Occupied Arab World

Who destroyed Algeria’s economy? - not FIS, surely

Crescent International

Ramadan 08, 14201999-12-16

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In a country blessed with vast oil and gas reserves, nine million Algerians, out of thirty million, live below the poverty line. A million children suffer from malnutrition, with a fifth of them suffering very serious consequences to their health. And with most of the revenues from oil and gas going to service the interest on external debts, and the non-oil and -gas sectors of the economy in a state of near-collapse, the country’s foreign currency reserves dwindling, and unemployment soaring to at least 33 percent, the situation can only get worse.

A recent report by a semi-official Algerian organisation charges this sorry state of affairs to the sole reliance on oil and gas exports and the absence of “an economic policy and a clear strategy”. A new book by an Algerian writer, Ahmed Dahmani, pins responsibility for the failure of the economic and social policies of successive governments during 1980-97 on the lack of ‘political will’ on the part of the ‘ruling class’ to implement already ‘approved reforms’.

Neither the report nor the book, however, highlights the crucial role of the IMF-imposed ‘structural reforms’; of the corrupt military, who rule Algeria from behind the scenes, and of the civilian politicians covering up for them and sharing the loot with them. Nor do they uncover the extent to which foreign (particularly western) businessmen and politicians are involved in the plunder of the country’s resources. This strange reticence in otherwise highly-critical expositions is not surprising, as those - even heads of state - who expose corruption in high places are often as good as dead. The late president Boudief, for instance, was gunned down in public while giving a speech, because of his tendency to attack corruption by senior public figures.

But although the secular ruling Θlites are doubtless relieved by the omission of these crucial factors, they will certainly not to welcome the failure of the report and the book to place primary responsibility for the economic fiasco squarely on the shoulders of ‘Islamic terrorists’, who have allegedly destroyed the conditions congenial for economic growth by waging an unremitting war on the government since 1992.

The authors of the two publications, themselves as secularist as the generals and their political allies, cannot be ideologically averse to blaming the Islamic National Front (FIS). However, the economic and social policies they examine were found wanting long before the advent of FIS’s armed struggle, and the incompetence and corruption of successive governments have been so monumental that blaming their only principled critics would have been glaringly wrongheaded.

The FIS was banned in 1992 after the army intervened to cancel the elections FIS was poised to win. The armed struggle, which it was forced to adopt in self-defence against the military’s war on its cadres and supporters naturally took some years to develop fully. By 1994, the government was forced to seek western and IMF ‘assistance’ to have its crippling foreign debts rescheduled. It took three-quarters of the revenues from oil and gas exports to service the interests on those debts. It was in February of that year that the proud Algerian ‘socialist and revolutionary’ ruling elite accepted for the first time - on humiliating terms - a typically capitalist structural programme dictated by the IMF in return for the reschedulement of debts.

The FIS and the other Islamic groups fighting the regime could have brought the Algerian economy to its knees by attacking the highly vulnerable energy installations - the country’s main source of revenues - but they deliberately avoided destroy a public industry.

According to the new report, issued by the Economic and Social Council (ESC), the industrial and agricultural policies designed to reduce the country’s reliance on the energy sector have shown disappointing results. The industrial sector, which provides some 80-85 percent of the national output, has grown by only 1.5 percent, while the agricultural sector has been a dismal failure as a result of some bizarre measures by officials. The government has transferred 155,000 hectares of agricultural land to other sectors not related to agriculture, for example.

In these circumstances it is not surprising that the exports designed to offset the fall in the price of oil have not materialised, nor that the need for food imports has increased instead of receding as promised. This has in turn led to a sharp rise in budget deficits and a steep drop in foreign currency reserves. Last June, for example, the budget deficit stood at 80.2 trillion Algerian dinars - three times its level in 1998.

The increase in budget deficits and the drop in foreign currency reserves, coupled with the steady privatisation required by the IMF’s structural programme, have led to large-scale unemployment (more than 33 percent in June) and a rise in the cost of imports hitting small business and the poor particularly hard. As in Egypt where the rate of privatisation is the fastest in the Arab world, only a small elite is doing well out of this man-made economic disaster.

Yet the few secular critics of these policies are drawing the wrong conclusions. Hamdawi, for example, approves of the IMF’s ‘reform programme’ but faults the lack of ‘political will’ to implement it on the part of the ‘ruling class’. He also singles out the Algerian population’s rapid growth as the single most serious obstacle to the country’s economic and social development in the 21st century. This, of course, suits the ‘ruling class’, which is promising more of the same.

Muslimedia: December 16-31, 1999

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