Les Nemethy, the founder and CEO of Euro-Phoenix, a financial advisory firm focused on emerging markets, a former World Banker, gives his impressions on the changes that have happened in Albania since his first stay in Albania as an expert of the World Bank in 1993.

In an exclusive interview with Albanian Daily News Mr. Nemethy dwelt also on other issues, which have hit many regions in the world like the war between Russia and Ukraine, the Middle East etc. Below full interview:

- It's a pleasure for ADN to have this interview with you. First of all, your impression on Albania from 1993 when you stayed in Tirana as an expert of the World Bank, two decades later you published a book in Albanian coming here for its launch, and now. My question is which is the difference you notice in these three stages of more than 3 decades?

- The rise in standard of living over the past three decades has been dramatic, noticeable on each visit—everything from the cars people drive to the way people dress. In 1993, I was visiting a poor Balkan country. Pillboxes wherever you looked were a constant reminder of the Hoxha regime. Now it feels increasingly like a mainstream, albeit somewhat poorer, European country. The pillboxes, of course, are now gone.

Back in 1993, very few people spoke English, I sometimes had to express myself in Italian to make myself understood. Today, at least as many people speak English in Albania as in Hungary.

Back in 1993, I was in awe of the Albanian coastline, one of the most beautiful, unspoiled coastlines in Europe.  This would have lent itself wonderfully to high-end tourism.  Instead, much of the coastline seems to have been developed in an unplanned kind of way.  The densification and lack of planning has resulted in a coastline that caters to mass tourism.

True, there are now a few developments that try to target the high end, such as the Durres Yacht Marina and the upcoming controversial project on Sazan by Jared Kushner. I would have preferred to see a more strategic approach to the entire coast, driven more by sustainability, preserving the environment and local identity. In the long-run, I believe this would have also generated more tourism revenues for Albania. 

- As an expert in financing and banking and shrewd follower of Albania which are the fields of the economy and society that have made the highest progress? Which are the weak points of Albania?

- The trend of increasing standard of living mentioned in the previous paragraph are supported by the numbers.  Nominal GDP has grown from USD 1.48 billion in 1993 to USD 23.6 billion (according to World Bank statistics), a spectacular sixteen-fold increase over thirty years.  GDP growth has undoubtedly been an area of high progress.

Perhaps the weakest point can be summed up by one word:  inclusion – or lack thereof-- namely, equal opportunities, access to financial resources, education, etc. 

At one end of the social spectrum, over 20% of the population is still considered below the poverty line and unemployment exceeds 12%. At the other end of the social spectrum, despite anti-corruption efforts, friends of the party in power seem to be amassing fortunes. Whereas in the early 1990’s the Gini index was around 0.30, in more recent years it has increased to approximately 0.50 (according to UN Data), indicating a rapid growth in inequality—all this despite roughly half a million people leaving over the past decade, presumably from the poorer segment of the population.

It is always a bad sign when large numbers of people “vote with their feet”—e.g. emigrate from their home country because they see a brighter future abroad than at home, voluntarily going into exile, assuming all the difficulties of transitioning to a new language, culture and social system.

The 2024 Nobel prize was awarded to a team of economists from MIT who underscored that institutions that promote inclusion are necessary for economic growth. In my opinion, Albania would be better served by developing more inclusive institutions and policies: creating more equality of opportunity, a more level playing field in everything from Government hiring to obtaining building permits, and more scholarships for less privileged students to further their educations.

A more level playing field would also help promote growth of Small and Medium-Sized Enterprises (SME’s), which could help the economy diversify away from construction and tourism, provide more opportunities and jobs, and wealth creation.

- Please what could you say about the relationship between Albania and Hungary?

- The relationship between Albania and Hungary transpires on at least three levels.

First, there has been some investment by Hungarian companies, most notably OTP Bank, which has become the fifth largest bank in Albania by asset size and third largest by loan portfolio. 

Second, trade between the countries has grown significantly, doubling between 2010 and 2023, to reach EUR 130 million.

Third, direct air links by budget airlines between Budapest and Tirana have dramatically increased the number of Hungarian tourists visiting Albania, and modestly increased the number of Albanians visiting Hungary.

In short, I see the relationship as very smooth and friendly.

- Any comment on the 11 May 2025 election in Albania?

- This is another area where the two countries bear some resemblance: both Edi Rama and Viktor Orban are into their fourth consecutive terms. Personally, I am in favor of two term limits.

According to Transparency International, Albania ranks 80 out of 180 countries for transparency, while Hungary ranks 82. Hungary’s rankings have been in a declining trend, whereas Albania has been rising, mostly attributable to the establishment of SPAK, (anti-corruption institutions). To the best of my knowledge, the Albanian SPAK have even prosecuted a number of ministers of the ruling Socialist Government, mostly ministers of the previous Government. 

However, when political rivals, such as the head of the main opposition party and the mayor of Tirana are charged, there is a risk that the process degenerates from anti-corruption to settling of political scores. Both cases are in early states of the trial process, with allegations of impropriety already common. The world will be watching the trials of both individuals very closely. Ultimately, whether history will judge the SPAK kindly will depend on (a) these two trials following principles of transparency and due process; and (b) how the SPAK will perform once the American involvement is withdrawn.  

From what I understand, both Albanian and Hungarian ruling parties have resorted to electoral tricks:  personalities friendly to the party in power acquiring ownership and influence over the media, redrawing of electoral districts, vote buying, etc.  

If I understand correctly, perhaps the most important election promises of Edi Rama was that all 33 chapters of the accession treaty would be negotiated by 2027 and that Albanians would have an EU passport by 2030. From what I understand, it would take a small miracle for this to happen. Most credible assessments believe that an achievable date for the latter objective would be 2033-2035.    While it is gratifying to see the strong desire of both the Government and majority of Albanians to join the European Union, it is unfortunate that an election was won based on a probably unachievable promise.

- Please let me touch about what is happening in the relationship between the US with Trump at the White House and the EU, the two big allies, and its impact on them and the world? What could you say about the relations between Hungary and the US?

- I should put my bias up front: I am a Euro-Atlanticist by nature, having grown up in Canada, lived half my life in Europe and five years in Washington DC. 

I am very saddened to see how Trump has loosened ties between Europe and the US.  This was already apparent in Trump’s first term, symbolized by his refusal to shake hands with Angela Merkel, while fawning over a North Korean dictator. This trend of weakening the Euro-Atlantic relationship has not only continued, but accelerated, during Trump’s second term, with a full- fledged tariff war and Trump threatening to annex Greenland (which belongs to Denmark), etc.  

In my opinion, Trump’s words and actions towards Europe are also inconsistent with his objective of containing China. The United States will need Europe, and its other allies (Japan, Australia, Canada, etc.) to contain the rise of China, particularly if China’s alliance with Russia continues. 

Fortunately, there are still many believers in the Euro-Atlantic alliance on both sides of the Atlantic. The big question, in my opinion, is whether Trump is an aberration, whether the isolationist anti-Europe trend will continue in a post-Trump era. 

If I had to engage in the hazardous exercise of forecasting the future, this second Trump term has the makings of a disaster, in which case the next US election will be all about a counter-reaction to Trump, and a candidate may ride into power who will undo much of Trump’s legacy. This would bode well for the restoration of the Euro-Atlantic relationship.  It is, however, worrying that a strong candidate to challenge Trump has not yet emerged.

Victor Orban, Hungary’s Prime Minister, who is now isolated within the EU, pinned his foreign policy hopes on developing a strong relationship with Trump. However, Orban’s strong relationship with China (approximately one third of all Chinese investment into the EU has come to Hungary!) stirred suspicions within the Trump camp. Hungary is also perhaps too small to move the needle with Trump. Hence, in my opinion, there has been very little economic or political benefit to Hungary from the so-called Trump-Orban relationship.

- To conclude, how the Russian aggression against Ukraine has changed the Old Continent and the world in general? According to you, how this war situation will end and will it be followed by a change of the world order?

- For good or for bad, Russian aggression against Ukraine has radically changed the Old Continent. Just look at Germany, where the post-Nazi reign of pacifism has been swept aside in favor of rearmament, not to mention Sweden and Finland joining NATO. Military spending is rising throughout the continent, with some countries, like Poland, spending well over 4% of GDP. There is talk of raising the objective from 2% to 3.5 or even 5%.

In my opinion, Putin’s invasion of Ukraine has made Russia relatively weaker compared to Europe, rather than stronger, not only because it has catalyzed Sweden and Finland to join NATO, creating a much longer border with NATO, will need to be defended.  Its obsolete military has been degraded (one third of its heavy bombers recently wiped out in just one attack during operation Spider Web—which will take at least 10 years to replace, and further attacks will cause further degradation).   Ukraine has become a world leader in drone technology which not only puts military targets deep within Russia at risk, it also changes the rules of warfare for all military powers in ways that still cannot be fully predicted.

The two strongest conventional military forces in Europe are Russia and Ukraine. If Russia were to win the war, and occupy Ukraine, the two militaries may come under a central command, and Europe would become even more vulnerable than it is today. Europe’s armies would be no match for a combined and battle-hardened Russian/Ukrainian military force.

Jean Monet, one of the fathers of the European Union, predicted that Europe will be forged in crisis.  The Ukrainian war, combined with tepid support from the US, is the EU’s most recent and perhaps largest crisis. Europe has acted in a more coherent manner than might have been predicted a few years ago—there is nothing that unites like a common enemy. Europe has a population a full 100 million larger than that of the US, it has taken first steps to emerge as a political and economic power in its own right.

It is difficult to predict how the war will end, with Russian numerical dominance pitted against Ukrainian spirit, and its newfound superiority in drone technology. However, a clear Russian victory seems increasingly unlikely, especially with support from an awakening and militarizing European Union. Russia’s GDP is equivalent to about that of Spain, it would be no match in economic power for a united Europe.  Its military power is being degraded by constant attacks from Ukraine. Russia is undergoing a demographic crisis, rendered even more severe by a million young male casualties. The one major card Russia still has left to play is its nuclear arsenal—a scenario too horrible to imagine, (one would hope also for Putin).

It is unlikely Putin will agree to peace unless he can show gains from the war commensurate with the costs, or he risks being toppled from within. Similarly, Zelenskyy may be democratically toppled from within by nationalist forces from within Ukraine if he agrees to peace by cessation of Ukrainian territory.  So, if I had to forecast how it will end, I would predict the war will drag on until Putin is toppled, or for whatever reason dies or resigns. He is much older than Zelenskyy and rumored to be unwell. 

As for the World Order, it has been changing for at least a decade. The United States no longer has hegemonic power. We are changing from a unipolar world to a multipolar world, which by nature is even more unstable than the bipolar world that existed during the Cold War. 

The three major world powers, in addition to issues of leadership (and each leader surrounded by advisors and ministers who tend to tell them what they want to hear), all have significant threats facing them today:

- The US faces excessively high debt, a tariff war that could backfire, erosion of rule of law and investor confidence, all of which might trigger a bond crisis and recession

- Russia faces a demographic crisis, the degradation of its military forces due to the Ukraine war and possible economic collapse due to the war.

- China faces a demographic crisis, a wobbly economy excessively reliant on real estate and infrastructure, and suffers from a tariff war.

So, nothing is for certain about who will be the losers and gainers from the current struggles. For the US and the so-called “free world”, it will be absolutely crucial who succeeds Trump, whether his tariff war and path to autocracy can be halted or reversed. / ADN