The economic growth that had begun in the 1980s transformed Italy by the 1990s into a host country for immigration. Emigration from Italy and south-north internal migration had all but disappeared by the 1980s. From the mid-1970s onward, immigrants from all over the world, but in particular from North Africa, the Philippines, and eastern Europe, had begun to appear in the big cities. Most worked in the service sector or in small-time street trading. Italy took a long time to react to this trend, and immigration became a national crisis. By 2000 Italy had more than one million immigrants, many of whom found it difficult to procure documents for legal residence. Racism emerged in Italian society and politics, and immigrants were stereotyped as criminals, just as southern Italians had been in the 1960s. However, this cheap labour was essential to the Italian economy.

In 1993 Italy ratified the Schengen Treaty, which eliminated passport controls between its European member states and mandated rigorous controls for persons arriving from nonmember states. Italy implemented these controls and joined the Schengen zone in 1997. Because of its position at the edge of prosperous western Europe and, after 1997, of the exclusive Schengen zone, Italy played a frontier role in immigration, with immigrants every day attempting the perilous sea crossings from Albania and North Africa despite Italian authorities trying to stop them. In the early 21st century, international attention focused on Lampedusa Island, located some 70 miles (approximately 110 km) from the Tunisian coast. Tens of thousands of prospective immigrants and asylum seekers made the treacherous crossing to the Italian island; hundreds were killed in accidents at sea, and the processing centre on Lampedusa was often filled beyond its capacity. As the flow of immigrants continued in the wake of the Arab Spring, Pope Francis visited the island in July 2013 to bring attention to the issue. The stream of immigrants and refugees quickened to a flood as the Syrian Civil War intensified, with more than 100,000 people seeking asylum in Italy in 2015 alone.

Economic dislocations after the Cold War had brought massive immigration from Albania in particular, especially in 1990 and 1991. Italy sent troops to Albania twice at times of crisis, and the huge boatloads of Albanians arriving on the coast of Puglia became symbols of pressures that some Italians perceived as a threat. Only the first Albanians were welcomed. Thereafter Italy adopted a policy of expulsion and began nightly patrols up and down the coast.

The end of the Cold War and growing European political and economic integration also had combined to erode Italy’s long-standing resistance to overseas military action, as the interventions in Albania demonstrated. In 1999 Prime Minister Massimo D’Alema faced the Kosovo crisis on his doorstep, and, in contrast to Italy’s complete inaction during the four preceding years of war in the Balkans, Italy permitted the use of its bases to bomb targets in Yugoslavia. This intervention, however, proved unpopular in Italy, both on the left and among Catholics.

Italy in the 21st century was far richer and more developed than it had been a hundred years previously. Many problems remained, however, including continuing political instability and corruption, the historic but persistent economic and cultural divisions between the north and the south, and the new challenges of immigration and European economic and political unification. These challenges dominated Italy’s political and economic agenda early in the new century.