Algeria has been long regarded as a sleeping giant. Despite having the largest landmass in Africa, abundant natural resources and a population of 45 million, most of which lives near the Mediterranean coast in close proximity to Europe, Algeria attracts few visitors and receives little coverage, at least in the anglophone press.
Its isolation is intentional. Six decades after colonisation, power and political legitimacy in Algeria is still monopolised by the National Liberation Front (FLN), the nationalist movement turned political party that prevailed against French rule, alongside the military and intelligence services. Relying on its hydrocarbon resources for revenue and guided by the quasi-socialist statist model in vogue in the first decades after independence, Algeria has had little interest in opening up its economy to either its own private sector or to foreign investment.
Much of Algiers appears frozen in time: most French colonial buildings remain intact; local grocers and bakers predominate; Western supermarket franchises or fast-food outlets are absent. The casbah, or old city, a UNESCO world heritage site – which in comparable countries would boast boutique hotels – has been allowed to fall into serious disrepair despite being the home of celebrated FLN fighters.
After the dirty war of the 1990s (so called because of the use of terrorism against civilians), Algeria was ruled for two decades by President Abdelaziz Bouteflika. High hydrocarbon prices for much of this period permitted infrastructure development and the buying of the social peace, entrenching the rentier model. With no external debt, Algeria guarded its independence proudly and did not make any of the so-called structural adjustment reforms demanded of other developing countries.
But the opportunities afforded by oil and gas wealth were squandered under Bouteflika. Very little economic diversification occurred. No sovereign wealth fund was set up. Much of the economy – especially the financial system – was allowed to become antiquated. Moreover, billions of dollars are believed to have been embezzled by Bouteflika’s family, his wider clan and the group of businessman who funded his election campaigns and shaped policy to their own interests. Algeria became notorious in Bouteflika’s later years not only for corruption but for high-handed treatment of the few foreign investors who took on the risks.
Popular anger at economic stagnation, unemployment, repression and corruption came to a head when Bouteflika – or rather those around him – announced in 2019 that he would stand for a fifth term, despite having been incapacitated since a serious stroke in 2013. A popular non-violent protest movement - the so-called Hirak movement – led the army to engineer Bouteflika’s resignation in April 2019. He died in September 2021.
There has been much talk of a “New Algeria”. Politically at least, this has not happened. COVID-19 lockdowns enabled the authorities to supress protest. The state remains under the control of the military, the intelligence services and a presidency headed by one of Bouteflika former prime ministers Abdelmadjid Tebboune, who talks of reforms, but whose vision and capacity to bring them about is questionable. Dozens of Bouteflika-era ministers, officials and businesspeople have been imprisoned on corruption grounds. While this has appeased public opinion, it has also paralysed decision making and shaken what remains of the private sector. Economically, many of the Bouteflika-era restrictions curtailing foreign investment have been rowed back (namely the state’s pre-emption right on the transfer of shares by or to foreign shareholders; the prohibition on investors financing projects with loans from foreign lenders; and the so-called 49/51% rule), but the local landscape is still far from investor-friendly.
For now, Russia’s war on Ukraine seems to have removed the urgency to reform; foreign currency reserves are growing again strongly after years of depletion. The leadership, whose military historically enjoys strong ties to Moscow, is enjoying being courted by opposing sides. In the context of Europe’s energy crisis, Algeria’s natural gas supplies are seeing its geostrategic position elevated. But old habits die hard, and the security state remains firmly in charge. Leaving Algiers’ Houari Boumediene Airport to board a flight on the state-owned Air Algérie (not an airline celebrated for the modernity of its fleet, punctuality or service), my passport was checked no fewer than seven times. Being sent from line to line, I had a taste of the forced interactions with officialdom that still characterises daily life for Algerians.
