Richer but still nervous : Algeria gets richer but is still subject to violence
Algeria should be enjoying its cash windfall more than it is CAN money buy happiness? For Algeria, the answer looks pretty clear. Ten years ago the huge, chronically turbulent but energy-rich country was in the depths of a hideous civil war. Aside from the violence that turned its cities into ghost towns and cost the lives of as many as 200,000 people, Algeria endured massive unemployment and a colossal foreign debt, the servicing of which ate up three-quarters of export earnings. That debt has now dwindled almost to nothing, as foreign reserves, boosted by a windfall of cash from oil and gas sales, have mounted beyond $120 billion. Overall unemployment has shrunk to a manageable 12%. With the value of energy exports quadrupling since 2002 and expected to top $80 billion this year, the government has embarked on a giant spending programme that aims, among other things, to double power-generation capacity and to boost oil output by 50% within five years. Come back, all is forgiven Investors, long spooked by Algeria's toxic mix of lawlessness and business-repellent socialist laws, have returned in force. It is easy to see why. Egyptian and Qatari firms, for instance, have snapped up two-thirds of a mobile-telephone market whose subscriber base has shot up from 1.4m to 28m in just four years. The French chamber of commerce in Algiers says the number of French companies working there has tripled since 2004, with French direct investment, excluding the oil sector, reaching $233m in 2007. Still, Algeria's troubles are hardly over. This week a French construction company, Razal, evacuated its foreign staff after a bomb killed two employees. The frequency of such attacks had dropped dramatically since the late 1990s, reflecting a fall in recruitment to Islamist guerrilla groups as well as the success of government policies that have matched broad amnesties for former militants with the beefing up of security forces. But three devastating suicide bombings in the past year, along with the persistence of smaller-scale incidents that have taken an average of 20 lives a month since January, continue to feed anxieties. Few analysts expect a return to anything like the full-scale mayhem of the 1990s, largely because armed Islamist radicalism has lost much of its appeal. Many also discount the importance of a move, two years ago, by the main surviving guerrilla group to align itself formally with Osama bin Laden and rebrand itself as “al-Qaeda in the Islamic Maghreb”. The group's switch from direct attacks on the security forces to suicide bombings and small-scale ambushes may be a sign of relative weakness. Yet while most Algerians are enjoying greater calm and better prospects, the underlying structural problems remain severe. Despite a veneer of political pluralism, popular disenchantment with a dirigiste state beholden to rival cliques of army officers and powerful bureaucrats is deep. Turnout for parliamentary elections, which were touted as democratic but have produced little change, fell from 45% in 2002 to 35% in 2007. Among people under 30, who make up 70% of the population, anger at what they call la hogra, a sense of victimisation due to the government's neglect and contempt, could turn explosive. A jobless rate for youths of 25% and a housing shortfall estimated by the government itself at some 1.5m homes are only part of the trouble. Serious riots that erupted in the past month were sparked in one case by ethnic tensions between Arabs and Berbers and in another because a football team was demoted to the second league. Many Algerians remember uncomfortably that the drift into civil war began, 20 years ago, when similar local riots started to spread across the country.
14 June 2008 (c) The Economist Newspaper Limited, London 2008. All rights reserved