1997 Rebellion in Albania - Causes

Causes

In 1992 the Democratic Party of Albania won the first free elections in Albania and Sali Berisha became president. In the mid-1990s, Albania was becoming a liberalized economy after years under a controlled economy. The rudimentary financial system became dominated by Ponzi schemes, and government officials endorsed a series of pyramid investment funds. By January 1997, the schemes (actually fronts for laundering money and arms trafficking) could no longer make payments once the number of investors grew to include two-thirds of Albanians, who had been lured by the promise of getting rich quick.

It is estimated that close to $1.5 billion were invested in companies offering monthly interest rates ranging from 10 to 25 percent, while the average monthly income was around $80. People sold their homes to invest the proceeds, and immigrants working in Greece and Italy transferred additional resources to the schemes back home.

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