Algeria: A Year of Plague, Poverty And Power Politics


April 8, 2020: The covid19 virus threat has ended the weekly protests, which began in February 2019 and quickly succeeded in overthrowing a corrupt and inept president. Also gone was the power of the FLN party, which had held onto power since the 1960s. One reason the FLN lost was that the deposed president, Abdelaziz Bouteflika, tried to limit the autonomy of military intelligence. This was an unpopular effort with most Algerians as well as the troops. The military was popular because it had defeated an effort by Islamic political parties to take over the government in the 1990s. After that, the military managed to keep Islamic terrorism out of Algeria, even after the 2011 Arab Spring and the appearance of ISIL (Islamic State in Iraq and the Levant) in 2014. The FLN saw the military as a potential rival and starting in 2015 tried to limit military intelligence capabilities. This was not popular with anyone but the FLN and the many corrupt politicians who believed (somewhat correctly) that the military intel had evidence of corrupt acts.

The presidential elections were held on December 12th despite popular opposition. This was not an instant disaster because the candidate elected, Abdelmadjid Tebboune, a former prime minister, formed his new government by appointing new government ministers that most protesters approved of, or could not criticize. None of the new ministers had opposed the weekly protests. Tebboune has also met with protest leaders and simultaneously organized an effort to create a new constitution that would make it more difficult for him or any future president, to again become a corrupt “president-for-life”. The new president, as a former senior official himself, knows that there are many senior people in the government, military and business community who oppose such changes. Such opposition has to be expressed quietly but it is still there and it will be a year or more before it will be clear if a new, dictator-proof, constitution is possible or not.

The problem is that Tebboune had the support of the military and will be under pressure to maintain a high level of military spending. Nearly a third of the government budget goes to the military. This is high by world standards. In fact, it is the highest in the world by a nation that releases such data. North Korea is believed to devote more of the government budget to the military but refuses to talk about it. Other nations that come close are Saudi Arabia, at 25 percent. Saudi Arabia believes it is at war with Iran and considers its military budget a wartime budget. Armenia, at 21 percent, is in a similar situation with neighbor Azerbaijan. Officially Algeria only spends about 14 percent of the government budget on the military but the reality is the spending is much higher and the security services want to keep it that way.

Most of the troops, mainly the younger ones, support going after corruption in a big way. The junior officers agree with that. For the older officers and NCOs who have made the military a career, priorities are different. For the older troops, the most important thing is to maintain enough political power to maintain the current levels of military spending.

This outcome may prove that Algerians who felt that rushing elections favored the election of another corrupt politician, were right. So far the new president and his ministers appear pretty clean, as do most senior military officers. But that could change, as it often does, leaving Algeria with leaders are as corrupt and ineffective as all the previous ones. In other words there would be a few token prosecutions for corruption but the majority of the corrupt bureaucrats and business owners would return to their outlaw ways.

Running Near Empty

The government measures how long it can avoid making decisive and effective changes in the economy by noting what the foreign currency reserves are. As of March 1st, the reserves amounted to about $60 billion. When these reserved dipped below $100 billion at the end of 2017 it was predicted that they were headed for $64 billion at the end of 2019 and $47 billion by the end of 2020. Things got worse faster than expected.

Until 2020 the government's inability to reform (suppress corruption) the economy quickly enough to reduce vulnerability to low oil prices was a major threat and cause the foreign reserves shrinking. The status of these reserves must be reported accurately in order to placate foreign exporters and lenders. Foreign exchange reserves, essential to pay for imports, keep declining because 70 percent of what Algerians consume is imported. Replacing a lot of those imports with locally produced food and manufactured goods takes time and the elimination of many laws and customs that allowed the FLN party and corrupt leaders like Bouteflika and to prosper and survive since the 1960s.

In 2020 there were two unexpected financial difficulties. First, Saudi Arabia and Russia got into a dispute over how to cut oil production to raise world oil prices. This dispute resulted in both nations increasing production and sending world oil prices down to $20 a barrel. Right after that covid19 got out of China and temporarily stalled American and European economies as most businesses were shut and people told to stay home to halt the spread of the virus. This reduced demand for oil, even at the very low prices and that drove prices still lower.

Then came covid19, a virus that first showed up in China back in December 2019. Local and national Chinese leaders mishandled the virus, especially when it came to sharing data with the outside world. As a result, the opportunity to halt the virus early on was lost and now it is worldwide. Algeria is dealing with the virus better than most other African or Middle Eastern nations. But this comes at the expense of economic activity. That is another battle, which is going to be more difficult because of the unusually low oil prices.

These low financial reserves are not a new problem, because since the collapse of oil prices after 2013, Algeria's foreign currency reserves have enabled the government to put off carrying out the extensive reforms and anti-corruption measures needed to revive the economy and achieve the degree of economic growth that would solve the unemployment problems. Those cash reserves were $193 billion in mid- 2014 and, even with cuts to non-essential imports, the cash reserves kept shrinking. The government cut its budget 14 percent in 2017 in order to get the budget deficit down to 8 percent (versus 15 percent in 2016). Even so after five more years of this, the foreign currency reserves will be less of a cushion and more of a threat because of all the additional budget cuts. By 2018 it was obvious that budget cuts and reductions in imports was not going to work and most Algerians knew it. That was one of the issues that led to the April 2019 overthrow of FLN rule. The current unrest is all about what replaces the FLN and if the replacements can fix the economy. Further cuts in the national budget are mandatory. It will be difficult to justify sparing the military and that could get interesting.

Islamic Terrorists Intimidated

Even before covid19 showed up Islamic terrorist activity in Algeria was declining year after year. Islamic terror groups have warned their members about covid19 and advised them to remain inactive and out of sight until the health crisis is over. The army continues its counter-terrorism and border patrols but at a reduced frequency. While some smugglers are taking advantage of this, they are just getting the stuff across the border and then hiding the goods until the quarantine measures ease up and enable them to move their drugs, weapons or consumer goods towards the coast.

April 7, 2020: Algerian banks agreed to defer, or reschedule, loan payments by firms that have lad operations disrupted by covid19.

April 5, 2020: The nationwide curfew is now longer, from 3 PM to 7 AM in the capital and eight of the most populous provinces. For the other provinces it remains 7 PM to 7 AM. There are two southern provinces, which are thinly populated and largely desert, where they have been no reported covid19 cases. These two provinces have no curfew at all. So far the government has identified nearly 1,300 Algerians who have come down with the virus. Over the next three days infections rose to 1,468 and virus-related deaths to 193. So far Algeria has suffered about four deaths per million population. That’s the same as South Korea, which is praised for its efficient handling of the virus. South Korea has a much better public health system but so far Algeria has done well with what it has. What helped was the Algeria has only had 33 cases per million people while South Korea had 203. Both are doing better than the United States, which has 1,210 cases per million and 39 deaths per million. One reason for the higher American, and European, numbers per million is a better health care system that identifies and counts more of the infected and dead from covid19. Not all nations are able, or willing, to get accurate numbers.

March 20, 2020: Protest leaders, who have managed 56 straight weeks of gatherings, decided to suspend the protests until the covid19 threat is over. So far there have been 90 confirmed people with the virus in Algeria and ten deaths. Today, which would have been week 57, the streets were empty.

March 17, 2020: The government ordered mosques and other religious institutions closed until firth notice as part of the effort to halt the spread of covid19.

March 12, 2020: The government ordered schools including universities, closed until firth notice as part of the effort to halt the spread of covid19. This comes two days after most businesses were ordered closed.




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