Mob fury as Albanians torch ruling party's HQ

One day after running the police out of town in pitched street battles, the furious citizens of Vlora, Albania's second city, set fire to the headquarters of the ruling Democratic Party yesterday. They chanted slogans accusing the government of murder as they joined the funeral cortege of a man shot dead during the riots.

As they walked across town behind the coffin which carried th body of Artur Rustemi, 33, a vegetable store owner who had piled hundreds of dollars into a local "pyramid" investment scheme, as many as 40,000 mourners shouted: "The police killed him! The government killed him!"

The anger of the population seemed unabated by the terrifying escalation of violence, which turned the city centre into a smouldering wreck on Monday, or by the threat to impose a state of emergency on the area. Deputies in parliament in the Albanian capital, Tirana, finally decided late last night against the latter measure.

Vlora has been badly hit by the failure of many of Albania's so-called pyramid schemes - pseudo-banks that offer unrealistically high rates of interest - because the amount of money at stake there is higher than in the rest of the country. The port city has grown rich on racketeering, whether of arms, drugs or illegal immigrants, and the collapse of the local pyramid company, Gjallica, last week - involving the estimated loss of more than pounds 300m - has robbed Vlora of much of its accumulated wealth.

The government has failed to convince the country that it had no part in the pyramid schemes and has maintained control in most areas through sheer intimidation, involving a heavy presence of armed and plainclothes police, mass arrests and random beatings.

The protesters in Vlora have ambitions to launch a "march on Tirana", joining forces with demonstrators in other towns lying on Albania's main south-north road, such as Fier, Lushnje and Kavaja.

So far that ambition has been thwarted, because army units have taken up positions in the hills around the city and on the main roads, but it could still become reality.

"It seems an impossible plan, but you have to remember that these are people who in the past have walked across almost all of Greece," said one Tirana journalist who did not wish to be named.

The crisis can only get worse, as it is probably a matter of days, or weeks at the most, before the largest of the pyramid schemes, holding the life-savings of hundreds of thousands of people, crumbles in turn.

The opposition, despite the constant harassment and physical attacks on its leaders, has demanded a cross-party dialogue and the establishment of a national unity government. Significantly, that proposal has met with some sympathy even in government circles. There are signs of cracks appearing in the power base of President Sali Berisha and his Prime Minister, Aleksander Meksi.

Bashkim Kopliku, a former deputy prime minister, has joined the calls for the government to resign.

There also appears to be a growing split between President Berisha and Mr Meksi, with each hoping to save his own skin by blaming the other for the debacle.

The foreign community, meanwhile, is hoping that the crisis can be resolved without a full-scale breakdown of public order.

Diplomats are starting to consider the possibility of a transitional period, followed by new parliamentary elections.

The envoys are worried, however, that President Berisha may not be an adequate guarantor for such a transition, and that no other figure of sufficient stature exists to do the job in his place.