William Easterly, an American economist and professor at NYU, wrote an essay back in 2006 on foreign aid. His central thesis focused on scrutinising the idealistic sentiment behind foreign aid, and the harsh reality of its lacklustre execution. In his cutting and astute observations, Easterly points to the fact that Foreign Aid Institutions often measure success by the vast amounts of money that gets sent out, as well as the grandiosity of the promises made. At the backdrop of such money and promise, however, there is no substance. “Lacking market feedback”, as Easterly put it, makes it so foreign aid institutions faced little pressure to correct mistakes, or reward what works. As one can image, such a scenario allows for failed approaches to persist unchallenged. Indeed, it seems that certain foreign aid initiatives today serve more as a game of politics, rather than impactful attempts at development. A front that covers real tangible problems behind a stylish curtain of progress. One place where this front is becoming surprisingly tenuous is Albania.
At the heart of this discussion about foreign aid in Albania is, unsurprisingly, the country’s EU aspirations. One can often catch wind of the lofty promises touted by the Albanian leadership for “Accession by 2027” set out in its national plan. EU representatives themselves have supported the idea that closing accession negotiations by 2027 is as ambitious but achievable goal (Cichocki, 2024). That would be a little over two years from now. For anyone who is familiar with what it is like to live in Albania, the challenges that citizens there face, and for anyone who keeps themselves informed about what it means to be a member of the European Union, these promises would seem more empty than the rural villages of the Albanian countryside.
It is difficult to point to an integral sector of Albanian society that is ready for EU accession today, halfway through 2025. Be it rule of law, free media, free and fair elections, separation of powers, pluralism, accountability and transparency in governance, education, healthcare, infrastructure, economy, agriculture, and so on. In this reality that Albania faces, we have to consider the validity of William Easterly’s thesis, that superficial promises and mounting financial support is causing more harm than good.
However, while there are pitfalls to poorly targeted aid, as we will discuss below, it is equally true that European assistance has proved its immense value through the development of infrastructure essential to Albania’s state-building. Over the past two decades, EU grants and loans often originating from the European Bank for Reconstruction and Development and the Western Balkans Investment Framework, have rehabilitated more than 100 kilometres of regional roads. These have co-financed the Fier and Vlora bypasses, easing trade flows and internal mobility (B. Vlajcic, 2023). Justice infrastructure has also benefited immensely. The Brussels-funded construction of the Vlora Court of Appeal (completed in 2006) and the dedicated Serious Crimes Court complex in Tirana have been very meaningful to the country (Tirana Times, 2006). In education, the post-earthquake EU4Schools programme is rebuilding or upgrading fifty-eight schools across eleven municipalities with a €75 million grant, modernising classrooms for some 20 000 pupils (EEAS, 2020). Even the penitentiary system was jump-started with EU PHARE money that completed the 750-place Lezha prison in 1999, Albania’s first purpose-built facility after the 1997 crisis (European Commission, 2025). Together these projects illustrate that European funds, when shielded from capture, do more than write policy papers: they lay bricks, pour asphalt, and keep classrooms open.
Even within these success stories that prove the validity of cross-border aid, however, but more so in other large-scale projects, there are hints of two very real problems:
- Foreign aid may very well crowd out local initiatives and institutions
- Despite the value of these critical projects, their inflated costs and their ultimate quality leave much to be desired
Dependency is the Cost of Aid
The argument for this first point is that an excessive amount of foreign aid makes a country dependent on it, preventing that same country from gaining the ability to solve its own problems. This insight is echoed in the efforts of Alexander Hamilton, the first U.S. Secretary of the Treasury, who famously advocated for protectionist policies in his 1791 Report on Manufactures. Hamilton aimed to protect America’s budding industries from foreign influences, maintaining that U.S. industry would never develop if America depended on foreign competitors and imports. Easterly believes this notion proves valid in the context of foreign aid.
Protectionist policies would have done some good in Albania’s oil industry, for one. A succinct example is that of Canada’s Bankers Petroleum, which has held the concession for the Patos-Marinza oilfield since 2004, paying royalties widely criticised as well below regional norms. Civil-society monitoring has linked their drilling to soil contamination, well-blowouts and even seismic tremors that damaged nearby homes, prompting temporary production suspensions in 2015 and a compliance review by the IFC Ombudsman (CAO, 2013). Residents and local officials have repeatedly protested, arguing that the statutory 25 per cent of royalties earmarked for host communities rarely arrives (Tirana Times, 2015). The case underscores how weak oversight can let strategic assets generate private rents and public liabilities simultaneously. This is a majorly disadvantageous partnership for a majority in Albania. This damage to communities and stopgap to development would have been avoided if, say, there was transfer of technology between Canada’s Bankers Petroleum and Albania. One where the former would stand to gain substantial economic value for a limited period of time, and in exchange would help Albania build and maintain refineries of its own. That would be a form of foreign aid well worth having.
On the subject of imports and the dependency they create one need look no farther that the ravaging effects a skewed import-to-export ratio has had on Albanian agriculture. This very vulnerable sector is being stifled by the overwhelming quantity, and the ultra-competitive pricing of imports from abroad. Often, local farmers have seen international products supplanting their own production. It is precisely this outcome that protectionist policies similar to what Hamilton advocated for could prevent. Contrary to protectionism, it would be more accurate to say that Albanian agriculture policies in recent years lean more towards the disruptive. The Open Balkans debacle and its effects on the Albanian dairy sector can attest to that (Monitor, 2022). Ultimately, though, this overreliance on outside markers, and outside influence has made agriculture and other sectors of Albania unproductive, and for some it has rendered them stagnant in a state of infancy.
It appears then, that foreign aid which is meant to help developing countries reach the standards of industrialised democracies, is instead allowing those countries to subsist on a cycle of quasi-parasitism. It is allowing Albania to eat away at the enormous economic potential it holds in exchange for the short-term monetary gain that is afforded by foreign dependency.
In the midst of all of this, however, is an even bigger challenge: the cost of implementing projects and their dubious quality. It appears that Albania has developed some sophisticated mechanisms to ensure the capture of foreign aids for the financial gain of a select few. As one would come to expect, this comes at the expense of some truly vulnerable groups. The following section of this article will dive into these mechanisms by looking at a particularly poignant case study on the subject: the notorious IPARD II scandal, and how one of the most underdeveloped sectors of Albanian economy was once again robbed of its exceptional promise.
The IPARD Misuse Mechanism
The Instrument for Pre-Accession for Rural Development (IPARD) project was a massive investment by the EU to align Western Balkan countries’ standards in agriculture and rural development with those of the EU, always with the goal of accession in mind. However, the IPARD saga entered a new phase in July 2023 when the European Commission, acting on findings from the EU Anti-Fraud Office (OLAF), froze reimbursements and halted new disbursements under IPARD II. This was after auditors documented €33 million in misused agricultural grants and numerous flagged systemic irregularities (Ebrea, G. 2023). OLAF went further in its 2024 annual report, recommending that the EU withhold the entire €112 million envelope earmarked for IPARD III until Albania demonstrates credible safeguards (Ebrea, G. 2023). As of this incident, no domestic indictments have followed, fuelling public scepticism that perpetrators closer to government are more equal than others before the law, to paraphrase Orwell. The IPARD episode offers a stark, evidence-backed snapshot of corruption that country-level perception indices often miss.
The core of the multi-year embezzlement scheme surrounding IPARD funds involved government-approved “consultancy” firms pressuring vulnerable beneficiaries into paying for services that should have been free to begin with. It involved fake bids and rigged tenders, inflated project costs, shell companies and fictitious ventures, fabricated receipts and more.
At the center of this scandal was the Agency for Agricultural and Rural Development (Agjencia per Zhvillimin Bujqesor dhe Rural [AZHBR]), a state institution established in response to the first round of IPARD funding, and which was responsible for distributing all IPARD funds. Ultimately, it was the lack of oversight over this agency, a lack of input and access when it came to rural communities and farmers, and the unconditional trust which the EU afforded the Albanian government that led to this scandal. The EU made an assumption, that Albania would be responsible enough to use these funds for the intended purposes of IPARD, these being rural development, better market access, increased competitiveness, greater safety, and increased agricultural productivity. This assumption that countries which struggle with pervasive corruption and democracy would make responsible financial decisions after a substantial injection of debt-free capital is, for lack of a better word, unfounded.
In practical terms, the main failures of IPARD II in Albania occurred because there were intermediaries, including government, between foreign aid institutions and the intended beneficiaries. An “impressive” way in which this happened was through a legal technicality in the way that AZHBR set up application processes. Besides the very intentional complexity of the application procedures, AZHBR made it so individual farmers could not apply for funds unless they had a trade-related tax identification number (TIN), something that is suited to large-scale producers. The idea here sounds reasonable from a Western perspective, you would incentivize larger producers that could hire more people from rural communities and increase productivity on a larger scale. The issue, however, was that the vast majority of farmers in Albania (almost 90%) are small scale producers with less than 2 hectares (Imami et al., 2020). The typical Albanian producer therefore does not qualify for a trade-related TIN. Effectively, this technicality cut out the intended beneficiary that needed the IPARD program the most.
In addition to this substantial stop gate, the complexity of application procedures ensured that most of these small-scale farmers would have a difficult time applying. Compounding this difficulty were the administrative hurdles and time-intensive bureaucratical steps that farmers had to accommodate into their very busy schedules. Naturally, time is of the essence when it comes to small-scale agriculture, and most Albanian farmers could not afford to spend days away from their plots. AZHBR’s solution to this was to endorse private consultancy firms (with ties to government higher-ups) that would “help” farmers manage these difficulties. As one would expect, these government-endorsed private consultancy firm required farmers to pay an upfront fee for their services. Services that should have been provided to farmers free of charge. In one news report, a local producer noted that he needed to apply for bank loans (which are far from favourable in Albania) to play these consultancy fees. He further stated that the firm would charge up to 30% of the granting amount upfront. Effectively, farmers in Albania, the target group of this foreign financial aid, had to plunge themselves into debt for only the opportunity to ask for funds. Astonishing as this may be, it’s worth considering that those farmer who took out loans to pay this absurd price for advice on grants that was originally intended for them did not necessarily win those grants.
This was one of the state-operated mechanism by which a state agency empowered well-connected members of the political elite to set up consultancy firms that siphoned funds from one of the most disadvantaged groups in Albania, all the while cutting out the very farmers that would benefit the most from those funds. It was organized collusion in its purest form. What followed were official announcements from the EU anti-corruption office, OLAF, that Albania would be shunned from the IPARD III programme, curtailing access to €112 million in follow-on funds.
The IPARD episode may have brought Albania’s mechanisms of fund capture to the international purview, but in reality the vehicle of corruption is embedded much more deeply in Albania. Another now-infamous scandal in local circles is that of the “incinerators”. In brief, Albania’s incinerator scandal centres on three waste-to-energy projects in Elbasan, Fier, and Tirana, where prosecutors allege that no-bid contracts and falsified invoices siphoned hundreds of millions of euros to officials and their associates, leaving the plants half-built and sparking short-lived public outrage. In Tirana’s case, this plant did not even exist.
Leaders of a political party launched an investigation on this in 2022, which outlined that the most substantial grant winners of IPARD II were composed of 24 shell companies. Their mission was to draw up fictitious invoices and receipts to justify the allocation of funds. Much of these same mechanisms existed during the IPARD II episode, but this case had one particularity: the cost of labour. These shell companies had to justify the significant human resource costs that they received funding for. Their clever solution to this was hiring post-retiree elderly citizens from rural areas. This was especially predatory, as disadvantaged elders in rural communities would not need much coercion to be forced to sign employment documents. In a few instances, their workforce included individuals that had passed away some time before the contract was signed.
These were just some of the ways in which misuse of foreign and national aid propagated the mechanism of corruption developed by a country that depends on well-intended, but poorly implemented funding programmes.
Oversight. And Institutional Failure.
The OLAF anti-corruption office was mentioned some paragraphs before. This is the highest institution for tackling fraud and mismanagement. Despite the institution’s importance, all OLAF referrals which passed to Albanian persecutors resulted in exactly zero convictions. The fact that inspection agencies and labs were staffed through political patronage, and that this led to a serious multi-year embezzlement-rich fiasco of a project, had absolutely no repercussions. In fact, the General Director heading the AZHBR at the time of IPARD II, was placed at the seat of Minister of Agriculture in Albania from 2021 to 2023.
It would be inaccurate to state that Albania has weak institutions or that there’s a lack of enforcement of rules, as the reality is that state institutions are all too powerful, and are all working in a coordinated fashion towards the same goal of profiting from this apparently benevolent but woefully naïve foreign aid policy of the international community.
There’s something to be said at this point about the role of the EU in this incident. It is clear that allocating large sums of funding is not enough to lead countries towards accession. The EU cannot work towards accession without admitting to and facing the limitations of Western Balkan countries like Albania.
If one had to point out the single most important thing that foreign aid institutions like the EU should take ownership of, it is the evaluation of projects during and post funding. Post-award checks focus solely on formal self-declarations rather than real-time monitoring of “EU values”, financial integrity, or objective project success rate. Ultimately, there is no proactive verification of whether grant beneficiaries adhere to EU values or standards, or whether they have implemented a project well enough to qualify for subsequent funding.
In addition to all of this, it’s important to monitor and evaluate the NGOs receiving grants themselves. Post-project studies by independent EU third-parties need to be a staple in all funding programmes. The lifespan of an organisation, the requisite experience, requisite staff, its reputation with cross-border partnerships, fiscal responsibility, all of these need to be scrutinized a lot more carefully. Perhaps this all needs to be done through a centralized platform, as opposed to many scattered ones. Perhaps there should be multiple accredited independent auditors in this same platform that are a lot more active. Yet another example from the IPARD episode is worth a mention here. In the same investigation uncovered by local actors in Albania it was found that more than half of NGOs that applied for funding were established at the same time that the IPARD program began. Many of these, approximately 50%, had built a resume in construction as a result of the 2019 Earthquake Foreign Aid initiatives, and had little to do with agriculture (Korrieri, 2023). All these clear breaches of ethics managed to slip through the cracks of EU oversight capacity all too easily. Nor the EU nor Albania can afford this to be the case for much longer.
Failure from Within – the Case of Italy
Thus far we have looked at the mechanisms through which Albania embezzled agriculture-directed funds from the IPARD program, but this incident is far from unique in the Western Balkan region. Italy is a showcase for how European farm money can both revive rural economies and enrich criminal networks. The Nebrodi pasture-fraud scandal illustrates the scale: for fifteen years mafia clans leased everything from NATO radar sites to airport runways in order to claim about €1.5 billion in CAP grazing subsidies; in October 2022 the Patti court convicted 91 defendants and handed down roughly 600 years of prison (Repubblica, 2022).
Further north, 165 Lombard municipalities that already exceed nitrate limits continued to draw €113 million in “green” CAP payments in 2023, a pattern Greenpeace calls “public funds fed to pigs” (Greenpeace Italy, 2024).
Fraud has migrated to new envelopes as well. Operation “Great Chariot” (“Grande Carro”), dismantled by the European Public Prosecutor’s Office in April 2024, exposed a ring of fifty shell firms in Puglia that laundered counterfeit invoices through Italy’s 110-percent “super-bonus” tax credit, inflating equipment prices and parking millions abroad (Ministry Agriculture, 2020) .
Rome’s response shows what capacity can achieve: the agriculture ministry has raised the Carabinieri agro-environment corps from 145 to 5 000 officers and, together with paying agency AGEA, now cross-checks every CAP claim against land-registry and criminal-record databases (MASAF, 2025, https://www.masaf.gov.it/…) . Italy and Albania therefore share the same choke-points in complex rules and politically connected intermediaries, but Italy’s data tools increasingly shut the gate before money disappears.
North Macedonia Struggles
EU funds have delivered hard infrastructure in North Macedonia. For instance the IPA grants resurfacing the Skopje–Štip motorway, thus cutting travel times in half. Yet, smaller but more inventive frauds keep eroding trust. The most symbolic case is that of “Hair-Salon Erasmus”: in 2020 a two-chair barber shop in Skopje won €270 000 for a digital-learning project and allegedly forced experts to return 60 percent of their salaries in cash; prosecutors have recovered only €80 000 so far (Balkan Insight, 2020)
Oversight gaps persist. The Anti-Fraud Coordination Service (AFKOS) set up in 2019 has six staff, a €120 000 budget and no investigative powers, so only one of 37 irregularities flagged in 2024 reached prosecutors (Ministry of Finance PR, 2024) . Meanwhile the European Anti-Fraud Office has ordered Skopje to repay €2.2 million misused through Erasmus+ (MIA, 2024).
Big envelopes remain at stake. IPARD II (2014-20) earmarked €80 million; by May 2023 only €49.2 million had actually been spent (CrossBorderLocal, 2024). IPARD III reserves €97 million in EU money for 2021-27, but disbursement still depends on national co-financing and credible audits.
Like Albania, North Macedonia funnels grants through thinly staffed agencies, creating gatekeepers who barter access for political loyalty. Until Brussels links every rural euro to open data, randomised on-site checks and whistle-blower protection, a barber’s mirror can drain EU coffers as efficiently as a Sicilian runway.
Escaping Easterly
What is needed now is a revaluation of context, reality, and power. It is important to consider what kind of problems Albania truly faces. Other countries too. Not from the spectrum of politics, but from the a perspective that is grounded in reality. Power shapes narratives. What is shown to the outside world may not what is really happening on the ground, particularly in countries where corruption runs deep. Foreign aid institutions cannot make assumptions based on what they know about their own countries. This shift is not something that can be easily achieved, but a real tangible step forward is to begin with what has truly worked. So then, what has truly worked?
Taking Albanian agriculture again, we can see a moment in time where foreign aid focused on what works. That moment comes from the Myzeqe Collection Point. This was a project funded by Heifer International, and it saw to the provision of dairy cooling and storage systems for dairy farmers, the provision of cattle, and the establishment of an organisational structure that enabled collaboration. Under the close inspection of the Heifer group via cameras and microphones, and under the guidance and expertise of Albanian academics from the University of Agriculture, a small village went from being destitute and disorganised, to integrating into a local economy and moving past subsistence farming in a time of crisis for the dairy sector (you can read more about this here). Four elements made this project truly work; (i) assets were given directly to beneficiaries and not intermediaries, (ii) trusted and reputable local experts gave the country-specific perspective needed to design the project, (iii) close international oversight ensured proper implementation and problem solving, and (iv) multiple follow-up reports demonstrated the success of this project years later. These elements need to become a mandatory part of more foreign aid initiatives.
Looking ahead, Brussels could condition the unfreezing of IPARD and other envelopes on a few verifiable benchmarks:
- Publication of all grant-award data in open formats
- Provision of grants is managed by EU institutions and not by state actors in Albania
- Independent EU monitoring teams with access to project sites that conduct checks every quarter.
- These teams could utilise a scoring performance matrix that is referred to in current and subsequent granting
- A formal EU requirement that mandates the verifiable involvement (though video recording, for instance) of intended beneficiaries
- The disallowment of paid consultancy services for projects.
- The exclusion of all individuals involved in the IPARD II embezzlement scandal
- A proven history in the required sector
- A multi-step interview process for newly-established organisations
These are some of the ideas that may work in the Albanian context. Some of these will perhaps not work, many others may be needed. What’s important, though, above all, is iteration and evaluation. Continually and consistently. Only transparent data, adaptive oversight, and a willingness to correct course will turn future EU euros from headline figures into real progress on the ground. If Brussels and Tirana embrace that discipline, the next round of aid can finally build trust instead of draining it.
“This article was produced as part of the Thematic Networks of PULSE, a European initiative that supports transnational journalistic collaborations.”
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