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Algeria: taking responsibility.

The Algerian government has now accepted that the popularity of Islamic fundamentalism in the country is more because of socio-economic conditions than religious fervour. Alfred Hermida looks at how the government plans to pull the country out of its economic mire.

THE ALGERIAN AUTHORITIES are finally facing up to the fact that they bear part of the responsibility for the upsurge of Islamic fundamentalism in the country, by allowing the economy to fall into such a pitiful state. The fundamentalists were on the verge of winning the country's first multi-party general elections in January last year, when the military intervened to dispel the phantom of an Islamic state in Algeria. The authorities recognise that reasons for the high level of support for the fundamentalists were not religious, but rather social and economic. Unemployment is rampant, especially among the young, and there is a severe housing shortage in Algiers.

The army has entrusted the prime minister Belaid Abdesselam, the father of Algeria's failed industrialisation programme of the 1970s, with the task of pulling the country out of its economic mire. The main problem facing Abdesselam is the country's huge foreign debt of $26 billion. The debt accounts for three-quarters of the country's foreign earnings, money which should be spent on urgently needed raw materials for industry.

Abdesselam is looking to break the back of the debt with a two-year crash austerity programme. In particular, he hopes to save foreign currency by restricting imports. Last November, the government introduced strict controls on a wide range of imports including cocoa, meat, fruit, cosmetics and toys.

As another plank of its programme, the government says it plans to reduce sharply public spending on state enterprises. Officials maintain the era when the state would bail out public industries is past. "We expect many state enterprises which are inefficient, uncompetitive and produce poor quality goods to disappear," said Rehda Hamiani, the minister in charge of the newly-created department for small and middle-sized businesses.

In the short term, the government expects economic conditions to worsen with no growth in industry until 1995. But after two years of belt-tighting, the government is aiming for economic take-off, with an annual growth rate of 6%, based on higher oil and gas revenues and lower debt repayments. By 1997 the government expects industry to be back on its feet and unemployment receding.

Ministers are confident they are on the right track. "The government's new message is becoming more and more credible," said Hamiani. "The fundamentalists can no longer seduce the public by saying that the government promises one thing and then does the opposite."

But despite the rhetoric, the government's programme appears hopelessly over-optimistic. Firstly, there are no guarantees that the regime will be around for the next five months, let alone the next five years. A year after taking power, the military-backed regime is struggling to keep the lid on attacks by armed groups of Islamic fundamentalists. In a series of ambushes and clashes, the militants have killed at least 350 members of the security forces.

The bedrock of support for the fundamentalists is found among the unemployed and disillusioned youth in the big urban centres. According to official figures, 20% of the active population is unemployed. Every year, 250,000 young people come onto the jobs market, but only 60,000 of them will find work. The fundamentalists' message of social justice proved irresistible to the ranks of young men who have nothing better to do than prop up the wall all day.

Despite the urgency of the unemployment problem, the government has put it on the backburner, concentrating instead on the austerity programme. According to the government's timetable, state enterprises are unlikely to hire any more employees until public spending picks up in 1995. In the meantime, the government is looking to the private sector to come to the rescue. But with companies struggling to balance their books, it seems unlikely they will be able to take on any more staff. The best the government can hope for is that unemployment will remain at its current level.

The other stumbling block is Abdesselam's chauvinistic attitude to foreign involvement in Algerian industry. The country desperately needs foreign investment in its oilfields to boost production, but Abdesselam has stressed that he will not sell off the family silver at a cut price.

Negotiations with the International Monetary Fund on liberalising the economy and moving towards a free market economy are also deadlocked. The Algerian press enthused about the recent visit by the IMF's director, Michel Camdessus, but in reality none of the differences between the IMF and Algeria were overcome.

The IMF wants to see a 50% devaluation of the dinar and a liberalisation of foreign trade before releasing a promised $400 million loan. But Abdesselam is committed to a strong dinar. The official exchange rate between the dinar and the French franc, the most popular currency for business transactions in Algeria, is 4 to 1. But on the black market, the rate can rise as high as 10 to 1.

Against this background, the government's plans for economic recovery appear to have little chance of success. And as long as the economic crisis persists, people will continue to turn to the fundamentalists as their only hope for the future.
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Title Annotation:Current Affairs
Author:Hermida, Alfred
Publication:The Middle East
Date:Apr 1, 1993
Words:880
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