Algeria's Struggle for Democracy
Prospects for Incremental Change

Mona Yacoubian

Council on Foreign Relations

January 1997, Studies Department Occasional Paper Series No. 3

Executive Summary

Algeria's bloody conflict has raged for five years, leaving at least 60,000 dead and causing more than $2 billion damage to Algeria's infrastructure. This paper provides a current analysis of the Algerian crisis, dissects its roots, and examines the conflict's regional impact, as well as its policy implications. Key conclusions follow:

• Algeria's immediate future will likely reside somewhere between the two extremes of total military victory and Islamist takeover.
• Absent genuine political reform and accelerated economic reform, Algeria's violence-laden political stagnation will incur mounting human and political costs and threaten regional stability.
• Fears of an Islamist "domino effect" have proven unfounded. Intensified domestic repression practiced by neighboring regimes in response to Algeria's crisis constitutes a more potent threat to long-term regional stability.
• The confluence of Algeria's dramatic political opening with its potent Islamist opposition challenges U.S. policymakers to reconcile the promotion of democracy with the rise of political Islam.
• Despite its deep historical ties and pressing political interests in Algeria, French policy remains largely adrift, lacking any clear strategic vision. The European Union may offer a more appropriate venue than France for concerted action on Algeria.
• Washington is afforded a certain luxury in Algeria and the rest of North Africa. Policymakers can press harder for political and economic reforms than they have thus far because such policies do not necessarily collide with key interests such as the Arab-Israeli peace process and secure access to Gulf oil.
• Ultimately, only the Algerians themselves can resolve their crisis, but greater American engagement together with European allies could facilitate a speedier resolution.
• The United States must consider ways to encourage regional friends and allies to move toward gradual opening and thereby avoid chaotic upheaval. Washington policymakers underestimate their potential impact in the region on questions of reform.

Foreward

Algeria's experiment with democracy, beginning in the late 1980s, has proven disastrous. With the Islamic Salvation Front (FIS) poised to sweep the 1991 parliamentary elections, the military halted the electoral process and seized control. In the following five and one half years of turmoil, more than 60,000 people have perished in political violence.

In the West, Algeria became a focal point in the heated debate over Islam's compatibility with democracy. For some observers, Algeria embodied the threat of an Islamic "green peril." Others castigated the United States for holding a double standard in its promotion of democracy: free elections only as long as the "right team" wins.

Yet the crisis in Algeria is far more complex. Historical, political, socioeconomic, and cultural factors all play a role in the current conflict. The demands of Algeria's deeply alienated and disproportionately young population underscore the limitations of the current system. It is difficult to foresee how Algeria can realize its tremendous potential without genuine political reform and accelerated economic liberalization. Mona Yacoubian makes a persuasive case for greater U.S. involvement in urging the Algerian government toward greater reform.

Richard W. Murphy
Nomi Colton-Max

Introduction

For more than five years Algeria has been embroiled in a savage cycle of violence and bloodshed. A long war of attrition between government forces and Islamist extremists has cost this North African country of 28 million people at least 60,000 dead, most of them innocent civilians. Scores of roads, factories and schools have been destroyed. Damage to Algeria's infrastructure exceeds two billion dollars.

As time goes by, the perpetrators of violence become more difficult to identify. Government security forces have infiltrated some of the armed Islamist groups, raising questions about attacks ascribed to Islamic extremists. Local rivals have exploited the situation to settle old scores. Posturing as Islamists, criminal gangs control certain areas, extorting vast sums and killing those who stand in their way.

Algeria's armed Islamist extremists have actively targeted foreigners, murdering nearly 200 in the past three-and-a-half years. No Americans have yet been killed, but several hundred continue to work on Algerian oil and gas projects representing billions in private U.S. investment. Regional fallout from the crisis poses a longer term threat to U.S. interests. Continued turmoil in Africa's second largest country could destabilise the rest of North Africa and imperil Mediterranean security.

As the conflict drags on, members of the European Union remain unable to articulate a clear, coordinated response. Even France has yet to formulate a coherent Algeria policy, despite deep ties grounded in 132 years of colonial domination. Meanwhile, the United States' muted policy toward Algeria has yielded few tangible gains. Hamstrung by the precarious security situation and its limited access to the military leadership in Algiers, American policymakers have maintained a studied distance from Algerian affairs.

Valid questions linger over Algeria's relevance for U.S. policymakers. Algeria is not a frontline state in the Arab-Israeli peace process, and its hydrocarbon resources pale in comparison with those of the Gulf states. But its location on the southern Mediterranean gives it geostrategic significance, particularly in relation to America's southern European allies. Algeria also served as the stage for the Arab world's first significant experiment in democracy, albeit a deeply flawed one. And the Algerian crisis exemplifies trends that may chart the future course of the Arab Middle East.

Algeria's political opening coincided with and facilitated the rise of a dynamic Islamist opposition. The confluence of these two currents has challenged the United States to reconcile two often-stated foreign policy goals: promoting democracy and containing Islamic extremism. For many Western observers, Algeria is an important test case for Islam's compatibility with democracy.

Contrary to popular punditry, however, the crisis in Algeria does not reduce to a simple conflict between democracy and religious extremism. Rather, Algeria's turmoil flows from the country's political, economic and social ills and underscores the need for reform. The Algerian government has only limited popular legitimacy, ruling instead through repression and an entrenched patron-client network. Civil society and the rule of law are sorely lacking; official corruption is rife. Socio-economic ills, meanwhile, have reached critical levels. Rapid urbanization is placing tremendous strains on the infrastructure. Nearly 30 percent of Algeria disproportionately young population is jobless.

These troubles result largely from the lack of sustained political and economic reform that plagues the Arab world in general. While Algeria is an extreme case, the country's tragic recent history may presage similar crises elsewhere in the region. The body of this paper analyzes the complex roots of Algerian instability and its international ramifications and concludes by suggesting practical measures the United States can take to encourage a peaceful resolution of Algeria's current crisis.

Algeria's legacy
Many assumed the Soviet Union's collapse heralded perestroika in the ossified autocracies of the Middle East. At that time, Algeria seemed to be one of the first Arab countries in the region ready to begin implementing serious reform. Between 1989 and 1991, the country attempted a political transformation without parallel in the Arab world. After violent street riots in October 1988, President Chadli Bendjedid responded to popular anger by proposing a broad series of political reforms. The constitution was amended by popular referendum to allow political parties, ending the National Liberation Front's 30-year political monopoly. The amendment led to the government's controversial 1989 decision to legalize the Islamic Salvation Front (FIS), an umbrella organization of Islamist opposition groups with significant grassroots support. ₁ By 1991, nearly sixty registered political parties existed in Algeria.

In addition, the government granted broad freedoms of expression, making Algeria's press one of the liveliest in the Arab world. The human rights situation improved markedly; torture practically disappeared. Important progress was made toward removing the Algerian army from daily politics.

The Algerian Abyss
Things then fell apart. By January 1992, the FIS, with its debatable commitment to democracy, was poised to gain a majority in the national parliament after the first round of legislative elections. But the army intervened, forced President Chadli Bendjedid to resign and halted the electoral process, installing an extra-constitutional governing body led by a series of appointed presidents. Within a few months, the FIS was banned and its leadership jailed; many of its suspected followers were sent to prison camps deep in the Sahara desert. The military-backed regime subsequently stripped popularly-elected FIS mayors and councilmen of their posts, replacing them with appointed functionaries.

Algeria's abortive experiment with democracy quickly deteriorated into violence as Islamist militants took up arms against the regime. The loosely-structured coalition undergirding the FIS splintered into rivalrous armed factions. As these groups surged at the expense of political moderates, Algeria's Islamist movement turned increasingly radical. A guerrilla-style insurgency erupted in the countryside. Urban-based Islamic extremists resorted to terrorist tactics, including hijacking, kidnapping, and assassinating foreigners, intellectuals, and journalists. The bloodletting has also targeted thousands of ordinary civilians who are often brutally mutilated, then massacred.

Algeria's military-backed government responded with indiscriminate and widespread repression. International and local human rights groups continue to accuse the regime of systematic torture, collective punishment, and extrajudicial killings. Countless "disappearances" have been blamed on the security forces, while government-sponsored "self-defense" groups (essentially village militias) stand accused of arbitrary killings. Algerian security forces routinely engage in broad-ranging sweeps (ratissages) in which innocents are often arrested in police dragnets. Ordinary Algerians fear the elite "ninjas," crack anti-terrorist units who speed through the streets wearing black ski masks.

By spring 1995, the Algerian government had scored some impressive military and political gains over the Islamist militants, defying doomsday predictions that Algeria would become the Arab world's first revolutionary Islamic republic. Large-scale security offensives seemed to have neutralized significant portions of the insurgency. The number of extremist attacks diminished, as did the size of guerrilla commando groups.

The November 1995 presidential election--with a reported 75 percent voter turnout, despite terrorist threats--lent President Liamine Zeroual a degree of popular legitimacy and raised hopes for peaceful reconciliation. Flush from its political victory, the regime continued its winning streak in 1995 by posting the first positive GDP growth in a decade. Foreign oil companies lined up to sign multi-million dollar contracts.

Lost opportunities
Eighteen months after his election, President Zeroual appears to have squandered the public's good will, with few tangible successes to report. Algerians hoped Zeroual would end the daily violence and find a political settlement to the crisis. But the bloodshed has persisted, with daily bombings and assassinations throughout the country. While not at peak 1993-94 levels, the unrest continues to pose a significant threat to Algerians and foreigners alike. The final months of 1996 witnessed some of the most gruesome attacks on civilians since the beginning of the conflict. Hundreds died in a series of massacres and bombings. This year, more than 400 people perished in violence during the Muslim holy month of Ramadan (January-February 1997).

Meanwhile, indications that President Zeroual is pursuing a genuine political solution remain mixed at best. Following the presidential election, the regime focused on consolidating its hold on power. The government imposed increasingly restrictive measures on the press, particularly regarding the reporting of security-related information. Several journalists were arrested and numerous newspapers seized for breaching tightened censorship laws.

Nearly six months passed before the regime attempted to reach out to disgruntled opposition groups and gain a popular consensus for resolving the crisis. Once consultations began, President Zeroual pointedly excluded the FIS from the government's dialogue with the opposition, raising doubt about his ability to craft a durable settlement. After these symbolic consultations the regime undertook its own reconciliation plan, ignoring the opposition's proposals.

This plan includes a series of constitutional, electoral, and party law amendments, to be followed by legislative elections by mid-1997 (currently slated for June 5) and local elections by the end of 1997. ₂ The government's program contains some encouraging proposals such as presidential term limits and a shift to a proportional electoral system, but these are overshadowed by more troubling constitutional revisions. ₃

The new charter dramatically expands presidential authority. The president can now rule by decree in certain situations not allowed previously, as when parliament is in recess or between sessions. Presidential appointment powers have been also broadened to include magistrates, the Central Bank governor and provincial governors, among others.

Most significantly, the president now has virtual veto power over the parliament. The amended constitution creates a second body within the parliament, the Council of the Nation, which substantially dilutes the legislature's power. Two-thirds of the Council's members are indirectly elected by local and provincial legislatures, while the president appoints the remaining third. Passage of legislation requires the approval of three-quarters of the Council. In essence, the president, via his directly-appointed members, can veto any legislation not to his liking.

The new constitution also restricts the definition of a legal political party to those not founded on religious, ethnic, regional, or linguistic bases. Strictly interpreted, the amendment would require legal Islamist and Berber parties to change their party platforms or face dissolution.

The amended constitution is a step backward for democracy in Algeria. Prospects for a political opening and a more plural society have diminished significantly. Instead, the regime is retreating to the more predictable and peaceful days of absolute government control. Its "reforms" retain democratic trappings (legal opposition parties, a functioning legislature) but virtually insure against any significant challenge to the regime's hold on power. And the new constitution is silent on the army's role, maintaining instead the constitutional ambiguity that has allowed the military to rule Algeria since independence.

What lies ahead?
Algeria's complexity confounds attempts at prophecy. Still, certain trends are discernible. The Algerian regime has demonstrated remarkable resilience and durability; its immediate survival is in no way threatened. Islamist takeover is today a distant prospect, but outright military victory seems equally improbable.

The Algerian security forces have been more successful than expected. But despite their own claims, they have not reduced extremist violence to "residual terrorism." Extremist groups attract (or coerce) a continuous stream of recruits to replace those who defect or are killed. In addition, some proportion of the violence is perpetrated by the security forces themselves. Indeed, more conspiratorial Algeria watchers argue that the regime allows a certain level of violence to justify repression.

Algeria's immediate future will likely fall somewhere between the extremes of total military victory and Islamist takeover. The government will muddle through, maintaining a strong grip on power without eliminating the armed Islamist opposition. Absent genuine political reform and accelerated economic recovery, Algeria's violent political stagnation will incur mounting human and political costs, threatening internal and regional stability. Accounts of throat-slittings, executions and bombings mark the absence of an open political system with well-grounded institutions allowing peaceful, inclusive debate.

The path toward political and economic opening in Algeria and elsewhere in the region is fraught with obstacles--many established by the ruling governments themselves. Still, U.S. decision-makers should prioritize political and economic reform in the Arab world. Greater American engagement on these difficult questions could help forestall future tragedies.

The Roots of the Crisis

The Political Dimension: A Struggle for Power
Who are the major players in the Algerian tragedy? What are their interests and capabilities? Who are their constituents? There are no simple answers, for Algeria's turmoil encompasses the whole of Algerian society. The conflict's two main protagonists are the regime and the Islamists, but neither is monolithic. The inner workings of the Algerian regime, especially the army, remain obscure and difficult to dissect. As for the Islamists, they have become more divided over the past five years.

The Regime--an Army with a Country
The regime, or le pouvoir as it is known in Algeria, relies on two primary sources of authority: the military and a complex bureaucracy/security apparatus. Real power in Algeria has always resided with the military. ₄ Often referred to as the boîte noire (black box), the military decision-making apparatus is the least understood yet most critical factor in Algerian politics. Although distant from daily governance (undertaken by the civilian bureaucracy), a relatively small group of military leaders retains ultimate authority over political decision-making. The generals broker power among themselves through consultation and consensus. Every leader since Algeria's independence in 1962, with the exception of President Zeroual in the November 1995 election, has been chosen through this collegial decision-making process. ₅

Algeria's military elite is comprised of several, competing "clans" that vie with one another for power and influence. The clans, often referred to as the "political-military mafia," constitute the informal power structure supporting military rule. These clans are not exclusively familial. Ties of blood and marriage supplement professional networks. Some clans trace their origins to regional alliances forged during the war for independence.

Intra-clan struggles (luttes des clans) have served as a constant backdrop to the army's role in Algerian politics. Lacking indigenous institutions to ground their authority, Algeria's new leaders simply grafted their war-time, clan-based network onto the remnants of the French colonial system. In the summer of 1962, clan infighting triggered a bloodbath as internal rivals battled for primacy. To this day, Algeria's leadership is driven by narrow, clan-based interests, and ultimately by a desire to stay in power. ₆ Notions of "national interest," public service and accountability remain conspicuously absent.

The army's January 1992 intervention was motivated by fear of losing political supremacy. Initially, the generals seemed to support the 1989 political reforms, which included measures to streamline and professionalize the army. They voiced a desire to rise above partisan political squabbling and focus on strengthening the army's role as ultimate political arbiter and guarantor of the new Algerian state. At the same time, the army insisted on preserving its special privileges.

But in late 1991, as President Bendjedid's experiment with democracy careened out of control, the generals grew concerned. Emboldened by its overwhelming victory in the 1990 municipal elections, the FIS had begun to stake increasingly strident positions, especially against the military. ₇ FIS rhetoric grew more threatening in the following months. It featured direct attacks on the army, particularly during the FIS-led strike in late spring 1991. When it appeared the FIS had successfully extracted its principal demands from the government, the army sharpened its response, challenging the FIS wherever it could. ₈

Following the FIS sweep in the first round of the December 1991 legislative elections, rumors swept Algiers that the FIS would purge the military leadership and install sympathizers in key positions. Suspecting that President Bendjedid was secretly negotiating a "co-habitation" agreement with the FIS, the army reacted by canceling the election and forcing the President to resign. ₉

When violence erupted in January 1992, the ruling generals reluctantly removed the veil of civilian government and assumed a higher profile. From the outset of the crisis, there were internal divisions among the ruling military elite. While the generals agreed about not sharing power with the Islamists, they differed on how to achieve this goal. The "conciliators" advocated a policy of coopting moderates within the FIS in the hopes of decisively dividing and weakening the Islamist opposition. The "eradicators" eschewed any dealings with the Islamists, demanding their total elimination.

Today, differences within the military leadership appear to have narrowed considerably, with the regime adopting a consistently hard-line position against the FIS and the more radical armed groups. Shortly after his election, President Zeroual ignored an open letter from the FIS, acknowledging his electoral victory and proposing new talks. Instead, the regime has worked assiduously to preclude the party from ever again rising to political prominence. Negotiations with the FIS have ceased. Its imprisoned leadership has reportedly faced harsh treatment. Meanwhile, government security forces continue to wage all-out war on the armed Islamist opposition.

The military's refusal to negotiate with the Islamists bodes ill for a near-term solution to the crisis. Indeed, the army stands as one of the key obstacles to lasting peace in Algeria. The regime's staunch position stems in part from the continued absence of a clearly defined role for the military, which any lasting resolution must address. ₁₀ The new constitution's vague definition of the military's political role will likely be used to justify prolonged military-backed authoritarian rule at the expense of political liberalization and the promotion of civil society.

With the army preferring to rule from "behind the shadows," an elaborate state apparatus executes military decisions. This vast network of security personnel, bureaucrats, and public sector entrepreneurs maintains a symbiotic relationship with the regime, carrying out its dictates in return for personal profit. These groups--not the Algerian populace--comprise the regime's key constituency.

While the army remains the arbiter of power relationships, technocrats within the Algerian bureaucracy wield inordinate influence in the daily lives of most Algerians. The French scholar Bruno Etienne once described them as "the new notability" who "possess a precious capital; they know how the system works." ₁₁ Over the years, elaborate patron-client networks have developed in which well-connected bureaucrats exploit their access to state goods and perks to secure favors from clients. Government bureaucrats serve as intermediaries, directing the distribution of goods, state contracts, and (notably) oil rents. As in the army, notions of public service and the rule of law hold but limited sway within the Algerian civil service. ₁₂

Official corruption grew particularly rampant during the Bendjedid era (1979-92). ₁₃ In 1990, former Prime Minister Abdelhamid Brahimi publicly claimed that FLN corruption in government amounted to $26 billion, a sum equal to Algeria's total foreign debt at the time. ₁₄

Official corruption remains a widespread problem in Algeria today. The atmosphere of violence and the breakdown of the rule of law have facilitated the spread of corruption. Although the government has announced cosmetic reforms aimed at reducing graft, little progress can be expected without measures to dismantle the political-military mafia's enrichment network.

The Islamists--A Broad Spectrum of Players
Despite Algeria's longstanding reputation as a bastion of secular, socialist ideology, Islam has always occupied an important place in the nation's history and development. Islam has been an idiom of political opposition in Algeria since the colonial era. Emir Abd al-Qadir, a charismatic leader from a family of religious notables, raised the most potent challenge during the early years of French colonial occupation. For nearly two decades, Abd al-Qadir resisted French troops while laying the foundations of an embryonic Islamic state. Following a period of dormancy during which local Muslim notables were largely coopted into the French colonial structure, a reformist brand of Islam emerged with the founding of the Association of Algerian Ulama in 1931. The reformist ulama played a critical role in the Algerian fight for independence, advocating a separate Arab/Muslim identity for Algeria and opposing cultural assimilation with France. Their motto: "Islam is my religion; Arabic is my language; Algeria is my country" later became the rallying cry for National Liberation Front fighters.

Following independence, Islam continued to play an important role in mobilizing opposition sentiment. Strict authoritarian rule left little public space in which to express popular dissatisfaction, except for the mosques and informal prayer areas that sprouted across Algeria in the seventies and eighties. ₁₅ Today, Islamist appeal is deeply rooted in popular disaffection stemming from sharp political and socio-economic grievances. Islam offers a powerful idiom for deep-seated popular grievances stemming from a lack of jobs, housing, and accountable government. On the whole, Algerian Islamism is as much a nationalist, political phenomenon as a religious one.

Algeria's Islamist movement is far from monolithic. It includes a broad spectrum, ranging from government-coopted parties to outlaw terrorist groups such as the radical Armed Islamic Group (GIA), which has claimed responsibility for several terrorist attacks. While most Islamists share a common aspiration for an Islamic state governed by shari'a, they differ in fundamental ways and are often rivals. ₁₆

The groups employ a broad range of tactics and strategies. Their supporters hail from diverse social classes. The most moderate among them are Islamic charitable organizations that eschew political activity. They advocate transforming society from its grassroots and have largely limited their activities to education and social welfare projects. Prior to the crisis, Islamic social welfare groups filled a critical gap left by inadequate government services. Their charitable activities played a key role in attracting supporters to the Islamist movement. However, the ongoing political violence has dramatically limited the scope of their activities. ₁₇

By contrast, since 1989, Islamist political parties such as the FIS (before being banned in March 1992), Hamas, and an-Nahdah have sought to further their goals via the ballot box. They have operated as opposition parties within the Algerian body politic and professed a willingness to play by the rules. All of the parties, including the FIS, have publicly denounced the use of terrorism. Leaders of the FIS, however, refuse to renounce the use of violence, claiming their partisans retain a legitimate right to armed resistance.

Support for Islamist political parties derives in part from Islamist intellectuals. Often university-trained professionals (usually with technical degrees), they seek their inspiration from the early Algerian Islamist reformers. Other groups include Arabic-speaking school teachers, Muslim preachers and small businessmen. These groups were sidelined by the Francophone elite, which profited from years of patronage and corruption. The Islamists' message of political reform and a return to core Arab/Muslim values resonated with an Arabophone educated class frustrated by its political exclusion and limited scope for social mobility.

The urban poor are also drawn to Islamist parties, whose support networks often serve basic needs not provided by the government. During the eighties, as the state retreated from the vast slums found in all major Algerian cities, Islamic charitable organizations stepped into the breach. They staffed medical clinics, picked up garbage and provided subsidized food during important holidays. Following the disastrous 1989 earthquake, Islamist groups beat the government to the devastated area with relief supplies. Disgusted by rampant public corruption and alienated from the regime, Algeria's underprivileged class found solace in the Islamist networks.

The Islamists also appeal to Algeria's youth, whose needs and views have been largely ignored by the regime. Jobless and often college or high school drop-outs, countless young men found a sense of purpose and belonging in the mosques during the eighties. The imams' fervent anti-government sermons inflamed their festering resentment and disillusion. Faced with extreme government repression following the cancellation of elections, scores of these young men opted for the armed groups.

Before its dissolution and the jailing of its leadership, the FIS dominated Islamist politics. Yet today, the FIS has been largely eclipsed by the armed groups on the ground and more moderate Islamist parties in the political arena. While FIS chiefs Abassi Madani and Ali Benhadj remain the spiritual leaders of the Islamist movement, they have limited influence over the armed groups. ₁₈ The FIS has grown increasingly marginalized, raising some question as to whether the once-formidable party is now a spent political force.

Meanwhile, profiting from popular disgust with the armed groups' brutal tactics and the Islamic Salvation Front's absence from politics, Hamas--a moderate party with previous ties to the government--has emerged as the frontrunner among legal Islamist parties. ₁₉ Its leader Mahfoud Nahnah placed second in the November 1995 presidential election with 25 percent of the vote. In an attempt to coopt Hamas further and to portray his government as broad-based, President Zeroual granted two cabinet positions to the party. ₂₀

Since the regime has foreclosed the re-emergence or reconstitution of the FIS, Hamas can be expected to retain its leading position. Unlike the FIS, Hamas will probably remain a relatively tame opposition party, serving the regime as a token Islamist presence without seriously challenging its hold on power.

The armed groups occupy the extreme of the Islamist political spectrum. They have resorted to violence, and in some cases terrorism, to bring down a government they consider illegitimate. The use of violence by Islamist opposition groups in Algeria dates back to the seventies. ₂₁ The most prominent Islamist guerilla organization, led by Mustapha Bouyali, was active throughout the eighties until Bouyali's 1987 death in a shoot-out with government security forces. Even during the days of FIS political prominence, an armed guerilla presence lurked in the shadows, staunchly opposed to the FIS strategy of political participation. Vindicated by the Salvation Front's discredited attempt to work within the system, these groups seized the initiative following the cancellation of the second round of legislative elections.

Despite a shared philosophy of using violence to achieve political goals, major strategic and tactical differences exist among the armed groups. Two rival groups, the Armed Islamic Group (GIA) and the Islamic Salvation Army (AIS), constitute the principal elements of Algeria's armed Islamist opposition. Sketchy information on the (fluctuating) number of fighters in each faction prohibits an accurate assessment of their relative strengths.

A large number of autonomous Islamist cells have proliferated in urban Algeria, some devoted mostly to petty crime. While these independent groups sometimes claim a loose affiliation with the GIA, their ties to local GIA leaders are informal at best. Instead, they rule local neighborhoods much as street gangs do in the United States. Many have joined these autonomous groups for their own protection or to avenge the death of a close relative killed in the ongoing violence.

The GIA is perhaps the most notorious and controversial armed faction. ₂₂ Since the organization is widely believed to have been infiltrated by government security forces, questions often swirl about the real perpetrators of terrorist acts for which the GIA claims responsibility. Its agenda and membership remain the subject of great speculation. Due to its continual splintering, the GIA is more often referred to in the plural--the Armed Islamic Groups. GIA members likely include a small number (estimated between 200-300) of "Afghans," Algerians who trained and fought in Afghanistan. Perhaps the majority of GIA fighters are recruited from Algeria's scores of jobless, young men with little formal education or religious training. Some GIA cells more closely resemble extortion rings, devoid of religious or political ideals.

The GIA openly espouses terrorism as a legitimate means to achieve its goals and rejects any dialogue or accommodation with the government. Its bloody tactics have included throat-slitting and mutilation of innocent civilians, including women and children. The group has claimed responsibility for numerous terrorists attacks, including the December 1994 Air France hijacking, as well as the killing of foreigners, journalists, and intellectuals. The GIA has also targeted and killed prominent members of the FIS as well as members of Hamas. Beyond its activities inside Algeria, the GIA has established arms networks in Europe. They claimed responsibility for several of the Paris bombings in July-October 1995.

The AIS is the GIA's chief rival on the ground. The two groups often clash in bloody turf battles. The AIS more closely resembles a classic guerilla insurgency group; many of its militants formerly served in the army. Its fighters primarily target infrastructure, military installations, and government buildings. Frequently referred to as the armed wing of the FIS, the AIS has staked a far more nuanced position than the GIA on many issues. It has distanced itself from the killing of innocent civilians and has supported past calls for negotiation with the government. Like the FIS, the AIS rejects exporting the Algerian conflict to French soil.

Despite variation across Algeria's Islamist spectrum, the groups share some characteristics. All have loose structures and fluctuating memberships. Leadership is typically diffuse, hierarchies ill-defined and secretive. Even as a legal party, the FIS never publicly divulged the membership of its governing council (majlis ash-shura). Decision-making structures are informal, with most decisions taken via consultation and consensus. The FIS never functioned as a coherent political party, but literally served as a front for diverse, often competing factions. ₂₃ Nor do the more radical armed groups display strict organizational structures. They are composed of several cells, each headed by a commander or "emir." Lines of authority are blurred; many cells operate autonomously. Membership and recruitment among the extremist groups fluctuates widely, with some militants moving back and forth between groups.

Algeria's Islamist groups are largely homegrown. They rely primarily on internal sources for financing and support. Extortion and theft are the principal means used for obtaining money and arms. Weapons are also captured during skirmishes with government forces. Some arms are procured through European-based arms trafficking, but European security operations have succeeded in dismantling several of these networks. Prior to the Gulf War, the FIS received some financial assistance from Saudi Arabia, but the Saudis stopped contributing to the Algerian party following its vocal support of Iraq. External aid from third countries such as Iran and Sudan remains minimal.

A battle of extremes

Over the past five years, Algeria's key political protagonists have grown increasingly polarized. In the regime and the Islamist opposition, extremists have eclipsed pragmatists and now dominate the conflict. They seem intent on pursuing their goals through violence and bloodshed. During key junctures in the crisis, secular opposition parties (led by the Berber Socialist Forces Front) have joined FIS moderates, local human rights groups and other members of Algerian society and called for broad-based dialogue. ₂₄ Both the regime and the extremist groups rejected these initiatives outright. With the middle ground tragically devoid of any influential partisans, prospects for near-term peace remain dim.

The Socioeconomic Dimension: A Ticking Timebomb?
A burgeoning population, massive unemployment, overcrowded cities, and a dilapidated infrastructure have combined with a vastly inefficient economy to create a socioeconomic catastrophe in Algeria. The past five years of violence only aggravated these deep-rooted problems. As most Algerians struggle to meet daily needs, the "social explosion" scenario of rioters taking to the streets looms ominously on the horizon.

IMF-mandated macroeconomic reforms have helped Algeria's struggling economy. GDP grew by 4.1 percent in 1995, the first positive growth in a decade. ₂₅ Inflation fell to 22.5 percent in 1995 from 30 percent in previous years, and Algeria posted a $300 million current account surplus in 1995, largely the result of a 21 percent rise in exports. ₂₆ At the end of 1996, foreign exchange reserves topped $3.5 billion, the greatest sum since 1981. In addition, the 1996 fiscal budget deficit is projected to fall by 33 percent.

But a report by the government-appointed National Economic and Social Council (CNES) characterized the situation as one of "growth amid stagnation of economic activity." Aside from the hydrocarbon sector--which accounts for 95 percent of foreign exchange earnings--the Algerian economy is plagued by inefficient, state-owned enterprises. In fact, while the GDP growth rate continued to rise in 1996, industrial output fell 12 percent from January to September 1996. State industries--which employ 1.7 million workers--routinely operate at 35 percent to 50 percent capacity. Furthermore, Algeria's state-owned enterprises reportedly created less than half the jobs per dollar invested as private firms. ₂₇

The Algerian government is reluctant to implement the privatization measures that the IMF deems critical for a sustained economic recovery. Of the 1350 public firms considered viable for sale, only 26 have been sold. The regime is understandably wary of the potentially explosive response to public sector lay-offs. An estimated 250,000 jobs will disappear when the privatization program is complete. Algeria's largest labor union, a staunch opponent of privatization, brandishes the threat of a general strike should the government move forward with public sector reforms.

The current population growth rate has slowed to 2 percent, but the disastrous effects resulting from years of growth rates that exceeded 3 percent continue to be felt today. As already noted, 70 percent of Algerians are less than 30 years old. The number of young men between the ages of 15-30 more than tripled from 1965 to 1990. ₂₈ This "youth bulge" has spawned social problems including truancy, drug abuse and mounting unemployment.

A generation of angry young men who harbor a deep hatred of the government and no hope for the future stands in the wake of these problems. Overcrowded schools and few opportunities for steady work force young men into the streets. ₂₉ Apartments are nearly impossible to find, barring most young people from marriage until later in life. ₃₀ Algerians have coined their own Franco-Arabic term for these disaffected young men: "hittistes." The term loosely translates as "those who prop up the walls." Often targeted by government repression, they provide a bottomless pool of recruits for the armed groups.

Unemployment officially stands at 28 percent, but may be as high as 75 percent in the volatile 16-24 age group. While the economy reportedly created 144,000 new jobs in 1995, the number of jobless is estimated at 2.1 million, 80 percent of whom are less than 30 years old. ₃₁ The Algerian labor force is growing by more than 3.5 percent yearly. The World Bank estimates Algeria will require $25 billion in investment to create enough jobs to keep pace with the growing labor force over the next 15 years. ₃₂ Yet private investment is inhibited by persistent violence, undeveloped financial markets, and the poor quality of basic services.

Crowded housing rivals unemployment as a challenge for the Algerian government. Algeria's housing crunch dates to independence, when two million people were driven to the cities by a combination of agricultural stagnation and war. They settled in crowded slums; few found jobs. Former President Boumedienne's (1965-78) industrial policies further exacerbated the crowding. As the agricultural sector withered from lack of investment, cities and towns--the sites of vast industrial complexes--became magnets for job seekers.

Today, at least 55 percent of the population is urban, and the cities are plagued by severe housing shortages. The 1996 housing deficit was estimated at two million units. ₃₃ With the population growing by at least 500,000 each year, the strain on lodging is unlikely to lessen anytime soon. Rapid urbanization has also placed a major strain on the infrastructure and drained public resources. Badly deteriorating water and sanitation services have led to a decline in public health. Contagious diseases such as typhoid, measles, and tuberculosis are occurring with greater frequency.

There are no simple solutions to Algeria's policy ills. The government's macroeconomic successes have not trickled down to the general population. Instead, privatization and other critical economic reforms will likely worsen many social problems in the short term. Hoping to defuse social tensions, the Algerian government, with assistance from the World Bank, established a "social safety net" targeting the most vulnerable segments of the population. ₃₄ But with no reservoir of public good will, the regime will likely encounter significant opposition to future economic reforms.

Hydrocarbon wealth: Blessing or Curse?

The hydrocarbon sector is the engine of the Algerian economy, providing more than 95 percent of foreign exchange earnings and nearly a quarter of gross domestic product. Government planners rely on Algeria's vast oil and gas wealth as the key to economic recovery and sustained growth. Oil and gas earnings are earmarked to meet foreign debt payments as well as to pay for Algeria's exorbitant food import bill. ₃₅

Prospects were particularly encouraging after the November 1995 presidential election. Foreign companies, buoyed by the unexpected success of the presidential election, signed contracts worth billions of dollars with Sonatrach, Algeria's state-owned oil company. British Petroleum led the pack with a $3.5 billion partnership contract, signed in December 1995, for joint exploration, development, and marketing of huge Saharan gas reserves as well as pipeline construction. The deal is the largest investment by a foreign company since Algerian independence. Several other multi-million dollar contracts followed in 1996 including a $1 billion production-sharing deal with ARCO.

In 1995 higher oil prices boosted net hydrocarbon earnings to $9.7 billion--a 15 percent increase from 1994. Planners anticipate more than $10 billion in earnings for 1996. Their optimism heightened in November 1996 with the completion of the Euro-Maghreb gas pipeline from the Algerian Sahara, across northern Morocco and under the Strait of Gibraltar to Cordoba, Spain. Algeria will supply gas to both Spain and Portugal and hopes to extend distribution to France and Germany. In addition, Algiers hopes to double gas production by the year 2000, further boosting potential foreign exchange earnings.

Cash windfalls generated by higher oil and gas prices can cushion the economy during an adjustment period, but Algeria's heavy dependence on the hydrocarbon sector seems ill-advised for several reasons. With oil prices expected to remain flat over the long term, the regime may lose its gamble that hydrocarbon earnings will resuscitate the faltering economy. Ironically, by staking its economic plans on a robust hydrocarbon sector, the regime appears to be falling back on the same strategy which initially brought the economy to the brink of disaster.

The 1986 oil market crash that triggered the economy's catastrophic free-fall is a sobering reminder of the dangers of promoting a single-resource economy. Between 1985 and 1986, oil prices fell 70 percent. Algeria's key source of foreign exchange earnings dwindled and its economy ground to a halt. After serving as an icon of Third World development during the oil boom years, Algeria abruptly became the poster child of disastrous central planning. ₃₆

The dramatic loss of oil revenues unmasked the deeply-embedded inefficiencies and mismanagement of Algeria's state-controlled economy. Until the early eighties, oil and gas earnings provided nearly 65 percent of Algeria's total revenues. In 1986, hydrocarbon revenues were halved to 32 percent of revenues. GDP growth stagnated at 0.6 percent in 1986, falling to -2.7 percent in 1988. The government was forced to cut imports drastically, particularly consumer and luxury goods. There were chronic shortages of basic commodities, and unemployment climbed to 25 percent. Algiers' foreign debt ballooned, pushing the debt-service ratio from 51 percent in 1986 to 87 percent in 1988. ₃₇

Due to circumstances beyond the regime's control, a crucial pillar upholding Algeria's precarious system of authoritarian rule and patronage had collapsed. The regime could no longer deliver goods that the population expected and demanded. Popular disaffection mounted and eventually erupted in the violent October 1988 street riots that left 200 to 300 dead.

Aside from heightening Algiers' vulnerability to external shocks, economic policies borne from an oil-centered economy fail to address--and may further conceal--the major structural flaws that continue to plague Algeria. Investment in the capital-intensive hydrocarbon sector does not translate into greater job creation--a critical need. Algeria's entire oil and gas industry accounts for 40,000 jobs, including 3000 positions staffed by expatriates. Isolated from other economic activities, the oil and gas industry operates as an "enclave economy" with few if any beneficial spillovers into the local economy.

Algeria's dominant hydrocarbon sector is also the anchor of a rent-driven economy in which income is not earned, but derived from a gift of nature. ₃₈ In a rent-based economy, revenues are not a gauge of productivity and efficiency, but instead flow from the exploitation of a limited natural resource. Productivity is stifled since the economy's signals are jammed by huge inflows of unearned oil and gas income. ₃₉

Algeria's rent-based economy is also a magnet for corruption. The rentier regime wields tremendous power by controlling the distribution of oil wealth. Unfortunately, the quest for personal enrichment often overshadows the efficient allocation of oil and gas revenues. Rather than focusing on productive economic ventures, many actors in the Algerian economy devote their energies to chasing hydrocarbon rents, thus compromising non-oil based productivity.

The Cultural Dimension: A National Identity Crisis?
The cultural dimension of the crisis reflects an existential battle for the soul of the country. Some Algerian intellectuals believe Algeria is plagued by the absence of a strong national identity stemming both from Algeria's colonial experience with France and from myths perpetuated during the struggle for independence. Following independence, questions of national identity have been posed but never fully resolved. Instead, successive regimes have attempted to erase cultural differences among Algerians rather than integrate their diverse strains of identity into a plural society.

Algeria's identity crisis encompasses ethnic, linguistic, and regional cleavages. Despite belligerent statements from some Berber nationalists, these rifts do not threaten Algeria's territorial integrity. Taken together, they do underscore the deep-seated divisions inhibiting national unity. The past five years of open conflict have allowed these longstanding differences to fester.

Berbers have inhabited Algeria since Roman times and comprise roughly 20 percent of the population. Ethnic rivalry between Berbers and their Arabized countrymen predates independence. During the colonial era, the French, in typical divide-and-rule fashion, encouraged linguistic and cultural differences between Arabs and Kabyle Berbers, the largest and most important of the four major Berber groups. The Kabyles were allowed separate representation in local administration and encouraged to speak their own dialect. Berber-Arab conflicts continued to mark Algeria's cultural landscape during the war for liberation. Following independence, Berber communities chafed under successive regimes' attempts to quash Berber culture and language and impose Arabic as Algeria's official language. ₄₀

The Berber community itself has been divided during the current crisis. ₄₁ The most influential Berber party is the Socialist Forces Front (FFS). It accuses the regime of attempting to "institutionalize dictatorship." FFS leader Hocine Ait-Ahmed has called for broad-based political dialogue, including members of the outlawed FIS. Meanwhile the Rally for Culture and Democracy (RCD), another Berber party, initially sided with the "eradicator" faction of the regime due to its staunch anti-Islamist stance. Following the constitutional referendum, the RCD dropped its support of the regime, complaining the newly-amended constitution ceded too much to the Islamists while not allowing Berber language and culture its proper due.

The controversial Arabization debate illustrates sharp linguistic fault lines dividing Algerians. Since independence, successive governments promoted the need to replace French with Arabic as Algeria's primary language, but the policy typically reflected a distant ideal more than an immediate goal. The eighties, however, witnessed a dramatic intensification of Arabic language policies. Initially introduced into primary schools, Arabic soon entered secondary school instruction and limited areas of the university curriculum.

The policy drew a strong backlash from the Berber community who accused the government of "cultural imperialism," as well as from the Francophone elite who used French exclusively to conduct business. More damaging than the cultural divide, the policy produced a generation of bilingual illiterates, students unable to function well in either French or Arabic. The quality of Arabic language instruction was poor, and French was badly neglected. ₄₂ Those who did gain Arabic proficiency were embittered by their inability to penetrate the Francophone elite where most job opportunities were found. Not surprisingly, the Islamist message resonated with these disillusioned students and university graduates who decided to support the FIS.

After the violence of January 1992, the Arabic language policy was abandoned until early 1997, when the regime passed a new law mandating the "general use" of Arabic in government ministries, the military, and public organizations including political parties by July 1998. In addition, the university curriculum must be taught exclusively in Arabic by July 2000. ₄₃ The law is certain to fuel resentment among Algeria's Berber and Francophone groups, who have already called it "a disaster."

The crisis has also aggravated longstanding regional divisions. In many areas, the government has ceded its authority to local civilian defense groups charged with protecting surrounding villages. Other areas are controlled by armed groups who dominate through threats and intimidation. Many groups set up their own checkpoints along major highways throughout Algeria. Armed groups and civilian defense forces have transformed remote regions of the country into competing fiefdoms, with area residents typically caught in the crossfire.

The Crisis' Regional Impact

Refuting the Islamist Domino Theory
Algeria's crisis sparked fear among neighboring Arab regimes that they would face similar populist challenges and be pressured to open up their political systems. In fact, the Algerian conflict's direct spillover into neighboring Morocco, Tunisia, and Libya has largely been limited to border security issues. In 1994, Morocco closed its border with Algeria, following a terrorist attack on a Marrakesh hotel (later found to have been perpetrated by Moroccans). The border closing was also sparked by a surge in arms smuggling, as well as Rabat's desire to inhibit the flight of fugitive extremists from Algeria. Spillover into Tunisia has been limited to two cross-border attacks by Algerian extremists on Tunisian guard posts. Libya has served primarily as a transit point for smuggled arms and an escape route for renegade extremists.

At the height of the Algerian crisis, proponents of an Islamist "domino theory" perpetuated fears of massive turmoil in the region. Never high on the list of possible outcomes, the prospect of an Islamic takeover in Algeria is an even more distant prospect today. But even if Algeria were to "go Islamic," the likelihood that this scenario would trigger a wave of Islamic revolutions in the region (notably in Egypt) is quite slim. Islamist oppositionists in neighboring countries would receive a psychological boost and perhaps minor support, or at least a safehaven, from an Algerian Islamist regime. Even so, the success or failure of Islamist opposition groups in nearby Morocco, Tunisia, and Egypt will rest on internal developments specific to each country.

The "Algeria Complex"
A more potent threat to long-term regional stability is the intensified repression practiced by neighboring regimes in response to Algeria's crisis. Today, many regional governments believe the Algerian catastrophe vindicates their authoritarian policies. Neighboring leaders point to Algeria's violence as the most certain outcome of political liberalization. The "Algeria Complex" is a mind set prevalent among the region's ruling officials and its secular elite, disdaining reform and tolerating repression in the name of stability and survival. ₄₄

This mentality is most evident in Tunisia, which has become a virtual police state. Despite the Tunisian government's success in "de-fanging" the Islamist threat and the economic boom that followed economic reforms, repression in Tunisia has worsened, rather than improved, over the past few years. Now, even secular, left-leaning opposition parties, previously considered the "loyal opposition," have been targeted by government crackdowns. Human rights organizations accuse the government of systematic torture. Political prisoners may number in the hundreds, and there is no free press. Privately, Tunisian officials boast their policies will save Tunisia from the tragedy that befell Algeria. Tunisia's tame secular elite echoes these sentiments.

In Egypt the Algerian crisis has also dampened prospects for political reform. The Egyptian government stands accused of backtracking on democratic reforms. In the December 1995 elections, for example, independent monitoring groups charged the government with widespread electoral fraud. Meanwhile, frightened by the prospects for similar violence in its own country, Egypt's secular intelligentsia has virtually ignored mounting government repression. Instead of pressuring the government for a greater political opening, they promote the Mubarak government as the best alternative to potential widespread unrest or even Islamic rule.

The View from the Other Side of the Mediterranean
Algeria's crisis reverberates along the northern shores of the Mediterranean, most significantly in France. Unlike other French colonies, Algeria was integrated into France's territory, with portions of Algeria becoming French departments. More than 30 years after independence, the French-Algerian relationship is still shadowed by its colonial past.

French interests in Algeria include geostrategic concerns and pressing domestic issues. Domestically, immigration and terrorism are two high-priority issues for French policymakers. France has a sizeable Muslim immigrant community, including at least 1.5 million people of Algerian descent. Of these, 700,000 are not French citizens. Many Algerian immigrants live in drug-infested housing projects where unemployment is high and school attendance low. Physically and socially relegated to the periphery of French society, they exemplify the tremendous difficulties Muslims face assimilating to French society.

Algerian-inspired terrorism inside France marks the nexus of domestic and geostrategic interests. Between July and October 1995, a series of eight terrorist bombings rocked France, leaving eight dead and more than 160 wounded. The GIA claimed responsibility for the attacks in retaliation for France's support for the Algerian government. In December 1996 another (as yet unclaimed) bomb attack shook Paris, leaving four dead and nearly 100 wounded.

Following the 1995 attacks, French security embarked on a major crackdown (known as "Operation Vigipirate") that entailed massive troop and police deployments inside Paris and wide-scale arrests of suspected militants. Subsequent investigations revealed that GIA operatives recruited the attackers from depressed urban housing projects. Most of these recruits were newly converted "Islamists" with little, if any, formal religious training. Frustrated by their inability to assimilate into French society, many turned to petty crime and drug dealing, only to "find religion" while serving time in French jails.

There are striking parallels between these French Islamist recruits and their counterparts from poor neighborhoods in Algiers. In both cases, decisions to join the GIA seem mainly motivated by social alienation rather than religious conviction. As such, France's terrorism problem underscores the need for French policies that encourage the assimilation of its alienated immigrant community as well as traditional security policies (intelligence operations, border patrols, etc.) that hinder the infiltration of foreign terrorists.

French policymakers also seek to protect French interests inside Algeria. These include the protection of French citizens in Algeria and the promotion of commercial and trade interests, particularly in the lucrative oil and gas sector. The French have been singled out for assassination more than any other expatriate group in Algeria. Despite French warnings for all its citizens to leave Algeria, more than 1000 French citizens still remain there. Several of the most spectacular attacks against foreigners were perpetrated against French targets. These include the gruesome kidnapping and beheading of seven French monks in spring 1996 and the December 1994 Air France jet hijacking, in which three French citizens died.

Algeria's geographic proximity as well as its historic and cultural linkages to France serve to magnify French interests. Indeed, France guards its special relationship with Algeria closely, at times rebuffing efforts by other European countries or the United States to engage more directly in the Algerian crisis. Yet despite deep historical ties and pressing political interests in Algeria, French policy has lacked strategic vision. Instead, the French have reacted to events as they happen. Even during high profile flare-ups of the Algerian conflict, French officials have refused to intensify their engagement in the crisis, despite domestic and global pressures for French intervention.

France's Algeria policy has two key components: economic aid valued at $1.2 billion, mostly in credits, and a sharply restricted visa policy designed to reduce the number of Algerians entering France. The French have also lobbied intensely on Algeria's behalf in international financial fora. Taken together, these policy instruments amount to a cordon sanitaire built on the hope of insulating France from Algeria's turmoil.

The French containment policy has not been very successful. While French officials continually repeat the mantra of "non-interference" as their guiding principle, the perception among Algerian opposition elements is quite the opposite. In fact, many observers speculate that the French government has opted to quietly support the current regime at any cost to insure that the Islamists never come to power in Algeria. Meanwhile, the December 1996 Paris bombing resurrected fears that Algerian extremists will renew their terrorist campaign inside France.

French policy critics argue for greater engagement including the conditioning of French aid to Algeria on progress toward democracy and respect for human rights. French officials have on occasion mentioned conditionality as a possible option. ₄₅ To date, strong objections to conditionality have precluded any serious consideration of the policy. Those opposed to conditioning French aid cite several obstacles, including implementation and the belief that the Algerian regime is simply not desperate enough to yield to such pressure--particularly from the French. Some even argue that French threats to condition aid would elicit the opposite response from Algiers, pushing the regime toward isolation and intransigence.

The European Union--A Hopeful Venue?
Given the inherent prickliness of Franco-Algerian ties, the European Union (EU) may offer a more appropriate venue for concerted action on Algeria. Over the past few years, EU interest in the Maghreb (Algeria, Libya, Morocco, Tunisia) has intensified, largely due to the Algerian crisis. Fearing the potential for widespread North African destabilization, the EU crafted a strategy for the region that focuses on economic development.

The EU's approach stems from the belief that economic growth will bring jobs and opportunity to the region, reducing the appeal of Islamic extremism and deterring Maghrebis from attempting to emigrate to Europe. At the November 1995 Euro-Mediterranean Conference, EU countries promised more than $6 billion in aid to the southern Mediterranean countries. The EU eventually hopes to establish a free-trade zone with the Maghreb, modeled on the example of the North American Free Trade Agreement (NAFTA).

Coordinated European policies could provide the critical mass needed to persuade the Algerian government to move toward a peaceful reconciliation of the crisis. Promises of substantial European aid and investment in Algeria should prove a powerful incentive. By the same token, the threat of withholding these benefits in the face of continued Algerian intransigence could convince the regime to undertake broad-based dialogue and implement political reform. As a first step, the European Parliament put the Algerian government on notice in December 1996 by adopting a resolution that strongly urged the regime to undertake political initiatives moving Algeria closer to plural democracy.

Policy Implications

Washington's Challenge
In January 1992, U.S. policymakers faced a difficult quandary. While the army's decision to cancel the election clearly undermined Algeria's political opening, the prospect of an Islamist-dominated parliament stoked fears that the Islamists would systematically dismantle Algeria's democratic reforms. American ambivalence drew strong criticism from the Muslim world, as many activists accused the U.S. of maintaining a "double standard" on democracy. It appears in hindsight that stronger U.S. and European opposition to the cancelation might have helped avert the current crisis, although this is far from certain. Still, Algeria's debacle underscores the need to resist knee-jerk fears of sinister "fundamentalists" and instead focus on constructive ways to integrate law-abiding groups into the political process.

Today, U.S. policy toward Algeria is focused on encouraging a political solution to the conflict. Publicly and privately, American diplomats have urged the government and the Islamists toward peaceful reconciliation through dialogue and the implementation of political and economic reforms. Admittedly, Washington's leverage with Algiers is limited since the United States does not provide direct economic aid or military assistance to Algeria. ₄₆ In discussions with senior Algerian officials, American officials have linked increased U.S. support for the Algerian government to progress toward a more open political system and continued liberalization of the Algerian economy.

Since this policy has not produced dramatic results, the United States needs a more dynamic stance on Algeria. Unlike much of the Middle East, North Africa provides great opportunities for policy innovation. Policymakers can plan along longer time-horizons and press harder for political and economic liberalization because such policies do not necessarily collide with key American interests such as the Arab-Israeli peace process and secure access to Gulf oil.

U.S. policymakers should therefore continue encouraging the Algerian government to devise a more open political and economic system. In particular, they should counsel Algiers to attack the root causes of Islamic extremism rather than its manifestations and that attempts to isolate and eradicate the Islamist opposition are unlikely to meet with long-term success. Indeed, such policies will likely breed more violent strains of Islamist opposition.

The United States' stature as the pre-eminent global power gives its public statements particular potency. Through strategically-timed and well-crafted public statements, U.S. policymakers can exert significant influence. Several venues are available for putting forth bold policy statements: public speeches by senior officials, prepared congressional testimony, press guidance and statements, and human rights reports. Together, these outlets offer a no-cost option for promoting U.S. interests. They serve as valuable tools, transmitting an important message not just to the Algerian government, but more importantly to the Algerian people.

To be effective, public diplomacy must be used strategically and in combination with private entreaties. At times, public posturing can backfire, inciting defensive, angry reactions. Public diplomacy can also create unrealistic expectations, exposing U.S. policies to "double standard" accusations. In such cases, private diplomacy is often a more effective tool. U.S. diplomats should raise concerns about the lack of sustained political and economic reform at senior government levels with greater frequency. They should signal to the Algerian regime that the U.S. places a high premium on reform, making explicit the positive link between gradual reform and long-term stability.

But movement toward a greater political opening must be gradual. Ideally, free elections should be the final step in the political liberalization process--not the first. The greatest emphasis should be placed on establishing the rule of law and building a strong civil society, essential keystones for a stable democracy. U.S. policymakers should focus on Algerian non-governmental organizations (NGOs) as important players who offer the greatest hope for a peaceful future. Several Algerian NGOs working in areas as diverse as AIDS prevention and treatment, the environment, and women's rights continue to operate despite the ongoing violence. By helping to facilitate a "culture of participation," these and other NGOs can play a key role in fostering Algerian civil society. Their work should be strongly encouraged.

U.S. diplomats should maintain contact with these groups, foster exchanges with their American counterparts, and facilitate the work of American NGOs attempting to support Algerian groups. In their meetings with senior Algerian officials, U.S. diplomats should emphasize the important contribution NGOs can make toward establishing lasting peace in Algeria. They should encourage the Algerian government to allow these groups to operate freely and without government restraint.

Given the absence of "levers" with Algiers, conditionality is often dismissed as a non-starter. Furthermore, establishing appropriate "benchmarks," concrete indicators of positive movement toward greater political reform, remains quite difficult. Nonetheless, decision makers should strive to coordinate U.S. policy with internal political developments by applying a system of both positive and negative conditionality.

Coordinate with European Allies
The United States can also play a valuable role in helping to organize a coordinated multilateral response to the Algerian crisis. Ultimately, only the Algerians themselves can resolve their crisis, but greater joint American and European engagement could facilitate a speedier resolution. The United States and Europe should present a united front on Algeria.

Upcoming legislative and municipal elections mark the next crucial scene in Algeria's drama. Washington, along with European allies, should encourage Algiers to conduct the elections freely and fairly. All political parties willing to renounce violence should be allowed to participate. Specifically, Algiers should be pressured to curb press censorship, cease harassment of legal opposition parties, and reduce human rights violations by its security forces. Prior to the election, American and European interlocutors should dissuade the Algerian government from rejecting outright proposals for dialogue initiated by opposition groups.

Both Washington and our European allies should give the Algerians incentives in exchange for positive movement on these issues. Possible measures include high-level diplomatic meetings, accelerated movement toward an EU partnership agreement with Algeria, and targeted incentives for U.S. and European businesses to invest in Algeria. These rewards should remain strictly tied to concrete improvements.

Conversely, the West should meet the Algerian government's continued refusal to pursue an open electoral process with increased isolation and a refusal to move forward with economic aid or private business incentives. Economic sanctions would not be appropriate, since they would be difficult to enforce and unlikely to yield results. However, the U.S. and Europe should consider some form of multilateral diplomatic intervention, particularly if the violence continues to escalate--a likely scenario if the government holds sham elections. Options include the appointment of a UN or EU mediator and/or the creation of a joint U.S.-European task force on Algeria. Alternatively, the Arab League or the Organization of African Unity could play a mediating role. Prospects for success would be slim, but humanitarian concerns dictate some action in the event of continued large-scale civilian casualties in Algeria.

Seeing beyond Algiers
The Algerian government has proven its ability to withstand the current Islamist challenge. Nevertheless, its long-term viability remains questionable. The Algerian crisis embodies several long-term issues at stake in the Arab world, and raises deeper questions about Arab political systems and their future prospects. The answers to these questions will have important implications for U.S. policy toward Algeria and the region as a whole.

U.S. policymakers need to re-examine U.S. interests and assumptions that have traditionally equated the status quo with stability. In the long term, the status quo could be quite destabilizing. As the Algerian case demonstrates, continued government repression could trigger precisely what it seeks to control. By eliminating channels for dissent and the expression of popular frustration, such regimes leave little space for peaceful, moderate opposition. Instead, radical groups who use violence rather than words to contest the reigning order will exploit the political vacuum left in the wake of such policies.

Government repression is rarely limited or nuanced. Once committed to a survival strategy based on repression, ruling regimes are generally less inclined to entertain notions of even limited political reform. Innocents who have no gripe with the government are often caught in the crossfire and subsequently alienated. Enemies are created where none existed.

Equally important, political reforms which allow for a degree of transparency and accountability are critical to the region's future economic growth and its enhanced participation in the global economy. As defined by the World Bank, the Middle East/North Africa region is only slightly ahead of sub-Saharan Africa in terms of its integration into the world economy. Political and economic reforms are inextricably linked and both could play critical roles in rescuing the region from its dire problems.

In a city not known for modesty or small egos, Washington policymakers surprisingly underestimate their potential impact in the region on questions of reform. A disquieting atmosphere of resignation permeates the policy debate. While most observers agree that Arab governments are in desperate need of reform, few believe there is much Washington can do. To the extent that U.S. policymakers can influence governments in the region, they must encourage them to work for gradual progress, thereby avoiding chaotic upheavals. Rather than straining to hear the sounds of Islamist dominoes dropping in the wake of Algeria's crisis, Washington should devote more energy to devising creative policies that encourage the broad-based reform that this region sorely lacks.

Footnotes

Note 1: President Bendjedid's motives for opening Algeria's political system are still hotly debated. Many observers believe, and some evidence suggests, that his objective was to outmaneuver old-guard opponents inside the National Liberation Front (FLN), rather than to create a new, democratic Algeria. Some go so far as to suggest that the success of the Islamic Salvation Front was largely dependent on Bendjedid's purported promotion of the Islamist party as a counterweight to anti-reform elements within the FLN. Back.

Note 2: On November 28, 1996, the government held a national referendum on its proposed constitutional amendments. Official figures tallied the Ayes' vote at 85.8 percent and voter turnout at 79 percent. However the absence of election monitors coupled with regime harassment of opposition parties substantiate the opposition's claims of government fraud and manipulation. Indeed, the few foreign journalists covering the vote reported a noticeable absence of crowds at the polls. Back.

Note 3: The sweeping FIS victory in the first round of the 1991 legislative elections was in part blamed on the government's disastrous decision to institute a "winner-take-all" electoral system (reportedly on the advice of French advisors) rather than proportional voting. As a result, the FIS gained 78 percent of the seats decided outright in the first round, while having won only 47 percent of the actual vote. The system resulted in other anomalies such as the National Liberation Front (FLN) winning a higher percentage of the vote (23 percent) than the Berber-dominated Socialist Forces Front (7 percent), but fewer parliamentary seats (16 for the FLN versus 25 for the FFS). Back.

Note 4: Most historians date the primacy of the Algerian military over all political factions to the struggle for independence. They specifically point to the 1957 assassination of Abane Ramdane, a powerful National Liberation Front (FLN) leader who railed against the growing ascendancy of the guerilla fighters over the political strategists in the movement. Back.

Note 5: Although President Zeroual was popularly elected, he was understood to be the army's candidate, and his electoral victory was deemed a foregone conclusion. Back.

Note 6: Still, the ruling generals often portray themselves as the embodiment of the national interest, saviors of a secular Algeria otherwise doomed to become a backward Islamic republic controlled by a group of religious fanatics. Yet their internal rivalries remain intense despite this perception of a common enemy. Back.

Note 7: Following the outbreak of the Gulf War in January 1991, FIS militants marched in the street, demanding that the Algerian military establish training camps for volunteers to fight in Iraq. Dressed in military fatigues, Ali Benhadj, the fiery preacher and deputy leader of the FIS, led a huge demonstration march to the defense ministry. In his speech, Benhadj bitterly accused the army of waging war on its own people, while showing cowardice in the face of genuine threat. Back.

Note 8: See Hugh Roberts, "A Trial of Strength: Algerian Islamism," in Islamic Fundamentalisms and the Gulf Crisis, ed., James Piscatori (Chicago, Illinois: University of Chicago Press, 1991). Roberts documents orders by the army to remove Islamic slogans from FIS-controlled town halls as well as the army's strategy to crack down on violent fringe groups. Back.

Note 9: Of course, even if such guarantees had been in place, the military still may have intervened to block the Islamists from gaining any foothold on power. Indeed, many observers contend that by its nature, the military remained fundamentally opposed to Islamist political participation. Further, the military leadership lost all faith in President Bendjedid and was determined to depose him at any cost. Back.

Note 10: The military's role in Turkey may serve as an interesting model for Algeria. Back.

Note 11: See Bruno Etienne, "Clientelism in Algeria," in Patrons and Clients in Mediterranean Societies, eds., Ernest Gellner and John Waterbury (London: Duckworth Press, 1977) p.298. Back.

Note 12: For additional insights on the survival instincts of the Algerian regime, see, among others, Muhammad Harbi, L'Algérie et son destin: croyants ou citoyens ( Paris: Arcantere Editions, 1992). Back.

Note 13: Several factors contributed to the dramatic rise in corruption beginning in 1979 when Chadli Bendjedid ascended to power. First, the 1979 oil shock injected a huge infusion of foreign exchange. These oil rents greased the wheels of patronage and corruption. Second, President Bendjedid's early economic reforms dismantled the 50 huge state enterprises that dominated the Algerian economy into 350 smaller enterprises. The net effect of this dismantlement was to create additional outlets of public patronage, thereby broadening and diffusing corruption. Finally, as the eighties progressed, the black market expanded dramatically, fueling additional corruption. Back.

Note 14: The Bank of France estimated the amount of money squandered through official corruption to be somewhat less, roughly several billion dollars. Back.

Note 15: See in particular Ahmed Rouadjia, Les frères et la mosquée: Enquête sur le Mouvement Islamiste en Algérie (Paris: Editions Karthala, 1990). Back.

Note 16: Not all groups profess a desire to transform Algeria into an Islamic state governed by the shari'a. One Islamic party, Hamas, has always been purposely vague on this question. Following the amendment of the constitution, Hamas has denied outright that it seeks to impose Islamic law. In any case, the diverse elements of Algeria's Islamist opposition do not share a common interpretation of what shari'a law means, how it would implemented, or the immediacy of this goal. Back.

Note 17: The prominent head of Algeria's largest Islamist charitable organization was assassinated in 1994, presumably by GIA operatives. Back.

Note 18: Indeed, of the two men, only Ali Benhadj--reportedly in very poor health--is considered to have any sway with the armed groups. His influence is likely limited to the Islamic Salvation Army (AIS) which has professed its loyalty to the FIS. The GIA, on the other hand, has actively targeted the FIS, placing many of its members on published hit lists. Back.

Note 19: The Algerian Hamas party has no ties to the far more radical Palestinian party. However, Algerian Hamas leader, Mahfoud Nahnah, has been linked with the Egyptian Muslim Brotherhood. Back.

Note 20: But even Hamas has distanced itself from the regime, particularly following the November 1996 constitutional referendum. The head of Hamas leveled sharp criticism against President Zeroual, demanding that the government cease its harassment of opposition parties and allow for a more open political process. Back.

Note 21: See Ammar Belhimer, "Les groupes armés de l'opposition islamique," Les Cahiers de l'Orient, Algerie: La descente aux enfers, no. 36/37 (1994/1995), p.62. In his article, he documents the first case of Islamist violence. On January 12, 1971 a young police officer was assassinated by militants from the underground Islamist group Da'wa wa Tabligh. Back.

Note 22: For more detailed information on the GIA, see a number of writings by Luis Martinez (pseudonym for a young, Algerian researcher based in Paris) who has conducted extensive interviews and field research on the GIA. Back.

Note 23: The two major "wings" of the FIS are the Djazarists and the Salafists. Of the two, the Djazarists (literally "Algerianists"), led by Abassi Madani, is more pragmatic and primarily comprised of educated technocrats. They emphasize the need for specifically Algerian Islamic solutions to the country's problems rather than employing Islamic ideals adapted from outside Algeria, and reject the notion of a transnational Islamic state. The Salafi wing, led by Ali Benhadj, preaches a return to the "pure" Islam that characterized the reign of the prophet Muhammad and the early caliphs. The Front has vacillated between these two poles, with neither view completely dominating the party. Back.

Note 24: The most significant initiative culminated in the January 1995 Rome Accord. Signed by members of all the major opposition parties, including the FIS, the document called for broad-based dialogue and the peaceful resolution of the crisis. In November 1996, 30 major Algerian figures, including opposition leaders and former government officials, signed an Appeal for Peace, demanding an end to violence from both sides and reconciliation. Back.

Note 25: However, GDP expansion was largely driven by an unusually high rainfall which led to 21 percent growth in the agricultural sector. In 1996, sustained GDP growth has been attributed to windfall profits stemming from higher oil prices. Back.

Note 26: But a reduction in imports, the removal of subsidies, and some commodity price increases have combined to bring dramatically higher prices for many daily consumption items. Back.

Note 27: See the World Bank, Claiming the Future: Choosing Prosperity in the Middle East and North Africa, (Washington, DC: The World Bank, 1995) p.26. Back.

Note 28: In 1965 the number was estimated at 1.15 million and swelled to 3.62 million in 1990. See John Ruedy, "Continuities and Discontinuities in the Algerian Confrontation with Europe," in Islamism and Secularism in North Africa, ed., John Ruedy (New York: St. Martins Press, 1994) p.82. Back.

Note 29: High schools can only accommodate 20 percent of those aged 15-19, while universities accept only 6 percent of students aged 20-24. Back.

Note 30: In an interview with French sociologist Meriem Verges, a 26-year-old man characterized himself as living in "extended childhood" because of his inability to find a job and rent an apartment. See Meriem Verges, "`I am living in a foreign country here': A Conversation with an Algerian Hittiste" Middle East Report, (25) no. 1 (January-February 1995) pp. 14-17. Back.

Note 31: Figures according to the Algerian National Office of Statistics. Back.

Note 32: See the World Bank, Claiming the Future, p.80. Back.

Note 33: Figure taken from background material to World Bank 1996 Low Income Housing Project. Back.

Note 34: It is estimated that the safety net will touch close to 15 percent of the population. Back.

Note 35: Algeria is the world's largest hard wheat importer. Back.

Note 36: Algeria suffered even more than other oil-producing states for a number of reasons. First, it built its facilities at significant cost during the oil boom of the seventies. Secondly, unlike the Gulf states at the time, Algeria was already pressured by its burgeoning population growth. Back.

Note 37: John Ruedy in Modern Algeria: The Origins and Development of a Nation ( Bloomington: Indiana University Press, 1992) cites a combination of IMF, Algerian Central Bank, and Economist Intelligence Unit statistics, p.246 Back.

Note 38: See in particular Hazem Beblawi, "The Rentier State in the Arab World," in The Rentier State, eds., Hazem Beblawi and Giacomo Luciani (London: Croon Helm, 1987). Back.

Note 39: Singling out the Middle East/North Africa (MENA) region's inefficient rent-based economies, the World Bank recently recommended that these economies substantially increase their non-oil exports in the hopes of realizing major productivity gains. Back.

Note 40: In the Spring of 1980, the Kabyles organized student strikes to protest the government's controversial Arabization policies. The demonstrations soon deteriorated into violent riots requiring the Algerian security forces to quell the unrest. The events subsequently became known as the "Berber Spring" and marked an important watershed for the Berber movement. Back.

Note 41: Indeed, during the June 1990 local elections, many Berbers based in Algiers and other major cities voted for the Islamic Salvation Front. Back.

Note 42: Due to the paucity of qualified Arabic instructors in Algeria, the government was forced to import teachers from Egypt and other Arab countries, many of whom were also not well-qualified to teach. The government subsequently accused many of these imported Arabic instructors of spending their time politicizing Algerian youth with Islamist propaganda. Back.

Note 43: Currently, the language of instruction for technical and scientific fields is French. Back.

Note 44: See Mona Makram-Ebeid, "Democratization in Egypt: The `Algeria Complex'" Middle East Policy, (III), no. 2, (1994) p.121. Back.

Note 45: The last time a senior French official raised conditionality was in October 1995 when President Jacques Chirac alluded to the possibility of tying aid to democratic reform. Back.

Note 46: The United States government does provide nearly $2 billion in loan guarantees and credits to Algeria. The majority of these guarantees are backed by the Export-Import Bank; a modest credit program is administered by the Department of Agriculture. The United States has also earmarked a symbolic sum (approximately $75,000) to promote respect for human rights and democratic values in the Algerian military through the International Military Education and Training program (IMET). Back.