Albania: Country Background Report

Albania: Country Background Report

98-974 F
Updated June 29, 2000
CRS Report for Congress
Received through the CRS Web
Albania: Country Background Report
(name redacted)
Specialist in International Relations
Foreign Affairs and National Defense Division
Summary
Albania has avoided direct involvement in neighboring Balkan wars, but continues
to seek political stability and economic recovery. In 1998 and 1999, Albania was on the
front line of the Kosovo crisis that culminated in the NATO air campaign against
Yugoslavia. Over 400,000 Kosovar Albanian refugees flooded across the border into
Albania, though most have since returned to Kosovo under an international protectorate.
Albania strongly supported the NATO operation and seeks closer integration with the
alliance and with the European Union. In early 1997, Albania went through a major
financial and social crisis that brought down the Democratic Party-led government.
Elections held in June 1997 brought the Socialist Party to power. In 1999, fierce rivals
Fatos Nano of the Socialist Party and Sali Berisha of the Democratic Party resumed
chairmanships of their respective parties. After one year in office, Prime Minister Pandeli
Majko resigned on October 26, 1999, and was replaced by another Socialist Party
member, Ilir Meta. Some observers expect that early elections may be held before their
June 2001 scheduled date. This report discusses the background and status of these and
other issues concerning Albania. It may be updated as events warrant.
Background1
Albania gained independence from the Ottoman empire in 1912. During World War
II, Albania was occupied by Italy and Germany. The Albanian Communist Party under
leader Enver Hoxha took power in 1944. Hoxha imposed a dictatorship that lasted until
his death in 1985. Allied at different times with Yugoslavia, the Soviet Union and the
Warsaw Pact, and China, Albania fell into dispute with each, and by the late 1970s
practiced self-reliance and isolationism. Albania was the last east central European
country to embark on limited democratization and market economic reforms toward the
end of the Cold War. Hoxha's successor, Ramiz Alia, was considered somewhat less
repressive than Hoxha and began to expose Albania more to the outside world, but still
1Sources for this report include the Europa World Yearbook, the Economist Intelligence Unit, the
Foreign Broadcast Information Service, and news wire services.
Congressional Research Service ˜ The Library of Congress

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maintained the Communist Party's exclusive hold on power. Large student-led
demonstrations in late 1990 pushed the Alia government to accept multi-party elections.
Political Developments: Albania’s first
multi-party elections, held in 1991, gave
Albania at a Glance
the Communist Party (renamed Socialist
Area:
28,749 sq. km.; slightly smaller than
Party) a majority but not a stable
Maryland
mandate. Facing grim economic
Population: 3.36 million (1999 estimate)
conditions that year, tens of thousands of
Ethnic Groups:
Albanians 95%, Greeks 3%
Albanians attempted to flee the country.
(official estimate), others 2%
Waves of strikes and protests by the
(Vlachs, Roma, Serbs, Bulgarians)
(1989 estimate)
burgeoning opposition brought down the
GDP/capita:
$1,030 (1999 estimate)
Socialist government under Prime
Leadership
Minister Fatos Nano. New elections in
President:
Rexhap Mejdani
March 1992 gave the anti-communist
Prime Minister:
Ilir Meta
Last elections:
June 1997 (parliamentary)
opposition Democratic Party an outright
Next elections:
June 2001
majority in parliament. Democratic Party
leader Sali Berisha became President and
Sources: Europa World Yearbook; Financial Times Survey (2/23/00)
appointed Prime Minister Aleskander
Meksi to head a Democratic Party-led
government. The Berisha-led government maintained a stable political majority but became
increasingly authoritarian and mired in corruption controversies. Amid international
charges of serious voting irregularities, the Democratic Party secured all but a few seats
in parliament in the next elections held in May and June 1996.
In early 1997, the collapse of several hugely popular “pyramid” financial investment
schemes caused financial losses to nearly every Albanian family and brought the country
to a nearly total breakdown. Much of the population blamed the Democratic Party
government for not regulating and even profiting from the shady schemes. Anti-
government demonstrations against investment losses turned violent and grew into an
armed insurrection led by pockets of guerrilla insurgents based in the south of the country.
Up to 2,000 persons were killed in the first half of 1997. Weapons depots were raided and
the country became awash in small arms, some of which flowed into neighboring Kosovo.
In response to the crisis, the U.N. Security Council approved the deployment of an ad hoc
Multinational Protection Force to help deliver humanitarian assistance to the Albanian
population and contribute to the restoration of civil order in the country. Led by Italy, the
6,000-strong force carried out its “Operation Alba” and withdrew in August 1997.
Several international organizations have since provided assistance in weapons collection,
police training, and customs controls.
Through mediation efforts by the Organization for Security and Cooperation in
Europe (OSCE), President Berisha agreed to appoint a broad-based interim government
under Prime Minister Bashkim Fino and to hold early elections in June 1997. The
Democratic Party lost badly to the Socialist Party, which won 121 of 155 seats in
parliament. Fatos Nano again became Prime Minister and the parliament elected Rexhep
Mejdani to replace Berisha as President.
Relations between the two largest parties have remained extremely contentious. In
mid-September 1998, prominent Democratic Party member Azem Hajdari was
assassinated. The Democratic Party blamed the government and led violent demonstrations

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in Tirana. Prime Minister Nano resigned after failing to secure a cabinet reshuffle at the
end of the month; shortly thereafter, Pandeli Majko succeeded Nano. Majko quickly
achieved passage by referendum of a new constitution, which came into force on
November 28. Majko also began to make overtures to the Democratic Party, seeking an
end to the Democratic Party’s boycott of parliament. The Democratic Party eventually
returned to parliament in July 1999.
In October 1999, after losing an internal party vote for the chair of the Socialist Party
to former party leader Fatos Nano, Prime Minister Majko resigned from office. However,
Nano did not seek the premiership and instead promoted Socialist Party member Ilir Meta,
an economist, to become the third Socialist Prime Minister since the 1997 elections. Meta
retained most of the Majko cabinet. At the party congress of the Democratic Party one
month earlier, Berisha retained his leadership position despite a brief challenge from a
younger party leader. With the “old guard” still at the helm of both parties, analysts
predict no breakthrough in political tensions between the Socialists and the Democratic
Party. The Democratic Party has pressed for early general elections, although their
scheduled date is within one year (June 2001). Local elections are to be held in September
or October 2000.

Human Rights: Albania’s human rights record deteriorated sharply in 1997 as a result of
the civil unrest and anti-government uprisings. Up to 2,000 persons, both civilians and
police, were killed by the middle of that year, and random killings and injuries continued
for months afterward. The U.S. Department of State’s annual Reports on Human Rights
Practices have noted improvements since the end of that crisis. The 1999 report noted
continued problems with police harassment and abusive treatment of prisoners, politically-
motivated violent crime, and lapses by the police in addressing criminal situations. An
inefficient and corrupt judicial system, corruption, and the general lack of law and order
also remain problematic.
Economy: Europe’s poorest country, Albania has seen dramatic economic swings since
1989. In 1990-1991, grim economic prospects, extremely high unemployment, and food
shortages prompted mass exodus attempts, especially by Albania's younger population.
Large, inefficient industries were abandoned, and collectivized farms were swiftly
dismantled and privatized. Albania's galloping growth rates in the mid-1990s surpassed
most expectations, but the country’s economic recovery proved to be deceptive and
susceptible to corruption. The 1997 pyramid scheme collapse and ensuing crisis brought
the economy to a virtual standstill. GDP declined by an estimated 7% in 1997. The new
government that took office in mid-1997 worked quickly, with assistance from
international financial institutions, to stabilize the economy and resume structural reforms,
especially privatization, and banking and administrative reform. Pyramid investment
schemes were banned and their assets auctioned. Economic growth has rebounded, with
8% GDP growth recorded in 1998 and 1999, under a stable macroeconomic environment.
The Kosovo refugee crisis in 1999 presented an enormous economic burden on the
Albanian economy, but was largely offset by the massive inflow of international
humanitarian aid. Very low foreign investment levels, poor infrastructure, and corruption
continue to challenge economic recovery.

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Foreign Policy
Kosovo and Neighboring States: Albania’s population, totaling about 3.2 million
people, is largely ethnic Albanian.2 Large numbers of ethnic Albanians live outside the
country, especially in Kosovo (in Serbia), the Former Yugoslav Republic of Macedonia,
and Montenegro. In Kosovo, ethnic Albanians comprised about 90% of the province of
nearly 2 million. When violent conflict began in Kosovo in March 1998, many observers
feared that Albania would become dragged into the conflict.3 Many Albanians support
the Kosovar Albanians’ quest for independence. Some observers fear that independence
for Kosovo could lead to its eventual annexation with Albania. They speculate that a
“Greater Albania” might also incorporate territories in neighboring Montenegro and
Macedonia. Publicly, the Socialist Albanian government has rejected the notion of a
Greater Albania.
During the Kosovo conflict, Albania bore the brunt of the refugee flow from Kosovo.
By the end of NATO’s Allied Force air campaign against Yugoslavia in June 1999,
Albania had received over 440,000 Kosovar refugees. The Majko government appealed
to all Albanians to accept and support the refugees, a posture widely applauded abroad.
Shortly after the Yugoslav Army withdrew from Kosovo and NATO began to deploy the
Kosovo peacekeeping force (KFOR), droves of Kosovar refugees began to make their way
back to Kosovo. Only a few thousand refugees currently remain in Albania.
Albania’s relations with its other neighboring states have also been problematic, but
to a much lesser extent. Ethnic Albanians comprise over 20% of the population in the
neighboring Former Yugoslav Republic of Macedonia, mainly in the western part of the
country adjacent to Albania. The Albanian population there maintains grievances with the
Slav Macedonian majority, although its parties participate in government and parliament.
Ethnic Greeks comprise the largest minority in Albania, although their number is disputed
between Albanian and Greek organizations. Relations with Greece had been strained by
the treatment of the Greek minority in southern Albania, Albanian fears of irredentist
Greek claims to southern Albania, the intermittent expulsion of migrant Albanian workers
from Greece, and occasional border skirmishes. After reaching the lowest point in 1993
and 1994, relations between Albania and Greece began to improve in 1995. Greek
President Kostis Stephanopoulos visited Tirana on March 21-22, 1996, and signed a
bilateral friendship treaty, marking a new beginning in bilateral cooperation.
European Integration: After many years of nearly total isolation, Albania made
significant strides in establishing and improving relations with other countries early in this
decade. Albania seeks eventual membership in NATO as well as the European Union.
Albania joined NATO's Partnership for Peace program in February 1994 and signed its
Individual Partnership Program on January 25, 1995. In June 1998, NATO opened a
Partnership for Peace training cell in Tirana. In October, the Albanian government offered
NATO use of its air space, air bases, and ports for NATO operations. In response to the
refugee crisis that erupted in March 1999, NATO increased efforts to assist humanitarian
2Among Albanians there are two sub-groups: the Gegs, based in the northern half of the country
and in Kosovo (in Serbia), and the Tosks, who live in the south.
3For more on the situation in Kosovo, see CRS Issue Brief IB98041, Kosovo and U.S. Policy.

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operations in Albania and Macedonia. NATO also deployed the U.S. Task Force Hawk
in northern Albania to prepare for possible helicopter attacks in Kosovo. NATO assured
Albania that it would respond to any security challenge resulting from the presence of
several thousand NATO troops in Albania. Albania was likely to become the primary
staging area for any NATO ground invasion of Yugoslavia. Now engaged in
peacekeeping in Kosovo, NATO maintains a KFOR supporting force of under 2,000
troops in Albania. In May 2000, Albania and eight other NATO aspirant countries called
upon NATO to invite all of them to join the alliance at the next NATO summit in 2002.
During the 1997 insurgency, the Albanian army disintegrated as many conscripts
abandoned the army and joined rebel forces. Since the departure of the Multinational
Force in August 1997, the reconstruction of the armed forces and police has been a
priority of the Socialist government.4 Armed forces restructuring is being designed and
carried out with NATO guidance and with the aim of improving interoperability with
NATO forces.
Albania has established institutional links with the European Union, although not at
the same level as other east central European countries. In June 1999, the European
Union launched a Stability Pact for southeastern Europe to promote stability and
prosperity in the region. Forty countries and international institutions are participating in
the initiative. As part of the strategy, the EU has offered to establish Stabilization and
Association Agreements with the so-called front-line states of Albania, Bosnia, Croatia,
Macedonia, and Yugoslavia. Negotiations on an SAA with Albania may commence before
the end of 2000; however, EU officials have said that Albania still needed to implement
further reforms and strengthen law and order.
After the 1997 insurgency, the international community became more closely engaged
in efforts to stabilize Albania. In 1997, international donor conferences raised $600 million
in aid to Albania. At a follow-up conference on October 30, 1998, in Tirana, donors urged
the Albanian government to do more to restore law and order, restore political dialogue
among parties, reform public administration, and fight corruption and smuggling in order
to establish a receptive climate for business and investment. The EU and the Organization
for Security and Cooperation in Europe (OSCE) have since co-chaired an international
“Friends of Albania” forum of donor countries intended to assist Albanian reforms and
coordinate international aid programs. At the July 1999 meeting, Friends of Albania
countries paid tribute to Albania’s response to the Kosovo refugee crisis.
In the wake of the 1997 crisis, occasional press articles have revealed that numerous
radical Islamic elements had established networks in Albania. Alleged terrorists,
reportedly from Egypt, Algeria, Saudi Arabia, among other countries, had infiltrated
Albania under the guise of religious foundation work and humanitarian assistance. In
1998, the Albanian government began a crackdown against suspected terrorist havens in
Albania. Reportedly in coordination with the CIA, Albanian authorities arrested suspected
Islamic associates of Osama bin Laden in June and July 1998.5 The Albanian government,
reportedly working with the CIA, has since extradited other alleged radical Islamic
4In 1996, the strength of the Albanian armed forces was 54,000.
5The Washington Post, August 29, 1998.

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militants to Egypt. For several years, Albania has also been a transit point for international
drug trafficking.
U.S.- Albanian Relations
Until 1991, Albania was one of the few countries in the world with which the United
States maintained no diplomatic relations and virtually no contacts. Relations with Albania
were formally reestablished in early 1991. After the 1992 Albanian national elections, the
State Department expressed support for
the Democratic Party-led government and
president. In the ensuing years, however,
the United States became increasingly
critical of the anti-democratic practices of
President Berisha and the Democratic
Party government. After the June-July
1997 elections, the Administration
welcomed the new Socialist government
and called on all parties to work toward
political reconciliation. In October 1998,
the Administration warmly welcomed the
appointment of Pandeli Majko as Prime
Minister. It criticized the destructive
practices of some other parties in Albania
and specifically called on Sali Berisha’s
Democratic Party to renounce appeals to
violence and instability. In November, the
Administration commended Albania for
the peaceful and sound conduct of the
referendum on the new constitution.
Administration officials met with
Prime Minister Majko in Washington in
February 1999 and with President Mejdani
in April, prior to the NATO 50th
anniversary summit. The Administration
does not support formal independence for
Kosovo or the concept of a greater
Albania. A few hundred U.S. troops are
stationed in Albania in a supporting
function to NATO’s Kosovo Force (KFOR). A U.S.-Albanian defense working group
resumed contacts in May 2000 after a three-year hiatus. Since 1990, the United States has
provided over $200 million in bilateral assistance to support Albania’s economic and
political transition and development. During her first visit to Albania in February 2000,
Secretary of State Albright expressed thanks to the Albanian people for their support to
NATO during the Kosovo war and pledged U.S. support for Albania’s transition. She
warned, however, that the United States did not support a “Greater Albania” and that any
attempt to expand territorial boundaries would be an invitation to violence.

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