THE capture of the strategic town of Gjirokaster by rebels at the weekend is believed to have played a more decisive role in bringing concessions from Albanian President, Sali Berisha, than all the weekend pressure from the European Union and the Organisation for Security and Co operation in Europe.

Gjirokaster's fall effectively partitioned Albania into northern and southern states. As each main town in the south came under the control of experienced military officers, Mr Berisha was left with little chance of regaining lost territory. His options therefore became limited to political concessions.

North south divisions are not new in Albania. It may surprise some that the young men seen on European television in recent days driving round towns such as Vlore, Sarande and Gjirokaster, are members of the Tosk ethnic community, who are considered to be far more urbane and cultivated than their northern cousins, the Gegs.

Inhabitants of the capital, Tirana, frequently refer to the Gegs, of whom President Berisha is one, as "Chechens" because of their warlike reputation. They have not begun to fight yet, maybe because their lack of wealth had kept them freer from the fraudulent investment schemes whose collapse sparked the current instability.

"Urbane" southerners, particularly those from the port city of Vlore, were caught up in the "pyramids" to a far greater extent both as investors in and organisers of the swindles. Many sold all their belongings and invested everything in the hope of making a fortune, but not all of them came by their money honestly.

Vlore has been acknowledged as a centre of drug trafficking, illegal arms exports and the selling of women and boys into prostitution in Western Europe. The pyramid schemes were born there. One individual, I was told, was rich enough to invest $3 million (about £2 million) in a Vlore pyramid. His money is reputed to be dirty.

Mr Aleksandar Frangaj, the founder and former editor of Albania's most popular newspaper, Koha Jove, believes Mr Berisha should have warned his people immediately of the dangers of pyramid schemes.

"The pyramids made everyone happy at the start. People were becoming rich. Mercedes cars began to appear on the streets. There was a temptation for Mr Berisha and his supporters in the Democratic Party to take credit for the new wealth and happiness instead of instantly banning the pyramids and arresting their organisers. They are now suffering for having fallen into that temptation," Mr Frangaj said.

Some pyramid schemes are still in operation in the north of the country merely because they started much later and have not yet reached collapse.

Pathetic groups of people meet daily outside the headquarters of Vefa Holdings in Tirana in the hope of recouping their money. This week they were getting angry. One told me the north would erupt if Vefa collapsed. "We will be like the southerners. We will fight."

President Berisha may have made an important concession but Mr Frangaj, who has been arrested several times for publishing articles criticising the government, believes the danger still exists.

"Supporters of Mr Berisha are being harmed on a daily basis. If the trouble spreads northwards, it could be very dangerous indeed," he said.

A major mistake by Mr Berisha in the past appears to have been the manner in which he reformed the country's armed forces. Southerners have traditionally made up the officer corps and swingeing cuts left many officers jobless and resentable.

While the uprisings of the south have been spontaneous, in each case, after a day or two of euphoria, citizens have seen the need for organised resistance in case of attack from the north.

There has been a good supply of experienced military officers to step into the gap. Col Xhevat Kocia is know in charge in Sarande, another officer, Lufter Petro Shati, has taken command in Vlore and yesterday Gen Agim Gozhita emerged as leader in Gjirokaster.

The next step in the south is expected to be the setting up of a unified command and Mr Berisha's extension of the "ceasefire" by a further week is likely to help cement the de facto north south partition further.

The officers, many of them graduates of the Funze Military Academy in Moscow, but some of them also trained in France, according to Mr Frangaj, have concentrated on organising effective defences. There appears to be no immediate danger of northward expansion by the rebels, just as there seems to be little chance of the Albanian army capturing any territory in the south.

While Mr Berisha has consistently offered too little too late, the rebels may also have been guilty of asking, according to Mr Frangaj, for too much too soon.

"They have made two impossible demands," he said. "Firstly they have asked for Berisha's resignation. I know his mentality and I know he will not resign, especially as he is only a week into his second term.

"Eventually the rebels may accept new elections instead of his resignation, but they will have to be convinced that the vote will be free and fair. Their second impossible demand is for a full restitution of the money they lost in the pyramid schemes. This is simply unrealistic."

Whatever about getting their money back, the rebels appear to have dug their heels in as far as Mr Berisha's resignation is concerned. And the ceasefire period of an entire week may provide enough time for the euphoria to wilt and for wiser and calmer counsel to prevail.

Mr Berisha's concessions are tempting in the extreme for the opposition parties but the offers will be worthless unless someone can persuade the ordinary people in the south to accept them.

Increasingly, it appears that the only man who might be able to do so is Mr Fatos Nano, the Socialist Party leader, who is currently in prison and who is very highly regarded in southern Albania.