Corrupt economy fuels Algerian revolt
The North African country’s rentier model is collapsing.
Algeria’s Feb. 22 uprising against President Abdelaziz Bouteflika’s two-decade rule coincided with the exhaustion of an economic model based on the unequal redistribution of the country’s energy wealth. Even before the ailing leader’s bid for a fifth term triggered the current political crisis, some experts had been saying the country could experience an economic crisis in the next few years absent an unlikely long-term hike in oil prices.
The continuing overall drop on the world market has laid bare the Algerian economy’s structural weaknesses. With hydrocarbon exports still making up more than 30% of the economy absent any real effort at diversification, Algiers has been printing money for the past two years: From late 2017 through January 2019, more than 6 trillion dinars — $50 billion — have been put on the market.
The current financial morass can be traced to the start of the Bouteflika era in 1999, which coincided with a steep hike in oil prices. By 2013, foreign currency reserves had reached $193 billion. But poor economic choices have squandered this manna: Algeria, long wedded to its own version of socialism, began flirting with a unique form of crony capitalism that some experts have qualified as large-scale economic crime.
One of its main instruments has been the National Investment Council created in 2006 at Bouteflika’s initiative to oversee projects worth more than 1 billion dinars (currently $8.4 million). Instead, this political-bureaucratic body emerged as a key player in the country’s corruption.
