The social base of Zog's power was a coalition of southern beys and northern bajraktars. With the support of this coalition—plus a vast Oriental bureaucracy, an efficient police force, and Italian money—King Zog brought a large measure of stability to Albania. He extended the authority of the government to the highlands, reduced the brigandage that had formerly plagued the country, laid the foundations of a modern educational system, and took a few steps to Westernize Albanian social life. On balance, however, his achievements were outweighed by his failures. Although formally a constitutional monarch, in reality Zog was a dictator, and Albania under him experienced the fragile stability of a dictatorship. Zog failed to resolve Albania's fundamental problem, that of land reform, leaving the peasantry as impoverished as before. In order to stave off famine, the government had to import food grains annually, but, even so, thousands of people migrated abroad in search of a better life. Moreover, Zog denied democratic freedoms to Albanians and created conditions that spawned periodic revolts against his regime, alienated most of the educated class, fomented labour unrest, and led to the formation of the first communist groups in the country.
In October 1940 Italian forces used Albania as a military base to invade Greece, but they were quickly thrown back into Albania. After Nazi Germany defeated Greece and Yugoslavia in 1941, the regions of Kosovo and Çamëria were joined to Albania, thus creating an ethnically united Albanian state. The new state lasted until November 1944, when the Germans—who had replaced the Italian occupation forces following Italy's surrender in 1943—withdrew from Albania. Kosovo was then reincorporated into the Serbian part of Yugoslavia, and Çamëria into Greece.
Meanwhile, the various communist groups that had germinated in Zog's Albania merged in November 1941 to form the Albanian Communist Party and began to fight the occupiers as a unified resistance force. After a successful struggle against the fascists and two other resistance groups—the National Front (Balli Kombëtar) and the pro-Zog Legality Party (Legaliteti)—which contended for power with them, the communists seized control of the country on Nov. 29, 1944. Enver Hoxha, a college instructor who had led the resistance struggle of communist forces, became the leader of Albania by virtue of his post as secretary-general of the party. Albania, which before the war had been under the personal dictatorship of King Zog, now fell under the collective dictatorship of the Albanian Communist Party. The country became officially the People's Republic of Albania in 1946 and, in 1976, the People's Socialist Republic of Albania.
The new rulers inherited an Albania plagued by a host of ills: pervasive poverty, overwhelming illiteracy, blood feuds, epidemics of disease, and gross subjugation of women. In order to eradicate these ills, the communists drafted a radical modernization program intended to bring social and economic liberation to Albania, thus completing the political liberation won in 1912. The government's first major act to “build socialism” was swift, uncompromising agrarian reform, which broke up the large landed estates of the southern beys and distributed the parcels to landless and other peasants. This destroyed the powerful class of the beys. The government also moved to nationalize industry, banks, and all commercial and foreign properties. Shortly after the agrarian reform, the Albanian government started to collectivize agriculture, completing the job in 1967. As a result, peasants lost title to their land. In addition, the Hoxha leadership extended the new socialist order to the more rugged and isolated northern highlands, bringing down the age-old institution of the blood feud and the patriarchal structure of the family and clans, thus destroying the semifeudal class of bajraktars. The traditional role of women—namely, confinement to the home and farm—changed radically as they gained legal equality with men and became active participants in all areas of society.
In order to obtain the economic aid needed for modernization, as well as the political and military support to enhance its security, Albania turned to the communist world: Yugoslavia (1944–48), the Soviet Union (1948–61), and China (1961–78). Economically, Albania benefited greatly from these alliances: with hundreds of millions of dollars in aid and credits, and with the assistance of a large number of technicians and specialists sent by its allies, Albania was able to build the foundations of a modern industry and to introduce mechanization into agriculture. As a result, for the first time in modern history, the Albanian populace began to emerge from age-old backwardness and, for a while, enjoyed a higher standard of living. Politically, Hoxha was disillusioned with his communist allies and patrons and broke with each one, charging that they had abandoned Marxism-Leninism and the cause of the proletariat for the sake of rapprochement with the capitalist West. Alienated from both East and West, Albania adopted a “go-it-alone” policy and became notorious as an isolated bastion of Stalinism.
Hoxha's program for modernization aimed at transforming Albania from a backward agrarian country into a modern industrial society, and, indeed, within four decades Albania had made respectable—in some cases historic—strides in the development of industry, agriculture, education, the arts, and culture. A notable achievement was the drainage of coastal swamplands—until then breeding grounds for malarial mosquitoes—and the reclamation of land for agricultural and industrial uses. Also symbolic of the change was a historic language reform that fused elements of the Geg and Tosk dialects into a unified literary language.
Political oppression, however, offset gains made on the material and cultural planes. Contrary to provisions in the constitution, during Hoxha's reign Albania was ruled, in effect, by the Directorate of State Security, known as the Sigurimi. To eliminate dissent, the government resorted periodically to purges, in which opponents were subjected to public criticism, dismissed from their jobs, imprisoned in forced-labour camps, or executed. Travel abroad was forbidden to all but those on official business. In 1967 the religious establishment, which party leaders and other atheistic Albanians viewed as a backward medieval institution that hampered national unity and progress, was officially banned, and all Christian and Muslim houses of worship were closed.
After Hoxha's death in 1985, his handpicked successor, Ramiz Alia, sought to preserve the communist system while introducing gradual reforms in order to revive the economy, which had been declining steadily since the cessation of aid from former communist allies. To this end he legalized some investment in Albania by foreign firms and expanded diplomatic relations with the West. But, with the fall of communism in eastern Europe in 1989, various segments of Albanian society became politically active and began to agitate against the government. The most alienated groups were the intellectuals and the working class—traditionally the vanguards of a communist movement or organization—as well as Albania's youth, which had been frustrated by years of confinement and restrictions. In response to these pressures, Alia granted Albanian citizens the right to travel abroad, curtailed the powers of the Sigurimi, restored religious freedom, and adopted some free-market measures for the economy. In December 1990 Alia endorsed the creation of independent political parties, thus signaling an end to the communists' official monopoly of power.
With each concession to the opposition, the state's absolute control over Albanian society weakened. Continuing economic, social, and political instability led to the fall of several governments, and in March 1992 a decisive electoral victory was won by the anticommunist opposition led by the Democratic Party. Alia resigned as president and was succeeded by Sali Berisha, the first democratic leader of Albania since Bishop Noli.
Albania's progress toward democratic reform enabled it to gain membership in the Conference on Security and Cooperation in Europe, formally bringing to an end its notorious isolation. Efforts to establish a free-market economy caused severe dislocations, but they also opened the road for Albania to obtain large amounts of aid from developed countries. Albania thus began integrating its politics and institutions with the West, which Albanians have historically viewed as their cultural and geographic home.
The failure of various fraudulent investment schemes caused first the collapse of the economy and then of the government in early 1997. One-third of the population found itself penniless overnight. Rioting quickly escalated, and vast stores of weapons were looted from storage depots; criminal gangs took control of the countryside. In response, the UN dispatched peacekeeping troops in March. The Socialist Party (the former Communist Party) won parliamentary elections in June 1997, and party secretary Rexhep Mejdani became president in July. In 1999 the nation was inundated by some 450,000 ethnic Albanian refugees from Kosovo.