Internacionals CIDOB 74 How Will Algeria Reinvent Itself ? JULY 2013 Francis Ghilès, Senior Researcher (CIDOB)

CIDOB • Barcelona Centre for International for Affairs Centre CIDOB • Barcelona notesISSN: 2013-4428 internacionals CIDOB 74 How will Algeria reinvent Itself ? JULY 2013 Francis Ghilès, Senior Researcher (CIDOB) lgeria will have to reinvent itself to meet the chal- fully with foreign partners. President Bouteflika’s attempts lenges it will face to reinvigorate his country’s on the departure foreign policy after he came Afrom the scene of President Algeria will have to reinvent itself to meet the challenges it will face to power in 1999, following Abdelaziz Bouteflika who on the departure from the scene of President Abdelaziz Bouteflika who eight years of international has ruled Africa’s largest country since 1999. The country sees itself as has ruled Africa’s largest a regional powerhouse in the Maghreb but also in the broader Arab, isolation, have paid off. Yet country since 1999. The African and developing worlds. This attitude has not changed since its Algerian views today com- country sees itself as a re- hard won independence from France half a century ago. mand less attention than gional powerhouse in the before. In the 1970s Presi- Throughout the history of Sonatrach, two broad policy rules have Maghreb but also in the guided long term policy planning in hydrocarbons. Algeria would dent Houari Boumediene broader Arab, African and not enter into any new export commitment without the equivalent was a key player in the Non developing worlds. This volume of proven reserves being found; furthermore when any new Aligned Movement. In the export commitments were entered into, its authors had to ensure that attitude has not changed 35 years worth of domestic consumption were built into the model. early 1980s President Chadli since its hard won inde- Bendjedid helped secure the pendence from France half The opaque elite of military, security and business interests which release of the US hostages a century ago. A former dominate much decision making in Algeria has jealously guarded held in Tehran. its turf from encroachment, often holding back a healthy but small head of France’s external private sector. An antiquated and state dominated banking system security (DGSE) calls Alge- has provided a key tool for keeping power in the hands of a few: it ria “the key to the future pumps money into state enterprises and subsidises some companies Algeria defies two stability of North West Af- by up to 40% according to the International Monetary Fund. trends in the Arab world rica and the Western Medi- While the uncertainty about the future course of political events is terranean”. Yet, despite palpable, the one thing that all Algerians are sure of is that they want Two and a half years into the the unprecedented turmoil no more war. The current uncertainty in North West Africa would Arab spring, the Algerian re- surrounding it since the pale by comparison with the havoc any return to Sinin al-irhab in gime finds itself in a remark- Algeria would bring. French and American leaders have indicated Arab Spring, it has been their preference for a semi-open contest between candidates with able position, having defied reluctant to flex its muscle. different views and but are well aware that public admonishing of two trends that dominate the Political leaders in the US, democracy serves no useful purpose. debates on the region. “It has Europe and the Arab world bucked the larger trend affect- The deep instincts of 35 million resilient Berber and Arab men and are conscious of the need to women and a group of powerful officers and DRS elders will decide ing Arab republican regimes: engage the country. They who runs Africa’s largest country in the coming years. Contrary to protests from the streets have are frustrated by what they the fears of conspiracy theorists and those who claim to know how not coalesced into widespread the inner mechanisms of the regime function, a worst case scenario see as its lack of vision and is not necessarily the most likely. popular calls for regime willingness to engage more change. Second, the Islamist notes internacionals CIDOB 74 . JULY 2013 1 establishment has been unable to convert regional Islamist establishment still thinks of Algeria as its special reserve, electoral victories into local victory.” 1 its chasse gardée. Other EU member states such as Spain, the UK and Germany no longer fear to step on French toes. Collectively, the Islamist parties won 27% of parliamentary Abdelaziz Bouteflika’s insistence on the need to diversify seats in 1997, a figure which dropped to 21% in 2002 and 16% partners with Europe and beyond is paying dividends. last year. Far from sharing the popular mystique the Mus- lim Brothers or En Nahda had over the electorate in Egypt Algeria is the world’s ninth largest producer of natural gas or Tunisia, Algeria’s Islamists are widely viewed as stake- and the third largest supplier to the EU after Russia and holders in a system which is “not a dictatorship and (…) not Norway. This asymmetric interdependence has resulted monolithic but (despite) the multiplication of political parties in the sense that the EU needed Algeria more than Alge- (has not) delivered a transition from the top-down rule of ria needed the EU. But changing gas market conditions in bureaucratic technocracy to one of real political alternatives Europe and the rapid rise in US domestic production of arbitrated by sovereign popular decisions.”2 Elections allow gas have put the state company Sonatrach and other gas a periodic redistribution of seats among major stakehold- suppliers to the EU such as Russia’s Gazprom in a more ers. In other words, the bustle of visible political activity and defensive position. Its pride has been dented. It feels that what goes on backstage are two different political phenom- France failed to acknowledge its historical crimes and the ena which seldom intersect. EU failed to recognise its regional and geopolitical impor- tance. Algeria has, for reasons of its perceived self interest and national pride, shown All the more galling was that the civil war erupted much less enthusiasm than neighbouring Tunisia and after two years of bold economic reforms. Had they Morocco for signing up to EU policies in the region. succeeded, they would have thoroughly modernised the Falling gas sales to key Eu- ropean customers, fast ris- management of what was a tight command economy, ing consumption of energy in Algeria and the damage would have entrenched freedom of opinion and would to the country’s reputation have brought in a measure of political pluralism. This from the terrorist attack on the gas field of In Amenas failure was first and foremost the consequence of bitter in January 2013 have weak- ened the hand of the state fighting within the Algerian leadership oil company, Sonatrach. The company was already struggling from the fall out Algeria’s recent history needs to be recalled as one tries of a major corruption scandal. This, in 2010, led to the to divine Algeria’s future. It explains many features of the purge of several senior managers and the eventual dis- country’s economic and political situation and the behav- missal of minister of energy Chakib Khelil, a close ally iour of its leaders. Algeria’s army and security forces won of the head of state and the brain drain of any of its engi- a brutal civil war in the 1990s against Islamist forces. Well neers who went off to better jobs in the Gulf. The cost of over 100,000 people were killed, over 17,000 disappeared doing business in Algeria has risen. The recent arrest of and hundreds of thousands of the country’s best educated senior executives at the state gas company, Sonelgaz, will fled the country. Sinin al-irhab (the years of terrorism) left do nothing to improve Algeria’s image internationally. bitter memories. All the more galling was that the civil war erupted after two years of bold economic reforms. Had Throughout the history of Sonatrach, two broad policy rules they succeeded, they would have thoroughly modernised have guided long term policy planning in hydrocarbons. the management of what was a tight command economy, Algeria would not enter into any new export commitment would have entrenched freedom of opinion and would without the equivalent volume of proven reserves being have brought in a measure of political pluralism. This fail- found; furthermore when any new export commitments ure was first and foremost the consequence of bitter fight- were entered into, its authors had to ensure that 35 years ing within the Algerian leadership. But French hostility worth of domestic consumption were built into the model. to the reformers did not help. The European Union (EU), Aggressive policy depletion was to be avoided at all costs. which until recently delegated its Algeria policy to France These rules were nearly discarded with the Valhyd Plan in did nothing to help either 3. France’s political and military 1977 and the attempt to sell the major oil field of Hassi Mes- saoud in 1991 to foreign companies. In both these cases those in Algeria who favoured a policy of maximum production of oil and gas were strongly supported by US oil and gas inter- 1. Algeria and the Arab Spring, Robert Parks in The Arab Spring: Will it lead to Democratic ests. The third attempt to maximise production, encouraged Transitions? Clement M. Henry and Jang Ji-Hyang (eds), Ansan Institute for Policy Studies, Seoul, South Korea 2012. as in 1977 by the US, failed in 2005 with the King of Saudi 2. After the War: Algeria’s transition to Uncertainty, James McDougall, Middle East Report Arabia and the Russian head of state lobbying hard against.

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