By Kieran Cooke Tirana, Albania

Albania has battled with Stalinist-style rule, near anarchy and floods, but now the economy is finding its feet. Emmanuel Decamps, a foreign banker working in Albania, says he's had to adapt to a very different way of working since arriving in this country of 3.5 million people two years ago.

"The usual banking rules do not apply here," says Mr Decamps, a Frenchman who is general manager of Fefad Bank, one of 12 foreign financial institutions operating in Albania.

"When someone comes for a loan I have to be like a detective, judge their appearance, go and see their home, meet their family.

"There's very little bookkeeping - Albania still has a very informal, cash-based financial system.

There was a decade of near anarchy - now people are gaining self-confidence Edi Rama Mayor of Tirana

"People are using banks more but still only 10% have accounts - cheque books or credit cards are very rarely used."

There are other oddities in the Albanian economy.

Estimates vary but it's believed that up to 50% of GDP is generated from various illegal activities - ranging from people and drug trafficking to the smuggling of cars and cigarettes.

The construction industry has boomed in the last two years - the government admits that large amounts of illegally earned money has been laundered through the construction of hotels and apartment blocks.

Back from the brink

In 1991 Albania emerged from more than 40 years of Stalinist style communism under the dictator, Enver Hoxha.

Foreign investors have not rushed in

There followed a decade of political and economic chaos.

In 1997 the country teetered on the edge of anarchy as a large number of its people lost money in a fraudulent pyramid-selling scheme.

"We still face big problems but the foundations for economic stability and growth are being laid," says Kastriot Islami, Albania's finance minister, in an interview.

"Reducing corruption in the system and reforming the administration of tax and customs is our top priority."

European aspirations

Another priority for Albania is to gain entry to the European Union.

Romani Prodi, the EU Commissioner, is due in Tirana next month to sign a "Stabilisation and Association Agreement", regarded as the first step towards eventual EU membership.

Bad floods have hurt economic growth

But Brussels insists Albania has to tackle serious problems before any progress can be made up the EU ladder.

These include putting a stop to criminal activities and showing evidence of solid economic progress.

Growth - albeit from a very low base - has been impressive in recent years.

GDP has expanded by about 7% in each of the last three years but bad floods last year and continuing infrastructure problems are likely to reduce growth in 2002 to around 4%.

With black-outs common and water supplies turned off - often on a daily basis - foreign investors have not been rushing to Albania.

Absence of proper legal procedures, including clearly defined laws on property, is another obstacle to inward investment.

New confidence

Over the past decade nearly one million Albanians have left the country - at least 600,000 now work across the border in Greece.

Remittances from abroad - estimated to run at between $750m and $1bn - are one of the mainstays of the economy.

"Yes, we have our problems but it's certainly not all doom and gloom," says Edi Rama, the flamboyant mayor of Tirana, Albania's capital.

Since coming to office two years ago, Mr Rama has transformed the once dowdy rundown city, painting buildings in bold colours and greening public spaces.

"We Albanians are a very entrepreneurial people," says Mr Rama. "For a generation we were suppressed under communism.

"Then there was a decade of near anarchy. Now people are gaining self-confidence.

"Shops and new businesses are opening every day. Albanians who went abroad are returning.

"Albania is a small country. It will not take much to turn our economic fortunes around."