Algeria has enjoyed relative stability and security over the past year, but the government confronts a youth bulge with a largely stagnant political system and a sluggish economy that regularly generates bursts of social discontent.
The U.S. government views Algeria as a major partner in counterterrorism efforts in the Sahel, according to General Thomas Waldhauser, commander of the U.S. African Command, during an April 25 visit to Algiers. The Algerian government, which had initially viewed the establishment of the African Command in 2007 with some suspicion, warmly received Waldhauser, and Abdelkader Messahel, Algeria’s foreign minister, said his country hopes to expand its security cooperation with the U.S.
Algeria has scored multiple successes against domestic extremists and the country is enjoying much improved security despite the terrorists operating in neighboring Libya and Mali. In his May 1 message to the nation, President Abdelaziz Bouteflika attributed Algeria’s success to his amnesty and reconciliation programs, and to the government’s efforts to sustain expensive social welfare programs.
The health of the 81year-old president, who suffered a major stroke in 2013, rarely allows him to appear in public, but the two largest political parties, the National Liberation Front (FLN) and the National Rally for Democracy (RND) that have dominated Algeria’s political space for more than 20 years, are lining up to back the ailing Bouteflika’s nomination for a fifth five-year term in the 2019 presidential election.
No other candidate among the ruling elite enjoys consensus support. Prime Minister Ahmed Ouyahia, a major figure on the political scene for the past 25 years from the RND, said that his cabinet is readying a media effort to explain to the Algerian public the achievements of Bouteflika’s two decades in power.
Ouyahia acknowledged that the government needs to answer a question whispered in Algeria: where did the government’s spending of about a trillion dollars over 20 years go?
Algeria’s weak political opposition accuses the government of corruption and denounces the stagnation of the political system and economy. There are allegations of government harassment of opposition parties, and Reporters Without Borders in its 2018 annual report ranked Algeria 136 out of 180 countries in press freedom. (By contrast, neighboring Tunisia ranked 97.)
The country’s ruling elite, represented by the FLN and the RND parties, dominates the scene, but tolerates a broad opposition that is fractured among many secular and Islamist parties. There is no charismatic leader among the opposition parties, and they appear unlikely to agree on a unity opposition candidate to challenge Bouteflika if he runs again. The president appears very likely to win again if his health enables him to pursue a fifth term.
Notably, the political opposition has been unable to capitalize on the social discontent resulting from the sluggish economy. Since November 2017, doctors in residency at hospitals and clinics have been on strike over work hours and salary, diminishing medical services. Primary and secondary school students lost weeks of classroom time because of a teacher strike over salaries earlier in 2018.
The government’s responded by banning the teachers’ union and dozens of other independent unions from issuing any further strike calls, and pleading with the doctors to return to work. Strikes and local disturbances have regularly popped up in Algeria over the past decade, but they have never expanded to jeopardize the government’s control. Until the economy starts to generate more job growth and housing, more small strikes and occasional disturbances are likely.
Strong, sustainable economic growth to forestall that social discontent also seems unlikely. Slumping world oil prices and declining domestic oil production slowed GDP growth from 3.3 percent in 2016 to 2.1 percent in 2017, according to the World Bank.
The government set aside its austerity program in mid-2017 and boosted spending, leading it to predict a rebound in growth to four percent in 2018. As the government still depends on oil and gas export receipts for about 60 percent of its budget revenues, the combination of low world oil prices and higher government spending increased the budget deficit in 2017.
In March and April 2018, the IMF and World Bank, therefore, warned that the government’s reliance on expansionary monetary policy to finance the budget deficit could lead to sharply higher inflation and trade deficits.
Already, Algeria’s sizeable foreign exchange reserves are gradually diminishing. To conserve foreign exchange, the government began restricting imports, leading to complaints from Algeria’s principle trading partner, the European Union.
Responding to the EU in May 2018, the commerce minister said the government was restricting imports to encourage foreign companies to invest in domestic production instead. This statist approach, often tried by independent Algeria, has never diversified the economy away from its reliance on the hydrocarbons sector.
The Algerian government, riding on revenues from hydrocarbons exports and preparing for the 2019 election, appears unmotivated in 2018 to launch deep structural reforms that would attract broader private investment and ultimately job growth for the young population.
Photo credit: FAROUK BATICHE/AFP/Getty Images
