Algeria, 1962-1984

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Houiti, Ahmed

INDUSTRIALIZATION AND ECONOMIC DEVELOPMENT: THE EXPERIENCE OF POST-INDEPENDENCE ALGERIA, 1962-1984

The American University Ph.D. 1986

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University Microfilms International

THE EXPERIENCE OF POST-INDEPENDENCE ALGERIA

1962-1984

Ahmed Houiti

submitted to the

Faculty of the College of Arts and Sciences

of The American University

in Partial Fulfillment of

The Requirements for the Degree

Doctor of Philosophy

Sociology

Signatures of Committee:

Chairman:

A/«0

Dean of the College 9 32* saamJqju- i

1985 The American University Washington, D.C. ?0016

THE AMERICAN UNIVERSITY LIBRARY

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. © COPYRIGHT

AHMED HOUITI

1985

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. INDUSTRIALIZATION AND ECONOMIC DEVELOPMENT:

THE EXPERIENCE OF POST INDEPENDENCE ALGERIA

1962-1984

Ahmed Houiti

ABSTRACT

This study deals with the problem of industrializa

tion and economic development in a Third World country,

Algeria. The main thesis of the study is that Algeria,

like most other Third World countries, is witnessing major

economic development and industrialization. Throughout

this process of industrialization Algeria is experiencing

dependent capitalist economic development. This thesis is

discussed through a detailed case study of the process of

industrialization and economic development over a period

of twenty-two years (1962-1984).

Moreover, the process of industrialization and econ

omic development is analyzed from a political economy

perspective and viewed within the international economic

order, whereby the major external political and economic

factors in shaping Algerian industrialization are dis

cussed .

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ACKNOWLEDGEMENTS

I wish to express my sincere thanks to the members of

the committee for their general advice and counsel; spe

cial appreciation is further expressed to Chairman Dr.

Jurg Siegenthaler for his criticism, guidance, and encour

agement of the study from its outline stage to its comple

tion. Sincere gratitude is expressed to Dr. Esther N.

Chow for her constructive criticism, guidance and encour

agement throughout this investigation; sincere apprecia

tion also is due Dr. Ken Kusterer for his constant advice

and valuable guidance at various stages of the investiga

tion.

Acknowledgement is also due Dr. Khalid bin Sayeed,

Professor of Political Studies at Queen's University,

Canada, for his deep interest and critical review of this

study.

I am very grateful to Dr. Obouzar, Mr. Rouag at the

World Bank, and Dr. Labis M. Hassan, Advisor to the Execu

tive Director at the International Monetary Fund (IMF),

for their cooperation and assistance in obtaining the

necessary documents and reports for this research.

Finally, I am very thankful for my family for giving

me the necessary spiritual support throughout all these

iii

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. years of study and research. Also, special thanks go to

the Algerian government and the Ministry of Higher Educa

tion (Ministere de 1'Enseignement et de la Recherche

Scientifique) for their material support which made this

work possible.

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. TABLE OF CONTENTS

ABSTRACT ...... ii

ACKNOWLEDGEMENTS ...... iii

LIST OF T A B L E S ...... viii

LIST OF ILLUSTRATIONS...... xii

I. INTRODUCTION ...... 1

Organization of the Study ...... 2 The Research Problem ...... 5 The Research Methodology ...... 11 Theoretical Framework ...... 13

II. GENERAL HISTORICAL BACKGROUND ...... 26

Algerian Social Formation under French Occupation, 1830-1962 ...... 28 Social, Economic and Political C o n d i t i o n s ...... 30 Agriculture...... 34 I n d u s t r y ...... 39 Birth of Nationalism and Political Struggle ...... 44

III. THE CHOICE OF THE ALGERIAN INDUSTRIAL MODEL AND DEVELOPMENT STRATEGIES ...... 52

Ideological and Political Foundation.... 52 The Evian Agreement (March 1962) . . . . 53 The Tripoli Programme (June 1962).... 55 The March Decrees (March 1963) 57 The Algiers Charter (April 1964).... 62 Algerian Development Strategies ...... 67 Conclusion...... 77

IV. CONSTRUCTION OF THE POST-INDEPENDENCE ECONOMY ...... 78

The Period of Transition (1962-1966).... 78 The New Industrial Doctrine (1966-1969) 86

with permission of the copyright owner. Further reproduction prohibited without permission. The Structure of Post-Independence E c o n o m y ...... 95 Private Sector ...... 97 Self-Management or Autogestion S e c t o r ...... 102 Public or State Sector ...... 109 Conclusion: The Algerian Social Class Structure...... 110

V. HYDROCARBONS INDUSTRIES ...... 115

Introduction ...... 115 The Strategic Importance of the Hydrocarbons Sector ...... 121 Oil I n d u s t r y ...... 130 Gas Industry ...... 143 Petrochemical Industries ...... 161 Conclusion...... 165

VI. HEAVY INDUSTRY ...... 169

Introduction ...... 169 Metallurgical Industries ...... 174 Mechanic Industries ...... 181 Construction Material Industries ...... 186 Mining Industries ...... 188 Electric Industries ...... 193 C o n c l u s i o n ...... 195

VII. LIGHT I N D U S T R Y ...... 199

Introduction ...... 199 Agro-alimentary Industries ...... 200 Textile Industries ...... 207 Tobacco Industries ...... 212 Paper and Wood Industries...... 213 Leather and Shoe Industries...... 217 Conclusion . 220

VIII. INDUSTRIALIZATION AND AGRICULTURE IN THE LIGHT OF DEVELOPMENT P L A N S ...... 222

Introduction ...... 222 Land and Climate Constraints...... 230 Human Resources ...... 230 Government Policy ...... 230 The First Three-Year Plan (1967-1969) . . . 238 The First Four-Year Plan (1970-1973) . . . 242 The Second Four-Year Plan (1974-1977) . . . 248 The First Five-Year Plan (1980-1984) . . . 253 C o n c l u s i o n ...... 272

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. IX. ALGERIAN SOCIALISM AND FOREIGN DEPENDENCY...... 277

Introduction ...... 277 Technological and Scientific D e p e n d e n c y ...... 278 Algerian Development Strategies . . . .279 Technological Transfers Policy ...... 286 Effects of Technological Transfers . . . 293 Conclusion...... Foreign Capital Dependency ...... 297 Conclusion ...... 30P Foreign Skilled-Labor Dependency ...... 308 Educational and Training System . . . .312 Educational and Training Policies . . . 318 Conclusion...... 324 Algerian Socialism ...... 325 Deviation from Socialist Theory .... 332 Conclusion...... 336

X. OBSTACLES TO ECONOMIC DEVELOPMENT IN A L G E R I A ...... 337

Population Growth ...... 338 M i g r a t i o n ...... 338 Land and Climate Constraints ...... 339 Mismanagement and Organization ...... 340 Underutilization of Technology ...... 342 Skilled Manpower ...... 342 Capital Shortage ...... 344 Underdeveloped Infrastructure ...... 344 Class Structure ...... 345

XI. CONCLUSION AND RECOMMENDATIONS ...... 347

APPENDIX A. MAIN HYDROCARBONS INSTALLATIONS . . . .362

APPENDIX B. MANUFACTURING INDUSTRIES AND THEIR DISTRIBUTIONS BY WILAYA AND PUBLIC AND PRIVATE SECTORS ...... 363

BIBLIOGRAPHY ...... 364

vii

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. LIST OF TABLES

1. Expansion of Vineyards and Wheat- Cultivated Land by Europeans ...... 36

2. Value of Exported Wine Production, by Thousands of French Francs ...... 36

3. Viniculture Expansion in Size and Production, 1921-1934 ...... 38

4. Movement of External Trade ...... 39

5. Workers, by Type of Industry, 1890 40

6. Jobs and Investment, 1958-1960 43

7. Approved Industrial Concerns, 1958-1960 .... 44

8. Investment for 1961 ...... 44

9. Employed, Unemployed and Active Population, 1966-77 73

10. Population Evolution ...... 75

11. Population Structure by Age G r o u p s ...... 76

12. Budget Revenues and Expenditures of 1963-1966 82

13. Employment and Underemployment in 1966 .... 83

14. Distribution of Industrial Investment, 1967-1969 ...... 89

15. Cultivable Land in 1964 ...... 98

16. Distribution of Privately-Owned Land by Size of H o l d i n g s ...... 99

17. Distribution of Privately Owned Land ...... 101

18. Proven Reserves of Crude O i l ...... 123

19. Proven Reserves of Natural G a s ...... 124

viii

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 20. Oil and Gas Production, 1970-1978 125

21. National Production, Exports, and Consumption of Oil and Natural Gas, 1957-1979 127

22. Production of Oil by SONATRACH and Foreign Companies ...... 132

23. Evolution of Algerian Crude Oil Price .... 133

24. Crude and Refined Petroleum Products, 1973-1977 ...... 134

25. Algerian Oil Exports (Crude & Condensate) by Destination, 1972-1975 136

26. Exports and Domestic Consumption of Crude and Refined Petroleum Products, 1973-1977 ...... 137

27. Present Refining Capacity ...... 140

28. Algerian Exports of Various Oil Pr o d u c t s ...... 141

29. Production, Exports, and Domestic Consumption of Natural Gas, 1973-1977 .... 144

30. Algerian Exports of Natural Gas, 1973-1976 ...... 145

31. Major Algerian Gas Pipelines ...... 147

32. Algeria's Liquified Natural Gas (LNG) P l a n t s ...... 148

33. Liquified Natural Gas Plant Contractors . . . 150

34. Contracts of Gas Delivery to F r a n c e ...... 153

35. American LNG Contracts...... 156

36. Selected Petrochemical Production ...... 162

37. Production, Exports, and Domestic Consumption of Fertilizers, 1973-1977 .... 163

38. Output of Iron and Steel Products, 1973-1977 176

39. Main Metallurgical Production ...... 176

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 40. Metallic Production ...... 178

41. Production of Cars and B u s e s ...... 182

42. Production of Tractors and Car Motors, 1974-1979 184

43. Major Products of Construction Material .... 189

44. Production and Exports of Minerals, 1973-1977 ...... 191

45. Output of Foodstuffs, Beverages and Tobacco Products, 1973-1977 ...... 201

46. Sugar Production ...... 203

47. Cereal Processing, 1963-1979 205

48. Production of Fat Matters ...... 206

49. Algerian Textile Products, 1966-1967 208

50. Textile Production, 1973-1977 ...... 212

51. Production of Paper and Boxes ...... 215

52. Output of Wood and Paper Products, 1973-1977 ...... 216

53. Output of Leather Products, 1973-1977 ...... 218

54. Shoe Production, 1970-1976 219

55. Percentage of Total Agricultural I n v e s t m e n t ...... 233

56. Investment by Sector and Year, 1970-1973 . . . 245

57. Development of National Consumption According to Rural and Urban Areas ...... 249

58. Investment by Sectors, 1974-77 251

59. Total Investment Allocations, 1980-84 ...... 255

60. Total Investment in Industry and Agriculture Throughout Development Plans . . . 256

61. Average Annual Amounts of Fixed I n v e s t m e n t ...... 259

62. LNG and Natural Gas Export Contracts ...... 260

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 63. Projected Imports of Selected Agricultural Commodities, 1985 ...... 264

64. Breakdown of Total Investment ...... 265

65. Algeria's Agricultural Imports, 1969-77 .... 269

66. Availability and Scarcity of Cadres in 1963 ...... 310

67. Deficit of Qualified Upper Level Cadres in the Industrial S e c t o r ...... 314

68. Deficit of Qualified Middle Level Cadres in the Industrial S e c t o r ...... 315

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. LIST OF ILLUSTRATIONS

Figure

1. Organizational Structure of the Self-Management Sector ...... 108

2. Structure of Public Sector ...... 110

3. Algerian Social Class Structure ...... 113

4. Organizational Structure of SONATRACH ...... 118

Map

1. A l g e r i a ...... xiii

2. Main Hydrocarbons Installations ...... 362

3. Manufacturing by Wilaya and Public and Private S e c t o r s ...... 363

Graph

1. Trends in Hydrocarbons ...... 168

2. Trends in Manufacturing Production ...... 197

3. Foreign Dependency by Industrial Branches, 1974 198

4. General Investment Trend of Industry and Agriculture, 1967-84 275

5. Trends of Population and Agriculture ...... 276

xii

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Algeria

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. CHAPTER I

INTRODUCTION

Socio-economic development in the Third World is not

only attracting widespread concern both nationally and

internationally, but it has become a main concern of

sociologists, economists, and political scientists during

the last three decades. The main question centers around

how to bring about an improvement in the quality of life

of underdeveloped countries through economic, social, and

political changes. Both economists and political scien

tists will find this study important as far as indus

trialization and economic development are concerned.

There are many societies in the Third World today at

various stages of development, attempting to become indus

trialized nations, and many of the major social, economic,

and political problems in these countries revolve around

the issue of industrialization. Therefore, the question

of industrialization in the Third World is worthy of

investigation, and the findings of this study will be

particularly significant for sociologists and students of

sociology who are interested in industrialization and

social change in developing countries.

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I have chosen Algeria as a case study simply because

I had the opportunity to live in that country and observe

closely its rapid development and social change during the

last twenty years. Most studies of Algeria in the field

of economic development and industrialization were carried

out by foreigners as a result of short visits to the

country. The importance of this study can be seen in

terms of its contribution to Marxist underdevelopment

theory, as an attempt to provide a better understanding of

a specific former colonial social formation in the context

of the Third World as well as in the international set

ting. Finally, it is hoped that the findings of this

research will be helpful to the Algerian government and

its economic institutions for carrying out its development

plans in the future.

Organization of the Study

In the first chapter, we will present the introduc

tion to the topic as well as the research questions to be

investigated throughout this study. Also, we will define

the concepts used in this research, such as economic

development, industrialization, and Third World. We will

present the main theoretical schools of development and

industrialization such as the Marxist school, the depen

dency school, the non-capitalist school and the "industri

alizing industries" theory. In addition, we shall develop

an appropriate theoretical framework in which the Algerian

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social formation may be studied with reference to these

different perspectives.

In the second chapter, we will provide a general

historical review for the study, concentrating on the

situation of agriculture and industry during the French

colonial period, 1830-1962. The nature of class conflict

that led to the Algerian revolution in 1954, and indepen

dence in 1962, will be analyzed. Finally, the French

development plan, the so-called Constantine Plan, 1959-

1964, and the major problems that Algerian industry inher

ited from the colonial order will be discussed.

In the third chapter, we shall present the problemat

ic choice of the socio-economic development strategy of

post-independence Algeria. More specifically, we will

discuss the ideological and political foundation of a

socialist choice by referring to the Evian Agreements of

March 1962, the Tripoli Programme of June 1962, the March

decrees of 1963, and the Algiers Charter of April 1964.

We will also discuss the Algerian economic development

strategy in general and industrialization policy in par

ticular.

In the fourth chapter, we will describe the structure

of post-independence economy, providing a brief descrip

tion of the period of economic transition and the new

industrial doctrine. A brief comparison between private,

public, and state sectors will be made.

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In the fifth chapter, we will provide a comparative

and quantitative analysis of the three main branches of

the hydrocarbons industrial sector: the oil industry, the

gas industry, and the petrochemical industries.

In the sixth chapter, we will provide comparative and

quantitative analyses of the five main branches of the

heavy industrial sector: metallurgical industries, mech

anic industries, construction material industries,, mining

industries and electric industries.

In the seventh chapter, we will discuss the five

major branches of the light industrial sector: agro-

alimentary industries, textile industries, tobacco indus

tries, paper and wood industries, and leather and shoe

industries.

In the eighth chapter, we will examine, through

comparative and quantitative analysis, agriculture and

industrialization in the light of development plans.

These plans include the three-year plan, 1967-1969; the

first and second four-year plans, 1970-1973 and 1974-1977,

respectively; and Algeria's first five-year plan, 1980-

1984. We will also examine how the priority given to

industrialization at the expense of agriculture has

resulted in an uneven development.

In the ninth chapter, we will explore the problem of

foreign dependency and see how industrialization in

Algeria is financed. At the same time, we will explain

the contradiction between establishing socialism and the

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participation of foreign capital in financing development,

and how this participation may lead to dependent develop

ment. Foreign skilled labor, technology and science will

be treated as variables of the dependency relationship

that links Algeria to the international economic setting.

In addition, we will attempt to trace the type of social

ism Algeria is adopting at this stage of economic and

industrial development.

In the tenth chapter, we will try to identify the

fundamental problems inherited from French colonialism and

those created by the process of industrialization and

economic development itself throughout the course of

application.

In the eleventh and last chapter, we will present our

conclusion as a result of the analysis presented in the

study. Some recommendations based on the above conclu

sions will also be provided.

The Research Problem

The focus of this study is the process of industrial

ization and economic development by a Third World country,

Algeria. It is a study of social change and transition

from a colonial capitalist social formation to a dependent

capitalist nation in the near future. Accordingly, the

research problem of this study centers around the follow

ing questions:

1. Can economic development in Algeria be inter preted as dependent development?

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2. Is there any contradiction between establishing socialism and the participation of foreign capital in financing the development?

3. Is dependent development avoidable if indus trialization occurs with the aid of foreign capital?

The main thesis is that Algeria, like other Third

World countries, is witnessing major economic development

and industrialization and that, throughout this process of

industrialization, Algeria is experiencing dependent

capitalist economic development.

To arrive at a sociological interpretation of econom

ic development and industrialization, it is necessary to

begin by providing the various definitions that will be

used in this research. To begin with, the term "economic

development" in this study is used to refer to the type of

social change described by Paul Baran: "Economic develop

ment has historically always meant a far-reaching trans

formation of society in economic, social, and political

structures."*

This study will be guided by the following two defi

nitions of development. First, M. Todaro gives the fol

lowing definition:

Development must...be conceived of as a multi dimensional process involving major changes in social structures, popular attitudes, and national institutions, as well as the accelera tion of economic growth, the reduction of

^Paul Baran, The Political Economy of Growth (New York: Monthly Review Press, 1957), p. 3.

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inequality, and the eradication of absolute poverty.

Second, the Algerian Charter of 1976 presented the concept

of economic development that was originally expressed in

both the Algiers Charter of 1964 and the Tripoli Programme

of 1962. The Charter defines economic development as

...the establishment of new and just socio economic structures, the recovery of natural riches and their exploitation, the rising up of the intellectual and political level of the masses, a substantial collective savings [sic], a strict planning of^of priorities, and equal division of revenues.

The reason for limiting ourselves to economic development

in general and industrialization in particular is simply

that economic development is the overriding priority among

the goals of government policies in the developing coun

tries, and industrialization is seen as the necessary

means for achieving economic development.

As far as industrialization is concerned, we adopt

the concept of industrialization in the sense that M.F.

Perroux has defined it:

A structuring of society by employing machinery in order to increase accumulatively and with decreasing individual effort, the power of human groups in obtaining the goods which are essen tial to their well-being. Industrialization is then the establishment of the process which consists of producing machines by using machines,

2 Michael Todaro, Economic Development in the Third World (New York: Longmans, 1977), p. 62. 3 John R. Nellis, The Algerian National Charter of 1976 (Washington, D.C.: Georgetown University, 1980), p. 10.

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such that the number of mechanical devices increases at an increasing rate and correlatively leads to a decrease in individual physical effort, therefore, a greater liberation of man from £he negative impact of the natural environ ment.

The term "non-capitalist development" in this study

will be used in the sense of V.G. Solodovnikov's defini

tion. Solodovnikov, director of the African Institute of

the USSR, sees the social system that most closely corres

ponds to objective conditions in the African countries as

...a system directing the development of society towards socialism, by-passing or terminating capitalism. Economically, backward countries of the African continent will require a whole transition epoch — one in which material and technological, social and political conditions will be created for the victory of socialism. Marxist-Leninists call Jbhat epoch one of non capitalist development.

Thus, according to him, non-capitalist development is a

transitional stage and a road of struggle for socialism in

countries where the proletariat has not yet become a

decisive force. By the same token, Yuri Popov argues

that "...both domestic and international conditions favour

the struggle of the newly free nations for the non-

4 Aissa Bennamane, The Algerian Development Strategy and Employment Policy (London: Geo-Abstracts, 1980), pp. 66-67. 5 V.G. Solodovnikov, "The Non-Capitalist Road of Development in Africa," in Marxism Today 13 (September 1969): 278.

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capitalist, and then the socialist road of social and

economic development.

By "dependent development" we mean a situation in

which the economy of a developing country is dependent on

capitalist countries in the major spheres of economic

life; the process of development and industrialization is

linked directly to the capitalist mechanism of imperialist

countries and their own international and national needs.

In other words, the economy of a developing country be

comes integrated and geared primarily to the demands of

the world market through patterns of trade, investment,

technology, capital, and large-scale recruitment of for

eign specialists. As Dos Santos puts it (and I think

Samir Amin, Andre G. Frank, and Celso Furtado would agree),

it is "a situation in which the economy of certain coun

tries is conditioned by the development and expansion of 7 another economy to which the former is subjected."

The term "Third World" or "developing countries"

includes

...countries of Asia, Africa, and Latin America, mostly former colonies or semi-colonies. In the course of national liberation struggle the developing countries have attained political sovereignty, but being in the orbit of the world capitalist economy they remain to various extent unequal "partners of highly-developed capitalist

6Yuri Popov, Marxist Political Economy as Applied to the African Scene (Moscow: Novosti Press Agency, 1973) , p. 105.

^heotonio Dos Santos, "The Structure of Dependence," American Economic Review 60 (May 1970) : 231.

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states. The developing countries include coun tries which...won political independence as a result of the collapse of the colonial system of imperialism after the Second World War.

The term "Third World" includes all the countries of Asia,

Africa, and Latin America that have appeared on the poli

tical map of the world and won their political indepen

dence in the last century. Despite differences in level

of socio-economic development, size and density of popula

tion, and ideological-political orientation of these

countries, they have many common features which justify

their definition as "Third World" or "developing coun

tries." These common features are the small scale of

per-capita production, low level of annual per capita

income, low productivity of labor, lack of capital, and

poor technology. However, the most important features are

similar socio-economic conditions and that these countries

have been subjected for a long time to colonialist exploi

tation. As Henri Alleg states: "All the countries con

sidered have some points in common, and first of all an

identical past of imperialist oppression that has left

them chained and in a state of economic and social back

wardness.

Finally, the concept of "foreign capital" means any

capital received from foreign sources (banks, governments,

g Political Terms (Moscow, Novosti Press Agency, 1982) , p.24. 9 Henri Alleg, "Perspectives of the National Libera tion Movement," Marxism Today 13 (September 1969): 259.

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private investors, and international organizations) by

means of loans or investment and used in financing domes

tic development. By foreign loans we mean "loans con

tracted in foreign money markets or extended by foreign

governments or international organizations."^ The varia

ble of "foreign capital" or "foreign loans" is very impor

tant in explaining the phenomenon of dependency, because

through foreign capital or loans, imperialist powers often

seize control of export markets and the raw material

sources of debtor countries which thus become economically

as well as politically dependent on the creditor coun

tries .

The Research Methodology

The research method to be used in this study will

entail an analytic procedure from the specific to the

general; the research will attempt to derive a general

conclusion from a particular case study based on available

data. These data will be analyzed within a historical

context over a period of twenty-two years, 1962-1984. The

year 1962 is selected because it marks the end of the

colonial period and capitalist social formation and the

beginning of a new era of political, economic and social

change. The date 1984 marks the end of Algeria's first

Five-Year Plan (1980-1984) .

^ABC Political Terms, p. 30.

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Due to the nature of the research and the research

questions under investigation, a comparative and quanti

tative analysis of the available data on economic develop

ment and industrialization of Algeria will be a useful

tool in explaining development processes. We will provide

a comparison between the different sectors of the economy,

such as industry and agriculture, and between the branches

of each sector, such as heavy industry and light industry.

Quantitative analysis will be carried out based on tables,

graphs, and statistics, allowing a final qualitative

assessment.

In considering our research questions, our analysis

will test the validity of De Bernis' theory of "indus

trializing industries" and to understand whether the trend

of economic development and industrialization experienced

by Algeria is moving toward establishing socialism or

building capitalism and thereby producing dependent devel

opment. Therefore, the main task is to study the process

of industrialization and economic development and its

direction. The selection of measurement for the major

variables of the study is essential as a starting point.

In this study, nationalization, percentage of imports,

volume of trade, foreign capital, capital-intensive and

labor-intensive industrialization, share of gross national

products, share of public ownership of the means of pro

duction, political and economic participation of the

working masses, and employment are the most important

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indicators for explaining the process of this dependent

development. These indicators will enable us to determine

the destination of post-independence economic development

and industrialization in Algeria. The main sources of

available data are books, articles, government reports,

and documents published mainly between 1962-1984. These

sources are the most appropriate for examining the phenom

enon of development and industrialization in the Third

World.

Theoretical Framework

The theoretical framework in which this study will be

carried out is that of political economy. The central

thesis which will guide the research and analysis is that

Algeria, like other Third World countries, is witnessing

major economic development and industrialization. Through

out this process of industrialization, Algeria is experi

encing dependent capitalist economic development.

There are different schools of thought and perspec

tives in dealing with the developing or newly independent

countries of the Third World. Some writers believe that

countries such as Algeria are in fact socialist countries,

while others maintain that they are state-capitalist, and

a third line of interpretation sees them as being on the

road of non-capitalist development toward socialism.

Since our thesis is to be studied within the theoretical

framework of political economy, it is necessary to discuss

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first the political economy approach to the study of

economic development and underdevelopment.

The main features of the political economy approach

are as follows:

1. It deals with the Third World countries and their

relationship to the imperialist world.

2. It is a historical approach in the sense that

development cannot be understood except in a historical

context.

3. It is concerned with wealth and income distribu

tion as key determinants of the kind of development the

society is experiencing.

4. Control of the economy is the key to power, and

hence the key to major economic decisions that determine

the kind of economic development.

Political economy sees revolution as the main vehicle

of social and economic change, and socialism as the next

stage of human development. There are two major schools

of thought within the political economy paradigm: the

orthodox Marxist school, and the dependency school. Both

schools agree in the sense that development and under

development cannot be understood except in a historical

context. The main difference between the two schools in

explaining underdevelopment is the emphasis of the ortho

dox Marxist school on internal class structure and the

emphasis of the dependency school on the relation between

capitalist and imperialist countries and controlling power

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in the Third World. In other words, the dependency theory

explains underdevelopment more through international

economic and political relations than through the internal

class structure.

Orthodox Marxist theory. This theory originated with

Karl Marx, and later was developed by Engels, Lenin, Mao,

Sweezy, Amin, Frank, John Gurley and Paul Baran. The

orthodox school will be represented here by John Gurley

and Paul Baran.

According to Gurley, the ruling classes in the devel

oping countries are directly responsible for underdevelop

ment in the Third World. Overthrowing the ruling classes

is a necessary condition for overcoming the phenomenon of

underdevelopment. Gurley emphasizes the role of class

structures in blocking development by asserting that the

ruling classes are usually afraid of revolutionary social

change, and therefore it is not in their interest to

establish a sound economic development program which will

raise the consciousness of the masses.^

For Baran, the phenomenon of underdevelopment is seen

as "the condition in which human and material resources

have been greatly underutilized or altogether unemployed,

^John Gurley, "Economic Development: A Marxist View", in Directions in Economic Development, eds. Kenneth P. Jameson and Charles K. Wilber (Notre Dame, Indiana: Notre Dame University Press, 1979), p. 25.

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12 accompanied by low output." This condition is histori

cal, and it exists because of the penetration of capital

ism into Third World countries. According to Baran, Third

World states represent the property-owning classes, and

therefore no economic development occurs in the Third

World countries without fundamental changes in their

political structures through breaking the alliance between

feudal landlords, industrial and business leaders. Thus,

revolutionary change is necessary for development in the

Third World.

Dependency school. This school of thought maintains

that the process of underdevelopment is a historical

process created by capitalist expansion that led to colon-

ialization and imperialism. To study underdevelopment, we

must begin by examining the historical factors that con

tributed to it and analyzing the relationships between

underdeveloped countries and the world. Underdevelopment

must be seen in relation to a world economic system. This

view has been discussed extensively in the work of Samir

Amin, Andre Gunder Frank, Celso Furtado, Theotonio Dos

Santos, and Keith Griffin. To Amin, state-capitalism is

nothing but a new form of the colonial dependency rela

tionship. In Unequal Development, he says:

Now these are, so far as relations between the developed and the underdeveloped parts of the

12 Paul Baran, The Political Economy of Growth, (New York, Monthly Review Press, 1957), p. 165.

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world are concerned, structures of asymmetrical domination by the center of the world system over the periphery. External equilibrium...is possible only because the structures of the periphery are shaped so as meet the needs of accumulation at the center.

Amin attempts to explain underdevelopment through the

concept of "unequal development" which focuses on the

effects of the center on the periphery. He believes that

unless the peripheral countries break away entirely from

the capitalist system they have no chance of achieving

economic development. This implies that revolutionary

political and social change is required. By the same

token, Frank maintains that

...contemporary underdevelopment is in large part the historical product of past and continu ing economic and other relations between the satellite underdeveloped and the now developed metropolitan countries... these relations are an essential part of the structure and development of the-capitalist system on a world scale as a whole.

Here, instead of the concepts of "center" and "periphery",

Frank introduces the terms "metropolis" and "satellite" in

referring to capitalist countries and Third World coun

tries, respectively, to demonstrate the kind of relation

ship between the two worlds — center and periphery.

According to him, the underdevelopment phenomenon is the

13 Samir Amin, Unequal Development (New York: Monthly Review Press, 1976), p. 104. 14 Andre G. Frank, "The Development of Underdevelop ment " in The Political Economy of Development and Under development, ed. Charles K. Wilber (New York: Random House, 1973), p. 95.

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product of the historical development of the capitalist

system and the continuing economic and political relations

between the "metropolis" and "satellite" countries. Dos

Santos believes that

[i]n order to understand the system of dependent reproduction and the socio-economic institutions created by it, we must see it as part of a system of world economic relations based on monopolistic control of large-scale capital, on control of certain economic and financial centers over others, on a monopoly of a complex technology that leads to unequal and combined development at a national and international level.

He goes on to say, "in reality we can understand what is

happening in the underdeveloped countries only when we see

that they develop within the framework of a process of X 6 dependent production and reproduction."

For Furtado,

The relations between "central and peripheral" countries are, however, much more complex....A fundamental aspect which is usually overlooked is the fact that when certain countries got to be peripheral, they were transformed into importers of new consumer goods, which were the fruits of technical progress in the central countries. Furthermore, this process of adopt ing new patterns consumption was bound to be a very uneven one.

15 Theotonio Dos Santos, "The Structure of Depen dence," American Economic Review 60 (May 1970): 235. 16t, . , Ibid. 17 Celso Furtado, "The Concept of External Development in the Study of Underdevelopment," in The Political Econo my of Development and Underdevelopment, ed. Charles K. Wilber (New York: Random House, 1973), p. 118.

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According to Furtado, external dependency is a structural

situation in which such peripheral capitalism prevails in

certain countries. Griffin has also argued that we cannot

understand the origin of underdevelopment without studying

the forces of history. He has analyzed this phenomenon by

saying:

It is our belief that underdeveloped countries as we observe them today are a product of historical forces, especially of these forces released by European expansion and world ascen dancy. Thus, they are a relatively recent phenomenon. Europe did not discover the under developed countries; on the contrary, she created them.

Non-Capitalist School. Like the dependency school,

the school of non-capitalist development interprets under

development in the Third World as a historical process

caused by the colonial exploitation of the imperialist

countries. This school will be represented by two of its

thinkers, V.G. Solodovnikov, director of the African

Institute of the USSR, and Yuri Popov, specialist in the

socio-economic problems of the Third World and the devel

opment of economic thought in African countries.

Solodovnikov sees non-capitalist development in the newly

independent African countries as a path of advancement

toward socialism, by-passing or terminating capitalism.

For him, the road of non-capitalist development of the

liberated countries

18 Keith Griffin, "Underdevelopment in History," in The Political Economy of Development and Underdevelopment, ed. Charles K. Wilber (1973), p. 72.

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...is a practical possibility in all countries which have...a mass revolutionary movement which rejects capitalism, and the existence of a revolutionary democratic party which accepts the principles of scientific socialism and is capable of leading the revolutionary upsurge of the masses into a new society.

Solodovnikov stresses that the need for a transitional

stage of non-capitalist development is an objective law of

development necessitated by the fact that these countries

did not yet have the material, technical, social, and

political basis for the construction of socialism. These

countries still need to develop their productive forces in

industry and agriculture. Similarly, Popov says: "The

main cause of economic backwardness of the people of Asia,

Africa, and Latin America is the colonialist exploitation

to which they have been subjected." 20 He also argues that

non-capitalist development is opening the road to a tran

sition to socialism in the Third World. According to this

school, there are five elements by which revolutionary

democratic regimes lead Third World societies to social

ism:

1. They force imperialism to make concessions

through nationalization of raw material production and

producer-country cartels.

19 V.G. Solodovnikov, "The Non-Capitalist Road of Development in Africa" Marxism Today 13 (September 1969) : 280. 20 Yuri Popov, The Developing Countries from the Standpoint of Marxist Political Economy (Moscow: Novosti Press Agency, 1977), p. 13.

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2. They promote agrarian reform.

3. The revolutionary democratic regime promotes

industrialization through the anti-capitalist state sector

and central planning.

4. The regime encourages the political participation

of working people and is concerned with their welfare.

5. The transition to socialism will finally come

when the working class and its Marxist-Leninist Party

assume leadership of society. 21

The theorists of this school have made a distinction

between socialist-oriented countries and socialist coun

tries. Algeria, for example, is one of the socialist-

oriented countries. This school does not see any contra

diction between opening the path to socialism and the

participation of foreign capital in financing development.

The Socialist Perspective. The socialist perspective

is held by the political leaders of the developing coun

tries, such as Gamal Abdl-Nasser, Sekou Toure, Modibo

Keita, Kwame Nkrumah, and Ben Bella and Houari Boummediene,

who openly proclaim that their goal is socialism. In

their speeches, which are usually used as underlying

principles of party programs and documents of mass politi

cal organizations, they claim that their countries are

socialist countries. For example, the Algerian President

21 Karen Pfeifer, "State Capitalism and Development," MERIP Reports 78 (1979): 7.

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Chadli Bendjadid said to the Front of National Liberation

(FLN) and the Algerian people in his first speech:

I will strive to continue along the path traced by the late president Boummediene. I affirm that socialism is an irreversible option for our country. I pledge myself to fight for the maintenance of our national independence both politically and economically and-to maintain the mastery of our national wealth.

This view holds that these countries, at the internal

level, are trying to strengthen the public sector, to plan

economic development, to control the activities of foreign

capital, to speed the development of productive forces, to

build their own national industry, to encourage coopera

tion among peasants, and to carry out democratic transfor

mation in the interests of the working masses. At the

external level, the political-economic relations of these

countries resemble the relations of the socialist coun

tries in their position against imperialism and neo

colonialism. Henri Alleg, leader of the Algerian social

ist vanguard party, implies in his writings that these

nations can be seen as socialist nations while they are

building their scientific socialism. The reason is that

the choice is not socialism or capitalism; it is socialism

because socialism is the only choice left for them. Alleg

writes,

22 Harold C. Nelson (Ed.), Algeria: A Country Study (Washington D.C.: Government Printing Office, 1979), p. xii.

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The colonial masses have had an entirely nega tive experience of capitalism. In their coun tries, it has never been an element of progress. It has not developed but, on the contrary, retarded productive forces...the majority of the people have the same hatred for both colonialism and the capitalist system that bred it.

Industrializing Industries Theory. The theory of

"industrializing industries," upon which the Algerian

development model is extensively based, departs from the

notion of producing machines by using machines, leading to

a greater liberation of man from nature. The accelerated

industrialization that Algeria has undertaken is often

considered the best illustration of the theory of economic

development by industrializing industries. The initiator

of this theory is the French economist M.G. De Bernis, who

is one of the most appreciated foreign consultants among

the Algerian economic authorities. De Bernis argues that

For the underdeveloped countries, the decisive fact in the industrialization process is the constitution of capital assets which are capable of feeding industry with the basic industrial products. Therefore, one has to start with the industries which produce the means of production and no£. with those which produce consumption goods.

The theory of industrializing industries rests on three

main features: large-scale industries, a very high capi

tal concentration, and production oriented to the means of

production rather than final consumption goods. It

23 Henri Alleg, "Perspectives of the National Libera tion Movement" Marxism Today 13 (September 1969): 261.

^4Jean-Claude Hazera, "Algerie: L'industrialisation acceleree", Les dossiers de Jeune Afrique 3 (1975): 118.

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appears that the main concern of De Bernis' theory is with

the development of large-scale industry and above all

those branches which produce means of production.

This study assumes that throughout the actual econom

ic development and process of industrialization, Algeria

is experiencing dependent capitalist economic development.

From the beginning, in the Tripoli Programme of 1962,

socialist ideas and the demand to limit the ownership of

land were combined with the promise of favorable condi

tions for foreign capital investments and free transfer of

capital. One can argue that Algeria at that time, as a

newly independent country, was still under French colonial

pressure. However, even later on, under the Boummediene

regime, there was a strong tendency to use foreign capital

to develop industry. Boumediene declared:

It is in the national interest, within the framework of our (politico-economical) option ...not to exclude and especially not to discour age national private investment...likewise, foreign effort in investments, within the framework of our option.

As our brief theoretical review has shown, neither

the orthodox Marxist theory nor the dependency theory

alone can explain the process of economic development and

industrialization in the Algerian social formation. This

is true because, on the one hand, we cannot understand the

relationship between the center and periphery by studying

25 Marnia Lazreg, The Emergence of Classes in Algeria (Boulder, Colorado: Westview Press, Inc., 1976), p. 112.

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only the internal class structure. On the other hand,

studying only the relationship between center and peri

phery will not help us much to understand the class struc

ture in the society under investigation. Although we

believe that the process of underdevelopment in Algeria

was maintained mainly by the internal class structure, we

also believe that this condition was partly helped by the

local or national bourgeoisie who appropriates a large

portion of the national income and who benefits directly

from the dependency relationship with imperialist coun

tries (see class analysis, p. 111).

In conclusion, we propose a new adjusted theoretical

framework in which Algeria — and perhaps most of the

third world countries — should be studied: a theoretical

framework joining both orthodox Marxist theory and Depen

dency theory. This means that the most appropriate theo

retical framework in which the current Algerian social

formation should be studied is that of both its internal

class structure and the relationship between its class

structure and the international economic setting. How

ever, the following analysis will finally determine wheth

er Algeria is indeed experiencing dependent capitalist

economic development.

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GENERAL HISTORICAL BACKGROUND

In this historical review we will discuss the situa

tion of agriculture and industry during the French coloni

al period, 1830-1962; the nature of the class conflict

that led to the Algerian revolution in 1954 and indepen

dence in 1962? and finally, the French development plan,

the so-called Constantine Plan, 1959-1964, and the major

problems that Algerian industry inherited from the coloni

al order.

Before we discuss Algerian society under French

occupation, it is necessary to shed some light on the

Algerian pre-colonial social formation. Due to the

various invasions that Algeria faced in its history, the

Algerian social structure cannot be reduced to any specif

ic pre-capitalist social formation. French military men

and colonial administrators saw the Algerian form of

property either as "communal" or "feudal," depending on

the purpose the interpretation was to serve. Algerian

landownership was claimed to be "communal" when French

immigrants needed land, and the only way to take it was to

declare that the indigenous population lived under a

"communal system" that was an obstacle to progress. It

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was considered "feudal" where the colonists needed labor

which they could get only by detaching small farmers from

landowners (local aristocracy). Rene Gallissot, in his

study L'Alqerie precolonial classes sociales en systeme

precapitaliste, argued that Turkish domination, combined

with the tribal mode of economic organization, formed a

special mode of production referred to as "Communal

Feudalism."* This type of feudalism was seen as somewhat

different from the accepted European feudal model, in that

it encompassed both town and country. The European model

was country-based and gradually produced an antagonistic

relationship between town and country, whereas in Algeria

the type of feudalism was based on the subordination of

the country to the town. Mahfoud Bennoune, in his dis

cussion of The Origin of the Algerian Proletariat, argued

that the Algerian pre-colonial social formation was a 2 semi-feudal state.

In reality, the Algerian pre-colonial social forma

tion was neither feudal nor semi-feudal nor communal;

neither was it made up of nomadic tribes roaming through a

vast land. It was customary for Algerian tribesmen to

leave part of their land in order to avoid exhausting it

*Rene Galissot, L'Alqerie precoloniale classes sociales en systeme precapitaliste (Paris: Centre d 1Etudes et de Recherches Marxistes, 1968), p. 26. 2 Mahfoud Bennoune, Algerian Peasants and National Politics (Washington D.C.: MERIP Reports, No. 48, 1976), p. 16.

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and move on to cultivate new plots within a given terri

tory. This was wrongly interpreted by French colonists as

a sign of a generalized nomadic life style. Identifica

tion of the Algerian property structure is easier if it is

compared with the pre-capitalist economic formation

described by Marx. Marx distinguished between the Asiat- 3 ic, Germanic, and Ancient types of property. In compar

ing pre-capitalist Algeria to these three types of econom

ic formations, we can say that in the areas where Melk

property (private property) was predominant (as in

Mitidja), the Algerian socio-economic structure was of the

Ancient type. Wherever Arsh property (tribal property)

predominated, Algeria approximated the Asiatic type of

economic formation. Wherever Melk and Arsh coexisted in

such a way that Arsh was a simple supplement to Melk,

Algeria was closer to the Germanic type.

Algerian Social Formation Under French Occupation, 1830-1962

Algerian history has been characterized by various

invasions such as those of the Romans, Byzantines, Arabs,

Turks, and finally the French. In 1830, France began its

conquest of Algeria and proceeded to colonize the terri

tory. However, the French military conquest could not

control the entire country until 1848. The history of

3 Karl Marx, Pre-Capitalist Economic Formation, tr. Jack Cohen (New York: International Publishers, 1965) , pp. 65 ff.

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Algeria for the next quarter of a century is mainly

concerned with the gradual reduction of continuing opposi

tion against colonization. A policy of widespread confis

cation of land and its transfer to settler groups was

pushed forward. Many French people were attracted to

Algeria; most of them engaged in business and agriculture.

However, the rural "traditional" sector where the Algerian

population lived remained separate from the modern econom

ic infrastructure of the European community. After 1848

the influx of colonists increased greatly, with the

approval of the government of the second republic. A

further stimulus to colonization was provided by the

widespread confiscation of lands. By 1860, much of the

best land in Algeria was in French hands, and French

settlers rapidly became the dominant power in the land.

After the Algerian revolt of 1871, the situation was

normalized by the new French administration. From that

time until the end of the nineteenth century, Algeria was

the scene of considerable economic progress and increasing

European immigration, especially from Italy. The main

feature of this period was the growth of large-scale

agriculture, concentrated in the hands of the settlers.

Thus, after more than 300 years of subjection to

Turkish rule, the French colonial regime aimed at destroy

ing Algerian society for the purpose of realizing capital

accumulation. The 1833 African Committee reported: "The

question, above all, for France, is to colonize part of

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North Africa for providing a market outlet to its industry 4 and trade." The further advancement of capitalism in

France required two main factors: (1) a new market for

the European capitalist export countries, and (2) control

of the sources of raw material. Accordingly, Algeria was

seen as a vital potential market where capital could be

realized, as in other social formations in the Third World

such as Latin America and India. Algeria was not only

meant to be a new market for French goods; it was also to

become a settlement colony. The French began an official,

systematic policy of settlement, encouraging immigration

from Alsace-Lorraine and southeastern France as well. The

expropriated land was given to large private investment

companies in the hope that they would stimulate immigra

tion and establish more settlement. The flow of European

settlers continued for the next 30 years.

Social, Economic, and Political Conditions

The French rule that emerged after the invasion aimed

at changing the social, economic, and political activities

of pre-colonial Algeria that had been devoted to produc

tion for use rather than commodities for exchange. This

was most evident in the rural communities; in the urban

4 A. Benachenhou, Formation du Sous-Developpement en Algerie: essai sur les limites de developpement du capitalisme 1830-1962 (Algiers: Office des Publications Universitaires, 1976), p. 53.

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centers, artisans and merchants had been involved to a

certain extent in production for exchange.

The majority of the Algerian people lived in rural

conditions, mainly on small farms and often on marginal

land. Some of them were literally landless, while others

were underemployed, as their own land would not yield

enough for them to live upon; they had to work for Euro

pean farms. Not only did Algerians have the poorer land,

but they were far behind in education, having an illiter

acy rate in 1954 of about 90 percent, with about 9 percent

being able to read and write. The European community in

Algeria was generally much better off than the Algerians,

owning about 90 percent of the industry and 40 percent of

the best land in the country; all of them were either

large colons, landowners, or administrators.

The most important act of the French government

concerned the destruction of the indigenous property

system. Three major decisions put an end to the Algerian

form of property. These were the 1844-46 ordinances and

the 1863 and 1873 laws. In the 1844-46 ordinances, the

administration declared the expropriation of all land that

appeared to be uncultivated, regardless of Habus property

(religious property). It claimed that Habus constituted

an obstacle to the development of industry. French

colonists moved into tribal land. The tribal communal

pastures became the property of the French state. The

1863 law proposed to distribute the inventoried Arsh

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property among individual members of the tribes. The

intention was to create individual property of the Euro

pean kind. Land was divided into three categories:

(1) collective cultivation lands, (2) collective pasture-

land, declared to be property of the tribes, and (3) Melk

land.

The 1873 law constituted a third historic measure in

terms of the destruction of the tribal organization of

Algeria. This law undertook to determine the individual

property of the tribesmen and to enforce the use of French

law in all land transaction, not only between Algerian and

Europeans, but among Algerians as well. These laws

accelerated the process of destroying Algerian social

formation and resulted in social change. This change can

be examined on three levels: (1) the level of the indi

vidual's relation to property, (2) the structural level,

and (3) the institutional level. The first consequence of

the 1846 ordinance was a sharp decline in cattle because

of the expropriation of cattle land. The natives were

forced to give up this traditional form of their activity.

They sold their cattle and sought work with the new

European landowners. As a consequence, Khammasa and wage

laborers emerged as two new social categories. Rural wage

labor was comprised of semi-permanent and permanent

workers. They were hired by individual colonists and

private companies. Under this category, the Khammasa

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existed as those who worked seasonally and got paid in

kind, receving one-fifth of the production.

The radical change in the structure of Algerian

property naturally affected the social organization of the

tribes. The process of dislocation replaced kinship

tribes with locality-tribes. Fractions of different

tribes were combined to form a single Duar. This disloca

tion of tribal organization was necessarily reflected in

the composition of the social groups that made up the

tribes. For example, the old aristocracy was displaced by

a new, composed of those who fought in the ranks of the

French army and those appointed to serve in the military

administration. In urban centers, where the rise of

industry and the expansion of trade took place, the old

handcraft workshops declined. Leather and copper crafts

men, along with wood workers, disappeared as independent

producers and became wage laborers. The small traditional

bourgeoisie became hostile to the French and gradually

became a marginal social class. In its place there

emerged a new social category comprised of businessmen,

exporters of farm production, wholesale and retail grain

dealers, tobacco dealers, oil manufacturers, and land

lords .

At the institutional level, the policy of cantonment

resulted in the breakdown and ultimately the disappearance

of those tribal institutions that had helped individuals.

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The appropriation of Habus estates by the French adminis

tration resulted in the abolition of the Zawias (religious

institutions) as provident institutions which used to

advance grain to the poor peasants.

Agriculture

Until about 1880, the emergence of capitalism in

Algeria was still limited because the destruction of the

traditional mode of production was not achieved until

1871. The emergence of capitalism was characterized in

the rural areas by "formalist capitalism" and in the urban

areas by "primary industrial stages."*’ The fundamental

departure of capitalism as a dominant mode of production

in Algeria occurred only after 1880.

Confiscation of the means of production took differ

ent forms. Sometimes it took the form of outright confis

cation, sometimes that of purchase by force. Algerian

economic history was marked by the transformation of land

into a commodity for sale. This situation was described

by Lerry Beaulier, who stated that Algeria became for the

European capitalists an agricultural colony in which they

purchased and sold crop land. We find, for example, that

Debonno had bought 1,000 hectares of crop land; Chiris

owned 710 hectares; the real estate agricultural company

^Benachenhou, Formation du sous-developpement en Algerie, p. 125.

^Ibid., p. 145.

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of El-Harrach possessed 460 hectares; and Le Chapeau de

Gendarme possessed 500 hectares. As a consequence, the

French administration thought it was necessary to create a

company specializing in the purchase and sale of land.

The Lyon Agricultural Company of North Africa was estab

lished in 1900 and owned 397 hectares in the first year.

As a result of the policy of separating the workers

from their means of production, confiscating land, and

destroying the traditional mode of production, the peas

ants described their social and economic conditions as

follows:

We have been submitted to all kinds of pres sures. We used to own the land but the colons bought it from us by force. After that we were obliged to sell even our cattle and work for them. In any way, we ar§ not the ones who created the property law.

The two dominant sectors in colonial agriculture were

wine and wheat. These two sectors were the source of

capital accumlation throughout the period of French

occupation. Table 1 shows the significant increase in the

number of vineyards and wheat-cultivated land. The

vinicultural sector had two main features: (1) its

domination within Algerian capitalist agriculture, and (2)

its capital concentration. Accordingly, we can say that

capital accumulation in viniculture was the fundamental

factor for the development of capitalism because of the

large number of workers being hired in this sector and the

®Ibid., p. 83.

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TABLE 1

EXPANSION OF VINEYARDS AND WHEAT- CULTIVATED LAND BY EUROPEANS (Hectares)

Years Vineyards Wheat

1880 23,724 372,722 1885 70,886 535,931 1890 110,048 435,759 1895 122,186 417,624 1900 154,430 532,091 1905 179,950 591,091 1910 152,129 752,750 1914 180,735 887,521

SOURCE: A. Benachenhou, Formation du sous-developpement en Algerie (Alger, Office des Publications Universi- taires, 1976), pp. 140, 149.

TABLE 2

VALUE OF EXPORTED WINE PRODUCTION, BY THOUSANDS OF FRENCH FRANCS

Value of Years export

1905 51,091 1906 58,587 1907 75,964 1908 81,326 1909 95,512 1910 214,095 1911 203,475 1912 35,475 1913 164,166 1914 97,920

SOURCE: A. Benachenhou, Formation du sous-developpement en Algerie (Alger, Office des Publications Universi- taires, 1976), p. 142.

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role it played in external trade. In regard to external

trade, Table 2 indicates the increase in the value of

exported wine. The export of wine was very significant in

terms of the total Algerian export. For example, the

export of wine during the ten years indicated in Table 2

reached a value of one-third of all Algerian exports.

Statistically, the value of exported wine exceeded the

value of wheat by 15 percent.

Between 1920 and 1934, viniculture had expanded

significantly, due to the expansion of wine markets and

the increase in prices. The output of wine in this period

exceeded that of France. For example, in France in 1932,

131 companies produced less than 250 thousand hectolitres,

whereas Algeria in the same year, with only 113 companies,

produced for the French market a quantity of 2,087

thousand hectolitres. In 1939, the production of wine

reached its highest stage. Table 3 shows the expansion of

viniculture in size, production, and export for the period

1921-1934. In the same period, wheat agriculture did not

expand in terms of area, because the labor force was

attracted by viniculture which was encouraged by the

French administration. For example, the value of European

agricultural production in 1934 in wine was 961,000 French Q Francs, whereas the value of wheat was only 696,000 FF.

9 A. Benachenhou, Formation du sous-developpement en Algerie, p. 174.

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TABLE 3

VINICULTURE EXPANSION IN SIZE AND PRODUCTION (1921-1934)

Area Production Export Years (hectares) - - - (hectolitres) - - -

1921 168,742 7,034,267 1924 180,757 10,141,589 7,394,048 1927 207,367 8,402,618 7,121,531 1930 234,916 12,821,141 10,939,434 1934 373,292 16,631,032 11,652,304

SOURCE: A. Benachenhou, Formation du sous- developpement en Algerie (Alger, Office des Publications Universitaires, 1976), p. 163.

Thus, wine production constituted 46 percent of Algerian

agricultural production, while wheat production constitut

ed only 33 percent. In other words, both wine and wheat

production constituted 79 percent of the entire agricul

tural production of Algeria. This means that those who

controlled wine and wheat agriculture controlled public

opinion and made the political and economic decisions.

The second dominant sector in colonial agriculture

was wheat agriculture. Between 1885 and 1900, as Table 1

shows, there was a significant reduction in wheat-

cultivated land because of the large quantity of wheat

imported to Europe from Canada, India, and Australia.

From 1900 to 1915 the wheat situation improved because of

a change in cultivation methods. The Europeans began to

use the "dry-farming" method in most of the regions of the

country.

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Due to the first world war, the demand for Algerian

agricultural production (wine, wheat, fruits, vegetables,

wood, and leather) rapidly increased. This increase in

export, as Table 4 shows, led to a high profit among

traders and those who controlled wine and wheat agricul

ture. We can conclude that the colonial agricultural

development was dominated by two main sectors of produc

tion: wine and wheat.

TABLE 4

MOVEMENT OF EXTERNAL TRADE (Thousands of French Francs)

Years Exports

1914 374,624 1915 537,107 1916 631,694 1917 856,269 1918 794,074

SOURCE: A. Benachenhou, Formation du sous-developpement en Alge'rie (Alger, Office des Publications Uni- versitaires, 1976), p. 154.

Industry

From the beginning it was French policy that the

country should provide an outlet for the industrial

products of France. Accordingly, few industries, and none

of any magnitude, were established in Algeria in the

nineteenth century, the accent being on encouraging the

colons to concentrate upon agriculture. This policy began

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to change in the twentieth century, but industry in

Algeria did not develop to any great extent until after

World War II. Some small industies, especially those

making consumer goods, were established, but still within

a primarily agricultural economic base. Table 5 indicates

the distribution of workers by types of industries in

1890.

TABLE 5

WORKERS, BY TYPE OF INDUSTRY, 1890

Number of Types of industry Workers

Food 6,191 Chemical production 536 Construction 4,040 Wood industries 2,342 Textiles 15,023 Mine workers 2,429 Clothing 1,187 Leather 691 Paper industries 771 Divers 1,627

SOURCE: A . Benachenhou, Formation du sous-developpement en Algerie (Alger: Office des Publications Uni- versitaires, 1976), p. 124.

NOTE: Original source: Statistique gene'ral de l'Alcjerie publiee par le gouvernement general. No further details given.

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The military conquest of Algeria was characterized by

violence. The socio-economic consequence of this conquest

was the destruction of the traditional industries or

artisans. In 1868, a law was passed by the French admini

stration to destroy, by every means, the artisan system,

sometimes by putting restrictions on getting raw materi

als, at other times by increasing their prices. In this

way, the Algerian craftsmen were deprived of their own raw

materials, which were put at the service of French indus

try. We should take into account the historical transfor

mation of the peasants into workers selling their labor

power, which led to the separation of the craftsmen and

their clients because of the decline in the purchasing

power of the peasants. As a result, many handcraft

workers had no other alternative but to be hired on a

day-to-day basis. A large number became dockworkers in

the port of Algiers.

Colonial administrators were alarmed that this shift

of native people into the proletariat might constitute a

great danger for the future. The rapid development of

colonization pulled a large number of people from the

tribal communities into the European colonial farms and

plants as wage laborers. Thus the French state succeeded

not only in tying a large number of agricultural workers

to the plantation of the settlers, but also in attracting

many migrant workers to metropolitan France itself, where

they were transformed into an industrial labor force.

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Heavy industry was not established until the late

1950s and early 1960s, after the discovery of oil at

Hassi-Massoud and gas at Hassi-R'mel in 1956 and the

implementation of the Constantine plan in 1959. Because

of the large sums of capital and technical problems

involved, the setting-up rate of heavy industry was

normally slower than that of the conversion industries.

For this reason, special attention was given to the

processing industries in the industrialization programs.

The processing industries were expected to furnish 400,000

new jobs needed to reduce unemployment and absorb the

increasing numbers of rural people emigrating to the

cities.

During the first two years of the plan, four heavy

industries were approved — one in 1959 and three in 1960.

In 1960, a total of 500 companies applied for approval to

locate in Algeria and 417 concerns had already been

approved, representing a potential investment of about

$200 million and the creation of 30,000 jobs. The major

heavy industrial projects began to take shape in 1961. A

start was made in the mining of the Djebel Onk phosphate

deposits; work began on the Annaba Steel Plant and the

Algiers Petroleum Refinery; and the a large petrochemical

complex using natural gas was established at Arzew.

If 1959 was the year for petroleum, 1960 opened up

the age of gas. The gas deposits at Hassi-R'Mel are among

the largest known in the world. The recoverable reserves

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under the technical conditions of that time were estimated

at over 35 trillion cubic feet of natural gas. A petro

chemical complex planning to utilize the higher grades of

methane for export was made possible by the liquefaction

of natural gas. A nitrate fertilizer factory had already

been officially approved under this industrialization

plan. Accordingly, the Arzew-Mostaganem region had became

the center for the development of heavy industry using

natural gas, and Hassi-R'Mel was treated by the French as

one of the important sources of energy for Western Europe.

TABLE 6

JOBS AND INVESTMENT (1958-1960)

Total Investment (millions of Years New Jobs French francs)

1958 1,208 6.7 1959 14,933 79.7 1960 13,514 115.2

Total 29,665 201.6

SOURCE: U.S. Department of Housing, The Con- stantine Plan for Algeria (Washington D.C., 1961), p. 32.

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TABLE 7

APPROVED INDUSTRIAL CONCERNS (1958-1960)

Years Number Approved New Companies

1958 17 6 1959 176 76 1960 224 139

Total 417 221

SOURCE: U.S. Department of Housing, The Con- stantine Plan for Algeria (Washington D.C. , 1961), p. 32.

TABLE 8

INVESTMENT FOR 1961 (Millions of Dollars)

Source of Funds France Algeria Total

Public investment 292 90 382 Private investment 170 280 450

Total 462 370 832

SOURCE: U.S. Department of Housing, The Con- stantine Plan for Algeria (Washington D.C. , 1961) , p. 34.

Birth of Nationalism and Political Struggle

The spirit of nationalism emerged among the Algerian

as a force to be counted after the First World War.

Nationalist aspirations began to be voiced not only by

resident Algerians, but also by Algerians who went to

France to study or work. In 1924 one of these students,

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Messali Hadj, founded the first Algerian nationalist

newspaper in Paris, in collaboration with the French

Communist Party. His movement called for total indepen

dence, the recall of French troops, the establishment of a

revolutionary government, large-scale reforms in land

ownership, and the nationalization of industrial enter

prises. More moderate doctrines were put forward in the

post-war years by an influential body of French-educated

Algerians, formalized in 1930 as the Federation of Muslim

Councillors. Under the leadership of Farhat Abbas, this

group called for integration with France on a basis of

complete equality.

The years immediately prior to World War II were

marked by growing nationalist discontent, in which Messali

Hadj played a significant part with the formation of the

Party of the Algerian People (PPA). Although the Vichy

administration in Algeria, strongly supported by French

settlers, opposed nationalist sentiments, the Allied

landings in North Africa in 1942 provided an opportunity

for the Algerian nationalists to put forward their consti

tuent demands. A group headed by Farhat Abbas in 1942

presented to the French authorities and Allied Military

Command a memorandum calling for the post-war establish

ment of an Algerian constituent assembly, to be elected by

universal suffrage. These proposals were followed early

in 1943 by the "Manifesto of the Algerian People", which

called for immediate reforms. Further proposals submitted

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emphasized the post-war creation of an Algerian state with

a constitution to be determined by a constituent assembly,

and looked forward to an North African union, comprising

Tunisia, Algeria and Morocco. But the French administra

tion in Algiers rejected the manifesto and the subsequent

proposals out of hand. Farhat Abbas shortly afterward

founded the Friends of the Manifesto of Freedom (AML), to

work for the foundation of an autonomous Algerian republic

linked federally with France. The new movement was based

mainly on the support of middle-class Algerians. Despite

the suppression and the dissolution of the AML, the

attempts to reach a compromise solution continued for some

time. In 1946 Farhat Abbas launched the Democratic Union

of the Algerian Manifesto (UDMA), with a program providing

for the creation of an autonomous secular Algerian state

within the French union. But the UDMA failed to achieve

any of its objectives.

In one of its compromise attempts, the French

government introduced a new constitution which became law

in 1947. This constitution gave all Algerian citizens,

including women, the right to vote and recognized the

Arabic language as equal in status to French. However,

this new constitution was never brought fully into opera

tion. The government's aim was to drive the main forces

of nationalism underground, and to destroy opposition to

French rule. After this political struggle, when the

Algerians could not obtain equal political rights, they

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declared revolution against France in November 1954. The

revolution was launched by nine members of national

leaders organized into the National Liberation Front

(FLN) . The Algerian revolution was a part of the vast

movement which achieved the successive liberation of

former subject people throughout the world in the 20th

century. The struggle for national independence in

Algeria was not an isolated movement, but part of a world

wide struggle.

A secret congress of the FLN, held at Soummam, formed

a central committee, and the national council of the

Algerian revolution drew up a socialist program for the

future Algerian republic. This program will be fully

discussed in the next chapter. In 1958, General de Gaulle

came to power, believing that he would further the French

aim of complete integration of Algeria into France.

Although he pushed more military action against the FLN1s

capacity to continue fighting, the FLN responded in August

1958 by establishing in Tunisia the Provisional Government

of the Algerian Republic (GPRA), headed by Farhat Abbas,

including Ben Bella and other leaders.

Due to the rise of nationalist consciousness among

the Algerian people, the declaration of revolution, and

the strength of political struggle, the French government

decided to improve the social and economic conditions in

Algeria in order to attract the revolutionary leaders to

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compromise negotiations and maintain political and econom

ic control over the Algerian people. The French govern

ment devised a long-range program known as the Constantine

Plan, which was put into operation in 1959. In this year,

Charles de Gaulle visited Algeria and introduced this plan

to the Algerian people:

Before the end of those five years, the first phase of the plan for the agricultural and industrial development of Algeria will be brought to its conclusion. This phase includes in particular, the delivery and the distribution of oil and gas from the Sahara; the setting up, on this soil, of great metallurgical and chemi cal complexes; the construction of housing for a million people; the corresponding development of health services, of roads, ports, means of communication. In short, the regular employment of 400,000 new workers...gradually in the course of those five years, more than two thirds of the girls and boys will be enrolled in school and, during the three years after that, complete school enrollment of all Algerian youth will be achieved.

The goals of this plan were as follows:

1. The development of Algerian agriculture which

will promote the income of the rural population .

2. Increasing the family revenue of small farmers

and raising their standard of living within a short time .

3. Under the land reform, the rural landholding

system will be improved by means of land redistribution .

4. Increasing crop production by 25 percent.

^U.S. Department of Housing, The Constantine Plan for Algeria (Washington, D.C., 1961), p. 2.

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5. Establishing industry that will provide 400,000

new jobs and reduce unemployment and absorb the rapid

population growth and the rural migration to the towns.

6. Increase activities in the field of construction,

public works, and housing.

7. Improving public services: education, health,

administration and communication.

8. Establishing heavy industry.

In reality, social and political stability was the French

government's major goal.

Despite the introduction of the Constantine plan and

its implications, the FLN rejected this offer and contin

ued the struggle. At this stage, De Gaulle recognized the

right of the Algerian people to self-determination and

moved cautiously towards accepting FLN demands. The

provisional government stated in its first declaration on

September 1958 that "the provisional government of the

Algerian republic is ready to begin negotiation. To

achieve this, it is ready at any moment to meet with

representatives of the French government."'*'^ In 1961,

direct negotiations between French and FLN representatives

began. After these protracted negotiations, a cease-fire

was signed by the French and the FLN in March 1962, at

Evian (on the French-Swiss border). Then a referendum was

■*^FLN, Algeria: Questions and Answers (New York, 1960), p. 15.

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held in Algeria, and France declared Algeria an indepen

dent state in July 1962.

Before we conclude this chapter, it is necessary to

look at the major problems that Algeria inherited from the

French colonial order. In 1962, Algeria appeared to be

emerging from a dark era of its history after more than a

century of colonial domination and almost eight years of

bloody war. However, with the departure of more than

nine-tenths of its European population in the months just

following independence, Algeria lost over half of its

skilled and trained work force, such as entrepreneurs,

managers, supervisors, technicians, professional persons,

office workers and skilled laborers. In 1964, the labor

force was estimated at four million; of those, nine-tenths

were unskilled and for the most part illiterate, and

two-thirds were in the agricultural sector and seriously

underemployed. The non-agricultural unemployement rate

probably reached as much as 50 percent. Henry Jackson

comments on this situation:

Because of the country's serious unemployment problem, high unemployment, under-employment affected the entire urban labor force in 1963. For every four employed workers, there we^re three either under-employed or unemployed.

At the same time there was a shortage of skilled workers,

qualified white collar employees, and professional people.

12 Henry F. Jackson, The FLN in Algeria (Westport, Conn.: Greenwood Press, 1977), p. 141.

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It was clear that the French colonization had a disastrous

effect on the immediate situation of the Algerian economy.

Algeria inherited some serious problems from the French

colonial order. These major problems included a mass of

under-employed or totally unemployed in both urban and

rural areas, a lack of professionals and experts, of a

highly centralized bureaucratic apparatus, and a structure

suited to capitalist forms of government. In this situa

tion, industrial production was set back almost a decade;

internal markets were severely disrupted; and the economy

continued to suffer from a severe lack of capital for

development, as well as a bureaucratic structure attempt

ing to impede the socialist goal and perpetuate capitalist

norms. The question of how to overcome these problems has

been at the center of Algerian policy since independence

and will be the focus of the next chapter.

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THE CHOICE OF THE ALGERIAN INDUSTRIAL MODEL AND DEVELOPMENT STRATEGIES

The choice of a development model and new socio

economic and political institutions at the time of inde

pendence was itself problematical because, on the most

vital issue, opinions were divided. In this chapter, we

will discuss the problematic choice of the socio-economic

development path of post-independence Algeria, specific

ally, the ideological and political foundation of the

socialist choice that referred to the Evian Agreement, the

Tripoli Programme, the March Decrees and the Algiers

Charter. We will also present the Algerian development

strategy in general and industrialization policy in

particular.

Ideological and Political Foundation

After the Second World War, and throughout the course

of the national liberation war that started in 1954, ideas

on the course of the national economy were born. Since

the period of armed struggle, some theses of economic

development and the means applicable to the independent

Algeria were presented. Between 1960 and 1962, in El-

Moudjahid, a journal edited by the National Front of

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Liberation (FLN), these theses were clearly discussed, in

an attempt, to introduce the theory for constructing an

integrated national economy. With political independence

in 1962, these theses were refined to give birth to the

"Algerian Model of Development."

The most important official documents of the Algerian

revolution that defined the main tasks which were to be

undertaken at independence, and that outlined the coun

try's future development, were the' Evian agreement, the

Tripoli Programme, the Decrees of March, and the Algiers

Charter.

The Evian Agreement (March 1962)

The economic situation we traced in the previous

chapter was the background to the Evian Agreement signed

in March 1962. The negotiation of independence was only

acceptable with the condition that French economic inter

ests must be respected. For example, France was to keep a

military presence in Algeria and maintain control over the

Sahara which means to retain possession of the oil fields.

In fact, French complete domination over the Algerian

economy lasted from 1962 to 1964, when France finally

abandoned its claims. But oil and natural gas resources

remained under French control until 1971, when the Algeri

an government under Boumediene decided to nationalize 51

percent of the whole Hydrocarbons sector and 100 percent

of natural gas. At independence, the Algerian economy was

completely dependent on France. The Evian Agreement

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stated in its first article that "Algeria will allow

France to continue its exploitation of the Sahara riches"^

until Algeria became able to carry out these activities by

itself.

At independence, the neo-colonialist authorities

tried to promote the formerly indigenous colonial civil

servants into managerial and administrative posts. About

50 percent of the personnel of the newly formed Algerian

government consisted simply of ex-colonial civil servants.

The major problems facing the FLN at independence were the

lack of qualified personnel to fill the administrative

machinery of the state and the drop in tax revenues that

left the newly formed government heavily in deficit and

reliant on external aid simply to cover its administrative

costs. It has been estimated that "the French government

was paying around 700,000 pound sterling a year to keep o the Algerian colonial administration functioning."

In the industrial and commercial sectors, the neo

colonial capital was dominant. According to the Evian

Agreement, Algeria must guarantee to the French enter

prises as well as to enterprises of which the large part

of capital was owned by the French, a normal exercise

*A. Decoufle, "Aspects socio-politique de 1'Accord Franco-Algerien du 29 Juillet 1965 sur,les hydrocarbures et le developpement de 1 'Algerie" in Economie Appliquee XIX (Paris: Presses Universitaires de France, 1966), p. 35. 2 Ian Clegg, Workers' Self-Management in Algeria (New York: Monthly Review Press, 1971), p. 81.

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of their activities within excellent conditions and

without any discrimination. Also, the transfer of capital 3 from Algeria to France must enjoy a regime of freedom.

In the agricultural sector, the colonial authorities

thought that by granting political independence to the

national bourgeoisie and by placing it in power, they

would protect their interests and continue to benefit from

Algerian agriculture.

The Tripoli Programme (June 1962)

The FLN had not officially considered a socialist

policy until the Tripoli Programme was issued in June

1962, a month before independence. Although the Tripoli

Programme, which came to be adopted as the new platform of

the post-independence FLN, was considered the first for

mulation of the conception of development, its socialist

principles were stated in vague terms. The programme

called for political and economic independence, social

transformation and the destruction of colonialism. It

also advocated the construction of a socialist society

devoted to the service of man.

Although the program raised the aspirations of the

landless peasants and the urban proletarian masses, it

remained the platform of the petty bourgeois nationalists.

The entire program "overlooked the possibility that in the

3 Decoufle, Aspects socio-politique, pp. 35-39.

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post-independence period these classes could become antag- 4 onistic competitors for political and economic power."

In reality that was exactly what happened. Instead of

cooperating, the indigenous antagonistic classes were

competing for economic resources and political positions

on the eve of independence.

The Tripoli Programme was the first authoritative

document that gave some indication of the model of devel

opment to be implemented in post-independence Algeria. It

also expressed the controversy over this model of develop

ment which focused on the problematical choice between

heavy and light industrialization in particular, and

between the socialist and capitalist model of development

in general. The program states:

The true and lasting development of the country depends on the implantation of the basic indus tries which are necessary for the modern agri cultural sector. In this respect, Algeria has huge possibilities for promoting oil and metal lurgical industries. In this field, it is up to the state to create the conditions that are necessary for heavy industrialization.

Although the programme mentioned clearly the neces

sity of industrialization, it did not provide a clear and

decisive industrial policy because of the social conflict

in the choice between capital-intensive industries and

4 Mahfoud Bennoune, "Algerian Peasants and National Politics" in MERIP Reports 48 (June 1976): 8. 5 The text of the Tripoli Programme as an Appendix to Thomas L. Blaire, The Land to Those Who Work it (Garden City: Doubleday, 1970), pp. 258-259.

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labor-intensive industries. This controversy reflected

the major conflict of interests between the nationalist

bourgeois forces and the workers' socialist forces. As a

consequence, and despite the ambiguous nature of the

ideological principles of the programme, it stated: "The

state must not, at any cost, help to create a local

bourgeoisie which will benefit from industrialization.

Indeed it must limit such a development by the appropriate „6 measures.

Finally, we can conclude that the Tripoli Programme

provided a general outline for the development of Algeria

through nationalization, agrarian reform, and industrial

ization.

The March Decrees (March 1963)

It was not until the end of August that the govern

ment finally arrived at some decisions about what to do

with the abandoned French properties. A decree published

on August 24 put all vacant farms, factories, houses and

shops under the state control. The French owners were

given thirty days from the publication of the decree to

come back and resume management of their farms and factor

ies. If the owners failed to return by the end of this

period, the prefects were authorized to appoint managers

to run the enterprises. This decree was, therefore, an

^Ibid.

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emergency measure aimed at resuming the country's economic

activity.

The document that was to put Algeria in the vanguard

of socialism was composed of three decrees which became

known as the "March decrees." These decrees were a turn

ing point for the country and for the workers. The

expression "state management" entered the official lan

guage, as did "self-management," which became the main

feature of the government and particularly of the Ben

Bella regime. Also, as a result of the March decrees, the

probability of the return of the French was greatly

reduced, since the owners were obliged to accept co

management with the workers. These decrees were issued in

March 1962.

The first, of March 18, dealt with the state's

appropriation of abandoned assets and self-management 7 enterprises. It defined the meaning of vacancy as

applied to French properties in the country: any enter

prise that ceased regular production and any house or

apartment left unoccupied by the owner or his legal tenant

for more than two months was to be declared vacant and put

under the control of the state. As a consequence, several

hundred thousand French properties were nationalized.

7 The text of the March Decrees as an Appendix to Clegg, Workers' Self-Manaqement, p. 201.

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The second decree, of March 22, dealt with the

administration and organization of the self-managed

enterprises. It established that the vacant enterprises

O would be run by the workers through the following bodies:

1. The Workers' General Assembly. The workers

assembly is composed of all permanent workers of an

enterprise. It deals with general policy matters affect

ing the enterprise. It adopts the enterprise's annual

plans for production, supply, marketing, and distributing

of tasks among the workers.

2. The Workers' Council. The workers' council is

elected by the Workers' General Assembly. It is a body

that includes at least two-thirds of the workers in a

given enterprise. It adopts the internal regulation of

the enterprise and decides on the purchase and sale of

material equipment. The council also decides on the

exclusion of members and the admission of new permanent

workers and supervises the management committee.

3. The Management Committee. The management commit

tee is responsible for the general running of the enter

prise. It is composed of three to eleven members or

cadres elected by the Workers Council. The management

committee draws up the budget and all plans to be submit

ted to the vote of the General Assembly and Workers'

Council. It also makes decisions concerning short-term

®Ibid.

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loans, marketing and buying of equipment and materials.

Also, the management committee designates each year one of

its members as president. He presides over and directs

the discussions of the management committee, the Council,

and the General Assembly.

4. The Director. The director of the enterprise is

appointed by the government. He represents the state

within the enterprise and assures the legality of its

operations as well as their conformity with the national

development plan. He controls the treasury and directs

daily operations.

The third and last decree, of March 28, regulated the

income distribution in the workers' self-managed enter

prises. In other words, it established the principle that

the profit of the enterprise should be shared among the

Q workers. However, the highly complex and sophisticated

system of management set up by the March decrees required

for its success a degree of education and experience which

the Algerian peasants did not have. Moreover, the system

of management had not been carefully studied. Many

decrees created conflict within the enterprise. For

example, the decrees led to strife between the permanent

workers, who were members of the General Assembly and

shared in the profit, and the seasonal laborers, who did

not participate in either the management or the sharing of

9 Ibid., p. 203.

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profits. A second example was the conflict between the

elected management committees and the state-appointed

director. Ottaway stated in this respect:

A sharp conflict developed between the elected management committee and the state-appointed director. Although the system was supposed to give power to the workers, it had in fact given the greatest authority to the director ov^ whose activities the workers had no control.

In addition, the decrees failed to explain the role

of the government agency in charge of the socialist

sector. According to the text of the decrees, this agency

was charged only with naming the directors and with making

sure that the plan of each enterprise would fit into the

national plan. But on April 18, 1963, Ben Bella signed

another decree, which obliged the self-managed farms to

market their production through the same organization that

was financing them, and recommended that these farms no

longer use private channels for marketing but only the

state-run SAP (Societes Agricoles de Prevoyance) and the

CCSA (Caise Centrale des Societes Agricoles). This decree

was, of course, a violation of the March decrees, which

explicitly stated that the workers' management committee

"chooses the channel for the marketing of the produce."^

This decree was followed a week later by another, which

■^M. Ottaway, Algeria: The Politics of a Socialist Revolution (Los Angeles: University of California Press, 1970), pp. 61-62.

"^Ibid., p. 63.

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put the SAP and the CCSA directly under the control of the

ONRA (Office National de la Reforme Agraire) and estab

lished that only ONRA could grant loans and credits to the

socialist firms. Thus, just one month after the publica

tion of the March decrees, the so-called self-managed

enterprises had lost all rights of decision over two

crucial matters: financing and marketing of their pro

duce. As a result,

Self-management was largely a myth...and the reality gave little ground for enthusiasm. While the farms had been deprived of much of their autonomy, the factories of the socialist sector were left totally to. ±hemselves and were hardly able to keep afloat.

The Algiers Charter (April 1964)

The third major event, and the most important at the

political and ideological levels, was the FLN's first

congress, held in Algiers in April 1964. The significance

of this congress lies in the fact that it represented the

conflict between the indigenous forces and produced the

first official document of the Algerian revolution which

came to be known as "The Algiers Charter." The present

regime still claims to believe in its principles and

respect its general guidelines. The basic question the

congress was supposed to answer was whether the socio

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economic and political system to be chosen was to be

socialism or capitalism.

Ben Bella called for the first FLN congress in April

1964 in order to clarify the ideological, political, and

socio-economic conflicts that prevailed between the

antagonistic national forces after independence. In spite

of the congress decision to make Algeria a truly democrat

ic socialist country, the Charter warned that the means of

production were not yet fully socialized and the revolu

tion was not strong enough to achieve this.13 Therefore,

it was suggested that a transitional period of the private

sector would be needed, while detailed plans were made for

total nationalization. During this period, it was felt

that it was necessary to keep the state as a managerial

rather than a fully democratic organ. In addition to

this, the Charter stressed that during the transitional

phase the basic questions the new society must ask itself

are these:

Who controls and sections the obligation to work? Who establishes the norms? If the answer indicates a separation between the social group charged with controlling the work of others and the di j | c t producers, then socialism is compro mised.

13 The text of the Algiers Charter as an appendix to Clegg, Workers' SeIf-Management, pp. 210-220.

14Ibid., pp. 219-220.

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To prevent the creation of a bureaucratic state, the

Charter demanded the establishment of a radical adminis

tration with the aim of making the commune the basis of

political, economic, and social organization. It saw the

best mode of economic development as one that provided an

immediate solution to the problem of unemployment. For

this reason, the newly independent state under Ben Bella

supported the wide-spread use of labor power rather than

the use of foreign capital, involving advanced technology,

for long-term projects. The Charter also emphasized the

significance of industrialization in general and heavy

industry in particular. According to the Charter, indus

trialization must respond to three fundamental objectives:

1. The satisfaction of national consumption needs

and a reduction in the import of consumption goods

2. The preparation and supply of agriculture for

establishing the basis of an integrated economic develop

ment

3. The creation of new jobs and the absorption of

unemployment and underemployment

Concerning unemployment and underemployment, the Charter

indicated that

One of the [main] factors limiting accumulation is underemployment, which means that an impor tant percentage of the population consumes without producing. The entry of this "reserve army" into the cycle of economic production would certainly raise levels of consumption but this would be less than the concomitant increase

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in production. The result5could be a very large increase in accumulation.

The Charter conceived the creation of new jobs, the

satisfaction of consumption needs, the reduction of

imported consumption goods, and the absorption of unem

ployed and underemployed workers as the logical basis of

giving priority to industrialization.

Moreover, the Charter recognized that the main

solution to the problem of economic organization and the

management of the production system lay in integration and

establishment of the socialist self-management system. It

stressed that growth must be carried out by the national

self-managed firms within the state development plan in

order to achieve the establishment of a socialist demo

cratic society. The Charter rejected the capitalist path

of development for the following reasons:

1. It hides a structure of social classes where

labor is simply a commodity subject to the market law

2. It brings about the crisis of overproduction and

unemployment, and gives rise to imperialism

3. It tends to spread in the contemporary world

through state intervention in economic affairs, thereby

creating state capitalism to protect the interests of

capitalists

15Ibid., p. 219.

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The alternative was the socialist path of development

which

...is not defined only by the nationalization of the means of production (but) also and especial ly by autogestion, a real solution to the double contradiction of private property and the separation^£etween decision making and decision execution.

At the theoretical level, the Algiers Charter may be

viewed as a further step towards the construction of an

Algerian socialist society. But in reality, it led

directly or indirectly to the institutionalization of

state capitalism and abolition of all previous socialist

achievements. Therefore, in spite of the congress'

acceptance of the Charter as the theoretical basis of the

FLN policy, this recognition remained largely formal.

According to Ian Clegg, despite the temporarily successful

attempt to placate the right wing functions and to make

them accept the socialist policy, it was the left wing

forces that were dominated by the bourgeois forces in that

they were administratively, economically, and militarily 17 powerless. We can conclude that the writers of the

charter had underestimated the task of constructing a

democratic socialist society. This, of course, could not

be achieved through a decision favoring either light or

^M.E. Benissad, Economie du developpement de 1 1Algerie (Paris: Economica, 1979), p. 20. 17 Clegg, Workers1 Self-Manaqement, pp. 138-139.

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heavy industries. They also overlooked the fact that a

socialist revolution cannot be achieved simply by formu

lating highly sophisticated socialist theories and pro

grammes .

Algerian Development Strategies

The controversy over the choice of socialist or

capitalist development, heavy or light industries, and

capital-intensive or labor-intensive industrialization

resulted in the adoption of an economic development

strategy. From 1962 to 1965 and under the Ben Bella

regime, a strategy of labor-intensive and light industri

alization policy was adopted. But since 1965, under the

Boumediene regime, this strategy of development was

changed. The government began the adoption of capital-

intensive and accelerated heavy industrialization to the

extent that some major sectors of the national economy

became completely neglected. Thus, the tendency of the

Algerian economic development strategy shifted and changed

from labor-intensive to capital-intensive, from light

industries to heavy industries and, as a result, from a

socialist-oriented path of development to a state-

capitalist style of development.

Besides the three historical documents presented at

the beginning of this chapter, there are no other official

documents that could provide us with the general princi

ples of the Algerian development strategy except the

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National Charter of 1976 and the speeches of the president

in which he outlined the strategy of economic development

in Algeria and the need for establishing industrializa

tion. With reference to these official documents, we can

sum up the general fundamental principles of economic

development as follows:

1. National economic and political independence,

2. Integration of the national economy,

3. Satisfaction of the total national demand,

4. The increase of employment, and

5. The construction of a socialist democratic

society.

The Algerian economic development strategy aimed at

state exploitation of national resources and control over

the economic means of production. The strategy of accel

erated industrialization — which has been in the course

of application since 1967, the first three-year plan —

originated in the assumption that Algeria was an oil and

gas producing country. The use of oil and gas revenues

was an immediate necessity in order to finance, establish,

and achieve socio-economic development. Therefore, the

country should have a "take-off" in the course of the

decade 1980-1990 and preferably before 1985. That means

the country would be able to rely more on itself and on

its own production with less dependency on foreign capi

tal .

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In regard to industrialization, the revolutionary

council in 1968 indicated that Algerian economic develop

ment must be carried out through giving priority to basic

industries and establishing heavy industry. It set three

fundamental objectives:

1. In the long run, Algeria should reach the stage

of innovation, that is the effective economic "take-off",

which would enable Algeria to carry out its own develop

ment.

2. The consumption goods of industry should be able

to satisfy the national demand.

3. The industrial sector should create 40,000 new

jobs per year.

It seemed that the Algerian government strategy of

development agreed with the Korean development strategy in

many aspects, as pointed out by M. Andre Marchal. Accord

ing to him, the construction of an independent national

economy necessitated the establishment of an industriali

zation based on heavy industry:

1. From a political point of view by the essential rupture with imperialist exploitation which is the center of the debate and the setting up of a popular government, independent of any form of foreign interference. 2. From a military point of view, it is neces sary to establish a heavy industry, in order to safeguard (militarily if it is necessary) the independence of the sovereignty against imper ialistic aggression. 3. From an economic point of view, as declared by Kim II Sung, the president of the Korean People's Republic, only heavy industry is capable of "producing and providing for the country the essential tools, raw materials,

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combustibles, energy and economic plants that are necessaryfor the development of our nation al economy."

In a Leninist-Stalinist scheme of economic growth,

heavy industrialization is seen as a transitional phase

towards socialism. However, if heavy industrialization is

a necessary condition, it is not a sufficient condition

for the transition towards socialism. It, therefore, must

be accompanied by a radical socialist mode of production

and relations of production. As a consequence of the lack

of this radical socialist measure, the complete break with

the Algiers Charter principles, and the abolition of the

self management system, the choice of heavy industrializa

tion did not reflect the dedication to socialist objec

tives that are stated in the previous Algerian official

documents. It was thus merely a justification of a system

which benefitted, in the first place, the nationalist

bourgeoisie. Finally, before we conclude this chapter, it

is necessary to provide a brief discussion of the question

of employment and the structure of the Algerian popula

tion.

The solution of the unemployment and underemployment

problem is among the major goals of the Algerian economic

development plan. This goal constitutes one of the main

factors against which economic development will be tested,

18 v ✓ Hammid Temmar, Structures et modele de developpement de l'economie de 1 'Algerie (Alger: SNED, 1974), pp. 206-207.

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because employment is the key factor that determines the

success or failure of the economic development of the

country. Therefore, the satisfaction of this fundamental

need is the essential and concrete indication for the

success of development and the real transformation of the

society during this decisive stage (1966-1980).

The situation of employment in the first year after

independence was characterized by a tendency toward

unemployment and underemployment. In 1966, the male labor

force increased at a rhythm of 70,000 persons or more per

year. This rhythm exceeded 100,000 in 1973 and 140,000 in

1980. Meanwhile, the economic structure of 1966 could not

create more than a few new employment opportunities.

During the seven-year period 1966-73, the labor force

(including workers 18 to 59 years old) of those looking

for work comprised 690,000 persons with an annual average

increase of 100,000 person. During the period of the

second four-year plan (1974-77), it increased by 470,000

person with an annual average increase of 120,000. From

1978 to 1980, it increased by 890,000 persons, with an

annual average augmentation of 140,000 persons per year.

The female labor force increased by only 50,000

persons during the same seven years (1966-73). During the

period of the second four-year plan (1974-77) , the male

labor force in the agricultural economy did not increase

more than 85,000 compared with 385,000 in the non-

agricultural economy.

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The slight improvement in creating new jobs was a

result of the implementation of the first and second

four-year plans. The number of jobs created by the

development of non-agricultural activities was 480,000, of

which 330,000 were created during the first four-year plan

(1970-1973).

In general, during the period 1966-77, changes in the

structure of the active population remained modest. It is

also evident from the following table that the number of

the active population was increasing very slowly. While

the percentage of unemployment in the urban areas was

decreasing, the opposite was true concerning the rural

areas where the number of underemployed people grew.

The more important role of industry — making jobs

available — was a new element of the employment policy

that began with the second four-year plan (1974-77) .

Ideally, the number of jobs to have been created during

the period of the second plan was 450,000 in the non-

agricultural sector, with an annual progress rhythm of 8

percent.

In the industrial sector, the achievement of employ

ment objectives was dependent upon the implementation of

the actual units of production in the construction materi

al, metallurgical, and petrochemical industries. The

growth of the population employed in industrial activities

was 1,950,000 in 1977 compared with 1,400,000 in 1973,

with an augmentation of more than 38 percent.

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TABLE 9

EMPLOYED, UNEMPLOYED AND ACTIVE POPULATION, 1966-77 (In Thousands)

1966 1969 1976 1977

Total population 11,820 13,200 16,700 17,200 Active population 2,565 2,912 3,590 3,740 Active urban population 1,017 1,212 2,055 2,195 Unemployed 33 30% 10% 8% Active rural population 1,548 1,698 1,535 1,545 Underemployed 40-43% 50% 63% 63%

' 0 SOURCE: M.E. Benissad, Economie du developpement de l'Algerie 1962-1978 (Paris: Economica, 1979), p. 254.

According to the 1966 census, the total population in

the agricultural sector was estimated at 6,300,000 per

sons. The active labor force was 1,270,000, of which

970,000 were between 18 and 59 years old. Among the

active labor force, only 450,000 had permanent jobs

(170,000 in the self-managed sector, and 280,000 in the

private sector). The remaining 820,000 were seasonal

workers in the agricultural sector.

At the end of the second four-year plan (1977), the

introduction of the agrarian revolution also improved the

revenue and employment situation of 50,000 peasants

organized in new cooperatives. The application of the

second four-year plan (1974-77) was marked by an essential

augmentation of employment in the agricultural sector by

20 percent. But we have to understand that the second

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plan did not solve the problem of unemployment in the

country. The real objective was to create more than one

million new jobs by 1980.

During the period 1978-1980, the conditions were not

favorable for creating the necessary employment because of

the absence of an existing plan as well as the disruption

of the political system caused by the death of President

Boumediene. The growth of new jobs during this period was

supposed to exceed the annual rhythm of more than 11

percent (against 7.5% achieved during the seven years

1966-73, and 8% during the second plan, 1974-77). The new

economic structure of 1980, therefore, was supposed to

create more than 200,000 jobs per year in order to satisfy

the needs of the increased number of young people entering

the labor market.

Algeria thus suffered from high unemployment and

underemployment (50-25% of the labor force) during the

immediate post-independence period. The growth of unem

ployment in the rural area brought about a labor force

movement to the urban industrial area. Although employ

ment in agriculture was stagnant, the agricultural sector

in Algeria continued to be important as a source of

employment (it employs 30% of the labor force) , food,

foreign exchange, and potential growth. Still its rela

tive importance declined as other sectors developed more

rapidly.

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The structure of the Algerian population is charac

terized by two dominant factors: a high annual rate of

growth and a young population. The 1966 census estimated

the population of Algeria to be 11,820,000 persons. The

evolution of the population (including immigrants) during

the seven years 1966-1973 raised it to an estimated

14,700,000 persons, with an average annual growth rate of

3.4 percent. In 1977, the population was estimated at

17,200,000. In 1980 the population was 18,524,000 (see

Table 10).

TABLE 10

POPULATION EVOLUTION (Millions)

Year Population

1954 9,530 1960 9,602 1966 11,820 1967 12,567 1968 12,951 1969 13,200 1970 13,749 1971 14,178 1972 14,495 1973 15,065 1974 15,534 1975 16,016 1976 16,700 1977 17,200 1978 17,624 1980 18,524 1982 20,300 1984 21,200

SOURCE: Previous tables and Jacques Schnetz- ler, Le developpement alge'rien (Paris: Masson, 1981), p. 12; QER 1 (1984,1985):2; Ministere de la planification, Statistigues 1967-68 (Alger: Direction des statistiques et de la comptabilite nationale, 1980), pp. 2-4.

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The share of young population (less than 18 years of

age) in the total population was 52.8 percent in 1966;

54.5 percent in 1973; and 54.2 percent in 1977 and 1980.

This is an important indicator for the size of the inac

tive population in Algeria. Table 11 shows the population

structure of Algeria by age groups.

TABLE 11

POPULATION STRUCTURE BY AGE GROUPS

Years 1966 1973 1977 1980

00-17 52.8 54.5 54.2 54.2 18-59 40.7 39.3 40.1 40.3 60 and above 6.5 6.2 5.7 5.5

Total 100.0 100.0 100.0 100.0

SOURCE: Secretariat d'Etat au Plan, II Plan Quadriennal 1974-1977 (Alger: Imprimerie Offi- cielle, 1974), p. 50.

During the seven years 1966-73, 39 percent of the

total population lived in urban and semi-urban areas, and

61 percent lived in rural areas. The structure of the

population during the second four-year plan 1974-1977 was

as follows: 42 percent of the total population lived in

the urban and semi-urban areas, and 58 percent lived in

the rural areas. The significance of this evolution

resides essentially in the increasing demand for urban

jobs. The movement of the rural population toward the

cities (excluding the rural movement toward foreign

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countries, i.e., France) during 1966-1973 was estimated at

840,000 persons. During the period of the second four-

year plan (1974-1977) the growth of the urban population

was 1,360,000 persons. This growth was due to the natural

growth of the urban and semi-urban population, and to a

rural migration toward urban areas.

Conclusion

Generally speaking, we can conclude that the social

ist option under both the Ben Bella and Boumediene regimes

was compromised in many respects. First, it was compro

mised by the continuous violation of the socialist princi

ples stated in the official revolutionary documents;

second, it was compromised from the beginning by eliminat

ing the workers' participation in political and economic

decision making; third and finally, it was compromised by

the choice of a development policy that sacrificed employ

ment generation for capitalist industrial development.

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CONSTRUCTION OF THE POST-INDEPENDENCE ECONOMY

In this chapter, we will discuss the structure of the

post-independence economy. We will discuss the period of

economic transition, the new industrial doctrine, and

finally provide a comparison between the private, public,

and self-management sectors.

The Period of Transition (1962-1966)

According to the Algiers Charter, the transition

period was a necessary stage in realizing the material and

social conditions of socialism. The Charter defined the

transitional period as follows:

The period of transition is when the political organization of the society prepares for social ism, starting with the abolition of the exploi tation of man by man, the establishment of the material and social bases for a rapid develop ment of the forces of production, and the freeing of the workers' creative activity.

The Charter also indicated that

In the period of transition, the country must solve the contradiction between town and country side and therefore must work to unite the poor peasantry with the workers of the towns and

The text of The Algiers Charter as an Appendix to Ian Clegg, Workers' Self-Management in Algeria (New York: Monthly Review Press, 1971) p. 218.

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realize one of the most important conditions for the victory of socialism.

However, following independence, the existing social

forces failed to achieve a sound economic development

during the period 1962-1966. To understand why the public

and self-managed sectors did not develop, and why this

period was conceived of as a period of economic stagna

tion, we have to analyze the political, economic, and

financial situation, as well as the situation of different

social forces.

At the political level, it is obvious that the state

was new and needed to establish its proper administration

and political institutions. It tried to regulate economic

activities such as foreign trade, the foreign oil compa

nies, and the management of the agricultural sector.

There was no clear economic doctrine to be followed in

undertaking economic development. In regard to the

self-management or autogestion sector, though the Summam

congress had admitted the principle of a "radical agrarian

reform," the Tripoli Programme "the collectivity of the

means of production," and the Algiers Charter that "auto

gestion is the basic principle of this society," the state

had pursued the policy of managing the self-managed

sector. In practice, and generally speaking, the sector

^Ibid., p. 212.

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3 of agriculture continued to live under anarchy. Until

the end of this period, the autogestion sector was limited

to small enterprises playing a marginal role in economic

activities. In other words, it was composed of almost 330 4 small and weak enterprises using 3000 workers in 1964.

This shows that the large foreign companies continued

their industrial activities and were not nationalized, for

example, "Renault and Berliet" in automobile construction;

"Durafour" for metallic construction; "SNAP" for iron

material; "Neyrpic" for mechanical construction; "ALTEMEL,

CABLAF, and PHILIPS for electric construction; "SOTUBAL

and ALTUMEL" for pipes, and finally "ALLUMAF" for

laminating and aluminum transformation. However, in the

metallurgy of steel, mechanic, and electrical industrial

branches, only a few important enterprises were abandoned

and put in the industrial autogestion sector, such as

"ACILOR" in Oran, and "ENCM" in Rouiba. It was mainly the

small enterprises of individual entrepreneurs with weak

capital and providing low salaries that were nationalized

in this period. The food, construction material, and wood

industries were the main domain of these small enterpris

es. They belonged to French entrepreneurs who abandoned

3 ' M.E. Benissad, Economie du developpement de 1 'Algerie (Paris: Economica, 1979), p. 7. 4 ' A. Benachenhou, Planification et developpement en Algerie 1962-1980 (Alger: CREA, 1980), p. 15.

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them at independence for the benefit of the industrial

autogestion sector. According to Temmar, during this

period (1962-1966) , Algerian industry was mainly made up

of light industrial concerns. It was oriented toward the

production of consumer goods. The industries created in

this period were as follows: textiles, five projects;

leather and tannery, two projects; shoes, four projects; 5 and food industries, three projects.

Likewise, in the public (state) sector, economic

doctrine was still vague. The creation of a national

company, SONATRACH, in 1963, was not seen as a means to

compete with foreign capital, but was simply to undertake

some vital projects which the foreign companies refused to

undertake, such as the construction of new pipelines for

developing oil production.

At the economic level, despite the political indepen

dence of Algeria, the country was still completely depen

dent. Consequently, the economic situation was charac

terized by low productivity in agriculture, weak capacity

of accumulation, disorganized management, and finally and

more important a domination of foreign companies over the

main production, oil and gas, which was guaranteed by the

Evian agreements during the transitional period of the

country.

5 ' ' , H . Temmar, Structures et modele de developpement de l'economie de l'Algerie (Alger: SNED, 1974), p. 218.

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If we take a look at the budget situation and expen

ditures shown in Table 12, we will find that the slight

increase of revenues at the end of this period was due to

the increase of oil production and the increased demand

for the social and economic infrastructural equipment.

TABLE 12

BUDGET REVENUES AND EXPENDITURES OF 1963-1966 (Unit = 10 DA)

1963 1964 1965 1966

Final budget revenues 3,289 3,200 3,038 3,517 Expenditures of operations 2,237 2,070 2,757 2,846 Saving budget 1,052 1,130 281 671 Expenditures of equipment 434 741 492 945 Deficit + 618 + 389 - 211 - 174

SOURCE: A. Benachenhou, Planification et developpement en Alqerie 1962-1980 (Alger: CREA, 1980), p. 19.

The employment situation is worse. The census of

1966 sheds some light on this matter (see Table 13). We

must keep the decline of unemployment in perspective:

statistics do not take into account the 260,000 workers

who sought jobs for the first time, 180,000 of them in

agriculture; neither do the statistics include the con

siderable number of unemployed females in the cities,

since the definition of the "active labor force" here

excludes females of working age; nor do they take into

account children under 18 years old.

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TABLE 13

EMPLOYMENT AND UNDEREMPLOYMENT IN 1966 (Millions of persons)

Agriculture Other Total

Population 6,300 5,520 11,820 Active labor forces 1,300 1,180 2,480 Population employed 870 850 1,720 Population unemployed 430 330 760 Rate of unemployment 33% 28% 30.6%

SOURCE: A. Benachenhou, Planification et developpement en Algerie 1962-80 (Alger: CREA, 1980) , p. 20.

In terms of the employed population/ the rate of

underemployment is very important. More than three-

fourths of 530,000 agricultural wage-earners were seasonal

workers. As a result of the demographic growth and

economic stagnation during this period, the social and

economic conditions of the great majority of the Algerian

population had not changed. Capital accumulation in the

hydrocarbons sector did not affect the rest of the econo

my; work conditions for the general population did not

improve.

The country remained financially dependent on foreign

sources in carrying out its economic development in both

the self-management and public sectors. The state had

insufficient financial resources, because the key produc

tive resources of the country, oil and gas, were still in

the hands of French companies. The main accumulation of

productive capital was achieved by the foreign firms in

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the hydrocarbons sector which received almost 60 percent

out of the total investments of enterprises for this

period. Despite this, the volume of investment in the

hydrocarbons sector did not witness a considerable growth

during this period; the French oil companies felt unsecure

and continued to export their capital back to France. The

lack of accumulation in the public sector was due to the’

absence of important financial means. For the whole

period, the investment in the industrial public sector was

equal to 900 millions of dinars which constituted only 12

percent out of a total of 7,100 million investments in the

productive sector. Almost 60 percent of this investment

came from foreign companies and went to the hydrocarbon

sector.®

However, all these political, economic, and financial

facts alone cannot explain entirely the phenomenon of

economic stagnation and the absence of a dynamic develop

ment in this period. The fundamental factor, and the most

important, is the absence of integrated social forces

capable of promoting a real economic and industrial

development. Although the foreign bourgeoisie could not

claim any political power, without doubt its economic

domination was still strong. The activity of foreign

capital was protected by the Evian agreements. This

6 / A. Benachenhou, Planification et developpement, p. 21.

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determined the monopoly of French companies over the

hydrocarbons sector. In fact, during this period, the

hydrocarbons sector constituted the privileged place for

the implantations of the foreign bourgeoisie. The local

bourgeoisie, a potential source of bourgeois ideology

hostile to socialism, filled a more important position in

agriculture, retail trade, and the main technical admini

strative and intellectual grades. This bureaucratic

bourgeoisie was rapidly forming in the machinery of the

administration, the state, and the economy. This is due

to the fact that the Algerian state maintained the admin

istrative structures established by colonialism when it

was called to assume an economic role.

As a consequence of the decline of agricultural

production, the absence of radical, integrated social

forces, the lack of financial sources, the dependency on

foreign capital, the high rate of unemployment, and

ultimately foreign control of the key resources of produc

tion oil and gas, stagnation struck the Algerian economy,

and the state failed to foster sound economic development.

Economic progress could not be achieved only by slight

growth in industrial production and by putting into

operation the industrial projects of the Constantine plan.

In fact, the large projects of the Constantine plan, such

as the "Siderurgie de Annaba" and the primary transforma

tion of hydrocarbons did not fundamentally change the

social and economic conditions of the country. The French

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companies still monopolized the market for the equipment,

the production, and the transportation of products of this

sector. We can conclude that the political economic

situation, the financial system, and the social forces

were not prepared for establishing a strong economic

development after independence. The Algiers Charter

admitted that "during this period [transitional period] it

is impossible to create immediately a situation any better 7 than the one the country inherited."

The New Industrial Doctrine (1966-1969)

Despite the clarity of the ideas of the Algiers

Charter, it did not reflect the economic and political

situation in Algeria between 1962 and 1965. Only since

1966 did the Algerian model of economic growth receive its

final formulation and was carried out to some extent by

coherent policies of investment. A brief analysis of the

distribution of investment since the beginning of the

first three-year Plan (1967-1969) indicates that Algeria

has adopted a new industrial doctrine. This new doctrine

lay in the establishment of heavy industry as a precondi

tion for achieving a sound and independent economic

development. This new tendency manifested itself in state

action which established two main goals: (1) the libera

tion of the economy from foreign dependency and the

7 The Algiers Charter, in Clegg, Workers' Self- Management, p. 220.

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recuperation of national wealth; and (2) the construction

of a strong national economy in general and Algerian heavy

industry in particular.

The socio-economic and political guidelines of the

period 1966-1969 are explained and justified in President

Boumediene's speeches and in the different Charters (the

Algiers Charter, 1964, and the National Charter, 1976).

According to Boumediene, "development [is the] condition

...of social, cultural, and economic progress, and the

national independence to which the Algerian people are

O deeply attached." In 1968, the revolutionary council

announced that the economic development of Algeria should

give priority to heavy industry. It defined three funda

mental objectives:

1. In the long term (horizon 1980), Algeria should

attain the stage of innovation. This implies the immedi

ate launching of heavy industry and ■'-he production of the

means of production

2. The consumption goods industry must be able to

satisfy national demands by then

3. The industrial sector must create 40,000 new jobs

per year

In order to achieve these objectives, two fundamental

conditions must be fulfilled:

8 Discours du President Boumediene, Vol. VIII (Algiers: SNED, 1979) p. 63.

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1. A large increase in the production of steel,

fertilizers, energy and cement

2. The production of the means of production within

national boundaries. By means of production is meant,

concretely, tractors, trucks, agricultural machines, and

machine-tools

When these conditions are fulfilled, the consumption goods

industries can be created. However, the consumption goods

industries cannot come into existence by themselves, but

must be brought about by:

1. The implantation of the metallurgical and petro

chemical industries (heavy industry)

2. The development of the mechanical industries upon

which the development of the agricultural sector depends

The largest part of investment during this period was

devoted to heavy industry, which constituted 89 percent of

total industrial investment, as Table 14 indicates.

There is no doctrinal text enabling us to identify

the main elements of the industrialization policy which

was started after 1966. It is only in the speeches of

President Boumediene that the elements of the new indus

trial doctrine can be found. These elements constituted a

new approach to the phenomenon of industrialization.

Industrialization has two major strategic dimensions:

political and economic.

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TABLE 14

DISTRIBUTION OF INDUSTRIAL INVESTMENT, 1967-1969 (Unit = 10 DA)

1967 % 1968 % 1969 % Total %

Heavy industry 655 83 1,621.5 93 1,933 90 4,209.5 89.5 Consumption goods industries 115 14 109 6 171 8 395 8.5 Other light industries 28 3 24 1 56 2 108 2

Total 798 100 1,754.5 100 216 100 4,712.5 100

SOURCE: H . Temmar , Structures et Modele de Developpe- ment de 1 'e'conomie de 1 'Alge'rie (Alger: SNED, 1974) , p. 222.

Politically, industrialization is a condition for the

liberation of the Third World from the imperialistic

control exercised upon it by the advanced countries.

President Boumediene said:

Our policy is based upon the industrialization of the country and the construction of a nation al economy which excludes all forms of exploita tion.... The construction of the national economy means, after all, the recovery and the exploitation of the country's resources for the benefit of the Algerian people.

In this sense, the nationalization of French oil firms in

1970-71 was considered one of the major first steps of the

recovery of the national economy by the state. It marked

9 . Boumedienne, Discours du President Boumediene, Vol. II (Constantine: El-Baath, 1970), p. 63.

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the decisive phase of liberation of the Algerian economy

from dependency on the French. So the essential objec

tives of industrialization, according to President

Boumediene, are

...the increase of the national revenues, the improvement of the level of technique of the workers, the increase of employment and the widening of the national markets, which. means less dependency on the foreign markets.

Economically, industrialization is conceived as the

intersectoral integration of the national economy. The

desire to build an integrated industry is explained in

terms of the liberation from any form of dependency on the

advanced countries. The Algerian authorities believe that

the advanced countries will always try to sell their

machinery and technology at high prices in order to main

tain the inequality between the rich and the poor coun

tries. In this respect, President Boumediene said:

Industrialization will realize a symbiosis between the industrial and agricultural sectors and achieve a real complementarity within our national economy... With this industrial- agricultural complementarity, we are not only going to be able to develop our agriculture and ensure our industrialization, but we will also be able to save the foreign exchange we need in order^±o finance our imported material equip ment.

10Ibid., p. 150.

11Speech delivered by President Boumediene on the occasion of the XlVth anniversary of 1st November, 1954, cited in Bennamane, 1980, p. 69.

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Industrialization is considered the key to a real

economic development. Therefore, in this period Algeria

adopted a new industrial doctrine. It is industrializa

tion in the sense that M.F. Perroux has defined it. For

him, industrialization is

a structuring of society by employing machinery in order to increase accumulatively and with decreasing individual effort, the power of human groups in obtaining the goods which are essen tial to their well-being. Industrialization is then the establishment of the process which consists of producing machines by using ma chines, such that the number of mechanical devices increases at an increasing rate and correlatively leads to a decrease in individual physical effort, therefore, a greater liberation of man from .jt^ie negative impact of the natural environment.

Accordingly, the concept of "industrializing industries"

upon which the Algerian development model is extensively

based was adopted. As a result, the experience of accel

erated industrialization which Algeria has undertaken is

often considered the best illustration of the theory of

economic development by "industrializing industries". The

initiator of this concept was the French economist M.G. de

Bernis, one of the most appreciated foreign consultants

among Algerian economic authorities. De Bernis argued

that

[for] the underdeveloped countries, the decisive fact in the industrialization process is the constitution of capital assets which are capable of feeding industry with the basic industrial

12 Temmar, Structure et Modele, p. 208.

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products. Therefore, one has to start with the industries which produce the means of production and not with those which produce consumption goods.

The theory of "industrializing industries" rests on three

main features: large-scale industries, a very high

capital concentration, and production oriented toward the

means of production rather than final consumption goods.

According to de Bernis, the industrializing industries

consist of metallurgy, mechanical industries (not deriving

from metallurgy), chemical, and electro-mechanic indus

tries. According to this definition, the "industrializing

industries" are, of course, the heavy industries (les

industries de base), including the hydrocarbons indus

tries. The theory of "industrializing industries" rejects

the view of economists who advocate the necessity of

balanced growth among the different sectors of the econo

my. Although the theory of "industrializing industries"

provides us with a more operational development theory, it

does not justify the neglect of employment generation.

After the revolutionary readjustment in 1965, the

state achieved complete control of all land resources in

1966, except for the hydrocarbons sector. In 1968, 45

foreign enterprises were nationalized in order to rein

force this "statist" policy. By 1974, and due to the

, ^Jean-Claude Hazera, "Algerie: 1'Industrialisation acceleree," Les Dossiers Jeune Afrique: 1 1Industrialisa tion du Tiers Monde 3 (1975) : 118.

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process of state economic expansion, all the self

management enterprises came completely under state con

trol. The state sector, or the state-firms (called

societes nationales), were created by capital provided by

the state. Authority within the state-firms was central

ized in the hands of the general director who acted on

behalf of the concerned ministry.

Besides the nationalization of the mining sector and

of heavy industries, the Algerian government also nation

alized the banking system and reorganized public finance

and foreign trade as well. In 1966, all the existing

banks were nationalized and reorganized into three major

banks:

1. The BNA (Algerian National Bank) regulates the

financial relations with the external world. It also

provides loans to private national industrialists and

agricultural self-management enterprises

2. The BEA (Algerian Foreign Bank) helps implement

export policy and provides export-oriented national

enterprises with the necessary financial means

3. The Popular Credit Bank finances industrial

mid-size and small enterprises

As a result, France was no longer the primary trade

partner of Algeria. In fact, Algeria turned all its

monetary deposits in French banks into gold and dollars in

1967-1968. This state domination of the banking system

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and reconstruction of public finance enabled the govern

ment to reorganize the foreign trade sector. It took over

foreign trade by 1969 and controlled directly or indirect

ly about 90 percent of total imports and about 80 percent 14 of total exports. Moreover, the government adopted a

new investment code in 1966. It gave financial advantages

to private national and foreign investments. For example,

it guaranteed that no nationalization will be made for at

least a period of 10 years; rights of profit transfers

were permitted. However, there remained only about 100

foreign enterprises in 1970, as compared with about 800

enterprises in 1962, representing about 15 percent of

total industrial employment and about 20 percent of the 15 turn-over of all enterprises.

The French-Algerian agreements of July 1965 improved

the oil receipts of Algeria and initiated the participa

tion of SONATRACH in development research which had been,

until then, undertaken exclusively by the French. Since

then, SONATRACH has progressively expanded its activities

to cover all the stages of oil exploitation. This econom

ic policy has led to a significant increase in the state's

financial resources and its ability to use these resources

in a relatively autonomous manner. As a consequence of

14 Aissa Bennamane, The Algerian Development Strategy and Employment Policy (London: Geo-Abstracts, 1980), p. 60. 15T. . . Ibid.

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this "statist" policy, the June 19th regime realized the

most important conditions for a state-capitalist economic

development. But this capitalist development was not

adopted until 1971 when these conditions had become fully

established.

The Structure of the Post-Independence Economy

In general, the structure of the post-independence

economy is characterized by a combination of public,

private, and self-management models of production.

Therefore, we need here a concept which expresses what is

common to the three modes of production coexisting in the

Algerian social formation. That concept is the mode of

appropriation of labor. In other words, the differences

between these three modes of economy lie in the agents who

control labor. In the private sector, this control is

exercised by individuals or corporate groups. In the

public sector, it is exercised by the state; and in the

self-management sector, it is exercised, at least theoret

ically, by the workers. More specifically, Algerian

industry can be divided into three main groups according

to the mode of ownership and labor appropriation: pri

vately owned enterprises, public or state-controlled

enterprises, and self-management enterprises. In 1966,

the self-management and the public sector employed about

the same number of workers as the private sector. After

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1966, the balance of employed workers has shifted in favor

of the public sector.

In the course of constructing the national economy

and establishing the basis of state-capitalist develop

ment, the government undertook several socio-economic and

political reforms. In regard to the financial system

(which was totally in French hands), the government

reorganized and controlled the whole banking system, as we

have already seen. The state also undertook a decentrali

zation policy of communes in 1967 and districts (Wilayas)

in 1969, which gave some autonomy in socio-economic

matters to the different regions of the country. But

these regions were still under direct control of the state

in terms of political and economic decisions. Moreover,

the government established a new policy of "special

programmes." These special programs aimed at improving

the local socio-economic infrastructure such as hospitals,

schools, and roads in the different regions, reducing the

gaps in living standards between regions, and building a

national, homogenous economy.

Although control over the national and foreign

markets by the state led to a state monopoly over the

import and export of products, this did not abolish the

different levels of private trade in the country, such as

wholesale, half-wholesale, and retail commerce. Redefini

tion of the price system, in order to furnish the popula

tion with basic commodities such as bread, sugar, and

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coffee for fixed prices, aimed at protecting national

prices from international inflation. The state also

provided a democratic system of education based on the

principle "basic education is obligatory," which was

adopted in 1974-1975. That meant putting a maximum number

of children in school, and giving the people access to the

different levels of education: primarily, secondary, and

higher education. The state also adopted a free medical

policy in 1974. As a result, all hospitals and medical

centers became part of the public sector and now were

directly under state control.

Finally, although the agricultural revolution is

expressed fully by the Tripoli Programme and the Algiers

Charter, the new agrarian policy which was implemented in

1971 was not reflected. This new agrarian policy called

for limiting the private property, abolishing absenteeism,

giving the new nationalized land to peasants, organizing

the peasants into cooperatives of production, constructing

one thousand agricultural villages, and creating coopera

tives of services. This new policy has affected, to some

extent, the nature of social relations, particularly in

the rural areas.

Private Sector

The 7.2 million hectares under private ownership

constitute the traditional or private sector, in which

some 500,000 hectares were bought by Algerians from

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Europeans. Algeria's cultivable land looked like this in

1964.

TABLE 15

CULTIVABLE LAND IN 1964 (Hectares)

Land under autogestion 2.300.000 Private ownership 7.200.000 Communal and state domain 9.500.000

SOURCE: This table constructed from data pro vided in John Waterbury, Land, Man, and Develop ment in Algeria: Problems of Trained Manpower, Industry and Agriculture (American Universities Field Staff, North Africa Series Vol. XVII, No. 1, 1973), p. 10.

The major characteristic of the private sector is

that it is totally dependent on inconsistent rainfall, and

supports about half of the Algerian population. This

private sector is geared to producing only for the nation

al market. In the first six years after independence, the

annual harvest was between 9-10 million quintals (100

kilograms), a level no higher than that of the 1870s. In

fact, since the 1960s the Algerian population has been to

some extent dependent on grain imported from the United

States. On average, the self-consumption in the private

sector runs at about 50 percent of total produce, while it

is only about 10 percent in the self-management sector.

Table 16 gives us a good picture of the size and number of

holdings.

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TABLE 16

DISTRIBUTION OF PRIVATELY-OWNED LAND BY SIZE OF HOLDINGS

Hectares Number of holdings Percent

1 110,000 19 2-10 340,000 52 11-50 170,000 26 51-100 16,000 2.5 101 + 8,450 1.3

Total 644,450 100

SOURCE: John Waterbury, Land, Man, and Devel opment in Algeria: Problems of Trained Manpower, Industry and Agriculture (American Universities Field Staff, North Africa Series Vol. XVII, No. 1, 1973), p. 11.

According to this table, about 71 percent of all private

holdings are 10 hectares or less, occupying only 21

percent of the privately cultivated land.

Within the private sector, there are two main social

classes: the new petty bourgeoisie, which owns the means

of production and controls the labor force, and the

working class, which neither owns the means nor control

the labor process. The private enterprises are usually

managed by the entrepreneurial petty bourgeoisie. The

rush for land abandoned or sold off by Europeans after

1962 led to the formation of this new rural petty bour

geoisie. Many owners resided in the cities, engaging in

commerce, private enterprises, and the state bureaucracy.

Not only did they draw revenues from land they did not

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themselves farm, but they also used to run and market the

production. It was estimated in 1967 that as much as one

million hectares might have been owned by absentees.

This is why the agrarian revolution considered the

following objectives:

1. To fix privately owned land

2. To put an end to absentee ownership of land

through application of the principle "the land to those

who work it"

3. To end private ownership of water sources

4. To end systems of indivision in property owner

ship

5. To abolish sharecropping (Khammasa) and tenant

farming

6. To nationalize communal and tribal land and

religious property

7. To establish a national land bank for distribut

ing the land to poor peasants

Table 17 shows us the general distribution of privately

owned land according to the categories mentioned above.

Agricultural growth has largely occurred in the

private sector producing vegetables, fruit, milk, and meat

for which prices could not be effectively controlled and

for which there was an uncontrollable private market.

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TABLE 17

DISTRIBUTION OF PRIVATELY OWNED LAND

Category Hectares Percent

Direct cultivation by owner 4,114,650 70.5 Indivision property 1,213,050 20.8 Tribally owned land 2,300,000 — Communally owned land 9,500,000 — Tenancy 162,195 2.8 Khammasa 31,780 .5 Others 317,985 5.4

SOURCE: John Waterbury, Land, Man, and Development in Algeria: Problems of Trained Manpower, Industry and Agri culture (American Universities Field Staff, North Africa Series Vol. XVII, No. 1, 1973), p. 12.

Since 1980, the tendency toward promoting the private

sector has become very clear; 7.5 million hectares offi

cially classified as usable land was retaken by the

private sector.^ In 1983, the government passed a law

which aimed at encouraging indigenous people to buy and

sell land and to apply for bank credits to use the land.

As a consequence, many bourgeois and entrepreneurs have

taken advantage of the 1983 law and benefitted from the

Chadli regime's "liberalization." This reflects the

elevated status of the private sector. It also means that

government is doing all it can to promote and develop the

private sector, but not at the expense of the state

*^Quarterly Economic Review of Algeria 2 (London: The Economist Intelligence Unit, 1985): 16.

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sector. The state still dominates Algeria's economy and

maintains its monopoly of foreign trade.

Self-Management or Autogestion Sector

Algeria became engaged in a very important economic

policy called self-management or autogestion. The term

autogestion corresponds to the idea of free management or

autonomous administration. This new system of autogestion

was established in rural and urban areas. Ideologically,

autogestion constituted the most original feature of

socialism under the Ben Bella regime. This regime accu

rately perceived autogestion as the main factor for deter

mining the success or failure of Algerian socialism. The

political bureau formulated a self-management system in

all enterprises, whether industrial or agricultural. The

concept of a worker self-management system was borrowed in

general terms from Yugoslavia. The government adapted

this model to the particular socio-economic conditions of

Algerian society, and so far the heart of Algerian social

ism has been the system of self-management. In addition

to the workers' participation in the direction of the

enterprise, there is their right to share in the profit.

The self-managed enterprises, according to the

Algiers Charter, were to be managed by their workers

through four bodies: the director, the Workers' General

Assembly, the Workers' Council, and the Management Commit

tee.

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The director of the enterprise is appointed by the

state. He represents the state within the enterprise and

assures the legality of its operations, as well as their

conformity with the national development plan. He con

trols the treasury, and under the authority of the presi

dent of the Management Committee directs the daily opera

tions. In case of conflict between the director of the

enterprise and one of the self-management bodies, the

Communal Council must decide. The Communal Council is

composed of the presidents of the Management Committees of

all the self-managed enterprises in the Commune plus

representatives of the party (FLN), the labor union

(UGTA), the army (ANP), and the communal administrative

authorities.

The Workers' General Assembly is composed of the

regular laborers in a given enterprise. The main tasks of

the Workers' Assembly are to adopt the enterprise's annual

plans for production, to buy new equipment and market

production, to check the accounting, and to decide the

distribution of tasks among the workers. It elects a

Workers' Council.

The Workers' Council is a body that includes at least

two-thirds of the workers in a given enterprise. It

duplicates many of the functions of the General Assembly

but has more direct control over the management. The

council serves a three-year term and selects three to

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eleven of its members to form the self-management commit

tee.

The Management Committee is responsible for the

general running of the enterprise. It is composed of

three to eleven cadres who will draw up the budget and all

plans to be submitted to the vote of the General Assembly

and Council. The Management Committee also has the power

to make decisions concerning short-term loans, marketing,

and buying of equipment and materials. It elects a

president, who is supposed to call and preside over all

meetings of the Assembly, Council, and Management Commit

tee. The president is to be elected annually, while the

members of the other bodies are elected for three-year

terms.

Although theoretically self-management has often been

advanced as a solution to alienated labor in that the

workers are given the opportunity to exert control over

the process of production, in practice the supervisory

state agency and directors of enterprises make the crucial

choices. Likewise, the role prescribed for the director

makes him more powerful than the president of the workers,

under whose authority he theoretically stands. The

General Assembly of the enterprise does not have the power

to make decisions; it simply endorses rather than controls

decisions made within the enterprise. The supervisory

state agency, by appointing directors, deprives workers of

any power over the functioning of their own enterprises.

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Because of the state's intervention, the self

management sector encountered several problems. For

example, financing was entrusted by a June 1964 decree to

the B.C.A. (Banque Centrale d'Algerie) and the C.A.D.

(Caise Algeriene de Developpement). The former was meant

to finance short-term loans, to control the management of

enterprises, and to participate in the elaboration of

plans and programs. The latter was formed to grant

long-term loans and make capital liquid. In fact, neither

the B.C.A. nor the C.A.D. solved the financial problems

encountered by self-management enterprise committees.

Both the B.C.A. and C.A.D. made weak contributions to

self-management. The nature of the difficulties encoun

tered in the application of the self-management model

illustrate the struggle between various political forces,

between the functional and the structural levels within

the self-management enterprises, and within the adminis

tration. We can share Clegg's claim that

[each] successive stage in this process placed the committees more firmly under central control until the administration came to control every essential aspects of the economic activity of the committee, rendering the concept of auto gestion derisory.

The administration not only held all the funds, but kept

the accounts and itself paid for all financial transac

tions of the committees, including wages. The self-

17 Clegg, Workers' Self-Management, p. 66.

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management committees were allowed a small amount of petty

cash for day-to-day needs. Thus, in financial terms, this

strict control by the administration meant that the

economic future of the self-management enterprises was no

longer in the workers hands. This was especially true in

the field of credits or loans to industrial enterprises.

As a result, productivity among the self-management

enterprises was decreased in this period (1963-1965) ,

because of state control of sales, profits, and credit.

Most of the committees within self-management enterprises

were unable to fulfill their obligations, since their

budgets were in the hands of the state agencies. Even

after this period, the productivity of the self-management

sector continued to be less than that of the private

sector. The causes appeared to be that guaranteed salar

ies were received by the employees of self-management

units regardless of farm performance or of an individual's

performance. Farm losses were covered by government

transfers. Stagnation of production in the self

management sector was the result.

After 1966, although Boumediene acknowledged the

existence of "enemies" of the self-management form of

economic organization, he blamed the workers for their low

productivity and declared the self-management must conform

to the law and submit to control. So he shifted the blame

for the failure of self-management from the "saboteur

cadres" to the workers. However, if we know that various

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management committees had from the very beginning been

under the high control of the administration or the

director appointed by it, and that the administration

managed both the finances of the committees and the

marketing of their products, it seems untrue to claim that

workers were unable to manage nationally and profitably

the concerns they had taken over.

As we have seen, despite the revolutionary commitment

to the principle of effective participation by the workers

in their enterprises, this principle was never extended to

the top managers of the economy, to the party, or to the

state. There was thus a clear contradiction between a

system of production theoretically and formally controlled

by the workers and an administration that totally escaped

their control.

However, the experience of self-management in Algeria

made the workers even more aware of the conflict between

the top managers and bureaucrats and themselves. At the

congress of the socialist industrial sector workers made

their voice heared and accused the administration of

impeding the functioning and the experience of self

management. What was the role of the Workers Union

(U.G.T.A.) in the process of distracting self-management?

The answer is obvious: the Union's role was very limited

because of its history of being controlled by the party

(FLN) or the state. It still suffered from a lack of

autonomy, manifested in its inability to provide workers

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with an adequate platform for expressing their interests.

As a consequence, most of the self-management enterprises

committees were blocked, unable to make a profit without

loans, and unable to get a loan without making profit. By

applying financial criteria, the administration effec

tively blocked the development of the entire self

management sector. According to QER, based on El-

Moudjahid, only 682 out of 3,200 self-managed farms made a

profit in 1983-84; this was an improvement over the 18 1982-83 figure of only 398 farms.

State agency/director

General Assembly

Workers 1 Council

Management Committee

Figure 1. Organizational Structure of the Self-Management Sector

18 Quarterly Economic Review of Algeria 1 (1985): 7.

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Public or State Sector

The public or state sector is usually managed by

state agencies or directors. It consists of enterprises

nationalized by the government since independence, sub

national enterprises, and new enterprises created with the

aid of foreign loans such as the Draa Ben Khedda textile

enterprise, and the Annaba steel complex. In fact, the

Annaba steel complex consists of four different compo

nents: its blast-furnaces are French, its steel-works are

Russian, its flattening-mills are Italian, and its pipe

line works are West German.

The industrial public enterprises were taken over by

the state in different forms. First, in the form of

reconstructing the existing enterprises such as the

"Societe Nationale des Chemins de Fer Algeriens"; second,

nationalizing or repurchasing foreign active enterprises,

changing their former names such as "Societe Nationale

d'Exploitation et de Recherches Miniers" in the place of

small foreign enterprises of mineral exploitation; and

third, creating new enterprises such as the "Societe

Nationale des Industries de la Cellulose." In this

respect, the most important historical decision was that

of February 1971, when the nationalization of 51 percent

of oil and 100 percent of natural gas took place.

Within the state controlled sector, there are three

social classes: (1) the bourgeoisie, the top managers and

directors, those who make up the core of the governing

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bureaucrats; (2) the new petit-bourgeoisie, comprised of

technicians and engineers and those who have high educa

tion and skills; and (3) the proletariat of manual working

class.

Thus, we will have the following social organization

and structure in the public sector.

Top managers/directors

Technicians, engineers, intellectuals

Working class

Figure 2. Structure of Public Sector

Conclusion; The Algerian Social Class Structure

The colonization of Algeria brought about the divi

sion of society into two antagonistic classes: a colonial

bourgeoisie monopolizing the means of production and a

proletariat. Moreover, a lumpenproletariat, which served

the function of a colonial reserve army, came into exist

ence. Before independence, the Algerian social formation

showed different ideological tendencies, which have

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determined the present Algerian socio-economic and politi

cal system. We can distinguish between three major

ideological tendencies:

1. The neo-colonial tendency, represented mainly by

the interests of the French metropolis and one category of

the indigenous capitalists who came to identify their

interests with the interests of France

2. The indigenous capitalist tendency, represented

particularly by the large landowners, the traditional

indigenous bourgeoisie, and in general those who were

opposed to neo-colonialism but who were naturally opposed

to any form of socialism

3. An orientation toward complete independence of

Algeria. It advocated socialist principles and called for

the abolition of capitalism.

After the independence of the country, the major

split between the conflicting classes was between the

socialist forces and the emergent national bourgeois and

bureaucratic forces that had come to dominate the state.

Each of these social classes was divided into two major

social groups:

1. Those who believed in a radical Marxist system

for the country were divided between those who favored a

central state-controlled socialist system and those who

were for a democratic socialist system with a correspond

ing socialist organization

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2. The anti-socialist forces, who believed in the

specific Arabic identity of Algeria, were split between

those who wanted a free enterprise system and those who

wanted some form of state control of the market

The interests of the two main social classes (socialist

forces and bourgeoisie) are contradictory. While the

national bourgeoisie was interested in the capital-

intensive industries in order to speed up its economic

enrichment and strengthen its political power, the social

ists advocated labor-intensive industries in order to

provide employment for the working classes.

At this point, we can maintain that within the

present Algerian social formation, there are three main

social classes:

1. The bourgeoisie, the top managers and directors,

those who make up the core of the governing bureaucrats

and hold the key to socio-economic and political power in

the country

2. The new petty bourgeoisie, comprised of techni

cians, engineers, intellectuals, and those who have high

levels of education and skills. This new social class is

a product of the industrialization process taking place in

Algeria. It includes those who started their careers as

professionals and technocrats and then moved up in the

social hierarchy to become petty-bourgeois, participating

directly or indirectly in the socio-economic decision

making with the national bourgeoisie

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3. The proletariat, which includes both white-collar

and blue-collar or manual working masses

We can summarize the Algerian social classes as follows:

Bourgeoisie (Top managers and directors)

New Petty-Bourgeoisie (Technicians, engineers, intellectuals)

Working class (Mental and manual working masses)

Figure 3. Algerian Social Class Structure

In determining these social classes, we used Nicos

Poulantzas' definition. According to Poulantzas, the top

managers who have economic possession are part of the

bourgeois class. Economic possession means the capacity

of putting the means of production into operation. In

other words, the top managers who have control over both

the means of production and the labor force are part of

the bourgeoisie. The new petty bourgeoisie, according to

Poulantzas, consists of the technicians, the engineers,

and the intellectuals, who are partly entrusted with a

special authority in controlling the labor process.

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Therefore, they cannot be considered part of the working

class, even when they take the working class side; their

place in political and ideological relations is not 19 reducible to their class position in the conjuncture.

We also use here Erik Wright's definition of the working

class, because Poulantzas' definition of the working class

is limited only to the productive labor who produce

surplus value, whereas Wright places both productive and

unproductive labor (white collar employees) in the working

class.20

19 . Nicos Poulantzas, Classes in Contemporary Capital ism (London: Verso, 1978), pp. 14-24. 20 Erik Olin Wright, Class, Crisis and the State (London: Verson, 1979), pp 46-63.

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HYDROCARBONS INDUSTRIES

Introduction

Activity in the hydrocarbons (oil, gas and petrochem

icals) sector is very recent in Algeria. It was not until

the late 1950s that hydrocarbons activities and research

began under the control of four French companies created

especially for this purpose: SN REPAL (La Societe Nation

ale de Recherche et d'Exploitation des Petroles en

Algerie), CFP (La Compagnie Francaise des Petroles), CREPS

(La Compagnie des Petroles d'Algerie). From 1957 to 1962,

twenty-three new companies with French and foreign capital

(Shell, BP, Esso) joined the previous French companies in

the hydrocarbons field. From 1954 to 1962, a reserve of

600 million tons of oil and 1,600 billion cubic meters of

natural gas were discovered. More precisely, it was only

in 1958 that the country began to produce oil and in 1960

to produce natural gas. After independence in 1963, the

national company SONATRACH (Societe Nationale de Transport

et the Commercialisation des Hydrocarbons) was estab

lished. By 1966, SONATRACH extended its activities to

other fields in the oil and gas industries.

115

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Until 1967, almost the entire production of hydro

carbons was under the control of foreign firms such as

Getty Oil, Sinclair, and other French oil companies.

Despite difficulties brought about by political and

economic conflicts of interest during the initial years

after independence, a normalization of Algerian-French

relations was reached in 1965 as a result of an accord

signed by Ben Bella with the French. The accord allowed

the French to participate actively in the industrializa

tion of Algeria through an office created specifically for

this purpose (Office de Cooperation Industrielle).

The hydrocarbons sector is comprised of the following

main activities:

1. Exploration of hydrocarbons resources

2. Production and transportation of crude oil

3. Preliminary transformation of hydrocarbons:

liquefaction, refining, and petrochemicals

4. Further transformation: raw material for deter

gents, synthetic fibers, and fertilizers

5. Distribution of hydrocarbons and their deriva

tives in the national and international markets.

The hydrocarbons sector contains one large company,

SONATRACH. Government decree No. 63-491, published on

December 31,1963, empowered SONATRACH to carry out all

transport and marketing of hydrocarbons in Algeria. In

September 1966, SONATRACH's own power increased to include

the management of other sectors, from exploration to

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production. On February 24, 1971, another decree nation

alizing all pipeline systems, natural gas reserves, and

foreign oil production, again enlarged SONATRACH's power.

Finally, two months later, all foreigners engaged in the

hydrocarbons business were required to function in associ

ation with SONATRACH, which was to own 51 percent of all

ventures. In addition to its domestic monopoly on the

import of all hydrocarbon by-products from fertilizers to

plastics. As a result, SONATRACH became the Societe

Nationale pour la Recherche, la Production, le Transport,

la Transformation et la Commercialisation des Hydrocar-

bures, the largest and most important company in the

country.

Despite the fact that SONATRACH exhibits some charac

teristics of private companies (a certain competitiveness,

varying salary scale, etc.) this company is, in the final

analysis, a direct extension of the government. For

example, the president (Directeur general) of SONATRACH is

nominated by the Ministry of Energy on the authority of

the President of Algeria, as was the case for the ex-

Minister of Energy, Said Ahmed Ghazali, who rose directly

to his position from the presidency of SONATRACH. All

department heads must be approved by the Ministry of

Energy.

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Ministry of Energy

President

Vice President/Head Organization & Planning Department

Executive Manager/Head Finance Department

Head of Personnel Department

Head of General Administrative Department

Head of Public Relations Department

Figure 4. Organizational Structure of SONATRACH

SONATRACH consists of four main divisions: (1) hydrocar

bons, (2) petrochemicals, liquefied natural gas, and

refining, (3) marketing, and (4) engineering and develop

ment .

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Since the new regime of Chadli Bendjadid (1979),

there has been some change in the economic policy. This

change was reflected in a renewed emphasis by the govern

ment on the agricultural sector and a restructuring of the

abnormal development of the state companies. A typical

example of these companies is of course SONATRACH. This

oil company absorbed during the last 10 years 62 percent

of the industrial investments, consumed half of the

foreign country credit, and employed more than 100,000

employees. As a consequence, in April 1980, three presi

dential decrees were published in the Algerian official

journal announcing the restructuring of the national

company SONATRACH, out of which three new national enter

prises were created:

1. The GTP (1'Entreprise Nationale des Grand Travaux

Petroliers), responsible for the large industrial work

projects in the oil, gas, and petrochemical fields

2. The ERDP (1'Entreprise Nationale de Raffinage et

de Distribution des produits petroliers), responsible for

oil treatment and its derivatives, and distribution of gas

and refined products in the national market

3. The ENPC (1'Entreprise Nationale du Plastique et

Caoutchouc), responsible for the production and sale of

its products (plastic and rubber) in the national market

SONATRACH maintained control over research matters,

exploitation, transportation, and commercialization of

hydrocarbons in the international markets.

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This decision was the first of its kind in Algerian

economic history. According to the Ministry of Energy and

Petrochemical Industies, the decision to restructure

SONATRACH reflected the government's desire to split the

big company into various medium size enterprises, thus

making them more manageable. In addition, it was an

effective way to increase productivity because, in most

cases, the planned capacity of production was under

utilized.

Besides its technical aspects, this decision also had

economic and political implications. The abnormal devel

opment of some national enterprises, which in general

dominated the economy for almost two decades, is responsi

ble for multiplying the assets and wealth of a few people

in the upper-management levels (directors, managers).

Each company dominates the entire branch of economic

activity and operates under one centralized decision

making body, which has been leading to the emergence of

"Feudal Industries." Politically speaking, it is aimed at

abolishing the previous industrial policy established

during the years under the former Minister of Industry and

Energy, M. Belaid Abdelsslam. In addition, this decision

clearly indicates the willingness of President Bendjadid

to reduce the political power of this company. The

restructuring of the national companies can also be seen

as advantageous for the country in terms of creating a

decentralized decision-making body.

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In the same manner, the principle of restructuring

may be extended in the future to other state companies,

for example, the SNS (Societe Nationale de Siderurgie),

the DNC (Societe des Batiments) and the SONACOME (Societe

Nationale des Industries Mechaniques). In general, the

restructuring of the hydrocarbons sector has received

particular attention by the government. This is due to

the strategic importance which this sector holds in the

national economy.

The Strategic Importance of the Hydrocarbons Sector

To better understand the importance of the hydro

carbons sector, it is necessary to study the role of

hydrocarbons in the economic development of Algeria. To

do so, we should present the political and economic

significance of the sector.

From the political point of view, the utilization of

hydrocarbons as a source of energy and as a means of

economic growth has been given top priority by the govern

ment. President Boumediene had indicated on many occa

sions that the development of the hydrocarbons sector was

a necessary stage in preparing the conditions for estab

lishing an independent Algerian industrial sector. In

this sense, industrialization does not only mean the

utilization of energy sources and the treatment of raw

material, but it also means a policy free and independent

from foreign competition. Moreover, the hydrocarbons

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sector is the government's source of political strength.

It is the state instrument for conducting foreign policy

and making its voice heard in international organizations.

From an economic point of view, the hydrocarbons

sector realizes 40 percent of Algeria's GNP (Gross

National Product), represents 96 percent of the country's

exports, contributes to state revenues by more than 50

percent, and employs more than 100,000 workers. More

specifically, energy exports jumped from 57.9 percent in

1963 to 97.4 percent in 1979 (see Table 29). The state

fiscal oil revenue increased from 7.5 percent in 1963 to

56 percent in 1978. The hydrocarbons sector also financed

47.4 percent of the total costs of imported industrial

equipment during the period 1962-1976. From 1976 and

beyond, the participation of the hydrocarbons sector in

financing economic projects has increased because of the

installation of the new liquefaction plant. Because of

the significant role played by the sector in the national

economy, the state assumed political and economic control

over the hydrocarbons sector.

The economic activities of the hydrocarbons sector

can be classified into different categories: crude oil,

natural gas, condensate and all liquefied gas (butane and

propane). This sector has recoverable reserves estimated

in 1978 at 10 thousand barrels per day of oil, or 1.24

million tons and 3,655 billion cubic meters of natural

gas.

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In 1978, SONATRACH estimated its proven crude oil

reserves at about 1.24 million tons. To confirm these

findings, SONATRACH commissioned the following foreign

consultants: the U.S. energy consultants of Degolyer

McNaughton and Bechtel Corporation. Degolyer McNaughton's

study cited only 1.023 million tons of proven reserves.

In 1978, the Algerian oil reserve was estimated at 1

percent of the world's reserve. According to other

estimates, the proven reserves of crude oil in January

1978 were about 900 million tons and in 1980 1151 million

tons (see Table 18) . To this we can add additional

possible reserves of 360 million tons of crude oil. The

accumulated production of the year 1978 and 1980 was 662

and 778 million tons, respectively. However, these

reserves cannot last more than twenty years at the 1979

rate of production (50 million tons). Table 18 shows the

proven reserves of Algerian crude oil.

TABLE 18

PROVEN RESERVES OF CRUDE OIL (Millions of Tons)

1960 1970 1973 1976 1978 1980

Reserves 714 1,091 1,528 1,006 900 1,151 Production accumulated in the beginning year 2 282 416 559 662 778 Total 716 1,373 1,944 1,565 1,562 1,929

SOURCE: Jacques Schnetzler, Le developpement algerien (Paris: Masson, 1981), p. 51.

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The proven reserves of natural gas in January 1979

were estimated at 3,005 billion cubic meters, to which we

can add the possible reserves of 950 billion cubic meters.

The accumulated production for the same year was 77

billion cubic meters, excluding burned gas. Condensate

production in January 1979 was 20 million tons, while its

reserves were calculated at 525 million tons (see Table

19). Algeria could be seen as a modest of oil producer,

but it is certainly one of the largest producers of

natural gas in the world. In fact, the Algerian natural

gas reserve was estimated at 5 percent of the world's

reserve. Table 19 indicates proven reserves of natural

gas.

TABLE 19

PROVEN RESERVES OF NATURAL GAS

Natural Gas Condensate (billion (millions cubic meters) of tons)

Hassi-R'Mel 2,000 400 Rourde-Nouss 375 50 Alrar 160 25 Other regions 470 50 Total 3,005 525

SOURCE: Jacques Schnetzler, Le developpement algerien, (Paris: Masson, 1981), p. 51.

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It appears from these figures that the production of

natural gas is more developed, especially after putting

into operation the liquefaction units of methane in 1964,

1972 and 1978. By 1985, a total production of 115 billion

cubic meters is planned, of which 70 billion is set for

export. Hassi-Massaoud alone furnishes 94 billion cubic

meters, Rhourde-Nouss 15 billion cubic meters, and Alrar 5

billion cubic meters. To this we add 24 million tons of

condensate. Altogether, this represents two thirds of

world production. But it seems that this enormous and

ambitious program could not be achieved by 1985. Thus,

during the six years to come, Algeria anticipates produc

ing 100 billion cubic meters per year of natural gas and a

production of liquid hydrocarbons (crude oil, condensate,

liquid propane) of more than 75 million tons per year.

TABLE 20

OIL AND GAS PRODUCTION, 1970-1978

Products 1970 1972 1973 1974 1975 1976 1977 1978

Crude oil & condensate (millions of tons) 48.2 50.0 50.8 47.1 45.7 50.1 53.5 57.1 Natural gas (billions m3) 2.7 3.3 5.2 5.9 7.8 10.3 8.3 14.1

SOURCE: M.E. Benissad, Economie du de'veloppement de 1 1Alqerie (Paris: Economica, 1979), p. 158.

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Today, three oil refineries exist in Algiers, Arzew,

and Hassi Massaoud, in addition to the liquefaction

complexes of natural gas at Arzew and Skikda. Determined

portions of oil derivatives production such as regular

gasoline, gas-oil, and kerosene, or derivates from natural

gas such as fertilizers and ammonia, are earmarked for

export. In addition to this, crude petroleum and lique

fied natural gas are the main hydrocarbons products used

for export.

In 1977, for example, petroleum revenues were esti

mated at 21 billion Algerian Dinars (DA), while total

fiscal revenues were 27.9 billion DA (75%). Since 1974,

the most significant and largest portion of revenues was

coming from the hydrocarbons sector. The rate of invest

ment in hydrocarbons was very high as it represented 39

percent of all industrial investments between 1973-1976.

These investments were used to cover the costs of imported

technology and its installation.

The evacuation of oil to the north toward the Medi

terranean Sea for easy transportation was assured by four

pipelines: the Arzew, Bejaia, Skikda, and Algiers pipe

lines. Natural gas was also assured by three gas pipe

lines: Arzew, Algiers, and Skikda. Table 21 shows the

national production, exports and consumption of oil and

natural gas.

According to Table 21, the completion of the first

three pipelines in 1959, 1960 and 1966, greatly improved

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. — — — — 1.6 1.1 1.0 0.6 0.3 0.4 0.2 0.3 0.4 National Consumption — — -- — 6.0 1.8 7.9 2.3 2.6 1.8 0.4 2.1 2.5 0.8 19.7 Exports (billions cubic meters) 2.3 1.9 1.5 0.3 0.3 17.825.2 11.0 10.3 Total Production — — ——— —————— 4.6 5.9 4.6 4.6 2.0 2.1 1.6 0.4 National T A B L E 2 1 Consumption Raw 49.2 49.0 40.9 5.2 7.8 42.1 48.0 5.5 14.0 6.8 5.2 34.9 2.2 3.4 2.4 36.3 41.142.0 2.0 2.1 2.8 31.9 1.5 20.3 0.1 15.5 0.1 0.2 Exported Oil (millions of tons) Natural gas 1.28.5 1.0 8.5 0.30.4 0.3 0.4 57.2 56.9 45.8 53.5 38.3 43.2 44.2 23.7 23.6 0.1 26.2 24.5 1.3 1.7 1.3 33.4 20.4 15.6 Total Production NATIONAL PRODUCTION EXPORTS, , AND CONSUMPTION OF OIL AND NATURAL GAS, 1957-1979 SOURCE: Jacques Schnetzler, Le developpement alqerien, (Paris: Masson, 1981), p. 55. 1978 1979 1975 1976 50.1 45.1 1977 19731974 50.0 47.1 45.0 5.0 5.4 4.0 1.4 1971 37.2 1972 49.3 46.6 2.7 3.7 1967 1968 1969 1970 47.8 45.5 2.3 3.4 1963 1965 1966 1962 1960 1961 1964 26.3 24.9 1.3 0.7 0.2 0.4 1959 1958 1957 Date

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the economic situation of the country the year immediately

following the completion of a pipeline, that is to say,

1960, 1961 and 1967. The decline of oil production in

1971 was due to the Algerian-French crisis of that same

year, while the decline of production in 1974 and 1975 was

due to the economic recession that struck the country and

the delay of new technological installations at Hassi-

Massaoud.

At the beginning of 1979, the maximum capacity that

these pipelines could transfer was 70 million tons of oil,

10 million tons of condensate, and 30 billion cubic meters

of gas. The evacuation of oil and gas by pipeline through

the Mediterranean Sea to other countries was made possible

by the recent completion of the Algeria-Italy pipeline via

Tunisia in 1981.

Some raw petroleum is being treated in Algeria at the

four refineries: Hassi-Massaoud (constructed in 1961,

with a capacity of 225,000 to 1 million tons); Algiers-El

Harrach (1964, with a capacity of 2.5 million tons per

year); Arzew (1972, with a capacity of 2.5 million tons);

and Skikda (with a capacity of 2.5 million tons per year).

All these refineries are under SONATRACH control (in terms

of commercialization and financing). Other refineries

are in the course of construction: An-Amenas (1 million

tons), Bejaia (5.5 million tons), and Skikda (15 million

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tons) in order to assist the former ones. In 1979, these

refineries delivered 7 million tons of finished products.^-

In addition to this, several factories of gas lique

faction were implanted in the country, the first of which

was CAMEL (Compagnie Algerienne de Methane Liquide) in

Arzew. Most of its capital was from British sources, but

it was entirely purchased by SONATRACH by the end of 1977.

CAMEL began its production by 1964 with a capacity of 1.8

billion cubic meters per year.

The second factory, GNL-1 (Liquefied Natural Gas),

was constructed by Americans in Arzew. As it began opera

tion in early 1978, Arzew GNL-1 had a capacity of 10.5

billion cubic meters per year. Plans are to build two or

three more GNL factories with a capacity of 12.5 billion

cubic meters per year each. However, since many projects

are under construction, the Algerian government has

postponed the construction of the GNL3 factories for the

time being.

The third factory of gas liquefaction is that of

Skikda. This liquefied gas factory is supplied by the

Hassi-R'Mel-Skikda pipeline. It comprises three units of

liquefaction with the possibility of a fourth one at the

project's completion. Whereas the annual consumption

of natural gas is around 5 billion cubic meters, the

annual production of this factory will be as follows:

1 ' Jacques Schnetzler, Le developpement algerien (Paris: Masson, 1981), p. 59.

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1. 3.7 billion cubic meters in the form of GNL, and

up to 5 billion cubic meters at maximum capacity

2. 150,000 tons of methane, and up to 200,000 tons

per year at maximum capacity

3. 25,000 tons of butane propane, and up to 330,000

tons per year at maximum capacity

This factory uses the most sophisticated technology.

Although it is one of the most important liquefaction

factories in the world, it employs only 400 persons.

Oil Industry

The French first discovered oil in Algeria during the

revolutionary war year of 1956. Production marketing

began in 1958. Before independence, Algeria's oil and

natural gas had been exploited by foreign companies, and

particularly French companies who controlled the explora

tion, capital, techniques, sales, and production managers.

After independence, French control was established by the

Evian Decree of 1962, thereby creating difficulties in the

beginning for the newly independent Algeria to manage its

oil and natural gas.

In December 1963, the government created the national

company SONATRACH in order to build the third pipeline

(from Haoud-el Hamra to Arzew) which the foreign oil

companies refused to construct. As we have already seen,

cooperation between Algeria and France continued after

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 1 3 1 2 independence due to the 1965 accord. In 1969, Algeria

decided to revise this accord to increase the price of

oil, but France refused to accept the price hike. Mean

while, Algeria was in need of capital in order to imple

ment its first four-year plan (1970-1973). The Ministry

of Energy and Industry increased the reference price of

oil from 2.08 to 2.65 dollars, and later raised it to 3.60

dollars (see Table 24). As a result, Algerian-French oil

price negotiations began in November 1969. These negotia

tions led to the nationalization of all foreign firms,

including French oil companies, in 1971. Algeria could

not have nationalized its oil industry prior to 1971

because SONATRACH did not have the required expertise to

operate it on its own. In February 1971, Algeria gained

control over more than half of its oil production (51%),

and almost all of its exploration, transportation and

distribution rights. In addition, it gained full control

over its natural gas (100%) . As a consequence, SONA-

TRACH's share of oil production has increased since 1971,

while fundamentally decreasing the foreign companies'

share. Oil production also dropped significantly in 1971.

This decline of oil production, of course, had a negative

effect on the first four-year plan, as we will see in

2 A. Decoufle, "Aspects socio-politique de 1 'Accord Franco-Algerien du 29 Juillet 1965 sur, les hydrocarbures et le developpement de l'Algerie" in Economie Appliquee XIX (1966): 82-90.

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Chapter VIII. Table 22 shows in general the increase of

oil production by SONATRACH and the decline of oil produc

tion by foreign companies.

TABLE 22

PRODUCTION OF OIL BY SONATRACH AND FOREIGN COMPANIES (Millions of Tons)

Foreign Year SONATRACH Companies

1966 3.9 29.5 1967 4.6 33.7 1968 5.9 37.3 1969 7.3 37.5 1970 10.2 38.0 1971 23.3 13.8 1972 38.5 11.6 1973 38.8 12.0 1974 35.8 11.4 1975 33.8 11.9 1976 40.4 9.7 1977 42.9 10.6 1978 45.1 12.1 1979 45.5 11.4 1980 — 10.1

SOURCE: Schnetzler, Le developpement algerien (Paris: Masson, 1981), p. 61.

As regards oil pricing, Algeria has adopted the

Geneva reference price $3.83 per barrel since 1972. In

1973, SONATRACH again adopted a new policy to deal with

its clients who do not participate in hydrocarbons re

search in Algeria and raised the oil price to $9.30. The

reference price for each barrel of oil became $16.2 in

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January 1976. The OPEC (Organization of Petroleum Export

ing Countries) increased its oil price by 15 percent

effective January 1979. Table 23 shows the evolution of

Algerian crude petroleum prices.

TABLE 23

EVOLUTION OF ALGERIAN CRUDE OIL PRICES (Dollars)

Jan. Apr. Feb. Nov. Jan. Jan. 1965 1970 1971 1972 1973 1974 1976

2.08a 2.65 3.60 3.83 9.30 16.21 16.2

SOURCE: Andre Gauthier, L'Alqerie: decolonialisation, socialisme, industrialisation (Canada: Breal Editeur, 1976), p. 107.

,a. This figure taken from Benissad, Economie du developpement de l'Alqerie, p.157.

Between 1967 and 1970, the Western oil companies of

Esso, Shell, Sinclair, Sofrapel, Amif, Phillips Petroleum,

and Mobil were nationalized. Control and distribution of

oil products and other hydrocarbon derivatives was en

trusted to SONATRACH. However, part of the oil production

continued to be exploited by foreigners. For example,

France's company Total was one of the major foreign

producers that had remained by 1978. Since 1975, the CFP

(Compagnie Francaise des Petroles) was another foreign

company that associated with SONATRACH for oil production

until 1980. Getty Oil also maintained a joint-production

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venture with SONATRACH until 1978, but it was much smaller

in scale. Table 24 shows crude and refined oil production

for 1973-1977.

TABLE 24

CRUDE AND REFINED PETROLEUM PRODUCTS, 1973-1977 (THOUSANDS OF METRIC TONS)

1973 1974 1975 1976 1977

Oil (crude & condensate) 50,822 47,192 45,788 50,183 53,838 Refined oil 245 328 545 653 1,048 Products 4,696 4,405 5,036 4,450 4,172 Regular gasoline 546 427 557 512 439 Super gasoline 314 306 254 298 410 Kerosene 338 363 450 405 360 Diesel oil 1,610 1,513 1,627 1,464 1,421 Fuel oil 1,404 1,290 1,508 1,333 1,133 Naphtha 432 466 576 454 284 Bitumen 52 39 62 56 81 Lubricants -- 1 2 18 44

SOURCE: Jack Kramer, Algeria (New York: Chase World In formation Corp., 1978) p. 59.

The 1977 planned crude production was 55 million

tons, or 10 percent more than in 1976. How much oil could

be produced annually? Some overly optimistic estimates

were conducted at the beginning of the last decade.

SONATRACH assumed that oil production would soon reach 65

million tons, but this figure is considered high today.

At a rate of 60 million tons per year, Algeria will

probably deplete its reserves in 20 years.

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During 1976, crude oil revenues were about 4 billion

dollars, a figure which was increased somewhat in 197 7.

Using 1976 prices, SONATRACH estimated that its revenues

from crude sales approached 4.5 billion dollars in 1980.

However, another factor which must be taken into account

is that the rate of domestic consumption is increasing at

an annual rate of 15 percent. Therefore, in order for

SONATRACH to maintain this level of revenues it has to

keep the domestic consumption of oil at the same rate

(15%) , which is impossible to accomplish.

Algeria's crude product is of exceptional quality.

It has a low sulphur content and it is light with a high

yield of paraffin naphtha. In addition to this, the

product is conveniently transported through pipelines to

the Mediterranean Sea for export to Europe and North

America. For these reasons, Algeria's crude product is

among the world's most expensive.

Algeria's main oil customer between 1972 and 1975 was

West Germany which bought about 37 billion tons. From

1976 to 1979, America was Algeria's main oil customer

through Exxon and Gulf Oil which bought 21 billion tons.

In 1977, the United States took 55 percent of Algerian

crude production and remains Algeria's prime customer.

Other main customers include several European countries:

West Germany, France, Italy, Spain and the United Kingdom.

West Germany was the second oil importer after the United

States in 1980, importing 9.5 million tons of Algerian oil

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in 1979. Table 25 shows the oil exports for the years

1972-1975 on a country-by-country basis. Table 26 shows

the exports and domestic consumption by type of product.

TABLE 25

ALGERIAN OIL EXPORTS (CRUDE AND CONDENSATE), BY DESTINATION, 1972-1975

Destination 1972 1973 1974 1975

West Germany 9,326.8 10,711.4 8,423.7 8,490.2 U.S.A. 3,682.7 5,357.7 8,173.6 7,033.9 Italy 3,562.5 4,382.9 2,761.1 2,170.9 Spain 4,124.2 3,983.7 2,216.6 1,635.8 France 2,401.6 2,693.6 1,740.6 1,532.7 Brazil 1,745.4 ---- 1,576.7 760.2 U.K. 992.5 1,803.0 930.9 564.5 Morocco 793.4 964.5 628.6 --- Netherlands 1,555.4 828.6 579.4 904.2 Sweden 798.9 724.7 560.2 56.6 Switzerland 792.1 591.0 466.8 67.8 Norway --- 327.3 412.8 --- Egypt 123.6 269.1 302.0 — Denmark --- 260.6 290.4 --- Bulgaria 611.9 244.8 226.9 108.6 Canada --- 149.6 220.3 70.5 Romania 290.2 147.2 211.9 280.0 Belgium 2,493.0 75.4 206.3 837.3 East Germany 207.3 --- 162.0 --- Austria 105.9 --- 153.7 --- Poland ------368.0 Finland ------356.8 Yugoslavia ------329.1 Japan ------288.8 Zaire ------268.4 China ------289.7 Other 289.1 259.3 481.8 984.2

Total 33,896.8 33,799.4 30,726.3 27,398.2

SOURCE: Jack Kramer, Alqeria (New York: Chase World Information Corp ., 1978)p . 62.

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TABLE 26

EXPORTS AND DOMESTIC CONSUMPTION OF CRUDE AND REFINED PETROLEUM PRODUCTS, 1973-1977 (Thousands of Metric Tons)

1973 1974 1975 1976 1977a

Exports Petroleum 45,002 42,110 40,637 45,083 48,919 of which SONATRACH (33,779) (30,726) (28,704) (35,390) (38,220) Liquefied gas frcm petroleum 8 59 252 264 534 Refined petroleum products 2,389 2,161 2,468 1,964 938 Ordinary gasoline 197 113 178 118 8 Super gasoline 106 64 49 19 34 Kerosene 96 127 165 139 69 Diesel oil 501 434 414 188 8 Fuel oil 1,089 932 1,082 1,032 544 Naphtha 400 491 580 468 275

Domestic consumption Petroleum slod to domestic refineries 5,012 4,623 5,214 4,675 4,558 Liquefied gas from petroleum 260 296 360 443 569 Refined petroleum products 2,586 2,700 2,983 3,156 3,862 Motor and fuel oils 2,132 2,407 2,685 2,948 3,631 Bitumen 115 137 128 125 140 Lubricants 51 59 70 83 91 Soot 288 97 100 ——

SOURCE: Jack Kramer, Algeria (New York: Chase World Information Corp., 1978), p. 63

a. Estimates.

b. Including changes in stocks.

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Oil exploration has continued, but there is no

evidence that a major discovery will be made. Petrobas,

Total, Sun Oil, Hispan Oil, Deminex, the French producer

ERAP, and Amoco have agreements with SONATRACH. If any of

these companies discovers oil, 51 percent of its explora

tion costs will be reimbursed in form of crude oil, and

production is to be apportioned between SONATRACH and the

foreign company on a 51-49 percent basis over a specified

period of time. In July 1980, the French oil company CFP

and the American company Amoco signed an associate con

tract with SONATRACH for research and oil exploitation in

Algeria. In case of discovery, SONATRACH will take 65

percent and CFP 35 percent of production, whereas in the

case of Amoco, SONATRACH agreed to take 58 percent and

Amoco 42 percent. SONATRACH has another contract with Sun

Oil company. In case of discovery, SONATRACH will take 65

percent and the American company Sun Oil will take 35

percent of the production.

SONATRACH's policy is aimed at defining known fields.

From 1966 to 1972, roughly $425 million was invested in

exploration of Algerian oil fields. Almost $319 million

was provided by SONATRACH. As a result, 20 new fields

with recoverable reserves estimated at 100 million tons,

were discovered. In 1976, SONATRACH spent some $250

million on exploration and it is believed to have in

creased that figure in 1977.

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Over the past few years most findings have been

minor. The foreign companies that participate in oil

exploration are especially disappointed. Getty has put

more than $100 million into the Sahara over five years,

and has come-up with nothing. Such was the case for Sun

Oil, Amoco, and Deminex. Petrobas and Hispan Oil have

made modest findings. Near In-Amenas, the Total company

has discovered a field that could yield 2 million tons a

year.

Because oil exploration does not seem encouraging, it

is obvious that more resources will be shifted from

exploration and production to refining. Besides the

existing refineries (at Algiers, Arzew, and Hassi-

Massaoud), four new refineries (at In-Amenas, Bejaia,

Hassi-Massaoud, and Skikda) were constructed and others

are still under construction (see Table 27).

Between 1974 and 1976, the percentage of exports

reached 90 percent, and by 1976 jumped to 97 percent (see

Table 28). Meanwhile, the percentage of other exports

such as agricultural products (wine, dates, etc.) has

declined.

Under present conditions, Algeria cannot produce more

than 50 million tons of oil per year; otherwise it would

consume half of its known reserves by the end of 1984. Of

this production, Algeria retains a sufficient quantity for

its own needs each year. It could consume 10 million tons

per year if the existing plants were operating at full

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TABLE 27

PRESENT REFINING CAPACITY (Tons)

Existing Refineries Annual Capacity

Algiers 2,700,000 Arzew 2,500,000 Hassi-Massaoud 200,000 Total 5,400,000

In Amenas 300,000 Bejaia 7,500,000 Hassi-Massaoud II 1,100,000 Skikda 15,000,000 Total 23,900,000

SOURCE: Jack Kramer, Algeria (New York: Chase World Information Corp., 1978), p. 66.

NOTE: This table is constructed from two earlier tables and updated.

capacity. But Algeria, at the present time, does not

consume more than 5 to 6 million tons per year (see Table

21) . It is anticipated that the coming years will see

more reduction in oil exports in order to save limited

reserves. Algerian authorities are aware of the limita

tions placed on oil reserves. The oil reserve of Algeria

was estimated at 1.1 billion tons. With the rate of

export between 50 and 55 million tons (52 million tons in

1979), the oil will be exhausted within 20 years.

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TABLE 28

ALGERIAN EXPORTS OF VARIOUS OIL PRODUCTS

Percent Year Millions DA of Exports

1963 2168 57.9 1964 1933 53.9 1965 1690 53.7 1966 1819 59.3 1967 2605 72.9 1968 2909 71.0 1969 2979 70.0 1970 3505 70.4 1971 3149 74.8 1972 4816 82.3 1973 6206 83.0 1974 18261 93.2 1975 17,273 93.1 1976 21,097 95.0 1977 24,397 96.2 1978 24,082 96.2 1979 35,578 97.4

SOURCE: Jacques Schnetzler, Le developpement alqerien (Paris: Masson, 1981), p. 62.

However, this analysis does not take into considera

tion the increase of the national consumption during these

coming 20 years. National consumption was estimated at 5

million tons in 1980. This makes us believe that the oil

reserves of the country will last less than 20 years. If

national consumption and oil exports remained at an annual

rate of 50 million tons per year, the country's reserves

would not extend beyond the year 2000, but only to 15

years from now, at which time Algeria would join the other

crude oil importer countries. This view of the future is

not a promising one. This also explains the new Algerian

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oil policy which has been undertaken by the FLN central

committee since 1980. This policy was manifested in the

government's decision to protect the strategic reserves of

hydrocarbons (oil and gas) , and the reduction of oil

exports. President Chadli Bendjadid has stressed on many

occasions the importance of safeguarding Algerian oil

reserves rather than converting them into currency. As a

result, since 1980, the Algerian oil policy has been

marked by a voluntary reduction in oil exports. More

efforts were directed toward improving the country's

refining capacity. However, the decline in crude oil

sales has been balanced by the increase of natural gas

exports, and the augmentation of the LNG price. This

explains why Algerian became more sensitive about oil

prices than the volume of exports.

Some high-level political authorities still believe

that the exclusive utilization of hydrocarbons is a

necessity in order to generate hard currency. For exam

ple, the returns from oil exports was estimated at 10

billion dollars in 1979, compared to 6 billion dollars in

1978. The hard currency revenue from oil increased from

50 percent in 1979 to 89 percent in 1981. Also, reducing

oil exports will definitely slow down economic development

and reduce the chances for the country to reimburse the

money borrowed from foreign banks during the previous

decade.

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Despite this, Algerian policy-makers have already

started to reduce oil exports and tried to improve, at the

same time, the refining capacity of the country. Oil

exports have declined from 51 million tons in 1980 to only

30 million tons in 1982. President Bendjadid has noted

that it is time for Algeria to think seriously about its

huge investments and the amounts of foreign currency that

are being absorbed by hydrocarbons. According to Belkacem

Nabi, Minister of Energy and petrochemical industries:

"Oil is being used in exchange for wheat, medication, and

imported products, instead of contributing to the effort 3 of economic development."

Gas Industry

In the Algerian Sahara lie about 12 percent of the

world's known gas reserves. Only the Soviet Union and the

United States have larger reserves. Gas is thus the

nation's number one resource for export. In the coming

decades, during which natural gas will play an increasing

ly important role, Algeria will be the world's top export

er of the product. Table 29 indicates the steady increase

in the production, export and domestic consumption of

natural gas.

Marches Tropicaux et Mediterraneans 1809 (Juillet 1980): 3395.

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TABLE 29

PRODUCTION, EXPORT, AND DOMESTIC CONSUMPTION OF NATURAL GAS, 1973-1977 (Millions of Cubic Meters)

1973 1974 1975 1976 1977a

Production 5,621 5,978 7,817 10,300 10,047 Transportation 4,783 5,497 6,684 8,514 10,043 Domestic consumption 1,399 1,561 1,847 2,317 2,664 Sales of liquefaction plans 3,384 3,936 4,837 6,197 7,379 Production of . liquefied gas 2,577 3,014 3,816 4,946 5,332 Exports of liquefied gas 2,521 2,921 3,758 4,952 5,294

SOURCE: Jack Kramer, Algeria (New York: Chase World Information Corp., 1978), p. 67.

a. Estimates.

b. One cubic meter of liquefied natural gas = 625 cubic meters of natural gas.

Algeria's natural gas includes substantial quantities

of light oils commonly called condensate. Condensate is a

prime liquid feed-stock for petrochemical and petroleum

refining operations, and it usually commands a premium

price over heavy crude. Estimated Algerian condensate

reserves are about 525 million tons. The country can

produce more than 15 million tons a year.

The future of natural gas, with reserves of more than

3655 billion cubic meters, seems to be very promising.

Unlike oil, where even the domestic consumption is subject

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estimated at 3 billion cubic meters with a growth rate of

16 percent. In fact, natural gas has helped and will

continue to encourage the government to pursue the policy

of saving oil reserves. Exporting liquefied natural gas

(LNG) is the sole objective outlined in industrial gas

plans. LNG exports were raised to 14 billion cubic meters

in 1979, representing 10 percent of hydrocarbons revenues,

compared to 5 percent of crude and 15 percent of conden

sate. Table 30 shows the growth of Algeria's LNG exports.

TABLE 30

ALGERIAN EXPORTS OF NATURAL GAS, 1973-1976 (Millions of Cubic Meters)

1973 1974 1975 1976

France 1,335 1,830 2,574 3,141 United Kingdom 1,087 918 919 1,006 Spain 92.5 172 121 398 United States 7.5 148 334

SOURCE: Jack Kramer, Algeria (New York: Chase World Information Corp., 1978), p. 73.

Unlike the oil sector, there are many problems with

the gas industry: (1) technical problems in building the

liquefaction plants, (2) contractual problems in dealing

with the companies that are designing and engineering the

plants, and (3) political problems in getting U.S. and

other governments approval of sales contracts. In the

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face of these obstacles, Algeria must develop its own

industrial expertise in order to contract and operate the

liquefaction plants independently. The construction of

gas pipelines and modern liquefaction plants are necessary

if Algeria is to continue selling to North America the

huge quantities of liquefied natural gas which Europe

could never consume.

Since independence, two pipelines were constructed by

SONATRACH, linking Haoud El-Hamra with Arzew (achieved in

1966) and Haoud El-Hamra with Skikda (achieved in 1972) .

The most important pipeline was the one constructed by

Great Britain linking Hassi R'Mel with Arzew, which cost

600 million DA with an annual transportation capacity of

22 million tons of oil (which is more than 45 percent of

the annual crude production). The fundamental gas pipe

line network of Algeria is composed of three main gas

pipelines that link Hassi R'Mel, Arzew and Skikda together

with a capacity to transport 15 billion cubic meters per

year. Table 31 shows the major Algerian gas pipelines.

Although capacity may appear superior compared to the

actual production in 1974, the difference is minimal if we

include the number of contracts with foreign countries

which have been increasing rapidly. The total capacity of

Algerian gas pipelines reached 60 billion meters per year

at the end of the second four-year plan (1974-1977). Two

new gas pipeline projects were recently completed in 1983

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TABLE 31

MAJOR ALGERIAN GAS PIPELINES

Distance Dates of Annual ^ Pipelines (in km) Operation Costs Capacity

Hassi R'Mel Arzew 509 1961 200 3.0 Hassi R'Mel-Skikda 575 1972 417 6.0 Hassi R'Mel-Arzew II 506 1974 600 6.0

SOURCE: Andre Gauthier, L'Alqerie (Montreal: Breal Edi- teur, 1976), p. 106.

a. In million DA.

b. In billion cubic meters.

by a consortium of companies: SONEMS (Societe Algero-

Italienne) constructed the gas pipeline that links Algeria

with Italy via Tunisia, which will have a capacity of 18

billion cubic meters per year. This pipeline is planned

to deliver 12 billion cubic meters of natural gas to

Italy. SEGAMO (Societe Alger-Franco-Espagnole) construct

ed the gas pipeline that connects Algeria (Oued-Mellah)

with Spain (Almeria) with an estimated capacity of 10 to

15 billion cubic meters per year.

Moreover, the construction of liquefaction plants

along the mediterranean coast (Arzew, Bijaia, Skikda) will

also contribute to the country's rapid development. After

the 1970's the liquefaction plants network was greatly

expanded. In addition to the main liquefaction factories

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in Arzew and Skikda, other installations have been com

pleted and some are still under construction, such as the

LNG centers of Issers, Arzew LNG 2, LNG 3, LNG 4, and

Skikda extension, LNG 2, LNG 3, LNG 4, LNG 5, and LNG 6.

The liquefaction factories which are presently totally

operational are the LNG centers of Issen (near Algiers),

Camel, LNG1, LNG2, (in Arzew), and the Skikda complex.

Table 32 shows the existing Algerian liquefaction plants.

TABLE 32

ALGERIA'S LNG PLANTS

Liquefaction Annual Capacity Plants (billion m3)

Arzew plants CAMEL 1.6 LNG 1 10.5 LNG 2 10.5 LNG 3 15.5 LNG 4 5.5

Skikda plants LNG 1 4.5 Extension 4.5 LNG 2 10.0 LNG 3 15.5 LNG 4 1.4 LNG 5 10.5 LNG 6 10.5

Issers LNG Center 10.5

SOURCE: The figures above adapted from Jack Kramer, Algeria (New York: Chase World Information Corp., 1978), p. 69, and updated.

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The LNG factory in Arzew, at a capacity of 10.5

billion cubic meters, is alone capable of supplying

annually 2 percent of U.S. needs. The three Arzew Plants

(LNG1, LNG2, LNG3) alone could produce annually twice as

much gas as Italy can consume. The plant at Camel is

currently producing above its 1.6 billion cubic meters

technical capacity. With the realization of LNG1 and LNG2

in Arzew, with a capacity of 10.5 billion cubic meters

each, Algeria was able to produce between 16 to 30 billion

cubic meters of liquefied natural gas in 1981. The future

of LNG3, which is supposed to deliver liquefied natural

gas to France (5 billion cubic meters per year), Germany

(18 billion cubic meters per year), and Holland (4 billion

cubic meters per year), is still uncertain. The LNG3 unit

is supposed to be constructed by the Foster Wheeler

Company and be equipped by the French company Technip.

The contract with these two foreign firms was signed in

1979.

By the year 2005, Algerian policy-makers are planning

to have completed construction on 7 new factories for

liquefied natural gas and 7 refineries, at a cost of $36

billion. Part of this ambitious program has already been

accomplished in Skikda and Arzew. For example, the Skikda

complex of liquefaction and LNG1, as well as LNG2 in Arzew

alone cost $17.5 billion . Besides the Arzew and Skikda

plants, additional plants of similar magnitude at Issers

and Hassi R'Mel are being considered for the future.

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All these plants have been constructed by European

and American firms (e.g., Pullman International, the San

Francisco-based Bechtel corporation, Technip, and others) .

Table 33 shows the LNG plant contractors.

TABLE 33

LNG PLANT CONTRACTORS

Plants Contractors

Arzew LNG 1 Chemico - Bechtel LNG 2 Pullman Kellogg LNG 3 Foster Wheeler

Skikda LNG 1 Technip LNG 2 Technip LNG 3 Technip LNG 4 Pritchard Rhodes LNG 5 Pritchard - Pullman International LNG 6 Pritchard - Pullman International

SOURCE: Jack Kramer, Algeria (New York: Chase World Information Corp., 1978), p. 75.

In Arzew, when Chemico ran into problems in completing the

LNG1 plant, the Bechtel corporation took over. Likewise

in Skikda, when Technip, which was supposed to handle the

entire project, ran into problems, SONATRACH gave the

construction of LNG4, 5, and 6 to the British firm of

Pritchard Rhodes. But after Pritchard struck-out and

could not finish LNG 5 and 6, Pullman International took

over. In addition to these firms, a number of other

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foreign firms have received lesser contracts connected

with the natural gas plants. For example, Raymond Inter

national of Texas was awarded a $10 million contract in

1977 for the installation of water-cooling ducts, and

since early 1977, WESCON International of the Netherlands

has been at work on two gas treatment plants worth $41

million. Japan Gasoline Company and C. Itoh of Japan

conducted negotiations with the Algerian authorities in

mid-1977 on an approximate half-billion dollar deal to

build a turnkey plant at Hassi R'Mel, to process natural

gas into liquid oil gas and condensate. For 237.5 million

dollars, Italy's ENI Company is building two gas "reinjec

tion" stations at Hassi R'Mel. These two stations are

designed to increase production of condensate, methane and

propane. The development of the Alrar field in the

In-Amenas region will be undertaken by SONATRACH and the

American company FLOUR Inc. Alrar, a natural gas field

with reserves estimated at 100 billion cubic meters, is

expected to produce 1.5 million tons of condensate and

700,000 tons of liquid oil gas annually. The cost of this

project is estimated at $336 million, with Algerian

materials and services accounting for $62 million of the

total cost. Financing all foreign services and equipment

is guaranteed by the U.S. Export-Import Bank and a group

of banks led by the European Banking Company.

The development of Algeria's most important natural

gas fields will certainly contribute to the economic

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development of the country, but at the same time, the

establishment of these gas pipelines under the Mediterran

ean Sea will have a direct effect on the naval transporta

tion network of the liquefied gas (LNG)* "by both Algeria

(CNAN) and the European countries, especially France

(Societe Francaise Gasocean). By the end of 1990, Algeria

could become the first exporter country of LNG in the

world because of its numerous contracts signed with

European countries and with the United States.

The main European customers of Algerian gas are the

United Kingdom, Italy, Spain, West Germany, and especially

France. The first contract for delivery of gas from

Hassi-R'Mel to Europe was concluded in 1964 between the

Council Gas Company and Camel of Arzew, for furnishing

Great Britain with 1 billion cubic meters of gas per year

for 15 years. Spain began receiving Algerian natural gas

only after signing a contract with SONATRACH in 1972 for a

period of 20 years. In 1978, France imported from Algeria

around 4 billion cubic meters annually, a figure which

later rose to 7.5 billion cubic meters. Belgium's Distri-

gaz recently contracted with SONATRACH for receiving 5

billion cubic meters will allow her to pipe its natural

gas to Europe directly through two gas pipelines:

Algeria-Italy, and Algeria-Spain, pipelines via Tunisia.

As a result, Spain has agreed to begin importing 4.5

billion cubic meters annually. In July 1978, SONATRACH

gave final approval to deliver 4 billion cubic meters of

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natural gas per year to West Germany for 20 years begin

ning in 1984. It was announced by SONATRACH that 20 year

contracts with France, Sweden, Austria, Yugoslavia and

Tunisia will also begin in 1984.

TABLE 34

CONTRACTS OF GAS DELIVERY TO FRANCE

Shipment Period Date of Annual3 ports Contracts (years) Delivery Delivery Terminals

Arzew Camel-Gas de 15 1965b 0.5 Le Havre France, 1968

Skikda SONATRACH-Gas 15 1973b 3.5 Fos de France, 1971

Arzew II SONATRACH-Gas de France 20 1980 3.5°

SOURCE: Andre Gauthier, L'Algerie (Montreal : Breal Editeur, 1976), p. 109.

a. In billion cubic meters.

b. Extended 10 years by the June 1976 accord.

c. 3.65 since June 1976.

The most important contracts were signed with France.

Table 34 shows Algerian-French contracts and the annual

gas delivery to France. France did not receive the

quantity of gas that was agreed to in the February 1971

accord because of the Algerian-French oil crisis. In

1974, total imports of Algerian LNG did not exceed 1.8

billion cubic meters because of the technical failure in

the liquefaction plant at Skikda. In 1975, Algeria began

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to apply a new fixed price for its gas. Since the

beginning of the first two contracts in 1968 and 1971,

prices were much lower than the price level applicable in

the international market since 1971, for example, 40 cents

vs. 1.30 to 1.40 dollars for each million BTU (1 British

Thermal Unit = 252 calories). This Algerian-French crisis

was overcome in 1976 after two successful contracts which

allowed the French to import annually 3.5 billion cubic

meters of LNG at the new Algerian price. In June 1976, a

second contract was signed allowing France to prolong its

first two contracts (1968, 1971) by 10 years each. These

contracts were a result of the negotiations between

SONATRACH and the European consortium of companies,

Eurogaz. Delivery of gas to France resumed again in

Summer 1980 at the conclusion of the protected negotia

tions between SONATRACH and Gaz de France. According to

the new contract signed by Algeria and France in February

1982, Algeria is supposed to deliver 5.15 billion cubic

meters of LNG annually to Gaz de France for 20 years. The

French terminal, Montoir, received, in 1982, 2 million

tons of LNG, of which 400,000 tons were directed to

Belgium. In 1983, 6 million tons of LNG arrived at

Montoir, and by 1984-1985, the volume of LNG is to be

increased to 8 million tons. The Algerian-French contract

of February 1982 has increased Algeria's revenues from

natural gas, as well as helped Algeria to negotiate with

other customers, especially Italy. Italy, by the way, has

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finally agreed to receive 13 billion cubic meters of

natural gas through the new Algeria-Italy gas pipeline.

In the final analysis, since 1980, France has been the

second importer of Algerian gas after the United States.

The United States has become Algeria's major market

for natural gas. At the beginning, Europe was the market

ing target, but after gas was discovered in the Nether

lands and in the North Sea, the European market was

reduced. The European market was also courted by the

Soviet Union because the Soviet product was cheaper than

Algeria's in both Eastern and Western Europe. It was at

this point that Algeria began looking to the U.S. as a

possible market. The questions we may ask at this level

of the analysis are: could Algeria deliver LNG to the east

coast of the U.S at the right price? Could Algeria's

potential U.S clients cope with the U.S. (political)

lobbies opposed to Algerian imports? Could the Federal

Energy Commission be persuaded to approve gas imports?

Nevertheless, Algeria made every effort to overcome these

difficulties. In 1969, El Paso Natural Gas signed the

first American purchasing contract and agreed to import

annually 10 billion cubic meters of LNG for 25 years.

Subsequently, five more contracts were signed, adding up

to a potential North American purchase of some 41.2

billion cubic meters of LNG per year, or about 5 percent

of total U.S. demand. Table 35 shows these six con

tracts .

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TABLE 35

AMERICAN LNG CONTRACTS

Annually Company (billion m3)

El Paso I 10.0 El Paso II 10.0 Tenneco 10.0 Eascogas 6.0 Trunkline Gas 4.0 Distrigas of Boston 1.2 Total 41.2

SOURCE: This table is constructed from data provided in Jack Kramer, Algeria (New York: Chase World Information Corp., 1978), p. 70.

All contracts were to be subject to the Federal

Energy Commission's approval. By 1978, only three of the

original six contracts had been approved: El Paso Natural

Gas, Trunkline Gas, and Distrigas of Boston. The Algerian

natural gas was to be delivered daily to the terminals at

Cove Point (Maryland) and Savannah (Georgia). Later, the

Algerian government decided to revise the SONATRACH-E1

Paso contract in order to be able to increase its gas

price. However, El Paso, which had previously agreed to

import 10 billion cubic meters per year for a period of 25

years, could not obtain approvel from the federal govern

ment for the increase caused by the Algerian gas price

hike. This contract was suspended in 1980. The United

States continued to receive Algerian liquefied gas through

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Distrigas of Boston (1.2 billion cubic meters per year)

and Trunkline Gas (4.0 billion cubic meters per year) for

20 years at $3.25 for each million BTU. A new agreement

was reached in 1981 with El Paso to receive 10.5 billion

cubic meters per year.

According to SONATRACH, in 1982 the United States

planned to import a total of 26.6 billion cubic meters

annually. Algeria's exports of liquefied natural gas to

the United States have increased much more than exports to

Europe, and in 1984 the export level was raised to 44

billion cubic meters per year. This volume was agreed

upon and confirmed by both Algeria and the United States.

Natural gas exports to North America may reach 60 billion

cubic meters by the end of the present decade. From these

figures, we can conclude that the increase in natural gas

exports will continue as a justification for the high cost

of liquefaction plants, as well as prompt rapid economic

development.

Development of the gas industry is very expensive.

It is estimated that 2.5 billion dollars is required to

develop 10 billion cubic meters of gas for delivery. At

the same time, huge amounts of capital are needed in three

crucial development areas:

1. Liquefaction plants

2. Facilities to "gather in" gas and pipe it to

liquefaction plants

3. Terminals for liquefied natural gas

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As we have already seen, most Algerian gas comes from the

nation's largest field, Hassi R'Mel, far south in the

Sahara (see Appendix A) . To pipe the gas from there to

Arzew requires 509 km of line, while to Skikda 575 km of

line is needed. This costs 1 billion dollars annually for

the pipe alone.

In 1982, the World Bank estimated that Algeria must

borrow an average of $3 billion annually. Most of this

money is needed to finance the liquefaction plants, the

development of gas fields, and the construction of pipe

lines from the fields to the liquefaction plants and LNG

terminals. Despite the size of the financial burden,

Algeria policy-makers are proceeding with their plans of

natural gas and LNG sales. They see natural gas as the

only way through which the country can generate foreign

exchange by the year 2000, when oil supplies will quickly

dwindle. If Algerian resources of natural gas are among

the largest in the world, the development and export of

natural gas also requires a huge capital investment, as

well as expensive technology and installations. In the

end, the success or failure of this policy will largely

depend upon what happens to world LNG prices.

Concerning the price of gas, SONATRACH has conducted

several negotiation with its main consumers: the United

States, France, West Germany, Italy, Spain, Belgium, etc.

Negotiations between Algeria and the United States led to

the conciliation of the SONATRACH and El Paso Natural Gas

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contract in 1980. Contract negotiations between SONATRACH

and Gaz de France on gas pricing were disrupted many

times, however, both countries finally resumed negotia

tions in March 1980. In 1979, Algeria provided France

with more than 13 percent of its gas consumption. Negoti

ations between SONATRACH and Distrigaz of Belgium were

successfully concluded in 1972 by the signing of a 20-year

contract for importing from Algeria 5 million cubic meters

of LNG starting in 1982.

The price of natural gas for export will determine

whether Algeria will continue to export its natural gas in

the form of liquefied gas or not. The prices of gas in

North America and Europe (especially France, Germany and

the Netherlands who import from Algeria about 15 billion

cubic meters for 20 years beginning in 1983) are, accord

ing to SONATRACH, lower compared to its equivalent in oil

(in terms of thermal unit). For example, France imports 4

billion cubic meters of gas per year at a price of $3 for

each million BTU, while Canada sells its gas for $4.50 for

each million BTU to the United States. At this low price,

natural gas does not generate enough revenue that will

permit the country to construct its liquefaction plants

with advanced technology. As a result, the Algerian

policy-makers established a basic price (prix de base) of

$5 for each million BTU. By so doing, Algeria established

a basic price for its natural gas comparable to the

thermic equivalent of its crude oil price. In 1980, the

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rate between the two prices was double ($3 for each

million BTU gas, compared to $7 for its equivalent in

oil) . However, harmonizing the basic selling price of

natural gas was characterized by dissimilarity among the

different customers. For example, Spain paid 60 percent

more for Algerian gas than did France, while in turn,

France paid more than the United States ($1.80 vs. $1.75).

Therefore, it was necessary for Algeria to call for

gas price negotiations, even with its main customers:

America (El Paso), France (Gaz de France) , Germany

(Ruhrgas Salzgitter and Brigitta/Thyssengas), and Holland

(Gasunie) . The result of these negotiations permitted

Algeria to increase its gas price from $1.95 to $6.11 for

each million BTU beginning in 1980. In this respect, Mr.

Belkacem Nabi, Minister of Energy and Petrochemical

Industries, noted that "[tjhere is no reason for the price

of Algerian gas to remain marginal compared to the inter- 4 national market price."

Using 1976 price, SONATRACH estimated that LNG sales

in 1981 approached $5.3 billion dollars. Crude sales

during the same year were $4.45 billion. By 1985, accord

ing to SONATRACH, LNG income will be $7.5 billion.

Finally, the outlook for the future is that Algeria is

planning to export 70 billion cubic meters of natural gas

^ , / / Marches Tropicaux et Mediterraneans 1809 (Paris, Juillet 1980): 3395.

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by 1990. This means more dependency on the international

market.

Petrochemical Industries

Petrochemical industries designate mainly the chemi

cal industries derived from hydrocarbons. To obtain

chemical products, it is necessary to have minimum treat

ment of hydrocarbons either by refining oil, or liquefying

natural gas. It is for this reason that we call all

hydrocarbon-derivative industries petrochemical indus

tries. Fertilizers, ammonia, phosphate, nitric acid,

nitrogen, and medical material are the main petrochemical

products of these industries in Algeria.

From 1962 to 1970, Algeria imported an annual average

of 40 million DA of different fertilizer that were needed

for the national market's consumption. However, in 1970,

Algeria stopped importing fertilizers because of a lack of

hard currency. Until 1969, domestic chemical industries

produced for the local market, but sometimes without

reaching the level of production of 1962. The production

of nitrogenous fertilizer was 70.190 tons in 1970; 123,000

tons in 1971; and 107,500 tons in 1973. Nitrogenous

fertilizer is derived from the following products:

ammonia, urea, nitrates, and nitric acid (see Table 36).

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TABLE 36

SELECTED PETROCHEMICAL PRODUCTION (Tons)

Products Tons/Year Tons/Day

Ammonia 198.000 1,000 Urea 79,000 400 Nitrates 148.000 500 Nitric acid 119.000 400

SOURCE: This table constructed from data provided in Hammid Temmar, Structure et modele de developpement de 1'economic de 1 'Alg6rie (Alger: SNED, 1983), p. 274.

The power of the private sector in this industry

declined considerably since the national companies kept

the entire hydrocarbon sector under their control.

However, the private sector retained portions of the

production of paint, varnish, soap, plastic, wood, and

shoes made out of plastic and rubber.

There are two main national companies operating in

the branch of chemical industries: SONATRACH, which still

has the upper hand in anything dealing with petrochemistry

and fertilizers, and SNIC (Societe Nationale des Indus

tries Chimiques), which deals with paint, varnish, deter

gents, and maintenance products.

SONATRACH began petrochemical production at Arzew in

1969, turning out ammonia and nitrogenous fertilizer at a

rate of 800,000 tons per year. It was between 1978-1983

that SNIC tried to increase its production to achieve

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635,000 tons per year. Despite the expansion of these

industries, the results remained modest until 19 77,

especially in the fertilizer plants. Production, exports,

and domestic consumption of fertilizers and other hydro

carbon by-products are shown in Table 37.

TABLE 37

PRODUCTION, EXPORTS, AND DOMESTIC CONSUMPTION OF FERTILIZERS, 1973-1977 (Thousands of Metric Tons)

1973 1974 1975 1976 1977a

Production Fertilizers 377 276 267 293 460 Ammonia 105 27 27 25 49 Nitric acid 90 50 64 65 108 Exports Fertilizers 4 75 —— 6 Ammonia 52 5 5 8 — Domestic consumption Fertilizers 317 411 447 477 763

SOURCE: Jack Kramer, Algeria (New York: Chase World Information Corp., 1978), p. 78.

a. Estimates.

b. Including imports.

In order to abolish the conditions of dependency, and

to achieve economic integration, Algerian policy-makers

decided to expand this industry to a large extend through

the creation of new petrochemical complexes and factories:

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1. Ammonia and nitrogenous fertilizer complex at

Arzew. The construction of this complex began in 1966,

and by 1969 it had started production. The total invest

ment was around 500 million DA. It yields 800,000 tons of

nitrogenous fertilizers per year, which are devoted to the

development of agriculture

2. Phosphate fertilizer complex at Annaba. While

the Arzew complex responds to the growing needs of agri

culture with regard to nitrogenous fertilizers, the

complex at Annaba responds to the needs of agriculture

with regard to phosphate fertilizers. The construction of

this complex began in 1969, and by 1972 it began to

produce phosphate fertilizer with a capacity of 500,000

tons per year

In addition, oxygen, nitrogen, and acetylene are

produced in the following three factories: Oran, Annaba,

and Algiers. Matches are manufactured in five factories

that are under SNTA (Societe Nationale des Tabacs et

Allumettes) control in Algiers. The Algerian Central

Pharmacy has one factory for medical materials in El-

Harrach (Algiers), two cotton factories, and one dressing

factory in Ain-Benian (near Algiers). Another medical

complex has recently been completed; it is to be extended

in the future and associated with the medical factory at

Marnia (near Oran).

Since 1972, phosphate fertilizer has been provided by

the new factory at Annaba which produces mixed phosphate

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fertilizer. An ammonia and nitrogen fertilizer complex

was established in Arzew and was put into service for

nitrogen in 1970, and for ammonia in 1971. Its production

capacity was 300,000 tons of ammonia, 150,000 tons of

nitrogen, and 120,000 tons of urea, which Algeria cannot

consume. Therefore, ammonia is used to a large extent as

an export commodity. In Skikda, another complex for

plastic material was constructed. This complex has two

main units: one for chlorine (with a capacity of 36,000

tons per year) and another unit for ethylene, with a

capacity of 120,000 tons per year. This complex is

expected to supply the plastic complex of Setif which

produces gamut. Other fertilizer plants and ammonia

complexes are scheduled for the future. For example, a

phosphate plant is to be located in Annaba, and two

plastic plants in Constantine and Annaba.

Conclusion

It is clear from discussing the oil, natural gas and

petrochemical industries, that the hydrocarbons sector is

perceived as a vital source for establishing industriali

zation. Thus, it was given top priority in terms of

budget allocation and investment throughout the different

development plans.

Although the recent application of the hydrocarbons

industry has known some integration from the production

point of view, the integration hoped for by policy-makers

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between the economic sectors, such as industry and agri

culture, has yet to occur. So the thesis of De Bernis

which was based mainly on the development of "industri

alizing industries" (hydrocarbons and heavy industry) as a

means for an integrated and independent economic develop

ment has led to an opposite result; that is, the develop

ment of the hydrocarbons sector was achieved at the

expense of other economic sectors, such as agriculture,

infrastructure and light industry, which resulted in (1)

uneven economic development, as we will see in more

details in Chapter VIII; and (2) the formation of a new

social class, the petty bourgeoisie. This new social

class is a product of the industrialization process taking

place in Algeria. The bourgeoisie and petty bourgeoisie,

who appropriate a large portion of the national income,

and who benefit most from relationships with rich coun

tries, are directly responsible for establishing dependent

development.

As we have already seen, a very substantial propor

tion of the investment in industry to date has gone into

the hydrocarbons industry, which still provides over 80

percent of the country's foreign exchange earnings and as

much as 90 percent of the government's domestic revenues.

In addition, Algeria seems to deal mainly with the capi

talist block. Most of its oil and gas exporting is

carried out with Western Europe and North America (see

Table 25) ; all its LNG plants have been constructed by

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European and American firms (see Table 33); its main gas

customers are France, West Germany, Italy, Spain, the

United Kingdom, Belgium, the United States, and Canada;

and finally, most of its ongoing oil and gas contracts are

set up with Western Europe, Japan and North America (U.S.

and Canada). Thus, we can conclude that the hydrocarbons

sector is strongly dependent on the international market

(capitalist block) in terms of export, plant construction,

and contracts.

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GRAPH 1

TRENDS IN HYDROCARBONS

Gas Production

Gets Expo: Oil Production

1960 1965 1970 1975 1930 1984

Source: Table 21, P. 127.

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HEAVY INDUSTRY

Introduction

Much criticism was directed at Algeria because of its

concentration on high-technology and heavy industries such

as iron and steel. The same argument was raised regarding

the natural gas industry. However, those who advocated

heavy investment in natural gas based their argument on

the fact that it was the nation's most important resource,

and for that reason it should be exploited despite the

heavy investment required for the necessary processing and

technology. But this argument cannot be applied to heavy

industry.

Although Algeria has large iron ore deposits which

can be exported, these deposits have no great value in the

international market. Unlike the natural gas and LNG

market, in which Algeria is among the world's few major

suppliers, the iron and steel market is dominated by the

experienced and sophisticated producers of the developed

countries who are currently producing more than the world

can consume. This is a problem for Algeria because the

country cannot consume all of its own production, at least

169

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not for the time being. Nevertheless, Algeria has commit

ted itself to processing the nation's raw materials. The

Algerian policy-makers believe that one of the reasons

that third world countries are poor is because they do not

process their raw materials.

During the past two decades, Algeria has been in

creasing its emphasis on heavy, capital intensive indus

try, and neglecting its infrastructure and agriculture.

The reasons for this unbalanced economic development are:

(1) the common third world desire to acquire the prestige

of a steel industry, (2) the desire to process all raw

materials, and (3) the attempt to correct a negative

balance created under the French administration. To some

extent, France built in Algeria a developed infrastructure

of ports, railroads, and roads, but almost no industry.

Under the French, the economy was almost entirely based on

agriculture with few extractive industries (iron ore,

zinc, phosphates and, by the late 1950's, crude oil).

Charles de Gaulle's Constantine Plan of 1958 was an

attempt to change this, but it was not an effective way,

as we have already seen in Chapter II.

Because of this, much emphasis was placed on heavy

industry. In 1977, the unique and powerful Ministry of

Industry and Energy was split into three separate minis

tries: Ministry of Energy, Ministry of Heavy Industry,

and Ministry of Light Industry. This meant that greater

efforts would be devoted to developing the infrastructure

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and other economic sectors; but in reality not much change

occurred in the economic policy of the country, and heavy

industry continued to top the list.

As defined in 1977, the sector of heavy industry is

composed of the following activities:

1. Research and exploitation of mining resources (non-hydrocarbons)

2. Metallurgy of iron, with activities of prelimi nary transformation

3. Metal, mechanic and electric construction

4. Manufacturing of equipment

The heavy industrial sector actually consists of six major

state companies:

SNS Societe Nationale de Siderurgie

SNMC Societe Nationale des Materiaux de Construction

SN Metal Societe Nationale de Constructions Metalligues

SONACOME Societe Nationale de Constructions Mecaniques

SONAREM Societe Nationale de Recherches et d'Exploitation Minieres

SONFLEC Societe Nationale de,Fabrication et de Montage de Materiel Electrique et Electronique

The main activities of each company in the field of

heavy industries are as follows:

SNS: - Metallurgy of iron and primary trans formation Investment realization of metallurgy Metallurgy of non-iron Recuperation of metals (mini metallurgy)

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SNMC: - Cement production Marble production Production and treatment of plaster, bricks, lime and glass

SN METAL: - Metallic construction (tankers) Engineering, assembling and research activities Construction and building products. Metallic products, and metallic packing materials

SONACOME: - Car and bus manufacturing Public works Agricultural machinery Industrial products Bikes and motorcycles Machinery and tools Mechanical equipment and heavy electro machines Engineering heavy industries

SONAREM: - Exploitation of mining Mineral research

SONELEC: - Cables Public telephone sets Electronic industries Electro-chemistry - Maintenance of heavy material

All these national companies, excluding SNMC, represented

in 1977: 107 units of production, 40 units of distribu

tion, 9 units of conversion, DA 11.080 billion of capital

and 105,836 workers.*

Between 1980 and 1985, it was planned that 20 new

enterprises of heavy industry would be created. Some other

projects are under study. For example, a center of heavy

Hammid Temmar, Structures et modele de developpement de l'economie de l'Alqene (Alger: SNED, 1974) , pp. 276-77.

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mechanic and electro-mechanic industries, and an engineer

ing company specializing in small-scale heavy industry,

are to be established in the future.

Since the heavy industrial sector contains a variety

of industrial activities, the organization of the national

companies was based sometimes on their type of production,

and sometimes on the kind of technology they used. That

means the organization of the national companies was based

upon the principle of specialization or specialized enter

prises. However, the general trend in organizing national

enterprises is moving toward regional enterprises. These

regional enterprises have been established at the level of

"Wilayas" and "Communes" in order to take care of the

maintenance activities, or final transformation, which

include among others, gas industries, frames, metallic

furniture, nails, screws, elevators, lightings, mainte

nance of mechanic and electric materials (elevators,

telephones), fabrication of parts and accessories, and

small-sized tools.

The Ministry of Heavy Industry controls and coordi

nates the investment amounts among its enterprises. It

assures, in particular, the coherence of technology and

production in this sector in order to meet national

demands. Meanwhile, each enterprise should provide itself

with the qualified and skilled workers through educational

programs, as we will see in chapter IX. Also, it should

develop, within its technical and financial capacity, the

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necessary means for research. In general, the production

of this sector is oriented toward the final consumption.

Metallurgical Industries

After independence, the production of metallurgy was

modest, as in many third world countries. For several

years, the production rested under the capacity of metal

lurgical installations. However, during the last few

years, the metallurgical industries witnessed a rapid

growth in terms of output, input and labor force. From

1966 to 1975, the number of workers employed in the metal

lurgical and preliminary transformation industries in- 2 creased from 3,500 to more than 24,000. During the same

period, the number of workers in the metallic, mechanic

and electric industries was double that of workers in

metallurgy. The activities of the metallurgical industry

2 The figures given in this chapter are mainly from the following sources: Tayeb Said-Amer, L 1 industrialisa tion en Alqerie (Paris: Anthropos, 1978); Temmar, Struc tures et modele de d^veloppement, 1974; Jacques Schnetzler, Le deve'loppement algdrien (Paris: Masson, 1981) ; Jack Kramer, Algeria (New York, Chase World Infor mation Corp., 1978); M.E. Benissad, Economie du developpement de l1Alqerie, 1979; Andre Gauthier, L 1Algerie: de'colonialisation, socialisme, industrialisation 1976 (Washington DC: IMF, 1982); Marches Tropicaux et Mediter raneans , No. 1809, 1980; Industry in Algeria, (Algiers: Ministry of Information and Culture, 1969) ; Basic Indus tries , (Algiers: Ministry of Information and Culture, 1971) ; Secretariat D'Etat au Plan, Productions industrielles et indices de la production industrielle 1969-1975, (Alger: le Bureau du Statistique, 1977); Annuaire statistique de 1'Alqerie 1976, (Alger, 1977); Secretariat Social d'Alger, Le developpement economique processus d 1adaptions structurelles, (Alger: SNED, 1968).

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mainly depend on two national companies in addition to

SNS: SN Metal and SONACOME.

The national company SNS, the state steel monopoly,

had 26 units of production, three units of distribution,

three units of conversion, four mixed companies, 33,000

workers, and an average capital of DA 4.200 million in

1979. The Algerian state companies are expected to pro

vide profits and employment at the same time. These two

goals usually conflict with each other in western coun

tries. In the case of Algeria, massive unemployment in a

region is to be solved by locating an industrial plant

there. The state company SNS is expected to provide

housing, education, and medical care for its employees.

This makes it extremely difficult to judge the performance

of SNS as a producer of steel. However, despite its broad

responsibilities, SNS has tried to increase its output of

iron and steel products in recent years. Table 38 shows

the increase of Algeria's production of iron and steel

products.

The SNS has a unit which manufactures aluminum and

fabricates oven material in Constantine. Another unit

producing 132,000 tons per year of aluminum is located in

M'sila. A small portion of these products is furnished by

the private sector. The SNS also produces gas bottles at

the Kouba factory in Algiers. Table 39 shows the main

products of SNS.

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TABLE 38

OUTPUT OF IRON AND STEEL PRODUCTS, 1973-1977

1973 1974 1975 1976 1977a

Castings 361 275 411 413 440 Rolled steel 183 98 149 341 423 Sheet metal 72 11 33 90 140 Rods and metal sheets 39 43.6 48 297 316 Tubes 53 80 123 106 194

SOURCE: Jack Kramer, Algeria (New York: Chase World Information Corp., 1978) , p. 84.

a. Estimates.

TABLE 39

MAIN METALLURGICAL PRODUCTION (Millions of tons)

1970 1971 1972 1973 1974

Cast iron 409 338 394 358 293 Steel —— 69 156 129 Bobbin & hard sheet iron —— 44 96 109 Lead 45 40 37 39 36 All steel tubes 89 76 83 94 105

1975 1976 1977 1978 1979

Cast iron 399 413 389 288 496 Steel 175 284 — 241 462 Bobbin & hard sheet iron 139 221 213 178 266 Lead 48 44 56 60 — All steel tubes 133 118 164 244 253

SOURCE: Jacques Schnetzler, Le developpement alqerien (Paris: Masson, 1981), p. 112.

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The national company SN Metal was once run by French

capital. Since 1968, the company has operated some indus

trial units that maintained a satisfactory level of pro

duction after their nationalization. These units mainly

produce tankers and mechanic equipment. In 1978, SN Metal

added four new units of production. In 1979, its assets

were: 19 units of production, three units of engineering,

civil engineering and assembling, 14,000 workers and DA

800 million of capital. In 1973, the total capacity of

its units of production was around 50,000 tons per year.

In 1977, the capacity of production jumped to 100,000 tons

per year. The following units of production raised their

rate of utilization for the year 1978 as follows: Annaba

and Hussin-dey by 2-3 percent, Oran I by 55 percent, Oran

III (Hassi Ameur) by 15-20 percent. The under-utilization

phenomenon is usually due to the fact that some companies

lack the required professional and skilled labor. Table

40 shows metallic products of SN Metal.

In general, we can make the following two obser

vations :

1. Production is increasing in a rapid manner com

pared to earlier years

2. The increase of production is due essentially to

the creation of new units and high level of investment

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TABLE 40

METALLIC PRODUCTION (Thousands of tons)

1969 1972 1975 1978 1979

Gas bottles _ t 0.5 5.8 Tankers 4.0 1.7 4.2 5.0 65.5 Metallic frames 14.0 24.6 37.2 40.1 — Iron pins, screws, locks 1.0 2.5 1.8 _ Metallic furniture, chains 0.9 0.9 2.4 Trucks3 72.0 393.0 349.0 474.0 335.0

SOURCE: Jacques Schnetzler, Le developpement algerien (Paris: Masson, 1981), p. 115.

a. In units.

Metallurgy is one of the key industries in Algeria.

It is among the "industrializing industries," according to 3 de Berms. The production of iron metallurgy is directed

primarily toward national consumption but, due to the

limited demand by the national market, some of the produc

tion is being exported. However, we should mention that

the national demand for the products is increasing because

of the expansion in construction activities.

Algeria, in an effort to develop its heavy indus

tries, has constructed a number of plants. For example,

3 G.De Bernis, "Deux strategies pour 1'industrialisa tion du Tiers-Monde: les industries industrialisantes et les options algeriennes" in Revue Tiers-Monde XII (Paris: Presses Universitaires de France, No. 47, Juillet- September, 1971): 545-47.

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the El-Hadjar plant (near Annaba) is the largest and most

sophisticated complex of metallurgy in the third world.

Its purpose is to supply the Algerian industry with cast

iron, steel plate, steel tubing, pipe, flats, and cold-

rolled steel. A broad range of foreign companies have

engaged in its construction besides the French: the

Soviets constructed a steel mill; the Italians installed a

seamless pipe plant and hot rolling mill; and the West

Germans built a pipe plant. The El-Hadjar complex is

composed of four main divisions:

1. Melting division. This division began to produce

in 1969 with a production capacity of 450,000 tons per

year

2. Steel works division. The completion of this

division was scheduled for 1969 but was delayed, and it

was not until 1972 that it started to produce. Its pro

duction capacity is 500,000 tons per year.

3. Flattening mills division. This division was

completed in 1972 and has a production capacity of 0.5

million tons per year of finished products, the equivalent

of 1 million tons of liquid steel. The flattening mills

contract, worth 100 million DA, was concluded in September

1967 between the Italian firm Innocenti and the SNS

4. Pipes division. This division produces oil and

gas pipes. It consumes 80,000 iron sheets per year. Most

of the finished products are directed to local markets

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The El-Hadjar plant has absorbed 2 billion dollars in

investment capital in the first decade since its construc

tion. It is a complete complex of metallurgy which pro

cesses raw material (iron ore, coke) into products direct

ly usable by other industries. For example, pipes, gas

bottles, steel for mechanic industry, and steel plates are

produced for foreign industry. The plant has a productive

capacity of 2 million tons per year, but in 19 78 it

achieved a production capacity of only 400,000 tons, due

to the low demand on the national market and a shortage of

technological know-how.

In 1978, a Japanese-German consortium (Kawasaki,

Heavy Industries Ltd., C. Itoh and Company Ltd., and

Demage A.G.) won a 244 million dollar contract to build a

steel converter plant at El-Hadjar. This plant, designed

to produce 600,000 tons of steel annually, was completed

in 1981. Another steel complex with an annual capacity of

10-12 million tons located in Oran is still under study.

Another plant, which will produce special steel with a

capacity of 150,000 tons per year, is to be built by the

Swedish company Bofors at a cost of 120 million dollars.

In addition to steel, SNS has other operations: at

Ghazaouet, it runs a zinc electrolysis plant with a capa

city of 40,000 tons per year that was completed in 1974;

at M'sila, the Soviets built an aluminum electrolysis

plant.

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The central question concerning heavy industry is

whether it can compete, or whether steel can be produced

cheaply enough to be sold at a profit in competitive world

markets. In the case of Algeria, this does not seem

likely, at least for the time being, because of the inten

sive use of foreign capital and foreign expertise in this

industry.

Mechanic Industries

The mechanic industry is a very recent branch of

activity in Algeria. In 1962, Algeria inherited two units

of automobile assembly: the truck builder Berliet at

Rouiba, and the auto producer Renault at El-Harrach

(Algiers) . Renault was created by the French for small

car construction as a result of the implementation of the

Constantine Plan. After independence, Renault became a

state company. Its theoretical productive capacity was

12,500 cars per year, a level supposed to be reached in

1971-72. However, most of the parts were imported from

France. In 1970, Algeria's Renault transferred its activ

ities to Oran, where it began to produce at a theoretical

capacity of 25,000 cars per year. Most of the cars are

the R6 type (see Table 41).

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TABLE 41

PRODUCTION OF CARS AND BUSES (Units)

1963 1966 1969 1972 1975 1978 1979

Cars 1,647 3,258 1,690 4,885 6,113 5,850 6,151

Buses 8 116 183 337 145 450 464

SOURCE: Jacques Schnetzler, Le deVeloppement algerien (Paris: Masson, 1981), p. 117.

Among the Constantine Plan's projects, SADAB (Societe

Africaine des Automobiles Berliet) has created an assembly

line factory at Rouiba. It began its activities in 1960

with a production capacity of 1,800 cars per year. After

1970, Berliet sold its majority interest in Algeria to the

national company SONACOME. This former Berliet plant in

Rouiba is currently producing trucks under a license

arrangement with Berliet. In 1978, the plant reached a

capacity of 4,000 trucks a year.

The national company SONACOME is the core of this

industry. In 1979, it had 19 units of production, 32

units of distribution, one mixed company, 28,720 workers,

and capital of DA 4,047 million. Almost 10 percent of

Algeria's produced steel is bought by SONACOME. It uses

the metal to manufacture machines, tools, tractors, agri

cultural equipment, trucks, and engines. SONACOME enjoys

a monopoly on the imports and exports of all these items,

all other heavy equipment, and automobile and related

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parts. Because of its extensive monopoly, SONACOME devel

oped very rapidly. Today it is involved largely in the

purchase, distribution and maintenance of imported machin

ery. Like other state companies, its ultimate goal is

domestic production. Different firms have provided of

fers, namely Fiat and Renault, but under present condi

tions, Algeria has not made any move to respond.

Up to the present, SONACOME has established the

following basic industrial plants across the country:

1. In 1972, a cycle and motorcycle plant was built

at Guelma. It produces 15,000 bicycles, 2,000

motorcycles, and 5,000 engines a year

2. In 1973, a tractor and diesel engine factory was

built in Constantine, and in 1973-74 it began to produce

the first tractor engines. Its production capacity was

9,500 engines per year, 4,000 wheel-tractors, and 1,000

Caterpillar tractors. Table 32 shows the production of

tractors and car motors

3. In 1978, a complex of agricultural machines was

constructed at Sidi-Bel-Abbas. It has the capacity to

produce 17,000 machines in thirty different categories

4. In 1978, another complex for casting and steel

parts was constructed in Berrouaghia. It produces valves

for the national company SONATRACH

5. A complementary assembly factory for producing

tractors and engines was built at Rouiba

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6. Two new truck plants were built: one at Setif

with a capacity of 20,000 trucks a year, and one at

Tiaret, with a capacity of 15,0t)0 trucks a year

7. A diesel engine plant at Ain Oussera, with a

capacity of 106,000 engines a year, was established

8. An equipment plant at Bordj Manaiel (near Con

stantine) has also been built! It produces plumbing

equipment, nuts and bolts, and precision items

9. A new, projected automobile complex to be con

structed in East Oran for small cars is under study. Its

capacity is to exceed 200,000 dars per year, which Algeria

cannot absorb for the time being

TABLE 42

PRODUCTION OF TRACTORS AND CAR MOTORS, 1974-1979

1974 1975 1976 1977 1978 1979

Tractors 799 1,562 1,834 2,839 3,724 4,883

Motors 867 1,792 4,845

SOURCE: Jacques Schetzler, Le developpement algerien (Paris: Masson, 1981), p. 118.

The national company SONACOME works in collaboration

with European manufacturers (e.g., Berliet for heavy cars,

Deutz for the engines). The company also depends, for its

production, on foreign professional and skilled workers,

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including a few Algerians who have been trained in Europe

for the same skills.

Until now, West German firms won most contracts, and

they are the best at building mechanic industries in

Algeria. DIAG (Deutsche Industrieanlagen Gesellschaft) is

a prime consortium from West Germany which has won several

contracts in the mechanic tool industry. Liebherr-

Hydraulikbagger has managed a 340 million dollar contract

for public works and industrial machinery. Kloechner-

Humboldt-Deutz has worked out a deal for a tractor plant.

West Germany's M.A.N. has completed a technical study for

an industrial complex in which truck assembly will be

integrated with a large diesel engine plant. The success

of the Germans in dealing with Algeria for building its

industry is due to two things:

1. Their reputation for skill and efficiency in this

particular industry

2. The readiness of the Germans to provide some form

of financing for the projects they want to carry out

The government has numerous projects to finance from the

loans it receives from public and private banks in the

West. Therefore, the Planning Secretariat has instructed

the national companies to favor foreign companies that can

finance the projects in which they will be involved. The

failure of SONACOME's relations with U.S. vehicle compan

ies was due to this financial reason.

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Since 1977, however, SONACOME has become anxious for

U.S. technology. It signed a 100 million dollar contract

with Ingersoll-Rand for a plant in Ain-Samra. This con

tract involved the construction of a plant intended to

turn out 3,000 compressors and 1,000 compactors annually

by 1980. SONACOME has concluded other contracts with

American Motors for Jeeps, and with Caterpillar for an

annual production of 1,000 bulldozers. It is estimated

that Algeria needs 15,000 Jeeps and an average of 50,000

automobiles per year. In 1976, car imports were increased

to 20,000 units. Demand has been high for Volkswagen,

Fiat, Renault and Peugeot.

The tremendous potential of Algeria's hydrocarbons is

matched by a corresponding demand for foreign participa

tion. Despite the investment correction which seems to be

in favor of light industry, agriculture and infrastruc

ture, the heavy industry sector continued to consume large

amounts of capital investments through the second four

year plan (1974-1977). During this plan, SONACOME expect

ed to spend between 1.5 to 2.5 billion dollars and earn

more than 1 billion dollars in sales revenues.

Construction Material Industries

In principle, the third industrializing industry is

the construction material industry — more precisely,

cement. After independence, the production of construc

tion material strongly declined. The 1960 level of 1

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million tons of cement was not achieved until 1976, and

not in all articles.

This explains the weak investment in this industrial

branch during the first decade following independence. At

the beginning of 1968, the cement factories were national

ized and put under the control of SNMC (Societe Nationale

des Materiaux de Construction). In addition to cement,

this industry provides the country with different con

struction materials such as plaster, lime, bricks, and

glass. The increase of cement production was due to the

newly constructed factories and to the increase in cement

imports. After 1976, the construction industry mush

roomed, because it was producing materials sorely needed

by this rapidly growing country and at a lower cost than

the imported variety from France.

By the end of 1979, SNMC had more than 28 units. It

controlled 71 units of production (8 cement, 19 bricks, 14

brick-tiles, 1 lime, 4 plaster, 3 sanitary, 1 tubes, 5

aminantine, 3 crockery, etc.). For example, the cement

factory in Zahara has a capacity of 450,000 to 1 million

tons per year. In Meftah, where the old cement units were

constructed, a new complementary cement factory with a

capacity of 500,000 tons per year was built. To this list

can be added the factories at Bejaia and Had jar, which

have been working at a capacity of 1 million tons per year

since 1976. Another cement project includes additional

units of production, bringing the production capacity to

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7.5 million tons per year. These units were partly work

ing at the end of 1979.

The national company SNMC covers all cement produc

tion and a majority of the production of marble, open

marble, plaster, tiles, bricks and others. The crockery

at Guelma, the first of its kind in Algeria, which was

constructed by the Chinese, began production in 1972. We

add to this list the glass factory that was built in

East-Oran. To a great extent this factory depends in its

activities on the SNIV (Societe Nationale des Industries

du Verre) which was created in 1966. Despite all these

efforts, Algeria could not cope with the increasing de

mands of the local market. Table 43 shows the main pro

ducts of construction material.

Mining Industries

When the Ministry of Industry and Energy was split

into three parts, mining concerns were given to the new

Ministry of Heavy Industry and put under the management of

the state company for mining and mining exploration,

SONAREM.

The French became interested in Algerian coal as

early as 1917. Because of transportation costs, coal

became much more expensive than oil and natural gas in the

1950s; thus coal production dropped from 300,000 tons in

1955 to 15,000 tons in 1962.

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. — 42 14 37 34 Cement Plate 124. 42 19 46 104 — 11 — — Glass

88— 12 34 89 108 100 899 914 algerien (Paris: Masson, 1981), p. TABLE 43 38 445 129 17 30 19 194 66 (Thousands of tons) Le developpement MAJOR PRODUCTS OF CONSTRUCTION MATERIAL Plaster Lime Bricks Tile Schnetzler, 928 67 43 458 117 13 25 601731 11 47 17 308 924 87 60 488 79 2,697 83 13 916 3,773 93 13 1,062 111 86 489 66 15 SOURCE: Jacques 1979 1976 1,695 127 33 1978 19721974 927 941 86 74 36 508 1970 1963 1967 1961 1960 Year Cement

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The national company SONAREM mines and sells phos

phates, lead, zinc, iron pyrites, and iron ore, most of

which come from the Ouenza mine (in northeastern Algeria).

In 1979, SONAREM had 33 units of production, four units of

distribution, one mixed company, 14,695 workers, and

capital of DA 633 million. Before 1980, SONAREM planned

to spend a quarter of a billion dollars on mineral explor

ation. Table 44 shows the production and export of miner

als in Algeria.

Eighty percent of the iron ore production had been

exported to Eastern Europe. Before the exploitation of

the huge deposits at Tindouf was put into operation, the

percentage of the exported ore dropped because of the

local consumption by SNS for building local railways. The

production of iron ore increased from 2.8 million tons in

1976 to 3.8 million tons in 1977. In 1978, SNS awarded a

33 million dollar contract to Bechtel for preparatory

development of an iron mine at Gara-Djebilet. This sta

tion was linked directly with the Mediterranean coast by

railways which were designed to transport 20 million tons

of iron ore annually.

There are about half a billion tons of phosphates at

Djebel Onk (near the Tunisian border), of which about

800,000 tons are extracted annually. Exports of phos

phates have risen considerably since 1975; Hungary alone

purchases about 100,000 tons annually. Total phosphate

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TABLE 44

PRODUCTION AND EXPORT OF MINERALS,a 1973-1977 (Thousands of tons)

1973 1974 1975 1976 1977°

Iron ore Production 3,184 3,990 3,200 2,800 3,800 Exports 1,966 3,245 ------1,800 2,820

Phosphates Production 604 797 940 741 1,300 Exports 285 418 ------522 872

Coal

Production ------10 11 7 ------

Zinc, lead, copper concentrates Production 32 25 30 19 28 Exports 26 13 — 24 —

Mercury Production0 13.2 13.5 28 31 30

SOURCE: Kramer, Algeria (New York : Chase World Informa- tion Corp., 1978), p. 91.

a. Excluding hydrocarbons.

b. Estimates.

c. In thousands of containers, each weighing 34 kg.

production jumped from 741,000 tons in 1976 to 1.3 million

tons in 1977. These phosphate deposits are also an impor

tant source of raw material for Algeria's own rapidly

expanding fertilizer industry, particularly at SONATRACH's

Annaba plant.

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SONAREM has also achieved its goal of increasing

annual production of mercury to 900 tons. This quantity

is about 10 percent of total world production. A mercury

mine at Ismail began production in 1971; in 1978, the

country was producing 1,000 tons yearly. Algeria's larg

est lead and zinc mine is at El-Abed (near the Moroccan

border). El-Abed provides the country with all lead

production and 60 percent of zinc production. In 1977,

the American Drave Corporation won a 7 million dollar

contract for the further development of lead mining at

El-Abed. By 1980, lead production increased to 30,000

tons, and zinc production increased to 70,000 tons.

Most uranium deposits are found in Hoggar, far to the

south. SONAREM has called six foreign companies to con

duct preliminary studies for the exploitation of uranium

ore. Uranium reserves are estimated at 12,000 tons.

Although it was hoped that commercial production would

begin by 1982, due to some problems the commercial plan

was delayed. The first problem was that of transporta

tion; the deposits of uranium are located at a distance of

1,500 miles in the south of Algeria in an isolated area.

The second problem was that of the climate. Water is

needed in the mining process, but this area is always dry.

Despite these obstacles, Algeria is believed to be the

first country in the Middle East and North Africa to have

taken steps in developing uranium deposits. The present

goal is to export, but at the same time, to prepare the

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deposits so that they can supply the nuclear reactors

which Algeria plans to purchase in the future, although no

decision has been made so far.

Electric Industries

Although electronics are not considered heavy indus

try, we will include it in this discussion simply because

it is linked directly to the electric industries, and

because electronic products are being produced under the

same national company management, SONELEC (Societe Nation-

p ale de Fabrication et de Montage de Materiel Electrique et

t Electronique).

At independence, Algeria inherited a few private

enterprises in electric manufacturing. After the nation

alization of these enterprises, the national company

SONELEC took over almost the entire market and production

of this industry. Besides the inherited enterprises,

SONELEC created two new large complexes which began pro

duction in 1978. The first, in Tizi-Ouzou, produces

200,000 refrigerators, 100,000 ovens, 200,000 small

stoves, and 25,000 electric razors. The second, in Sidi-

Bel-Abbas, is a large state factory which produces 240,000

television sets per year, 400,000 radios, 50,000 auto

radios, 30,000 telephone sets, and 40,000 cassettes.

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There are an additional five essential production

factories. The first (near Algiers) produces air condi

tioners; the second, in Blida, produces ovens, refrigera

tors, and electric razors; the third, in Constantine,

produces radiators, radios, television and telephone sets

(the production of these consumer goods is still under

foreign license); the fourth, in Mohammedia, can provide

26 million standard lamps; and the fifth, in Tlemcen,

manufactures telephone material. This last factory was

constructed with the help of ITT (International Telephone

and Telegraph) of Spain. The most important electric

center is the one found in Ras-Djinet (a wilaya of Tizi-

Ouzou). This electric center is composed of four units of

production, the first of which will be completed by 1985.

The completion of the entire center is scheduled for 1986.

This project was financed by a German and Australian

consortium at the rate of 85 percent.

In 1979, SONELEC had 10 units of production, one unit

of distribution, two units of maintenance, one public

works unit, 15,421 workers, and capital of DA 1,400 mil

lion. The national company SONELEC has the same problems

that SONACOME has: both have management difficulties in

operating the mechanical and electric industries in a

professional fashion, because both still lack qualified,

skilled and professional staff and are dependent on for

eign expertise for most operations. The lack of full

integration between branches of the industrial sector has

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permitted foreign companies to provide Algeria with equip

ment which its own national companies should be capable of

providing.

Conclusion

The facts discussed above confirm the dominance of

this sector in the national economy. Excluding the hydro

carbons industries, heavy industry alone represented 34.9

percent of the total industrial production in 1975. This

percentage has been increased in recent years. Algeria's

main development efforts to date have been in industry

(including hydrocarbons) which has received over 60 per

cent of all the investment made since the start of the

first plan (the three-year plan of 1967-69). Algeria is

moving toward greater promotion of capital-intensive

industry, rather than large scale labor-intensive indus

try.

According to Benissad, who measured the degree of

foreign dependency of each branch of industry in accor

dance with the rate of imports of each branch for the year

1974, the branches of heavy industry are indeed dependent.

For example, the branch of construction material indus

tries is strongly dependent. The rate of dependency is

almost 50.9 percent. This rate of foreign dependency has

been increasing during recent years because of the in

crease in cement demands. It will be even more dependent

when all national demands have been satisfied. The

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branches of metallurgy, mechanics, and electric indus

tries, which are responsible for importing machines and

equipment needed for rapid industrialization, are strongly

dependent on foreign countries. The coefficient of for- 4 eign dependency has reached 76.3 percent (see Graph 2).

Therefore, the thesis of De Bernis which indicates

that the development of heavy industry (including hydro

carbons) , which mainly produces the means of production

rather than consumption goods, will lead to an independent

national economy and industrialization, is not valid.

Concentration upon developing heavy industry has led to

two results. First, the neglect of agriculture and infra

structure has created uneven development; secondly, the

national economy and industrialization have become more

dependent on the neo-colonialist economy, further inte

grating themselves into the international capitalist

system.

4 M.E. Benissad, Economie du developpement de 1 'Algerie, p. 140.

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GRAPH 2

FOREIGN DEPENDENCY BY INDUSTRIAL BRANCHES, 1974

(O 50 ft 3 40 1 2 30

0 1 Y////SA CHE CM AGRO TEX

Source: Previous tables provided in chapters VI and VII.

MME: Metallurgy, mechanics and electric industries CHE: Chemical industries CM : Construction material industries AGRO:Agro-alimentary industries TEX: Textile industries LS : Leather and shoes

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GRAPH 3

TRENDS IN MANUFACTURING PRODUCTION

Tractors

» / Cement // ' Metal lurcjic ' Production

Cars

Buses

1960 1965 1970 1975 1980 Source: Previous figures provided in chapter VI.

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LIGHT INDUSTRY

Introduction

The construction of light industry is viewed as

necessary from a political and economic point of view. A

balance between heavy industry, on the one hand, and light

industry, infrastructure, and agriculture, on the other

hand, was emphasized after the Boumediene regime because

the previous emphasis on heavy industry affected the

quality of Algerian life in many ways. However, there has

been no major change in the industrialization policy,

which continues to give priority to heavy industry. The

development of the means of production in this sense does

not contradict the establishment of light industry. On

the contrary, it will enhance the productive machinery for

consumer goods. The creation of light industry is neces

sary to achieve this objective. The development of light

industry in Algeria has been aimed at satisfying the

essential needs of society with regard to clothing, shoes,

sugar, flour, and bread.

As defined in 1977, the sector of light industry

consists of the following major activities:

199

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1. Agro-alimentary industry (sugar, grain, crops,

preserves, beverages, and transformation of cereals)

2. Textiles

3. Tobacco and matches

4. Wood and paper

5. Leather and shoes

The main enterprises of light industry are as follows:

SOGEDIA Societe Nationale de Gestion et de Developpement des Industries du Sucre

SNSEMPAC Societe Nationale de Semoulerie, Meunerie, Fabrique de Pates Alimentaire et Couscous

SONITEX Societe Nationale des Industries Textiles

SNTA Societe Nationale des Tabacs et Allumettes

SNLB Societe Nationale des Industries du Liege et des Bois

SONIPEC Societe Nationale de Industries de Peaux et des Cuirs

These national enterprises run more than 430 units of

production, and employ about 120,000 workers. The Minis

try of Light Industry does not have the capacity, in terms

of capital, to cover all enterprises that were placed

under its management, but it assures technical coherence

among them and the major part of investment for the sec

tor.

Agro-alimentary Industries

Algeria's largest branch of light industries is

agro-alimentary manufacturing. Under French rule, the

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agro-alimentary industry constituted the bulk of manufac

turing in Algeria. It was not damaged as severely as

other industries, but it did not grow much during the

recovery period from 1966 to 1969.

TABLE 45

OUTPUT OF FOODSTUFFS, BEVERAGES, AND TOBACCO PRODUCTS, 1973-1977 (Thousands of metric tons)

1973 1974 1975 1976 1977a

Wheat flour & semolina 1,283 1,352 1,400 1,480 1,572 Oils 102 116 146 152 176 Sugar 118 143 111 146 186 Margarine 14 4 6 8 — Fruit juices & preserves . 13 15 13 22 45 Mineral water 335 462 642 696 802 Soft drinks 81 177 274 490 689 Cigarettes 8 9 10 10 22 Tobacco 16 17 19 20 23 Beer — 508 569 568 584

SOURCE: Jack Kramer, Algeria (New York: Chase World Information Corp.), p. 98.

a. Estimates.

b. In thousands of hectoliters.

The alimentary industries have been consciously

developed in Algeria in order to satisfy the needs of the

population. This industry, apart from processing the

national agrarian production, also treats some imported

raw material such as sugar and tobacco. Since colonial

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times, alimentary industries treat mainly the production

of the country: tobacco, fish, oil, fruits, vegetables,

different kinds of cereals, and some imported articles

such as sugar, chocolate, tobacco, cereal and food for

cattle.

The branch of alimentary industries is dominated by

the state. Out of 23,300 workers, 14,200 are employed in

the state sector, which is 61 percent compared to 8,172

workers in the private sector (35%) . The remainder con

stitutes collective enterprises with self-management

(autogestion). The state units of production are located

all over the national territory: 38.3 percent are estab

lished in the Algiers region (in the north), 38.8 percent

in the Oran region (in the west), and 22.8 percent in the

Constantine region (in the east) (see Appendix B).

Algeria's two largest agro-industrial enterprises are

SOGEDIA and SN SEMPAC. SOGEDIA maintains full control

over the sugar production in the country. Before indepen

dence, there was no single factory for sugar processing.

Sugar production began only with the construction of the

first refinery at Khemis-Miliana in 1965. It began its

production in 1966. The first three-year plan (1967-1969)

permitted the extension of this factory to reach a produc

tive capacity of 20,000 tons of sugar. National consump

tion in 1966 was estimated at 200,000 tons per year. It

appeared necessary to put into operation new units of

production. The first four-year plan (1970-1973) helped

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in establishing some new sugar refineries. For example,

one was built in Mostagenam with a capacity of 80,000 tons

per year in 1972, and another one in Guelma in 1974.

SOGEDIA continued to expand its activities, and by 1978 it

began to run a number of sugar refineries with annual

productive capacities exceeding a quarter of a million

tons, in addition to a sugar-packaging plant in Oran.

Under license, SOGEDIA also bottles Coca-Cola, Pepsi-Cola,

Fanta Orange and the famous beer, "33". Table 46 shows

sugar production for the period 1970-1979.

TABLE 46

SUGAR PRODUCTION (Thousands of tons)

1970 1972 1974 1976 1978 1979

Sugar production 4.5 2.1 3.0 3.0

Refined sugar 15.0 56.0 49.0 107.0 103.0 101.0

SOURCE: Jacques Schnetzler, Le developpement algerien (Paris: Masson, 1981) p. 138.

In 1975, the beer industry and all concerns dealing

with wine and alcohol were taken on by ONCV (Office Nation

ale de Commercialisation des Produits Vini-Viticoles)

which was created in 1968. SNEMA (Societe Nationale des

Eaux Minerales d'Algerie) exploits three main sources from

which it sells pure water in both plastic and glass

bottles: Ben Haroun (gaseous water) in Kabylie, Mouzaia

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in Mitidja (gaseous water), and Saida in Hamman Boukhara

(pure mineral water). Mineral water, lemonades, soda,

Coca-Cola, Orange, fruit syrup and apricot beverages are

manufactured and sold in Algeria as in any place in the

world. Algerians are considered among the largest consum

ers of soft drinks, coffee and tea.

SN SEMPAC, important in a nation which seems to

subsist on couscous, produces various forms of pasta and

semolina at more than 100 different mills. Cereal proces

sing, in terms of volume is the largest group of alimen

tary industries. In 1963, there were 73 mills: nine

grouped into two factories, one for flour and the other

for semolina; 24 for pure flour; 21 for pure semolina; and

19 were mixed mills for flour and semolina. In 1964, the

flour mills, and pasta and couscous manufacturing were

nationalized and organized into national enterprises, then

reorganized into regional units, and finally, in 1966,

regrouped under one unified national company, SN SEMPAC.

In 1969, the national production reached 800,000 tons of

flour and semolina. Because of the growth of population

and the increase in demand, SN SEMPAC established six new

mills in Blida, Setif, Batna, Boura, El-Asnam, and Sidi-

Bel Abbas. In addition, three units of couscous were

constructed in Setif, Blida and Sidi-Bel Abbas. In 1971,

Algeria continued to enlarge flour mills, but the quality

of production is still below average, which has led most

people to seek imported flour despite its high price. The

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state controls the entire production of flour, wheat,

semolina, pasta, and couscous. However, the private

sector maintained a good place in the secondary processing

of cereals (rice, corn), of which Algeria did not consume

much. Since domestic agriculture cannot regularly provide

enough wheat for local consumption, Algeria imports a

great part of the demand for wheat from abroad, especially

Canada and the United States. Table 47 shows cereal

processing from 1963-1979.

TABLE 47

CEREAL PROCESSING (Thousands of tons)

1963 1970 1972 1974 1976 1978 1979

Flour & wheat 456 838 1,033 1,376 1,489 1,483 1,418

Semolina, couscous, and pasta 25 38 45 53 62 69 68

SOURCE: Jacques Schnetzler, Le developpement algerien (Paris: Masson, 1981), p. 136.

All manufacturing of olive oil and vegetable and

animal fat were placed under the state company SNCG (Soci

ete Nationale des Corps Gras). Since 1971, SNCG makes

margarine, soap, and also produces and commercializes

Zitoune Oil and Safia Oil (pure oil). Table 48 shows the

production of fat matters.

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TABLE 48

PRODUCTION OF FAT MATTER (Thousands of tons)

1970 1972 1974 1976 1978 1979

Refined olive oil 78.6 98.9 117.6 153.0 196.1 203.1

Vegetable fat and margarine -- 4.5 4.6 8.5 11.6 12.6

SOURCE: Jacques Schnetzler, Le developpement algerien (Paris: Masson: 1981), p. 137.

Algeria produces very little milk. Most milk is

imported from Europe and Canada in forms of condensed and

powdered milk. ONALAIT (Office Nationale du I.ait) assures

the commercialization of a large part of the production.

Until 1977, ONALAIT possessed six units of production

(with a capacity of 900,000 litres per day) in Algiers,

Annaba, Oran, Draa-Ben Khedda, Constantine, and Tlemcen.

The production was further supported by adding the fac

tories of Sidi-Bel Abbas, Boudouaou and Constantine-II.

Total capacity reached 1,300,000 litres per day.

The preserves industry (vegetable, fruits, juice,

jams, etc.) was taken over for some time by the private

sector, then was placed under the state sector through

SOALCO (Societe Algerienne de Conserves). National pro

duction has not covered the population’s needs, so the

country is obliged to import a large quantity of preserved

tomato and the like for local consumption. Thus, this

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branch of industry is concerned more with imported prod

ucts than national production.

Textile Industries

Before independence, the textile industry was not

well developed. It was limited to small traditional work

shops . Even such small workshops and artisans were

crushed by French colonists. Algeria at that time import

ed almost all of its needs from France. In 1954, textile

production did not cover more than 8 percent of total

local consumption. It was one of the industries that did

not benefit from the Constantine Plan.

At the time of independence, the Algerian textile

market represented a consumption of 120 million square

meters of cloth. Algeria had to create the conditions

that would enable it to satisfy its needs, to end the

pressure of imports, and to utilize local labor power.

The government established the state company, SONITEX, in

1966. It also established another five large projects

which were entrusted to the state company SONITEX. Table

49 presents the five projects and their capacity of pro

duction.

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TABLE 49

ALGERIAN TEXTILE PRODUCTS, 1966-1967 (Millions square meters)

Project Theoretical Number of Location Annual Capacity Workers

Oued-Tlelat 11.6 592 Batna 10.0 597 Draa-Ben Khada 19.5 1700 El-Kerma 8.5 825 Constantine 6.5 365 Total 56.1 3979

SOURCE: This table constructed from data provided in H. Temmar, Structures et modele de developpement de 1'econo mic de l'Alg£rie (Alger: SNED, 1974), p. 285.

In 1966, the unit of Oued-Tlelat (near Oran) was

designed to produce cotton thread and bonded fiber with a

capacity of 2,050 tons per year. In the same year, the

unit of Batna was planned to make cotton thread and bonded

fiber with a capacity of 1,800 tons per year. In 1967,

the unit of Draa-Ben Khoda, a cotton spinning mill, was

designed to produce 18 million square meters of material

and about 1.5 million square meters of finished cloth and

shirts. In addition, two small weaving units were created

in Tlemcen and Tiaret. A sponge factory was created at

Hussin-dey (Algiers). With a total production of 56.1

million square meters of fabrics and cotton thread, the

three-year plan (1967-1969) planned to elevate this total

to 90 million square meters by extending the units of

Draa-Ben Kedda and Batna. The first four-year plan (1970-

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1973) continued the effort to develop this industry. It

tried to complete what was left unfinished by the three-

year plan and to create new units of production. For

example, a wool complex in Tiaret was launched in 1970, to

be finished in 1974.

In 1976, SONITEX owned and operated 36 mills, of

which 27 were clothing factories. It employed 16,000

workers who produced annually 18,000 tons of yarn, 60

million meters of cloth, 1.3 million pieces of upholstery,

and 7.5 million articles of clothing. However, the state

sector still could not meet local demand. Therefore, the

government gave permission to the private sector to invest

and participate in the development of this industry. 179

small private spinning mills were established in Tlemcen,

Oran, Tizi-Ouzou, Ghardia, Biskra, and Constantine,

employing 5470 workers. Since 1978, the private sector

has been an important factor in textile production. It

consists of existing enterprises and units newly created

by individuals after independence.

Presently, the textile industry provides various

kinds of threads and fabrics, cotton threads, bonded

fiber, pure or mixed wool threads, blankets, carpets, lace

and embroidery. The theoretical capacity of production

may achieve a growth of production that would allow

Algeria to halve its imports, with the exception of some

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articles. Algerian textile products are generally expen

sive and are of average quality (shirts are of high quali

ty, being the exception). The quality of production has

in many cases affected the size of production. This is

why many textile factories are still under-utilized.

Despite this, Algeria continued to expand further the

activities of its textile enterprises. In 1980, SONITEX

planned to build 25 more mills than the 36 it had operated

since 1976. The company expects that by 1980 it should be

able to produce 80,000 tons of yarn annually, 127 million

linear meters of cloth, 36 million meters of silk, 14

million meters of jute, 3.5 million meters of velvet, 120

million meters of knitwear, 13 million articles of cloth

ing, and 2,000 tons of cotton thread, in addition to the

several contracts that Algeria is conducting with foreign

companies in order to develop its industry.

Italian firms have been especially successful in

winning contracts to help Algeria build its textile indus

try. The major reason is that Algeria did not want to

become overly dependent on France, West Germany, or the

United States.

In 1977, the Italian firm Generale Impianti Castoldi

signed a $91 million contract with SONITEX for building a

cotton thread factory with a capacity of 2,000 tons per

year. Two other Italian firms, Marzotto and Iteco-

Lanerossi, in partnership with Famatex of West Germany,

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have signed a $125 million contract to build wool proces

sing and polyester plants. Another Italian firm, SNAM

Progetti, won a $200 million contract to engineer a weav

ing and finishing unit at a textile complex in Khenchela.

Japan's Kawasaki Heavy Industries, Ltd. won a $100

million contract to supply and install a turnkey plant at

Nedroma that will provide 1,200 jobs and produce 3,250,000

meters of fabric, in addition to dying and finishing an

additional 5 million meters of cloth produced at Algerian

mills. This plant was to be operational in 1982. Another

Japanese firm, Marubeni and Fuji Spinning, is building a

$40 million mill at Kherata which will employ 400 people

and process 18 million meters of cotton and fabrics. A

third Japanese company, Toyo Kogyo, has contracted the

national company, SONITEX, to supply $1.5 million of

equipment for a silk factory at Telemcen.

In 1977, two Belgian firms, Sybetra and Union

Cotonniere, were engaged in building a cotton mill for

SONITEX at Laghouat which was designed to produce 2,610

tons of thread and 8 million meters of cloth per year by

1980, employing 840 workers. In 1977, a turnkey contract

was won by a Franco-Belgian consortium (Agach-Willot and

Sybetra) to build a factory at Akbou to produce velvet,

employing 1,300 workers. Once this factory is put into

operation, Algeria will no longer be dependent upon import

ed velvet. Table 50 presents textile production 1973-

1977.

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TABLE 50

TEXTILE PRODUCTION, 1973-1977

1973 1974 1975 1976 1977a

Clothb 39 38 42 45 51 Yarn0 d 11 11 13 14 16 Bedspreads 820 800 Ready-made, clothing 3,657 3,335 3,887 8,700 7,600

SOURCE: Jack Kramer, Algeria (New York: Chase World Information Corp., 1978), p. 104.

NOTE: Original source: Government of Algeria. No further details given.

a. Estimates.

b. In millions of meters.

c. In thousands of metric tons.

d. In thousands.

Tobacco Industries

Algeria's tobacco manufacturing was among the first

industries to be nationalized by the state. In 1963, the

state company SNTA (Societe Nationale des Tabacs et Allu-

mettes) was established. It runs several tobacco factor

ies and more than 25 warehouses with production concen

trated at Laghouat, Biskra, Blida, Constantine and

Mostagenem. In 1978, SNTA signed a contract with a Swiss

firm, Rinsoz and Ormond, to build another four plants.

One was constructed in Algiers, one in Oran, and two in

Constantine. Although these plants were designed to

process tobacco leaves, they also produce some cigarettes.

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It should be noted that Algeria managed to convert

its cigarette production to 90 percent filter-tip in 1978,

compared with 41 percent in 1965. Production increased

from 5,000 tons in 1965 to 22,000 tons in 1977. Cigars do

not constitute a large market in Algeria, but there are

two other significant tobacco products besides cigarettes:

chewing tobacco and snuff. Combined production of these

two products grew from 2,334 tons in 1968 to 5,000 tons in

1977. Match production rose from 272 million boxes in

1965 to more than half a billion boxes in 1977. SNTA also

equipped a cigarette factory at Kroubs and three match

factories. Its expansion program is designed to expand

production and to transfer tobacco industry to areas where

unemployment is high. The Algiers region, for example,

now produces 80 percent of the nation's cigarettes. This

is due to the concentration of tobacco industries in the

Algiers region, as noted in Appendix B.

Paper and Wood Industries

Algeria inherited from the Colonial period only a few

factories of paper production — for example, the factory

of Baba-Ali (near Algiers) which began production in 1950

with a theoretical capacity of 20,000 tons of paper;

Oran-exCalempo, which used to make bags; Al-Arbaa, which

makes packing boxes; and Oued Smar, which manufactures

bags. After independence, Algeria constructed five new

paper units, which were entrusted to the state company

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SONIC (Societe Nationale des Industries de la Cellulose).

These units of production are as follows:

1. El Harrach (boxes and packing paper)

2. Souk Ahras (silk paper and hard paper)

3. Mostaganem (Mixed Alfa, white and printed paper

for writing)

4. Saida (boxes and different bags)

5. Bordj-bou Arriridj (paper bags)

The Mostaganem factory has a capacity of 66,000 tons

of pulp and 33,000 tons of paper. The factory of Saida

has a capacity of 40,000 tons of cardboard boxes. The

factory of Souk-Ahras produces 10,000 tons of paper per

year. During 1974, Algeria's capacity for producing paper

jumped from 50,000 tons to 150,000 tons as the three units

of Mostaganem, Saida, and Souk-Ahras were put into opera

tion. However, although the situation of paper production

has been improved after the establishment of new factor

ies, Algeria still cannot export and must always import

paper in order to cover its national needs, especially in

cardboard boxes and pulp.

Alfa in Algeria is very limited. Its transformation

into paper and its transportation is still expensive which

has made the state companies depend more on imported

paper. In 1976, the state company SONIC assumed control

over all paper industry. It manages pulp production, the

making of printed paper and packing cases, and the major

ity of paper transformation. In 1978, SONIC signed a $55

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million contract for another paper mill at Mostaganem with

the United States firm of Parsons and Whittemore. An

Italian firm, Poligrafico Bultoni, won a $47 million

contract with SONIC to built a factory for paper bags and

cardboard boxes with a capacity of 25,000 tons per year.

A Swiss firm, Bobst, has also signed a $6.1 million con

tract to supply machinery for a SONIC plant at Bordj-Bou

Arriridj. Table 51 presents the production of paper and

boxes.

TABLE 51

PRODUCTION OF PAPER AND BOXES (Millions of tons)

Paper & Packing Packing Articles

Printed Year Boxes Paper Paper Boxes

1972 16.6 21.1 12.5 7.4 1974 18.1 17.5 11.7 10.4 1976 35.6 26.4 12.9 9.6 1978 34.0 23.9 ------1979 36.5 27.5 ------

SOURCE : Jacques Schnetzler, Le developpement algerien (Paris: Masson, 1981), p. 134.

Algeria's forest land provides little wood for local

industry. The major part of wood that is being used to

manufacture furniture, doors, and windows is imported.

Most of these articles tend to be made of metal because

the price of wood is very high. In general, the private

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sector maintained a good place in the production of furni

ture. Two national companies are specialized in the wood

industry: SNLB (Societe Nationale des Industries du Liege

et des Bois) and SONACOB (Societe Nationale de Commercial

isation des Bois et Derives) . In 1970, the latter company

began to import and commercialize wood and its deriva

tives. The direct purchase of wood or already built

furniture from abroad is restricted. A factory for plas

tic furniture is planned. Table 52 shows the production

of wood and paper products.

TABLE 52

OUTPUT OF WOOD AND PAPER PRODUCTS, 1973-1977 (Thousands of metric tons)

1973 1974 1975 1976 1977

Furniture 172 205 _ _ » mm mm — w _ Packing cases3 7,341 4,600 ------Wooden boards 14 75 ------Paper 29 31 35 56 90

SOURCE: Jack Kramer, Algeria (New York: Chase World Information Corp., 1978), p. 105.

a. In thousands of units.

According to this table, packing case production has

dropped dramatically since 1974, while paper production

has risen. The reason is the greater profitability of

paper operations and the concentration of capital in this

area.

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Leather and Shoe Industries

Before independence, the leather industry had little

significance. There was only one tannery in existence in

El-Amria (near Oran) producing 2,500 tons of leather. The

local demand was very low, because there were no important

shoe industries. Even the production of El-Amria used to

be exported to France.

After independence, both leather and shoe industries

witnessed a considerable development. In 1966, the state

company, SNTAL (Societe Nationale des Tanneries Algeri-

ennes) opened the first tannery at Rouiba (near Algiers)

with a capacity of production of 25,000 tons of leather

and employing 264 workers. Within the framework of the

third-year plan (1967-1969), another tannery was built in

Jijel in 1967, with a capacity of 8,000 tons of leather.

Other shoe factories began production in Setif (1967),

Tebessa (1967), Sidi-Bel Abbas (1967), and Dellys, antici

pated to produce 8 million pairs of shoes by 1969 and 19

million pairs by 1973. These factories were regrouped

under the state company SONIPEC (Societe Nationale des

Industries de Peaux et des Cuirs) in 1972.

In 1969, the state company SNTAL, with 1,396 employ

ees and 13 micro-enterprises, was the dominant company in

this industry. This was due to the four-year plan (1970-

1973) which had among its objectives the extension of the

two former tanneries, Rouiba and Jijel, the creation of

new ones at Batna (treating 200 tons of leather per year)

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and another at Tizi-Ouzou (treating 2,000 tons of leather,

mixed leather and rubber). At the level of finished

products, a factory was established in Algiers to provide

leather cloth and suitcases. We can say that since 1969,

Algeria has imported no leather for the manufacture of

shoes. It obtains all of its needs from the two major

tanneries at Rouiba and Jijel. Table 53 shows the general

increase of leather products.

TABLE 53

OUTPUT OF LEATHER PRODUCTS, 1973-1977

1973 1974 1975 1976 1977

Shoes3 . 633 1,120 1,230 1,319 1,775 Goat & Sheep skins 6.5 11 11 14 17 Leather covering0 392 672 644 753 773 Shoe soles 12,012 14,718 14,484 15,540 22,530

SOURCE: Jack Kramer, Algeria, (New York: Chase World Information, 1978), p. 104.

a. In thousands of pairs.

b. In millions of square feet.

c. In tons.

Before independence, as we have already seen, the

shoe industry did not exist in the full meaning of the

word. However, since independence it has known a remark

able growth. During the first years, this industry was

largely dominated by the private sector, which consisted

of 117 enterprises employing 4,572 workers. These units

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of production were concentrated around Algiers (50%) ,

Oran, and Constantine. At present, the private sector is

still active in the retail business of the industry

through Bata, which is authorized to distribute and sell

the products to the private sector on behalf of the state

company, SONIPEC. In 1978, the Algerian general company

for shoes in Bordj El-Kiffan (near Algiers) and the CAFIC

(Compagnie Algerienne des Fabrications Industrielles de la

Chaussure) in El-Harrach (Algiers) started their activi

ties in shoe manufacturing. In that year, SONIPEC operat

ed 12 factories. At the end of 1976, a contract was

signed with a French consortium to build a factory at

Akbou (West Bejaia) employing 800 workers, and turning out

2,225,000 pairs of shoes by 1978. Algeria is now self-

sufficient in shoes, but the quality is still average for

men's shoes and below average for women's shoes. Table 54

shows Algerian shoe production.

TABLE 54

SHOE PRODUCTION (Thousands of pairs)

Year Leather Textile Other Internal

1970 5,428 900 10,302 210 1972 5,087 1,052 9,336 424 1974 6,060 880 13,183 134 1976 6,859 1,068 11,251 234

SOURCE: Jacques Schnetzler, Le developpement alqerien (Paris: Masson, 1981), p. 131.

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Conclusion

Light industry is the sector in which the control

over imported equipment and finished products is the

strictest. To measure the foreign dependency of light

industry, we will consider the following branches: tex

tiles, chemistry, leather, and agro-alimentary industries.

In the textile branch, the coefficient of foreign depen

dency is 6.6 percent, which proves that the substitution

for imports has achieved a high level in this branch of

industry, although Algeria still imports cotton and some

finished textile products. In the branch of chemicals,

the coefficient of dependency has remained high at 60.1

percent. In the branch of leather and shoes, the substi

tution of imports is very advanced and the coefficient of

imports is no more than 2.7 percent. Finally, in the

field of agro-alimentary industries, the coefficient of

foreign dependency remained somewhat high at 26.2

percent (see Graph 3).*

The dissimilarity in degree of foreign dependency

among the different branches of industry can be explained

by two factors: the lack of local input and the complex

ity of technology that is needed to put the industry into

operation. For example, substitution of imports in the

1 ' / M.E. Bemssad, Economie du developpement de 1 'Algerie, 1979, p. 141.

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pharmaceutical industry (chemistry branch) is more diffi

cult, because of a lack of input (raw material) and know

how, than in of the shoe industries (leather branch) ,

where the input (leather) is available and know-how is

easy to obtain. Another factor that also determines the

trend of substitution is that state policy is more strict

with regard to imports in the light industry sector.

Finally, it is necessary to point out that since

1980, policy has been shifting in favor of light industry.

An immediate effect of the new policy was reflected in the

annual development budget allocation for the financial

year 1980. The allocation for heavy industry was cut back

to DA 7.8 billion, whereas light industry, which is

regarded as having a great impact on consumer demands, was

given an increased allocation of DA 8 billion as compared 2 to DA 6.8 billion in 1979. Therefore, the recent

achievement of light industry is due to the fact that this

sector is more integrated with the national agricultural

sector, from which it receives around 41 percent of its

input, and because of the increased attention devoted to

light industry during the period of the first five-year

plan (1980-84) .

1 ' > M.E. Benissad, Economre du developpement de 1'Algerie, 1979, p. 141.

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. CHAPTER V III

INDUSTRIALIZATION AND AGRICULTURE IN LIGHT OF DEVELOPMENT PLANS

Introduction

In this chapter we will explain the issue of agricul

ture and industrialization in light of development plans.

These include the three-year plan, 1967-1969; the first

and second four-year plans, 1970-1973 and 1974-1977,

respectively; and finally the first five-year plan, 1980-

1984. We will also explain how the priority that has been

given to industrialization at the expense of agriculture

has resulted in uneven economic development.

During the colonial period, agriculture was the basic

economic activity for the largest segment of the Algerian

population. French policy was designed to enlarge the

amount of public land for distribution to French settlers.

At independence in 1962, Europeans owned about 22,000

farms totalling about 2.2 million hectares of cropland and

400,000 hectares of unproductive forest land. Algerian

farm owners numbered 631,000 and held 4.7 million hectares

of cropland plus 6.3 million hectares of forest and unpro

ductive land. The European owners, managers, and techni

cal staffs of most of the farms fled Algeria immediately

after independence and abandoned about half the farmland

222

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in 1962. All remaining European land was nationalized in

two stages in April and May 1963. The workers seized

control of the farms in order to carry out the production

routines. The outcome was the famous autogestion or

self-management process, which was further developed in

1963. The rapid speed of autogestion not only served to

protect the country's agriculture from severe damage, but

also provided the government with a new socialization

program for the agricultural sector (see Chapter IV for

the organizational structure of the autogestion coopera

tives) .

However, since 1966, the government has modified its

original position of turning ownership of the farms over

to the workers. Since then, the right to the use of the

land remained with the workers, acting through their

cooperatives, but ownership resided in the hands of gov

ernment. Gradually the government established effective

control of the self-managed farms. The number of social

ized farms was progressively reduced to accommodate the

scarcity of management and technical expertise. It was

estimated that

[in] 1978, the socialized farms totaled an estimated 2.4 to 2.5 million hectares and employed around 160 thousand permanent workers and about 90 thousand to 100 thousand seasonal workers. It was estimated that these farms supported about 20% of the agricultural labor force.

The effort of the government that assumed power in

1965 was concentrated on establishing a new modern

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agricultural sector because of its foreign exchange-

earning capabilities. To achieve this objective, the new

government tried to provide adequate services, marketing

credit, and foreign trade facilities for the modern sec

tor. The 1967-69 and 1970-73 development plans have

served to organize investment available for the agricul

tural sector in a more rational way. The goals of the new

regime for agriculture were to:

1. Increase production and incomes in the agri

cultural sector

2. Provide food at affordable prices to low income

groups

3. Establish wages which provide a sufficient incen

tive for farmers to produce

4. Improve farm productivity and hence output by

subsidizing key inputs such as fertilizers

5. Develop the marketing system

6. Distribute credit for investment and farm inputs

to farms according to a government development plan

7. Establish prices of inputs and of agricultural

commodities

8. Define investment and programs for agricultural

marketing, inputs supply, and processing enterprises

^Harold D. Nelson, ed., Algeria: A Country Study, (Washington D.C., Government Printing Office, 1979), p. 168.

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To meet these goals, the government launched an

agrarian revolution for the traditional sector in 1972.

The traditional sector was essentially the indigenous

agricultural community, where cultivation was carried out

under inadequate conditions in terms of cultivation

methods and production inputs.

The charter of the agrarian revolution was not only a

land distribution document; it was also a political and

economic one. It stood for improving the economic and

social welfare of the rural population. Among its long-

range goals were the reduction of rural unemployment, an

increase in the production of foodstuffs, and the exten

sion of the domestic consumer market for domestic manu

factured goods.

During the period 1972-1973, the first phase of the

agrarian revolution, 3 million hectares of state-owned

land, communal land, and habus (religious) land were made

available for redistribution, although only about one-

fourth was redistributed.

The second phase of the agrarian revolution, which

lasted from 1973 to 1975, dealt with the large private

farms owned by Algerians. This land, which had passed out

of the hands of the former European owners to Algerians

who were absentee owners, was to be nationalized. During

this period, the Algerian government began to expropriate

land from farms having more than 50 hectares. The expro

priated land, combined with traditionally collective land

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that was distributed, totaled about 1.6 million hectares

by 1980. Beneficiaries were grouped into about 6,800 new

production cooperatives. About 50 percent of Algeria's

land is farmed by production cooperatives and self-managed

farms created from colonists' holdings.

The third phase dealt with livestock reform. All

pasture land was nationalized and the Nomads were to be

resettled in new villages. According to the Charter, one

thousand new villages were to be created across the coun

try, where the soil could be cultivated by irrigation. By

1978, several hundreds were built. Another aspect of the

agrarian revolution was the establishment of cooperatives

(either for production or marketing). Most of the redis

tribution land went to landless peasants who joined coop

eratives. Most cooperatives were of small and medium

size, having only a few members and a guaranteed yearly

income from the state, regardless of the profitability of

the cooperative.

As early as 1978, most observers noted that the

agrarian revolution in Algeria was limited to a quantita

tive change, without paying attention to the social end

economic changes that have occurred. Although the reform

was not as extensive as the government had hoped, some

change had taken place. Perhaps the major changes have

been the abolition of the Khammas (sharecropper) system,

absentee landlords, and religious and tribal land.

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The most important structural change in the agricul

tural sector during the past twenty years has been in

government intervention. Public agricultural marketing

enterprises were created and given an official monopoly.

Prices were fixed by the government from the wholesale to

the retail level, banking was nationalized, and agricul

tural credit was provided through one of the banks accord

ing to government directions.

Crop production has varied widely from year to year,

depending on annual rainfall. In the late 1950s and early

1960s, crop production was severely disrupted as a result

of the dislocations of the war for independence. The

decline in the areas planted with vines reflected the end

of the French market for Algerian wines. During the

French colonial period, grapes were the chief crop? but

since 1967 the export market for wine has declined, and

many vineyards have been converted to grain production and

citrus. Still, Algeria was the fifth largest producer of

wine in the world as late as 1976. About 90 percent of

the wine produced was exported.

Before the colonial period, olives dominated Algerian

agriculture. After the French arrived, thousands of

hectares of olive trees were uprooted, and the land was

transformed into vineyards. After independence the new

Algerian government tried to revitalize the olive indus

try, but progress in increasing olive production is slow.

The best quality of olive oil is being exported.

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In terms of cultivated land and orchards, the most

important crops are wheat, barley, grapes, olives, citrus,

fruit, potatoes and other tree crops. Together these

represent about 95 percent of the cropland in actual use,

of which almost 80 percent is devoted to the production of

cereals. The area under cereal cultivation almost doubled

between 1974 and 1976, when it reached about 4 million

hectares. Harvests were poor in 1974 and 1975, necessi

tating annual imports of over one million metric tons of

grains. 1976 was an exception because favorable weather

provided a yield of 2.9 million metric tons. Although the

amount of land for grain production in 1977 was even

greater than in 1976, yields were only about 40 percent of

the 1976 level because of severe drought.

In the south, about half of the labor force is en

gaged in date production. Algeria is the leading producer

of the kind of date most in demand on the international

market, and date production represented in 1979 about 2

percent of the country's total agricultural production.

Objectives assigned by the government to the agricul

tural sector include the pursuit of food self-sufficiency

to reduce dependence on food imports, increased rural

incomes, greater food availability, employment generation,

foreign exchange, and economic growth. In order to

achieve these goals, greater government control over

resource use in agriculture is seen as necessary. Fifty

percent of the land is farmed by the public sector.

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Government control is believed necessary in Algeria not

only to efficiently manage the economy, but to achieve

social objectives and economic independence.

However, according to these objectives, Algerian

agriculture has done less well. Despite all these ef

forts, the role of agriculture is declining as other

sectors, such as the hydrocarbons and industrial sectors,

grow more rapidly. The overall value of agricultural

output was estimated to have declined 10 percent between

the late 1950s and the late 1960s. The decline in output,

combined with a rapid increase in population, suggests a

significant downward trend in the per capita income of the

agricultural sector. Agriculture's share in GDP declined

from 21 percent in 1960 to 7 percent in 1979. Agricul

tural growth contributed only by 4.55 percent to Algeria's

total growth of GDP. During the ten year-period 1960-70,

agricultural growth continued to be slow. According to

the World Bank, Algeria from 1969-70 through 1978-80 had

among the slowest-growing agricultural sectors of middle

income countries. However, general rapid growth in

Algeria's GDP has been primarily the result of increased

income from oil and gas, and to a lesser extent rapid

growth in services and industry.

The low agricultural growth must be viewed in the

context of the natural constraints, human resources,

government policy, and the need to transform a colonial

agricultural structure inherited at independence.

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Land and Climatic Constraints

The primary constraint is the low level of rainfall.

The more intensive use of farm inputs in a low rainfall

year could cause considerable revenue loss. This is

certainly one of the major factors inhibiting many farm

ers, particularly small farmers, from introducing new

forms of technology. A second major constraint is the

scarcity of agricultural land relative to the rural popu

lation (7 hectares of cultivable land per rural person).

Most of the land is used for the cultivation of barley and

wheat.

Human Resources

The development of human resources is associated with

education. Greater education leads to a greater ability

to understand and apply new agricultural knowledge and

technology. In other words, the lack of skilled workers

and competent cadres has contributed to the decline of

agricultural sector output. This is why government spend

ing on education increased in the five-year plan

(1980-84).

Government Policy

Due to the government policy of economic development,

the largest part of investment is devoted to industry; the

budget allocated to agriculture is maintained extremely

low. This explains in part the poor operation and mainte

nance of the agricultural sector. Management and other

institutional constraints have also hindered the ability

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of Algerian production cooperatives. This is due to the

bureaucratic nature of the administration.

Other factors contribute to the declining trend of

agriculture, such as the massive withdrawal of European

capital, management, and skilled labor after independence.

The breakdown of the French markets for Algerian exports,

especially that for wines, was also a decisive factor.

Primitive farming methods characterizes the small tradi

tional farms; modern methods are generally followed on the

farms formerly owned by Europeans and now run by the

public sector. An estimated 20,000 to 25,000 private

medium-sized farms still practice the traditional methods

on a large scale. Many young farmers have left the land

for the cities. Many workers, who now receive a guaran

teed monthly wage, simply do not have the incentive to

produce, and there is a lack of coordination of needed

inputs. For example, seeds, fertilizers, and spare parts

for machinery must be ordered from a central source, and

frequently the needed items do not arrive at the farm on

time. These are among the most important explanations for

the low agricultural growth in Algeria.

Average wheat yields in Algeria have not increased

(as a matter of fact, they declined at 1 percent per year

from 1970 to 1979) . The share of fruit tree investment in

total agricultural investment has declined considerably.

Yields for other crops have stagnated for the same rea

sons. The benefit of technology has been questioned.

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because it has caused the replacement of labor. There

fore, Algerian dependency on agricultural imports has

increased greatly during the 1960s and 1970s. Continua

tion of present trends would make Algeria increasingly

dependent on imports. In this sense, Algeria's pursuit of

economic independency and self-sufficiency has not yet

been achieved. With this poor performance comes low

income in agriculture, increasing rural-urban inequality,

and rapid migration off the land.

Algeria's poor agricultural performance has resulted

in less satisfaction of its population's food needs.

Increased Algerian demand for food, caused by rapidly

rising population growth, was largely satisfied by im

ports. According to the World Bank, for example, during

1976-79 the annual percentage growth of consumption in

vegetables was 8.1 percent, sugar 7.0 percent, meat 7.2

percent, and cereals 4.0 percent, whereas the annual

percentage growth of production was only 6.8 percent in

vegetables, -9.2 percent in sugar, 6.1 percent in meat,

and -2.2 percent in cereals. The annual percentage growth

of imports was 4.8, 7.4, 3.9, and 14 percent, respective-

i 2 i y .

It is only very recently, with the five-year plan,

that investment in agriculture is devoted on a large-scale

2 World Bank, The Agricultural Development Experience of Algeria, Morocco, and Tunisia (Washington D.C., World Bank, 1982), p. 14.

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to irrigation, infrastructure, mechanization, and other

public projects. Table 55 shows the shifting structure of

agricultural investment.

TABLE 55

PERCENTAGE OF TOTAL AGRICULTURAL INVESTMENT

1970-73 1980-84

Irrigation 26.6 45.3 Extension, research training 2.4 11.6 Livestock 10.9 7.0 Fruit trees 13.2 3.8 Forestry,soil construction 9.8 7.6 Machinery 18.9 7.0 Rural infrastructure 15.1 15.7 Fisheries 3.1 2.0 Total 100.0 100.0

SOURCE: World Bank, The Agricultural Development Ex- perience of Algeria, Morocco , and Tunisia (Washington DC., 1982), p. 20.

According to the five-year plan, 75 percent of the

agricultural investment was devoted to livestock. Live

stock includes mainly cattle and poultry. Animal health

services, shelters, and better feed are necessary to

maintain this stock. Growth in poultry production was 9.5

percent per year in 1967-79. However, satisfaction of the

national needs has not been reached. Constraints to

higher yields include (1) inadequate feed quality and

quantity, (2) frequent lack of water, and (3) poor shel

ters and inadequate health facilities.

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Agricultural growth can be expected to occur not only

as a result of the introduction of new farm technologies,

but also of investment in rural infrastructure. Modern

input and knowledge can reach the farmer when there is a

road network. Investment in rural infrastructure should

operate to:

1. Facilitate the transmission of knowledge to

farmers

2. Facilitate farmers' acquisition of inputs

3. Facilitate the continuous sale of products to

buyers

Algeria, by the end of 1970, was transformed from an

agricultural country to one with a growing industrial

economy. The government after 1965 was determined to

carry out a long-range industrialization development plans

projected into the 1980s.

The fundamental economic objectives of the Boumediene

government have been the the establishment of heavy indus

try and the expansion of production. This would lead to a

stage of self-sufficiency by the 1980s, the achievement of

economic independence, the improvement of income distribu

tion, employment generation, and the training of skilled

workers. To meet these fundamental objectives, the gov

ernment adopted a long-range development aimed at rapid

industrialization, based on hydrocarbons and heavy indus

try.

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From the start of independence, the authorities

considered industrialization the best means for solving

the major structural problems of the economy. During the

first years of independence, industrial policy was in

favor of light industry for two reasons: to reduce import

materials and to create comparatively labor-intensive

development. With the change of government in 1965 and

the rapid growth of hydrocarbons output, export, and

prices, the authorities shifted to a policy of heavy

industry and industrialization based on hydrocarbons.

This policy aimed at achieving effective self-

sufficiency that called for a high level of technological

competence. The key was the hydrocarbons sector, which

would provide financing and basic raw materials. Financed

by exports of petroleum and natural gas, the iron ores

would provide the raw material for the steel industry.

The steel industry would provide the metal needed for the

pipelines that would feed the hydrocarbons from the Sahara

fields to the expanded transformation and export facili

ties on the coast. It would also supply the necessary

railroad, auto, truck, and tractor plants, petrochemical

complexes, shipbuilding, and machine tool industries.

Algeria has pursued a mineral and industry growth

strategy in which government participation is dominant.

The government has been radical in this strategy, allocat

ing the greatest percentage of its investment and human

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resources to the mining (mostly petroleum) and industrial

sectors.

Planned economic development in Algeria started with

the three-year plan (1967-1969) , which represented the

first phase of a long-range development program running

into the 1980s. The three-year plan was followed by the

first four-year plan (1970-1973) and the second four-year

plan (1974-1977). The years 1978 and 1979 were used as a

transitional period before launching the next five-year

plan (1980-1984).

The actual planning machinery was detached from the

Ministry of Finance and placed under a Secretary of State

for Planning. A plan was designed in terms of the physi

cal outputs on the basis of production presented by the

technical ministries. The analysis and screening of the

results was usually arrived at by the Planning Secretariat

and the Ministry of Finance, involving also the approval

of the Central Bank of Algeria (Banque Centrale

d'Algerie), the Algerian Development Bank (Banque Algeri-

enne de Developpement), and the commercial bank charged

with the responsibility for the economic sector in which a

given project fell.

Each plan laid the groundwork for another, and at the

end of each year the Council of the Revolution and the

Council of Ministers in a joint session reviewed the

objectives of the development plan and assessed the prog

ress achieved during the year and the adjustments that

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should be made. For example, investment in the years 1974

and 1975 were made on the basis of the original plan,

which had anticipated high oil prices. Total investment

was over 110 billion DA. When oil revenue declined in

1975 from the expected level because of a combination of

energy-saving measures in western countries and the need

to import more food, a number of projects for 1976 were

postponed, and the government was forced to rely more than

it had anticipated on foreign borrowing to maintain its

revised investment goals.

The three-year plan (1967-1969) envisaged investment

of around DA 12 billion, of which about 82 percent was

utilized. The first four-year plan (1970-1973) was more

ambitious, and more money was invested than the originally

proposed DA 27 billion. Although some goals of this plan

were not achieved, the growth rate of the gross domestic

product (GDP) averaged more than 11 percent annually.

Between 300,000 and 320,000 new jobs were created in that

period. The second four-year plan (1974-1977) continued

to give top priority to industrialization. The first

five-year plan (1980-1984) also continued to give priority

to industrialization but with more attention to infras

tructure, agriculture and social needs such as housing,

water, electricity, health, and education.

Although these plans form the core of Algerian devel

opment, a number of special regional programs have been

organized outside the framework of the plans to provide

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more economic and social aid, notably for employment and

education in low income areas. For example, the special

programs for the Aures and the Grande Kabylie regions.

During the 1974-1977 development plan a series of small

industrial projects operated by the wilayas (provinces)

were begun as part of the new regional industrial develop

ment program.

To equalize regional incomes, the government has

maintained a policy of locating many of the new industries

in the poorest Wilayas. For example, more than two-thirds

of the 900 new industrial projects originally proposed for

the 1974-1977 period were to be located outside major

urban areas. Despite the government's goal of diversify

ing the geographic location of industry, most industry is

still concentrated on the coast near Algiers, Oran,

Annaba, and Constantine. Many of the older plants have

been expanded or modernized. The coast zone continues to

be the country's principal industrial center (see Appendix

B) .

The First Three-Year Plan (1967-1969)

The three-year plan constituted in general an attempt

to restructure post-colonial Algeria's economic situation.

It was planned to deal with the following main issues:

1. The correction of uneven colonial development and

its failure to develop the productive forces

2. Presenting a new policy of development

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3. Reorganizing the social, economic and political

apparatuses

4. Implementing a rapid capital-intensive indus

trialization

5. Enhancing state control

The substance of the three-year plan was, therefore,

to overcome the underdevelopment of the productive forces,

to reduce the disequilibrium between the economic sectors

created by French colonialism, to accelerate development

based on industrialization, and to integrate the different

branches of economic production.

Few details have been released concerning this plan.

A total of DA 12 billion was scheduled for investment over

the three-year period, and DA 9,124 million were actually

invested. Already industry took the lion's share with DA

5,400 million, while agriculture was given only DA 1,900

million. This led to inequality between the two sectors.

By branches, the allocations were as follows: hydro

carbons DA 2,307 million, metallurgy DA 975 million, and

chemicals DA 463 million. These three industrial branches

absorbed about 80 percent of industrial investment during

this plan.

During the Ben Bella regime, the policy of economic

development was in favor of light industry, and to some

extent, the development of the agriculture sector. The

new regime believed that the development of agriculture

could not be achieved without the development of heavy

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industry, which would bring about an independent national

development. Thus, within the framework of the three-year

plan, industrial investment was emphasized while the

agricultural sector was neglected.

The first goal of this plan was to generate some

resources of hard currency. Therefore, the plan mobilized

the export sectors (hydrocarbons; mining and some agro-

alimentary industrial branches; dates, citrus, and other

fruit). The second goal was to integrate productive

sectors and the different industrial branches such as

metallurgy and the mechanical and electric industries.

Foreign credit contributed to the financing of the

industrial program of the three-year plan with 25 percent

of the total capital used. In 1969, following the 29 July

1965 accord, French capital dominated most of the projects

that were announced by the Algerian government: seven

contracts in 1967, 10 contracts in 1968, and 15 contracts

4 in 1969. The majority of the projects were undertaken by

French companies and financed by the OCI (Office de

Cooperation Industrielle). From 1966 to 1969, the OCI

spent FF 1,643 million, of which FF 155 million was in the

form of aid, FF 642 million was in long-term government

loans, and FF 845 million from private credit.

Sixty-eight percent of these credits went to the hydrocar

bons sector. Each project offered an opportunity to

French companies to sell their equipment and to install

their technology and, finally, to train Algerian

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personnel, which meant adopting the technical, economic,

and social norms of French capitalism.

In general, the three-year plan did not change the

pre-plan economic situation very much. Its effort was

mainly devoted to the organization of administration,

public enterprises, and enlarged state control. Also,

this plan led to the consolidation and the domination of a

new social class of bureaucrats over the country's affairs

and the expansion of its economic base, reinforcing its

political power.

Although the three-year plan marked some social and

political achievement (i.e. enhancing state control and

establishing a public enterprise base), it did not achieve

its economic objectives. The delay in the realization of

public economic projects, the marginality of agricultural

production, and the growth of local demands with the

shortage of alimentary goods led to a serious disequilib

rium of the national economy and thus toward uneven devel

opment. According to the planners of the first four-year

plan (1970-73), the large projects that were not achieved

by the three-year plan were as follows:

1. The unit of gas liquefaction at Skikda

2. All the projects of SONAREM, some of which had

been planned since 1965

3. The thermic power station of Annaba

4. The metallurgical complex of El-Hadjar

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5. All main mechanic and electric construction

projects and, in particular, the two tractor and agricul

tural machines complexes

6. All the light chemical projects, in particular

the pharmaceutical product plants

7. The cement projects, which were delayed by two

years

The First Four-Year Plan (1970-1973)

With the implementation of the first four-year plan,

there was no major change in development policy. The

emphasis on heavy industry and capital-intensive indus

trialization continued along the same lines. Concentra

tion on the hydrocaj.oons sector, construction of national

economic enterprises, and centralization of credit and

decision making in the hands of government were all

enhanced.

The first four-year plan constituted the fundamental

law governing all economic and social activity of the

country during the period 1970-73. It embodied a strategy

for development that was based on hydrocarbons and indus

try.

Planners of this plan (1970-73) distinguished between

two types of investment: non-productive, such as social

services and research, and productive investment, such as

industry and agriculture. The productive investment

represented 49 percent of the total and was concentrated

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in the sectors that were directly profit-earning. The

foreign involvement in financing the first four-year plan

was 50 percent of the total investment. We can therefore

say that financing the investment of this four-year plan

was achieved by foreign capital as a main source.

The growth of the hydrocarbons sector continued.

Some progress in construction, public works and services

(transport services and trade) was achieved. The margin-

ality of agriculture and traditional mining activities was

obviously maintained.

During the period covered by the this plan, the

average annual GDP growth rate was fixed at 9 percent. At

an annual growth rate of 9 percent, the Algerian GDP was

scheduled to rise from DA 14,640 billion in 1969 to DA

21,083 billion in 1973. An International Monetary Fund

report asserted that in the period 1969-70, GDP in fact

grew by 10.6 percent per annum. Prices rose by perhaps

2.5 percent annually during the same period so that real

growth should be estimated at 8 percent per annum.

Agriculture was consistently under-represented. Only

15 percent of total investment in the first plan was

allocated for agriculture, while 45 percent was devoted to

industry (see Table 63). This imbalance is at the heart

of the Algerian policy of development: the country must

industrialize in order to develop agriculture. In other

words, industrialization is a pre-condition for agricul

tural development. However, it seemed a hopeless task to

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change one factor without changing most other components.

For example, introducing modern technology and chemical

fertilizers alone is not enough. Efforts were needed for

regrouping fragmented land, establishing land banks,

intensifying irrigation and creating service cooperatives

to provide farm machinery, seeds and extension services.

Agricultural development is not only a matter of convinc

ing peasants to use new technology and chemical fertiliz

ers, but involves a complete transformation of the infra

structure .

In reference to the figures of the first plan, agri

cultural investments looked like this: total investments

within the framework of the plan reached DA 27,740 million

($1=4.4 DA) or about $6.3 billion. Of this total, only DA

4,140 million were invested in agriculture, that is, 15

percent of the total investment (see Table 57).

The gross agricultural product was anticipated to

grow by only 3 percent per annum, which would mean that,

with a population growth rate of 3.3 percent, per capita

income in the agricultural sector would remain unchanged.

Could the agricultural sector thus perform its crucial

role as a market for industrial production? The answer is

negative because the amount of production that agriculture

provided was not sufficient to create significant exchang

es between agriculture and industry. Also, because most

of the new development programs were confined to the

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modern sector or public sector, Algeria's agricultural

dualism was simply reinforced.

TABLE 56

INVESTMENT BY SECTOR AND YEAR, 1970-1973 (Millions of DA)

Total Sector 1970 1971 1972 1973 1970/73 (percent)

Industry 3,100 3,100 3,100 3,100 12,400 45 Agriculture 720 910 1,100 1,400 4,140 15 Infrastructure 494 500 600 713 2,307 8 Education 650 665 682 721 2,720 10 Training 135 160 160 132 587 2 Housing 238 368 438 476 1,520 5 Transport 368 208 131 93 800 3 Tourism 165 170 180 185 700 2.5 Social 190 213 243 288 934 3.5 Ccmnunity equipment 165 175 195 225 762 3.0 Administrative equipment 210 210 220 230 870 3.0 Total 6,435 6,679 7,059 7,563 27,740 100

SOURCE: John Waterburg, Land, Man, and Development in Algeria: the Four-Year Plan. American Universities Field Staff, Vol. XVII, No. 3, 1973, p. 5.

Advocates of the present policy might accept the

above argument and still defend the validity of current

investment proportions. For some, the imbalance was due

to the lack of capital; for others, it was due to the lack

of skilled personnel, which in itself would require a

higher level of investments. The Ministry of Agriculture

did not play a dynamic role in this respect, as it did not

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devote enough money to research, training, or agent exten

sion .

With regard to industry, the first four-year plan

called for an investment in industry of DA 12.4 billion or

45 percent of total plan investments. Of the DA 12.4

billion, 36 percent went directly to hydrocarbons, and a

third of that to research and exploration. The other

largest industries were those of steel (15%) and elec

trical and mechanical equipment (11%). It is clear that

the first four-year plan aimed at establishing what De

Bernis called "industrializing industries," that is,

establishing a heavy industry that would be capable of

feeding basic industries. The raw materials available in

Algeria for this effort were principally oil, natural gas,

iron ore, phosphates, and zinc combined. These were to

supply the two wings of the industrial sector: the steel

industry and the hydrocarbons industry.

Algerian planners wanted the Algerian steel industry

to have access to foreign markets, once it reached full

production, on the assumption that Algeria would break its

neo-colonial dependency on the developed world. For this

reason, Algeria used capital-intensive projects, employing

tne most advanced technology. It was argued that this

strategy would keep per unit costs down, and with low

labor costs, Algerian products would be competitive in

world markets. The price paid for this choice was, of

course, dependency upon foreign capital and technology and

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the maintenance of a high level of unemployment. Presi

dent Boumediene stated his position with respect to

capital-intensive industrialization as follows: "I accept

the pressure of a certain amount of underemployment,

because it is temporary, but I will never accept under- 3 equipment of my country for that would be definitive."

In examining the resources of financing the first

four-year plan, one has to come back to hydrocarbons. Oil

accounted for 70 percent of all Algeria's exports and 50

percent of all hard currency earnings. It was estimated

that in 1972, oil earnings reached DA 3.2 billion or 41

percent of the total fiscal income of the Algerian govern

ment. Oil production in 1972 was to reach 54 million

tons, but in fact reached only 52 million tons, as we have

seen in Chapter V. Throughout the period of the first

plan, around 35 percent of total Algerian investment was

financed by oil earnings. However, GDP grew only by 4

percent. The following factors determined the financing

and execution of the first four-year plan: first,

maintaining and finding foreign markets for raw materials

and processed goods; second, achieving targeted production

within Algerian enterprises; third, maintaining a steady

flow of foreign credit, which was dependent on the first

two factors.

3 • H. Boumediene, Discours du president Boumediene (Alger: SNED, Vol. VIII, 1979), p. 77.

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According to Algerian planners, at least 60 percent

of all plan goals were achieved on time. If we accept

this as success, part of it was due to the large funds

spent on it. There was a tendency to assume that progress

in completing projects varied directly with the proportion

of allocated funds spent on them.

The first plan could be seen as successful according

to its own criteria of building an industrial sector, but

it could not be successful in terms of selling its prod

ucts to the agricultural sector, because the agricultural

sector was not developed to the extent that it could form

a market or outlet for industrial products. It could not

be considered successful in terms of achieving an inte

grated independent economic development. The neglect of

agriculture and infrastructure reinforced the imbalance.

The Second Four-Year Plan (1974-1977)

The general objectives of the second four-year plan

(1974-77) were to reinforce the economic independence of

the country, to build up the state enterprises, to in

crease production, and to construct a productive base of

industrialization in order to meet demographic growth

needs. To achieve these goals, the government tried to

mobilize all material and human means. The major princi

ples of the plan were as follows:

1. Medicine for all

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2. The satisfaction of essential needs: employment

and housing

3. The increase of production

4. Creating maximum employment

The increase of production was the dominant factor in

the second four-year plan. The plan emphasized an indus

try of transformation which could play an important role

for the integration of the national economy. Although

investment in agriculture was slightly raised in the

second four-year plan, the strategic choices remained

unchanged.

TABLE 57

DEVELOPMENT OF NATIONAL CONSUMPTION ACCORDING TO RURAL AND URBAN AREAS

1973 1977

Units Rural Urban National Rural Urban National

Cereals 10 Q 12.22 12.18 24.4 15.65 14.3 29.95 Vegetables 10 T 150.0 365.0 515.0 233.0 582.0 815.0 Fruits 10 T 211.0 509.0 720.0 330.0 820.0 1,150.0 Meat 10 T 57.5 122.5 180.0 83.0 205.0 288.0 Milk 10 L 180.0 720.0 900.0 270.0 1,200.0 1,470.0 Fatty matter 10 T 37.6 87.7 125.3 52.0 126.0 178.0 Sugar 10 T 109.0 145.0 254.0 151.0 178.0 329.0 Textiles 10 T 14.25 33.25 47.5 25.2 46.6 71.8

SOURCE: Secretariat D'Etat au Plan , II Plan Quadriennal 1974-77 (Alger: Imprimerie Officielle, 1974), p. 84.

Since the first four-year plan, the establishment of

national industry has become more visible and concrete.

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During the second four-year plan, as another step in

realizing the global strategy of development, more empha

sis was placed on industrialization as being the essential

base for constructing an independent national economy,

achieving integration of industrial activities, enlarging

production, and creating employment. This second four-

year plan also differed in terms of the great diversity of

objectives to be achieved. Accordingly, the second four-

year plan launched a great number of projects that would

furnish the necessary equipment and tools for the differ

ent economic activities. It directed its efforts mainly

to the mechanical and electric industries, the chemical

industries, and the preliminary transformation of metal

industries. It also continued to establish the metallur

gical complexes (e.g., El-Hadjar) , as well as the hydro

carbons and petrochemical industries. In general, the

second four-year plan concentrated upon the satisfaction

of local needs and was to constitute a new important step

in the process of industrialization. A great part of the

satisfaction of the national needs was achieved in the

textile sector. In contrast, other sectors, such as the

branches of the alimentary industries, faced some diffi

culties to follow the growth of national consumption.

This is why agriculture and the alimentary industries,

particularly cereal transformation, occupied an important

place in the next plan (1980-1984) .

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TABLE 58

INVESTMENT IN MILLIONS OF DINARS, 1974-77

Sector Expenditures Percent

Industry 48.000 43.5 Agriculture 12.005 10.9 Hydraulic 4.600 4.2 Tourism 1.500 1.4 Fishing 155 0.1 Economic infrastructure 15.521 14.0 Education, training 9.947 9.0 Social 14.610 13.3 Administrative equipment 1.399 1.3 Research & divers 2.520 2.3 Total 110.217 100.0

SOURCE: Secretariat d'Etat au plan, II plan Quadriennal 1974-77 (Alger: Imprimerie Offi cielle, 1974), p. 89.

Due to natural problems and the lack of competent

cadres, the agricultural sector did not improve. During

the first plan, some efforts were made to identify the

problems of the rural sector. During the second plan,

efforts were directed to the structural and technical

conditions that were to lead to a rapid development of the

agricultural economy. The agrarian revolution was intro

duced as a new form of land exploitation. The two years

of application that the agrarian revolution witnessed

during the first plan had achieved some good results.

More than 700,000 hectares of land were distributed among

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60,000 beneficiaries organized in almost 4,000 coopera

tives of different types.

The period of the second plan was to be the decisive

period for putting the agrarian revolution in operation.

This plan aimed at improving the utilization of fertiliz

ers, enlarging the mechanical means of exploitation, and

improving the cadres of the agricultural sector.

The agricultural policy of the second plan was

marked, more than the previous plan, by the transformation

and consolidation of the material and structural base of

the rural parts of the country in order to improve the

standard of living of the rural masses.

The evolution of the Algerian economy during the

1974-77 plan period was characterized by substantial

growth in the non-hydrocarbons sector, especially in

industry and construction. However, the implementation of

the plan generated imbalances in the distribution of

investment between the economic sectors, such as industry

and agriculture.

Regionalization of investment was an important ele

ment of the 1974-77 plan. Heavy industrial projects under

the plan were located in several regions of the country.

The lack of industrial experience in the regions and

frequent delays in establishing the necessary supporting

infrastructure were serious obstacles to efficient opera

tion. Special programs for the least-favored wilayas

(provinces) and urban and commune development programs

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were implemented during the period of the second four-year

plan in order to build economic and social infrastructure

and create productive activities needed by secondary

cities and rural communes. Under the plan, a total of DA

11 billion was budgeted for those programs, representing

40 percent of government direct investment and 10 percent

of the country's total fixed investment. Implementation

of the regional programs suffered delays because of insuf

ficient local capacity to identify, prepare and execute

projects and lack of coordination and support at the

central level. About 250 regional industrial projects had

been started at the end of 1979.

Expansion was particularly rapid in manufacturing and

construction, reflecting the high level of investment.

Investment and public consumption were the most dynamic

domestic demand components during the plan period. Public

consumption increased at an average rate of 15 percent per

year, reflecting the expansion of public employment and

services.

The First Five Year-Plan (1980-1984)

The first five-year plan provided another opportunity

to examine economic and sectoral policies. The efforts

accomplished during the previous two plans were in favor

of heavy industry. In the first five-year plan, large

investment in the industrial sectors continued. Although

more emphasis was placed on light industry, agriculture

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and infrastructure, the priority given to hydrocarbons as

a means of raising financial resources was maintained.

Algerian planners utilized the two-year transitional

period of 1978-1979 to draw conclusions and to formulate a

detailed policy for the next plan, which covered the

1980-84 period. At the time of this writing, the five-

year plan is still in the course of implementation. The

major objectives of this plan are as follows:

1. Correction of sectoral development imbalances

2. Improvement of the efficiency of the economic

system and of financial management in general

3. Satisfying basic social needs and improving the

quality of life

4. Elimination of under-utilization of production

capacities

Agriculture, water development, and the social sec

tors such as housing, training, economic infrastructure,

regional development and education have been given more

attention in this plan. The emphasis placed on heavy

industries indicates that Algeria is continuing its depen

dency on the hydrocarbons sector over the long term.

Since independence, the emphasis on developing the

manufacturing and hydrocarbons sectors has led to a seri

ous decline in agricultural production. In 1979, agricul

ture contributed less than 7 percent to Algeria's GNP,

although over half (55%) of the Algerian people still

derive their livelihood from farming. The 1980-84

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Algerian development plan attempted to reverse the pattern

of relative neglect by allocating over DA 47 billion to

improve and expand crop productive and modernize farming

methods (see Table 59) .

TABLE 59

TOTAL INVESTMENT ALLOCATIONS, 1980-1984 (DA billion)

Total Sector Investment Percent

Industry 154.5 38 Hydrocarbons 63.0 — Agriculture and water 47.1 10.6 Agriculture 24.1 — Infrastructure, transport and communication 36.5 — Social infrastructure 118.5 32 Housing 60.0 — Education and training 42.2 — Other 44.0 — Total 400.6 100

SOURCE: COMET, The 1980-84 Algerian Five Year Plan (London: Committee for Middle East Trade, 1981), p. 30.

Although the government remains committed to a policy

of rapid industrialization, the new plan acknowledges that

more immediate attention must be given to improving the

conditions of living for the average Algerian. This is

the first time the development plan seems to take into

account the social requirements of Algeria which result

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from its high population growth rate (3.3% per year) and

the predominance in the population as a whole of young

people (over 50% are under the age of 18).

According to the above table, total allocations show

the significant shift of emphasis under the first five-

year plan. For example, investment in social infrastruc

ture (particularly housing, health, education and train

ing) registers a marked increase under this plan, account

ing for 32 percent of total allocated expenditures, com

pared with 38 percent for industry. In addition, invest

ment under this plan has increased significantly in com

parison with earlier development plan targets. The 1980-

84 plan provides for the expenditure of DA 400 billion,

compared with target expenditures of DA 110 billion for

the second four-year plan, 1974-77 (see Table 60).

TABLE 60

TOTAL INVESTMENT IN INDUSTRY AND AGRICULTURE THROUGHOUT DEVELOPMENT PLANS (Billions of DA)

Sector 1967-69 % 1970-73 % 1974-77 % 1980-84 %

Total investments 12 27 110 400

Industry 5.400 42.8 12.400 45 48.000 43.50 154.5 38

Agriculture 1.900 15 4.140 15 12.005 10.9 24.1 10.6

NOTE: For 1967-69 figures see p. 239; for 1970-73 see Table 56, p. 245; for 1974-77 see Table 58, p. 251; for 1980-84 plan see Table 59, p. 255.

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The priority assigned to hydrocarbons as principal

target of finance is maintained. A consensus has been

reached among the Algerian authorities in favor of a

policy for conservation of the country's hydrocarbons

resources. The study of the five-year plan should take

into consideration the policy for conservation of hydro

carbon resources recently decided by the government. With

respect to gas, the authorities have re-examined the

program for construction of plants for gas liquefaction

and have already cancelled some projects. For example,

the installed capacity for export of liquefied gas and

natural gas is only about 41 percent billion cubic meters

in the last year, 1984, and to be 47 percent billion cubic

meters in 1988, compared with 57 percent and 80 billion

cubic meters, respectively, in the original program. The

authorities had reduced output to about 45 million tons in

1980 (52.5 million tons in 1979). The assumptions for

crude oil output for the period 1980-1989 imply a reduc

tion of about 15 percent from the levels projected in the

original long-term plan for hydrocarbons development.

Over the entire period 1980-89, about 75 million tons

corresponding to two years of output would be saved in

this way, based on earlier forecasts. Previous projec

tions for condensate and refined products are not sub

stantially changed.

With regard to prices, the projection takes into

account the price of oil as established for 1980 and

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thereafter of an annual increase of about 3 percent. The

average price of gas is less predictable in view of on

going negotiations concerning various sales contracts and

the wide differences between the actual and projected

prices among the various contracts. In 1979, the average

export price of Algerian gas came out at $1.18 per million

BTU. The principle underlying the ongoing negotiation

between Algeria and its main partners in the U.S. and

Europe consists of an alignment of the price of gas with

the price of crude oil in terms of thermic equivalent.

The fact should be taken into account that transport cost

of gas to the buying countries and treatment cost in these

countries are substantially higher than that of crude oil.

Due to the relatively rapid growth of the non

hydrocarbons economy, Algeria was able to maintain an

overall GDP growth of about 6.5 percent during 1980-84,

although the projected overall growth was set for 7.2

percent a year during the same period. During the second

five year plan (1985-89) GDP growth is expected to remain

rapid in the non-hydrocarbon sector and to reach 6.2

percent, as Table 62 indicates.

Beyond the period of the first five-year plan (1980-

84) , gas export volumes would become very important.

Since Algeria's strategy is now to adjust gas and oil

export volumes to the levels needed to achieve domestic

and external financial equilibrium, a more active policy

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for conservation of hydrocarbon resources would be pur

sued.

TABLE 61

AVERAGE ANNUAL AMOUNTS OF FIXED INVESTMENT AND ANNUAL GROWTH RATE (Billions of 1979 Algerian Dinars)

Fixed Investment 1979 1980-84 1985-89 1980-84 1985-89

Hydrocarbons sector 16.2 14.4 9.9 -7.5 -2.6 Industrial sectors 14.1 16.3 23.0 6.7 5.8 Other sectors 21.8 34.9 54.3 14.9 7.8 Total 52.1 65.6 87.2 7.2 6.2

SOURCE: World Bank, Algeria, Recent Economic Develop ments and Prospects: The Five-Year Plan, 1980-84 (Washing ton D.C., World Bank, 1980), p. 29.

After the second five-year plan (1984-89), Algeria's

exports, consisting mainly of hydrocarbons, may remain

stagnant in volume and, with growing import needs, large

resource deficits may also reemerge. The conservation

policy, by reducing the volume of oil exports in the years

ahead and spreading the development of natural gas

resources over time, will permit sustained growth of

export volumes over a long period until such time as the

economy is in a position to replace hydrocarbons by other

export products. At the same time, the changes that have

taken place in the geographical distribution of gas sales

contracts conducted by Algeria — now mainly with European

countries — have led the authorities to reconsider the

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program of construction of gas liquefaction plan in favor

of expansion of export capacity by gas pipelines, first

via Tunisia to Italy and second directly to Spain (see

Table 62).

TABLE 62

LNG AND NATURAL GAS EXPORT CONTRACTS

Planned Period of Quantity Delivery Contract Buyer (Billion M) Date (Years)

Operational contracts British Gas Council (Canvey Island) 1.11 1964 15 Gas de France (le Havre) 0.56 1964 25 Gas de France (FOS) 3.70 1972 25 Distrigas-USA (Boston) 1.20 1978 20 Enagas (Spain) 4.76 1980 23 El Paso I-USA (Cove Point) 10.95 1978 25

Contracts signed and approved Distrigas-Belgium (Zeebruge) 5.29 1980 2 Gas de France (Montoire) 5.45 1980 2 Trunkline-Panhandle USA 4.76 1981 2 (Lake Charles) Thyssengas/Brigitta (West Germany) 11.90 1983 20 Ruhrgas/Salzgitter (West Germany) 1983 2 Sub-Total 53.91

Gas pipeline to Italy 13.07 1982 20

Tunisia gas pipeline 1.20 1982 2

SOURCE: World Bank, Algeria: Recent Economic Develop- ments and Prospects, The Five-Year Plan, p. 91.

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The share of investment in the non-industrial sectors

has increased from 42 percent of the total in 1979 to 59

percent in 1984 and would increase to 64 percent in 1989.

Such an effort of investment in favor of the non

industrial sectors — agriculture, water resources, con

struction, economic and social infrastructure and services

— would have considerable strength and priority. The

production of the non-hydrocarbons sectors depend to a

large extent on future progress in improving the efficien

cy of the economic system. The efficiency of the economy

depends also on the following main factors:

1. The implementation of the first and the second

five-year plans which aimed at restructuring investment in

favor of economic and social infrastructure and making

existing industrial capacities profitable

2. The industrial experience that Algeria has now

acquired after more than twenty-two years of accelerated

development, enabling it to obtain better control over

existing production

3. The moderation of investment growth, particularly

in industry, making it possible to devote greater atten

tion to inter- and intra-sectoral coordination

4. More skilled workers, technicians and managers,

who should become available as a result of the important

training efforts being pursued, attracting skilled emi

grant workers back home

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Some improvements in efficiency have already been

achieved in a number of industries during the first five-

year plan. Continued improvement in the efficiency of the

economy will also depend on:

1. Effective implementation of management decen

tralization in all production sector and strengthening

planning

2. Reorganizing of the socialist sector and public

enterprises

3. Improving the system of input and supply

4. Facilitating the operation of production units in

general

5. Strengthening the role of the financial system

6. Worker participation in decision making

As far as the first five-year plan is concerned, a

growing proportion of investment has been channelled to

economic and social infrastructures, particularly housing

and education. The growth of agriculture has remained

relatively low during the plan period. Agricultural

exports remained at the same level throughout the period

in view of the priority given to supplying the domestic

market. Food import is seen in relation to balance be

tween consumption demand and agricultural production.

While imports are to eliminate shortages of certain

consumer goods, strict management of import requirements

have also been taken into account.

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Total consumption has continued to grow at about 9

percent, reflecting the expected increase in public out

lets for the operation of the administrative and social

infrastructure and the effect of the policies to expand

employment, satisfy basic social needs, and improve the

quality of life. The decline in the deficit and the

external dept will depend on the policy followed with

respect to volume and prices of oil and gas exports during

the second five-year plan (1985-89).

With the growing needs of a rapidly expanding popula

tion and recent shortfalls in domestic agricultural pro

duction, Algeria has become increasingly dependent on

foreign suppliers of foodstuffs. The United States has

long been a major supplier of agricultural products to

Algeria, principally wheat, cotton, and beans. According

to a study carried out by the Committee for Middle East

Trade, the food and consumer goods imports is expected to

rise from just under DA 10 billion in 1979 to over DA 13 4 billion by 1984. During the 1980-84, food and consumer

goods will continue to represent 21 percent of total

imports. The imports of raw materials, semi-finished

products and capital goods for industry will remain vital,

which together will account for 59 percent of import

requirements.

4 COMET, The 1980-84 Algerian Five Year Plan (London: Committee for Middle East Trade, 1981), pp. 4-5.

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Projections of agricultural imports for 1985 are

shown in Table 63. As already noted, the country imports

almost all of its butter and sugar, a third of its milk, a

fifth of its grain, and in the process spends almost a

third of its hydrocarbons receipts. With the population

increasing as fast as was noted earlier, it is unlikely

indeed that this heavy demand for agricultural products

will also slow.

TABLE 63

PROJECTED IMPORTS OF SELECTED AGRICULTURAL COMMODITIES, 1985 (Millions of dollars)

1985 Commodities Projections

Cereals and flour 788 Sugar 303 Dairy products 370 Fats and oil 259 Meats 176 Subtotal 1,896

Other food and agricultural products 2,387

Total 4,283

SOURCE: Jack Kramer, Algeria (New York: Chase World Information Corp., 1978), p. 126.

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The 1980-84 plan continued to allocate heavy invest

ment to the steel, nonferrous metals, mechanical-

electrical engineering, and construction material indus

tries. Light industry is being expanded and new plants of

all sizes are being opened every year. Many of the plants

suffer from a lack of skilled labor, but the government is

investing large sums in education and training to overcome

this problem. If we judge according to the evolution of

investments, we observe that agriculture has been given a

very limited place in the strategy of development, and

massive capital has been devoted to the industrial sector

and hydrocarbons (Table 64).

TABLE 64

BREAKDOWN OF TOTAL INVESTMENT

Constantine Plan Billions of DA (Millions of F.F.) 1967-69 1969-73 1973-77

Total investment 27,750 12,090 33,000 110,000 Agriculture 3,900 2,400 4,500 12,000 Industry 8,800 5,200 17,700 48,000 Hydrocarbons 5,500 2,800 8,000 19,500

SOURCE: Benhouria Tahar, L'economie de 1'Algerie (Paris: Maspero, 1980), p. 138.

Agriculture occupies an important place in public

speeches, but in reality the gap is very large between

what is being said and what is being done. The objectives

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and principles of Algerian agrarian policy have been fixed

since the beginning. They are inscribed in all national

development programs since the Soummam Congress, taken up

by the revolutionary council of 19 June 1965, made more

precise in the preliminary project of the agrarian revolu

tion, elaborated by the FLN in 1968, then in the Charter

of the agrarian revolution in 1970, and finally in the

National Charter 1976. However, the concrete application

to this agrarian policy did not take place successfully,

because of the priority given to the industrial sector

that characterized the development policy since indepen

dence, and the bureaucratic nature of the administration.

The contradictions that exist in this type of devel

opment and that have been aggravated through the years are

found in the realization of new resources, such as gas and

oil. A large part of revenues of these activities were

concentrated in the hands of government, the entrepreneurs

and the directors of state companies. The quantitative

growth of the unequal development in agriculture and

industrialization of the Algerian economy was not only due

to the levels of investment in the two sectors, but also

due to the formation of a state bourgeoisie linked to

industrialization and bureaucratic management of the

economy. This is not the only form that expresses the

industrialist strategy adopted in Algeria by the dominant

class, but salaries, price system, and land are other

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factors that were responsible for this unequal develop

ment .

The price system since independence has been in favor

of industry. From 1962 to 1974, the prices of agricultur

al products were relatively stable, compared to the rapid

increase of price of products oriented toward agriculture

by the industry (machines, fertilizers, construction,

etc.). This situation was a direct consequence of the

Algerian economic dependency on the international market,

and its influence exercised upon internal prices. The

local prices of industrial products were partly determined

by their sales prices in the foreign markets.

The price system resulted in unequal conditions for

the reproduction of the labor force. The dissimilarity

between the two sectors did not touch only the low salary

categories, but all categories of workers: skilled and

unskilled, manual and labor workers. For example, 30,000

workers in SONATRACH received in 1972 a total salary of

nearly DA 600 million, while 250,000 employees in the

self-managed agricultural sector reached only DA 450

million.

In terms of land, thousands of hectares of the best

land for cultivation have been transformed into industrial

zones. The region of Annaba, Rouiba, Reghaia, the zone of

Mitidja, are only examples. Out of these more essential

zones, other land was transferred also to the industrial

zones of Arzew (1600 hectares in the first phase), Tiaret

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(1300 hectares), Jijel (800 to 1600 hectares) Bouira (200

to 300 hectares), etc. As a result, this land was lost

for agriculture. It was not only productive land, but

also rich with a working population and stock of diverse

agricultural materials.

The conclusion is that, in the course of the last

years, the rate of transferring agricultural land to the

industrial sector has been intensified. The bureaucratic

bourgeoisie has a negative point of view toward agricul

ture. The same bureaucrats who favored the growth and

construction of industry caused the underdevelopment of

agriculture.

The three categories of the conditions of reproduc

tion that we have analyzed: investment, salaries and

prices, and finally land and water, are real factors and

basic conditions of agricultural production. Unemploy

ment, immigration, and urbanization have basically been

shaped by the development strategy elaborated and put into

operation by the bureaucratic bourgeoisie.

If we analyze the alimentary production, the picture

will be even clearer. The production of cereal has been

inferior to consumption since 1962. With the growth of

urban population, Algeria became more dependent on foreign

markets: 1 450,000-ton deficit in 1969, 1 980,000-ton

deficit in 1972. Expenditures of imported goods of con

sumption were very high: DA 820 million in 1964, DA 1,077

million in 1972, DA 6,300 million in 1975. For example,

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in 1980 a large demand could not be satisfied by local

production. The deficit especially touched cereals,

sugar, meat, and milk. The deficit in the alimentary

products is not likely to disappear soon.

Algeria's continuing importation of agricultural

products will remain strong. The country is a long-time

importer of U.S. agricultural commodities, particularly

wheat, cotton, and beans. Overall, Algeria's imports of

agricultural products from all sources have been increas

ing fairly steadily throughout the decade (Table 65).

TABLE 65

ALGERIA'S AGRICULTURAL IMPORTS (Millions of dollars)

Year Imports

1969 167.2 1970 173.5 1971 206.4 1972 301.4 1973 448.6 1974 880.0 1975 1,377.0 1976 1,011.0 1977 1,350.0 1985 4,283.0'

SOURCE: This table constructed from data pro vided in Jack Kramer, Algeria (New York: Chase World Information Corp.), p. 126.

a. Table 63.

The situation of the working class did not change

much. The average annual salary, in the textile branch in

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1969, was DA 4,892 for the enterprises that employed more

than 200 workers and only DA 4,436 for enterprises with

fewer than 20 employees. Even within the same branch, the

workers' wages differ, for instance, in hydrocarbons. It

appears that, in the light of these figures, the distribu

tion of salaries in the industry is resembling a capital

ist structure with inequality of salaries in different

productive branches.

It seems clear that the distribution of income in

Algeria essentially determined by the amount of capital

revenue. It could be explained as competition among the

branches and between the national companies in order to

attract the skilled category of workers. Otherwise, how

can we account for different incomes for the same work in

different branches? Unequal distribution of income is

also due to the size of the enterprises. (We have seen in

Chapter V the inequal development of the different indus

trial enterprises, SONATRACH). The concentration of

capital in these branches explains this phenomenon. For

example, the workers who work for SONATRACH earn more than

those who possess the same skills and work in the textile

or leather enterprises. The size of capital and rentabil

ity determine the size of incomes. Therefore, the workers

in the branches with less capital and lower rentability

are still underpaid.

The over-exploitation of the workers in the sectors

that are less advanced, and the enterprises that are less

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important, as well as the inequality of salaries among the

branches, is linked directly to the size of capital that

each company possesses, the concentration of the invest

ment in some branches, and the disequilibrium between the

industry and agriculture.

This can explain also the failure and weakness of the

U.G.T.A. (Union Generale de Travailleurs Algerienne) and

its shift to become a bureaucratic apparatus instead of an

organization defending the interests of the working mass

es. Although U.G.T.A. achieved some relative autonomy

during the period of transition, its function was abol

ished by the party later on. It has been under criticism

since independence by the bureaucratic bourgeoisie. The

committee for preparing the third congress (1966), desig

nated by the U.G.T.A., was eliminated and replaced by a

special committee nominated by the party, which was under

the authority of Raid Ahmed. This means that the working

classes had lost their representative at the national

level. The 1966 report of the U.G.T.A. made the following

remarks:

Since the realization of December 1962 Accord, things have been developing. This development always manifests the same direction, which means Party-UGTA. We understand all the formulas: UGTA is a national organization with the party; UGTA is a national organization after the party; UGTA is a national organization for the Party; UGTA is a national organization within the party We have to confess to the upper authorities of the Party that the only relations that we have had with the party since its establishment have been relations of subordina tion: contacts took place only for us to be

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informed that we had to follow the rules, that we were prohibited from doing this or that. Never have we been invited to conferences dealing with unemployment or dealing with the question related to the training and education of militants.

Conclusion

The structure of investment with regard to agricul

ture and industry has drawn heavy criticism even from

within Algeria. Some have argued that if equity is a

concern, then certainly 55 percent of the population

should receive greater attention.

Planned economic development in Algeria began with

the three-year plan (1967-69), which represented the first

phase of a long range development program running into the

1980s. The three-year plan was followed by the first

four-year plan (1970-73) and the second four-year plan

(1974-77). The two succeeding years, 1978 and 1979, were

viewed by Algerian officials as a period of "transition"

during which attempts were made to complete the many

projects started during the previous first and second

four-year plans. The first five-year plan followed as

another step in the economic development of the country.

All these economic development plans, without exception,

have emphasized the establishment of a capital-intensive

5Annuaire de l'Afrique du Nord (Paris: Centre Nation al de la Recherche Scientifique, 1966), p. 628.

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industry, involving hydrocarbons, iron and steel, chemi

cals, and engineering, to serve as a basis for economic

growth and industrialization.

Algeria's three-year plan allocated investment total

ling DA 12 billion, of which 5,400 million (or 42.8%) went

to industry and only 1,900 million (or 15%) went to agri

culture (see Table 60). During the first four-year plan,

total investment was DA 27 billion. 12,400 million (or

45%) was devoted to industry and only 4,140 million (or

15%) was directed to agriculture (see Table 56) .

Algeria's second four-year plan allocated investments

totaling DA 110 billion. As in the first four-year plan,

industrialization continued to receive top priority, with

43.5 percent of total planned outlets, while agriculture

received only 10.9 percent (see Table 58).

Agriculture has been consistently misrepresented.

Consequently, increasing rural-urban inequality, rapid

migration, and uneven development was the result. This is

due not only to the natural constraints and lack of human

resources, but mainly to the industrialization policy

followed by the government. At this point, we come to the

same conclusion that was achieved by the Committee for

Middle East Trade in its research on Algerian economic

development and industrialization:

1. The great emphasis laid on heavy industry (including hydrocarbons) under previous plans has resulted in a unacceptably high level of external indebtedness.

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2. At the same time, industrial development has not resulted in a steady flow of products which the domestic market urgently needs; there have been bad bottlenecks and performance failures. 3. The failure to put an equivalent amount of effort into agricultural development has result ed in an increasing requirement for imported foodstuffs.

Under the first five-year plan (1980-84), more empha

sis was placed on infrastructure, housing, agriculture,

education, and light industry. Thirty-two percent of

total expenditures was devoted to social infrastructure,

compared with 38 percent allocated to industry. Although

the development of agriculture is still inferior in terms

of investment, cuts in the industry and hydrocarbons

budgets are registered under the five-year plan, with 38

percent compared to 43.5 percent during the previous

(1974-77) plan (see Table 59). This could be seen as the

first step in the right direction. The following graph

shows the general investment trend of industrialization

and agriculture during the last two decades.

^COMET, The 1980-84 Algerian Five Year Plan, p. 3.

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GRAPH 4

GENERAL INVESTMENT TREND OF INDUSTRY AND AGRICULTURE, 1967-84 (IN DA BILLION)

160

140

120

100

1967-69 1970-73 1974-77 1980-84

Source: Table 60, P. 256

Industry (including hydrocarbons)

Agriculture

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GRAPH 5

TRENDS OF POPULATION AND AGRICULTURE

Agricultural Iirports

Populatic n

liheat Processing

1960 1965 1970 1975 1980 1985

Note: See table 10, P. 75; table 65, P. 269; and table 42, P. 205.

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ALGERIAN SOCIALISM AND FOREIGN DEPENDENCY

Introduction

Policy planners in Algeria face a central challenge.

On the one hand, they are making a determined effort to

transform the economy rapidly, largely through the intro

duction of foreign technologies. On the other hand, in

the absence of a well-developed infrastructural and

skilled manpower base, they are attempting to do so with

out increasing dependency upon foreign suppliers, without

loosening control over internal economic, social and

political developments, and without weakening or destroy

ing indigenous cultures, traditions, and values.

The purpose of this chapter is to assess how these

aims have been addressed in the technology transfer poli

cies of Algeria and the challenges which lie ahead. More

specifically, the aim of this chapter is to explore the

problem of foreign dependency. It will discuss tech

nological and scientific dependency and its effects on the

recipient country; the problem of foreign capital depen

dency and how industrialization in Algeria is being fin

anced; and finally the problem of foreign skilled labor

dependency. In addition, the chapter will try to trace

277

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the type of socialism Algeria is adopting at this stage of

economic and industrial development.

Technological and Scientific Dependency

Generally speaking, technology has developed from the

demand for solutions to problems associated with man's

needs in the real world. In this research, "technology

transfer" means a process in which one party provides and

another party attains a capability. This capability

allows the recipient to carry out an operation or process

which the recipient could not previously perform, or could

carry out only with lower efficiency. The term of "tech

nology transfer" here covers not only the transfer of the

products which are manufactured to satisfy Algeria's

needs, but also the know-how required for their operation,

repair, and maintenance. When we speak of the "transfer

of technology", we are not referring merely to the trans

fer of equipment, but also to the related know-how.

Algeria is one of the few cases in which industrial

technology imports have formed the core of its economic

development. Like other developing nations, Algeria is

engaged in an industrialization and development effort

which involves considerable importation of foreign tech

nology. However, technology transfer is only one part of

a broader development process, so that choices affecting

the selection, importation and utilization of foreign

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technologies are by nature linked to policies affecting

development as a whole.

In Algeria, there has been no developed technology

transfer policy as such. Nor is there one best approach

to technology transfer anywhere in the world. Instead,

technology transfer choices are normally made within the

context of broader development goals, and these have

depended upon the resources of each country, its develop

ment strategies and the political and social context in

which development is to occur. It is useful to briefly

examine the development strategy in Algeria and see how it

has affected the type selected for technology transfer

before discussing the effects and policies related to

technology transfer.

Algerian Development Strategies

After gaining its political independence in 1962,

Algeria embarked on a development program in which indus

try played a major role. During the period of transition

1962-1965, Algerian industry was mainly concerned with

light industry, therefore it was oriented toward the

production of consumer goods. For example, the industries

established in this period were as follows: textiles,

leather and tannery, shoes, and food industries. During

the Ben Bella regime, the policy of economic development

was in favor of light industry and the development of

agriculture.

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However, after Houari Boumediene took over in 1965,

and particularly since 1967, Algeria has adopted quite

different strategies to promote socio-economic develop

ment. The new strategy was aimed at achieving the follow

ing objectives:

1. In the long term, Algeria will attain the stage

of innovation

2. The consumption goods industry will be able to

satisfy national needs

3. The industrial sector will create 400,000 new

jobs per year

The new regime claimed that the development of the economy

cannot be achieved without the development of hydrocarbons

and heavy industries, which will bring about independent

national development. The major change in development

policy was the shift from labor-intensive industries to

capital-intensive industries, from development directed

primarily to infrastructure and agriculture into develop

ment oriented toward heavy industry and the hydrocarbons

sector. The price paid for this policy was, of course,

dependency upon foreign technology and the maintenance of

a high level of unemployment.

The economic policies followed from 1965 to 1979

aimed at laying the base for capital-intensive, high

technology, export-oriented industries, and the use of

Algeria's energy resources to supply this industrial

system. The hope was that by the time the oil and gas

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income declined, at least some industries would be inter

nationally competitive and able to replace energy sales as

foreign exchange earners.

In 1967, the Algerian government launched its first

development plan, aimed at massive heavy industrializa

tion. The primary emphasis in government investment was

on heavy industry, which continued into the second and

third plan periods. The plans between 1970-73 and 1974-

77, for example, were more ambitious than previous poli

cies in terms of investing domestic and foreign capital

into programs and projects designed to develop Algerian

heavy industry. Between 1970 and 1977, Algeria invested

heavily in industry, completely neglecting the agricultur

al sector. During the period of 1970-1977, the plans

called for investment between 42 to 45 percent of the

total budget for industry.*

During the 1970s, Algeria was one of the world's

fastest growing markets for engineering products, con

struction and technical services. Thanks to rising oil

revenues, oil production gained the financial resources

needed to purchase these imports. During the past two

decades, Algeria has rapidly expanded its imports of

advanced civilian equipment and technologies. The main

foreign projects initiated in Algeria over the past two

^Ministry of Planning and Regional Development, "Invertisement," Synthese du bilan economique et social de la decennie (Alger: May 1980), p. 5.

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decades have mainly occurred in the following three sec

tors: the hydrocarbons sector, which can be considered an

example of technological transfers contributing to the

development of export industries; heavy industry, with

technological transfers contributing to the development of

the industrialization process and meeting local demand;

and light industry, with technological transfers contrib

uting to the improvement of local living conditions.

During the last few years, the country has signed

numerous contracts with international firms in an effort

to gain both their technology and know-how. As a result,

the volume of technological transfers from industrialized

countries to Algeria has grown. The major Algerian sup

pliers of technology are the U.S.A., France, West Germany,

Italy, Spain, England, Belgium, and Canada.

Algeria became a very competitive marketplace, and

suppliers specialized in certain types of exports. The

U.S. has been an important supplier of machinery equip

ment, particularly aircraft and technical services, in

cluding large-scale projects management and provision of

technical support. French firms have been particularly

prominent in public works projects, while Japanese firms

have continued to export automobiles and consumer elec

tronics to Algeria. West German firms have had a compara

tive advantage in exporting buses and transport equipment,

while Italy has been more specialized in exporting textile

products and equipment, and construction material.

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Technology utilization or absorption by the recipient

is a critical part of technology transfer. The extent of

technology absorption depends on the type of capability

developed by the recipient country. In the Algerian case,

the experience shows that technology is not fully util

ized. A number of factors restrict technology absorption.

These factors all relate to the fact that Algeria is

constrained in its ability to fully utilize imported

technology by shortages of technical and managerial per

sonnel. In addition, Algeria is challenged to use foreign

technologies and personnel in meeting development goals,

without creating irreconcilable conflicts with its tradi

tions and values.

Although the growing hydrocarbons industries have

been in a position to help finance these capital-intensive

projects themselves, there remains a need for foreign

assistance. This type of technology transfer obliged

Algeria to operate the facilities by relying extensively

on foreign managers and technicians. Over the long run,

maintenance of the facilities and development of a skilled

manpower base will be the key problem for Algerian petro

chemical firms.

The comparative success of a recipient in utilizing

these technologies stems from a number of factors, includ

ing skilled labor, developed infrastructure, the length of

experience and the emphasis on local markets. This

research indicates that technology absorption in Algeria

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has been limited to the development of a capabil

ity to operate and maintain facilities in the sectors

examined.

In the late 1970s, declining oil revenues, infra

structural problems, evaluation of plan performance, and

other political factors subsequently led to reevaluations

of development plans, strategies, and priorities in

Algeria. The scope of plans was often cut back, sectoral

priorities shifted, and goals became more circumscribed.

As mentioned before, the early 1970s, in conjunction

with the oil price rises, saw a rapid influx of technology

to Algeria. One direct effect of the cutbacks in expendi

tures in the late 1970s and a shift towards greater empha

sis on more modest rates of economic growth, was the rate

of technology trade. For example, the indefinite shelving

of expensive large-scale industrial projects has been an

immediate consequence of the decision to slow down the

rhythm of rapid industrialization. The second steel plant

and the construction of a new part at Jijel have been

deferred to the second five-year plan (1985-1989). Like

wise, the project to construct Algeria's third gas lique

faction plant, for which Foster-Wheeler held the original

contract, was shelved indefinitely, as was a new aluminum

complex which was to be financed with Soviet money.

In the early 1980s, Algerian planners began to re

evaluate the performance of these plans, and the detri

mental effects they had had on the non-industrial sector

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of Algeria's economy. Especially after 1978, with the

death of President Boumediene, domestic critics within the

government planning community began criticizing the stra

tegy of heavy or massive industrialization. With rela

tively severe financial constraints, the role of the

private sector and foreign involvement was also reas

sessed.

At the beginning of the 1980s, plans were sharply cut

back, priorities shifted to the long-neglected agricultur

al and infrastructural sectors. A socialist tendency has

not been abandoned completely, but has become less empha

sized. The beginning of the 1980s also saw an opening up

of the Algerian economy, and a shift in Algerian priori

ties toward the development of infrastructure, human

resources, and agriculture. Table 68 shows the expendi

tures for the latest five year plan, 1980-84. The plan

still calls for the greater investment to be in industry,

totalling 154.5 billion AD, but its share of total planned

investment has declined to 38 percent. While industrial

development is still fundamental to Algeria's long-term

policy, the focus has shifted from heavy to light indus

try. The country's critical housing shortage has received

an investment allocation of 60 billion AD of total planned

investment, and education, training and social infra

structure together comprise about 118.5 billion AD of

total planned investment.

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Technological Transfers Policy

As already mentioned, there is no comprehensive

technology transfer policy, but only an attempt to improve

capacities for selecting and utilizing foreign technolo

gies. Algeria tried to develop an implicit strategy for

dealing with technology transfer choices in conjunction

with its development planning. Algeria faces choices

concerning regulation of foreign businesses, choice of

suppliers, financing education and manpower policies, and

institutional mechanisms for carrying out technology

transfer. As suggested by official plans and import

trends, Algeria, as a developing country, has depended

heavily on imports of technology, and this dependence is

likely to continue for the foreseeable future.

The policy chosen after 1965 effectively changed the

structure of economic development and took investment away

from agriculture, housing and infrastructure, towards

hydrocarbons and heavy industries. This policy created in

turn the need for imported technology. The major goals

underlying government policies of technological transfers

can be summed up as follows:

1. To motivate the development of export industries

2. To meet local demands

3. To gradually develop local technologies

4. To improve the capacity and output of domestic

industrial units

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5. To acquire technologies appropriate to local

requirements

However, testing these goals against actual practice

reveals that they seem only to diversify dependence,

because Algeria has not been able to change its position

from licensee to licensor. The contribution of imported

technology to exports has been limited, since the major

Algerian exports are still raw materials and products of

light industries such as textiles and leathers. In the

final analysis, the challenge to policy makers is to

design policies which enhance the mutually beneficial

aspects of technology trade, without being completely

subordinated to foreign economic conditions and policies.

All of these development strategies and goals have

called for the transfer of a variety of advanced technolo

gies from abroad. Until recently, Algeria paid much

attention to the import of technology in its official

policies. In most cases, technology transfer was conduct

ed in an almost random way, without any overarching policy

to guide it. With the re-evaluation of development poli

cies and goals which occurred in the beginning of 1980s,

however, specific approaches towards technology transfer

began to emerge.

Of equal importance, changes in development priori

ties were also associated with changes in the type of

technology selected. One key issue regarding the selec

tion of technology to achieve development aims has been

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the decision to import capital- or labor-intensive tech

nologies. In Algeria, where limited capital but unskilled

labor is available, this issue represents a central policy

debate.

Some planners argue that capital-intensive technolo

gies in certain sectors can provide modes of labor-

intensive production. Other planners argue that the

tendency to import the most advanced kinds of industrial

technology to Algeria threatens to destroy innovation

among local manufacturers and renders Algeria ever more

dependent upon foreign technologies and suppliers.

Algeria, during the late 1970s, followed the theory that

only the most advanced industrial processes will permit

LDCs to export their manufactures on a competitive basis.

Recently, however, light industry has been emphasized over

heavy industry, and small scale projects have been

emphasized over large scale ones. For Algeria, this has

meant a new orientation in technology transfer, favoring

simpler and more labor-intensive technology importation

and more trade with those nations which have an

international reputation for high quality performance in

subway construction, railway and dam construction,

hospital and housing construction. A few large scale

turnkey projects continue to be awarded mainly in the

petrochemical sectors.

During the past few years, Algeria has begun national

planning exercises to better define policies in this area.

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Algerian policy makers appear to be aware of the "ad hoc"

nature of their approach to technology transfer, so

Algeria is attempting to improve this situation with the

help of Western consultants. These efforts have so far

yielded limited results. In all cases, the essence of

these debates remains on a broad level. While efforts may

seen promising, technology transfer strategies today

remain ill-defined and largely determined on an ad-hoc

basis. Any policy which is primarily based on oil and gas

exports and the importation of advanced technology seems

in conflict with the effort to expand employment.

The Algerian concept of technology transfer and

economic independence is based on the following implicit

model.

Importation of advanced technology ------» accumulation process of technology ------» economic independence.

Algeria is among the first third world countries that

adopted the above defined model. But the experience of

Algeria reveals that after 20 years of industrial effort,

there is no sign to indicate that economic independence

will be achieved in the near future. On the contrary, the

economy is in a situation where every move in the develop

ment process signifies more dependency.

The Algerian experience confirms that when a techno

logical base does not yet exist, the option of industrial

ization and importation of advanced technology will not

lead to a stage of innovation but will aggravate economic

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dependency, for the medium-term at least. It suggests

that for a small economy engaged in a large-scale indus

trial development process, independence is no more than a

mirage.

The adoption of this growth model brought about the

problem of technological and scientific dependency, and

the call for advanced technology on a massive-scale way

has aggravated the situation of dependency upon the for

eign centers. This problem is being aggravated because

the purchase of machines from abroad does not involve only

the purchase of technology but also the training of pro

fessionals and cadres who will put this technology into

operation. Purchasing technology necessitates first the

preparation of an appropriate technological infrastructure

which does not yet exist in Algeria. In this sense, we

propose the following alternative model:

Education & training + developed infrastructure + capital accumulation -- » accumulation process of technology -- * economic independence and industrialization.

Strategies regarding the mechanisms by which technol

ogy may be transferred are also important, ranging from

those countries emphasizing a strategy of investment in

foreign companies (Kuwait), to those emphasizing joint

ventures (Saudi Arabia), to those emphasizing turnkey

plants (Algeria) and other mechanisms for technology

transfer.

In Algeria, the basic strategy toward technology

transfer has emphasized turnkey plants, with managerial

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and other support offered until operational skills are

transferred to indigenous personnel. Although Algeria has

traditionally emphasized technology transfer through

turnkey operations, it is increasingly searching for the

link to international markets which the joint venture

route provides. Beginning in the early 1980s, Algerian

planners shifted from a reliance on turnkey plants to

joint ventures with foreign partners. The Chadli govern

ment currently prefers joint ventures with foreign firms

on a close-to-equity basis rather than large scale turnkey

contracts, because it hopes that such joint ventures will

encourage more technology transfer through inhouse train

ing of Algerian personnel and the greater long-term com

mitment of the foreign partner to the joint enterprise.

According to one observer, Algeria will do everything

short of declaring herself "capitalist” to encourage this

development during the next decade. She will allow a few

turnkey contracts to be signed primarily in the civil

aviation and petrochemical sectors. The technological

goal is to train her own people to acquire technological

skills suited to local conditions.

Although technology can be transferred in a variety

of ways, there are only three main vehicles for technology

transfer in Algeria: joint venture, turnkey, and licen

sing. In the case of joint venture, most of the large

heavy industries in the country, such as petroleum, refin

ing, petrochemicals, and fertilizers have been established

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through joint ventures. In this joint effort, Algeria

provides the necessary infrastructure, labor and protec

tion for the investment; it also participates in the

management of such ventures.

In the case of major industrial projects, Algeria

buys technology and technical and engineering services

from foreign firms in the developed countries on a turnkey

basis for the establishment of a plant. The foreign firms

will not have any financial stake in the project. The

engineers, scientists and managers of the foreign compa

nies will provide the complete know-how and the training

of local personnel in the operation of the plant.

In the case of license, a formal or legal permission

is to be granted by a country or company that possesses a

particular technology, in order to enable Algeria to

manufacture that particular type of technology on its

land. For example, the Berliet plant in Rouiba is cur

rently producing trucks under a license arrangement with

the French company Berliet.

In Algeria, it is the government and the national

companies that import technologies and make them available

along with all other services. This applies to small and

medium-scale industries such as electronic and textiles,

as well as the heavy and large-scale industries such as

steel, mechanical and petrochemical industries. In the

highly centralized Algerian context, where all foreign

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trade is transacted by the government and national compa

nies, the concerned Ministry of Industry, the Planning

Ministry, and the Ministry of Finance are directly respon

sible for each stage of technological transfers.

With regard to the problems connected with the trans

fer of technology, Algeria, like other third world coun

tries, is still facing the following difficulties:

1. The selection of technology is needed. A tech

nology suitable for one country is not necessarily the

best for another

2. When the technology being imported is the latest

in the field, the experience of Algeria shows, it is not

necessarily the most desirable and appropriate technology

to suit the country's internal conditions and needs

3. The technologies of the developed countries are

usually not specifically geared to the conditions prevail

ing in the developing countries

4. The developing country is given little choice in

the selection of technology when the technology is tied to

foreign aid; the choice is restricted to the technologies

available in the developed country offering the aid

Effects of Technological Transfers

Even though Algeria emerges as one of the leading

third world countries as an importer of industrial tech

nology, this technology has a problematic impact on

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Algerian economic development in general, and on the

question of employment in particular.

First, due to the introduction of new technology and

the intensified use of capital-intensive industrializa

tion, the role of agriculture has declined significantly.

Agriculture's share in GDP declined from 21 percent in

1960 to 7 percent in 1979. Agricultural growth contribut

ed only 4.5 percent to Algeria's total growth of GDP. We

have to understand that the rapid growth in Algeria's GDP

has been primarily the result of increased revenue from

oil and gas. As a result, agriculture has been consis

tently underrepresented. Only 15 percent of total invest

ments in the first four-year plan was allocated to agri

culture compared to the 45 percent that was taken by

industry. In the second four-year plan 10.9 percent was

budgeted for agriculture, whereas 43.5 percent was budget

ed for industry. In the five-year plan, only 10.6 percent

of the budget was for agriculture compared to 38 percent 2 for industry. Algerian dependency on agricultural im

ports has increased sharply since the 1970s, and the

continuation of this trend has prevented Algeria from

obtaining economic independence and self-sufficiency.

Second, in light of Algeria's lack of local skilled

labor and the shortage of technical expertise, the trans

fer of technology to Algeria demanded the importation of

2 World Bank, World Development Report (Washington D.C., World Bank, 1980), p. 29.

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foreign skilled labor. This demand has been extensive,

particularly in the oil, gas, and metallurgical indus

tries. This importation of foreign skilled labor has two

negative results: (1) it costs Algeria millions of

dollars to pay for the service they provide; (2) the few

local skilled workers, after their close contact with

foreign professionals, leave the country and emigrate to

European countries to earn more money and enhance their

prestige.

Third, major international technologies are con

trolled and monopolized by multi-national firms which

usually impose, directly or indirectly, the sale of their

capital-intensive industrial equipment. This type of

technology, which is being used now in Algeria, has re

placed the human labor force in both agriculture and

industry. As a result, it has put thousands of employed

Algerians out of their jobs.

Fourth, as a result of technology transfer, the

ecological situation of Algeria has been transformed. The

extensive installation of industrial plants at the expense

of cultivated land has contributed to the scarcity of

agricultural land in the country, causing a considerable

loss for the farmers. As a result, the size of the unem

ployed population has increased in rural areas.

Last, as a direct effect of technological transfers

in Algeria, rural-urban inequality has been increased.

This, of course, has led to a rapid migration off the land

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and a massive number of unemployed people in the cities

and industrial centers.

Technological transfers appear not to generate more

jobs as it was believed they would. In other words, the

impact of technological transfers upon employment proves

once again that it runs counter to the national objectives

of creating a greater number of jobs in order to satisfy

the needs of an increasing number of unemployed people.

Conclusion

There can be no doubt that industrialization cannot

be achieved only by transferring a new technology and

establishing intensive industrial projects, but also in

establishing the necessary infrastructure that will

receive this technology. For instance, human resources

must be developed, engineering and design capability must

be created and expanded, existing research institutions

must be improved, and productivity of national companies

must be increased. When the technological base of Algeria

reaches this level, the country becomes better prepared to

use and benefit from the advanced foreign technologies.

Therefore, economic development is not only a matter of

importing new technology and techniques, but rather of

producing and using this technology in a way that suits

local needs.

The findings of this section clearly confirm that

trade between Algeria and advanced industrialized

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countries is capital- and skill-intensive. All signs

indicate that trade regarding technology transfer will

increase in volume in the future as the industrialization

of the country progresses. This means that reducing

technological dependency on the industrialized countries

is still far from being achieved in the case of Algeria.

Technology transfers to Algeria have created only a few

jobs. This implies that import promotion of advanced

technology and employment policies are in conflict, since

importation of advanced technology usually undermines the

growth of labor-intensive industries. If we are allowed

to generalize the implication of these findings, we can

say that the more technology is exported to developing

countries, the fewer jobs are generated.

Foreign Capital Dependency

The question of financing technology transfer has

been one of the most important policy issues and a major

concern, because Algeria is one of the more capital-short

countries. The dilemma here is that while Algeria is

attempting to avoid foreign dependency, the country has

found itself heavily dependent upon foreign sources in

financing technology transfer. Heavy reliance upon extern

al sources of financing is often associated with a great

degree of dependency upon the supplier of funds. This

section examines the policy approach adopted by Algeria

that led to contradiction between establishing socialism

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and the participation of foreign capital in financing the

development.

Since 1978, the Algerian state has held a monopoly

over foreign trade. The national companies and the gov

ernment ministries have been the exclusive importers of

foreign technology, and have been financed by resources

from oil revenues and by foreign loans and grants of

credit. Since 1973, the Ministry of Finance has permitted

its institutions (banks and state enterprises) to borrow

and carry out foreign loans. During the 1960s and 1970s,

however, these state enterprises accumulated enormous

debts, which were financed in large part by advances from

the treasury. By 1980, the national enterprises had

accumulated bank debts of almost $5 billion, and the

manufacturing sector alone accounted for almost $3 billion

of this debt.^

Foreign capital for financing Algerian enterprises

increased sharply during the four-year plans (1970-73 and

1974-77). According to many estimations, the amount of

external debts of the country increased from 35 percent

in 1971 to 60 percent in 1973.^ The 1973 balance of

payment was to be settled through new borrowed capital in

3 H. Elsenhans, "Some Contradictions in Algeria's Development Strategies," Maghreb Review, (May 1982), p. 64. 4 < / Tahar Benhouria, L'economie du developpement de 1 1Alqerie (Paris: Maspero, 1980), pp. 299-300.

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form of loans contracted by the national banks and state

enterprises. Borrowing foreign capital did not solve the

problem; rather, it elevated the permanent deficit, espe

cially in service goods.

After the first four-year plan, and due to the oil

price increase, Algerian oil revenue increased by DA 2.5

billion. This led to an increase of the budget for the

year 1974 by 9 billion DA. This of course helped the

state to reduce its foreign debts and to improve the

financial situation of the public sector by reimbursing

the Treasury and the Central Bank. But this recovery was

limited to a short period of time, as implied by the

announcement by M. Mahroug, Minister of Finance: "In

1975, the financial condition of our development is not

bad despite the world inflation that struck our economy.

It resulted in cutting down the relative advantage we 5 acquired in 1974 in terms of international exchange."

According to the World Bank report of the public debts of

developing countries, Algeria occupied the first place in

terms of loans received by all African countries.

Out of a total $14,466.6 million of loans received by the African countries, Algeria occupied the first place with $ 3,109.5 million before the other two big borrowers: Egypt ($1,746.1), and Zaire ($1,016.7). In over all debts, Algeria is also first with $ 4,788.9

5 M. Mahrouq, "Les grandes lignes du budget pour 1975", El-Moujahid (8 January 1975), p. 49.

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million out of a total. $ 21,774.7 million for all African countries.

In 1979, Algeria owed $245 million to international finan

cial institutions. In the same year, she owed communist

bloc countries $532 million, and Arab and African finan- 7 cial institutions $1.2 billion.

Algeria has been a high debtor during the past two

decades. However, it has recently pursued policies which

attempt to turn away from foreign aid and borrowing as a

means of financing technology transfer. Present Algerian

policies stress that the main sources of financing should

be exports of natural gas and crude oil, and then in

creased private investment as well as foreign joint ven

tures with the national companies. Since 1980, Algeria

has imposed restrictions on foreign borrowing. Sixty

percent of funds for investments for the present five year

plan are scheduled to be financed by the foreign exchange

earned from estimated annual revenues of $12 billion from

petroleum and natural gas.

In 1980, the Chadli government made it official

government policy that oil revenues must become an effec

tive source of accumulation for production and not just

for investment. One major effect of this decision was

6Banque Mondiale, Rapport Annuel (Washington D.C., 1975), p. 55. 7 OECD, Geographical Distribution of Financial Flows to Developing Countries, 1977-1980 (Paris: Organization for Economic Cooperation and Development, 1981), p. 23.

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another decision to practically shut off the demand by

state enterprises for international loans in 1980-82.

According to Benissad, an Algerian economist, "The

international solvency of Algeria resides in her present

revenues from the exportation of oil and in the immediate

future in the execution of contracts for the export of

O natural gas." As Algeria has stressed hydrocarbons

exports as the major source of foreign reserves, an impor

tant component of Algeria's financing policies has con

cerned the pricing of oil. Algeria has gained a reputa

tion by frequently demanding higher than agreed OPEC

prices per barrel of crude oil (in 1981, Algeria received

$40 per barrel; in 1982, after negotiations, she reduced

her price to $37.50 per barrel, while the OPEC price was

$34 per barrel). In spite of the reputation for higher

pricing, Algeria has usually succeeded in having all of

its oil lifted by its foreign purchasers without a prob

lem. This may be due to the high quality of its hydro

carbons, as we explained in Chapter V.

In early 1975, Algeria's high prices apparently led

to a shift of oil demand to the Gulf states, and Algeria's

government revenues fell. This motivated Algeria to

barter oil at full official prices in return for machinery

and transportation equipment from the purchase of oil, but

^M.E. Benissad, Economie du de'veloppement de 1 'Alqerie (Paris: Economica, 1979), p. 252.

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this offer apparently was not picked up. By the end of

1975, the decision by OPEC to raise the price of oil by 10

percent led to an improved situation for Algeria. Because

of an impressive hydrocarbon production record, Algeria

will probably continue to enjoy relatively easy access to

international lending markets at favorable interest rates

throughout the present as well as the next decade. But it

must be noted here that this heavy dependence upon hydro

carbons exports means that, unless Algeria's capacity to

produce exports increases greatly in the next two decades

to replace the revenues currently earned by hydrocarbons,

it could have serious problems in financing future devel

opment .

Despite all this effort, total debt has remained

high: in 1980 the total estimated external debt was $17.5

billion, and the debt service was estimated at 25 percent

of imports. In 1982-83, Algeria had to pay $4 billion in 9 foreign debt service payments. It is estimated that

Algeria's current external debt, which stood at $13.5

billion at the end of 1982, had risen by the end of 1983

to over $15 billion; some estimates have put it at $17

billion. Between $800 million and $1.5 billion of this

was in short-term credits. Service debt has been rising

from about $3.8 billion in 1982 to between $3.9 billion

and 4.5 billion in 1983.

9 EIU, Quarterly Economic Review of Algeria (London: The Economist Intelligence Unit, No. 1, 1984), pp. 17-18.

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Algeria returned to the international capital market

in a major way in 1983. A $700 million Euroloan raised by

SONATRACH in June 1983,*^ followed by another loan

financed by Gulf International Bank, initially put at $500

million and then increased to $800 million, were concluded

by the Banque Exterieure d'Algerie (BEA) and the Banque

Nationale d'Algerie (BNA).^ In addition to the $700

million raised by SONATRACH, and the $800 million raised

by the two state banks in Dec 1983, a number of other

substantial loans brought the total borrowing for 1983 to

$2,183.44 million, ten times more than in 1982. This put

Algeria well ahead of other Middle Eastern borrowers, 12 followed next by Iraq with $1.6 billion. Much of this

borrowed amount ($2,183.44 million) was seen by interna

tional bankers as being essentially for balance of pay

ments support. In 1985, the Algerian Internal Bank has

obtained two loans totaling $700 million from French banks

(Banque Lyons de Credit, Banque Nationale de Paris, and

Banque de Societe Nationale). SONATRACH obtained a loan 13 of $33.5 million from a Japanese bank.

**Ibid., p.18. 12 EIU, Quarterly Economic Review of Algeria 2 (London: The Economist Intelligence Unit, 1984), p. 14. 13 Asharq Al-Awsat, The International Arab Journal, May 22, 1985.

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A $128 million loan by the World Bank to finance a

major telecommunications development scheme was signed in

Algiers on Jan 1983 by the President of the World Bank,

A.W. Clausen, and the Algerian Finance Minister, Boualam

Benhamouda. The World Bank has now made 23 loans to

Algeria, amounting to $1,229 million overall, covering

projects in the fields of transport (roads, railways, and

ports), water supply, electrical energy, industry, agri- 14 culture, rural development, and education. In the next

few years the Bank's loans will continue to concentrate on

the development of the economic infrastructure. The Bank

is currently participating in the financing of the new

port at Jenjen near Jijel.

In recent years, Algeria has also come to rely on

Arab sources for an increasingly large amount of its

foreign borrowing needs. In 1983, the Jeddah-based Islamic

Development Bank provided a total of $106 million in loans

to finance imports of raw materials and intermediate

industrial goods. In 1984, it has already agreed to lend

a further $65 million for the same purposes and to put up

$10.8 million towards the financing of the Jenjen port.

In 1983, the Kuwait-based Arab Fund for Economic and

Social Development (AFESD) lent $120 million for various

projects, including the building of two hospitals at

Tiart, and an earthquake early warning system. In the

14 EIU, Quarterly Economic Review of Algeria 2, p. 13.

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same year it gave $41 million for the Jenjen project, and

an agreement has been reached on a $19 million loan to

Algeria's Banque de 1'Agriculture et du Developpement

Rural (BADR) for agriculture development projects.*^

According to AFESD officials, lending to Algeria is

expected to continue at about $20 million a year in 1985

and beyond. Substantial loans are also forthcoming from

the Saudi Fund for Development this year. In addition,

the Saudi government has put up $50.7 million towards the

Jenjen project; it is now lending $108.3 million to fin

ance the Ain Dalia Dam as well as the construction of a

railway link between M'sila and Bordj Bou Arreridj in

eastern Algeria. The Saudi government has recently grant

ed Algeria $143 million to finance in its entirety a

program of infrastructural projects at Ech-Chlef, formerly

El-Asnam, which was devastated by an earthquake in 1980.

As a result of this increased reliance on Arab sources,

Algeria and the United Arab Emirates (UAE) are to set up

an investment bank. Agreement in principal was reached on

April 1984.16

This reflected Algeria's continuing heavy debt ser

vicing burden and reinforced the expectations of interna

tional banks that Algeria would return to the Euromarkets

and Arabic countries for further large loans in the course

15 EIU, Quarterly Economic Review of Algeria 3 (1984), p. 18.

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of 1984. Although the balance of payments is improving

only slowly, the overall balance of 1984 and 1985 is still

in deficit. The IMF figures that the Algerian debt has

increased and reached $4.8 billion by the end of 1984. In

1982, the World Bank estimated that Algeria must borrow an

average of $3 billion annually in order to be able to

carry out all its industrial projects. Most of this money

is needed to finance the liquefaction plants, the develop

ment of gas fields, and the construction of pipelines. It

now looks certain that Algeria will need to raise further

loans in the course of this year.

At this point, we can conclude that there are two

main sources through which technology transfer is being

financed in Algeria. The first source is hydrocarbons

sales. Approximately 98 percent of all foreign exchange

earnings come from oil and natural gas. The hydrocarbons

sector (oil and gas) realizes 40 percent of Algeria's GNP,

represents 96 percent of the country's exports, and con

tributes to state revenues by more than 50 percent. For

example, the hydrocarbons sector has financed 47.4 percent

of the total cost of imported technology during the period 17 1962-76. In the last year (1984), oil and gas revenues

were expected to total 57 billion AD ($11.6 billion), down

$1 billion from 1983, and were to account for 54 percent

1 7 ' Marches Tropicaux et Mediterraneens 1809 (Juillet 1980) : 3395.

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of government income compared with 59 percent in the year

1983. The government intends to reduce imports to 48

billion AD ($9.8 billion) in line with the reduced hydro

carbons revenues, a reduction of 2 billion AD on the 18 actual imports total for 1983.

The second source is foreign aid or loans, either

through international organizations such as the World Bank

and the International Monetary Fund (IMF), or through

government and private banks in Canada and European coun

tries, and through the U.S. Eximbank. Despite some fluc

tuations in the smoothness of relations between the

Algerian government and the U.S. Eximbank, Eximbank finan

cing has been the largest single source of capital for

financing a wide variety of technology imports to Algeria.

Canada is providing a major credit for Algerian purchases

of capital goods. A C$542.5 million credit for Algerian

purchases of Canadian capital goods and services was

signed in Ottawa on April 1984. Algeria is Canada's

biggest customer in both Africa and the Middle East and

her eleventh most important trading partner worldwide.

Total Canadian sales to Algeria were C$380 million in 1981

and now reportedly stand at C$470 million a year. The

latest arrangement, comprising a principal credit of C$500

million and a complementary credit of C$42.5 million, is

18 EIU, Quarterly Economic Review of Algeria 1, p.10.

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to be drawn on over the next two years and is expected to

be used mainly for purchases of machinery.

Conclusion

Financing the process of industrialization in Algeria

is dependent and will become increasingly dependent on the

international financing market. The tendency of preceding

years was marked by shifting the direction of dependency

from Europe in general to the United States and Arab oil

countries. This dependency is explained by the augmenta

tion of loans Algeria obtains every year. Financing the

industrialization through foreign banking loans and credit

implies the integration of the Algerian economy into the

international system which is dominated by the capitalist

production and the imperialist interests of the interna

tional monopolists. This leads to the confirmation of our

research questions, that is, the thesis of the study that

there is indeed a contradiction between establishing

socialism and the participation of foreign capital in

financing development. Dependent development is unavoid

able if industrialization occurs under foreign capital.

Foreign Skilled-Labor Dependency

If the question of financing is of major concern for

Algeria as a capital-short country, so is the question of

foreign skilled manpower. This section will assess to

what extent Algeria is dependent on foreign skilled and

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professional labor, as well as to discuss educational and

training policies associated with technology transfer.

Some argue that the presence of foreign workers in a

developing nation is undesirable because it signifies

ongoing dependence on foreigners and may lead to political

and social unrest at home. Others argue that foreign

workers make an important economic contribution, and that

their presence is generally beneficial to the host nation.

A third view sees that since no nation can be completely

self-sufficient, the challenge is to utilize foreign

workers effectively, based on a realistic understanding of

both the problems which can arise and the potential con

tribution they can make. Although Algeria is different

from the Middle Eastern nations, particularly the

labor-short Gulf states such as Saudi Arabia and Kuwait

that have promoted policies to utilize foreign workers,

the Algerian economy suffers only from a shortage of

highly qualified and professional indigenous workers. The

question of foreign qualified workers, which is part of

the larger issue of dependence on foreign suppliers, is

still facing Algeria.

After independence, Algeria was faced with a lack of

skilled and trained workers. With the option of an indus

trial model, the needs for skilled and trained cadres

became enormous. Table 66 indicates the availability and

the scarcity of trained cadres in 1963.

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TABLE 66

AVAILABILITY AND SCARCITY OF CADRES IN 1963

Available Deficit

Directors of industrial enterprises 1,500 5,000 Higher staff and intellectuals 1,300 15.000 Technicians & heads of non-agriculture 8,400 35,500 Professional workers 39,500 45.000

SOURCE: Andre Tiano, La dialectique de dependance (Paris: Presses Universitaires de France, 1977), p. 75.

During 1966-1967, while the national economy was

dependent on 7000 foreign professional contractors, the

economy suffered from a deficit of 2500 persons at the

qualified upper level. At the qualified middle level,

where 20,000 of foreign contractors were active, the

deficit was 11,000 persons. During the three-year plan

(1967-69), the deficit at the qualified upper level was

7000 and at the qualified middle level 11,000 persons. The

population of the foreign labor force was 15,000 of higher

cadres and 10,000 of middle cadres. Industry alone,

excluding agriculture and service sectors, required 3000

persons of higher cadres. The need for higher cadres for

the metallurgical, metallic, mechanic and electric indus

tries increased from 541 persons in 1965 to 3,180 person

in 1973 (48% increase) . The need in the hydrocarbon

sector increased from 290 persons to 802 persons, and the

needs of the consumer industries (leather, textiles,

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alimentary) increased from 580 to 1,014 persons for the

same period.

In 1977, according to the Ministry of Industry, only

25 percent of the projects were executed under the author

ity of Algerian engineers, architects and technicians; 50

percent in the metallurgical industries; and 25 percent in

the construction industries. In 1979, 75 percent of

construction projects were entirely on turnkey-based

contracts, and 20 percent were achieved by foreign engin

eers. As regards the critical industries such as oil, all

projects were entrusted to the foreign engineering compa

nies which assumed the general responsibility for the

execution, namely French companies (ENSA, Technip, KREBS,

SOCEA); British (CJB); Japanese (Japan-Gasoline, Mitsui) ;

and Italian (SNAM, Progetti).

In 1977, the total of newly trained engineers and

qualified cadres in the applied science and economy was

under 1700. In addition, the deficit within the higher

cadres had tripled in five years, and the deficit in

middle cadres could not be reduced. If we consider the

availability of upper and middle cadres as an indication

for potential economic independence, the future does not

hold any significant improvement from the present situa

tion. The causes behind this situation lay in the system

of education as it related to economic development.

19 / H . Temmar, Structures et modele de developpement de l'economie de l'Alqerie (Alger: SNED, 1974), p. 252.

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Educational and Training System

Education and training are presented in Algerian

political literature as the third dimension of an indus

trial, agrarian, and cultural revolution. In reality, we

propose, education and training must be considered as

pre-conditions for independent economic development and

technology. Despite constant political attention devoted

to education, the reform policy of the university (1970),

and the progressive restructuring of the elementary and

high school educational system (1975), the Algerian gov

ernment has not been capable of directing the system of

education so that it would respond to the economic devel

opment demands.

Despite a significant increase in the budget of

education in the five-year plan by 10 percent of the total

investment, and a sharp increase in student enrollment,

the Algerian universities could not meet all the needs of

industry. The government began establishing several new

technological institutions adopted to Algerian needs with

the cooperation of American and European industrial firms.

These institutions were created in response to the urgent

need of the national companies for expertise and skilled

manpower. Training at all levels of the Algerian person

nel required for the proper operation of the plants became

a very important element in every contract that Algeria

carried out with foreign firms. In addition, students are

being trained abroad in increasing numbers.

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Besides the national educational system, at the level

of higher education, the Planning Ministry supervises an

"Institut de technologie de la planification et d'economie

appliquee" with a capacity for 500 students, and a "Centre

de formation de techniciens" with a capacity for 600

students. The Ministry of Finance controls an "Institut de

technologie des finances et de la comptabilite." The

Ministry of Work and Social Affairs runs, in turn, a

network of professional schools with a capacity for 15,000

students. The Ministry of Commerce directs an "Institut

de technologie du commerce." In addition, a system of

training and forming professional technicians has been

progressively put into operation by the Ministries of

Industry (light industry, heavy industry, energy and

petrochemical industry), and the national companies. The

latter presently run a system of technical training com

prised of 300 establishments with a capacity for 800

students; and a higher institute of management, INPED

(Institut National de Productivite et du Developpement).

The Ministry of Work and Social Affairs runs, in turn, a

network of professional schools with a capacity of 15,000

students.

Tables 67 and 68 present the real situation in 1978

concerning the upper and middle cadres, with comparison to

the estimated needs. The two levels of technicians and

managers are considered of primary importance. Referring

to Tables 67 and 68, the deficit of 41 percent at the

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higher level and 42 percent at the middle level, for

manufacturing industries, shows that a process of accumu

lation for technological innovation cannot take place in

the near future.

TABLE 67

DEFICIT OF QUALIFIED UPPER LEVEL CADRES IN THE INDUSTRIAL SECTOR (Units)

Real number Estimated of Estimated needs staff needs in in in Variation 1978 post Deficit % 1985 78/85

Petroleum and gas 5,300 3,000 -2,300 44 7,500 +2,200 Manufacturing industries 10,250 6,000 -4,250 41 21,000 +10,750 Goods for construction 650 500 -150 23 1,800 +1200 Electricity 400 350 -50 12 800 +400 Total 16,600 9,850 -6,750 41 31,100 +14,550

SOURCE: H. Temmar, Strategie de developpement independant: le cas de l'Algerie (Paris: Editions Publisud, 1983) , p. 196.

Taking the figures of 1977, with an annual growth of

2 percent, the total number of engineering and other

students preparing for a technical and economic diploma

within the period of 1978-1985, is about 13,000. In

reference to Table 67, we can establish the following

observations:

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TA B LE 6 8

DEFICIT OF QUALIFIED MIDDLE LEVEL CADRES IN THE INDUSTRIAL SECTOR (Units)

Actual Number of Estimated Qualified Percent Needs Workers Deficit

Petroleum 35,000 7,100 20 Manufacturing industries 42,000 17,700 42 Goods for construction 2,200 1,300 59

SOURCE: H. Temmar, Strategie de developpement independant: le cas de l'Algerie (Paris: Editions Publisud, 1983) , p. 197.

1. The total number of qualified upper cadres avail

able in 1985 is 13,000 + 9,850 = 22,850, compared with the

estimated need of 31,100 (Table 67, column 5). The

deficit of 1985 is, therefore, 8,250, or 27 percent

2. The growth of the total need for upper cadres be

tween 1978 and 1985 is 14,550 (Table 67, column 6), com

pared with the total available of 13,000. The deficit

will be 1,550, or 12 percent

It seems that despite the great efforts devoted to

training and education, the system seems unable to reach

the stage of innovation in the near future. In fact, the

established system is unable to satisfy the actual needs

of the industrial sector in terms of qualified managers

and skilled workers.

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It is for this reason that Algeria is presently in

the process of restructuring its entire educational sys

tem. The Ministry of Higher Education and Scientific

Research was founded in 1970, and since then, the number

of institutes of higher learning has expanded rapidly. In

1978/79 there were 10 universities in Algeria, with a

total enrollment of over 51,000 students, and the plan

announced in 1980 called for 18 more to be built to accom- 20 modate an additional 54-72,000 students. This new

system began, in 1975, with heavy emphasis being placed on

vocational and technical education. One major reform is

the replacement of the existing primary and middle school

structure with a technical education of nine years,

consisting of three-year cycles; at the end of the second

cycle, those with a technical orientation are channelled

into pre-professional training schools. Those who com

plete the third cycle, and remain in the formal educa

tional system, may go on to an academic secondary school,

specialized technical school or professional training

school.

By the 1978-79 academic year, Algeria had 22 techni

cal schools, with close to 12,000 students enrolled in

them and over 1000 teachers. The 1980-84 plan allocated

approximately $11,000 million for training and education,

20 Middle East and North Africa (London: Europa Publi cations, 1982-83), pp. 277, 285.

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with close to $76 million for building professional cen

ters, and additional funds for building and equipping 268

training institutes and 300 vocational education centers.

Foreign assistance in expanding training and vocational

educational centers and providing the necessary personnel

and equipment is also being utilized.

Several vocational training centers are currently

being built by Belgian and USSR contractors. A World Bank

loan of $87 million to assist in the construction of three

maintenance training schools, three industrial training

schools, and an institute for training maintenance trade

instructors is being considered, which would also provide

fellowships to train Algerians abroad.

In addition to technical institutes, professional

schools and vocational centers, Algeria has emphasized

developing technological institutes, conceived in 1964 as

a solution to the shortage of qualified middle level and

senior technicians caused by the departure of the French

in 1962. These technological institutes are intended to

attract those who have never had access to formal educa

tion, as well as drop-outs or failures from the tradi

tional educational system. For example, the INELEC (the

Institut National d'Electricite et d'Electronique) was

established with the cooperation of American universities

and industrial firms in March 1976 to serve as an insti

tute for training Algerians in electrical engineering and

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electronics. The American contractor, Education Develop

ment Centre (EDC), had the responsibility of recruiting

professors and training Algerian teaching staff; in 1978,

there were 300 students enrolled.

Educational and Training Policies

Despite the efforts made by Algeria to emphasize the

importance of "indigenizing" technology development, in

gaining not only technology products but the expertise to

properly operate, manage, maintain advanced technology,

and sustain technological development, the policy of

training local labor in Algeria has demanded at least

temporary reliance upon foreign personnel in each of these

efforts to transfer necessary skills.

The policy of Algeria views a trade-off between the

desire for rapid economic development and the aim of

indigenizing the labor force, which will shape that devel

opment in the future. Here the key policy issue has been

one of emigration of indigenous skilled personnel to other

countries, and better utilization of trained manpower at

home. The policy of Algeria has been directed toward two

goals: upgrading the quality of the indigenous labor

force in order that it may substitute for imported skilled

workers, and controlling the size and composition of the

foreign labor force, considered necessary for technology

transfer and economic development.

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Naturally, policies oriented toward education and

training of the indigenous labor force have an impact at

the project level and on society at large. The former

includes laws and regulations which require companies and

government to train indigenous personnel in various areas

of project operation and maintenance. The latter includes

policies designed to expand education and training —

particularly vocational and technical training — at home,

and encouraging indigenous students to study abroad. At

the project level, in 1963, a governmental decree was

issued to oblige all state and private companies that

employ more than 100 workers to create centers and estab

lish a general training program. Algeria has established

regulations which require foreign companies to train

indigenous workers, so most of the contracts with foreign

firms include an arrangement for professional training

programs. Although regulations governing foreign partici

pation have not yet been developed in Algeria, the country

has begun to move toward a stricter foreign employment

policy.

Despite the emphasis placed on indigenous training in

Algeria, there is little direct control, and policies are

so far not well-defined. Policies governing foreign

employment are just now being shaped, as the number of

foreign personnel in Algeria has grown rapidly. The

importation of foreign personnel to operate and construct

new facilities and plants has been growing in Algeria, and

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concern has grown that this has been at the expense of

developing indigenous expertise. While this would be

difficult to assess, by 1978, more than 86,000 foreign

technicians were employed in Algeria. 21

New forms of contracts in Algeria have also empha

sized shifting the responsibility of training to a foreign

contractor, but so far the terms for doing so have varied

from contract to contract. Algeria is only beginning to

articulate specific policies in this regard, but most

observers in Algeria feel that the issue of training

Algerians in the maintenance of plant and equipment is

crucial.

The 1980-84 plan indicates Algeria's intention of

using alternative methods of reducing its dependence on

foreign skilled labor. The plan provides for a national

program to encourage on-site training. The government

also intends to enforce more technology transfer require

ments in contracts, such as requiring the contractors to

train local staff to run the plants that they establish.

This is a relatively new aspect of contracts that has

developed out of a dissatisfaction with turnkey contracts,

wherein plant and equipment have been provided without the

expertise to operate them. For example, in the Societe

Nationale de Siderurgie (the Algerian Steel Company),

21 J. Minces, L'Alqerie de Boumediene (Paris: Presses de la Cite, 1978), p. 50.

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Algerians operating the steel mill will be replaced tempo

rarily by Japanese production workers, with the hope that

Algerian workers will learn by observing the correct

methods of operating the mill.

On a broader level, as the critical role of foreign

workers has become a more important policy issue in

Algeria, so has the issue of expanding education and

training more broadly. This has been evident in the last

few years. In light of rapid technological change,

Algeria has been placing increasing emphasis on vocational

and technical training to allow the indigenous population

to assume the main role in developing its own society.

The main components of this policy have been twofold: to

expand the system of technical training at home, often

with foreign assistance and, in the temporary absence of

indigenous technical training, to send students abroad

under government-sponsored programs. In short, the scope

of policies to train local personnel is extensive, ranging

from regulations of project training to expansion of

general vocational and technical training for indigenous

cadres, both at home and abroad.

Despite these efforts, however, a number of problems

have been associated with this policy. First, in Algeria,

most of the indigenous labor force is concentrated in the

government or in service sectors of the economy, with

relatively small proportions entering the scientific and

technical fields. This has been due mainly to two

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factors: (1) a lack of wage and other salary incentives

to enter the more technical fields; and (2) an attempt to

avoid many kinds of industrial manual labor, which has

extended to many of the technical fields, even in the

light of the growth of technical institutions. This

question of inadequate incentives to attract the indige

nous population to more technical sectors has affected the

distribution of trained personnel once they have graduat

ed. The first problem which stands out is the question of

providing incentives for indigenous personnel to enter

these technical institutes and fields, and matching train

ing with manpower needs. Algeria should realize that none

of these programs can be successful unless there are

incentives for the local populations to participate.

These might include monetary incentives, such as offering

higher scholarships for technical study or higher wages in

technical fields; smoother job placement through links

between technical institutions and universities and places

of employment; and better efficiency in job placement

programs overall.

The second problem, associated with students studying

abroad, is the fact that many students choose not to

return home. In 1977, for example, 1,000 Algerian stu

dents had been sent abroad to the United States and else

where to be trained in gas and petroleum technology and

civil engineering. Although most of these trainees were

obliged by the Algerian government to return home after

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their period of study, it was estimated that 70 percent of 22 them never returned to Algeria.

The third problem is the question of migration. Even

though Algeria seems to have a better potential of skilled

manpower, due to emigration, skilled technical and profes

sional labor, nonetheless, is in short supply. Emigration

of indigenous manpower has often meant a loss of highly

skilled personnel, and has therefore often caused severe

manpower shortages in certain sectors and occupations at

home. In Algeria, there has been increasingly more debate

on the issue of migration, but few policies have been

explicitly formulated. The out-flow of migrants has been

almost as large, mainly in the direction of France.

Algeria's traditional policy of preferential treatment for

capital intensive high-technology industries resulted in

structural unemployment and underemployment. During the

latter part of the 1970s-1980s, upwards of 30,000 skilled

and unskilled Algerian workers have been leaving Algeria

each year in hopes of finding employment in France. While

this has become a worry for Algerian planners, no over

arching policy has as yet been articulated. Reducing the

number of foreign skilled labor will remain a long-term

challenge.

22 OTA, Manpower and Training in Algeria (Washington D.C. , OTA, 1982) , p. 10.

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The fourth and last problem associated with this

policy is related to controlling the foreign labor force

associated with technology transfer. Although foreign

manpower is in demand, too much foreign labor is viewed as

a negative phenomenon both economically and politically.

The impact of worker migration has been especially criti

cal in Algeria, where the costs of losing skilled labor

for the domestic economy must be balanced by importing

foreign skilled labor.

Conclusion

Despite these efforts, many problems remain, and

these policies will continue to demand revision and re-

evaluation in the years ahead. Ultimately, we can make

three main general remarks:

1. The Algerian educational system must be recon

structed on the basis of efficiency and openness toward

the world economy. The call for establishing technologi

cal institutes is the first step toward reconsidering the

system of education

2. The scarcity of higher cadres brings another

consequence. The qualified middle cadres will assume the

higher responsibilities without adequate qualifications.

This situation has resulted in a reduction in the quality

and efficiency of production and in the low level of

innovation

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3. Incentives are essential for indigenous personnel

to enter technical institutes, for the success of educa

tional programs, and for the participation of local

skilled manpower

Algerian Socialism

The concept of "socialism" became a common reference

in the Algerian literature only during the armed struggle

against French colonialism. The first document to intro

duce the concept of "socialism" was the Tripoli program

that was adopted by the National Revolutionary Council in

June 1962. This program proposed that the peasants and

the working class form the active base of the revolution

and the ones who give the revolution its popular charac

ter. The organization of the political power and the

economic strategy must be established for the benefits of

these social classes.

According to this program, the tasks of the Algerian

democratic revolution are immense. These tasks cannot be

accomplished simply by one social class, regardless of its

degree of engagement. It is only the people who can

accomplish them efficiently. The meaning given to the

concept "people" here is synonymous to that of "working

classes." "People" was used as a multi-dimensional con

cept at the time of independence:

1. To help mobilize the Algerian people and secure

the direction of the FLN after independence

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2. To assist the country in the working of large

units of production abandoned by French owners, and to

protect the Algerian firms from the destruction by the OAS

(Organisation de l'Armee Secrete)

3. To help bring to political power those who are

totally devoted to socialist ideas

According to the National Charter of 1976, the term

"socialism” was defined as "a theoretical aim and strategy

that takes into account the reality of each people and

implies the rejection of all dogmatism...and the rejection 23 of exploitation of man by man." In this view, socialism

becomes a rational, pragmatic tool for development and

justice. It is more of a device than an ideology.

This general and imprecise definition of "socialism"

had served to justify socio-political choices. It became

a reference for justifying:

1. The establishment of autogestion as a more demo

cratic social organization (1963-1965)

2. The static and centralized institutional model of

organization (1965-1967)

3. The establishment of socialist forms of auto

gestion at the state enterprise level (1977)

At the Tripoli conference, the FLN confirmed that the

popular democratic revolution is the identity of the

23 * Front de liberation nationale. Projet de charte nationale (Alger: El-Moudjahid, 1976), p. 4.

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country. In order for the development of Algeria to be

rapid, harmonious, and oriented toward the satisfaction of

people's needs, it must be put within a socialist frame

work. In the following years after independence, the new

constitution made the notions of "democratic socialism"

and the "struggle against the exploitation of man by man"

the main principles of the new Algerian democratic and

popular republic.

Generally speaking, Algerian socialism has two essen

tial characters. First, it is a national socialism,

inseparable from the struggle of national liberation.

Accordingly, for every revolution to be socialist it must

first be nationalist. The Algerian nationalists distrust

foreign models. The importation of foreign socialism is

condemned and considered anti-nationalist, because the

adoption of any foreign concept of socialism will contra

dict the socio-cultural traditions of the country. This

is especially true in Algeria, which is strongly attached

to the traditional values of the Arab world. With respect

to anti-imperialism, Algerian socialism was presented as

an example for the Third World nations that struggled

against all forms of neo-colonialism and fought for the

establishment of a new international economic order which

would respect the aspiration and interests of the develop

ing countries.

Second, it is a pragmatic socialism. According to

the Charter, Algerian socialism is a practical one rather

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than an ideology, a doctrine of action and not an

intellectual speculation. Therefore, socialism was seen as

a means of transforming the socio-economic conditions of

the Algerian population.

After the coup d'etat that brought Boumediene to

power in June 1965, the Revolutionary Council decided to

adopt a trend of socialism that conformed with the reality

of the country. Boumediene noted that "it is the Algerian

people...who have chosen socialism, and it is the Algerian

conditions that imposed socialism as the best way for the 24 future." This political choice was emphasized later in

the National Charter of 1976 in which the principles of

Algerian socialism were defined.

Overall, the regime of Boumediene has introduced the

three major modern ideologies: nationalism, socialism,

and democracy. It stated as its goal the creation of a

society that would be industrial, socialist, democratic,

productive and egalitarian. However, the gaps between the

statements of goals and on-the-ground performance have

been many, substantial, and increasingly apparent. These

gaps have led observers to criticize Algerian economic

development policies, and to dismiss Algerian pretensions

to democratic and socialist status.

24 H. Boumediene, cited in A. Bennamane, The Algerian Development Strategy and Employment Policy, 1980, p. 65.

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For example, until 1974, the realization of Algerian

socialism was still partial and limited. Boumediene's

regime did not, in the name of the unity of the Algerian

people, reject completely the emergence of a bourgeoisie

at the national level. He admitted in October 1974 that

"Algeria is not yet a socialist country." The ideology

remained vague to the extent that everybody could find in

it what they were looking for. The rationality of techno

crats was promoted, the control of the petty bourgeoisie

and bureaucrats was increased, and the Arabic traditions

had to be respected. It appears that Boumediene took a

reformist position and socialism was understood simply as

a means of non-capitalist development.

Left-oriented analysts have classified the Boumediene

era as an example of petty bourgeois dominance (Lazreg's

book was based on this view). The left has argued that a

coalition of military officers, senior bureaucrats, and

petty bourgeois political leaders inherited political

power. While not owners, they have become controllers and

regulators of the means of production. The state control

is justified because they claim that their aims are to

promote socio-economic development in the public interest.

In reality, the coalition has produced a system of state

capitalism in- which its members are the major benefici

aries .

After the death of President Boumediene in December

1978, although socialism remained a component of the

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Algerian ideology, it was evident that the concept had to

be redefined. The debate on socio-economic questions

required an ideal socialism that rejected (1) the authori

tarian government exercised by bureaucratic entities such

as the party and administrative directors, (2) the dicta

torship of bureaucracy, and (3) poverty. However, the

socio-economic and political tendency under the Bendjadid

regime has pointed in the other direction. The question

to be addressed should not be the classical one: Is

Algeria a country well embarked on a transition to social

ism, or is it a socialist country? The evidence offered

to support this claim, which consists of the nationaliza

tion of most foreign firms, the introduction of central

ized planning and non-market pricing mechanisms, the

popular assemblies installed at the communal and provin

cial levels, the workers' participation scheme placed in

state-controlled industries, and the agrarian reform

movement, have not been supported by any concretely so

cialist actions. In theory, this perspective, which

distinguishes the Algerian socialist organization from

Western capitalist systems, seems superior, but the super

iority of the Algerian approach is asserted rather than

demonstrated. Since the gaps between Algerian participa

tory theory and elite-dominated reality are so obvious,

the Algerian people have no role in participating in

decision making. The principle of participation has not

been applied, and the bureaucrats will not allow the

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"laboring masses" to control the bulk of the affairs of

state. Why are the Algerian working classes not yet ready

to assume this control? The general response is that

their natural development was hindered by capitalist

colonialism during the French occupation and by the petty

bourgeoisie and bureaucrats after independence. Implemen

tation of participatory programs and more equitable dis

tribution of the social product might shift power to the

emerging proletariat. But it is in the interest of the

ruling coalition to prevent this kind of change. Its goal

is to maintain the present intermediary situation.

The question that therefore should be answered here

is: Is Algeria state-capitalist, or is it moving toward

the final stage of a capitalist social formation? The

Algerian state, by means of centralized resource alloca

tions and fixed prices, and the marketing of most major

and industrial commodities, is state-capitalist. In fact,

90 percent of all Algerian industry is state owned and

operated. However, the Algerian private sector is now

growing under the Bendjadid regime. The extent of

Algeria's involvement with the western capitalist system

permits us to view Algeria as being on the road to submis

sive integration into the capitalist world economy. There

are some signs which indicate that the Bendjadid regime is

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indeed moving in a more liberal, market-oriented direc

tion. All sections of the left agree that the continua-

tion of the present situation will not and cannot lead to

the creation of anything resembling a socialist society.

Deviation from Socialist Theory

The first deviation is the retention of private

property. According to the Charter, in order for a soci

ety to be socialist, it must "abolish private ownership of

the means of production and...declare the end of exploita- 25 tion of man by man." However, the private sector has

continued to exist in Algeria. The Charter warns: "It is

clear that the maintenance, in industry, construction,

tourism, etc., of a private sector will always constitute 2 6 a potential risk for the resurgence of capitalism." The

Charter also states that "it is a matter of leaving to

private initiative the possibility of acting in a socially

useful sense, and of allowing private entrepreneurs to

receive a reasonable and satisfactory remuneration for 27 their activities."

The second deviation is that, in Algeria, socialism

can be created without the divisive conflict of class

struggle. This concept is said to apply only on the

25 Proget de Charte, p. 6. 26t, . , Ibid.

27Ibid., p. 22.

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international level; Algeria and other third world coun

tries are, as proletarian states, struggling against the

bourgeoisie and the industrialized west. Therefore,

internally the concept cannot be applied:

1. Because of the circumstances of settler colo

nialism, which prevented the growth of either an Algerian

national bourgeoisie or an Algerian working class

2. Because of the persistent historical need to

maintain trans-class unity in the war of liberation

3. Because the existing classes-who are indispen

sable for economic production-are nationalist and thus

make divisive class struggle simply unnecessary

Algerian socialism turns out to be socialism without

historical materialism, socialism without class struggle

and, in the final analysis, socialism without Marx.

The third deviation concerns the question of partici

pation in decision-making, either economically at the

level of socialist management or politically at the level

of political organizations. Economically, a worker said,

"You tell me, the people should be in control. How am I,

a worker, going to control our director general? I have

never laid eyes on him; I don't even know what he looks 2 8 like." Another worker said, "The idea [popular control]

28 El-Moudjahid (National Daily Newspaper), Mav 13. 1976, p. 4.

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is good, but experience shows us that sanctions are gener

ally limited to minor bureaucrats who serve very often as

scapegoats. Those truly responsible manage to get out of 29 the situation and preserve their interests." In mid-May

1976, a meeting of the national commission on socialist

management was called to discuss the implications of the

Charter for the development of socialist management. The

vice-president of the commission stated, "It is neces

sary... to ban the term participation, because the workers

are not participating in power, but rather are confused by 30 it." Politically, between 1965-71, the building up of

the state structures was accompanied by the neglect of the

institution of popular participation in political affairs.

The party, the union movement, the student organization,

the self-managed farms and industrial units, the national

assembly, none of these had been participatory either in

the Ben Bella or in the Boumediene regimes. It seems that

no substantive change has taken place at the micro-level:

on the workshop floor, in cooperatives, and economic

enterprises; nor in popular assemblies, or party cells.

The fourth and last deviation is the unavoidable

linkage with the world capitalist system. For example,

the aim of the first official visit by any Algerian leader

to Washington since the country became independent 23

29 El-Moudjahid, May 12, 1976, p. 7. 30 El-Moudjahid, May 18, 1976, p. 3.

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years ago was to enhance relations with the United States

and to discuss the possibility of Algeria's purchasing

U.S. arms. According to the Algerian Ambassador, Mohammed

Sahnoun, Algeria was interested in purchasing U.S. weapons

to reduce its dependency on its longtime main arms suppli

er, the Soviet Union. In the past, Algeria has been

accused of excessive military dependence on Soviet bloc

countries. Since its eight-year struggle for independence

against France, Algeria has acquired 80 to 90 percent of

its arms from the Soviet bloc, although some recent pur

chases have been made from France, West Germany, and Brit

ain. According to the Washington Post, the number of

Soviet military advisers attached to the Algerian armed

forces has dropped from a high of around 3,000 to about

1,200. Bendjadid admitted that the reduction in Soviet

military personnel is expected to continue as Algeria 31 masters foreign weapons systems. Bendjadid's visit to

Washington is the logical outcome of Algeria's gradual

shift from revolutionary positions both at home and

abroad. It is also the strongest evidence to date of the

changing Algerian foreign policy under his leadership

since 1979. One can say that the Algerian president's

visit to the United States is a symbolic milestone in the

country's gradual transition from a revolutionary transi

tional-socialist state to a nation seeking to associate

31 The Washington Post, April 14, 1985, p. A-30.

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its primary interests with the capitalist bloc. It is the

most visible illustration of Algeria's shift under his

seven years of leadership toward closer relations with the

West in general and the United States in particular.

Conclusion

Since 1962, three different Algerian regimes have

consistently claimed as their main goal the construction

of a socialist system. Even those who have admitted

Algeria's pretensions to be of socialist or in-transition-

to-socialist status would still classify the Algerian

approach as interventionist or, in the apt French term,

"dirigiste." Due to the growth in size and power of the

bourgeoisie and bureaucratic strata in Algerian society,

the shortcomings of participation mechanisms at all

levels, and the unavoidable linkages with the world capi

talist system created by Algeria's export-oriented indus

trial ambitions, the present study confirms the hypothesis

that the bourgeoisie and petty bourgeoisie have become the

dominant class in Algerian society, and that it is this

factor which accounts, ultimately, for the performance of

Algerian economic development and industrialization. This

research confirms the main thesis of the study that

throughout the actual process of industrialization,

Algeria is experiencing dependent capitalist economic

development.

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OBSTACLES TO ECONOMIC DEVELOPMENT IN ALGERIA

In this chapter we will identify briefly the funda

mental problems that Algeria inherited from French colo

nialism. We will also identify the major obstacles to

economic development in Algeria, knowing that most of

these obstacles have been created by the process of indus

trialization and economic development itself throughout

the course of application.

As a consequence of the departure of most Europeans,

Algeria was left in the post-independence era with major

problems. For example, insufficient industrial planning,

management, and technical experience; an inadequacy of

local skilled labor; absence of equipment and capital; a

high rate of unemployment; and a domestic market composed

largely of an impoverished rural peasantry and urban

proletariat. After independence, the country decided to

carry out a policy of rapid development based on hydro

carbons and heavy industrialization in order to overcome

these problems. However, despite the efforts of develop

ment during the twenty-two years, Algeria is still facing

some major obstacles to its economic development and

337

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industrialization. These obstacles can be summarized as

follows.

Population Growth

The massive increase of the population (3.3%) imposes

massive social obstacles to economic development, with

tremendous effects upon education, housing, medicine, and

employment. Although the government is mobilizing an

alternative strategy to limit overcrowding, by educating

households that their quality of life would improve with

fewer children, demographic pressures continue to put

intolerable stress on the existing infrastructure. In the

longer term, the World Bank's World Development Report for

1984 projects a population of 39 million by the year 2000

at current fertility and mortality rates.

Migration

Since 1967, Algeria has witnessed a rapid internal

migration from the rural to the urban areas, from the

countryside to the cities. Movement of the rural popula

tion into urban areas is a result of the process of indus

trialization taking place in Algeria now. In addition,

stagnation of the traditional agricultural sector has

aggravated the situation. The expected flow of young

people 14-19 years old seeking further training and em

ployment will also constitute an important social problem

for the future of economic development. The movement of

Algerian skilled and professional manpower from the

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country to abroad, especially France, has also been

conceived as a major obstacle facing the economic develop

ment of the country.* New policies aimed at limiting

participation of foreign workers and loss of indigenous

skilled workers through immigration should be established.

Land and Climate Constraints

These obstacles to economic development can be seen

in terms of cultivable land and the availability of water.

The agricultural land in Algeria is characterized by low

rainfall. The scarcity of agricultural land relative to

rural population (7 hectares of cultivable land per rural

person) is another obstacle, although we believe that this

situation was aggravated by the industrialization policy

that led to the transfer of thousands of hectares of

cultivable land into industrial zones. In addition,

Algerian agriculture has inherited from the colonial

agricultural structure a dualism which continues to exist

during independence: a sector oriented toward the market,

utilizing new technology and modern methods of exploita

tion, coexists with a sector of subsistence utilizing the

traditional methods. In the traditional sector, the lack

of water resources, the absence of fertilizers and the use

of traditional methods and equipment constitute the key

characteristics of this sector.

^Stephen Adler, International Migration and Depen dence (London: Gower Publishing Company, 1981), pp. 72-85.

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Secondly, as in the case of many rapidly developing

countries, Algeria has a growing water resource problem.

This is partly due to increasing domestic demands for

fresh water, and partly to the competing needs of the new

industries and agriculture which still accounts for 80

percent of total water consumption. As a result of delays

in implementing projects since the introduction of the

first four-year plan (1970), extreme shortages of water

have built up in all economic sectors. Shortage of water

supply remains one of the main obstacles to the economic

development in Algeria.

In order to make effective use of the country's

agricultural potential, future development must take into

account the development of water resources and irrigation,

the abolition of agricultural dualism, the protection of

cultivable land, and the proper exploitation of the three

main usable land areas of the country: the steppes (les

hauts plateaux), the high plains, and the tell (the coast

al region: Chelif, Mitidja, and Annaba plains).

Mismanagement and Organization

Inadequate management and organizational structure is

another obstacle to economic development in Algeria.

Despite the special attention given to the problem of

management by the government under the Boumediene regime,

Algerian management is still characterized by unorganized

and inefficient decision-making. Boumediene himself

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admitted this fact in a 1977 speech: "In truth, the

problem of the management of the economy, and more partic

ularly, of production and service units, will constitute

our major concern for the coming years.... This will be 2 the priority task of the government."

Confusion of authority or legitimate control in

different social and economic apparatuses constitutes a

situation characterized, in general, by inadequate and

unorganized management, resulting in delays of salary

payments, big account deficits, poor commercialization,

unreliable financial transactions, an inefficient methods

of communicating information, near-total absence of coor

dination, and unavailability of spare parts. This situa

tion, of course, has led to a very low level of productiv

ity and poor quality. Management inefficiency resulted in

a tremendous delay in industrial plants. Besides the

population growth, migration, land, and climate obstacles,

the managerial and organizational structure imposes anoth

er obstacle in the way of Algerian economic growth.

Changes for more efficient and organized management, a

profitable public sector, proper professional training, a

well organized financial system, and clear work procedures

are urgently needed.

2 El-Moudjahid (National Daily Newspaper), March 21, 1977, p. 4.

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Underutilization of Technology

The adoption of the model of "industrializing indus

tries" of economic development and the intensive importa

tion of foreign technology brings about the phenomenon of

underutilization of technology. In addition, the intro

duction of foreign technology has contributed to the

maintenance of domination and subordination relationships

in the workplace.

Making existing industrial capacities profitable is

still a critical problem. In the case of Algeria, the

experience shows that technology is not fully utilized.

The main reasons for underutilization of foreign imported

technology are the lack of industrial experience, the

delays in establishing the necessary supporting infra

structure, and the shortage of technical and managerial

personnel and skilled manpower.

Skilled Manpower

With the independence of the country, Algeria found

itself in a big shortage of trained cadres. With the

adoption of the "industrializing industries" model of

development, the needs for skilled manpower became enor

mous (see Tables 66, 67 and 68).

The country's lack of skilled manpower is still one

of the major obstacles to the Algerian economy. This need

is being addressed, in part, by sending large numbers of

Algerians overseas for training, and, in part, by asking

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foreign participation in turnkey and joint venture pro

jects to provide the required training. It is also being

addressed by borrowing more many to achieve these goals.

For example, the World Bank in 1977 advanced $45.5 million

out of a $111 million contract toward a technical training

program. This program is designed to correct shortages of

middle management and skilled labor. Over the period

1973-1978, the value of foreign "technical assistance"

alone has cost Algeria no less than DA 30 billion and has

represented a further major drain on its foreign exchange

resources.

Foreign machinery and technology does not consist

only of the purchase of technical units, but a technology

that requires the know-how for its use, maintenance, and

repair or replacement. These factors make it necessary

for the country to be more dependent on foreign skilled

labor, and to maintain a continuous relationship with the

foreign experts and professionals. The increased demand

for foreign technicians, professionals and qualified

workers, as a result of the industrialization policy, has

aggravated this situation.

A way out of this situation lies in the shift to

light industry and in the training of a large number of

high-level Algerian technicians capable of innovation.

The means of research must be at the top of economic

growth priorities. Plans to attract back to Algeria the

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most skilled of the large emigrant population in Europe

must be worked out.

Capital Shortage

In addition to the underutilization of technology and

the limitation of local skilled manpower, another strong

obstacle to the country's development has been the

shortage of capital. Unlike major Middle East oil pro

ducers, Algeria has not generated oil income on a scale

sufficient to finance its extensive development plans. It

has therefore had to seek foreign loans to finance many of

its projects. For example, by 1978 debt servicing repre

sented no less than 25 percent of the current value of

exports. This high debt service has been a major obstacle

to the country's development, particularly since repayment

on existing external debts has amounted to about DA 80

billion over the period 1980-84.

Underdeveloped Infrastructure

Due to the priority given to hydrocarbons and the

application of an intensive industrialization policy, the

development of infrastructure has been neglected for the

past two decades. Emphasis on developing one sector, of

course, by definition demands drawing resources away from

another. As a result, the country now is facing a housing

crisis, education that has failed to provide the necessary

trained manpower, insufficient medical care, undeveloped

transportation network, and inadequate roads and railways.

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For example, the housing crisis is not due only to the

lacking of construction materials and entrepreneurs, but

also due to the priority given to investment in the indus

trial sector. The absence of a well developed infra

structure has conceived one of the major obstacles to

economic development of the country. Special attention

and more investment in the economic and social infrastruc

ture is required if industrialization is to take place.

Class Structure

Due to the denial of workers participation in deci

sion making and the distance placed between them and the

means of production, a total disinterestedness and the

loss of a sense of security among the workers has been

generated, which has a direct effect on production. The

permanent confrontation between the bureaucratic bour

geoisie and the workers at different levels of social and

economic apparatuses has prevented the development goals

to be achieved.

For example, Gerard Chaliand, in his work Mythes

revolutionnaires du Tiers-Monde, dismisses Algeria's

socialist pretensions and indicates that the bureaucrats,

acting as managers for the interests of the bourgeois 3 class, have excessively centralized the state apparatus.

The linkage of the national bourgeois interests with the

3Gerard Chaliand, Mythes revolutionnaires du Tiers- Monde (Paris: Sevil, 1976), p. 152.

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interests of the international monopolists; created by

Algeria's export-oriented industrial ambitions on one

hand, and the dependency on technological imports on the

other hand; has prevented Algeria from achieving a real

economic development and self-sufficiency. A new society

cannot be developed using methods and structures that are

part of the development of capitalism. Any reform without

total structural transformation, organizational and soci

etal change, and workers participation in the political

and economic decision making will not lead to sound eco

nomic development. Thus, workers must continue their

struggle and not simply demand material benefits, but

realize that capitalism is the enemy of their well-being.

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CONCLUSION

In this study, we have discussed the process of

industrialization and economic development taking place in

Algeria over a period of twenty-two years (1962-1984) .

The process of industrialization and economic development

is analyzed from the perspective of political economy and

viewed within the international economic order, whereby

the major external economic factors in shaping Algerian

industrialization have been discussed. The focus of this

study has been the process of industrialization and eco

nomic development in Algeria in a comprehensive sense.

Planned economic development in Algeria began with

the three-year plan (1967-69), which represented the first

phase of a long range development program running into the

19 80s. The three-year plan was followed by the first

four-year plan (1970-73) and the second four-year plan

(1974-77). The two succeeding years, 1978 and 1979, were

viewed by Algerian officials as a period of transition

during which attempts were made to complete the many

projects started during the first and second four year

plans. The first five-year plan followed as another step

in the economic development of the country. All these

347

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economic development plans, without exception, have empha

sized the establishment of a capital-intensive industry,

involving hydrocarbons, iron and steel, chemical, and

engineering, to serve as a basis for economic growth and

industrialization.

It is clear from discussing the oil, natural gas, and

petrochemical industries that the hydrocarbons sector is

perceived as a vital base for establishing industrializa

tion. It was given the top priority in terms of budget

allocation. In fact, a very substantial proportion of the

investment in industry to date has gone into the hydro

carbons industry, which still provides over 80 percent of

the country's foreign exchange earnings and as much as 90

percent of the government's domestic revenues (see Graph

1) . Algeria seems to deal mainly with the capitalist

block. Most of its oil and gas exports go to West Europe

and North America (see Table 25); all its liquified natur

al gas plants have been constructed by European and Ameri

can firms (see Table 33) ; its main gas customers are

France, West Germany, Italy, Spain, the United Kingdom,

Belgium, the United States, and Canada; and finally, most

of its ongoing oil and gas contracts are carried out with

West Europe, Japan and North America (U.S. and Canada).

The hydrocarbons sector is strongly dependent on the

international market (capitalist block) in terms of ex

port, plants construction, and contracts.

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Although recently the hydrocarbons industry has known

some integration from the production point of view, the

integration hoped for by policy-makers between the econom

ic sectors, such as industry and agriculture, has yet to

occur. The thesis of De Bernis, which was based mainly on

the development of "industrializing industries" (heavy

industry and hydrocarbons) as a means for an integrated

and independent economic development, has led to the

opposite result. That is, the development of the hydro

carbons sector was achieved at the expense of other eco

nomic sectors, such as agriculture and infrastructure,

which resulted in (1) uneven economic development, as we

have already seen in Chapter VIII; and (2) the formation

of a new social class, the petty bourgeoisie. This new

social class is a product of the industrialization process

taking place in Algeria (see Figure 3).

This study also confirms the dominance of heavy

industry in the national economy. Heavy industry alone

represented 34.9 percent of total industrial production in

1975. This percentage has increased in recent years.

Algeria's main development efforts to date have been in

industry (including hydrocarbons) which has received over

60 percent of all the investment made since the start of

the first plan (the three-year plan of 1967-69). Algeria

is indeed moving toward greater promotion of capital-

intensive industry, rather than large-scale labor-

intensive industry (see Graph 6).

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According to Benissad, the branches of heavy industry

are strongly dependent. For example, the rate of foreign

dependency in the construction material industries is 50.9

percent. This rate of dependency has increased during

recent years because of the increase in cement demands.

It will be even greater when all national demands have

been satisfied. The metallurgy, mechanical and electric

industries, which are responsible for importing heavy

machines and equipment needed for rapid industrialization,

are strongly dependent on foreign countries. The coeffi

cient of foreign dependency in these industries reached

76.3 percent.1

Therefore, De Bernis' thesis that the development of

heavy industry (including hydrocarbons), which produces

the means of production rather than consumption goods,

will lead to an independent national economy and indus

trialization, is not valid. As a matter of fact, con

centration upon developing heavy industry has led to two

results. First, the neglect of agriculture and infra

structure has created uneven development; and second, the

national economy and industrialization have become more

dependent on the neo-colonialist economy and further

integrated into the international capitalist system.

1 ' ' M.E. Benissad, Economie du developpement de 1 1Algerie (Paris: Economica, 1979), p. 140.

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With regard to light industry, the degree of foreign

dependency is in general less than that of heavy industry.

In the textile branch, the coefficient of foreign depen

dency is 6.6 percent, which proves that substitution for

imports has achieved a high level in this branch of indus

try, although Algeria still imports cotton and some fin

ished textile products. In the leather and shoe indus

tries the substitution of imports is very advanced, and

the coefficient of imports is no more than 2.7 percent.

In the agro-alimentary industries, the coefficient of

foreign dependency remained somewhat high at 26.2 percent.

Finally, in the chemical industry, the coefficient of

dependency has remained high at 6 0.1 percent (see Graph

3) .

This dissimilarity in degrees of foreign dependency

among the different industrial branches is explained by

two factors: the lack of local input and the complexity of

technology needed to put the industry into operation. For

example, substitution of imports in the pharmaceutical

industry (chemistry branch) is more difficult because of a

lack of input (raw material) and know-how, than in the

shoe industry (leather branch), where the input is avail

able and know-how is easy to obtain. Another factor

determining the trend of substitution is that state policy

is stricter with regard to imports in the light industry

sector.

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Concerning the structure of investment in agricul

ture, this study argues that agriculture has been consis

tently misrepresented. Algeria's three-year plan allo

cated investment totaling DA 12 billion, of which DA 5,400

million (or 42.8%) went to industry and only DA 1,900

million (or 15%) went to agriculture (see Table 60) .

During the first four-year plan, total investment was DA

27 billion. DA 12,400 million (or 45%) was devoted to

industry, and only DA 4,140 million (or 15%) was directed

to agriculture (see Table 56). Algeria's second four-year

plan allocated investments totaling DA 110 billion. As in

the first four-year plan, industrialization continued to

receive top priority, with 43.5 percent of total planned

outlet, while agriculture received only 10.9 percent (see

Table 58 and Graph 4, which show the general investment

trends of industrialization and agriculture during the

last two decades).

Consequently, Algeria has imported a growing propor

tion of its food. In 1979, for example, it imported over

30 percent of its grain and milk, over 50 percent of its

eggs, 80 percent of its vegetable oil, and nearly all its 2 butter and sugar. Increasing rural-urban inequality,

rapid migration off the land, and uneven development were

the result. This is due not only to natural constraints

^COMET, The 1980-84 Algerian Five-Year Plan (London: Committee for Middle East Trade, 1981) , p. 25~.

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and lack of human resources, but to the industrialization

policy followed by the state (see Graph 5).

Algerian dependency is not only due to the country's

dependency on imported consumer goods and the essential

capital for industry, but also to the increasing importa

tion of foreign technology. Intensively importing foreign

technology, of course, has and will prevent Algeria from

being self-sufficient and creating an appropriate techno

logical environment and innovation. Moreover, all signs

indicate that technology transfer will continue as the

industrialization of the country progresses. This means

that reduced technological dependency on the industrial

ized countries is still far from being achieved in the

case of Algeria. Technology transfers did not create

enough jobs for the increasing labor force. This implies

that import promotion of advanced technology and employ

ment policies are in conflict, since importation of

advanced technology usually undermines the growth of

labor-intensive industries.

The findings of this study clearly show that indus

trialization cannot be achieved only by transferring new

technologies and establishing intensive industrial pro

jects, but rather by establishing the necessary infra

structure to receive this technology. Human resources

must be developed, engineering and design capabilities

must be created and expanded, existing research institu

tions must be improved, and productivity of national

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companies must be increased. When the technological base

of Algeria reaches this level, the country will become

better prepared to use and benefit from advanced foreign

technologies. Economic development is not only a matter

of importing new technology and techniques, but also

establishing a sound social and economic infrastructure

and using technology in a way that suits local needs. The

findings of this study suggest that since the technologi

cal base does not yet exist, the option of industrializa

tion and importation of advanced technology will not lead

to innovation, but will aggravate economic dependency, at

least for the middle term.

Financing the process of industrialization in Algeria

depends and will depend increasingly on the international

financing market. The preceding years were marked by a

tendency of shifting the direction of dependency from

Europe in general to the United States and Arab oil coun

tries. This dependency is explained by the augmentation

of loans Algeria obtains every year. Therefore, financing

industrialization through foreign bank loans and credit

implies the integration of the Algerian economy into the

international system, which is dominated by capitalist

production and the imperialist interests of the interna

tional monopolists. This leads to the confirmation of the

research questions and thereby to the thesis of the study

that there is indeed a contradiction between establishing

socialism and the participation of foreign capital in

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financing Algeria's davelopment. Dependent development is

unavoidable if industrialization occurs under foreign

capital.

In examining the educational system, this study

confirms that education has a direct effect on economic

development through the supply of trained manpower (e.g.,

entrepreneurs, technicians, managers, and skilled labor).

Existing education is seen here as a basic factor under

mining economic development. How can economic development

be achieved without skilled manpower to do the work that

economic development entails? One of the main factors in

determining economic development is the ability of the

educational system to provide trained manpower and the

skills required by various fields of economic activity.

In this respect, Algeria cannot, with the existing educa

tional system, provide the necessary skilled manpower.

This is due to the fact that Algeria's educational system

was not well organized and oriented toward its economic

goals. Few people with adequate technical, commercial,

and agricultural training enter the labor force. The

institutional infrastructure compatible with a changing

society is absent. The result is dependency upon foreign

skilled labor in major economic and industrial activities.

Although investment in education and vocational

training has been of major concern to the authorities

since independence, the priority has been on providing

locations for schools. Special emphasis must be put on

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improving the content of education, especially in higher

education, where there has been considerable under

fulfillment of past plans.

Since 1962, three different Algerian regimes have

consistently claimed as their main goal the construction

of a socialist system. But even those who have admitted

Algeria's pretensions to socialist or in-transition-to-

socialist status would still classify the Algerian ap

proach as interventionist or, in the apt French term,

"dirigiste." In light of the growth in size and power of

the bureaucratic strata in Algerian society, the short

comings of the participation mechanisms at all levels, and

the unavoidable linkages with the world capitalist system

created by Algeria's export-oriented industrial ambitions,

this study confirms the hypothesis that the petty bour

geoisie has become the dominant class in Algerian society,

and that this factor ultimately accounts for the perform

ance of Algerian economic development and industrializa

tion. This research confirms the main thesis of the study

that throughout the actual process of industrialization,

Algeria is experiencing dependent capitalist economic

development.

At this point, it is necessary to point out that

since 1980, policy has been shifting in favor of agricul

ture, social infrastructure (housing, education), and

light industry. An immediate effect of the new policy was

reflected in the annual development budget allocation

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for the financial year 1980. The allocation for heavy

industry was cut back to DA 7.8 billion, whereas light

industry, which is regarded as having a great impact on

consumer demands, was given an increased allocation of DA 3 8 billion as compared to DA 6.8 billion in 1979. The

recent achievement of light industry is due to the fact

that this sector is more integrated into the national

agricultural sector, from which it receives around 41

percent of its input, and that increased attention was

given to light industry during the period of the first

five-year plan (1980-84).

Under the first five-year plan, more emphasis was

directed to social infrastructure and agriculture.

Thirty-two percent of total expenditures was devoted to

social infrastructure, compared to 38 percent allocated to

industry (see Table 59). The country's critical housing

shortage received an investment allocation of DA 60 bil

lion of total planned investment; education, training and

social infrastructure together comprised about DA 118.5

billion of total planned investment. Although development

of agriculture is still inferior in terms of investment,

cuts in the industry budgets are registered (38% compared

to 43.5% during the previous plan 1974-77; see Table 60).

This could be seen as the first step in the right direc

tion.

3 Ibid., p. 29.

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We can conclude that despite government efforts, many

problems remain, and these policies will continue to

demand revision and reevaluation in the years ahead.

Based on the above conclusions, we can make the following

recommendations.

The scarcity of higher cadres and the lack of indi

genous trained manpower have had several consequences.

First, the middle qualified cadres assumed the higher

responsibilities without adequate qualifications. This

situation resulted in a reduction in the quality and

efficiency of production and in a low level of innovation.

Second, dependency upon foreign expertise and skilled

manpower is intensified. We recommend that the Algerian

educational system be reconstructed on the bases of effi

ciency and quality, and be directed toward the economic

development of the country. The call for establishing

technological institutes is the first step toward recon

sidering the system of education. Incentives are very

essential if the local skilled manpower is to be kept in

the country and used effectively.

We believe that there is considerable agricultural

potential in Algeria, but the agricultural development

strategy needs reform, particularly with respect to subsi

dies, cultivated land, credit, marketing extension, re

search, irrigation, and investment. As a result of indus

trialization, the ecological situation of Algeria has been

transformed. The extensive installation of industrial

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plants at the expense of cultivated land contributed to

the country's scarcity of agricultural land, causing a

considerable loss for the farmers. We recommend the

protection of land from transformation to industrial

zones, introduction of an extensive program to provide the

needed water, an improvement in vegetable cultivation

under cover, and a significant increase in domestic produc

tion to meet the major part of the country's needs.

Consideration of the long term demographic level of growth

implies the need for new approaches to agricultural devel

opment which must take into consideration natural, techni

cal, and institutional obstacles, as well as the complete

transformation of working conditions and relations of

production in the agricultural sector.

The industrialization policy aimed at achieving

effective self-sufficiency calls for a high level of

technological competence. The key was seen in the hydro

carbons sector, which would provide financing and basic

raw materials. Financed by exports of petroleum and

natural gas, iron ores would be made to provide the raw

material for the steel industry. The steel industry would

provide the metal needed for the pipelines that would feed

the hydrocarbons from the Sahara fields to expanded trans

formation and export facilities on the coast.

However, the tremendous potential of Algeria's hydro

carbons is matched by a corresponding demand for foreign

participation. Despite the investment correction which

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seems to be in favor of light industry, the heavy industry

sector (including hydrocarbons) continued to consume large

amounts of capital investments through the first-five year

plan (1980-1984). In addition, because of the high cost

of building these industries and because of inefficiency

and lack of trained workers, it is almost impossible to

produce cheap goods that are marketable in foreign ex

change. We recommend that a further reduction in heavy

industry must be applied and that more attention be dir

ected to light industry that produces consumer goods

directly affecting the basic needs of the population,

simply because the fundamental law of socialism is the

satisfaction of the basic needs of the majority of the

people.

As suggested by official plans and import trends,

Algeria, as a developing country, has depended heavily on

imports of technology, and this dependence is likely to

continue in the foreseeable future. The contribution of

imported technology to exports has been limited, since the

major Algerian exports are still raw materials and prod

ucts of light industries such as textiles and leathers.

Technology transfers to Algeria did not solve the problem

of unemployment and underemployment through creating

enough jobs for the increasing number of the labor force.

We recommend a new policy aimed at shifting the emphasis

from importing a highly sophisticated and very expensive

technology to a technology that can easily be handled by

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Algerian skilled labor and is within the financial capa

city of the country.

In the final analysis, the challenge to policy makers

is to design policies that will bring about a sound so

cialist economic development and industrialization without

being completely subordinated to foreign economic struc

tures and policies. Fundamental changes in the societal

structure and in the relations of production are absolute

ly required if the goals of industrialization and economic

development are to be achieved.

Finally, it is hoped that this study helps provide a

better understanding of the Algerian social formation and

its transition from a colonial capitalist social formation

to a dependent capitalist nation in the near future. It

is also hoped that this study would be helpful to the

Algerian government and its economic institutions in

carrying out its development plans in the future.

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. APPENDIX A

MAIN HYDROCARBONS INSTALLATIONS

TUNISIE

Hasti R* M«l

Hm u M « tM O iid

- Oil Pipeline - Gas Pipeline

— Condensate Pipeline Export of Crude Petroleum

V Export Refined Products

< Export of IMG \

i Hydrocarbon Resources

0 Liquefied Gas Factory

O Refined Oil Factory

Source: J. Schnetzler, Le developpement Algerien (Paris: Masson, 1981), P.56.

362

Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. APPENDIX B

MANUFACTURING INDUSTRIES AND THEIR DISTRIBUTION BY WILAYA AND PUBLIC AND PRIVATE SECTORS

Annabd TmOtizou onsiantine

"FT Asnam Mostagapen

Tlemcen Medea

4sooo salarie; •Public •Pnve

Source: John Waterburg, Land, Man, and Development in Algeria (New York: American Universities Field Staff, Vol. XVII, No. 3, 1973), P.9.

363

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Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.