HIS NAME is Urim and he can offer you a red pounds 25,000 Mercedes, less than one year old, for pounds 5,000. Or perhaps you would prefer a classier metallic green model, pounds 40,000 in Britain. Yours for pounds 8,000.

Urim has lots of other Mercedes, plus the odd BMW and Toyota, all at temptingly low prices. Snag is the cars are all stolen from the wealthier parts of Europe - and they can only be bought and driven in Albania.

Urim is one of the handful of shifty salesmen whose showroom is a bumpy field outside the Albanian port of Durres. They have more than 100 stolen cars for sale and most of them are Mercedes, polished to a mirror-shine by young boys while would-be buyers haggle over prices.

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Albania may be Europe's poorest country, plagued by a daily round of murders and power cuts, but it is also the Mercedes capital of the world, home to more of the prestigious German cars per capita than Germany itself.

Three out of every five cars in Albania are "Mercs", some of them powerful and expensive models, others battered and rusting. Dealers are reluctant to open up shop in Albania, so spare parts are hard to come by. Most are sold at roadside stalls, and they have usually been stolen from other Mercedes.

In the capital Tirana, the Mercedes is the favourite taxi, the preferred family car and the supreme status symbol. But at least 80 per cent are stolen, often to order, by ruthless and highly organised professional gangs, linked to Albania's growing drugs and arms trades, according to police. Major hire-car companies have pulled out of Albania because their cars were all stolen by thieves with false identities and cloned credit cards.

The evidence is in the statistics; the number of cars in Albania has soared since the collapse of Communism, from 5,000 in the early Nineties, to 500,000 today. Yet last year only three new cars were registered; down even on the paltry 99 the year before that, according to official figures.

Everybody knows the cars are stolen but nobody seems to care. "In Albania you're a mug if you buy a Mercedes legally," said Urim, giving the green Mercedes' bonnet an affectionate pat.

Many of the Mercedes still have the D (for Deutschland) or CH (Switzerland) sticker on the back, denoting the real owner's nationality. The new owners soon add AL stickers, often without even bothering to remove the other labels.

Such impunity goes unpunished. The police turn a blind eye and some are involved in the trade. Customs officials are urged to be vigilant when the cars are brought in, but they are easily bribed or intimidated by criminals.

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The newly elected Socialist government has shown little more desire than its predecessor to halt the wholesale import of stolen cars. Some MPs even claim that the growth in Mercedes ownership is a barometer of the nation's prosperity and therefore of the government's success.

The cars, often with very few miles on the clock, are usually taken from German cities such as Frankfurt, Munich and Bonn but also from Switzerland, Italy and Greece. British cars are targeted less because they are right- hand drive but there are prestigious exceptions; two years ago a stolen British-owned gold-coloured Rolls-Royce was spotted being driven into Albania from the Greek border, after the customs officers had been paid off.

Britain plays another role too; thousands of cars stolen on the Continent are taken to British container ports to create a complicated paper trail to disguise their route to Albania and other Eastern European countries.

The cars from Western Europe are usually stolen at night and have reached Slovenia by the time their owners have discovered the theft. From there they are driven to the Croatian port of Rijeka and on to the ferry to Durres. Croatian customs and police order a few cars off the ferries but most are allowed to continue to Albania.

Once in Albania the cars are virtually untouchable. Out of 110,000 cars stolen in Germany last year, some 42,000 remain untraced. "We know a lot of them are in Albania," said a German federal police spokesman in Wiesbaden. "But without the co-operation of the Albanian authorities we cannot just go in and get them. It would be too difficult and too dangerous."

Taking the cars back out of Albania is more difficult since it involves the risk that European Union customs officials might check their databases of stolen cars. It can also be embarrassing. The Albanian central bank's former governor, Ilir Hoti, took his official Mercedes to Italy only to be told by Italian police, who checked their computer records, that it was on the stolen list. The car was confiscated but was later returned to the governor, apparently because the owner could not be traced.