tirana is strong but marred by disillusionment with apparatuses such as the courts. With case backlogs reaching tens of thousands, it’s often too late to stop the heavy machinery from taking hold.
The result is a charming and imperfect city, but slowly losing its architectural heritage. As Ottoman homes and 1930s villas are razed, Albanians struggle to identify with the concrete monoliths that replace them.