It is essential for the country to prepare for the post-hydrocarbon era.
When Emmanuel Macron declared in Algiers that colonization was a crime against humanity, this was both a contradiction of history and political grandstanding, the same event being judged to be a “civilizing element” in Paris and condemned as an “act of barbarism” on the other side of the Mediterranean. It shows how dangerous it is for politicians to instrumentalize history, for history will have its revenge and, as Kamel Daoud points out, is best left to historians. Such an illl-considered remark legitimizes the propaganda of the Algerian dictatorship which is always on the lookout to mobilize conflicting memories in an attempt to obscure its own failure.
The general election in April will be decisive in enabling the country to bring the political system out of the coma in which it been engulfed ever since the surreal re-election in 2014 of Abdelaziz Bouteflika, a man who has been in power since 1999 and yet now unable to move about or to express himself. Although the FLN is certain to retain the majority of the 479 seats in parliament, developments in the power struggle between the different factions are beginning to foreshadow a post-Bouteflika era.
Fifty-five years after independence, Algeria is an extremely rich country whose people have been ruined by its leaders. It is a textbook case of a dual curse: raw materials plus socialism. This is the largest country in Africa and occupies a strategic location between Africa and Europe. it has exceptional resources – in hydrocarbons, which make it number three in the league table of the world’s gas exporters – and in the mining and agriculture sectors as well. This makes it even more scandalous that the Algerian people are suffering such poverty, unemployment, oppression and violence on a daily basis. In the 2020s, Algeria will have a population exceeding 20 million, but growth, officially put at 3%, depends totally on hydrocarbons which generate 97% of export income and 60% of public revenues. The grey economy represents a third of all activity. The overall unemployment rate is 25% of the working population, and half of all young people with university degrees are unemployed. After the terrible civil war of the 1990s, a semblance of public order was restored only by making increased concessions to the Islamists and increasing social benefits, which take up 26% of GDP. Corruption is endemic. Illegal capital outflow exceeds 40 billion dollars per year.
Since 2014, the collapse of oil prices has given the death blow to this intolerable rentier economy and brought about a triple deficit. The public deficit rose to 30 billion dollars in 2016, i.e. 24% of GDP. The trade deficit is more than 20 billion dollars. The current account deficit is 8% of GDP. Instead of getting the measure of the revolution in the energy market, the regime has resorted to expedients: massive devaluation of the dinar, assumption of external debt, and the use of exchange reserves, which have decreased from 185 to 110 billion dollars. These reserves will have been exhausted by 2020, because the imports essential to meet the basic needs of the population cost 60 million dollars per year.
After independence, the country opted for a one-party dictatorship under the influence of the army – which has a 11.3 billion dollar budget that is the the highest in Africa – and for a planned economy, but both paths have proved to be dead ends. A new civil war is looming. In the world ranking for business climate, Algeria occupies only the 153rd place – it has been reduced to the distressing status of being the least free Arab economy after Syria. The Algerian regime is in the final stages of a terminal illness. It is developing into an Islamic démocrature (a combination of democracy and dictatorship) without any strong leader – torn between the FLN, the oligarchs and the army.
Algeria is where the USSR was at the time of perestroika. The regime is too strong to be overthrown but too weak to reform itself. Any reforms required by the modernization of the country would involve the fall of the dictatorship. There is no choice for Algeria but to prepare for the post-hydrocarbon era, which means going from a rentier economy to a production economy, by means of privatization, liberalization of the labor market and opening the economy to foreign investment. It would then have an opportunity to become Europe’s workshop.
Instead of enflaming passions and fears, France and the rest of Europe must work out a long-term strategy with regard to Algeria, and learn from the mistakes made in Libya and Syria. The transition toward a market economy deserves to be encouraged at all costs; making Algeria into an emerging country with intensive growth is the best way to counteract social deprivation, fanaticism and violence. There is an Algerian proverb that says, “It is God’s way to go slowly and Satan’s way to be hasty.” However, there has to be speedy action if we want to defuse the Algerian bomb.
(Column published in Le Point, 23rd February 2017)