Albania—Property Rights and Resource Governance Profile

The country has made significant progress toward establishing a multi-party democracy and has implemented numerous economic reforms since the fall of communism in 1991. Albania's economy is one of the fastest growing in Europe, averaging 5.5% in the 2006-2009 period, and the percentage of the population living in poverty fell from 25% in 2002 to 12% in 2008. However, despite its progress, Albania remains one of the poorest countries in Europe, with a per capita income of US $4,070 in 2009. An estimated 1.2 million people out of a labor force of about 2 million work abroad, and remittances account for an estimated 30-40% of GDP. The country faces high unemployment, low foreign direct investment, poor infrastructure, and rising trade deficits. Albania applied for European Union membership in April 2009, but the European Commission's assessment in November 2010 recognized the progress made but concluded that Albania's democratic institutions have not yet achieved the effectiveness and stability required for membership. One area highlighted by the European Commission's assessment is Albania's persistent land tenure insecurity. Land reforms implemented after the fall of communism provided hundreds of thousands of people with smallholdings and urban residences but failed to address the rights of pre-1945 landowners. The estimated 41,000 claims to restitution and compensation remain largely unresolved, undermining tenure security and the development of functioning formal land markets. Almost 70% of all civil cases pending in Albanian courts involve land disputes, and the courts suffer from an inadequate legal framework, inefficiencies, and corruption. The Government of Albania (GOA) is taking steps to strengthen property rights, including continuing a national project to register all property and to regularize the significant number of informal landholdings in urban and peri-urban areas. Creating a plan to address the claims for restitution and compensation from pre-1945 landowners is proving most challenging. The GOA is also targeting the agricultural and mining sectors with initiatives designed to promote growth and good governance of natural resources. Albania's agricultural sector, which accounts for over half of employment but only about one-fifth of GDP, is limited primarily to small family operations and subsistence farming. The GOA has identified several key issues and opportunities for interventions, including addressing pre-1945 restitution and compensation claims, enhancing dispute resolution mechanisms for land conflicts, addressing informal settlements in urban and peri-urban areas, developing initiatives to improve productivity of smallholdings, and strengthening local management of natural resources. The GOA is seeking technical assistance from USAID and other donors to support these efforts, including developing a national action plan on property rights, creating a comprehensive legal framework for informal settlements, and promoting rural economic stability and growth. Prior to 1944, landholdings in Albania were highly concentrated, and when the communist government came to power in 1944, the state confiscated and nationalized all land and formed large-scale cooperatives and state farms. When communism collapsed 46 years later, the post-communist government introduced a system of individual property rights. In an effort to avoid re-empowering pre-1945 landowners and returning to a feudal system, the government passed legislation allocating the land held by agricultural cooperatives on an equal per capita basis to cooperative members. Land was allocated without reference to the pre-1945 boundaries and landowners.