EXCERPT | Transformation of Albania’s Political and Economic Structures since 1997
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EXCERPT | Transformation of Albania’s Political and Economic Structures since 1997

By Islam Jusufi

Image Attribute: Tirana City Center, Albania Photograph by Azem Ramadani

Image Attribute: Tirana City Center, Albania Photograph by Azem Ramadani

The crisis of 1997 was too costly in many respects and “affected all the political, military, social and economic aspects of life in the country” [1]. However, Albania was able to recuperate politically and economically. With macroeconomic stability emerging in 1998, Albania’s economy grew significantly and transitioned to a rapid economic recovery. Political stability as a whole increased as the political polarization and cleavages that haunted the political economy in the 1990s started to recede [2]. As the 1997 crisis and state collapse affected everybody, it came to have implications in overcoming the divides in society. 

It may be the case that the 1997 events set in motion a change in patterns of north-south polarization, as everybody was affected by the events. This article argues that the 1997 events, because they sped up the process of democratization, also came to play a role in overcoming the north-south divide. It has led to a political environment where clientelism has become less of a feature of the appeals of parties to voters. In the aftermath of 1997, there has been an improvement in the functioning of government institutions, which has been key to overcoming clientelism. This has given post-1997 Albania an opportunity to break the traditions and structures of clientelism. The events of 1997 reflected the division of north and south; however, the country has more and more come to have a national character rather than being torn by clan-based divisions. Although the rebellion was initially concentrated in the south, it spread to the central and northern territories of the country, making it a national event. Therefore, the 1997 events, although initially capitalizing on the existing divisions between north and south, was not a south-only rebellion – it became an unrest affecting all of Albania. 

The pyramid scheme crisis, and the resulting political and armed chaos, regardless of all the negative sources and results, brought, in a paradoxical manner, the finalization of the political transition in Albania. The parties accepted the change in the government. This is important to take into account in judging the democratic level of the state. This was the first rotation of the government and it was successfully closed. Thus, the elections held in June 1997 brought about a change in the government through voting. It was the first change of government after the end of communism [3].

After restoring order towards the end of 1997, the situation was sharply reversed again following the killing of Azem Hajdari, one of the founders of DP and a leader of the 1990/91 student demonstrations that brought about the fall of the communist government. The country was threatened once more by the prospect of civil chaos.

The Albanian people generally, however, had no stomach for a repeat of the previous year’s horrific violence. Although they were undeniably dissatisfied with the performance of new administration, the overriding attention of the population was focused on finding the means for survival amidst the country’s economic ruin. [4] pg 253

Also, the start of a dialogue between the government and opposition was seen as positive and as a step “towards healing the deep political wounds that [have] scarred Albanian politics” [1]

In the aftermath of the events of 1997, Albania made progress in reestablishing peace and order in the country. Military committees were dissolved. However, only a fraction of stolen arms was collected.

A serious factor contributing to worsening social relations was a large number of weapons still in civilian hands since army depots were looted in the spring of 1997. It was estimated that 656,000 weapons of various types were looted from army depots in March 1997, together with 1.5 million rounds of ammunition and vast quantities of hand grenades and land mines. Despite much discussion, however, attempts to disarm the population proved fruitless. By the end of 1998, only 97,000 weapons (excluding mines and ammunition) had been retrieved. [4] pg 253

The rest remained in the hands of the population, contributing to the climate of criminality still present in the country. The armed population and the return of public security, therefore, represented the “gravest and most complicated challenges for the Albanian government” [1]

Kosovo, now a separate independent state of Albanians, but in the 1990s still part of Serbia, was one of the hurdles to a successful transition in Albania after 1997. The Kosovo question, which led in March 1999 to NATO’s intervention against Serbia, became an integral part of Albanian domestic politics in the post-1997 era. As Albania was moving towards recovering from the 1997 crisis, it faced the challenge of how to deal with the hostilities in neighboring Kosovo in 1998–1999. But Albania, despite expectations to the contrary, encouraged a peaceful solution to the problem [5]. A key moment was during and in the aftermath of the 1997 disorder when Albania is believed to have supported the Kosovar Albanians to launch their armed campaign against Milosevic’s Serbia – in terms of weapons and a base from which to launch attacks [6]. The flare-up of the war in Kosovo in March 1999 led to a massive exodus of Kosovar Albanian refugees to Albania, which immediately responded with immediate assistance to meet the needs of the refugees [7]. The Kosovo crisis further intensified the contacts between Albania and the EU, and the EU started to invest heavily in the provision of aid aimed at re-establishing control over the security sector [8].

After 1997 the country reformed its security sector, including the police, army, intelligence and other security institutions, seeking to ensure the security sector was able to meet its contemporary obligations and challenges. This success was crowned with full NATO membership in 2008. In the process of approaching the EU and NATO, Albania took on many new security obligations and responsibilities and actively participated in international peacekeeping and peace support operations, such as those in Afghanistan, Chad and Bosnia and Herzegovina. Adopting NATO standards and providing support to peace missions brought security actors such as the army and the police in the country closer to meeting international standards. Immediately after the events of 1997, Albania embarked on security sector reforms, which included the establishment of new institutions, structures, and chains of responsibility for the security sector [9].

Economic growth following the regime change in 1990 fell by 29.6 percent in 1991, and the economy contracted by 10.2 percent in 1997 due to the civil unrest. During the period 1991–1997,

“Albania experienced a post-communist transition that led the country to become one of the poorest, if not the poorest and the least developed economy in Europe. The underlying strengths of the Albanian economy led to a recovery in 1998 with robust GDP growth of 12.7 percent that year. The economy grew by over 80 percent over the thirteen-year period of 1998–2010, one of the highest sustained rates of growth in Europe. Once labeled as the continent’s poorest country, Albania has been one of the fastest growing economies in Europe. Today, Albania is a lower middle-income country, and graduated from the World Bank’s IDA lending for only-poor countries in 2008. The country has also experienced rapid social change, including internal migration from rural to urban areas and mass emigration of economically active citizens who are a source of substantial remittances (ranging from 11–14 percent of GDP annually).” [2]

While Albania has a considerably smaller economy than other European states, it is an open economy that is highly integrated into international trade markets. It undertook significant reforms to many aspects of its economy over the past few years, including improving the business environment and the transport and energy infrastructure. The business climate also improved and a number of leading foreign investors expanded their operations in Albania. Steps were taken for purposes of administrative streamlining also improved the investment climate. As a result, Albania succeeded in attracting US$4 billion in net FDI during the period of 2007–10. Significant levels of corruption, however, and weak property rights have been a substantial drag on economic activity [10].

Albania’s economy has grown significantly and slowly transitioned to a state of economic recovery; the overall political stability has also improved in recent years. “EU accession is highly popular and remains the anchor of reform in nearly every area of the government” (Yusufi et al. 2012: 10). All of these provide good grounds for having the country pay attention to tackling its specific development achievements. Albania’s development achievements are substantial. With a GDP per capita of $3,960, and a Human Development Index score of 0.751 (with a rank of 70), the country has reached a high level of human development. Along with 188 other countries, Albania has pledged to achieve the MDGs and the nation seems well-placed to meet most, if not all millennium targets by 2015. Albania’s strong economic growth has been a major contributing factor in its positive steps towards achieving the MDG targets. It is on track to achieve its MDGs, including with respect to poverty reduction, child, and maternal mortality and in regards to combating diseases [2].

Rapid GDP growth in Albania has been accompanied by an equally impressive decline in poverty. Nearly half of Albania’s poor were lifted out of poverty between 2002 and 2008 and the poverty head-count fell from 25.4 percent in 2002 to 12.4 percent by 2008. Extreme poverty is very low. More than 50 percent of the population lives in rural areas, home to half of its poor people. Poverty reduction was initially more pronounced in rural areas (29.6 percent in 2002), but the decline in rural poverty has accelerated substantially over the past years and is now approaching urban rates (14.6 percent in 2008). Nonetheless, there are areas of the country – mostly mountain areas – where poverty remains high (29.8 percent). Poverty is particularly evident in depressed regions that lack industries. In addition, in the rural areas, female-headed households have experienced only one-third the rate of poverty reduction as male-headed households have due to the difficulties for women to access job opportunities and the lack of women-specific measures of empowerment in the labor market. Albania’s strong economic performance has been accompanied by positive changes in employment. Between 2002 and 2008, the unemployment rate decreased from approximately 17 percent to 12.8 percent [2].

Although there have been notable improvements in Albania’s social indicators – for instance, enrollment has increased at all levels of education – the nation remains an outlier with respect to the goal of achieving universal primary education. Albania also faces significant challenges in promoting gender equality, empowering women, and in ensuring environmental sustainability. With respect to infrastructure development, a high proportion of the population (82.1 percent) had access to potable drinking water as of 2009, though the 2015 target of 98 percent will likely not be reached. With a strong probability of continued domestic and external financing that focuses on sanitation, it is likely that the 2015 target of 90 percent of the population having access to sanitation can be reached. Challenges do remain in a number of other MDG target areas. While there has been a decline in unemployment since 2002 – to the level of 17.7 percent (2015) – it did not reach the targeted 9 percent level by 2015 [11]. Challenges related to rural-urban, regional and gender-related inequalities also remain.

The status and position of women in Albania have been a development challenge; however, the country has made substantial progress in setting standards and passing laws to promote equality between men and women. Albania has also worked hard to improve the lives of women and girls throughout the nation and overall; the country can be considered to be moderately advanced in implementing gender equality rules in its governance systems. Albanian gender equality legislation also carries mandatory percentages or quotas (30 percent) for women in political office and ensures this representation through an authority that monitors progress. The introduction of a 30 percent quota of representation has ensured a strengthened balance of participation for men and women in decision-making; however, in practice, the quota level has yet to be achieved. Albania has made progress in tackling gender-based violence, although a 2009 survey concluded that more than 50 percent of women has experienced some form of physical, sexual, psychological or emotional violence and abuse [12]. An increase in reported cases of domestic violence following the introduction of this new law attests to the fact that family violence continues to affect many families in Albania, while cases are under-reported, particularly in rural areas. Women are under-represented in the labor market in Albania, with their economic activity being lower than men. Women experience unequal access and control over resources (e.g. property, land, credit, etc.) and a much higher proportion of women work in lower skilled occupations. This is due, in particular, to the insufficient allocation of human, technical and financial resources for the effective implementation of laws and strategies that relate to women’s access to and treatment in the labor market. Women’s employment, although still lower than men’s, has seen a slight increase, with an increased presence of women in the agriculture sector. Albania remains a country of origin of women trafficked for the purposes of sexual exploitation and forced labor; however, there has been a decline in the number of persons being trafficked. Notwithstanding improvements in the situation of women, Albania has kept the same place in the GenderGap Index of the World Economic Forum (rank78) because of a below average performance in terms of female educational attainment.

Post-1997 Albania experienced a combination of political and economic stability. It has had coalition governments with broad public support, and favorable long-term population dynamics. These circumstances provided Albania with a historic opportunity, by continuing its strong economic policies, to achieve sustained high-income growth and better lives for the Albanian people [2]. Post-1997 governments were not able to continue along the same path, as the 1997 events reminded the new government of the power of popular resistance, but also because the state of Albania in the aftermath of the 1997 events was not tolerated by the international community and did not have the capacity to coopt or repress opposition challenges. In post-1997 Albania, control over state and economic resources became fragmented, which generated political competition. What was also important was the emergence of a civil society able to voice and provide checks on the behavior of the government.

Substantial changes occurred in the country only as the result of shocks of the 1990 regime change and the 1997 unrest. The 1997 disorder represented a second shock in Albania’s post-communist history after that of the 1990 regime change. The 1997 crisis was instrumental in shaping the political and economic transformation of post-1997 Albania. The 1997 disorder became an important reference for measuring the progress of reforms in the country. The post-1997 reforms thus became locked in a pattern, where the transformation of the political and economic structures that led to the 1997 events became a priority that no post-1997 government could escape. The strong commitments that were made by the international community after the 1997 crisis with regards to Albania’s transformation became a particularly strong mechanism influencing the path dependent pattern. The logic of action of the political establishment early on became closely connected to protecting the peace and order that was established after 1997 as a symbol of the successful conflict transformation. The attachment to maintaining peace and order was not particularly surprising, as changes in the country from the inception of the pro-democratic reforms in 1990 have been developed in response to external pressures and shocks.

Reviewing the developments in post-1997 Albania, the new governments in the post-1997 period have provided the basis for major changes in the country. Despite weaknesses in relation to the democratization process, what Albania went through was a profound transformation that led in the medium term to a regime change, from being a competitive authoritarian regime to being considered a candidate for proper democracy. The post-1997 period has led to a major political reorientation for Albanians, with increased cultural, economic, as well as political contacts [13]. In post-1997 Albania, modernization and westernization (or Europeanization) has been highly popular and remained the anchor of reform in nearly every area of Albania’s governance. The country has struggled to overcome disparities in income levels across the country, improve the regulatory environment and tackle corruption. It has also faced challenges in implementing reforms aiming to give it a market-oriented economy, build democratic institutions and strengthen the legal system [2].

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About the Author:

Islam Jusufi is a Lecturer and Head of the Department of Political Sciences and International Relations at Epoka University, in Tirana, Albania. His research interests relate to democratization processes and security politics in the Balkans. He earned his Ph.D. in Politics at The University of Sheffield and did the bachelor and master studies in International Relations at the Universities of Ankara, Bilkent, and Amsterdam. He served as a policy adviser on foreign security policy and on development cooperation. He held research and teaching fellowships at the Wilson Centre, Washington DC; the EU Institute for Security Studies, Paris; the ERSTE Stiftung, Vienna; UNESCO, Paris; the Centre for Policy Studies, Budapest; and NATO, Brussels.

Cite this Article

Jusufi, Islam. "Albania’s Transformation since 1997: Successes and Failures" Croatian International Relations Review, 23.77 (2017): 103-110. Retrieved 18 Sep. 2017, from doi:10.1515/cirr-2017-0003

This work is an excerpt taken from a research article titled - "Albania’s Transformation since 1997: Successes and Failures" and republished at Indrastra under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License. (CC BY-NC-ND 3.0) provided by the original publisher.


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