How Albania reached “breaks” debt 7 billion USSD of the Ottoman Empire

At the end of the 19th century, the Ottoman Empire was facing an unfavourable economic situation that forced the government to turn to European markets for loans. In 1854 the Ottoman government managed to provide an international loan worth $331 million today, and the following year the foreign government would increase to $518m of current value.

As collateral, the Ottomans would establish significant resources and a series of natural resources. Creditors, but the beneficiaries of these rights were the British and French. Despite this, the economic situation of the Ottoman Empire would not recognise the improvement of the budget deficit is deepening. This situation would have the empire again sought <x0-oxygen” in European allies.

From 1863 to 1875, the Ottoman government engaged consistently and on a wide scale borrowed from international financial markets. These loans were used mostly for paying off existing loan installments, for financing the budget deficit, and payment of debts owed. Between 1854 and 1875 The Ottoman Empire received from the international European markets 15 loans at a total value of 217m lira, or $2.4 billion in current value. Of this amount, only a small portion of it was used for railway construction.

As a result of the rapid public debt increase, which was joined by deepening the budget deficit, the Ottoman Empire was unable to meet its debt service and declared a mortorium in payment of debt installments. Under the October 6th 1875 Ramadan decree declaring the mortorium, the Ottoman government stated it would pay back half of its accumulated interest and half of its debts in a period of 5 years. It committed it would issue bonds of interest 5 %s to cover the rest of the obligations.

After a short time, the Ottoman government found itself unable to fulfil the promises made in the Ramadan decree. As a result, the total deadlock was declared. Negotiations between debt holders and the Ottoman government during this period focused on restarting debt payments. These negotiations culminated in the decree of Muharrem of December 20th,81. In this decree, the Ottoman government agreed to allow the creation of a financial control commission.

Named Public debt Administration Otoma, this commission was made up of debt guarantees. This commission would have headquarters in Istanbul and would consist of seven members representing Britons, Germans, Austro-Hungarians, Italians and debt holders Osman.

This commission would receive the power of direct debt collection through direct tax revenues and the use of money for write-off of the Ottoman debt. The Ottoman government granted the commission all income rights from eight indirect taxes. They included taxes on alcoholic beverages, stamps, fish, silk, and income from salt and tobacco monopoly. Public debt management had the power to obtain several more rights in the countries of the Ottoman Empire.

Establishment of the Public Debt Management Commission Osman is considered a new era in Ottoman financial history.

Because of the authority given to the administration, Ottoman debt was subject to restructuring. Public debt management improved the credibility of the Ottoman Empire on European financial markets and increased the will of European capitalists to lend the Ottoman government.

The efficiency of public debt management in revenue collection in meeting debt installments in line with Muharrem's decree was the main factor the state Osman improved international credibility.

As international credibility improved it would bring down debt costs. Following the formation of the debt management commission Osman, state foreign borrowing Osman grew rapidly after being secured by the public debt administration. These loans, like those before 1875, were used to finance the budget deficit and for military purposes.

The Kolapsy of the Ottoman Empire at the end of World War I resulted in the birth of new states. The unpaid debt had remained in the figure of 126 million liras, or about $7 billion at present value, referred to the encyclopedia of the Ottoman Empire.

The Republic of Turkey refused to assume responsibility for all Ottoman debts and proposed that it share with the other states that had previously been part of the Parundy that had already come out on their own.

To that end, it would take long discussions that would be finalised in an agreement where the new Turkish republic would be responsible for 65 per cent of the total debt Ottoman. The rest of the debt was split into proportion among other countries of the Ottoman Empire.

Public Debt Administration Osman in Albania, Tax and Demissions

By the decree of Muharrem, on December 20, 1881, the OPA, or the Osman Pulbic Debt Administration, was established. Under this decree, many sources of revenue would be managed by this commission.

These included salt, silk, and indirect taxes such as stamps, fishing, and alcoholic beverages. The tobacco monopoly would also be in charge of this commission. At the end of the 19th century, this administration would control approximately 30 percent of the futures of the Ottoman Empire. To increase revenues, this administration would try to intensify the production of tobacco, salt, and vineyards in order to provide more revenue through their trading to international markets.

In 1892, Riza Bey, a Turk would be director general of the Osman Public Debt Administration in Thessaloniki, while Oscar Edwards was chief of control. The personnel they had under their jurisdiction consisted of 255 officials, of whom 12 directors and 46 deputy directors.

The administration would further expand and employ 480 people as controllers to prevent smuggling and evasion that could be done with the commission management products and allow for revenue that would be used to pay off the debt.

Tax rules for tobacco, alcoholic beverages, silk salt would also be subjected to Albanian territories.

The tobacco cultivation was massively developed in Albanian, Kosovo and Macedonia territories. But there would be a high dose of evasion in these territories, and to that end, the largest number of auditors would focus on these territories.

Despite the administration's efforts with local merchants, there would be many problems in these territories for collecting tobacco tax duties, and especially the Elbasan area was considered almost a “before” in this regard.

The same problem also surfaced with taxes to be paid for alcoholic beverages or salt. The criteria of Seman, Vlora, Durres and Kavaja that were functional in that period would benefit Turkey's creditors' administration. But again, there would be high evasion in this case, and not in a few cases the administration would surrender by failing to realise the goal.

Salt was smuggled because it was a necessary element for population feeding. Its price was high because the population did not have enough money and was at a high level of poverty.

It was only during the harvest period that farmers had money and the income from the sale of salt increased, and the debt administration also earned more. Like other parts of the Ottoman Empire, Albanian territories would be part of “concessions” of foreign companies.

And in the territory of today's Albania, concessions or full rights were granted to Austro-Hungarians and French people. In 1885 a French society would gain the right to use Selenica resources in the vicinity of Vlora. The only mining industry was what was exercised by the Ottoman Bank in Vlora to extract bitumen.

Meanwhile, Albanian coasts were the exclusivity of Austro-Hungary within the chapters. All Albanian sketches were frequented by the travel company Lloyd, who made three stops a week. Albania's foreign trade was thus controlled. However, there was no shortage of cases when Turkish, domestic, Greek sailing ships approached the Albanian ports in a disorderly manner.

Also, Austria, as an early concession, would have postal offices all over the Albanian coastline and on Janina, thus controlling Albania's communications more abroad. In the meantime, in terms of investments planned by the Ottoman Empire to make through money obtained from loans, construction was among them of the railway crossing Albania from east to west, starting from Vlora and ending in Thessaloniki. But so, Durres was scheduled to be linked to the Manastir-Thessalnik line, while Shkodra's railway with Shengjin and Serbian railways.

Thus, Albania was involved in the international transportation network, but everything would remain a paper project. The Albanian uprisings and independence efforts by the Ottoman Empire would be finalised on November 28th of 1912.

Such a move comes at a time when France's prime minister had begun to demonstrate the idea of a conference of six major powers. The proclamation of independence in November was a good chance to be recognised as a new state by great powers at the conference of a month later to be held in London and to be also known as the Peace Conference. And the subsequent decisions of the London Conference that would define political and administrative boundaries would result in a deep gap for Albania, with consequences for the economy as well.

The outbreak of World War I would lead Albania to manage foreign armies and, as a result, until the years of the '20s, no more discussions on debt issues Osman, even though the tax system and certain privileges continued to be exercised as in the period when the country was part of the Ottoman Empire.

The process of Albanian military reorganisation after the first world war would coincide with the overall dissolution of the Ottoman Empire and the birth of new states. And in these conditions the debt the empire had not yet paid to European creditors would be re-disputed. Discussions on the issue would begin at the end of 1922 in Lausanne, Switzerland, and would last until the agreement was reached in mid - 1923.

Mehdi Frasher and Benedict Blinishti, Albanian debt negotiators

The Lausanne conference was held in Lausanne, Switzerland, in 1922-1923. The purpose of this conference was to negotiate a treaty with the new Ataturk government. The conference began in November 1922 and lasted until July 1923. Among other things, this conference would discuss debt inherited from the Ottoman Empire. The initial discussions was that debt be divided into proportion among states created by the dissolution of the empire. At this conference, Albania would have two official representatives -- Mehdi Frasherin and Benedict Blainish. But how do you describe Lausanne's conversations in his memories, Mehdi Frasher?

The “After the Greeks were defeated in Asia Minor in December 1922, Lausanne's conference to establish peace between Turkey on the one hand and Greece and the states of the agreement on the other took place. Among the issues to be discussed in Lausanne was that of Turkey's public debts that would be divided among the heir states.

Of course, Albania was also in line with heirs, so it was called from the conference to attend. The government decided to take me, so in early December, I left for Lausanne with Mr. Benois Blinish, a permanent secretary near the League of Nations in Geneva.

By the time I arrived in Lausanne, the conference had gathered and had been operating for several days. Since the conference had been photographically announced for my appointment since the next day, I presented the credentials and participated in the Finance Commission, which had Turkey's debts to discuss.

The chairman of the Conference was Lord Kurson, foreign minister of Great Britain, but the chairman of the financial commission was Mr. Bohmpart, who had been France's ambassador to Constantinople.

When I attended the committee meeting, Mr. Bohmpart with sweet words and commended the commission members for participating in me in welcoming...

When the conversation began, I asked for a quick word saying that Albania was participating in the commission, but the former Ottoman Empire during its rule in Albania had made no way, nor the Ferrov (Kurdish) or government buildings, nor the schools. In other words, he had done nothing.

On the other hand, in past Balkan wars and in the case of foreign occupation in the general war, from 1910 to the end of the wars in 1920, 2/3 of Albania have been burned and the only property that has been living has been looted. And besides, there is no financial and economic organization in Albania, so the Albanian people with great patience but with dignity hold on to their feet but are unable to pay anything, because according to an old “there, neither is God”.

The Turkish shipment was under the leadership of Ismet Pasha, having a suite of many, including Turkey's Finance Minister, who attended the commission. Along with the Turkish envoy, without any official quality there were Xavit became the former minister of finance of the former Ottoman performance and Hysen Xahiti, former Istanbul President and famous journalist. Both of them were my schoolmates.

Xavit Bey and I were friends so I went to the hotel. In question, I told him that if the Turkish official envoy declared the Conference that there was no rule with Albania or that he would especially choose it, I would not give them any objections and how much to take my hand I would help, but if the Turkish envoy insisted that he ask us for our share of debts then to protect the interestingness of my homeland, I would use arguments from which other Balkans would benefit.

Turkey's debt issue was put into conversation on our commission. I totally rejected it, citing that Turkey had not made the iron path in Albania. Note that Public Debt Administration representative Osman Sir Adam Block, known in the financial world, also participated in the financial commission.

At another meeting of the commission, the Turkish envoy's request, begging for recognition of the private assets of the Ottoman dynasty that he had in the various countries of the former empire and for today were in the heir states.

I refused this by saying that these types of real estate in Albania have been of Ibrahim bebe Alltun, confiscated without trial by the former Ottoman Empire at the time of Sultan Abdel Hamid. Outside the law, they were adopted and transformed as Abdel Hamit's private property, and for this reason, after this Sultan was removed from the throne in 1909, a law went out of Parliament that restored these conflicts to the Ottoman state and the wealth of a broken state goes to the heir states that split from sight.

Therefore, according to this rule, the conflicts in question belong to the Albanian state, and the Ottoman dynasty does not have any rights. On this long speech of mine, Venizelos said he accepted the Albanian thesis. At another committee meeting, the Public Debt Administration sought the real estate this administration had established in different countries.

I also refused that, saying these assets were raised with the money the administration has collected in question from the intended revenues for debt laundering. But if these money had not been scrapped for building buildings, part of the debt being demanded from the heirs would have been cleared. So one debt is counting us twice; once in the shape of a building and another in cash. Venizelos once again accepted my thesis. Other Balkans were silent; they also accepted Albanian thesis. The Balkans had found a free lawyer. In a word, everything the Turks claimed I turned them down, but since the refusal was well argued, other heirs also benefited from” Mehdi Frasher, Cameron 1913-1933

Osman debt burden formula and “balance” for Albania

In total, the debt of the Ottoman Empire amounted to about $7 billion today. The debt agreed that Turkey would pay 65 percent of it, or about $4.6 billion. Reference to this deal, Turkey would pay a yearly sum of around $3351m today, a move that would be carried out periodically until 1954, when the Turkish republic completely cleared its debt. Meanwhile, the rest of the $2.4 billion debt today) was split among other countries that had been part of the empire, where Greece kept 9 % per cent Syria and Lebanon, 5 per cent Iraq, 4 per cent Yugoslavia, 3 per cent Palestine and the remaining 6 per cent would be shared collectively between Albania, Bulgaria, Yemen, Jordan, Italy, and some countries are currently part of Saudi Arabia. / ScanTv/