What is the future of the Algerian state?

What is the future of the Algerian state?
Analysis: A former senior civil servant argues the Algerian state is sleepwalking into crisis, and the easy solutions of the past will no longer work.
5 min read
28 June, 2015
Is Bouteflika up to the challenges ahead? [Getty]

On arrival in Algiers on 15 June, Francois Hollande reiterated the reasons for his two-day visit to a president who is incapable of governing: "France is Algeria's primary economic partner and intends to remain so, with a view to developing is presence here."

Mustapha Baba-Ahmed argues the economic and leadership crises have to come to a crisis point.

Has the time of reckoning come for the Algerian regime? To adopt the vocabulary of the bullfighting arena, is the regime on the eve of being "put to death"? This is the question posed by Mustapha Baba-Ahmed, author of "Algerie: l'heure de verite pour la gouvernance" (Algeria: the day of reckoning for governance'), and former high-level civil servant at the Finance Ministry in Algiers.

He is familiar with the internal workings of a system whose lack of transparency is its best defence. He describes himself as a technocrat shocked by the increasingly significant gap that is appearing between the official line and the economic reality of the country.

Baba-Ahmed is familiar with the internal workings of a system whose lack of transparency is its best defence.

His argument goes to the root of the problem: poor governance. "The State, a legal entity" to which he dedicates a whole chapter, has imposed regulations that are irrational and out of touch with the reality of the country. Furthermore, he argues it flouts these regulations as the leaders have effectively confiscated sovereignty and the people no longer have a voice.

Maintaining the flow of oil at all costs

Between 1962 and 1977, Algeria ran a command economy, dominated by the public sector and closed to external forces. The market, so to speak, had no role to play whatsoever, or almost none.

The thirst for power and the intoxication of wealth eventually disrupted the Algerian State, making the sharing of oil revenues into the fundamental element of national political life.

This frenzied quest watered down the legal system to the point of its dissolution, as demonstrated recently by the sensational anti-corruption trials that hound the scapegoats and exonerate the guilty ones before they even get to trial. The president of the criminal court of Algiers publicly recognised that, "a lowly judge can do nothing against a minister..."

In concrete terms, the institutions responsible for applying the laws are hampered and neutralised to facilitate access to oil revenues (more than $70 billion in 2012).

They benefit from these revenues legally because of their position, and by the same token they waste them to remain in power by buying the backing of the people, and their approval of the status quo. Elsewhere they gain access illegally, via corruption and misappropriation, aided by the complicity of the leaders of the time.

The author, who finished his work in the summer of 2014, before the crisis of low oil prices hit Algeria, identifies three groups that profit from oil revenues: Companies earning a lot simply because the money is flowing in; friends, who are assisted in every possible domain to help them develop their business in an accommodating bureaucratic context; the millions of Algerians who benefit from large-scale social investment, especially if they live in the centre of the country.

Petrol, electricity, water, gas and soil are sold off cheaply at prices that are less than their market cost and this accentuates social inequalities on the pretext of combating them. And, those who consume the most are of course, also those who benefit the most.

The burden on the poor

In reality, this State, which is neither regulatory nor entrepreneurial, is above all deceitful. It stresses, for example, the "social needs of the population" and on the grounds of helping the poorest it rejects any kind of reform, though as Baba-Ahmed points out, the poorest (40 percent of Algerians) do not actually benefit from these much discussed about subsidies.

The era of easy energy is over. The Algerian economy is in danger.
-Mustapha Baba-Ahmed.

Attempts at reform have been made twice in the past. In 1989, following a popular uprising, a glimmer of hope was quickly stubbed out in the name of "defending the Republic" against the Islamist insurrection. As of spring 1991, economic reforms were buried and free elections postponed.

In 1994, under pressure from foreign players who provide essential aid, Algiers turned again toward reform, at least of the economic kind. But 20 years later, Abdelaziz Bouteflika is closing the door again, turning the regime into an presidential affair thanks to an unexpected and unprecedented influx of revenue that owed nothing to his policy.

On the contrary, the production of petrol and above all gas is decreasing at the same time, and successive ministers are failing to redress the situation.

Algeria, like other countries that export hydrocarbons, is wasting this windfall instead of reacting constructively to this opportunity that may well never re-materialise.

"The era of easy energy is over," warns the author. "The Algerian economy is in danger."

Political change and policy reform are necessary for saving the country "from the turbulent times and restructuring that the Arab-Muslim world is going through."

A reflection is also necessary for establishing a scenario based on a significant decrease in oil revenues. Baba-Ahmed proposes a calculation based on the best sources that demonstrate the breadth and urgency of the task before Algerian leaders.

This reading will not please everyone in Algiers and they will be sure to point out it does not provide the answers. But in questioning the Algerian State, his book sounds an alarm call that should be heeded on both sides of the Mediterranean.

A version of this article was first published by our partner website, Orient XXI.