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The transition from a planned to a free market economy: constitutional issues and challenges in drafting new laws

Krenar Loloçi

For almost 50 years, lasting until 1990, Albania was run by a Communist regime that was the most extreme of those established anywhere in the Eastern and Southern Europe.

The severity of the regime can be shown just by mentioning several indicative measures that the regime took during its governance:

– It eliminated private ownership of the land from the first days when it was established. It persecuted, sentenced and annihilated the overwhelming part of its political opponents. It sequestered and confiscated their assets and properties, as well as those of many other wealthy persons, whether traders, land owners or proprietors of enterprises.

– It repealed all the legal acts taken during the monarchy that existed in Albania before the Second World War, included the Constitution of 1929.

– It prohibited the existence and formation of other parties besides the Communist Party. All social organisations that existed during the Communist regime were simply organisations created by the Communist Party and were under the total political and ideological dependency of the party.

– In less than a decade, it eliminated the entire private sector of the economy.

– It abolished the Ministry of Justice and the institution of the legal profession.

– It liquidated religion and religious institutions completely. It prohibited the following and free exercise of religion and its rituals.

The above list, although not long, speaks clearly about the extremist nature that the Communist regime in Albania took from its beginnings.

As a consequence of the measures undertaken by the Communist government, within a short time Albania eliminated almost all the elements of a market economy and private property that had been developed up to that time under the monarchy of King Zog I, as well as transforming it into a centralised state economy.

In other words, by the end of the 1950s or the beginning of the 1960s, the Communist Party established its full control over the country’s political and economic life.

Despite the fact that the economy of the country underwent development during the years of the Communist regime, this development was empirical, superficial and extremely unstable. Of course, in relation to the situation in which the country found itself before the Second World War, the progress made during the Communist regime was considerable, especially during the first two decades.

Later, however, the economy began to fall and to become non-productive. Comparing the development with that of other countries of the region, Albania had remained far behind. The comparative gap between it and those countries became larger and larger.

Taking account of the distinctions of the Communist regime in Albania of which we spoke above, compared to the Communist regimes of other countries of Eastern and Southern Europe, I think it becomes clear for anyone how large the difficulties were that Albania would face in order to pass from a state with dictatorial institutions to a state with democratic ones; from a centralised state economy to a private market economy.

It is worth pointing out here that it is of course a consequence of the negative characteristics, which we just mentioned, that all these changes had to be made, and were made, by people who had been born, grew up and were educated during the Communist regime. This is a fact that doubtless made even heavier the weight of the workload that had to be faced to overcome the difficulties of the changes.

Having said this, I think that it explains to a certain extent the reason why the period of the transition of Albania has continued for such a long time compared with the time that other countries needed to make the necessary political and economic changes to create democratic regimes.

On the other hand, for the same reasons, Albania was and remains the country most in need of manifold assistance from other countries, and in the first instance, from European ones, in order to get onto the true road of democracy and the market economy.


1. Political and judicial changes - 2. Economic changes - 3. Conclusion

1. Political and judicial changes

It is difficult to summarize in a few pages the changes and reforms made during this period starting from 1990. However, let us list a number of acts that constitute the essence of the political and judicial changes and later, the economic changes as well. In 1990 a new electoral law was approved, which, besides the Party of Labour (the Communist Party), contemplated that other social organisations would be able to participate in the elections. But all the organisations at this time were still satellites of the Party of Labour. The electoral law provided for a majoritarian system which, despite numerous changes over the years, has dominated the electoral system in Albania ever since. Real changes started to take place in the life of Albanian society after the first opposition party, the Democratic Party, was established. This happened on December 11, 1990. After days and nights of student strikes and clashes between the state police and the students, the leader of the Albanian state hierarchy, Ramiz Alia (who also became the first President of the country after 1990), was obliged to permit political pluralism and recognise the establishment of new parties. Then the real political challenge began. The elections held on March 31, 1991 were won by the Party of Labour, which captured more than two-thirds of the seats in Parliament. Despite having this big majority, however, it was not able to govern the country effectively and take any concrete steps [continua ..]

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2. Economic changes

Alongside with the political changes, at the same time considerable changes were made in the economic fields. Numerous measures were taken in those beginning moments to lay the foundations for the market economy. Unfortunately, all these measures carried on were interwoven with practices and concepts of the prior regime, and many were of a superficial nature. Indeed, a number of them were mistaken, and as such, they had a negative influence, which continues today, on the pace of growth of the country’s economy and its ability to attract foreign investments. The legal measures related to land and its ownership are examples of this. In 1991, Parliament enacted a land law that divided the agricultural land in an equal manner to the families that lived and worked in the countryside. This land had previously been administered by state agricultural cooperatives. Four years later, the land that had been under the administration of state farms met almost the same fate. These measures were and continue to be objected too vociferously by the pre-war former owners whose lands had been confiscated, expropriated or nationalised during the years of the Communist regime. At the same time these former owners have presented requests and claims for the return of the property that they owned before the Communist regime was established (or for compensation, if return is impossible). Looking at it from the distance of current days, we see that no government and no party whether left or [continua ..]

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3. Conclusion

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