Foreign Relations of the United States, 1981–1988, Volume X, Eastern Europe

429. Paper Prepared in the Central Intelligence Agency¹

EURM 88–20060

Washington, April 8, 1988

Albania: Unprecedented Growth in Foreign Ties
[portion marking not declassified]

Summary

Albania is likely to continue its recent unprecedented expansion of foreign ties, but is unlikely to establish relations or upgrade contacts with the US or USSR any time soon. Over the next year, we expect Tirane to improve trade and political ties with most NATO allies and several East European countries, and further increase multilateral and bilateral cooperation with its Balkan and Mediterranean neighbors. On balance, we believe these trends will at least modestly enhance US interests: Tirane will likely remain sharply hostile to the USSR and develop more extensive and higher-level political ties to Western Europe than to Moscow’s allies, even though the volume of trade with the bloc will likely remain higher than that with the West. Nonetheless, the regime will continue to strictly limit Western influence and maintain its oppressive, tightly controlled political system. [portion marking not declassified]

Recent Foreign Policy Initiatives

Tirane began slowly improving ties to the outside world following its break with China in 1978, a trend that gained momentum after the death of longtime leader Enver Hoxha in 1985 and accelerated further over the past year and a half. Since the start of 1987, Tirane has established or normalized relations with several NATO countries, welcomed the first visits by Western foreign ministers (from West Germany and Greece) since World War II, upgraded diplomatic relations with two Soviet bloc countries from the charge to ambassadorial level, and increased its participation in multilateral forums, including joining UNIDO and attending the six-country Balkan foreign ministers’ conference this past February in Belgrade. It also exchanged diplomatic notes with the US for the first time last June, a move that so far has remained an isolated act. [portion marking not declassified]

Mainly Economic Motives

Recent public statements by Hoxha’s successor, party chief Ramiz Alia, and other leaders indicate that Tirane’s expansion of ties has been prompted by a growing belief that increased foreign contacts are essential to modernize Albania’s abysmally backward economy and outdated industrial base. Since 1985, Albania has increased its total exports by 13 percent—in almost equal proportions to the Soviet bloc and the developed West—reversing a previous downward trend. But while Tirane in this period has raised imports from the Soviet bloc, by some 15 percent, its purchase of Western goods has declined by about the same amount. This trend has been due to Albania’s limited hard currency earnings and, conversely, Eastern Europe’s willingness to accept inferior Albanian goods and to engage in barter trade. The Alia regime has also taken limited, ad hoc steps to stimulate domestic economic performance, such as increasing wage differentials, experimenting with some private agricultural production, and allowing more decentralized economic decisionmaking. [portion marking not declassified]

Expanding Ties with the West

We believe Albania over the next year is likely to continue growing foreign policy initiatives toward the West, including some NATO nations. Tirane’s first priority will be to press for further expansion of exports to earn the hard currency needed for Western imports. We believe, because of recent increases in exports, Albania will begin to purchase more Western goods and that the decline of imports from the West will thus begin to level off. Tirane will probably also increasingly pursue masked forms of development assistance to circumvent its constitutional ban on accepting foreign credits. For all these reasons, it probably will try to ameliorate several outstanding political disputes and build on diplomatic ties recently established. We expect Albania to:

• Try to increase trade, particularly on concessionary terms, with West Germany following the two countries’ establishment of diplomatic relations last year. Tirane apparently views the FRG as its best prospective source of Western technological and other assistance. It is particularly interested in receiving training and equipment for its export-oriented but dilapidated mining industry. The FRG already has agreed to provide DM 6 million for unspecified projects, according to press reports. [less than 1 line not declassified] trade potential is limited because of Tirane’s shortage of hard currency reserves, ban on foreign borrowing, and few products suitable for the West German market.

• Make new concessions in its ongoing talks with the UK over establishing diplomatic relations. The talks have made little headway during the past several years because of Tirane’s refusal to compensate Britain for the destruction of two destroyers in the Corfu channel by mines in 1946, and its insistence that Britain return 2.5 tons of gold held in the Bank of England since World War II, the release of which must be agreed upon by the Tripartite Gold Commission (made up of the UK, US, and France).

• Intensify trade ties with Canada following the establishment of diplomatic relations last year. Reportedly an important motive for the normalization was Tirane’s interest in gaining US technology.

• Take steps to ease a bitter dispute with Italy over six Albanians who in 1985 sought and received refuge in the Italian Embassy in Tirane. In the early 1980s Italy was Albania’s second most important trading partner in the world. The subsequent impasse over handling the refugees has contributed to a reduction in political contacts and trade levels—as of 1986 Italy had dropped to eighth place. [portion marking not declassified]

Upgrading Diplomatic and Trade Ties to Eastern Europe

We believe Albania will continue its recent moves to enhance trade and to restore diplomatic relations with all of Moscow’s East European allies to the ambassadorial level. Each of these countries except Romania reduced representation to the charge d’affaires level following Albania’s break with Moscow in 1961. In recent months Tirane has announced upgraded relations with East Germany and Bulgaria, the former following the establishment of ties to the FRG and the latter on the eve of the Balkan conference in February. Ties with Czechoslovakia (now Albania’s leading trade partner in the world), Poland, and Hungary may soon follow. [portion marking not declassified]

Imports from the Soviet bloc will continue to grow faster than those from the West. Tirane, however, almost surely will keep its trade with the bloc confined to straightforward barter deals. It will avoid aid packages, significant presence of East European economic and technical personnel, and dependence of key sectors on imports from the bloc. We believe Tirane also is unlikely to conduct high-level political contacts with the bloc, as it has with the FRG and Greece. Moreover, we foresee no restoration any time soon of Albanian Communist Party relations with East European bloc parties, which were severed after the 1961 break. [portion marking not declassified]

Regional and Multilateral Ties

Albania almost certainly will also continue to improve relations with its Balkan and Mediterranean neighbors, as well as gradually become more involved in selected multinational institutions. Tirane reversed its longstanding opposition to multilateral Balkan cooperation by attending the February foreign ministers’ conference, and signaled willingness to continue similar contacts in the temperate speech on that occasion by Foreign Minister Reis Malile. Albania is also likely to strengthen its political and trade ties with Greece and Turkey, while avoiding becoming enmeshed in the Greek-Turkish dispute. Tirane seeks improved ties to Yugoslavia and recently reestablished cultural ties, broken after Yugoslav suppression of ethnic Albanian rioting in 1981. But substantial improvements in relations with Yugoslavia are unlikely because of continuing frictions over Belgrade’s treatment of the Yugoslav Albanian population. [portion marking not declassified]

In the Mediterranean, Tirane will seek to augment its budding ties to nonaligned and independent-minded states in the Middle East and North Africa. Its closest ties probably will continue to be with Algeria, from which Tirane probably also seeks technological assistance for its ailing petroleum industry. Albania last July held foreign ministerial talks with Algiers resulting in a joint communique, the kind of diplomatic document that is still a rarity for Tirane, and in December followed Algeria’s lead by recognizing the Saharan Democratic Arab Republic. [portion marking not declassified]

Albania is likely to participate in some multilateral forums, provided it believes they are not dominated by the US or USSR. Its decision last month to join UNIDO, which is designed to promote industrialization among lesser developed member nations, could lead to some needed funding for development projects. For the foreseeable future, however, we believe Tirane will remain the only European nation not to be a member of CSCE. It is likely to remain put off not only by US and Soviet influence in the CSCE process, but also by some of the terms of the Helsinki Final Act, such as complying with international human rights norms. [portion marking not declassified]

No Ties to US or USSR

We believe Albania will remain publicly and vehemently opposed to establishing relations or upgrading contacts with both the US and USSR for at least the next several years. Tirane appeared to signal a new flexibility last year toward the US when it rescued some stranded American boaters and subsequently informed the US of this help in its first exchange of diplomatic notes with Washington. But the move now seems intended more to show adherence to basic international norms than as a more significant political gesture, and Tirane has not signaled any further desire for contact. We believe Tirane in the next year or two may make some minor moves, such as increasing purchases of some US products through third countries and allowing a limited number of contacts with non-official Americans. [portion marking not declassified]

Tirane probably will continue to view the Soviet Union as a more serious threat to its sovereignty than any other state, including the US, and will continue to sharply reject Moscow’s overtures. These overtures have increased since Gorbachev took power; [less than 1 line not declassified] they have included personal communications from Gorbachev to the Albanian leadership, wider favorable Soviet press coverage of Albania, and directives to some East European allies to press Tirane for reconciliation with the bloc. Tirane currently imports a limited number of Soviet goods through third countries and is unlikely to substantially increase this volume any time soon. [portion marking not declassified]

Implications for the US

On balance, we believe the recent expansion of Albania’s foreign ties at least modestly supports basic US interests. Tirana’s steadfast independence of the USSR continues to restrict Soviet influence, and these ties are not likely to increase. Its ties to Western Europe are likely to grow more comprehensive—including high-level political contacts as well as economic relations—than those with Moscow’s East bloc allies, even if trade volumes with the bloc remain higher. In the longer term, such Western contacts could lessen Albanian suspiciousness of NATO and the US, and lead to an eventual establishment of bilateral relations and increased opportunities for US influence. Nonetheless, for at least the next several years, Tirane will almost certainly carefully limit Western and other foreign influences on its population and maintain its oppressive, tightly controlled political system.[portion marking not declassified]

1. Source: Reagan Library, Rudolf Perina Files, Country File, Albania—Substance 1988 RP. Secret; [handling restriction not declassified]. Prepared in the Office of European Analysis.