In late December, the government began removing many food price subsidies, forcing people to pay over fifty percent more for things like cooking oil and sugar. Middlemen and distributors were also accused of raising prices still further (beyond normal markups). This is seen as another example of the corruption in government and throughout Algerian society. In the last week, riots broke out in several cities, and so far six people have been killed and over 400 injured. This led the government to rescind most of the prince increases yesterday. The violence was about more than food subsidies. Some 70 percent of the population is under age 30. There is persistent high unemployment among young men. with over a third of men 18-30 are out of work. The government is generally hated because it is basically a self-serving dictatorship pretending to be a democracy.
Despite all the oil money, the economy is sluggish, and it's difficult to start a new business without someone in the government getting a cut. This scares off foreign governments, as does the terrorist violence. The government is trying to change its image, but it cannot change what it is. Even with the sharp decline in Islamic terrorist violence in the last decade, there is still enough violence to make potential investors uneasy. The government corruption is a larger impediment. For example, the government has stalled paying Japanese construction companies nearly 20 percent (over $1.2 billion dollars) of the money due for work done building 400 kilometers of highways.
The government also has problems with income, and fluctuations in oil and gas prices. In 2009, they took in half the oil and gas revenue ($20 billion) as they did in 2007 ($40 billion.) Oil prices have been higher in the past year, but the additional revenue often gets diverted by government officials, and ends up in foreign bank accounts. All this means erratic government spending, higher unemployment and more public unhappiness. Most embarrassing to the government has been the militancy of thousands of maimed military and police veterans, who have been demanding better care and compensation. When veterans demonstrate in the capital, the police are reluctant to act against their injured brethren. But there have been plenty of other demonstrations, by non-veterans, against lack of housing and jobs, which the cops have cracked down on. People are unhappy and frustrated. A recent opinion poll found half of all Algerian males aged 15-34 wanted to get out of the country, permanently. But that is not easy, as people smugglers have to be paid, and most unemployed young Algerians haven't got the cash needed to leave the country. There have been similar riots, for similar reasons, in neighboring Tunisia. But one thing all North African governments are good at is dealing with unruly citizens. Riot police and other paramilitary forces have been able to contain the riots so far.
To the south, Mali admits that it has a few hundred al Qaeda members are hiding in its northern desert. But Mali is angry at France, and most other Western nations, for declaring northern Mali too dangerous for tourists. Mali is making an effort to develop better relations with the tribes in the north, using economic aid, and more police patrols to chase down bandits (and catch al Qaeda drug smugglers and find terrorist camps). Unfortunately, corruption and incompetence limit the effectiveness of counter-terror operations. Mali doesn't like foreigners to speak openly of these problems, but makes little progress in fixing things.
January 7, 2011: In Niger, Islamic terrorists kidnapped two Frenchmen in the capital. The kidnappers fled towards Mali. Police and French special operations troops took off in pursuit. The kidnappers were caught up with twice, and each time there was gunfire. The kidnappers refused to surrender. The two hostages and most of the kidnappers were killed. Terrorists particularly like to kidnap Westerners, because they can eventually receive ransoms of a million dollars or more per hostage.
January 4, 2011: In Morocco, police arrested 27 people and accused them of trying to establish a support network for terror attacks, and al Qaeda operations (intelligence, fundraising, training and recruiting) in general.
December 31, 2010: Counter-terror operations in the last three weeks, east of the capital, killed over fifty al Qaeda terrorists, destroyed several bases arrested dozens of suspects. Large quantities of weapons and documents were captured, revealing the extent of al Qaeda operations in North Africa.
December 27, 2010: In the east, four police commanders were arrested for trying to cover up the murder of a man arrested for being drunk. Police are a major source of criminal activity, and the government is under pressure to clean up this problem, and government corruption in general.