Albanian Republic

The Albanian Republic was the official name of Albania as enshrined in the Constitution of 1925. Albania became a de facto protectorate of the Kingdom of Italy after the signing of the Treaties of Tirana of 1926 and 1927. Albania was later declared a constitutional monarchy in 1928. Upon its inception, the republic was under heavy influence of the Kingdom of Italy which demanded in 1925 that the two states be allied. This was done largely to increase Italy's influence in the Balkans but also aided both Italian and Albanian security of their interests against Greece and Yugoslavia, with which both countries had territorial feuds.

Abolishing the Principality
After defeating Fan Noli`s government. Ahmet Zogu recalled the parliament, in order to find a solution for the uncrowned principality of Albania. The parliament quickly adopted a new constitution, proclaimed Albania a republic, and granted Zogu dictatorial powers that allowed him to appoint and dismiss ministers, veto legislation, and name all major administrative personnel and a third of the Senate. The Constitution provided for a parliamentary republic with a powerful president serving as head of state and government. Ahmet Zogu was elected president for a term of seven years by the National Assembly, prior to his proclamation King of Albanians. Zogu maintained good relations with Benito Mussolini's fascist regime in Italy and supported Italy's foreign policy. He would be the only Albanian to hold the title president until 1991. On January 31, Zogu was elected president for a seven-year term. Opposition parties and civil liberties disappeared; opponents of the regime were murdered; and the press suffered strict censorship. Zogu ruled Albania using four military governors responsible to him alone. He appointed clan chieftains as reserve army officers who were kept on call to protect the regime against domestic or foreign threats.

Economy
In early 1925, began a series of developments for the economy, positive, but also negative. Began to organize a private initiatives in the field of industry, construction and transportation. In the same year was created the first coin of Albania (Albanian Gold Franga). The introduction of foreign capital became the official policy of the governments of Zog I. With this, the Zog in the regim was intended to strengthen personal power, to enrich his supporters. Granting concessions of foreign capital used as a tool for providing income for the regime, in the form of loans and rent, which later was assessed as a means for overcoming the economic crisis.

At this time they were created 14 new societys. Their initial capital was 7.6 million gold francs, about 28% more than the capital of the societies of the period '21-'24. In 1928, the number of enterprises reached 127. Domestic capital was 6 times greater than in 1927. In this period was achieved partial stability of the economy. Main feature of this period is the connection between Tirana government agreements with Italian financial groups to invest in the country. Thus, in 1925 between Albanian government of that time, and the Italian financial group loan agreement was signed with Italian society SVEA, where 96.4% of its loans were used by the Foreign Ministry for road construction. This was not just for the country's economic needs, but to create the conditions for the penetration of foreign capital in our country. To increase the pace of building Roads, on June 6, 1927, the Foreign Ministry stripped activity works in agriculture.

In 1928, fiefdoms occupy an area of 200,000 hectares, of which 100,000 were private. Berat was the city with the largest surface fiefdoms, about 36,000. At this time, the country's most important families were it Shefqet Vërlaci, Ibrahim Pasha, Dervish I do Biçoku, Toptanasit, Vrionasit etc.. Estate Divjaka, Karavasta and another was made Zog's gift.

Infrastructure situation was deplorable. Roads serve only for the passage of wheelchairs. Missing bridges and had no car transport. After the First World War in Albania came 40 lorries walking speed 20–25 km / h. In 1926, the number of vehicles reached 150. Maritime transport is mainly realized by foreign companies. And mail air transport in the hands of the Italians. Trade was the main areas of the economy. During this period increased circulation of goods. Mainly exported agricultural raw materials and livestock.

Many Italian companies, English, French and American began to be present in the Albanian market and through the provision of concessionary agreements or through direct investment began their activity. Such was the case SISMA Society (Societa Italiana Sfrutamento Miniere Tanzania); SEIA society (sociate Electrica Italo-Albanese); society ALBA (Azienda LAVORI Boschi Tanzania); EIAA society (Ente Italiano Attivita Agraria); SESA society, who got the concession electricity in 7 cities in Albania; Anglo-Persian society "Oil Company"; U.S. society "Standard Oil Company"; Franco-Albanian union of kerosene; German society INAG for exploitation of forests etc.. During the period 1925-1926, 23% of the territory of Albania included in the concessions granted foreign capital from the governments of King Zog. This gave a further impetus to the country's economy, which introduced some modest development, those were in the period 1925-1928.

In 1925 was created the Albanian National Bank, which was awarded the concession Italians. In the same year was established SVEA society (Society for the Economic Development of Albania) which would give Albania a loan worth 50 million gold francs. In 1927, the fund was estimated at 65 million gold francs. Annual interest rate of this loan was 7.5% too high and should be settled within 40 years. Guarantee that the Albanian state has to give was 8.5 million gold francs, or about 24% of the state budget for the year '25-'26. Under these conditions Italia gained a very strong position in Albania. National Commercial Bank had anticipated capital amounted to 125 million gold francs. In this bank, the Albanian state had 49% share, while Italy 51%. During the '25-'28 period, the Albanian government also significantly increased its costs. Another aspect that Italy's position was strengthened Maritime Trade Treaty, which gave the state the status of "most favored nation". This legalized the Italian monopoly on foreign trade. In the period 1925-1928 the Albanian capital accounted for 7-8% of monetary accumulations, calculated approximately.

Italian penetration
In return for aiding Zogu's invasion, Belgrade expected repayment in the form of territory and influence in Tirana. It is certain that Zogu promised Belgrade frontier concessions before the invasion, but once in power the Albanian leader continued to press Albania's own territorial claims. On July 30, 1925, the two nations signed an agreement returning the monastery of Saint Naum on Lake Ohrid and other disputed borderlands to Yugoslavia. The larger country, however, never reaped the dividends it hoped for when it invested in Zogu. He shunned Belgrade and turned Albania toward Italy for protection. Advocates of territorial expansion in Italy gathered strength in October 1922 when Benito Mussolini took power in Rome. His fascist supporters undertook an unabashed program aimed at establishing a new Roman empire in the Mediterranean region that would rival Britain and France. Mussolini saw Albania as a foothold in the Balkans, and after the war the Great Powers in effect recognized an Italian protectorate over Albania. In May 1925, Italy began a penetration into Albania's national life that would culminate fourteen years later in its occupation and annexation of Albania. The first major step was an agreement between Rome and Tirana that allowed Italy to exploit Albania's mineral resources. Soon Albania's parliament agreed to allow the Italians to found the Albanian National Bank, which acted as the Albanian treasury even though its main office was in Rome and Italian banks effectively controlled it. The Albanians also awarded Italian shipping companies a monopoly on freight and passenger transport to and from Albania. In late 1925, the Italian-backed Society for the Economic Development of Albania began to lend the Albanian government funds at high interest rates for transportation, agriculture, and public-works projects, including Zogu's palace. In the end, the loans turned out to be subsidies. In mid-1926, Italy set to work to extend its political influence in Albania, asking Tirana to recognize Rome's special interest in Albania and accept Italian instructors in the army and police. Zogu resisted until an uprising in the northern mountains pressured the Albanian leader to conclude the First Treaty of Tirana with the Italians on November 27, 1926. In the treaty, both states agreed not to conclude any agreements with any other states prejudicial to their mutual interests. The agreement, in effect, guaranteed Zogu's political position in Albania as well as the country's boundaries. In November 1927, Albania and Italy entered into a defensive alliance, the Second Treaty of Tirana, which brought an Italian general and about forty officers to train the Albanian army. Italian military experts soon began instructing paramilitary youth groups. Tirana also allowed the Italian navy access to the port of Vlorë, and the Albanians received large deliveries of armaments from Italy.