What now for Algeria?

7th March 2019

Tens of thousands of Algerians are protesting the decision of their ailing President, Abdelaziz Bouteflika to run for a fifth term. The 82-year old announced his candidacy for the April 2019 elections by letter last month despite having suffered a stroke in 2013, being in a wheelchair and potentially unable to speak. His last public appearance was in 2014.  But his bid for re-election is just the tip of the iceberg. Algeria is also facing economic crisis, and the ruling elite, known colloquially to Algerians as le pouvoir (the power), is unable to choose Bouteflika’s successor.

Algeria did not undergo the same upheaval that was experienced by other Arab countries during the Arab Spring of 2011. This divergence can in part be explained by the raw memories of the civil war between between Islamists and the government between 1991 and 2002. 150,000 Algerians died or were forcibly “disappeared” by the Algerian military.

Bouteflika, and/or le pouvoir appear to have acknowledged the problem. He announced that if he were re-elected he would step down after a year, but not before making constitutional changes and an “inclusive national conference” to resolve “political, economic and social issues”.

The Algerian government has been ruled by the same party, the National Liberation Front (FLN) since its independence from France in 1962. However, unlike many other one-party Arab governments, the FLN is more decentralised and has various power centres.

There is a division of power between the main tribes in the country. The Eastern clan, which comprises the majority of the Algerian population, controls the army. The western (Tlemcen) clan controls the presidency.

In the struggle to find a new dynamic balance after the departure of Bouteflika, rivals and contenders for the presidency are being eliminated in multiple rounds of infighting. Two important figures pulling strings are Bouteflika’s brother, Said, and the army chief of staff, General Gaed Saleh. Said is believed to be controlling access to the president, while Saleh has amassed power around himself. Bouteflika’s nomination, and offer to step down after a year, indicates that le pouvoir are buying time in which to find his successor.

There is no real opposition outside the party: not least because opposition parties are unable to rally behind one leader. Moreover, the legacy of the war means that many Algerians are willing to acquiesce to peace and stability in a semi-autocracy instead of risking violence to achieve real political change. The last serious contender to the FLN was the Islamic Salvation Front (FIS) in 1991. After FIS won the first round of a parliamentary election, the  the military cancelled the second round, leading to a decade of violence.

The power of Bouteflika’s reputation as the man who ended the war in Algeria means that it is difficult to find a replacement with the same credibility and authority. Bouteflika’s success turned, in part, on his strategy of co-opting the militias following the war, offering them amnesty in return for disarmament, and a return of fighters to civilian life. Since the end of the civil war, the country has developed a reputation as a bastion against Islamist extremism. Notably, following the rise of ISIS, Algerians accounted for only 170 foreign fighters. By contrast, there were more than 3,000 fighters from neighbouring Tunisians, and 1,500 from  Morocco, according to the Washington Institute.

Algeria is not only an oligarchic regime that faces a power struggle. It also suffers from significant economic challenges. High oil prices between 2004 and 2014 gave the Algerian state, which owns the national oil industry, the opportunity to build infrastructure and promote economic development. It is suspected that a significant amount of revenue ended up in le pouvoir’s pockets. During the Arab Spring, part of the wealth was used for the purpose of subsidies, with the object of stemming potential unrest.

The nation’s economic problems can be traced back to the aftermath of the War of Independence between 1954-1962. In common with many Middle Eastern and North African states in the mid-twentieth century, the government preferred isolationist socialism to free trade. Unlike many other countries, Algerian economic policy has remained hostile to foreign investment. As a result, the population of the country do not reap the full benefit of its vast resources.

The Algerian government’s spending is highly dependent on state-owned oil revenue. It has failed to diversify its economy. As a result, its economy is not resilient to fluctuations in the market. In 2014, a barrel of crude oil sold for $100. Presently, it stands at just under $66.  

Annual GDP growth ground slump to 0.8% last year, and unemployment stands at 11.7%. In addition, 70% of its population is under the age of 30, and over half are under 25. Youth, unemployment is particularly high, at 29%. Educated professionals – doctors, pilots, engineers and many other educated professionals are leaving the country to Europe or the Gulf, where wages are higher.

Government spending is too high. According to Forbes, fiscal deficit hit 10% GDP this year, and the trade deficit is set to hit 12.5%. High debt means that foreign reserves in the Algerian central bank are dwindling. This situation, in conjunction with the slump in oil prices, means one thing: Algeria is running out of money fast. Forbes reports that the country’s foreign reserves are now half of what they were five years ago. At the current rate, Algerian reserves will be wholly depleted by 2024, with predictable and dangerous consequences.

If le pouvoir hope to quell unrest, it is imperative that steps are taken both to find a new balance of power within the elite, and to pursue economic reforms to rekindle growth and replenish the state’s coffers. Once this happens, serious discussions about a new social contract between the people and the elite can start. Bouteflika, meanwhile, should be allowed to enjoy the end of his life enjoying the Mediterranean sun rather than acting as le pouvoir’s marionette.