After the war, in 1918, it was occupied by Italian troops and annexed to Italy in 1920. Between 1920 and 1941, many locals emigrated abroad, mostly to Argentina and Yugoslavia, and the number of inhabitants dropped significantly.
During World War II, especially after the Italian armistice, the area was an important center of Slovenian partisan resistance. Between September 10 and November 1, Drežnica was part of the liberated territory, known as the Kobarid Republic, administered by the local anti-Fascist resistance (composed
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