Starting in 1928, but especially during the Great Depression, the government of King Zog, which brought law and order to the country, began to cede Albania's sovereignty to Italy. Despite some significant resistance, especially at Durrs, Italy invaded Albania on 7 April 1939 and took control of the country, with the Italian Fascist dictator Benito Mussolini proclaiming Italy's figurehead King Victor Emmanuel III of Italy as King of Albania. The nation thus became one of the first to be occupied by the Axis Powers in World War II.
As Hitler began his aggression against other European countries, Mussolini decided to occupy Albania as a means of competing with Hitler's territorial gains. Mussolini and the Italian Fascists saw Albania as a historical part of the Roman Empire, and the occupation was intended to fulfill Mussolini's dream of creating an Italian Empire. During the Italian occupation, Albania's population was subject to a policy of forced Italianization by the kingdom's Italian governors, in which the use of the Albanian language was discouraged in schools while the Italian language was promoted. At the same time, the colonization of Albania by Italians was encouraged.
Mussolini, in October 1940, used his Albanian base to launch an attack on Greece, which led to the defeat of the Italian forces and the Greek occupation of Southern Albania in what was seen by the Greeks as the liberation of Northern Epirus. While preparing for the Invasion of Russia, Hitler decided to attack Greece in December 1940 to prevent a British attack on his southern flank.
Albania became dependent on Soviet aid and know-how after the break with Yugoslavia in 1948. In February 1949, Albania gained membership in the communist bloc's organization for coordinating economic planning, the Council for Mutual Economic Assistance. Tirana soon entered into trade agreements with Poland, Czechoslovakia, Hungary, Romania, and the Soviet Union. Soviet and central European technical advisers took up residence in Albania, and the Soviet Union also sent Albania military advisers and built a submarine installation on Sazan Island.
After the Soviet-Yugoslav split, Albania and Bulgaria were the only countries the Soviet Union could use to funnel war material to the communists fighting in Greece. What little strategic value Albania offered the Soviet Union, however, gradually shrank as nuclear arms technology developed.
Anxious to pay homage to Stalin, Albania's rulers implemented new elements of the Stalinist economic system. In 1949, Albania adopted the basic elements of the Soviet fiscal system, under which state enterprises paid direct contributions to the treasury from their profits and kept only a share authorized for self-financed investments and other purposes. In 1951, the Albanian government launched its first five-year plan, which emphasized exploiting the country's oil, chromite, copper, nickel, asphalt, and coal resources; expanding electricity production and the power grid; increasing agricultural output; and improving transportation. The government began a program of rapid industrialization after the APL's Second Party Congress and a campaign of forced collectivization of farmland in 1955. At the time, private farms still produced about 87% of Albania's agricultural output, but by 1960 the same percentage came from collective or state farms.
Stalin died in March 1953, and apparently fearing that the Soviet ruler's demise might encourage rivals within the Albanian party's ranks, neither Hoxha nor Shehu risked traveling to Moscow to attend his funeral. The Soviet Union's subsequent movement toward rapprochement with the hated Yugoslavs rankled the two Albanian leaders. Tirana soon came under pressure from Moscow to copy, at least formally, the new Soviet model for a collective leadership. In July 1953, Hoxha handed over the foreign affairs and defense portfolios to loyal followers, but he kept both the top party post and the premiership until 1954, when Shehu became Albania's prime minister. The Soviet Union, responding with an effort to raise the Albanian leaders' morale, elevated diplomatic relations between the two countries to the ambassadorial level.
Despite some initial expressions of enthusiasm, Hoxha and Shehu mistrusted Nikita Khrushchev's programs of "peaceful coexistence" and "different roads to socialism" because they appeared to pose the threat that Yugoslavia might again try to take control of Albania. Hoxha and Shehu were also alarmed at the prospect that Moscow might prefer less dogmatic rulers in Albania. Tirana and Belgrade renewed diplomatic relations in December 1953, but Hoxha refused Khrushchev's repeated appeals to rehabilitate posthumously the pro-Yugoslav Xoxe as a gesture to Tito. The Albanian duo instead tightened their grip on their country's domestic life and let the propaganda war with the Yugoslavs grind on.