In 1997, Albania experienced widespread civil unrest due to economic problems stemming from the collapse of pyramid schemes. The large sums of money siphoned from the government to fund these schemes led to the collapse of the Democratic Party's government in January 1997. The conflict, which lasted until August 1997, resulted in the deaths of more than 2,000 people and the establishment of a new government as revolutionaries surrounded Tirana. Various sources also describe the ensuing violence as a rebellion or even a civil war.
By January 1997, Albanian citizens, who had lost a total of $1.2 billion, took to the streets in protest. Beginning in February, thousands of people launched daily protests demanding reimbursement from the government, which they believed had profited from the schemes. On 1 March, Prime Minister Aleksandër Meksi resigned, and on 2 March, President Sali Berisha declared a state of emergency.
On 11 March, the Socialist Party of Albania achieved a major victory when its leader, Bashkim Fino, was appointed prime minister. However, the transfer of power did not halt the unrest, and protests spread to northern Albania. Although the government quelled revolts in the north, its ability to maintain order began to collapse, especially in the southern half of the country, which fell under the control of rebels and criminal gangs.
By 13 March, all major population centers were engulfed in demonstrations, and foreign countries began evacuating their citizens. These evacuations included Operation Libelle, Operation Silver Wake, and Operation Cosmas, conducted by the German, American, and Greek military forces, respectively. The United Nations Security Council authorized a force of 7,000 troops under Resolution 1101 to direct relief efforts and restore order in Albania. The UN feared that the unrest could spread beyond Albania's borders and send refugees throughout Europe. Consequently, the US and NATO assisted in managing refugee camps, airlifting displaced populations across Europe, and securing the borders. On 15 April, a multinational peacekeeping force launched Operation Alba, which helped restore the rule of law in the country by late July.
After the rebellion ended, some of the weapons looted from Albanian army barracks and stockpiles were acquired by the Kosovo Liberation Army, with many making their way into the ensuing Kosovo War (1998–1999).
Terminology
The period has been described as a civil war, on the brink of civil war, or near civil war, and as anarchy, while others argue that it was not.
Causes
In 1992, the Democratic Party of Albania won the nation's first free elections, and Sali Berisha became president. In the mid-1990s, Albania was transitioning to a market economy after decades of a planned economy under the People's Socialist Republic of Albania. The rudimentary financial system soon became dominated by Ponzi schemes, and even government officials endorsed a series of pyramid investment funds.
By January 1997, the schemes, many of which were fronts for money laundering and arms trafficking, could no longer make payments, leading to their collapse. By then, the number of investors lured by the promise of getting rich quickly had grown to include two-thirds of Albania's 3 million population. It is estimated that close to $1.5 billion was invested in companies offering monthly interest rates ranging from 10% to 25%, while the average monthly income in the country was around $80. A significant number of Albanians had sold their homes to invest, and emigrants working in Greece and Italy transferred additional resources to the schemes.
1996 elections
On 26 May 1996, general elections were held, and the conservative Democratic Party won by a large margin, securing 122 out of 140 seats in Parliament. The voter turnout was 89.1%. However, the opposition Socialists (PS) accused the government of election fraud and rejected the results. They proceeded to leave the ballot-counting process and boycott the parliament. Five months later, local elections were held on 20 October. The Democratic Party won again, but the Socialists rejected this result as well.
Pyramid schemes
The pyramid schemes began in 1991. The first scheme was that of Hajdin Sejdisë, who later fled to Switzerland with several million dollars. It was followed by "Sudja," run by shoe factory worker Maksude Kadëna in 1993, and then by the "Populli" foundations, run by an opposition politician, and "Xhaferri." By the end of 1996, the schemes had peaked, with very tempting interest rates; for example, Sudja offered 100% interest.
The schemes were not criticized immediately because a banking law adopted in 1994, based on advice from the International Monetary Fund (IMF), did not include a provision for the National Bank of Albania to supervise commercial banks. The IMF revised its advice two years later, after the consequences of the schemes had become apparent. Despite the IMF's recommendation to shut down these schemes, the government continued to allow them, often participating in them.
In January 1997, the schemes finally collapsed. On 22 January, the government froze the assets of the Xhaferri and Populli firms. "Gjallica," another firm, was on the verge of bankruptcy, while "Vefa," which had invested in Albanian hotels, the fuel industry, and factories, continued operating as usual.
The first public protests occurred on 16 January in the south of the country. On 19 January, demonstrators protested in the capital, Tirana, over the Sudja scheme. On 24 January, open rebellion effectively began. Thousands of people in the western town of Lushnjë marched on the city hall to protest the government's support for the schemes, and the protest quickly descended into violence. Police forces were subsequently routed, and both the city hall and the adjoining cinema were burned down.
One day later, on 25 January, Tritan Shehu, the leader of the Democratic Party, was sent to Lushnjë to resolve the situation. Upon arrival, he was captured by protesters and held hostage for several hours at the City Stadium, where he was also assaulted. Albanian Special Forces intervened to extract Shehu. By the morning of 26 January, every government institution in the city had been looted and destroyed, except for the Interior Ministry building, which was protected by the Director of Communications, seven of his engineers, and a guard who refused to abandon his post.
On 26–27 January, violence erupted in other southern towns, including the major port city of Vlorë. On 30 January, the Forum for Democracy was formed by opposition parties to try to lead the protests. Anger was also directed at President Sali Berisha and the government for allowing the schemes to continue, despite IMF advice. As allegations grew that Berisha and others in the government had personally profited from the schemes, many became convinced that the Democratic Party had to be removed by force, particularly in Vlorë.
On 4 February, the government began distributing reimbursements for some of the lost money at subsidiaries of the state-owned National Commercial Bank. Instead of quelling the protests, this move backfired, increasing public suspicion. A $550,000 check from the "Gjallica" firm, paid on 7 January to the Socialist Party, accelerated the firm's collapse. On 5 February, Gjallica declared bankruptcy, and on 6 February, violent protests resumed in Vlorë. On 9 February, state police were attacked in Vlorë, and a day later, in the south, a group of 50 Special Forces troops attacked and brutally dispersed protesters.
Hunger strike at the University of Vlorë
On 20 February 1997, approximately 50 students at the University of Vlorë began a hunger strike on campus, demanding the government's resignation and the full return of invested money. On 22 February, the opposition Forum for Democracy declared its support for the strike. Students from Gjirokastër and Elbasan also came to show their support. They were then brought by FRESSH (the Youth Wing of the Socialist Party) activists from Vlorë to Tirana, the capital. In contrast, the students of the University of Luigj Gurakuqi in Shkodër did not participate in the protest. The Students' Union there declared that while "the students share the pain of the citizens of Vlorë in losing money in pyramid schemes, they believe that freedom and democracy, homeland, and nation have a higher price."
On 26 February, thousands of people gathered around the university building in Vlorë to defend it against a rumored attack by SHIK (Shërbimi Informativ Kombëtar), the national intelligence service. On the same day, a group of strikers requested additional medical assistance, raising doubts about the doctors available to them. On 27 February in Shkodër, Mayor Bahri Borici of the United Right declared his support for the hunger strike.
The next day was a decisive moment in Albanian history. After strengthening their perimeter around the university building, the rebel forces, without warning, attacked the SHIK building. In the ensuing fighting between the rebels and government forces, nine people—six officers and three civilians—were killed. This incident marked the beginning of a year of violence in southern Albania.
Looting and opening of weapon depots
The so-called "opening of the depots" (Albanian: Hapja e depove) refers to the opening of the army's weapons depots in the country's northern regions, ordered by President Berisha. He justified this decision by citing the need to protect the population from the violence spreading from the south.
When southern Albanian bases were looted, it was estimated that, on average, every male aged ten and older had at least one firearm and ample ammunition. During the rebellion, 656,000 weapons of various types, 1.5 billion rounds of ammunition, 3.5 million hand grenades, and one million land mines were looted from army depots, according to the UNDP.
At the village of Selitë, near Burrel, a town 90 km north of the capital Tirana, an explosion occurred at an arms depot on 29 April after a group of villagers broke into the facility. The blast resulted in the deaths of 22 of the 200 village residents, most of whom were from the same family.
Treasury robberies
The Krrabë Event (Albanian: Ngjarja e Krrabës) refers to the theft of gold from the Albanian state treasury on 24 April 1997. The treasury, hidden in tunnels near Krrabë outside Tirana, contained 340 kg of gold ingots, banknotes, and other items. The perpetrators, who were later tried and received prison sentences, were: Arian Bishqemi (7 years), Blerim Haka (3 years), Pellumb Dalti (6 years), Enver Hyka (8 years), and Ahmet Hyka (4 years).
The Robbery of the Northern State Treasury (Albanian: Grabitja e Thesarit të Veriut) was the theft of approximately $6 million from the Albanian state treasury in Shkodër in March 1997. A group of six people attacked the fortified building with an antitank weapon. Although the building contained $8 million, the robbers managed to escape with $6 million. The few police still in the city soon arrived at the scene and took control of the remaining assets.
Later, several witnesses saw the thieves meeting on the outskirts of Shkodër, where they divided the money among themselves. After the robbery, police and investigators began their inquiries in Shkodër. In the spring of 1998, more than a year later, the investigators closed the file and handed it to the police for further investigation.
International intervention
On 28 March, the United Nations adopted Resolution 1101 to provide humanitarian aid to Albania. On 15 April, Operation Alba began to arrive and withdrew on 12 August. Approximately 7,000 soldiers from the multinational, Italian-led UN mission were deployed to Albania to restore order and the rule of law. The first forces were stationed in Durrës, and normality began to return to Tirana. An element of the Operation Alba forces remained in place to retrain the military to modern standards. From mid-May, this unit was joined by members of the WEU's Multinational Albanian Police element, which worked to restructure the police and the legislative base that had contributed to the crisis.
Involved were:
UN resolutions
These UNSC resolutions provide the basis for establishing and executing the mission (Resolution 1101) and its limited extension (Resolution 1114).
Evacuation operations
In March 1997, several nations launched evacuation missions to remove their nationals, embassy personnel, and numerous other civilians by air and sea. Italy conducted a series of rescue flights and sea evacuations without assigning an overarching name to these actions.
Peacekeeping
As part of a peacekeeping mission under UN Security Council Resolution 1101, a multinational protection force of more than 7,000 troops was deployed to Albania in mid-April. By mid-August 1997, it had largely restored public order and secured new elections under OSCE supervision.
Snap elections
On 29 June 1997, Albania held a referendum on restoring the monarchy alongside early parliamentary elections. The referendum was rejected by 66.7% of the voters, while former Crown Prince Leka claimed that 65.7% had voted in favor. Meanwhile, the parliamentary elections resulted in an overwhelming victory for the opposition Socialist Party of Albania, which won 100 of the 151 seats, with a voter turnout of 72.6%.
Armed groups
Gangs
Taking advantage of the chaotic situation, criminal groups armed themselves and took control of entire cities. Most leaders had been imprisoned in Greece but suddenly escaped and returned to Albania. The most notable case is that of Zani Çaushi, who escaped from the high-security prison in Larissa in February 1997 and, with a group of associates, established the gang of Çole in Vlorë.