About the CBI

September 2005
Background Note: Albania

Flag of Albania is red with a black two-headed eagle in the center.

PROFILE

OFFICIAL NAME:
Republic of Albania

Geography
Area: 28,748 sq. km. (slightly larger than Maryland).
Major cities: Capital--Tirana (700,000). Others--Durres (400,000), Shkoder
(81,000), Vlore (72,000).
Terrain: Situated in the southwestern region of the Balkan Peninsula, Albania
is predominantly mountainous but flat along its coastline with the Adriatic
Sea.
Climate: Mild temperate--cool, wet winters; dry, hot summers.

People
Population (June 2002 Institute of Statistics est.): 3,129,000.
Growth rate (2001 est.): -0.88%.
Ethnic groups (2004 Foreign Ministry and Institute of Statistics est.):
Albanian 98.6%, Greeks 1.17% (Note: The 1989 census, the last official census
to record ethnic data, listed the ethnic Greek population at 2%; estimates by
the Greek community itself place the number as high as 10%.), others 0.23%
(Vlachs, Roma, Serbs, Montenegrins, Macedonians, Egyptians, and Bulgarians).
Religions: Muslim (Sunni and Bektashi) 70%, Albanian Orthodox 20%, and Roman
Catholic 10%. (Greek Orthodox percentages would conform to the percentage of
the ethnic Greek population.)
Official language: Albanian.
Health (2001 est.): Life expectancy--males 69.01 years; females 74.87 years.
Infant mortality rate--39.99 deaths per 1,000 live births.

Government
Type: Parliamentary democracy.
Constitution: Adopted by popular referendum November 28, 1998.
Independence: November 28, 1912 (from the Ottoman Empire).
Branches: Executive--President (chief of state), Prime Minister (head of
government), Council of Ministers (cabinet). Legislative--Unicameral People's
Assembly or Kuvendi Popullor--140 seats (100 members elected by direct
popular vote; 40 by proportional vote; all serve 4-year terms).
Judicial--Constitutional Court, Court of Cassation, multiple district and
appeals courts.
Suffrage: Universal at age 18.
Main political parties; Albanian Republican Party (PR); Albanian Socialist
Party (PS); Democratic Party of Albania (PD); New Democrat Party (New DP);
Socialist Movement for Integration (LSI); Liberal Democratic Union Party
(PBL); Movement of Legality Party (PLL); Social Democratic Party (PSD); Unity
for Human Rights Party (PBDNJ).

Economy
Real GDP growth (2003): 7%.
Inflation rate (2003): 2.4%.
Unemployment rate (2003 est.): 15.8%.
Natural resources: Oil, gas, coal, iron, copper and chrome ores.

GEOGRAPHY
Albania shares a border with Greece to the south/southeast, Macedonia to the
east, and Serbia and Montenegro (including Kosovo) to the north and
northeast. Eastern Albania lies along the Adriatic and Ionian Sea coastlines.
Albania's primary seaport is Durres, which handles 90% of its maritime cargo.

PEOPLE AND HISTORY
Over 90% of Albania's people are ethnic Albanian, and Albanian is the
official language. Religions include Muslim (Sunni and Bektashi), Albanian
Orthodox, and Roman Catholic.

Scholars believe the Albanian people are descended from a non-Slavic,
non-Turkic group of tribes known as Illyrians, who arrived in the Balkans
around 2000 BC. Modern Albanians still distinguish between Ghegs (northern
tribes) and Tosks (southern tribes). After falling under Roman authority in
165 BC, Albania was controlled nearly continuously by a succession of foreign
powers until the mid-20th century, with only brief periods of self-rule.

Following the split of the Roman Empire in 395, the Byzantine Empire
established its control over present-day Albania. In the 11th century,
Byzantine Emperor Alexius I Comnenus made the first recorded reference to a
distinct area of land known as Albania and to its people.

The Ottoman Empire ruled Albania from 1385-1912. During this time, much of
the population converted to the Islamic faith, and Albanians also emigrated
to Italy, Greece, Egypt and Turkey. Although its control was briefly
disrupted during the 1443-78 revolt, led by Albania's national hero, Gjergj
Kastrioti Skenderbeg, the Ottomans eventually reasserted their dominance.

In the early 20th century, the weakened Ottoman Empire was no longer able to
suppress Albanian nationalism. The League of Prizren (1878) promoted the idea
of an Albanian nation-state and established the modern Albanian alphabet.
Following the conclusion of the First Balkan War, Albanians issued the Vlore
Proclamation of November 28, 1912, declaring independence. Albania's borders
were established by the Great Powers in 1913. Albania's territorial integrity
was confirmed at the Paris Peace Conference in 1919, after U.S. President
Woodrow Wilson dismissed a plan by the European powers to divide Albania
among its neighbors.

During the Second World War, Albania was occupied first by Italy (1939-43)
and then by Germany (1943-44). After the war, Communist Party leader Enver
Hoxha, through a combination of ruthlessness and strategic alliances, managed
to preserve Albania's territorial integrity during the next 40 years, but
exacted a terrible price from the population, which was subjected to purges,
shortages, repression of civil and political rights, a total ban on religious
observance, and increased isolation. Albania adhered to a strict Stalinist
philosophy, eventually withdrawing from the Warsaw Pact in 1968
and alienating its final remaining ally, China in 1978.

Following Hoxha's death in 1985 and the subsequent fall of Communism in 1991,
Albanian society struggled to overcome its historical isolation and
underdevelopment. During the initial transition period, the Albanian
Government sought closer ties with the West in order to improve economic
conditions and introduced basic democratic reforms, including a multi-party
system.

In 1992, after the sweeping electoral victory of the Democratic Party, Sali
Berisha became the first democratically elected President of Albania. Berisha
began a more deliberate program of economic and democratic reform but
progress on these issues stalled in the mid-1990s, due to political gridlock.
At the same time, unscrupulous investment companies defrauded investors all
over Albania using pyramid schemes. In early 1997, several of these pyramid
schemes collapsed, leaving thousands of people bankrupt, disillusioned, and
angry. Armed revolts broke out across the country, leading to the near-total
collapse of government authority. During this time, Albania's already
inadequate and antiquated infrastructure suffered tremendous damage, as
people looted public works for building materials. Weapons depots all over
the country were raided. The anarchy of early 1997 alarmed the world and
prompted intensive international mediation.

Order was restored by a UN Multinational Protection Force, and an interim
national reconciliation government oversaw the general elections of June
1997, which returned the Socialists and their allies to power at the national
level. President Berisha resigned, and the Socialists elected Rexhep Meidani
as President of the Republic.

During the transitional period of 1997-2002, a series of short-lived
Socialist-led governments succeeded one another as Albania's fragile
democratic structures were strengthened. Additional political parties formed,
media outlets expanded, non-governmental organizations and business
associations developed. In 1998, Albanians ratified a new constitution via
popular referendum, guaranteeing the rule of law and the protection of
fundamental human rights and religious freedom. Fatos Nano, Chairman of the
Socialist Party, emerged as Prime Minister in July 2002.

On July 24, 2002, Alfred Moisiu was sworn in as President of the Republic. A
nonpartisan figure, nominally associated with the Democratic Party, he was
elected as a consensus candidate of the ruling and opposition parties. The
peaceful transfer of power from President Meidani to President Moisiu was the
result of an agreement between the parties to engage each other within
established parliamentary structures. This "truce" ushered in a new period of
political stability in Albania, making possible significant progress in
democratic and economic reforms, rule of law initiatives, and the development
of Albania's relations with its neighbors and the U.S.

The "truce" between party leaders began fraying in summer 2003. Progress on
economic and political reforms suffered noticeably since the latter half of
2003 because of political infighting. Nationwide municipal elections were
held in October 2003. Although a significant improvement over past years,
there were still widespread administrative errors, including inaccuracies in
the voter lists.

The July 3, 2005 general elections were considered a step in the right
direction in terms of Albania's consolidation of democracy. The Democratic
Party and its allies returned to power in a decisive victory, pledging to
fight crime and corruption, decrease the size and scope of government, and
promote economic growth. Their leader, Sali Berisha, was sworn in as Prime
Minister on September 11, 2005.

GOVERNMENT AND POLITICAL CONDITIONS
The unicameral People's Assembly (Kuvendi Popullor) consists of 140 seats,
100 of which are determined by direct popular vote. The remaining seats are
distributed by proportional representation. All members serve 4-year terms.
The Speaker of Parliament (currently Jozefina Topalli) has two deputies,
along with 13 parliamentary commissions, to legislate Albanian affairs.

The President is the head of state and elected by a three-fifths majority
vote of all Assembly members. The President serves a term of 5 years with
right to one re-election. Although the position is largely ceremonial, the
Constitution does give the President authority to appoint and dismiss some
civil servants in the executive and judicial branches. The current
President's term expires on July 23, 2007.

The Prime Minister is appointed by the President and approved by a simple
majority of all members of the Assembly. The Prime Minister serves as the
Chairman of the Council of Ministers (cabinet), which consists of the Prime
Minister, Deputy Prime Minister, and other ministers. Members of the Council
of Ministers are nominated by the Prime Minister and approved by the
President.

Albania's civil law system is similar to that of other European countries.
The court structure consists of a Constitutional Court, a Supreme Court, and
multiple appeal and district courts. The Constitutional Court is comprised of
nine members appointed by the Assembly for one 9-year term. The
Constitutional Court interprets the Constitution, determines the
constitutionality of laws, and resolves disagreements between local and
federal authorities. The Supreme Court is the highest court of appeal and
consists of 11 members appointed by the President with the consent of the
Assembly for 9-year terms. The President chairs the High Council of Justice,
which is responsible for appointing and dismissing other judges. The High
Court of Justice is comprised of 15 members--the President of the Republic,
the Chairman of the High Court, the Minister of Justice, three members
elected by the Assembly, and nine judges of all levels elected by the
National Judicial Conference.

The remaining courts are divided into three jurisdictions: criminal, civil,
and military. There are no jury trials under the Albanian system of justice.
A college of three judges, who are sometimes referred to as a "jury" by the
Albanian press, render court verdicts.

Principal Government Officials
President--Alfred Moisiu
Prime Minister--Sali Berisha
Deputy Prime Minister--Ilir Rusmajli
Minister of Foreign Affairs--Besnik Mustafaj

ECONOMY
Albania is one of the poorest countries in Europe. According to the World
Bank's November 2003 Poverty Assessment, average per capita income was
U.S.$1,230 in 2002. The official unemployment rate is 16%, and 30% of the
population lives below the poverty line. Two-thirds of all workers are
employed in the agricultural sector, although the construction and service
industries have been expanding recently, the latter boosted significantly by
ethnic Albanian tourists from other parts of the Balkans. The GDP is
comprised of agriculture (approx. 34%), industry (approx. 13%), service
sector (approx. 32%), and remittances from Albanian workers abroad--mostly in
Greece and Italy (approx. 21%).

Albania was the last of the central and eastern European countries to embark
upon democratic and free market reforms. Further, Albania started from a
comparatively disadvantaged position, due to Hoxha's catastrophic economic
policies. Transition from a centrally planned economy to a market orientated
system has almost been as difficult for Albania as the country's Communist
period.

The democratically elected government that assumed office in April 1992
launched an ambitious economic reform program meant to halt economic
deterioration and put the country on the path toward a market economy. Key
elements included price and exchange system liberalization, fiscal
consolidation, monetary restraint, and a firm income policy. These were
complemented by a comprehensive package of structural reforms, including
privatization, enterprise and financial sector reform, and creation of the
legal framework for a market economy and private sector activity.

Results of Albania's efforts were initially encouraging. Led by the
agricultural sector, real GDP grew, and Albania's currency, the lek,
stabilized. The speed and vigor of private entrepreneurial response to
Albania's opening and liberalizing was better than expected. Beginning in
1995, however, progress stalled. The collapse of the infamous pyramid schemes
of the 1990s and the instability that followed were a tremendous setback,
from which Albania's economy continues to recover.

Within recent years, the Albanian economy has improved, although
infrastructure development and major reforms in areas such as tax collection,
property laws, and banking are proceeding slowly. Between 1998-2002, Albania
experienced an average 6.2% annual growth in GNP. Fiscal and monetary
discipline have kept inflation relatively low, averaging roughly 4.2% per
year between 2001-2003. Albania's public debt reached 67% of GDP in 2002, and
the growing trade deficit was estimated at 22% of GDP in 2002. Economic
reform has also been hampered by Albania's very large informal economy, which
the IMF estimates equals 50% of GDP.

Albania's trade imbalance is severe. In 2002, Albanian trade was U.S. $1.8
billion in imports, and U.S. $350 million in exports. Albania has concluded
Free Trade Agreements (FTAs) with Macedonia, Croatia, UNMIK (Kosovo), and
Bulgaria. FTAs with Romania, Bosnia, and Moldova are at various stages of
approval. However, combined trade with all these countries constitutes a
small percentage of Albania's trade, while trade with EU member states
(notably Greece, Italy, and Turkey) accounts for nearly 75%.) U.S. two-way
trade with Albania is very low. In 2003, U.S. exports to Albania totaled $9.7
million making it the 183rd overall destination for U.S. exports. U.S.
imports, during the same time period, totaled $4.3 million, making Albania
the 177th overall source of U.S. imports. Major U.S. investment to date has
been limited to large-scale infrastructure contracts with the government. The
Albanian Government is currently negotiating a FTA with the EU, as part of
its Stabilization and Association Agreement negotiations, which, when it
comes into force, could significantly reduce revenue collected.

Albania is assiduously trying to attract foreign investment and promote
domestic investment, but significant impediments exist. The Albanian
government faces the daunting but essential task of rationalizing and
uniformly applying business laws, improving transparency in business
procedures, restructuring the banking and tax systems (including tax
collection), reducing corruption in the bureaucracy, and resolving property
ownership disputes.

Business growth is further retarded by Albania's inadequate energy and
transportation infrastructure. The capital, Tirana, generally receives
electricity most of the day, but constant power outages plague every other
major city, small town and rural village. Although recent steps have been
taken to improve the transportation infrastructure, Albania has a limited
railway system and few domestic airports. Because of the mountainous terrain,
goods traveling overland must spend hours traversing the relatively sparse
network of switchback roads, many of them of poor quality, to reach
destinations that are relatively close.

MILITARY AFFAIRS
Since the fall of Communism in Albania in 1991, the country has played a
constructive role in resolving several of the inter-ethnic conflicts in south
central Europe, promoting peaceful dispute resolution and discouraging
ethnic-Albanian extremists. Albania sheltered many thousands of Kosovar
refugees during the 1999 conflict, and now provides logistical assistance for
Kosovo Force (KFOR) troops. Albania is part of the international
Stabilization Force (SFOR) serving in Bosnia, and Albanian peacekeepers are
part of the International Security Assistance Force in Afghanistan and the
international stabilization force in Iraq. Albania has been a steadfast
supporter of U.S. policy in Iraq, and one of only four nations to contribute
troops to the combat phase of Operation Enduring Freedom.

Albania continues to work with the international community to restructure its
armed forces and strengthen democratic structures pursuant to its Membership
Action Plan. At the June 2004 Istanbul Summit, NATO encouraged Albania to
continue making progress towards membership. Since 1999, Albania has spent
approximately $108 million annually on military expenditures, roughly 1.35%
of its GDP. With bilateral and multi-lateral assistance, the Ministry of
Defense is transitioning to a smaller, voluntary, professional military, and
reducing the vast amounts of excess weaponry and ammunition that litter the
country and pose a significant public hazard and proliferation risk. The
government continues efforts to collect from civilians the weapons that were
seized during the chaos of 1997. The Albanian government and the
international community are also working towards making Albania a mine-safe
country by 2006. The heavily mined areas of northeast Albania are a legacy of
the 1999 Kosovo crisis.

In May 2003, Albania and the U.S. signed a treaty on the Prevention of
Proliferation of Weapons of Mass Destruction and the Promotion of Defense and
Military Relations. In May 2003, Albania, Croatia, Macedonia, and the U.S.
created the Adriatic Charter, modeled on the Baltic Charter, as a mechanism
for promoting regional cooperation to advance each country's NATO candidacy.
Also in March 2004, Albania and the U.S. signed a Supplementary Agreement to
the Partnership for Peace Status of Forces Agreement, which defines the
status of American military troops in Albania and further enables military
cooperation.

FOREIGN RELATIONS
Albania is currently pursuing a path of greater Euro-Atlantic integration.
Its primary long-term goals are to gain NATO and EU membership and to promote
closer bilateral ties with its neighbors and with the U.S. Albania is a
member of a number of international organizations, including the Organization
for Security and Cooperation in Europe (OSCE), the UN, the Stability Pact,
the Adriatic Charter, and the WTO. In February 2003, the EU opened
negotiations with Albania on a Stabilization and Association Agreement, with
an initial focus on implementing essential rule of law reforms and curbing
corruption and organized crime.

Albania maintains generally good relations with its neighbors, and has or is
seeking FTAs with all the Balkan countries. It re-established diplomatic
relations with the Former Republic of Yugoslavia following the ousting of
Slobodan Milosevic in 2000. Although the final status of Kosovo remains a key
issue in Albanian-Serbian relations, both nations are committed to achieving
a peaceful resolution. Albanian, Macedonian, and Italian law enforcement
agencies are cooperating with increasing efficiency to crack down on the
trafficking of arms, drugs, contraband, and human beings across their
borders. Albania has also arrested and prosecuted several ethnic-Albanian
extremists on charges of inciting interethnic hatred in Macedonia and Kosovo.
Tensions occasionally arise with Greece over the treatment of the Greek
minority in Albania or the Albanian community in Greece, but overall
relations are good, and Greece is a strong proponent of Albania's eventual
integration into the EU and NATO. Albania recently upgraded the railway
between the Montenegrin capital, Podgorica, and Albania's northernmost major
city, Shkoder, to improve trade. Italy, Greece, and Turkey are Albania's
largest trade partners.

U.S.-ALBANIAN RELATIONS
Albania enjoys friendly and cooperative bilateral relations with the U.S.
Pro-U.S. sentiment is widespread among the population. Even while the U.S.,
which had closed its mission to Albania in 1946, was being vilified by
Communist propaganda during the Hoxha regime, ordinary Albanians remembered
that Woodrow Wilson had protected Albanian independence in 1919. Albanians
credit the NATO bombing of Serbia in 1999 with saving thousands of
Kosovar-Albanian lives.

In 2003, Albania and the U.S. signed and ratified a number of agreements,
including a treaty on the Prevention of Proliferation of Weapons of Mass
Destruction and the Promotion of Defense and Military Relations; the Adriatic
Charter; and an Agreement regarding the non-surrender of persons to the
International Criminal Court. The U.S. strongly supports Albania's EU and
NATO membership goals. Working towards NATO membership, the U.S. and Albania
signed a Supplementary Agreement to the Partnership for Peace Status of
Forces Agreement, an important step in strengthening bilateral cooperation
and enhancing security, peace, and stability in the region. Since FY 1991,
the U.S. has provided more than $531 million in assistance--not counting U.S.
Department of Agriculture (USDA) food aid--to Albania to facilitate its
transition from the most isolated and repressive communist state in Europe to
a modern democracy with a market-oriented economy, and to support long-term
development. In 2004, the U.S. gave over $28 million to Albania under the
Support for East European Democracy (SEED) Act program. On September 30,
2004, Albania was selected to participate in the FY 2004 Threshold Program
under the Millennium Challenge Account, which may help Albania implement
programs targeted toward two critical stumbling blocks to
development--corruption and rule of law.

Despite its daunting problems at home, Albania has wholeheartedly supported
the U.S. in the global war on terrorism, by freezing terrorist assets,
shutting down suspect Islamic NGOs, expelling Islamic extremists, and
providing military and diplomatic support for the U.S.-led actions in
Afghanistan and Iraq. On October 20, 2004 President Bush authorized for the
first time the use of the Nunn-Lugar Cooperative Threat Reduction program
funds outside the former Soviet Union. Under Nunn-Lugar the United States
plans to assist the Government of Albania with the destruction of a stockpile
of chemical agents left over from the communist regime.

Principal U.S. Embassy Officials
Ambassador--Marcie B. Ries
Deputy Chief of Mission--Steven E. Zate
Political/Economic Section Chief--Todd D. Robinson
Political Officers--Rima Koyler, Nigchuan Zhu, Bernadette Roberts
Economic/Commercial Officer--David Schroeder
Consular Officer--Alma Gurski
USAID Director--Harry Birnholtz
Public Affairs Officer--Roxanne Cabral
Defense Attaché--Cmdr. Shaun Hollenbaugh
Regional Security Officer--S. Wade DeWitt
Management Officer--Richard Morgan

The U.S. Embassy is located at 103 Tirana Rruga Elbasanit, Tirana; telephone:
[355] (4) 247-285; facsimile: [355] (4) 232-222.