BRIEF ECONOMIC HISTORY OF ALGERIA


Economy:
Oil and gas account for 97 percent of Algerian exports, 60 percent of Algeria’s government revenue and 30 percent of the country’s total economic output. Algeria sits on the world’s ninth-largest reserve of natural gas and 14th-largest oil reserve. The United States has more than $5 billion invested in Algeria, most of it in the oil and gas sector. The economy is diversifying poorly, with higher oil prices acting as a disincentive to reform and privatize the economy. Unemployment officially stands at 13 percent but is likely much higher. 2007 oil revenue: $57 billion; 2008: $76 billion; 2009 forecast: $30 billion.
Military:
Algeria’s military totals 138,000 active soldiers and 100,000 reservists. Paramilitary forces include a 60,000-member national guard, controlled by the president (who’s also the minister of defense), and a 30,000-member police force under the control of the ministry of interior. Men 18 and older must serve 18 months. Algeria has traditionally been armed by Russia and China. In “Bush at War,” Bob Woodward wrote of Algeria that “the CIA was heavily subsidizing its intelligence service, spending millions to get their [sic.] assistance in the war against al-Qaeda.”
Human Rights, Civil Rights and Media:
The government through an amnesty law forgave the perpetrators of the 1990s civil war, but also criminalized criticism of government abuses during that war. The amnesty law diminished efforts to investigate numerous cases of enforced disappearance and other cases of human rights abuses, according to Amnesty International. The Algerian military and police reportedly torture suspects in detention. Journalists benefited from the amnesty law in 2006 as many were freed from prison, but press-freedom reforms have not followed. Criticizing the president or the state can still yield five-year prison sentences.
History Until Independence:
Ottoman Turks gave Algeria the rough outline of its present boundaries between 1516 and 1830, when France began conquering the country. Algerians resisted fiercely. But by 1900, millions of arable acres were in French hands, encouraging more French settlers to move in and undermining Algerian tribal unity. Resistance began anew in the run-up to World War II as the French refused to reform their governance. Bloody French repression continued leading to an outright French-Algerian war that ended in March 1962. Algeria declared its independence on July 3, 1962 (observed on July 5).
History Since Independence:
One of the more vibrant cultures of the Arab world, Algeria was moving toward a marginally open society in the 1970s and 1980s, at least economically, at the same time that political Islam was making inroads throughout the Middle East. Islamists appeared poised to take over the Legislature in the 1992 election. The Algerian army intervened and routed Islamists, who, with $40,000 in seed money from Osama bin Laden, regrouped as the armed, brutal force known as the Groupe Islamique Armé. A civil war raged through most of the 1990s.
The Algerian economy today

Interestingly enough, for most economic commentators, Algeria today has an economy that, having gone through the long, tortuous and painful path of economic reform and restructuring, now stands on the threshold of economic revival. Not only have the elements of a liberal, free market economy been put in place, but Algeria’s access to oil and gas revenues, together with the improvements in its external account, should mean that positive development and an appropriate environment for foreign investors has been created. Even though the remnants of the violence that has characterised the past decade linger on, Algeria seems to offer opportunities that will soon be difficult to resist, not just in the oil and gas sectors but in other sectors of its economy as well.

An economy in crisis?

Yet, despite the increasingly encouraging macro-economic indicators – and last year Algeria posted a current account surplus of $9.9 billion and saw its foreign exchange reserves rise by $7.5 billion to $12.03 billion at the end of 2000 and further rose to $15.4 billion at the end of June 2001 – scepticism still seems to reign. Foreign investment has stubbornly remained below $500 million annually, even when investment in the oil sector is included and, given the delays in the long-promised privatisation programme , foreign investors seem reluctant to take the plunge. Unemployment remains remarkably high – from a low of 23 per cent of the labour force at the start of the 1990s, it rose to 28 per cent in 1998, fell slightly to 26.4 per cent in 1999 and is now believed to have risen again towards 30 per cent . Over 450,000 workers have lost their jobs in the restructuring exercises of the last decade and, even worse, three-quarters of the unemployed are under the age of 30 .

A somewhat more sour and, perhaps, more accurate vision of Algeria’s economic progress is provided by France’s authoritative Nord-Sud Export, part of the respected Le Monde group. In May 2001 it commented:

The paralysis of the Algerian economy, outside the hydrocarbon sector, can be expressed in one statistic – imports. In 2000, a year in which external revenues beat all records (because of the rise in oil prices), external purchases only amounted to $9.2 billion, $900 million less, even, than in 1995 ($10.1 billion) . The decline in domestic demand – whether in household consumption (where living standards have continued to fall) or in terms of companies (for production and investment) – is evident. Furthermore, there has been no evidence of local production being substituted for imports; agricultural production fell by 5 per cent in value in 2000, whilst, during the first nine months of the year, the non-hydrocarbon industrial production index declined by 0.3 per cent. Even worse, output from all manufacturing industries fell during the same period by 1.4 per cent .

It needs to be borne in mind that this comment was made at a critical juncture in Algeria’s recent political history; during the riots in Kabylia which resulted in an official toll of 52 dead and more than 1,300 wounded – unofficial but reliable sources claim that over 80 people died. These riots were notable for the fact that they were the first example of public unrest that was not involved with the Islamist crisis for many years. Instead, they were directed against the Algerian regime, both over the issue of Berber marginalisation and over the more general issue of regime brutality towards the civilian population and popular attitudes towards it. It should not be forgotten that the riots of April 1980, also in the Kabylia region, were the precursors of the October 1988 riots, in themselves the first overt sign of the social and political crisis that faces Algeria today.

In other words, despite the satisfaction felt in Washington and Europe over Algeria’s macro-economic performance in recent years, it is evident that, in micro-economic and social terms, the crisis is as bad as ever. Indeed, opposition politicians in Algeria and leading Algerians outside the country argue that it is worsening . For them, the problems are structural and reflect years of economic mismanagement and political corruption, as a result of the dominant role played by the occult and unaccountable economic and political elites, the nomenklatura known to Algerians as the mafia. Indeed, for them, it is the institutional failure that lies behind the widespread misery that characterises life in Algeria. Whether that be the reason or not, there is little doubt about the misery that Algerians face today.
references

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