Albania: Current Issues and U.S. Policy

CRS Report for Congress
Albania: Current Issues and U.S. Policy
Julie Kim
Specialist in International Relations
Foreign Affairs, Defense, and Trade Division
Summary
Some two months after Albania held parliamentary elections, a new government
was sworn in on September 11, 2005. Democratic Party leader Sali Berisha, whose
controversial term as President of Albania ended in 1997 amidst violent civil unrest,
returned to power as the new Prime Minister and leads a center-right coalition
government. Along with other states in the western Balkan region, Albania seeks
membership in NATO and the European Union, but its accession prospects are not
certain. This report may be updated as events warrant. A related CRS report is
RL33012, Islamic Terrorism and the Balkans.
Current Political Situation
During the Cold War, Albania was ruled by a brutally repressive communist regime
that kept the country in near-total isolation and underdevelopment. The legacy of this
experience - in addition to political instability, weak institutions, economic problems, and
wars in neighboring states over the last decade - has hindered Albania’s democratic and
economic transition from communism. In early 1997, a series of destabilizing events
brought Albania to the brink of civil war. The collapse of several popular but unregulated
investment schemes prompted thousands of citizens to demonstrate and eventually take
up arms against the Democratic Party-led government and President Sali Berisha. A brief
international intervention and new elections restored order and a semblance of political
normalcy.
Albania’s July 3, 2005 parliamentary elections were considered by the international
community to be a crucial test of the country’s democratic development as it prepares for
eventual membership in NATO and the European Union (EU). The incumbent
government led by the leftist Socialist Party and Prime Minister Fatos Nano came to
power after the 1997 period of unrest and also won the last parliamentary vote in 2001.
Since the fall of communism in 1991, Albania’s political scene has been largely shaped
by a bitter feud between the Socialist Party and the Democratic Party — and especially
between their longstanding respective leaders, Nano and Berisha — as well as by
intermittent power struggles within each party bloc.

Congressional Research Service ˜ The Library of Congress

Albania has had a relatively poor track record of conducting elections that meet
democratic standards. In municipal elections held in October 2003, international
observers reported numerous irregularities and assessed that the vote did not meet
international standards on free and fair elections. Prior to the 2005 parliamentary vote,
some electoral reforms were passed (including a code of conduct agreed to by all political
parties) but shortcomings persisted, according to international assessments.
The July vote produced a
complex result. As expected, bothBasic Facts on Albania
the Socialist Party and Democratic
Party dominated the direct ballot^Area^:^{28,748 s}^q^k^m^{, s}^lⁱ^g^h^t^l^y^s^m^al^l^e^{r t}^h^an^Mary^l^aⁿ^d
portion of the vote (100 seats were^Ca^pita^l^{: T}ⁱ^r^aⁿ^a
directly elected under a majority^GD^P^{: $16-}^{$17 billio}ⁿ^(pu^r^ch^asⁱⁿ^g^p^o^w^e^{r parity}^{, 2004}
system, and 40 by party list under a
proportional system), and the^es^t.)
Democratic Party appeared to^GD^P^/^c^a^pⁱ^t^a^:^$4,400-^{$4,900 (ppp, 2004 es}^t^.⁾
capitalize on its anti-corruption^P^o^pula^t^ioⁿ^{: 3.56 m}^illion^{(2005 es}^t.)
platform. The initial international^Et^{hnic g}^r^o^ups^:^A^l^banⁱ^an^(95%^{), G}^r^eek^(3%⁾^{, ot}^h^e^{r (2%}^,
response to the July vote was warily
positive, if also critical of problemsⁱⁿ^cl.^Vlach^{, R}^o^m^a^{, Serb, Macedon}^ian^,^B^u^lg^arian⁾⁽^note^:
with voter registration and other^{1989 la}^s^t^of^fⁱ^cⁱ^a^l^c^eⁿ^s^u^s^;^e^s^tim^a^t^e^s^of^G^r^e^e^k^popula^{tion v}^a^r^y⁾
processes.¹ However, as in previous^Relig^io^ns^:^Mu^s^lⁱ^m^(70%^{), O}^r^t^h^odox^(20%^{), R}^o^m^aⁿ
elections, disputes over procedures^Cath^o^{lic (}²⁰^%⁾
and charges of fraud ensued, leading^Pres^ident^:^A^l^f^r^{ed Moi}^sⁱ^u^(sⁱⁿ^{ce Ju}^l^y²⁰⁰²⁾
to protracted delays in certifying
final results. Albania’s Central^Prim^{e M}ⁱ^nis^t^er^:^S^a^lⁱ^Beri^s^h^{a (s}ⁱⁿ^{ce S}^e^pt^em^{ber 2005)}
Election Commission reviewed over

100 complaints of irregularities, but^S^o^ur^ce^s^:^CI^A^W^o^r^l^{d F}^actbo^o^k^{, S}^E^E^D^A^c^{t I}^m^pl^e^m^eⁿ^tatio^{n Re}^p^o^rt⁽^F^Y²⁰⁰⁴⁾^.

called for a repeat vote in only 3
districts. The rerun in these districts
took place on August 21.
In the final results, the Democratic Party won 56 seats. In conjunction with four
much smaller parties, it claimed a total of 81 seats, a solid majority in the 140-seat
parliament. The Socialist Party won 42 seats alone and 59 seats with four allied parties.
It was hurt by popular discontent with the Nano government as well as by the emergence
of splinter parties that divided the left. Still disputing the conduct and outcome of the
vote, Nano resigned as Socialist Party chairman and was succeeded by party official
Gramoz Ruci. Many analysts believe that the Socialist Party is in need of a major
overhaul in the post-Nano period. One potential leftist leader frequently named is Edi
Rama, the popular mayor of Tirana.
Berisha was sworn in as Prime Minister on September 11. He pledged to carry out
the party’s 23-point, 100-day program on political and economic reform that is largely
¹ The preliminary election report by the Organization for Security and Cooperation in Europe
(OSCE) assessed that the conduct of the July 3 election day only partially complied with
international standards for democratic elections. The report, which also details Albania’s
electoral system, is available at [http://www.osce.org/documents/odihr/2005/07/15541_en.pdf].

focused on the fight against corruption and organized crime. The program seeks to
“dismantle” corruption, cut taxes, increase employment, and fight poverty, among other
priorities. Pervasive corruption has registered as a primary concern of the population.
While welcoming the peaceful (if delayed) succession of power, some observers view
Berisha’s return with some trepidation. Prior to his ouster in 1997, then-President Berisha
had come under growing international criticism for anti-democratic practices and
authoritarian tendencies. Some analysts believe that the 2005 election results reflected
more a desire for change from the perceived corruption and incompetence of the Nano
government than explicit support for Berisha and the Democratic Party.² At the same
time, Berisha has filled his cabinet with young, western-educated ministers, perhaps
signaling a new start and new priorities.
Economic Situation³
One of Europe’s poorest countries, Albania continues to face daunting economic
problems as it pursues ongoing reforms. Albania began its transition process from a very
unfavorable starting position at the end of communism. The economy faced a significant
setback from the economic implosion in 1997 that resulted from the investment collapse
and civil unrest, but stabilized quickly afterward. GDP growth has been strong in recent
years, reaching 5.6% in 2004. A significant portion of the nation’s income and
employment derives from agriculture. Albania continues to rely (although increasingly
less so) on remittances from abroad, often coming from temporary and/or illegal Albanian
laborers in European countries, especially Greece and Italy. Unemployment remains high,
officially at about 15% of the workforce. The poverty rate is also high (estimates range
from one-quarter to one-half of the population). Under terms of IMF and World Bank
agreements, Albania has kept to tight spending constraints, limiting inflation and
achieving macroeconomic stability. Most of Albania’s trade is with European Union
countries, especially Italy, Greece, and Germany.
Albania’s underground economy is very large, comprising possibly as much as one-
third to one-half of the country’s gross domestic product. Despite numerous anti-
corruption initiatives, Albania continues to rank poorly in international surveys of
corruption levels.⁴ Weak financial institutions, poor judicial controls, as well as
corruption have also attracted transnational organized crime. Organized criminal groups
reportedly use Albania for transit in trafficking of narcotics, especially heroin, and as a
base of operations for money laundering and other criminal activities. Other key
economic challenges include developing large-scale infrastructure (such as transportation
and energy), continuing privatization, and attracting foreign investment.

² “Berisha beacon, Albania’s election,” The Economist, July 9, 2005.
³ Further detailed economic information can be found in Albania, Sustaining Growth Beyond the
Transition, World Bank Country Economic Memorandum, Report 29257, December 27, 2004.
⁴ “Albania facing challenges over economic reforms,” Dow Jones Newswires, March 14, 2005.

Foreign Policy
Albania’s long-term strategic goal is to achieve full integration into Euro-Atlantic
structures, including NATO and the European Union. After the end of the Cold War,
Albania was among the first countries to apply for NATO membership. Albania
participates in NATO’s Membership Action Plan (MAP) and Partnership for Peace (PFP)
program. It contributed forces to NATO’s Stabilization Force (SFOR) in Bosnia, which
was turned over to the EU at the end of 2004, and provides logistical support to NATO’s
Kosovo Force (KFOR). It also has a small unit with NATO’s force in Afghanistan. Along
with Croatia and Macedonia, Albania is part of the U.S.- Adriatic Charter initiative that
seeks to accelerate integration into NATO and increase security cooperation. At the 2004
Istanbul summit, NATO members welcomed seven additional members into the alliance.
They reaffirmed that NATO’s door remained open to new members, and encouraged
Albania, Croatia, and Macedonia to continue reforms necessary to progress toward
membership in the alliance.⁵ NATO has not yet established any timetable for further
enlargement. After Istanbul, many observers expected that NATO would address
enlargement at its next summit in 2006 or 2007. However, U.S. officials have recently
called for further enlargement of the alliance to be postponed until at least 2008.
Nevertheless, new Prime Minister Berisha has pledged to bring Albania into the alliance
before the end of his term.
Albania also seeks membership in the European Union. In mid-2003, the EU
declared its intention eventually to integrate all of the western Balkan nations into the
Union, and launched a Stabilization and Association process (SAp) to guide this effort.
Since then, the European Commission has been in negotiations with the government of
Albania on a Stabilization and Association Agreement (SAA), the first step toward EU
membership. Progress on concluding the SAA, however, has stalled because of Albania’s
poor record of implementing reforms, continued political instability, and limited
improvements in the development of the rule of law. The EU is expected to assess the
status of the stabilization and association process with Albania in the next few months,
but has postponed plans to complete the SAA in the fall of 2005 in order to give the new
Albanian government additional time. Even after an SAA is concluded, likely now in
2006, Albania will still face a long road to actual EU membership. Moreover, the EU’s
own internal struggles, as reflected in difficulties in ratifying the EU’s constitutional
treaty, have called into question the pace of and support for further EU enlargement.⁶
The Albanian government has supported regional cooperation as a means to promote
its interests. During the last decade of recurrent conflict in the states of the former
Yugoslavia, a key foreign policy goal for the Albanian government was to avoid
becoming a direct party to these conflicts, some of which involved ethnic Albanian armed
groups and civilian populations. During the Kosovo conflict, Albania accepted over
300,000 ethnic Albanian Kosovar refugees, most of whom swiftly returned to Kosovo
after the NATO air operation in 1999. Albanians generally support the Kosovar
Albanians’ aspirations for independence, but only on the basis of a peaceful, negotiated
settlement. The international community is expected to begin to address the difficult

⁵ Istanbul summit communiqué, June 28, 2004.
⁶ For additional information see CRS Report RS21344, European Union Enlargement, by Kristin
Archick.

issue of Kosovo’s disputed status as early as fall 2005. While not directly involved in the
international process that will determine Kosovo’s status, Albania will be a highly
interested and affected party. Kosovo is therefore likely to become an even more
prominent foreign policy topic for the incoming Berisha government. Berisha’s
Democratic Party is considered to be somewhat more nationalist than the leftist parties,
although Berisha has expressed support for the current international policy on Kosovo.
U.S. Policy
Successive U.S. Administrations have expressed strong support for Albania’s
political and economic transition and its Euro-Atlantic integration aspirations, including
membership in NATO. The Bush Administration has lauded Albania’s cooperation in the
war on terrorism (including taking action against suspected terrorist financiers and
supporters) and its contributions to U.S.-led operations in Iraq and Afghanistan. Albania
is also considered to be a constructive partner in promoting regional stability in the
Balkans, a key U.S. objective in Europe that has regained prominence as the international
community prepares to address the issue of Kosovo’s future political status in 2005-2006.
Since 1990, the United States has provided almost $380 million in bilateral Support
for East European Democracy (SEED) Act assistance to Albania through Fiscal Year
2004. An estimated $28 million in SEED funds have been allocated for FY2005, and the
same amount has been requested for FY2006. Current SEED programs in Albania focus
on promoting economic reform, strengthening democratic institutions and good
governance, and combating organized crime and corruption. In addition, the United
States has provided security assistance to Albania in support of its aspirations to join
NATO, its participation in PFP activities, and its contributions to the war on terrorism.
Some U.S. assistance supports improving export controls, weapons destruction, and other
non-proliferation measures. For example, U.S. funds from the Nunn-Lugar Cooperative
Threat Reduction program are assisting Albania in destroying stockpiles of Chinese-origin
chemical weapons leftover from the Cold War.⁷ The United States also has a Peace Corps
program in Albania.
Albania has contributed small units of military forces to U.S.-led operations in Iraq
and to the International Security Assistance Force (ISAF) peacekeeping operation in
Afghanistan. It also offered to the United States access to Albanian airspace, land routes,
and territorial waters in support of these operations. Albania has concluded a bilateral
agreement with the United States on exempting U.S. personnel from possible extradition
to the International Criminal Court (ICC, a so-called “Article 98” agreement), and another
agreement on the Prevention of Proliferation of Weapons of Mass Destruction. In recent
reports, the State Department has noted Albania’s considerable support to U.S. and
international counter-terrorism initiatives, including actions to curb terrorist financing and
enhance information-sharing with the United States and other governments.⁸ Albania has
also cooperated with efforts to curb trafficking in narcotics and in women and children;

⁷ See “Albania’s chemical cache raises fears about others,” The Washington Post, January 10,

2005.

⁸ Reports include Country Reports on Terrorism (released April 27, 2005), International
Narcotics Control Strategy Report (March 2005), and Trafficking in Persons Report (June 3,

2005).

however, Albania remains a country of concern on both transnational issues. Corruption
and lack of resources are cited as obstacles to greater effectiveness in tackling these
problems.
On June 27, 2005, the House of Representatives passed H.Con.Res. 155, a resolution
urging Albania to adhere to democratic standards in the July parliamentary elections and
expressing U.S. support for Albania’s transition and Euro-Atlantic integration. The
Senate introduced a similar resolution, S.Con.Res. 34, on May 17.
Following Berisha’s swearing-in on September 11, President Bush and the EU
leadership sent letters to the new Albanian government reportedly urging it to achieve
greater progress in reforms and move closer to full Euro-Atlantic integration.