Algeria: Bunkering Down in a Bad Neighborhood

From the outside, Algeria seems relatively stable, especially in contrast to regional neighbors Libya and Egypt. Behind the scenes, however, a prolonged succession crisis is underway at the heart of the ruling military and intelligence establishment, known to ordinary Algerians simply as le pouvoir ‘the power’. As infighting within the establishment distracts the regime, the deteriorating economic situation could threaten stability in an increasingly unstable neighborhood.

Algeria’s president, Abdelaziz Bouteflika, who has been in power since 1999, has not been seen in public for two years since standing for a fourth term in 2014. Many question his health, and therefore who is actually in control in Algeria.

High oil prices were key to keeping the country’s generous welfare state running. Algeria is Africa’s third largest producer, and the region’s number one for natural gas. But with the precipitous fall of the price of oil since late 2014, the state’s ability to buy off dissent has collapsed. Widespread unemployment and a youth bulge do not help matters. The government adopted a package of austerity policies in December.

On March 18, a BP gas plant operated with Norway’s Statoil at In Salah was attacked by rockets. This is not the first time foreign-owned assets in the country have been targeted. The attack was claimed by Al Qaeda in the Islamic Maghreb (AQIM). AQIM’s choice of targets demonstrates jihadists ability to strike at the establishment’s economic lifeline. “[The] oil and gas industries are the backbone of the military regime in Algeria. They had [also] been the target of attacks by the jihadis during the civil war,” says Jocelyne Cesari, professor of religion and politics at the University of Birmingham.

Rival radical islamist factions also exist next door. ISIS has established footholds in Libya, and turbulent Mali lies directly to the south. Neither country is able to control its borders with Algeria. Algeria’s exponential increases in defense spending are testament to the state’s mounting feelings of insecurity. “Security has become a priority for the government over the last decade. Algeria’s military spending has increased by 176% since 2004, and it now has the largest defense budget in Africa,” says Assia Sabi, an analyst at Global Risk Insights.

A significant part of Algeria’s $10 billion military budget is now spent trying to secure its southern borders. Thousands of Algerian army soldiers are positioned along it to contain the spillover of militant groups. All borders are declared military zones and more than 20 monitoring sites have been put in place in an attempt to prevent the infiltration of weapons and armed groups. AQIM, Ansar Dine and Al-Mourabitoun—the latest splinter group led by Mohktar Belmohktar—continue to clash regularly with the Algerian military.

These porous borders, and the groups that take advantage of them, are not only a problem for Algeria. Mr Belmohktar’s group has claimed responsibility for recent hotel attacks in west African neighbors Mali and Burkina Faso. Meanwhile, AQIM claimed responsibility for March’s deadly attack on the Grand Bassam beach resort in Côte d’Ivoire. North Africa’s jihadists do not yet pose a mortal threat to the Algerian regime, but they are waiting in the wings. The regime’s inability to modernize the economy may give them more fertile ground in which to operate and recruit.

Balancing act

Elaborate maneuvering by ailing 78-year-old President Bouteflika—or political players in his entourage—has seen his inner enclave steadily capture key state institutions from political rivals, albeit without provoking public unrest. Since 2011, le pouvoir has avoided the severe social unrest that affected other Middle Eastern dictatorships following the Arab Spring. The memories of the horrific 1990s civil war in Algeria, known to many as the Black Decade, appear to remain fresh enough to temper unrest so far.

Despite the crash of oil prices, Algeria is moving carefully as it tries to curb high public spending without eating into a generous welfare budget which pays for everything from public housing to cheap loans. The country saw several major protests in 2015, as the population became frustrated with austerity measures passed during a time of rising poverty and unemployment.

State spending on subsidies ranging from milk and cooking gas to electricity and housing represents 30 percent of GDP, according to Reuters. The bloated public sector provides 60% of the jobs. The state is buffered by almost $200 billion in foreign exchange reserves, but has announced initiatives such as the postponement of several transport projects in January in a bid to save cash.

“The low oil and gas prices have put considerable pressure on Algeria. Having said that, military spending will most likely increase in 2016, necessarily at the expense of other crucial sectors, increasing current risks of popular anger,” says Barah Mikail, professor of international security at Saint Louis University.

The decision is an existential one for the regime, as much as it is a strategic one. “[They] understand well that the post-Bouteflika transition entails serious uncertainties, but also believe that maintaining tough security policies is a condition for its survival – particularly at a moment when securing foreign presence is needed to attract investments and thus compensate the current financial crisis.”

This article was first published in This is Africa and reappears here with kind permission.