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Analysis

Algeria: Still Vulnerable, But With Some Resources to Placate the Population

By Maya Senussi

Since the first protests in mid-January, which were violently crushed, demonstrations in Algeria have been regular but limited, with participants (often heavily outnumbered by riot police) gathering every Saturday and promising to continue until their demands are met. To avoid the fate of its North African neighbors, the government has made concessions to placate its people. Not only has it lowered prices of staple foods, but it has also promised to lift the 19-year-old emergency law and tackle unemployment and housing issues. But opposition groups are skeptical that changes will be implemented.

Algeria, with a population of 35 million, the second largest in the Arab world, after Egypt, is vulnerable to global food price pressures and labor constraints. The government has spent little of its hydrocarbon revenues on the growing population, and income disparities have widened. Spending, both on social transfers and infrastructure, only began to pick up in 2008, but has so far done little to create jobs. Moreover, tighter curbs on foreign investment, formalized in 2010, will likely slow the diversification of the economy. Algeria’s gas output, mainly destined for Europe, suffers from a lack of investment in infrastructure or exploration.

As in Iraq, protesters in Algeria are not asking for a change of the regime, but rather an improvement in their economic situation. Most people remember how destructive the civil war was and are wary of the military, currently curbed by President Abdelaziz Bouteflika, who has been in power for “only” 12 years. Despite expansionary fiscal policy, oil money might not be sufficient to foster growth in non-oil industries, expand private sector activity and increase competitiveness sufficiently to create jobs.

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