At the end of the Second World War, in Istria, as well as in the rest of the region of Venezia Giulia, Allied forces and Yugoslav Army introduced military governments due to impossibility of solving the problem of Venezia Giulia legal status. Istria, Slovenian Littoral and the city of Rijeka became part of Zone B of Venezia Giulia, under the rule of Yugoslav Military Administration (YMA). On the other hand, the cities of Trieste and Gorica with the area between them, as well as the city of Pula with its suburbs, became part of Zone A of Venezia Giulia under the rule of Allied Military Government. Military governments in Venezia Giulia operated until the 15th September 1947, when the implementation of Yugoslav-Italian peace treaty came into force. Zone B was divided into three parts, which included Istria, Slovenian Littoral and the city of Rijeka. The Military Administration of Zone B shared its authority with the representatives of civil authorities in the form of people’s committees. The main representative of civilian authority in Slovenian Littoral was the Provincial People’s Committee. In Istria, it was the Regional People’s Committee for Istria and in the city of Rijeka, it was the City People’s Committee for Rijeka. The most important objective for military and civilian authorities in Zone B was the annexation of the whole area under YMA, including the city of Pula, to Yugoslavia. If possible, they wanted the city of Trieste, too. Although they were spending most of their energy to achieve the main objective of annexation, the authorities of Zone B had to find the strategy to normalize everyday life and provide a minimum standard of living for the population. The first step was establishing a functional administration as soon as possible. The biggest problems the authorities faced in that process were the unsolved legal status of Venezia Giulia, destroyed economy, industry and infrastructure, as well as general poverty. The economic recovery, along with the normalization of everyday life which included the psychological transformation in a peacetime way of thinking and living, was a big challenge for the authorities in Zone B. The whole process of economic and industrial recovery was aggravated by the lack of experience, experts, manpower and resources. Until the end of 1945 and the beginning of 1946, there were no plans of restoration, so the reconstructions were spontaneous and uncontrolled, mostly focused on the revitalization of coal mine industry and less damaged factories and other industry facilities. After some time, at the end of 1945, YMA in Zone B and Yugoslavia provided reconstruction loans, but the non-existence of reconstruction plans obstructed the progress. The first results of progress were felt in the second half of 1946, but it never achieved its full potential, mostly because of lack of material and financial resources. At the same time, the authorities needed to ensure a minimum standard of living for the population. Because of that, the whole process of economic and industrial restoration necessarily had to have a social character. The social security system took care of the most vulnerable social groups such as children, widows, war invalids, elders etc. The authority’s employment policy of all able-bodied in industry or administration also contributed to the improvement of the living standard of the population. The negative effect of that policy was the growth of the administrative apparatus, which led to bulkiness and administrative inefficiency. Something similar also happened in industry, where workers did not try too hard, because the payment was always the same, no matter of their work performance. The slow pace of the restoration process was further decelerated by the political indoctrination of individuals in power and rigid adherence to ideological guidelines. It was particularly expressed through the establishment of cooperatives that did not function due to organizational and personnel problems. The improper cooperative work had its biggest effect on trade and craftsmanship. For example, the struggle against private property went so far that some district authorities had banned all traders from work. In that situation, district authorities took over the trade, of which they did not know much. The consequence of their trade takeover was the complete paralysis of trade and inability of providing basic food necessities for the population of their district. The supply of population with food, clothing, footwear, medicine and other goods was insufficient and irregular also because of the general lack of goods, professional workforce, means of transport and, to a degree, because of illegal activities, such as smuggling. In an attempt to stop the uncontrolled outflow of goods, authorities in Zone B banned the export of any sort of food. This measure had some success, but also had some negative consequences, such as increased smuggling activity and number of seizures on the demarcation line between Zone A and Zone B. After-war smuggling was not something new on Istrian soil. It had been present in Istria since the early modern period, but now its character changed. Unlike in earlier periods, when groups and individuals had been mostly smuggling wine, oil, wood and other materials exclusively for profit, during the period of Italian rule it became a way of survival. Monopoly products have been largely replaced by food products and other household goods. Due to the inability of providing adequate food and household goods supply, the authorities were mostly very lenient towards small smugglers. On the other hand, the authorities put in a lot of effort to catch bigger smugglers who smuggled tobacco and tobacco products, cattle, wine and other alcoholic products, money, gold etc. However, most of the smuggling activities were associated with small smugglers who smuggled small amounts of goods on an everyday basis. All classes of society took part in such activities. Even the bishop of the diocese of Poreč and Pula was caught transferring larger amounts of flour and cigarettes than allowed. The most interesting fact about smuggling is that about 50 % of smugglers caught were women. Considering that during the war a huge number of men were killed, maimed, disabled, captured or still in the army, women took care of families. In the case of craftsmanship, authorities failed to realise that craftsmanship in Istria did not have productional characteristics and tried to gather small family crafts in productional cooperatives. The authorities thought that in that way Istrian craftsmanship would lead the restoration of the region by providing raw materials. It was completely wrong because Istrian craftsmanship was oriented toward repairs, not production. The restoration of industry was also, as everything else, slowed down by the lack of manpower, professional and skilled workforce. The situation was aggravated by the shortage of raw materials, destroyed facilities and unsolved legal problems. Some industries, like the fish processing industry, remained without machinery and finances after their Italian owners had left for Italy. Only the coal mines “Raša” remained mostly intact, but their equipment and mining methods were obsolete. Because of that, the coal industry did not stop working, but it had some production difficulties, due to the lack of manpower and materials. In the field of agriculture, the situation was very chaotic and production was not enough to feed the population, so Istria depended on external food import. In accordance with the ideological guidances, the authorities tried to increase the production by establishing agricultural cooperatives. However, that attempt failed very quickly. The main problem of Istrian agriculture production was the disunity of land holdings. Mechanized tillage was sparse and ineffective due to the parcelled and scattered land holdings. Therefore, the only purpose of Istrian agriculture was satisfying the basic nutrition needs of producers and their families. Small amounts of surpluses were intended for local market or exchange. Even the Agrarian reform was not been able to solve the main problems of Istrian agriculture. Problems like disunity of land holdings and lack of mechanization were present long after the war. During the YMA rule in Istria the authorities started with the reconstruction of economy and industry, but they were not able to reach the full potential of industrial production. The first results of economical and industrial reconstructions followed in the second half of 1946. Despite that, everything stopped after the peace conference decision that Istria would belong to Yugoslavia. From that time, until the official annexation in September 1947, the authorities were working exclusively on the legislative alignment with Yugoslavia, neglecting the economic and industrial reconstruction. The abandonment of the implementation of reconstruction plans was a consequence of the idea that the annexation to Yugoslavia would solve all economic problems singlehandedly.