Algeria has largely avoided the type of unrest witnessed in Tunisia, Egypt, Syria, Libya and Yemen. This could all change due to the slow pace of promised reforms by Algeria’s President Abdelaziz Bouteflika. Earlier this decade Algeria faced an uncertain future after emerging from years of a civil war that began in the 1990s and resulted, by some accounts, in the killing of over a 100,000 people. Algeria still faces the difficulty of dealing with groups like Al Qaeda in the Islamic Maghreb which has been known to rely on attacks against the government officials and others seen as pro-Western.
Andrew Hansen writes in the Council on Foreign Relations, “Terrorist activity in North Africa has been reinvigorated in the last few years by a local Algerian Islamist group turned pan-Maghreb jihadi organization: al-Qaeda in the Islamic Maghreb (AQIM). A Sunni group that previously called itself the Salafist Group for Preaching and Combat (GSPC), the organization has taken responsibility for a number of terrorist attacks in the region, declared its intention to attack Western targets, and sent a squad of jihadis to Iraq. Experts believe these actions suggest widening ambitions within the group’s leadership, now pursuing a more global, sophisticated, and better-financed direction.”
One of the largest problems facing Algeria and the likely cause of unrest in the streets is unemployment for the country’s youth. While Mr. Bouteflika did lift the 19-year-old emergency law, many would contend that unless more is done, Algerians under the age of 30, who make up 70% of the population, will take to the streets en mass and demand more structural changes.
Algeria has experienced some level of street demonstrations and civil unrest since the Arab Spring began but due to precautions taken by security forces, sustained street demonstrations similar to the protests in Egypt’s Tahrir Square, Tripoli, Libya, Daraa, Syria and Sana’a, Yemen have not materialized.
During the first week in January, protests broke out over increased prices for necessities like sugar, flour and oil. As a result, the government slashed taxes by 41 percent and custom duties on foodstuffs. Protests in February did force the hand of the Bouteflika administration to yield to pressures resulting in the lifting of the emergency law. Throughout the protests, the common grievances levied at the government were the lack of transparency, lack of employment opportunities and a feeling that the future for many Algerians was bleak.
Hamid, from Bab El Oued summed up the anger shared by many, “We’re fed up of being ignored all the time. We’re fed up of being treated like guinea pigs. We are telling this government: you’ve done nothing for us, we don’t recognize you anymore.” Protests have continued as late as May but they have consisted primarily of specific interest groups lobbying against the government.
While conditions might be ripe for revolution and a continuation of the Arab Spring sweeping the region, the memories of the 1990s have largely scarred this country of 34 million and will act as a counterweight to those seeking wholesale change through revolution. Additionally, the government is adept at insuring that the discontents have money in their pockets through increased wages. According to the International Monetary Fund, the government has raised wages for civil servants by 34 percent. Moreover, while Libyans, Syrians and Egyptians have taken to the streets to rally against their autocratic leaders, President Bouteflika is viewed more or less, as a figurehead and is not the sole target of Algerian anger.
Algerians have had the same political system since their country gained independence in 1962 and it is this political system which street level Algerians despise. Patronage, corruption and nepotism are seen as the norm in Algerian society. Without political connections many Algerians find their job prospects dim and view a political system controlled by a few as the cause of their problems. “Nepotism exists all over the world, of course, but nowhere does it dominate political, economic, and social life as comprehensively as it does in the greater Middle East… Nepotism is one of the big reasons why so many of these strongmen now face extinction. The rage that has united young Arabs from Tunis to Tripoli is fueled not just by hatred of their rulers but also by the widespread and entirely valid belief that those rulers intend to bequeath power to their equally loathsome offspring,” Romesh Ratnesar argues in Bloomberg Businessweek.
Additionally, corruption pervades many sectors of the economy and acts as an impediment for business owners who are not willing to pay under the table bribes. According to Freedom House, “High levels of corruption still plague Algeria’s business and public sectors. The energy sector is viewed as especially graft prone.”
Of 178 countries surveyed in the Transparency International’s 2010 Corruption Perceptions Index, Algeria ranked 105. However, even with these structural deficiencies, some Algerians would contend that President Abdelaziz Bouteflika has attempted to address many of Algeria’s problems. Moreover, many Algerians would admit that the country enjoys any number of freedoms not present in Libya and elsewhere. For example, some Algerians would contend that they have a modicum of democracy, freedom of the press, and when necessary, Algerians have been allowed to cry foul to the international press.
While far from ideal, this is a marked improvement from the 1990s. “There are an array of restrictions on press freedom, but the situation has improved since the peak of the civil war in the mid-1990s. Privately owned newspapers have been published for nearly two decades, and journalists have been aggressive in their coverage of government affairs, though readership is limited by an illiteracy rate of about 30 percent,” Freedom House writes.
Algeria’s government would argue that reorganizing the state has been a monumental task considering that the country emerged from a gruesome civil war a little over a decade ago.
Taking this into account, government officials argue that shifting from dealing with the threat of terrorism and internal strife to tackling endemic unemployment will take time. “It’s not easy to build a good democracy and to open and to develop the country…We try,” argues Algeria’s Communication Minister Nacer Mehal.
By some estimates, with the unemployment rate hovering around 50 percent for Algeria’s youth, the government is aware that is must improve its efforts to address this problem. The government has begun to offer microcredits to prisoners to prevent recidivism and to women.
Additionally, due to revenues resulting from oil and gas discoveries, the government is quickly building housing and providing government jobs. CGAP points out, that due to a severe shortage of banks for private citizens, the need exists for microlending institutions.
According to CGAP, “It is estimated that approximately 30 percent of Algeria’s population uses banking services, with only one bank branch or post office for every 7,250 inhabitants. The 1.25 million workers in the informal sector, who have no access to credit, and the small proportion of banked households, also give an idea of how large the unmet credit needs are. The potential for developing microfinance looks immense, in view of the needs that the financial sector fails to meet.”
CGAP continues, “The prospects for the development of inclusive financial systems in Algeria are very attractive, given the very favorable overall economic context and the inadequacy of the current system…The government has a key role to play in strengthening the financial sector, especially in implementing actions that fall outside the scope of private-sector investment and concern public services and national planning and development…Today, the government is genuinely interested110 in developing microfinance and it favors the creation of one or more new institutions. This interest is fully in line with that of international public-sector and private-sector investors and is likely to give rise very soon to the creation of new credit institutions to provide financing primarily for the vast sector of very small enterprises.”
Whether the government follows through on providing microcredit or creates the conditions for microcredit institutions to exist will be a long-term challenge. In the short-term, a policy which undoubtedly will create jobs is the $286 billion infrastructure development program which seeks to address the countries crumbling infrastructure. While the program will create jobs, in the long-term it will add to Algeria’s already large budget deficit.
Long-term challenges remain for Algeria. The International Monetary Fund describes Algeria’s economic climate from 2000 to 2010 as “very positive.” However, the next decade potentially could be described as the complete opposite unless the government does more to create a healthy business climate in order to attract FDI (foreign direct investment) and divests itself from an economy based solely on its oil and natural gas reserves.
“Unlike other middle-income economies, for many decades, Algeria has not been able to attract large amounts of FDI…The lack of FDI could have negative effects on Algeria’s growth prospects as empirical research has proved extensively the positive impact of FDI on economic growth. Moreover, in a world economy where control of knowledge and technology are essential assets for companies, ownership limits on foreign subsidiaries, such as those contained in Algeria’s new FDI rules…could deter foreign investors,” the IMF contends.