>>>Menas AlgeriaFocus 4/14 Politically independent monthly news and analysis of strategic developments in Elections deliver fourth term for Bouteflika but also an uncertain future

BOUTEFLIKA CASTS HIS VOTE April has been dominated by the presidential sole topic of news and even conversation for Fearing that the elections might be disrupted, April 2014 · Volume 13 · Number 4 Number · 13 Volume · 2014 April election: three weeks of campaigning, followed several weeks. Moreover, Abdelmalek Sellal, Presidential election: the government, in an obvious attempt to blame by polling, the results and now the question of prime mister until he briefly vacated his office to official results (% of vote) ‘the old enemy’, leaked a ‘highly classified’ where Algeria goes from here. serve as Bouteflika’s campaign manager, had security report to the media, which warned of a spent most of the previous three to four months “foreign plot” to cause chaos and destabilise The official result was announced on the on a more or less non-stop tour of the wilayas 81.53% Algeria. The report, almost certainly fabricated, afternoon of 18 April, less than 24 hours after on what was financed as “government (prime said that 56 Moroccans had been recruited to 12.18% the polls closed. It was, as expected, a massive ministerial) business”, but which everyone could enter Algeria individually and to create chaos in victory for the incumbent President Abdelaziz see was nothing more than electioneering. Abdelaziz Belaïd 3.03% the wilayas. How one Moroccan per wilaya could Bouteflika, who will serve a fourth term, Louisa Hanoune 1.37% “create chaos” was not explained. As it turned although it is most unlikely, given his health and Security throughout the campaign was massive. Ali Fawzi Rebaïne 0.99% out, there was no such chaos and Morocco age, that he will survive it. Some 130,000 gendarmes and 100,000 troops, survived the election. Moussa Touati 0.99% not to mention the police, were mobilised The electoral campaign officially kicked off on ostensibly to protect the country from terrorist Disinterest, anger, cynicism and 23 March, although few would have noticed the attack, but in reality to protect the regime from Turnout 51.7% resentment fact, given that the election and especially the possibility of political demonstrations and The overall mood during the election period was Bouteflika’s fourth term had been the almost unrest gaining national momentum. a mixture of disinterest, anger, cynicism and >>>

Politics and security Geopolitics 7 Economy 7 Energy sector 10 Business environment 12

> Elections deliver fourth term for Bouteflika > Badly-timed Kerry visit rouses controversy > Under the spotlight > Can the hydrocarbons decline be redressed? > Businessmen grease the Bouteflika wheels but also an uncertain future > EU looks to Algeria to fill the Russian gap > China-Algeria trade increases fifteen-fold > Where does Algeria go from here? > New Arzew LNG plant to sell first gas in > Security concerns focus on prospect of June-July mounting violence > Eni looks for price cut www.menas.co.uk Algeria Focus · April 2014 2 Politics and security Copyright www.menas.co.uk [email protected] +44 (0)20 3585 1401 Phone United Kingdom London WC1B 5HJ 31 Southampton Row Menas Associates Ltd © 2014 All rights reserved ISSN 1477-2442 Production editor: Managing director: Produced by Menas Associates staff Sold by subscription only Algeria Focus >>> law Menas Associates Ltd shall have no liability for any damage responsible for inaccuracies. To the full extent permissible byMenas Associates Ltd cannot ensure against or be held Disclaimer publisher. any other means, without the express written consent of the recording, taping, or by information storage or retrieval,graphic, or by electronic or mechanical, including photocopying, in whole or in any part, or used in any form or any means publication may be reproduced, repackaged, redistributed, resoldname of Menas Associates Ltd and as such no part of this All information contained in this publication is copyrighted in the profits, loss of business or any indirect or consequential loss),or loss (including, without limitation, financial loss, loss of taken as a result of using the publication. appearing in this publication or from any action or decision however it arises, resulting from the use of any material Menas is published monthly Miles Smith-Morris Charles Gurdon Associates 1 Geopolitics level that most campaign meetings were poorly In fact, interest in the election was at such a low fourth term. and the extent of opposition to a Bouteflika media interest, to the sham of Algerian elections huge international attention, thanks to the more than 100 demonstrators, they brought violence. Although few of them rallied many were peaceful, apart from occasional police media expected. Its widespread demonstrations sort of national momentum that much of the the other major cities, but it failed to gain the protest movement, rooted mostly in Algiers and Arabic. This was a predominantly middle class meaning literally ‘Enough’ (of Bouteflika) in was the emergence of the ‘Barakat!’ movement, the most interesting features of the election decision to run for a fourth term. Indeed, one of widespread opposition and anger at Bouteflika’s fraudulent than usual. A second reason was the sham, and that this election would be more Algerians know that elections are a fraudulent The boycott was massive primarily because all moderately acceptable ‘official’ turnout figure. fraud than usual to come up with even a government would have to rely on even greater turnout would be minimal, and that the movements boycotting the elections, the voter with all the Islamist and opposition parties and resentment. It was clear from the outset that, >>>

Menas Associates Visit ournew website at www.menas.co.uk 7 Economy protesters forced him to stop a rally. also ran into strong opposition in Bouïra where where his cavalcade was heavily stoned. Benflis Tizi Ouzou and Metlilli (30km from Ghardaia), arrests. Sellal also ran into violent protests at violence also led to a number of injuries and TV crew members attacked and injured. Street resulted in a building being set on fire and four serious was at Bejaïa, where a Sellal rally there was relatively little violence. The most especially those held by Bouteflika’s campaign, Although demonstrations greeted most rallies, publicity or because of non-attendance. of the threat of demonstrations and more bad Bouteflika rallies were simply cancelled because rallies, or because of demonstrations. Several in the case of many of Bouteflika’s campaign crowds were paid to attend or were bused in, as where he has a big local following, or because high only in attended or even cancelled. Attendances were His only physical appearance was when he cast foreign minister Sheikh secretary of state greeting visiting foreign dignitaries: US apart from for a few seconds on television when Bouteflika did not appear during the election, performance condemned by peers Bouteflika’s campaign Tamim Bin Hamad al-Thani Ali Benflis 7 José Manuel García-Margallo John Kerry Energy sector ’s home town of Batna, , the Emir of Qatar and Spain’s . younger brother, of being “at the head of a accused Benflis’s election headquarters, Bencherif national gendarmerie. At a press conference at 86-year-old former colonel and head of the on Bouteflika came from One of the most vicious and damaging attacks Algeria’s interests. someone who could not be trusted to look after $23 million when foreign minister, and therefore called Bouteflika a thief, because he embezzled the country’s president) from 1992–94. Kafi chairman of the High Council of State (that is, broadcast an old video made by the late However, the his immediate predecessor, was bad enough. Zeroual condemned by former president public against his fourth term. It was high-profile regime dignitaries coming out in reason for this was the almost daily stream of deteriorated as the campaign went on. One popularity, which has now fallen to rock bottom, It is probably true to say that Bouteflika’s of the legislative elections. 2012 when he gave a speech in Setif on the eve was his first public appearance since 8 May having to be held to help him cast his vote. It polling station in a wheelchair, with his hand his vote on polling day. He was pushed into the 10 (1994–98). Such criticism from Zeroual, Saïd Bouteflika Business environment El Khabar TV channel found and , the president’s Ahmed Bencherif Liamine Ali Kafi >>> , an 12 , 3 political-financial mafia that has taken Algeria fraudulent) votes than Bouteflika. This fact, turnout figure threefold. The official figure for hostage” (see page 12). along with an expected turnout of less than the May 2012 legislative elections was put at 15%, raised the academically interesting 43.14%, while our calculations, along with those Bencherif really put the knife into the question of how the government would actually of most other analysts, put the real figure at incumbent, however, when he said that rig the poll so as to come up with even vaguely around 12–15%. A similar threefold Bouteflika did not have the right to call himself a credible figures. manipulation was seen in the previous 2009 ‘Mujahid’, as he had spent only one week in the presidential election. The government put the underground (the maquis), during which time he With the four other candidates entirely official figure at 75.54%, whereas a Wikileaks- didn’t fire a single shot. He spent the rest of the irrelevant to proceedings, the issue was how the released communication from the US embassy in War of Liberation in Oujda. For someone who government would ‘allocate’ the votes between Algeria to the State Department put the figure has tried to make much of a questionable Bouteflika and Benflis. Sensible and credible at 25–30%.

mujahedeen pedigree, Bencherif’s revelations BENFLIS: WINNER OF THE ‘REAL’ ELECTION? figures would give Benflis about 30–35% of the were damning. vote and Bouteflika about 55–65%, with the Based on the same ‘three-fold’ manipulation, Algeria Focus · April 2014 April · Focus Algeria Although denying it in public (for the obvious remaining few percentage points scattered this month’s election would have had a real Bencherif then turned to the matter of electoral reason), he also met members of the Front among the four also-rans. As for the turnout, the turnout figure of about 17%. That is pretty fraud. “There has always been fraud in Algeria,” Islamique du Salut (FIS) leadership, promising government would obviously have to come up much in line, possible a shade above, nearly all he said. “Algeria’s elections have always been that he would recognise them if he came to with a figure of more than 50% to legitimise knowledgeable estimates and observations fraudulent. If there was no fraud, Bouteflika power and that he would allow them to be a Bouteflika’s mandate. But, with the real turnout made on the day. wouldn’t win 10% of the votes.” He added, normal political party. This received a mixed unlikely to be much over 15%, any official figure “Those who vote for Bouteflika are either sick reaction among the FIS. Most of the senior far above 50% would be wholly incredible. The ‘Coordination of Parties and Personalities like him, ‘yes-men’ or traitors to the nation.” leadership maintained their boycott stance Boycotting the Presidential Elections’ said on towards the election, although a number of the The ‘real’ result the eve of the poll that it expected the turnout Benflis’s campaign focuses on ‘second-tier’ leadership said they would vote for The official figures for Bouteflika (81.53%), would not exceed 15%. Moussa Touati, the fraud him. Whether they actually did so is not clear. Benflis (12.18%) and turnout (51.7%) are all so Algerian National Front (FNA) candidate, said Benflis, unlike Bouteflika, did at least manage to incredible as to be preposterous. If anything he was “convinced that the participation rate do the customary rounds, although without The main thrust of Benflis’s campaign was, these figures display the arrogance and would not exceed 15%”. The Justice and setting the world alight. As a former prime however, that ‘fraud’ was his main adversary. As contempt that the Bouteflika clan had for both Development Front reckoned on the eve of the minister (1999–2004) and member of the everyone in Algeria knows that elections are the election process and the electorate. They poll that turnout “would not be above 12%”, regime, Benflis is not popular. And, with the rigged, this rather begged the question of why are also a display of its complete confidence in while the Jil Djadid Party said turnout “will be election boycotted by the vast bulk of the he was standing at all. His answer seemed to be its ability to ride roughshod over the entire no more than 15%”. population, his campaign, perhaps not that he would fight any such fight, leading many electoral and political process. surprisingly, was more that of a journeyman to wonder if he would immediately declare The El Watan newspaper, which called it “the than a luminary. Apart from in Kabylie, Benflis himself the winner on the polls’ closure and There has not been a single election in Algeria election of the absurd”, said that “abstention” is ran into far less animosity and fewer perhaps try and rally the people to his cause. that has not been heavily rigged to ensure the “the largest party in the country”. demonstrations than Bouteflika’s team. He also regime’s candidate and/or party obtains the came up with a number of ideas that were As the campaign headed towards its uninspiring desired outcome. It is therefore hardly surprising Our conclusion, based on these estimates and broadly popular, such as opening the Moroccan end, it became clear that if it was a ‘free and fair’ that so few Algerian bother to vote. In the past the observer reports that are still coming in, is border. election, Benflis might well win more ‘real’ (that few elections, it has been clear that the that the real turnout was probably between 12

www.menas.co.uk is, not stuffed, multiple, deceased or otherwise government has tended to increase the ‘real’ and 17%. >>>

Politics and security 1 Geopolitics 7 Economy 7 Energy sector 10 Business environment 12 4 Candidates’ results people who were frightened by threats that How the vote was rigged 930,000 voters. They are entitled to vote in Neither Bouteflika’s 81.53% nor Benflis’s they would lose their homes and/or other On the day after the election (18 April), El any of four municipalities (where they are 12.18% have any credibility. The evidence we benefits if they did not vote for Bouteflika. A Watan published a list of most of the ways in stationed; where they were born; where either have is that in terms of ‘real’ (non-fraudulent) few would also still have voted for him because which the government is known to rig votes. At of their parents live or where they were born). votes cast, Benflis may have won. of his former popularity and the belief that he the core of the fraud is the electoral roll, which is This creates a pool of some 2,790,000 votes did bring peace and stability to Algeria after the secret, managed in the heart of the Interior (in practice probably several hundred The evidence for this is still sporadic. Benflis civil war of the 1990s. Ministry and not available to candidates or thousand) that can be used as required. himself publicly stated after the election that he observers/monitors for reasons, according to the > Proclaiming false results: by manipulation of had more than 50% of the votes and that he Bouteflika would also have received the vote of government of “data protection”. This, in itself, software held by the Interior Ministry. was ‘elected’ president. His evidence comes Front de Libération Nationale (FLN) members, allows for massive fraud, inclusion of multiple from his own observers at polling stations (who but certainly not all of them. He would also have voting, transfer voting, voting by the deceased, What will Benflis do now? were blocked and harassed) and the evidence received the vote of those businessmen who and so on, none of which can be checked or During the election campaign, Benflis made a that they recorded of massive fraud. have been made rich by the Bouteflika proved without access to the full national voting big issue of saying that he was going to fight Algeria Focus · April 2014 April · Focus Algeria corruption culture (see page 12) and who are register. electoral fraud. So far, he has shown no sign His claim fits other evidence, such as the fact afraid of losing their assumed immunity from that he intends to do so. Rather, he has been that his campaign rallies were generally better investigation and prosecution should the Other methods listed by El Watan include: talking about launching a new opposition attended and attracted more interest than Bouteflika clan lose power. He would also have > Intimidation: the threat that people, coalition party and mobilising it for the next Bouteflika’s. Reports from outside Algeria received the vote of a large percentage of civil especially the poor and vulnerable, will lose election – whether this is in five years or in the indicate that Benflis may have won many more servants, although certainly not all, as some access to housing and other benefits and event of early elections. That does not sound votes than Bouteflika from Algerians living would have voted for Benflis. And he would amenities. like a man determined to overcome injustice abroad. In addition, FIS members may have have received the rump of the vote of the > Fictitious voting stations: in Adrar, for (which he talked so much about in the voted for Benflis following his overtures to security services, but again not all; many, example, El Watan claims that 19 of the 35 campaign) and fight fraud. Rather, it sounds like some of the leadership. Also, many people may especially ‘old guard’ Département du voting stations are fictitious. a man of the regime, which, of course, he is. have switched from a boycott position to voting Renseignement et de la Sécurité (DRS) > Use of deceased persons: left intentionally for Benflis out of sheer anger about Bouteflika’s supporters, were opposed to his standing for a on the master roll. And that is his problem. His limp response to the fourth mandate. We will never know the true fourth term. Members of government trade > Multiple voting: also facilitated by non- election results appears to be losing him the figure, but 12.18% is an absurdity. unions and factories would also have been transparency of the roll. modicum of support he had on ‘the street’, coerced into voting for him, at the risk of losing > Vote buying. where the reaction to the election has been one If, instead, we ask who voted for Bouteflika, it is their jobs and other state benefits. > Stuffing the ballot box: made easy by the of frustration and anger. Rather than clear that he would not have achieved anything inability of candidates/observers/monitors to demonstrating in support of Benflis, which some like 81.53%. Some 70% of the population is view polling boxes and stations at all phases thought might happen if he declared himself the under 30. The youth are known to have of the electoral process. real winner, there are signs that Benflis is abstained almost entirely. Of those who did > The use of walis (governors) to transit becoming the target of much of the street’s vote, very few would have supported Bouteflika. voting data to the Interior Ministry illegally: anger. The social media, often the best measure this gives the ministry time to doctor the of Algeria’s political pulse, are full of expressions His votes would have come mostly from old figures before the official declaration. of anger with Benflis for having given the people, particularly those who, largely out of > Optimising the vote of ‘constituted bodies’: election credibility. If he had not stood, so it is fear, believed his campaign slogan that only he the army, police, civil protection, municipal argued, there would have been no credible

www.menas.co.uk can give the country stability; old and poor guards, customs, etc. These represent about candidate to challenge Bouteflika, and the >>>

Politics and security 1 Geopolitics 7 Economy 7 Energy sector 10 Business environment 12 www.menas.co.uk Algeria Focus · April 2014 5 if he is ready to make personal sacrifices, such build on. He even went so far as to say: “I think Benflis has some good ideas, which he could many people have about him. In Mesbah’s view, approach, he might overcome the doubts that so promises by taking a more confrontational Mesbah, and followed up on his election he now took the opposite stance, argued decision and disappeared from view. However, if because of fraud, he did little to challenge the Benflis lost the presidential election in 2004 turned political analyst. Mesbah said that when from possible position at the time of the polls came A particularly interesting view of Benflis’s the regime and its choice of leader. designed to do nothing more than to legitimise win in a system which is so totally rigged and “naïve” for even standing and thinking he could Others are saying that he was “stupid” and rid himself of. accusation that he will probably never be able to being a government stooge, which is an the sham that it is. He is even being accused of electoral system would have been exposed for signs are that it will soon fall below the radar. As for his plan to form a coalition party, the have had. if he had lost whatever opportunity he might outcome immediately. A week later it looked as a vociferous stance against the election slipping from Benflis’s grasp. He needed to take But that possibility looks as if it may be rapidly point.” as going to prison, he could become a rallying Politics and security Chafiq Mesbah , a former DRS officer 1 Geopolitics to see out his fourth term in office or, if he does assumed that of infighting will be ‘succession’. It is generally ever before. The focal point for the next round andvery possibly soon – more viciously than the election campaign are likely to re-emerge tensions that were barely held in check during The regime is more divided than ever. Factional More infighting in the regime These are as follows: this stage we can only give some pointers. That is the big question, and one on which at from here? Where does Algeria go people that he still has to win over. probably nearer double that), but they are not vote in these elections (the figure is may be correct when he says that 10 million did election outcome and the regime as a whole. He much more combative attitude towards the looks unlikely unless he is prepared to take a trusted. That could change, but at the moment it seen as part of the regime and therefore not social movements. That is because Benflis is civil society and the more important opposition moment, contains no leading personalities from reason is that the coalition, such as it is at the have little widespread support. The second small, fragmented opposition parties, which traction. The first is that it so far consists of only such a coalition is unlikely to gain much political opposition. However, there are two reasons why coalition, the first step in creating a political outcome, he signed an agreement to form a On 21 April, three days after the election Abdelaziz Bouteflika 7 Economy will not live nothing more than media conjecture. That is possible, but at the moment we believe Hamrouche factions of the regime that a deal has been done between the various if nothing has changed. One such rumour is that that were circulating before the election. It is as that are doing the rounds are the same as those Algiers is awash with rumours, but the names months ago. prevailed since Bouteflika had his stroke over 12 straight back into the uncertainty that has the regime, which could take the country person is likely to involve fierce fighting within apparent, possibly very soon. Finding such a That person will be seen as Bouteflika’s heir- and appoint a vice-president (or possibly two). will amend the constitution very soon to create It is therefore expected that the government duties of his office. is, he is incapable of fulfiling almost any of the incapacity (Article 88 of the constitution). As it the presidency on the grounds of medical survive, will certainly have been removed from HAMROUCHE: POSSIBLE DEPUTY PRESIDENT? DEPUTY POSSIBLE HAMROUCHE: will be appointed deputy president. 7 Energy sector Mouloud unpopular with the public. Ouyahia, however, is not, being far too Ouyahia Tayeb Belaïz been widely mentioned are interior minister the premiership. Two names that have not so far more likely to remain as a ‘safe pair of hands’ in being a general, while widely respected, he has the disadvantage of once again being mentioned. But, although The name of General official age of 78. Again, that is still speculation. is thought to be at least six years older than his Salah and deputy minister of defence Similar rumours are circulating that chief staff economy, for reasons discussed below, is are several reasons for this. One is that the repression and violence by the regime. There We also expect a far more ready resort to limits of perception on the use of violence. longer credible. The election has changed the that the ‘non-violent’ option for change is no that the elections have proved to many people more likely to turn violent. One reason for this is increasingly widespread unrest, which is now whole is likely to become manifest in anger with the government and the regime as a most unlikely, the widespread frustration and extraordinary changes very quickly, which is straw’. Unless the regime makes some many people, this election has been ‘the last greater resort to violence by both sides. For upsurge in social and political unrest and a The country is likely to see a considerable Unrest and violence will increase 10 may soon retire. That is quite possible: he . Belaïz is a very likely candidate. Business environment and former prime minster Abdelghani Hamel Abdelmalek Sellal Ahmed Gaïd Ahmed is also >>> is 12 6 not going to allow the government to continue relatively violence-free, at least by Algerian Berber protesters clash with police the Sunday, lasted until 1am Monday and then with its usual approach of ‘buying off’ unrest. standards. As mentioned above, there was in Tizi Ouzou resumed during Monday afternoon. serious violence at Bejaïa, and other Far more serious, and perhaps ominous, was the A second reason is that the regime knows that it manifestations at Tizi Ouzou, Bouïra and Metlili. eruption of new clashes between the security Opposition parties condemned the violent has the West’s support, and, given the West’s forces and Berber protesters in Tizi Ouzou. The suppression of anniversary demonstrations. The prioritisation of energy requirements over However, there were two more serious authorities have subsequently announced an Rassemblement pour la Culture et la concern for human rights abuses, is likely to turn outbreaks of violence in the immediate wake of inquiry into allegations of police violence. The Démocratie (RCD) denounced the police a blind eye to any intensification of repression the elections. police used tear gas and are alleged to have repression, which it said “contrasted with the and violence by the regime. used rough tactics in confronting some 400 or peaceful impulse that inspired citizens to come Anti-Bouteflika demonstration more demonstrators in Tizi Ouzou. and express their loyalty to the message of the The use of more violence by the state will be dispersed Berber Spring”. The rival Front des Forces legitimised by the fact that Bouteflika was On 18 April, following noon prayers, the security A video, posted on the internet on 20 April, Socialistes (FFS) “vigorously denounced and ‘democratically’ elected. forces used heavy-handed measures to disperse when the violence first broke out, showed police condemned” the prevention of this year’s Algeria Focus · April 2014 April · Focus Algeria what was probably the largest single beating protesters in Tizi Ouzou. DGSN (Police) anniversary rally. Return of the ‘old guard’ DRS demonstration of the election period. spokesman Djilali Boudalia, quoted by official For reasons discussed below, we believe that media, said: “The contents of the video show Some 70 people were wounded in Kabylie ‘state terrorism’ and elements within the ‘old Several hundreds of what the authorities called actions that are unacceptable and damage the during clashes with the police during election guard’ DRS will make their presence more felt. “Islamist activists”, mostly from the outlawed reputation of the police force, whatever their demonstrations the previous week. We believe that the recent events in Kabylie, Front Islamique du Salut (FIS) held an anti- motivations.” He said the head of the DGSN, discussed below, may be an indication of this. Bouteflika demonstration in Algiers. The protest General Abdelghani Hamel, had ordered Military convoy ambushed: 14 came only a few hours before the official “disciplinary measures to be taken against soldiers killed Deterioration of the economy announcement of Bouteflika’s victory. anyone who violates the dignity of the citizen”. At about 22.00 on 19 April, two days after the For reasons we explain below (see page 8), presidential election and on the eve of the there will be far greater focus, both Before being dispersed by security forces, the The rally was called to mark the anniversary of demonstrations in Tizi Ouzou, an Algerian internationally and domestically, on all aspects demonstrators had shouted anti-Bouteflika the so-called Berber Spring, a movement military convoy was ambushed by Islamist of the country’s economy, which we expect to slogans, accusing the government of rigging demanding recognition of Berber language and insurgents, said to belong to Al Qa’ida in the go into a potentially serious decline during the elections and playing up voter turnout numbers. culture that was brutally suppressed by the Islamic Maghreb (AQIM), near the village of next few years. They also held banners reading, “Don’t turn the Arabising regime of the time in an operation Iboudraren in the wilaya of Tizi Ouzou. In one of republic into a monarchy, Bouteflika,” and “Down that climaxed on 20 April 1980. the deadliest attacks on the military in years, 11 Security concerns focus with the constitution; we want an Islamic state.” soldiers were killed in the ambush, while three According to Amazigh rights activist Kamira more reportedly died later of their injuries. Many on prospect of Former FIS vice president Ali Belhadj was Nait Sid, who participated in the protest, more, possibly about 11, were wounded. El mounting violence arrested during the demonstration, according to “women and children were running for safety in Khabar later reported that 16 soldiers had been a statement issued by his office. Belhadj had every direction”. Demonstrators said over 60 killed and nine wounded. The reason for the been detained briefly by the security forces the injured protesters were admitted to one local disparity in figures is that some of the deaths In addition to what we might call ‘normal’ previous day as he monitored polling in Algiers. hospital, and a further 50 were arrested. occurred later in hospital. violence, a major security issue has arisen since A dozen or so other protesters were also the elections. To deal first with the normal rounded up during scuffles with the police. According to El Watan, the clashes between A local official said a large group of insurgents

www.menas.co.uk violence: the election campaign itself was police and street protesters, which started on hid on both sides of the road and opened >>>

Politics and security 1 Geopolitics 7 Economy 7 Energy sectorindustry 10 Business environment 12 www.menas.co.uk Algeria Focus · April 2014 7 (that is, General attack was the work of the old guard of the DRS there are strong and widespread beliefs that the Our own sources in the region have told us that throughout the civil war of the 1990s. something that the DRS undertook frequently AQIM, but a DRS false flag operation, which is elsewhere, that this attack may not have been There is widespread belief in the region, and Algerians?” soldiers to inject fear back into the heart of state’ have slaughtered the country’s own some dangerous, covert branch of the ‘deep Islamist rebel movements, back at work. Could war, security agents who operated within the the old government ‘exterminators’ of the civil back?” he asked. “Or were – heretical thought – the 1990s was returning. “Was al-Qa’ida coming of these soldiers whether Algeria’s ‘civil war’ of April, asked in the context of the shocking killing Robert Fisk Sécurité (DRS). the Département du Renseignement et de la flag’ operation, undertaken by the ‘old guard’ of because there are rumours that it was a ‘false simply because of the number of deaths, but This is a particularly serious security matter, not Ouzou region. the troops were searching for militants in Tizi 17 April presidential election. Other reports said returning from securing polling stations for the as it drove by. The soldiers were allegedly fire with automatic weapons on the military bus Bouteflika’s election claim that he has brought and that it was designed to show that Politics and security , writing in Mohamed Mediène The Independent ’s people) 1 on 22 Geopolitics internal affairs of Algeria”. Notwithstanding Kerry’s visit as “blatant interference in the Members of Algeria’s opposition described regime. for scheduling the visit to show support for the opponents to President administration have come under attack from visits during election periods, Kerry and the US contrary to Algerian protocol to schedule such more controversy. Apart from the fact that it is Kerry A two-day visit by US secretary of state rouses controversy Badly-timed Kerry visit Geopolitics expect an escalation of violence on all fronts. then Algeria can, as we have predicted above, If these rumours and allegations are correct, you need the security forces to be there. message is: with such ‘terrorism’ in your region, not to step out of line. In other words, the Berber Spring to warn the people of the region planned for the eve of the anniversary of the attack was not coincidental, but that it was check. It is also believed that the timing of the needs the DRS to keep this sort of violence in “stability” to Algeria is false, and that he still > on 2–3 April could scarcely have caused www.menas.co.uk Abdelaziz Bouteflika 7 Economy John some erroneous reporting on Secretary Kerry’s The US communiqué read: “There has been the transparency of the presidential elections. endorsed the electoral process and prejudged inaccurate, and gave the impression that the US of the US-Algeria Dialogue was distorted and the translation of his statement at the opening Department issued a communiqué saying that Two days after Kerry’s visit, the State Algeria had manipulated the visit. livid about the false translation and the way having Kerry visit Algeria at election time, was had committed a serious diplomatic The US administration, no doubt realising that it Algeria”. He said nothing of the sort. satisfaction with the electoral process in Kerry saying that the US “expresses its speech for the local media. The translation had published an incorrect translation of Kerry’s To make matters worse, the government everyone else, including most Algerians. how the visit has been interpreted by almost denials from Washington and Algiers, that is KERRY: BAD TIMING, BAD TRANSLATION BAD TIMING, BAD KERRY: 7 Energy sector faux pas by that Algeria and its neighbours deserve.” Algeria choose in order to bring about the future will work with the president that the people of international standards, and the United States that are transparent and in line with weeks from now. We look forward to elections have an election coming up here in Algeria two original statement read as follows: “Lastly, you The State Department pointed out that Kerry’s being incorrectly reported.” translation of Secretary Kerry’s statement that is provide for you the State Department’s French Secretary Kerry said. However, we would like to have the full English transcript of what remarks at the Opening Plenary Session. You on Russian gas. the strategic option of reducing its dependency sanctions or simply as Europe tries to exercise of Russian gas to Europe, whether as a result of able to make up for any reductions in the supply crisis and the extent to which Algeria will be second reason relates to the Russian-Ukrainian unrest by the usual means of ‘buying it off’. The whether the regime will be able to counter That immediately raises the question of to lead to more markedly political social unrest. election, although exactly as expected, is likely One is because the outcome of the presidential spotlight for two specific reasons. Algeria’s economy is suddenly under the Under the spotlight Economy 10 Business environment >>> 12 www.menas.co.uk Algeria Focus · April 2014 8 increasing wages, increasing subsidies and youths, striking workers or by whoever – constituencies – communities, unemployed to throw money at it to buy off the protesting government’s response to such unrest has been directed specifically at the regime. The unrest is likely to become more political and That may be about to change, in that future political. condition issues in Algeria are, of course, specifically political issues, although living government/municipal services – rather than food prices, low wages, unemployment, lack of categorised broadly as living conditions issues – unrest has been orientated towards what can be Over these past four to five years, most social increased even further since then. One reason is that the figure is thought to have perhaps not surprisingly, has not been released. social unrest. The data for subsequent years, occasions in that year to deal with incidents of that the police were called out on over 10,000 The government’s own data for 2010 revealed more political flavour. to increase. Moreover, it is likely to take on a long that may last, is that social unrest is likely Abdelaziz Bouteflika One outcome of the presidential election and section on page 10. industry and is looked at in the future prospects of Algeria’s hydrocarbons the economy; the second is more to do with the The first of these reasons relates specifically to payments. thereby reducing prices, and various other social Politics and security ’s fourth term, however Energy sector 1 Geopolitics presidential election, Bouteflika, or rather his This year, in the run-up to the 17 April households in need. disproportionately to richer Algerians and not to Africa, the benefits from subsidies accrue And, as elsewhere in the Middle East and North account, it could be even higher. budget’ areas of social spending are taken into subsidies make up about 30% of it. If other ‘off- Depending on how the budget is looked at, such GDP on explicit and implicit subsidies. that Algeria is now spending almost 16% of its obscure budgetary data. Latest data suggests subsidies are mostly very opaque and buried in on hydrocarbon products, is ‘off budget’. Other readily available. Much of it, especially subsidies Precise data on the cost of subsidies is not but it is forecast to increase this year. dipping slightly last year, to the relief of the IMF, rose again by around a quarter in 2012, before and civil servants’ salaries by 46%. Expenditure 2011, government spending jumped by 50% handouts dramatically in the past three years. In and oil exports, Algeria has increased such Thanks to the substantial revenues from gas money at it. has been resolved in the same way: by throwing then most unrest, and especially strike action, uprisings toppled long-serving dictators. Since neighbouring Tunisia and Egypt, where popular spending to prevent contagion from increase consumer subsidies and crank up public over food prices, the government rushed to 2011, the start of the so-called Arab Spring, For example, when Algerians rioted in early 7 Economy economy to reduce dependence on shrinking under 30, needs to reform its tightly controlled country, 70% of whose 37 million people are close to the Algerian regime, argue that the most other economists, except perhaps a few does not look anything like as rosy. The IMF and That is the upside, and the past. The future region. the second least indebted country in the MENA off some $40 billion in debts, leaving Algeria as statistical source; and the government has paid between $5,500 and $7,500, depending on the effectively; average annual income stands at schemes, although not always very efficiently or billion has been ploughed into social spending reserves have climbed to $194 billion; $500 in 1999, the country’s foreign exchange quick to recite. Since Bouteflika came to power data that the government and its supporters are the one hand, there is an array of impressive can be seen from a number of perspectives. On Algeria’s economy, like that of most countries, future An impressive past, but a worrying alone further increases, cannot be maintained. that even the present level of subsidies, let never was. Many economists are now arguing this course of action is no longer sustainable. It now facing Bouteflika and the regime is that skate by over the past three years, the problem While this policy has enabled the regime to plank of his domestic policy. salaries and social housing will remain the main state spending on subsidies, public-sector promises indicating very clearly that generous campaign team, have again made election 7 Energy sector reached almost $55 billion last year. prices.” Imports are also rising. The import bill compounding the longstanding risk of lower oil consumption are squeezing export volumes, hydrocarbon production and surging domestic hydrocarbon sector is worsening. Declining vulnerability to developments in the Assembly said in December: “The economy’s special committee of France’s National Algeria is already heading in that direction. A sustained fall”. even sooner if hydrocarbon prices experienced a could become a net borrower in 20 years, or “policy adjustments”, the IMF warned, “Algeria current account surplus is shrinking.” Without fiscal policy is on an unsustainable path and the for hydrocarbon production is relatively short, IMF emphasised in February: “The time horizon considerable foreign currency reserves. As the natural gas exports and to avoid squandering its equivalent period for this year. quarter of 2013 to $13.83 billion in the by 2.03%, from $14.12 billion in the first Imports also fell, which is good news, but only from $16.85 billion to $15.7 billion. to a decline of 6.8% in exports of hydrocarbons, same period in 2013, down 6.02%, mainly due quarter of 2014 against $17.48 billion in the Exports reached $16.43 billion during the first surplus. reveals a further deterioration in the trade Informatics and Statistics (CNIS) on 21 April, released by the Customs National Centre for The latest data for the first quarter of this year, Declining trade surplus 10 Business environment >>> 12 9 The urgent need for structural Attempts to introduce economic reforms that Public redistribution policies are distribution of hydrocarbons ‘rent’ through reforms threaten these short-term and wholly selfish only a partial answer rampant social spending. Resistance to the Major structural reforms, notably diversification interests are likely to be resisted. Hence, for Algeria’s series of five-year investment plans regime, as almost everyone now knows, is away from dependency on hydrocarbons, along example, the regime has little interest in since 2004 have so far ploughed about $500 simply ‘bought off’. As Ihsane al-Kadi, editor of with fairly radical fiscal-budgetary reforms, are developing manufacturing (import-substitution) billion into national infrastructure and social Maghreb Emergent, said this month, “They [the urgently needed. Hydrocarbons account for 97% plants within Algeria, as more money can be sending schemes. They have certainly seen regime] rule through money and they have no of foreign earnings and almost 40% of GDP, but made, and far more easily, through the corrupt some tangible successes in terms of other source of legitimacy.” employ only 3% of those in active employment. manipulation of import licences, which are infrastructure and job creation, with some handed out to members of the regime as if they national commentators claiming, with some And this is where the regime is now facing its This month, economist Abdelatif Rebah said were part of their pension fund. justification, that they contributed to keeping biggest dilemma. Resistance to it, in the form of that he believed the “vulnerability and structural the lid on official unemployment levels. social and political unrest, is expected to handicaps of the Algerian economy have got Second, foreign investors are unlikely to see a However, their overall success is difficult to increase now that Bouteflika has been allocated worse” and that the country’s dependence on change in the 51:49 ownership law, for the measure because of the opacity of national his fourth term. Buying this off, with more Algeria Focus · April 2014 April · Focus Algeria energy exports has not changed, despite simple reason that the regime fears that the economic data. They have been characterised by consumer subsidies, wage increases and other repeatedly announced plans to diversify. “The growth of a private sector, which the economy gross inefficiencies, delays, non-completions forms of social spending, is no longer share of industry in GDP,” he said, “has gone urgently needs, could become the focus of a and corruption, with the latter probably economically tenable. But the regime, it would from 25% to 5% in 30 years.” powerful political opposition. This is one reason contributing more than inefficiencies to massive seem, has no choice, other than to intensify why Algeria receives so little foreign direct budget overruns. Some commentators reckon levels of repression that are already the focus of A broad review of most international reports and investment, which was only $1.5 billion in 2012. that corruption may account for close to 20% of attention of most international human rights analyses of the Algerian economy in the weeks the $500 billion being syphoned off. organisations such as Amnesty International since the announcement of Bouteflika’s fourth The government’s current nationalist and Human Rights Watch and which could very term suggests that most knowledgeable opinion tendencies, such as the 51:49 rule, no longer The 1,227km East-West highway, connecting quickly lead to a national rebellion. Indeed, one is of the view that Algeria’s current rulers do not have the ideological underpinnings that Algeria’s borders with Tunisia and Morocco – in outcome of this month’s election is that the have the zeal and commitment to undertake characterised the (1963–65) spite of only 3% of the country’s trade crossing non-violent option has lost a great deal of these reforms and so avert a medium- to long- and Houari Boumédiène (1965–78) eras. them – was initially estimated at $7 billion, but credibility. If, on the other hand, the regime does term economic and hence social catastrophe. Rather, they reflect a purely selfish and is now expected to cost $13 billion. Some 16% attempt to cut subsidies, salary increases and pragmatic adherence to economic nationalism in of this amount has, according to the daily El other areas of social spending, it will almost We share that view for two very specific order to facilitate the looting of the national Watan newspaper, been distributed in bribes. certainly trigger more, immediate unrest. reasons. One is that the country’s sclerotic and economy, which, especially during the largely geriatric rulers have little concern for the Bouteflika era since 1999, has become the self- The third such plan, announced by prime It is because Algeria’s rulers have trapped well-being of either the Algerian people or the perceived entitlement of an increasingly corrupt minister Abdelmalek Sellal in the latter part of themselves in something of a ‘Catch-22’ that country’s future. Their primary concern is to ruling elite. The reason Algeria has one of the 2013 for the period 2015–19, with a provisional there is little chance of them taking such bold ensure their own immediate survival, by most difficult business environments in the allocation of $286 billion, looks like being initiatives as reducing fuel, or any other, maintaining the status quo, and to continue Middle East and North Africa is not its statist bedevilled with the same problems. subsidies. plundering for as long as they can what many French colonial legacy or flirtation with the analysts and journalists now refer to Soviet Union, but the desire of its rulers to Algeria’s ‘Catch-22’ If, as we must conclude, at least for the time increasingly as a ‘mafia’ economy. maintain a tight grip on the populace to pre- The second reason why we believe that the being, Algeria’s rulers are as determined as they empt challenges from new social forces. regime will not countenance economic reform is appear to be to maintain the status quo,

www.menas.co.uk that it derives its legitimacy from the especially in the manner in which they >>>

PoliticsPolicy focus and security 1 Geopolitics 7 Economy 7 Energy sectorindustry 106 Business environment 12 10 www.menas.co.uk Algeria Focus · April 2014 investment agenda, the decision-making, a resource-nationalist companies (IOCs) have been put off by opaque domestic electricity. Meanwhile, international oil pressure from a sharp upward demand curve for exports are under severe and increasing decline; gas production is falling; natural gas the industry. Major oil and gas fields are in who does not recognise the challenges facing regime, least of all in the hydrocarbons sector, there can scarcely be a single official in the ‘Crisis’ may still be too strong a word for it. But decline be redressed? Can the hydrocarbons Energy sector difficult it will become to implement change. instead on its hydrocarbons wealth, the more up to its structural economic challenges, relying longer the government procrastinates in facing However, as most analysts now recognise, the redressing the decline in hydrocarbon exports. hope of prolonging it is through somehow control and deal with unrest, then their only probable and possible reserves into account, if recently warned that: “Taking the level of Sonatrach’s former CEO requirement. under pressure from the increasing domestic demand for electricity, so gas exports will come There is a continuing very rapidly increasing corruption scandals, plus security issues. Politics and security Abdelmadjid Attar Sonatrach and other 1 Geopolitics puts 31 blocks on offer. licensing round announced in January, which revision goes hand in hand with the new revised terms in the Hydrocarbons Law.” That encouraged by the passing in February 2013 of should double exports, and this has been new fields. “The aim,” says Hached, “is that we 2014 to 5.4tcf in 2018, with 1.5tcf coming from forecast to rise from 2.8 trillion cubic feet (tcf) in tonnes in 2018. Similarly, natural gas output is 202 million tonnes in 2014, rising to 224 million quicken significantly, with oil output forecast at pace of discoveries and development will According to Hached, Sonatrach believes the Sonatrach also holds optimistic expectations. were made by Sonatrach and only three by IOCs. discoveries were made in 2013. Of those, 29 the In Amenas crisis in January 2013, 32 government adviser, pointed out that, in spite of On the more optimistic side, false optimism. nationalistic mixture of wishful thinking and their conviction is soundly based or a demand. The ‘$64,000 question’ is whether Europe, while also meeting burgeoning domestic will allow it to remain a major energy supplier to exploit substantial oil and gas reserves, which impression that Algeria – is well placed to least their public statements give that government officials remain convinced or at – Energy Ministry spokespersons and other In spite of these ominous warnings, Sonatrach, export commitments by 2030.” and 2019–22, Algeria may be unable to meet its [implement] energy efficiency between now Algeria does nothing to increase exploration and 7 Ali Hached Economy , a senior save the regime and the economy. on their expectations, they will do so too late to even if shale gas and renewables both deliver fear most likely to dash these aspirations, is that The third uncertainty, and the one which we requirements from renewables by 2030. target of meeting one third of its power projects will result in investments being made in solar and wind The second factor is whether the huge and development costs prove to be prohibitive? reserves, and will the exploration, production technology be in place to extract those of estimated shale gas reserves but will the rank third in the world at the moment in terms meet Algeria’s high expectations. Algeria may is whether the unconventional exploration can There are three uncertainties in all this. The first electricity. as well as meet the internal demand for more allow Algeria to expand its export commitments they are as productive as they anticipate, will that these new sources of supply, assuming Sonatrach officials believe, or perhaps hope, than half the acreage on offer. unconventional licences, which make up more revisions will make the frontier and Much will depend on how attractive those attractive to IOCs, have yet to be published. law, intended to make exploration more burned. Full details of further revisions to the unenthusiastic. Several have had their fingers ventures, IOCs have mostly remained 2007 to give Sonatrach a majority stake in all Since the Hydrocarbons Law was revised in 7 Energy sector Sonelgaz achieving its much, its own declining production. depend on whether it can reverse, and by how substitute for Russian will, however, very much The extent to which Algerian gas can become a want to reduce its dependence on Russia gas. has received a sufficient wake-up call to make it entire Russia-Ukraine issue was settled, the EU replaced by eastern Ukraine. But, even if the slipped off the news headlines it has now been with Russia over Crimea. Although Crimea has gas imports in the absence of any agreement said he expected a “gigantic” effort to diversify Last month largest recoverable shale gas reserves. estimated that Algeria has the world’s third a US Department of Energy assessment could meet 10% of the UK’s gas demand, while projects that expanded Algerian production government trade and investment briefing can be increased. For example, a recent UK gas needs. Europe hopes that this contribution the region and is supplying 14% of EU natural Algeria has some of the largest gas reserves in Norway and Algeria. Europe’s second and third largest gas suppliers: some Russian gas imports with supplies from summit. The obvious options include replacing by EU heads of government at their June energy dependence on Russia”, to be debated The EU is drawing up options for “reducing fill the Russian gap EU looks to Algeria to 10 6 Business environment Eni ’s CEO summed it up when he >>> 12 11 www.menas.co.uk Algeria Focus · April 2014 declining, there is no certainty, in spite of with Algeria’s own production and exports up its exports to the EU. As discussed above, First, there is the question of Algeria’s ability to the EU, the key issues come down to logistics. With ‘political’ issues clearly being set aside by of human rights. dictatorial and repressive regime and its abuse energy needs ahead of concerns about Algeria’s which, like most other EU states, is putting its are, being levelled at the British government, Algiers last July. Similar criticisms have, and still sign a strategic energy agreement on his visit to Commission president political and human rights issues, European failing to budge one iota on these sensitive improvements and the like. In spite of Algeria reform and liberalisation, human rights Algeria can ignore all ‘requests’ for political once again had to eat humble pie, knowing that problems that the European Commission has Nevertheless, such are Europe’s energy did not even send observers. bigger sham than 2012’s brazen fraud. The EU month’s presidential election was an even after Algeria’s 2012 legislative elections. This of the EU Election Observation Mission made reform” and “implement the recommendations” that it “progress the process of constitutional Algeria. It has failed to budge on EU requests continually faced by stumbling blocks placed by Instrument (ENPI) with Algeria, but has been a full European Neighbourhood and Partnership Commission has been negotiating for some time business with the EU. The European difficult for itself, at least in terms of expanding Algeria has, however, been making life very Politics and security José Manuel Barroso 1 Geopolitics did will be delivered as LNG rather than pipeline gas, For northern European countries, Algeria energy replace 10% of Russian gas imports. along the Mediterranean coast (Midcat) could proposed pipeline from the ‘Spanish gas island’ the Spanish authorities claimed in March that a Algerian pipeline gas to central Europe, although There is nothing that currently connects Almería in Spain. Medgaz pipeline running directly from Algeria to R’Mel via Morocco to Spain and the more recent the Maghreb-Europe Gas Pipeline from Hassi Hassi R’Mel field to Italy via Tunisia and Sicily; Medediterranean Pipeline running from the Europe via three main routes: the Trans- connectivity. Algerian pipeline gas reaches Third, there is the problem of European grid terminals, becoming a reality. (TSGP), carrying Nigerian gas to Algeria’s the possibility of the Trans-Saharan Gas Pipeline Algeria’s own difficulties are once again raising Interestingly, both the EU’s supply problems and disruptions in supply can become magnified. regions where, as we have seen, even small creaking infrastructure, especially in its southern Second, there are questions about Algeria’s hydrocarbons law. the 2007 change in Algeria’s previously liberal because of the underinvestment stemming from while gas production has declined, largely exported. However, domestic demand is soaring, natural gas annually, of which 60bcm are produces 152 billion cubic metres (bcm) of increase its exports substantially. Algeria Algeria’s optimism, that it will be able to 7 Economy cooperation through continuing dialogue”. adding that his visit “aims at boosting bilateral the largest EU economic partner of Algeria”, García-Margallo further indicated that “Spain is natural gas imports. Algeria currently supplies Spain with 45% of its Algeria to curb its dependence on Russian gas. Spain wanted to import more natural gas from Margallo cement Western energy ties with Algeria. is playing such a central role in the drive to Russian dependency. This explains why the UK from Algeria, it would almost free itself of substitute that 13% with the 10% envisaged other EU countries. But, if the UK were able to 13%, less dependent on Russian gas than most strategically significant. The UK is, at around demand they could become increasingly supply a large proportion of some countries’ gas Therefore, even though Algeria does not yet Mediterranean countries. which is likely to be limited to Europe’s by Spain’s foreign minister The Ukraine crisis precipitated a visit to Algeria Spain turns to Algeria’s natural gas on 11–12 April. He told reporters that 7 Energy sector José Manuel García- Italy’s oil and energy giant Eni looks for price cut Fantolini said the plant, built by conference in South Korea this month. Marco Fantolini the plant’s LNG technology manager dispatch its first export cargo hopefully in June, The third LNG train at Arzew is expected to sell first gas in June-July New Arzew LNG plant to operations Algeria, Eni’s executive for midstream term take-or-pay gas supply contract with achieve a significant price reduction in its long- upstream gas, sources have said. second train as it has not yet lined up enough yet of Sonatrach proceeding with its option for a trains. However, Fantolini said there was no sign same infrastructure, such as the jetty, for both through economies of scale and the use of the area, which would cut the unit costs even more, possibility of building another plant in the same Saipem planned the site allowing for the the nominal output is 4.7 million tonnes/year. if the ambient temperature is below 21°C, but It is capable of producing 5.1 million tonnes/year the storage tanks, ready to test LNG production. Sonatrach the Algerians,” he said. should have a significant price reduction with hearing on 2 April. “By the end of this year we 10 Business environment , was entering the cool-down phase in Marco Alvera told delegates at the Gastech >>> told an Italian Senate Eni is expecting to Saipem Anton for 12 12 www.menas.co.uk Algeria Focus · April 2014 companies, including a 30% state in Eni, holds core stakes in some of Italy’s largest listed Late on 12 April the Italian Treasury, which New CEO has E&P background have been a little too hasty. as profitable at the time, now looks as if it may Sonatrach much as 50% higher, and split the profit with LNG cargoes for sale to Asia, where prices are as was to convert part of the pipeline supply into increase flows from Russia. Part of that deal negotiated a deal to buy less from Algeria and Last year, with Algerian supplies diminishing, Eni 2013. Russia supplied Italy with around half its gas in Europe’s biggest customer for Russian gas. 90% of its gas. Along with Germany, it is also change. Italy depends on imports for more than below), Eni’s relationship with Algeria may and with a new CEO taking over at Eni (see However, in light of the Russia-Ukraine crisis take more Algerian gas. other EU countries, such as Spain, wanting to negotiate the price reduction, especially with Alvera did not elaborate on how he expected to DESCALZI: BACK TO BASICS AT ENI? AT BASICS TO BACK DESCALZI: Politics and security . That decision, although clearly seen 1 Geopolitics company’s 43% stake in analysts, that could also mean selling down the new oil and gas fields. In the opinion of some business of exploration and development of predecessor’s efforts to focus on its core Descalzi is seen as likely to push forward his Scaroni as the group’s new CEO. He replaces of Eni’s exploration and production since 2008, proposed largely state-controlled economy. fourth term and more lucrative deals with the election campaign in the hope of securing his into President during the election campaign. They poured cash Algerian businessmen showed their true colours the Bouteflika wheels Businessmen grease Business environment top job. persuaded him to stay with the promise of Eni’s E&P business, but the Italian government recently offered Descalzi the job of head of its Engineers. According to industry sources, Engineers and the American Institute of Mining Gold Medal award from the Society of Petroleum receive the prestigious Charles F Rand Memorial in E&P. In 2012 he was the first European to Descalzi is one of the most respected managers raise more cash to invest. service group’s debt off its balance sheet and , who had served three terms in office. Claudio Descalzi Abdelaziz Bouteflika Saipem 7 , who has been head Economy to get the oil ’s re- Paolo Shell state contracts worth an estimated $2.5 billion. since Bouteflika came to power and has secured experienced meteoric success in the 15 years Haddad’s both Hamidouche and Algerian press reports, often seen with Saïd Bouteflika. According to Prominent among them was contracts. many businessmen dependent on public sector Bouteflika’s campaign contributors were the as saying that first and foremost among Economist local authorities. state-owned banks or planning permission from Algeria’s notorious red tape to secure loans from the way for public contracts, or cut through queue up with campaign donations to smooth In the Bouteflika business world, businessmen spent at least €75 million. reports reckon that Bouteflika’s campaign alone campaign funds come from. Algerian press to be broken, no public records are kept of where low amount. As this limit almost inevitably has a country the size of Algeria, that is an absurdly to a second which round does not– happen. For ($674,000) on their campaigns, unless they go allowed to spend more than €500,000 Algerian law dictates that candidates are not youngest brother Bouteflika family and coterie, with Bouteflika’s economy’, controlled in large part by the more of what many analysts now call a ‘mafia become profoundly more corrupt, turning it into During the Bouteflika era the country has ETRHB M’Hamed Hamidouche 7 construction company has Saïd Energy sector (born 1957) at the apex. Ali Haddad was reported , who is Dzair TV Haddad, who already runs the pro-Bouteflika extract donations from reluctant contributors. Othjmani (AFP) reported food business boss Bouteflika’s campaign. pledges of between ¤5,000 and €500,000 to members said they were “invited” to make Maghreb Emergent Bouteflika’s re-election. According to the a special meeting in March to support Forum des Chefs d’Entreprises Algeria’s main employers’ organisation, the campaign funding. Bouteflika’s rule were another source of his services sector who have flourished during Hamidouche said that businessmen in the campaign. dedicated to covering the Bouteflika re-election NGO Bouteflika’s rule. Hydrocarbons wealth has and gas prices that have soared during corruption was hydrocarbon wealth, based on oil Hadjadj said the cause of the spreading of dollars have been pocketed at different levels. different levels”, estimating that tens of billions system are generally involved [in corruption] at to the presidential circle and the [political] Corruption quoted Bouteflika’s 15-year rule. The news agency had risen to the forefront of public life during An AFP report on 14 April said that corruption life Corruption at forefront of public 10 Association Algérienne de Lutte contre la Djilali Hadjadj , launched a new channel, Business environment as saying that “threats” were made to (AACC), as saying that: “Those close news website, several FCE , head of anti-corruption Agence France-Presse (FCE), voted at Slim Wiam , >>> 12 13 www.menas.co.uk Algeria Focus · April 2014 found guilty and subsequently “pardoned”. the country’s foreign chancelleries. He was Houari Boumédiène 1970s and 1980s and protégé of President himself, when, as a young foreign minister in the culture was almost set in place by Bouteflika have fostered, condoned and lived by. That endemic culture of corruption that its members sense of entitlement to these resources and the actual cause. The cause is the regime’s own certainly facilitated corruption but it is not the SAÏD BOUTEFLIKA: APEX OF THE ‘MAFIA ECONOMY’ ‘MAFIA THE OF APEX BOUTEFLIKA: SAÏD Politics and security , he looted $23 million from 1 Geopolitics minister rumours are again circulating that former energy of the elections and a Bouteflika fourth term, again being widely talked about in the context It is interesting to note that, with corruption apex of Algeria’s corruption. relationship’ with Bouteflika’s mother, sits at the former leader and Boumédiène’s ‘close ‘Boumédiène’ because of his resemblance to the Today, his younger brother Saïd, nicknamed girding their loins. enemies, especially those in the DRS, may be raised again now suggests that Bouteflika’s legal writs following. The fact that it is being a strong airing in the Algerian press without any done the rounds. A year or more ago, it got quite This is not the first time that this rumour has Bouteflika. corruption scandal, was the ‘fall guy’ for Saïd have been at the centre of the Chakib Khelil , generally thought to 7 Sonatrach Economy $21 billion) in 2013. 40% of China’s total trade with Maghreb (nearly Beijing’s trade with Algeria represented over largest export market in the Maghreb region. Algeria is now China’s top trade partner and strategic partnership”. established what they call “the comprehensive the end of 2013. The two countries have $608 million in 2003 to more than $9 billion by almost fifteen-fold in the past 10 years, from and Beijing, according to UN data, has grown can say is that bilateral trade between Algiers not given, so we cannot comment on it. What we Arabiya economic data, supplier to China in 2013, according to the latest France lost its position as Algeria’s major increases fifteen-fold China-Algeria trade on 26 March. The source of the data is 7 Naser al-Tamimi Energy sector reported for Al- possible procurement of Chinese weaponry. of the world’s major arms purchasers, in the recently commented on Algeria’s interest, as one A number of defence industry sources have producing 10,000 vehicles a year. deal to build an assembly plant in Algeria, state manufacturer export destination in 2012 and 2013. Chinese other country. Algeria was China’s top vehicle (CAAM), exports more cars to Algeria than any Association of Automobile Manufacturers is that China, according to the establishment of French auto-plants in Algeria, possibly because of the prominence given to the A little known feature of Chinese-Algerian trade, Chinese contractors in Africa, after Nigeria. show that Algeria is the biggest market for market for Chinese engineering. Latest data As we reported last month, Algeria is a lucrative 10 Business environment FAW has recently signed a China 12