Albanians Label Aid for Reform A Western `Catch-22'

`WE have only 20 percent of what we need to cover expenditure in the second half of this year," Albanian Economic Minister Genc Ruli said, drawing a grim parallel with 1991, when Europe's poorest country had the money for only one-quarter of the food imports needed to support its population.

A year and two premiers after Albania's Democrats won an election landslide in March, the situation of the smallest and least developed of the former communist countries has not improved one whit. In fact, it is worse because the election euphoria further escalated public frustrations and inflated expectations which the fledgling democracy cannot begin to fulfill.

Nonetheless, true to election pledges, the Democratic government has just struck out on a bold path of reform. Moreover, it has adopted a "shock therapy" strategy with which the relatively economically strong and bigger East European countries along with Russia have already run into difficulties.

Public anger over steep new market prices forced Poland to slow down a reform package seen initially as an East European model. Polish President Lech Walesa has again chided the West for not opening its markets wider to encourage a government stable enough to get the reform back on course.

Before the most recent summit of the world's leading industrialized nations, Russian President Boris Yeltsin complained that the International Monetary Fund's (IMF) loan terms are too tough politically. He gained some short-term relief, but the massive aid he needs is still dependent on Russia's performance over the next few months.

And now even Albania is planning radical changes that seem likely to encounter similar obstacles before meaningful Western support is given. It is freeing prices and, even more risky, eliminating the 80 percent pay subsidy instituted as a cushion for layoffs as total economic breakdown signaled the collapse of Albanian communism two years ago. The cushion helped families survive but was crippling to the economy.

With its imperative need for Western aid, however, Albania now finds itself in the same Catch-22 of which the other East European countries complain.

Western countries and the IMF generally reserve aid and credit until satisfied that fundamental reform is securely in place. The former communist states see it the other way around: Without financial support to bolster the painful start, they say, radical economic reform is socially too dangerous.

There seems to be a good case, however, for easing the terms for Albania: Other Eastern European states had at least some infrastructure on which to start reform. Albania had virtually none. When Albania was founded in 1912, it had a literacy rate of only 15 percent, far behind that of other, already well-established Eastern European countries.

For two years, most Albanians have subsisted on the 80 percent handout - of a pitiable monthly wage - and on food from abroad. Without the subsidy, and with no money to import food, says Mr. Ruli: "It will be difficult for the people not to react."

In fact, the reactions have already begun as hundreds of Albanians confront police at the ports in a desperate mimic of last year's exodus to Italy. Worse tensions are inevitable without outside help more substantial than humanitarian guarantees of daily bread.

The leading industrialized countries were so preoccupied at their Munich summit with their own monetary problems, interest rates, and the state of world trade that they could produce no encouragement for the East Europeans. They did agree, however, to help the poorest developing nations.

Albania hasn't begun developing, but it might still be included with aid for carefully chosen economic sectors where it does already have something to offer in return.