May 2000 - North Africa Journal Monthly

ENCOURAGING
ALGERIA’S RECOVERY

By Cameron R. Hume

The author has been the U.S. Ambassador to Algeria since 1997.
The views expressed are the author's and not necessarily those of the US Department of State

Algeria, the most populous Arab country after Egypt, is coming out of a crisis that took 100,000 lives, destroyed infrastructure, caused a decade of missed economic opportunity, frayed Algeria’s relations with other states, and threatened regional security. After this trauma, Algeria is now healing and hoping for a better future. How Algeria recovers from this crisis will have consequences for the future of democracy, the rule of law, economic reform, and regional security throughout the Arab world.

These stakes are important. The United States can encourage a positive outcome that will protect and promote its interests throughout the region. To achieve such a result the United States must act based on a sound understanding of what caused the crisis, what were the crucial turning points, and what is the situation today.

The Roots of the Crisis

Algeria has given new meaning to the term "culture wars". This country won its independence from France in 1962, after more than a century of colonial rule, under the banner "Algeria is my country; Islam is my religion; Arabic is my language." While all Algerians are nationalists and Muslims, the cultural consensus stops there. Some Algerians want a secular state, but others want Islam to form not only the ethical norms of the society but also the framework for government. Arabic is the official language of the state and the maternal language of most Algerians, but French and Berber are both in widespread use. Some Algerians insist on respect for national sovereignty at the cost of damaging ties to other countries and economies. The political process in place for the first thirty years after independence, a one-party system, failed to help Algerians manage their differences. The consequences have been division and intolerance. The question of national identity became a cause of conflict.

During the 1960’s newly independent states claimed revolutionary legitimacy, but such legitimacy is a wasting asset that does not endure unless reaffirmed by good governance. Algeria’s new rulers, in both the army and the National Liberation Front (FLN), cited their eight-year epic struggle to make the strongest claim of all for their side. From the beginning they wanted a state that had maximum autonomy and complete independence in its relations with other states; the growing interdependence of states soon made this model outmoded. The army was the backbone of the state. In time the party came to be seen more as the embodiment of a privileged caste, not the embodiment of the nation. Without regular, democratic elections, and none took place during the first generation after independence, the party and government could not convincingly claim democratic legitimacy. These fundamental choices about the nature of the state and the relationship between the government and the citizens would lead to failure.

The commodity boom of the 1970’s fueled the Algerian economy. The new state, with no experience in managing a modern economy, chose to build a planned, directed economy; it emphasized heavy industry and slighted agriculture; it limited foreign investment. It promoted immigration from the countryside to the cities, and it did nothing to promote family planning. The ideal was a self-sufficient economy with a strong industrial base, able to fund the full range of free public services for a rapidly growing population. Then, in 1985, the price of petroleum dropped below ten dollars a barrel. Short-term foreign debt piled up, crowding out the state’s spending on social programs and on the unprofitable industrial sector. By 1988 Algeria’s population had reached 22 million, up from 9 million at independence, and in the previous three years per capita income had dropped from $2,600 to $1,600. This collapse discredited the state as guarantor of the economy.

The struggle for political power was the final cause of Algeria’s crack-up. The army had been the ultimate arbiter of power; the FLN was the only political party; the media was a state monopoly; and, civil society was weak. This monolithic structure neither moderated conflict nor accommodated change. The government of President Chadli Benjedid, who came to power in 1979, had made facilities available to Islamic community groups, perhaps to counter the risks that far left political groups would gather the rising discontent. In retrospect it was foreseeable that such groups would spawn aspirations for political power.

These factors are essentially domestic, but international circumstances influenced how they developed. The era of decolonization was the stage setting for Algeria’s war for independence and the dream of absolute national sovereignty. The bi-polar world of the Cold War gave Algeria the opportunity to lead the Non-Aligned Movement. Rising commodity prices in the 1970’s justified Algeria’s decisions to be a founding member of OPEC and to co-chair the North-South Dialogue. Revolutionary politics, statist economics, and arms length relations to the West were popular choices at the time, but eventually they led to Algeria’s failure.

The Turning Points

In October 1988 crowds of disillusioned and alienated youth marched through the center of Algiers attacking symbols of the state. When the crowds converged in the area of the headquarters of the military security service, shots rang out. In the ensuing panic the security forces fired repeatedly, and this was the first time since independence that Algerian soldiers had shot at Algerian civilians. This clash emphasized the widening gulf between those who had already obtained lifetime benefits from the one-party state and those many jobless youths who had little hope. In the days that followed Islamist and leftist groups vied to capture and to express the public rage. Conflict was now in the open.

During the next three years President Chadli Benjedid’s government tried a series of reforms. One law opened up the economy to private investment; a second allowed for a free press; a third provided the structure for a multi-party political system. Algeria went from being a one-party state to having more than fifty registered political parties. Those responsible with leading the reforms were insiders who had spent their careers in the army, in the party, or in the government bureaucracy. They knew the system had to bend, or it would break. But there was no consensus within the power structure about how far-reaching reforms should be, and, without such a consensus, reform stalled.

During this period of attempted reform Islamist groups gradually gathered strength. The Islamic Salvation Front (FIS) was most successful at capturing the popular mood of alienation, and its emphasis on Islam seemed the natural antidote to a government criticized for both incompetence and corruption. Soon the FIS had active cells in communities across the country, where it engaged in a heady mixture of social work, political activism, and religious revival. The FIS had a good organization at the local level and a strong appeal based on Islamic values, as well as a deputy chairman, Ali Belhaj, who was a charismatic orator.

In 1990 Algeria tried its first multi-party elections. The two main parties contesting the election were the FLN, which in every way was the party of the status quo, and the FIS, which represented an option for radical change. In the 1990 the FIS won more than half of the votes, taking control of many municipal governments, including Algiers. It then used, or its critics would assert abused, its control of local governments to strengthen its appeal to the voters and to promote its victory in the upcoming national elections. After some delays, in December 1991 in an atmosphere of social tension and political instability the country went to the polls for legislative elections. The FIS won 49 percent of the vote and 188 of the 220 parliamentary seats awarded in the first round of voting. Although many criticized the conduct of the election, the FIS was now Algeria’s leading party, and it was sure to win enough seats in the second round of voting scheduled for January 1992 to control outright the new parliament. At this point the senior leadership of the Algerian army stepped in to force the resignation of President Chadli Benjedid, to cancel the second round of voting, and to appoint a de facto government. The army blocked the FIS’s march to power.

Some FIS adherents, arguing that the Army had used violence to prevent their rightful accession to power, turned to violence. First in the field was the Armed Islamic Group (GIA), which launched a campaign to assassinate foreigners, intellectuals, and individual policemen. Its operational groups, later split into several factions, gained notoriety for ghoulish massacres of rural villagers. The Islamic Salvation Army (AIS), which had close ties to the political leadership of the FIS, concentrated its attacks on the security forces and public infrastructure. The number of civilian victims grew alarmingly. The struggle between the armed Islamist groups aiming to establish an Islamist Republic and the security services seemed to put the entire population at risk.

By the end of 1994 Algerian civilians were caught in crossfire. The violence, including abuses by both sides, was taking over 1,000 victims a month. The government turned to the IMF for a debt rescheduling that further constricted the stalling economy. In January 1995 leaders of Algerian political parties, including the secretary-general of the FLN, a representative of the FIS, and the head of the Socialist Forces Front (FFS), the third largest party, met in Rome to endorse a peace platform that foreswore violence and called on the government to join in an open-ended negotiation. Meanwhile Liamine Zeroual, the retired general serving as the appointed president, had been negotiating directly with the imprisoned leaders of the FIS.

The government rejected the Rome platform and scheduled presidential elections. President Zeroual ran without party affiliation and promised to continue his own peace initiative. In an election that observers considered generally free and fair, Zeroual won with over 60 percent support. Mafoud Nahnah, leader of a moderate Islamist party, was runner up with 26 percent of the vote. Algerians saw the election as a sign of hope, but observers questioned if Zeroual could maintain army support for his peace initiative. In June 1997, under a constitution that banned political parties based explicitly on religion, the country elected a multi-party parliament.

The breakthrough that opened the way toward ending the violence came from a series of contacts between the army and AIS chief Medani Mezraq, not from Zeroual’s negotiations with the civilian leadership of the FIS. By 1997 the army was confident that it had gotten the upper hand in the struggle, even if the level of violence had yet to drop. In October the AIS committed itself to a unilateral truce in the context of negotiations that suggested an eventual amnesty for AIS members. AIS combatants, for the most part, respected the declared truce. Simultaneously GIA groups committed a series of horrible massacres, from which the army failed to protect the citizenry.

In the summer of 1998 the Government of Algeria agreed with UN Secretary-General Kofi Annan to invite a group of eminent persons to visit Algeria and to report. The group had wide, but not unrestricted, access to sites and to political leaders. Its report was factual and impartial, and it commented that increasingly the institutions of government should be in the hands of civilians, not the military.

In September 1998 President Zeroual announced that he would resign as president, setting off another lengthy transition. Seven candidates contested the April 1999 election. The campaign had been open and fair, but on the eve of voting six candidates withdrew, charging that the results would be fixed in favor of the army’s preferred candidate, Abdelaziz Bouteflika. Their withdrawal cast doubt on the legitimacy of Bouteflika’s victory. On the night of his election victory Bouteflika said that his top priority was to end Algeria’s violent conflict and that he wanted to improve relations with the United States.

Bouteflika quickly took the initiative. He put forward a plan for national reconciliation, the essential element in which was an offer of clemency covering all crimes except murder, rape, and placing bombs in public places, for all members of armed groups who surrendered to the authorities. In July the parliament adopted the necessary legislation, and a referendum in September 1999 confirmed public support for the peace initiative. In accordance with this plan Bouteflika released over 2,500 individuals from prison. Of the 4,000-5,000 active members of the armed groups, up to 1,500 took advantage of the clemency offer.

Meanwhile the army, with the political backing of the president, concluded its negotiations with Medani Mezraq, commander of the AIS. As a result in January 2000 approximately 1,500 AIS members laid down their arms in return for a blanket amnesty covering all their crimes. Several other smaller groups, loosely affiliated with the GIA, seem to have cut similar deals. The number of terrorists now active can be counted in the hundreds, no longer in the thousands.

The Situation Today

Algerians no longer live in the state of fear that prevailed in the mid-1990’s. The number each month of victims of this violence has dropped from over a thousand to under a hundred. Once deserted city streets are again crowded at night. The outcome of this struggle is no longer in doubt, even if each week terrorists strike at some isolated village and overland travel remains dangerous outside the cities. Algerians, only recently traumatized by fear of violence, are now asking how to put their country back on its feet, how to recover from the losses of the last decade, and how to put the rising generation to work.

The economy can recover. Algeria completed its IMF program successfully in April 1998, and it then weathered a year of unusually low oil prices. 95 percent of its export earnings and half of government revenue come from hydrocarbons. By maintaining conservative macro-economic policies the government has again built up hard currency reserves. Other crucial indicators, however, are less positive. Unemployment hovers at almost 30 percent, with higher rates among the young men and women trying to enter the work force. Housing is scarce, preventing many young couples from starting their own households. Lack of clear land titles hinders investment and agriculture. The banking system fails to provide the services needed for a market economy, and the banks hold many obligations from state-controlled enterprises that have no capacity to repay these debts. Telecommunications are among the worst in the Arab world. The message that Algeria is living in a new world has not yet penetrated a sclerotic bureaucracy.

The new government announced in January a program to address these problems. It promised to privatize state enterprises, to modernize banks and telecommunications, and to reform trade practices in line with requirements for membership in the World Trade Organization. The needed changes have been identified for years. However, they will not come easily, and none of them can be accomplished by Algeria acting on its own. Algeria needs outside partners to supply technical expertise, capital, links to other markets, and confidence.

No one doubts that a transition is underway in Algeria’s political life. Algerian journalists, 59 of whom were assassinated in the last decade, have created a free press. In the parliament and during last year’s presidential campaign the debates have been frank and vigorous. A presidential commission has been appointed to guide reform of the judiciary, and the International Committee of the Red Cross now has access to Algerian prisons. However, much remains uncertain. The political parties are weak, the parliament has yet to take the lead on drafting legislation, and actual judicial reform has not happened. Meanwhile the government and the society have yet to come to grips with the often-conflicting claims from families representing victims of terrorism and from families seeking to resolve cases of persons who may have disappeared in custody of the security services. Inevitably the growth of democracy and the rule of law will take time.

Change is coming to the Algerian military. The senior ranks, still dominated by individuals who joined the Algerian forces fighting for independence, are all now approaching retirement. Within the next five years, officers who began their careers in the army of independent Algeria will take over leadership of the military, and their perspectives will be different. The army will remain the backbone of the state for the foreseeable future. However, there are already signs that it will move away from being a conscript army to being more professional; that it will shift its emphasis from heavy weapons to smarter tactics; and, that it will for the first time develop links with western militaries. For the first time Algeria’s president is not a military man, and it should be possible to encourage the military’s retreat from an active role in Algeria’s politics.

The Future

How will Algeria deal with the forces of change prevalent in today’s world? If Algeria engages and shapes these forces of change, it will prosper. The contrary is equally true.

People are the most fundamental factor of change. Algeria has a young population, and that half of its people who were born after 1984 have no memory either of the war for independence or of the good years that followed. They tend to be proud nationalists, but they simultaneously want to be part of the wider world beyond Algeria’s borders. Where will these Algerians live and work? How will they move about and interact with others? How well prepared is this rising generation for the challenges of the new century? What political choices will they want to make?

The increased intensity of communications, regardless of national boundary, is a second challenge to Algeria’s inertia. The form of human settlement that predominated for centuries, the autonomous village in which the products needed for daily life were produced and consumed and where custom ruled is ceasing to exist. Every village will be connected to every other village, whatever the confines of the nation state, thanks to ubiquitous satellite television dishes, radios, mobile telephones, and the Internet. This intensified pattern of communication is connecting local economies, challenging local customs, and encouraging exchanges across great distances. Algeria needs new connections to the world. The concept of geography is changing.

States can no longer succeed by acting alone. To provide security and economic wellbeing, they must cooperate with other states and facilitate efforts of the private sector. When a state impedes economic transactions across borders, it weakens the national economy. States are no longer the primary actors in most international transactions.

Algerians have to decide for themselves how best to harness these forces of change. The first step must be peace. Nothing is more important than restoring domestic tranquility so that Algerians can work together, so that they take risks to invest in their country, and so that foreign partners invest. The violence of the last ten years has caused not only death and destruction, but it has cost incalculable lost opportunities. Many of Algeria’s most talented people emigrated, and outside the petroleum sector investment dried up. While the decade of the 1990's can never be recovered, the present development deficit presents great opportunities for those bold enough to seize them.

Success will depend on thoroughgoing economic reform. Major sectors of the economy are woefully outdated, and no national economy can develop efficiently when isolated from international patterns of production and marketing. Three steps must be taken urgently to permit the growth of a market economy. First, unless Algeria modernizes its telecommunications facilities to world standards, it risks being unplugged from the global economy. The telephone system is unreliable, and the Internet is usually inaccessible. This situation presents great opportunities for intrepid foreign partners ready to propose comprehensive solutions.

A second need is banking reform. The national banking system does not provide the services needed by a market economy. Letters of credit routinely take two months to clear. There is little lending for medium term commercial risks, and financial transfers, especially overseas, can take weeks or even months. Unless Algerian banks are reformed up to world standards, those Algerians who can will keep their funds in banks abroad that offer security, a reasonable return on investment, and the ability to transfer funds by phone, fax, or Internet. The national banks carry on their books an undisclosed amount of loans to state-owned companies that have no reasonable prospect of repayment. The government needs to confront this problem, perhaps with help from the IMF.

A third need is better management of the national debt. With petroleum at high prices, Algeria is in no danger of default. The government has an opportunity to reduce the rate of interest on the debt and to expand its access to investment capital. It should shift decisively from the use of sovereign guarantees to project financing for infrastructure and industrial investments and to lease-purchase arrangements for major equipment purchases. It should prepare to exchange part of its outstanding debt through offerings on international capital markets, which should lead to lower perceptions of risk and thus to lower interest rates.

Finally, Algeria’s progress depends on regional stability. While Algeria’s priority must be to overcome its recent crisis at home, it needs improved relations with its neighbors. The border with Morocco is closed, and regional trade needs to be developed. Courageous statesmanship can reduce and resolve these problems.

The U.S. Role

The United States may have no vital interests at stake in Algeria, but the turning toward peace inside Algeria presents it with a significant opening to promote important interests. The United States should approach this opening with an overall policy that addresses the strengthening of democratic institutions and the rule of law, economic reform, security cooperation, and regional stability. Moving this agenda forward requires the involvement of business corporations and non-governmental organizations.

More than any other country the United States is well positioned to encourage positive change in Algeria, and it can do so in concert, not in competition, with its European allies. In fact, given the proximity of Europe and the importance of Algeria’s relations with European states, Algeria is one place where the United States is not resented for being the world’s only super-power and where more U.S. involvement is welcomed.

For the first time both sides are ready to work for better relations. U.S./Algerian relations have never been close, even after the Algerians played the key role in negotiations leading to the release of U.S. hostages in Tehran. During the 1990’s contacts were in fact reduced as Algeria radiated instability. Now that violence is on the wane, President Clinton has given public support to President Bouteflika’s efforts to promote reconciliation.

The United States should promote democratic institutions and the rule of law. Algerians are in the front line of this struggle, but outside encouragement will make a noticeable difference. Western governments have given strong vocal support to the free press in Algeria, and several have programs to support the growth of political parties and the work of parliament. Working together the U.S. government and private organizations should support the growth of Algerian non-governmental organizations, which already constitute the core of the emerging civil society. Algerian families deserve as complete and credible account of those missing as possible, and cases of abuse by the security services should be turned over to the judicial system. In the context of cooperation on anti-terrorism, the United States should provide the kind of training it made available to police in Bosnia so that police activities at the local level are consistent, visible, fair, and in accordance with the rule of law. The arrest of Ahmed Ressam, the Algerian who entered the United States from Canada with explosive devices, was a sobering reminder that the United States has compelling interest in cooperation with Algerian law enforcement officials.

The United States should promote the development of a free-market economy with healthy links to the global marketplace. With a population of 30 million and a GDP of $60 billion, Algeria is worth consideration. The greatest needs are to give more initiative to private enterprise, to encourage the most productive use of Algeria’s capital and human resources, and to connect the economy to the world economy by trade, finance, and telecommunications. The new Algerian government is actively seeking direct foreign investment, including in such sectors as telecommunications, which were previously off-limits. U.S. and European firms should push the pace of change by making their own proposals for investment. U.S. direct foreign investment in Algeria is already over $3 billion, and it is expected to double in the next five years.

U.S. security objectives need to look beyond the current crisis. U.S. and NATO forces should aim to have no less of a relationship with Algeria than they have with Morocco or Tunisia. Since 1998 U.S. forces in Europe have had several contacts with Algerian counterparts, including a one small joint naval exercise and last year a visit by the commander of the Sixth Fleet, Admiral Daniel Murphy. Now NATO has invited Algeria to join the NATO-Mediterranean dialogue, and a senior French general has visited Algiers. Although such contacts make little news elsewhere, in Algiers they signal an end to Algeria’s isolation on security issues. The United States should aim for a normal relationship that emphasizes the role of the military under civilian control and in turn encourages Algeria to establish normal relations with other partners.

When the United States considers its interest in regional stability, it sees several different objectives at stake in Algeria. The first priority is the re-establishment of domestic tranquility inside Algeria, but there are also important international issues on which cooperation can benefit both sides. U.S. and Algerian forces are beginning to cooperate on security in the Mediterranean and on conflicts in Africa. Because Algeria now holds the presidency of the Organization of African Unity, collaboration on the situation in the Congo and on the conflict between Ethiopia and Eritrea has been particularly important. At crucial moments in the past, such as in brokering the end to Lebanon’s civil war, Algerian statesman have made contributions to peace in the Middle East, and Algeria can play a positive role in pushing for the next steps in the Middle East Peace Process. Most immediately, however, the United States looks for a peaceful resolution of the conflict concerning Western Sahara and eventually the improvement of relations between Morocco and Algeria.

Today the United States has an opportunity that it should not miss. The stakes are high. Will Algeria succeed in moving away from the model of a one-party state and state socialist economy to a multi-party democracy with a market economy? Failure would most likely lead to an even more violent repeat of the past ten years, with extremist Islamist groups battling the army to control the future, and with the great majority of Algerians simply victimized. The odds now favor success. For the United States this is an opportunity to seize.