June 30, 2009

For the most current version of this Note, see Background Notes A-Z.

PROFILE

Geography
Area: 28,748 sq. km. (slightly larger than Maryland).
Major cities: Capital--Tirana (600,000, 2005 est.). Others--Durres (200,000, 2005 est.), Shkoder (81,000, 2005 est.), Vlore (72,000, 2005 est.).
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 (2007 est.): 3,600,523.
Growth rate (2007 est.): 0.529%.
Ethnic groups (2004 est., Government of Albania): Albanian 98.6%, Greeks 1.17%, others 0.23% (Vlachs, Roma, Serbs, Montenegrins, Macedonians, Balkan Egyptians, and Bulgarians).
Religions: Muslim (Sunni and Bektashi) 70%, Albanian Orthodox 20%, and Roman Catholic 10%.
Official language: Albanian.
Health (2007 est.): Life expectancy--males 74.95 years; females 80.53 years. Infant mortality rate--20.02 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--140-seat unicameral People's Assembly or Kuvendi Popullor (100 members elected by direct popular vote; 40 by proportional vote; all serve 4-year terms). Judicial--Constitutional Court, High Court, multiple district and appeals courts.
Suffrage: Universal at age 18.
Main political parties: Democratic Party of Albania (DP); Albanian Socialist Party (SP); Socialist Movement for Integration (LSI); Albanian Republican Party (PR); Demo-Christian Party (PDK); Union for Human Rights Party (PBDNJ); New Democracy Party (PDR); Social Democratic Party (PSD); Social Democracy Party (PDS).

Economy
Real GDP growth: 6% (2007); 6% (2008 forecast).
Inflation rate (2008): 3.4%.
Unemployment rate: 12.7%.
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, Kosovo to the northeast, and Montenegro to the northwest. Western 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. 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 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 Skenderbeu, the Ottomans eventually reasserted their dominance.

The League of Prizren (1878) promoted the idea of an Albanian nation-state and established the modern Albanian alphabet, updating a language that survived the hundreds of years of Ottoman rule despite being outlawed. By the early 20th century, the weakened Ottoman Empire was no longer able to suppress Albanian nationalism. Following the conclusion of the First Balkan War, Albanians issued the Vlore Proclamation of November 28, 1912, declaring independence and the Great Powers established Albania's borders 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.

A UN Multinational Protection Force restored order, 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, 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 to fray in summer 2003 and progress on economic and political reforms suffered noticeably due to political infighting. The municipal elections of 2003 and national elections of 2005 were an improvement over past years, adding to the consolidation of democracy despite the continued presence of administrative errors and inaccuracies in voter lists.

In 2005, the Democratic Party and its allies returned to power, 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.

Since the election, Prime Minister Berisha's government has made the fight against corruption and organized crime a priority, although the former has met with limited success. The opposition has criticized the government's approach to fighting corruption and crime as unconstitutional and an attempt to undermine independent institutions. While previously relations between the government and opposition SP party were characterized as antagonistic, both sides have at times shown willingness to work together to achieve major policy objectives, such as the constitutional reforms of early 2008.

Another politically contentious process was the pre-electoral period prior to the 2007 local elections. Although the February 18, 2007 local elections were generally peaceful and democratic, over-politicized debate during the preceding months resulted in procedural and administrative problems during the conduct of the elections. A major positive step forward was the performance of the police force.

The fragility of the Albanian electoral system was tested again during the parliamentary by-election in zone 26 (Shijak) on March 11, 2007. The left-wing opposition parties withdrew their commissioners from the polling stations and the counting center, in spite of prior concessions from the Central Elections Commission (CEC) to the opposition's demands. Opposition commissioners left and took with them one of the seals that mark the ballots. By midday, the opposition candidate also announced his withdrawal from the parliamentary race. However, the right of citizens to vote prevailed and the process continued thanks to the technical arrangements of the CEC. The only visible sign of violence was the wounding of a Democratic Party commissioner, who was fired upon by a militant.

Both elections were an indication of lack of political will to cooperate and of the need for a comprehensive electoral reform of the Albanian electoral system.

On July 20, 2007 President Bamir Topi was elected within Parliament after six members of the opposition coalition broke ranks to vote for his candidacy. Out of 90 deputies present at the session, 85 voted for Topi, while Neritan Ceka, head of the opposition Democratic Alliance party, won five votes. Topi, 50, a former agriculture minister, succeeded President Alfred Moisiu for a five-year mandate.

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 (Jozefina Topalli) has two deputies, who along with eight permanent parliamentary commissions assist in the process of legislating Albanian affairs. Parliamentary elections were held on June 28, 2009; as of end-June, results were not yet finalized.

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 the right to one re-election. Although the position is largely ceremonial, the Constitution gives the President authority to appoint and dismiss some high-ranking civil servants in the executive and judicial branches, and this authority can have political implications. The President is also commander in chief of the armed forces, and chairs the National Security Commission. The current President's term expires on July 23, 2012.

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, decreed by the President, and approved by a parliamentary vote.

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 Council 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, sometimes referred to as a "jury" by the Albanian press, renders court verdicts.

Principal Government Officials
President--Bamir Topi
Prime Minister--Sali Berisha
Deputy Prime Minister--Genc Pollo
Minister of Defense--Gazmend Oketa
Minister of Foreign Affairs--Lulzim Basha

ECONOMY
Albania's economy has improved substantially over recent years and has outperformed many other countries in the region. However, it is still considered one of the poorest countries in Europe. According to the Bank of Albania, per capita income was $3,675 in 2008, expected to reach $4,000 in 2009. According to some preliminary data by the World Bank's Poverty Assessment Program, 12.4% of the population lived below the poverty line in 2008, marking a considerable improvement from 25.4% in 2002. The official unemployment rate is 12.7%. Almost 60% of all workers are employed in the agricultural sector, although the construction and service industries have been expanding recently. Tourism has been boosted significantly by ethnic Albanian tourists from throughout the Balkans. The GDP is comprised of services (50%), agriculture (19%), industry (12%), construction (14%), and transport and communication (6%). The Albanian economy has been partially sheltered from the global financial crisis and the economic downturn. In April 2009, the International Monetary Fund (IMF) predicted that Albania would be one of two countries in Europe to enjoy a positive growth rate for 2009, but lower remittances from Albanian workers abroad (approximately 9.6% of the GDP in 2008), mostly in Greece and Italy, and smaller exports will put a strain on economic activity.

The global financial crisis has reduced Albanian citizens' trust of commercial banks, even though the domestic banking sector has remained largely insulated from the crisis. Although bank deposits dropped by 10% since September 2008, withdrawals have diminished recently and deposits have stabilized during the second quarter of 2009. Lower liquidity has forced commercial banks to tighten lending procedures. In February 2009, the growth rate of loans dropped to 29% from 35% in 2008. In general, the banking sector remains viable and able to further finance the economy, as the ratio of loans to deposits, approximately 65%, is still low compared to western standards.

Albania was the last of the central and eastern European countries to embark upon democratic and free market reforms. Furthermore, Albania started from a comparatively disadvantaged position due to Hoxha's catastrophic economic policies. The transition from a centrally planned economy to a market-oriented system has been almost 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 the opening of Albania's economy was better than expected. In 1995, however, progress stalled. The collapse of the infamous pyramid schemes of the late 1990s and the instability that followed were a tremendous setback, from which Albania's economy continues to recover.

In recent years the Albanian economy has improved, and infrastructure development and major reforms in areas such as tax collection, property laws, and business climate are proceeding well. During 2004-2008, Albania experienced an average 6% annual GDP growth. Fiscal and monetary discipline has kept inflation relatively low, averaging roughly 2.9% per year during 2006-2008. In 2008, inflation increased to 3.4%, still within the target range set by the Bank of Albania. Albania's public debt reached 55.9% of GDP in 2008, and the growing trade deficit was estimated at 26% of GDP in 2008. Economic reform has also been hampered by Albania's very large informal economy, which the IMF estimates at 50% of GDP.

Albania's trade imbalance is severe. Albania continues to be an import-oriented economy and the export base remains small, narrow, and undiversified, due mainly to a lack of price competitiveness, poor infrastructure, and a challenging business environment. In 2008, Albanian imports amounted to $5.25 billion and exports were $1.35 billion. The trade deficit continues to widen and, according to the estimates of the Ministry of Finance, reached 26% of GDP for 2008, up from 23.3% in 2006.

The Albanian Government signed a free trade agreement (FTA) with the European Union (EU) as part of its Stabilization and Association Agreement negotiations. The interim agreement entered into force in December 2006, with a duty-free regime for almost 90% of agricultural and industrial products. On the fiscal side it will also significantly reduce revenue collection.

Albania has FTAs with Macedonia, Croatia, Bulgaria, Romania, Bosnia, Turkey, and Moldova. Albania also previously established an FTA with the UN Interim Administration Mission in Kosovo (UNMIK), which was transferred to the Republic of Kosovo in 2009. In April 2006, these bilateral agreements were replaced by a multiregional agreement that entered into force in May 2007 based on the Central European Free Trade Agreement (CEFTA) model.

The EU remains, by far, Albania’s main trading partner, providing 60.7% of Albania’s imports and receiving 79.7% of exports for 2008. Trade with Italy and Greece represent the largest share of EU trade, with a combined 67.7% of imports and 88.6% of exports. The impact of CEFTA in Albania’s trade with member countries has been insignificant.

U.S. trade with Albania is very low. In 2008, U.S. exports to Albania totaled $67 million compared with $49 million in 2007, an increase of 36.7%. Part of this increase was due to the 8% depreciation of the dollar against the domestic currency. U.S. imports from Albania decreased 26% in 2008 ($5.1 million) from $6.9 million in 2007. However, there are some discrepancies between U.S. and Albanian trade figures. Major U.S. investment to date has been limited to large-scale infrastructure contracts with the government; Lockheed Martin and Bechtel are principal U.S. participants. In 2008, Refinery Associates of Texas became the first significant U.S. investor representing 20% of the consortium that privatized 85% of the shares of the state-owned oil refinery ARMO.

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

Business growth has been hampered by Albania's inadequate energy and transportation infrastructure despite some significant investments in both sectors during the last few years. The capital, Tirana, and the main port of Durres generally receive electricity most of the day, but frequent power outages plague every other city, small town, and rural village. Although recent steps have been taken to improve the transportation infrastructure, Albania has a limited railway system and just one international airport. Because of the mountainous terrain and poor road conditions, overland goods transport is arduous and costly. However, the government has invested heavily in road construction over the last three years, and the country now sports a new, modern highway along its entire coastline, from Shkoder in the north to the southern resort city of Sarande. In addition, completion of the 170-kilometer Durres-Kukes highway in fall 2009 will provide a major transportation corridor connecting markets in the central Balkans through Kosovo to the port of Durres.

MILITARY AFFAIRS
Since the fall of communism in Albania in 1991, the country has played a constructive role in resolving several of the interethnic 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. Albania is part of the international force serving in Bosnia (EUFOR), and Albanian peacekeepers are part of the International Security Assistance Force (ISAF) in Afghanistan and previously contributed to the international stabilization force in Iraq prior to its mandate expiring in December 2008. While in Iraq, Albania was one of only four nations to contribute troops to the combat phase of Operation Enduring Freedom.

Albania worked with the international community to restructure its armed forces and strengthen democratic structures, including addressing military reforms, in its pursuit of NATO membership. Since 1999, Albania has spent approximately $108 million annually on military expenditures, roughly 1.35% of its GDP. According to Government of Albania projections, military expenditures were to reach 2% of GDP in 2008. With bilateral and multilateral 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 Albanian Government and the international community are working together on a project that will make Albania a mine-free country by 2010. Most high- and medium-priority mine clearance has been completed in the mined areas of northeast Albania, a legacy of the 1999 Kosovo crisis. However, a significant amount of unexploded ordnance remains to be demilitarized in the country.

Albania and the U.S. enjoy a military partnership and are signatories to treaties including the 2003 Prevention of Proliferation of Weapons of Mass Destruction and the Promotion of Defense and Military Relations and the 2004 Supplementary Agreement to the Partnership for Peace Status of Forces Agreement, which defined the status of American military troops in Albania, further enabling military cooperation. 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. In spite of strong EU objections, Albania also signed in May 2003 a bilateral agreement with the United States on non-surrender of persons, based on Article 98 of the statute of International Criminal Court.

In 2004 President George W. Bush authorized the use of the Nunn-Lugar Cooperative Threat Reduction program funds for projects in Albania, marking the first time such funds were used outside the former Soviet Union. With this funding the United States has assisted the Government of Albania with the destruction of a stockpile of chemical agents left over from the communist regime. Under this program, Albania became the first nation in the world to complete destruction of declared chemical weapons holdings under the Chemical Weapons Convention in July 2007. Albania received an invitation to become a NATO member at the April 2008 NATO Summit in Bucharest. The U.S. Senate unanimously ratified Albania’s Protocols of Accession to NATO on September 25, 2008, and President Bush signed the Accession Protocols on October 24, 2008. Albania became a member of NATO on April 1, 2009.

FOREIGN RELATIONS
Albania is currently pursuing a path of greater Euro-Atlantic integration. Its primary long-term goals are to gain 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, as well as multiple regional organizations and initiatives, including NATO, the Organization for Security and Cooperation in Europe (OSCE), the UN, the Stability Pact, the Adriatic Charter, and the World Trade Organization (WTO). In June 2006, Albania and the EU signed a Stabilization and Association Agreement, the first step to EU membership, which will focus on implementing essential rule of law reforms and curbing corruption and organized crime. Albania filed its application for EU candidacy on April 28, 2009.

Albania maintains good relations with its neighbors. It re-established diplomatic relations with the Federal Republic of Yugoslavia following the ousting of Slobodan Milosevic in 2000, and maintains excellent relations with the Republic of Montenegro, which gained its independence after the dissolution of the Serbia and Montenegro union in 2006. 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.

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 supported Albanian independence in 1919. Albanians credit the NATO bombing of Serbia in 1999 with saving thousands of Kosovo Albanians, and they greatly appreciate the U.S. Government's continued support for a stable, free, and democratic Kosovo.

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 membership goal, as it did Albania’s pursuit of NATO membership. Working toward 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. The U.S. Senate unanimously ratified Albania’s Protocols of Accession to NATO on September 25, 2008, and President Bush signed the Accession Protocols on October 24, 2008.

Since FY 1991, the U.S. has provided Albania with more than $616 million in assistance, not counting U.S. Department of Agriculture (USDA) food aid. The aid has served to facilitate Albania's 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 2007, the U.S. gave over $21.1 million to Albania under the Support for East European Democracy (SEED) Act program. Albania was among the first countries selected to participate in the Threshold Program under the Millennium Challenge Account, winning a grant of $13.8 million and a second Threshold grant of $16 million in 2008. The program targets two critical stumbling blocks to development--corruption and rule of law.

Despite daunting problems at home, Albania has wholeheartedly supported U.S. anti-terrorism efforts by freezing terrorist assets, shutting down non-governmental organizations (NGOs) with possible links to terrorist financing, expelling extremists, and providing hundreds of military troops for the U.S.-led actions in Afghanistan and Iraq. Albania has played a moderating role in the region and has fully supported UN mediation efforts in Kosovo.

Principal U.S. Embassy Officials
Ambassador--John L. Withers II
Deputy Chief of Mission--Stephen Cristina
Political/Economic Section Chief--Paul Poletes
Political Officers--Tony Baird, Michael Gray
Economic/Commercial Officer--Victor Myev
Consular Officer--Abigail Aronson
USAID Director--Roberta Mahoney
Public Affairs Officer--Bix Aliu
Defense Attaché--Brian Moore
Regional Security Officer--Patrick Leonard
Management Officer--vacant

The U.S. Embassy is located at 103 Tirana Rruga Elbasanit, Tirana; telephone: [355] (4) 224-7285; facsimile: [355] (4) 223-2222.

[This is a mobile copy of Albania (06/30/09)]