Postcard from Tirana

So, Swen, ever well intentioned, sends me down here to check out the Albanian stock market and I turn up in Skanderbeg Square, white shirt, sober tie, notebook in hand – only find that it was closed down last year.

Mind you, there were only about nine stocks quoted, mostly local retail banks. Apparently, it was so illiquid with mind-bending dealing spreads that the Central Bank, which calls the shots down here (as elsewhere) put it out of its misery. Though I have found out one or two things of interest – so it wasn’t a completely wasted journey.

At least I’ve had the chance to walk in the footsteps of one of my heroes. If you might allow me to digress from my normal laser beam-like focus on new exotic investment opportunities for one moment, I’ll explain.

One of the most romantic, swashbuckling and brutal chapters of the Second World War was played out in the Balkans by the British Special Operations Executive (SOE). SOE agents were parachuted into Yugoslavia and Albania to help partisan forces undertake sabotage operations against the occupying Nazis. Over 1943-44, about fifty brave British officers were dropped into Albania. They included Captain David Smiley (who was famously “happiest when blowing things up”), Peter Kemp, Billy McClean, Julian Amery (later a Tory MP and minister), Brigadier EF “Trotsky” Davies, Brigadier Arthur Nichols and Reginald Hibbert (later a distinguished diplomat).[i]

Many of them, including Nichols (who won a posthumous George Cross), ended up in a corner of the Tirana Park Memorial Cemetery: until such time as the communist dictator, Enver Hoxha, decided to destroy all trace of the British War Cemetery and remove these soldiers’ bodies to an unmarked grave. In 1995, however, after the fall of the communist regime, Hibbert and Smiley were honoured by the newly democratic Albanian government.

Fast-forward or flash-back to 36 years after the end of the War. Sir Reginald is now Her Britannic Majesty’s Ambassador to Paris. He and his châtelaine Lady Hibbert have a reputation as formidable hosts. It is the British Embassy spring drinks party and yours truly, a very young banker (jeune financier), arrives at the former palace of Pauline Bonaparte (Napoleon’s sister) with companion. The champagne is served in the Embassy garden by liveried flunkies – but then the skies fall in. London has April showers; Paris has May monsoons. Such was the ferocity of the rain that the marquee began to heave. Lady H announced that we should all decamp to the Pauline Bonaparte Salon.

I don’t think I have ever been to a party like it. When the Champagne ran out Sir Reggie unleashed a seemingly unending torrent of gin. Reggie was one of that Old School who believed that decent gin should never be adulterated with tonic. The atmosphere became more than cordial, in fact almost riotous. I just remember being shown the first floor apartments where Somerset Maugham was born – in the witty company of the writer Peter Tinniswood and the man who invented Lycra (Spandex to you Americans)[ii]. My companion, who later became a big wheel in the world of ladies’ magazines, entirely lost the use of her legs, and I was obliged, sometime in the wee hours, to carry her in a fireman’s lift across the wet Embassy courtyard and then down the Faubourg Saint-Honoré. Of all the parties of my misspent youth, that was the most memorable (from the little of it that I can remember, if you see what I mean).

Forget his extraordinary bravery: there ought to be a statue to Reggie Hibbert somewhere for his legendary hospitality.

But where was I? Oh yes – new Albanian opportunities. Albania was ruled by the Ottoman Turks for more than 500 years. No prizes for guessing who is now becoming the major investor. Of course, the Turks. Regular readers know my theory about historic empires: they might hibernate for a half a century or more; but they never really go away. So the Ukrainian moon will never entirely escape the orbit of the Russian sun; and Albanians, who eat börek and shish kebabs, will always look east towards Istanbul. They are quite underwhelmed by the prospect of EU membership.

The total value of Turkish investments in Albania stands at over €1 billion Euros. Leading Turkish investments include construction and building materials (ENKA, Gintaş, Armada, Metal Yapı, Aldemir, Servomatik); telecommunications (Çalık Holdings, Türk Telekom, Makro-Tel, Hes Kablo); banking (Çalıkbank, Şekerbank-BKT); iron and steel (Kürüm); healthcare (Universal Hospital Group); mining (Ber-Oner, Dedeman); manufacturing and consumer goods (Yilmaz Cable, Merinos, Everest, Pino, RM Kocak); education (Gülistan Foundation, Istanbul Foundation, Epoka University); and transport (Turkey’s Evsen Group has invested in Albanian Airlines)[iii].  I’ll have more to say about some of these players soon: I’m currently working on Turkish investment opportunities.

There are still people in Albania who identify as Turks, and the two peoples share hundreds of words across both their languages. But these investments relate as much to good rates of return as to kinship. Simply put, Albania spent nearly fifty years after the War in a Stalinist cocoon and was one of the most isolated countries in the world. Now it is open for business, with a go-ahead democratic government, but it has a lot of catching up to do.

Albania has huge untapped potential as a tourist destination. It has verdant mountains and pristine beaches, a pleasant Southern European climate (mild winters, hot summers) and abundant agriculture[iv]. (Wine-lovers: try Shesh i Bardhe, an indigenous varietal which makes a stylish dry white with a distinguished finish – available at an economical price.) But there is a shortage of decent hotels. Best Western (a private US franchise) is the western operator at the forefront. InterContinental is present – one of the few decent hotels in Tirana. Currently EasyJet and RyanAir have spurned Albania. Though EasyJet flies to Podgorica (Montenegro) from where serious hikers can pick up the trail into the Albanian Alps.

Those banks which were listed on the now-defunct Albanian SE are well capitalised and virtually Basel III-compliant. They are well ahead of neighbours. (One of my rules of thumb – or heuristics, as economists call them – is to take the measure of the banking system before adjudicating on the economy as a whole.) Greek (Piraeus), Austrian (Raiffaisen), Italian (Intesa San Paulo) and French (Société Générale) banks all top pygmy skyscrapers in downtown Tirana. And they are making money.

Today is a special day. I head through drizzle to the Orthodox Cathedral of the Resurrection past endless high-end cafés: Balkan café society is flourishing. Under the Great Dictator religion was abolished and Albania was declared the world’s first Atheist State. But, inside the Cathedral, people of all ages cross themselves, kiss icons and light candles.

Reggie would probably have smiled about that: the small, unique and ancient nation and culture he fought to liberate, has awoken from its long Communist nightmare and its economy is growing.

[i] See Albania’s National Liberation Struggle (1991) by Sir Reginald Hibbert and The Wildest Province: The SOE in the Land of the Eagle (2009) by Roderick Baily.  Both books are available on Amazon (though Hibbert’s book is pricey!).  Smiley and Amery also wrote memoirs in which they claimed that the SOE was infatuated with the communist-leaning partisans and was infiltrated by communist spies.

[ii] He very probably wasn’t – but that was how he introduced himself.

[iii] See: http://www.mfa.gov.tr/relations-between-turkey-and-albania.en.mfa

[iv] There are some glorious photos at: http://invest-in-albania.org/happy-world-tourism-day-welcome-to-albania/