Gabriel Algerian Situation report

This information is from public and non-public sources, and has not been corroborated by third parties



ALGERIA MONTHLY SITUATION REPORT #118

October 17, 2012

Executive Summary
Political Trends

· The new government headed by Abdelmalek Sellal will have its hands full fending off socio-economic challenges in the year and a half left before the presidential election.

· Current expenditure having been pumped up by last year’s public sector pay rises, capital expenditure has been reined in for the first time in years in the 2013 budget. Even so, the government may be unable to balance the budget if oil prices weaken even moderately.

· An explosion in international grain prices is set to test the regime’s strategy of ‘buying’ social peace to the limits.

· There are signs of a crackdown on potential ‘troublemakers’, in particular human rights activists and independent trade union organisers.

· Public Works Minister Amar Ghoul has established a new party, TAJ, with what seems to be the tacit complicity of the authorities.

· There is speculation that Ghoul is being groomed as a possible successor for Bouteflika in 2014, or at least as a vice president if and when the constitution is amended.
Foreign Relations

· Algiers has spent much of September and early October battling a French-backed diplomatic push in favour of military intervention in northern Mali.

· Although it has every reason to distrust the jihadist quasi-state that has emerged in northern Mali, Algiers fears the political and geopolitical consequences of military intervention and distrusts Paris’ motives.

· The gap between the French and the Algerians has lessened somewhat since UNSC Res. 2017, which calls for negotiations towards a peaceful settlement in northern Mali before the use of force can be authorised as a last resort, was passed with American backing,.

· But with little chance of negotiations succeeding, tensions between Paris and Algiers are likely to re-emerge before François Hollande’s visit to Algiers, tentatively scheduled for early December.
Security

· With levels of violence lower than average nationwide and particularly low in Kabylia, the question of whether the jihadist organisation’s capability in its historic heartland has been lastingly degraded remains open.

· On the other hand, there has been an upsurge in incidents on Algeria’s southern borders, including one operation in which a number of SA-7 man-portable air defence systems, smuggled out of Libya, were reportedly seized by the security forces.

· As international discussions continue as to the possibility of a military intervention against the jihadist entity in northern Mali, Gendarmerie commanders from all the wilayas bordering on Mali and Libya have been summoned by their national command to a meeting in Tamanrasset to review border security.





Political Trends



Appointed just over a month ago, the Sellal government was convened on September 17 for the first full council of ministers meeting chaired by President Bouteflika in seven months. The new government now has a programme of sorts, coupled with a draft budget for 2013 that will soon be put to the vote in parliament. Although its programme includes no lofty ambitions for political transformation, the Sellal government will nonetheless have its hands full fending off socio-economic challenges in the coming period – all the more so given that the crucial presidential election is now just a year and a half away.



The official communiqué issued after the council of ministers meeting, which outlines the government’s priorities, makes no mention of the promised reform of the constitution, or more generally of the programme of political and institutional reforms launched in April 2011. These, it would seem, are the exclusive prerogative of the Presidency. Prime Minister Sellal and his team, according to the text of the communiqué, are to concentrate on “four main areas”:

continued improvement of governance such as to strengthen the rule of law, carry through a root and branch rehabilitation of public services and promote national cohesion;

the consolidation of the economic and financial sphere with a view in particular to strengthening the visibility of the national development process, improving the investment environment, notably as far as land is concerned, continuing the modernization of the financial system and increasing the efficiency of government intervention in the economy;

the development of socio-economic infrastructures, and in particular implementing scheduled house-building programmes for which all necessary resources will be mobilised, and the expansion of infrastructure networks;

the promotion of human development through the continued implementation of the reform of the education and training sector, the fight against unemployment, developing government assistance for the less well-off, better support for young people and establishing an efficient cultural policy.



In our last report, we suggested that the replacement of Ouyahia with Sellal might augur a shift in economic strategy, away from the “economic nationalism” championed by Ouyahia and towards more investor-friendly policies. The reference to “improving the investment environment” in the government communiqué comes as partial confirmation of that, but it would seem that Sellal has been told to tread carefully on this front: presenting his plan of action to parliament on September 25, the new Prime Minister insisted that Algeria “would never become a neoliberal country, but will establish the necessary conditions to encourage direct and indirect investment”; furthermore, the rule requiring a minimum Algerian stake of 51% in all ventures established by foreign firms in Algeria, imposed by his predecessor, is to remain unchanged. This cautious, middle-of-the-road approach is very much in evidence in the government’s new bill to amend the Hydrocarbons Law[1]: on the one hand, the conditions pertaining to IOCs’ exploration and production activities are to be eased, the methodology for determining the tax rate on oil revenues is to be based on a project’s profitability instead of sales, and there are new tax incentives to encourage activities related to unconventional hydrocarbons, small deposits, deposits in under-explored areas, and fields with complex geology and/or lacking infrastructure; while on the other, Sonatrach’s monopoly over pipeline transportation of oil and petroleum products is restored and partnership with Sonatrach in the downstream sector becomes obligatory.



The 2013 draft budget is also a cautious piece of legislation. Current expenditure having been pumped up by the public sector pay rises that were rolled out last year in a panic reaction to the wave of revolt sweeping through the Arab world, capital expenditure has had to be reined in for the first time in years; taxes, meanwhile, go up. Even so, it is by no means guaranteed that the government will be able to balance the books at the end of the year. For 2013, as for the past several years, revenue has been calculated on the basis of a reference price for crude oil of $37/barrel, and as in previous years, on paper this results in a deficit budget. $37 is of course way below actual international oil prices, and the government has for years now been able not only to wipe out the programmed deficit each year but to run a substantial surplus. By the middle of this year, however, the central bank calculated that an oil price of at least $112/barrel was needed in order to balance the 2012 budget. The 2013 budget requires broadly similar oil p rice levels in order to break even, and any lasting decline in oil prices in the coming year could therefore have a dramatic effect on Algeria’s fiscal balance, perhaps forcing the government to draw for the first time on the Revenue Regulation Fund established in 2000. Sustained low oil prices might compel the government to review its spending commitments under its five-year infrastructure development plan – putting the regime’s strategy of buying social peace at risk. On top of this, as a major importer of agricultural products Algeria is highly vulnerable to fluctuations in global food prices. Drought in the US cereals belt is currently fuelling an explosion in the price of wheat (the main staple in Algeria, in the form of bread and couscous), corn (an essential ingredient of feed for chickens, the main source of meat for ordinary Algerians) and soya (also an input for animal feed, as well as a source of cooking oil). The government’s commitment, also made under the pressure of the Arab Spring, to controling prices for basic foodstuffs means that its subsidies bill will be rising dramatically. Over the medium term, the Algerian government may therefore have to choose between making further cuts to capital expenditure to compensate for runaway spending on consumer subsidies, or cutting subsidies on food and running the risk of bread riots.



It is against this background that the authorities have begun to crack down on potential agitators, in particular human rights activists and independent trade union organisers, who have been increasingly subject to harassment, arrest and prosecution of late. With the clock now ticking on the countdown to the 2014 presidential election, the regime will be all the more inclined to try and keep a lid on social protests.



It cannot be entirely ruled out that President Bouteflika – who has been written off as dead or dying more often than can be remembered but who bounced back once again in apparently combative form at the September 17 council of ministers meeting – might yet stand for a fourth term of office[2], notwithstanding his earlier hints that the time has come for his generation to stand aside. But a new element has emerged recently in the preparations for 2014 with the creation of Amar Ghoul’s Algerian Hope Rally, more commonly known by its Arabic acronym, TAJ (meaning ‘crown’). Ghoul, who has been Public Works Minister for ten years, broke with the moderate islamist MSP this year in order to hold onto his ministerial position and proceeded to establish TAJ, which was joined by around 40 members of parliament, freshly elected on the MSP ticket or under the colours of Moussa Touati’s Algerian National Front (FNA). In late September, when TAJ held its founding congress, it became clear that the new party enjoys surprisingly abundant financial resources and the tacit complicity, if not outright support, of the authorities. Ghoul has proclaimed that his party, inspired by the example of the FLN during the liberation war, intends to “mobilize the living forces of the country, irrespective of ideological divisions: islamists, nationalists and democrats come together under its banner to inspire hope and build a united, promising and pioneering Algeria” – a discourse which might have come straight from the regime’s copybook. The episode is reminiscent of the creation back in 1997 of the RND, which three months after it was established went on to win the parliamentary elections. This suspiciously premature success, together with the physiognomy of its General Secretary Ahmed Ouyahia, led Algiers wits to dub the RND “the baby that was born with a moustache”. The latest joke, alluding to Amar Ghoul’s islamist background, casts TAJ as “the baby born with a beard”.



There is now speculation that Ghoul himself is being groomed as a possible successor for Bouteflika in 2014, or at least as a vice president if and when the Presidency finally gets around to amending the constitution. It is worth noting in this respect that Ghoul, although not particularly charismatic, offers the distinct advantage, from the point of view of the regime’s power brokers and in particular DRS chief Mohamed ‘Tewfik’ Médiène, of being eminently controllable: deeply involved in corruption in his time as Minister of Public Works, notably in connection with the East-West motorway project, Ghoul has to date never been charged, and rarely even accused publicly, giving those in the know – in other words, the DRS – a potentially powerful hold over him.





Foreign Relations



Algiers, as we observed in our last report, is faced with a quandary in the festering crisis in northern Mali, where a trio of jihadist groups (AQMI, the closely related MUJAO, and the Malian Tuareg Ansar Dine) have taken power in the wake of February’s revolt led by the ostensibly secular Tuareg-separatist MNLA. While it is clearly uneasy about the emergence of a jihadist quasi-state on its southern border, Algiers is leery of sending its own armed forces to attempt to quash it and is at the same time very reluctant to see other forces – especially extra-regional and a fortiori French forces – take on the job.



Algiers objects to military intervention on several levels. Operationally, the Algerian military foresees only disaster. As a high-ranking Algerian army officer quoted by French daily Le Figaro (Oct. 1) puts it:

3,000 men[3], thrown into a theatre of more than 8,000 square kilometres, would be insignificant. What’s more, the invisible, elusive enemy will conduct a war of attrition that it will win for sure, pitted against a military force such as the one ECOWAS is suggesting – a force that is not acquainted with the terrain of the Sahara, either. Finally, armed groups will be able to draw on the support of the local population, the Tuaregs, for whom an African army amounts to a foreign occupation force.



Politically, Algiers fears the destabilising effect of a military intervention, especially (but not only) if it were to commit troops of its own. Rachid Tlemcani, professor of international politics and regional security at the University of Algiers, sets it out in stark terms:

Stability is a fundamental issue for Algeria’s leaders. Between now and 2014 (when the next presidential election is due) they want unity and social peace at any price… [Algeria fears] that military intervention could awaken regional, religious or ethnic extremism, and risks opening a Pandora’s box. An explosion in the south would destabilise the north all the way to Morocco. That would be unavoidable. The principle of the inviolability of borders would be challenged, with the risk of implosion as happened in Somalia.



And on the geopolitical level, the involvement of forces from outside the region in any such adventure gives Algiers nightmares. As we have observed on several occasions over the past year and a half, the NATO intervention in Libya, inspired largely by the French, shocked and dismayed the Algerian regime, which saw the whole episode at best as a dangerous precedent in terms of overriding national sovereignty in the name of the ‘right to protect’ and at worst as proof of the neo-colonial ambitions in North Africa of France and its allies. Since then, there has been a tendency on the part of leading Algerian politicians – including notably President Bouteflika himself and, more recently, Prime Minister Abdelmalek Sellal[4] – to pepper their speeches with references to sinister « foreign hands » seeking to stir up strife in Algeria and generally to prepare the way for outside intervention in the country’s destiny. A person close to the Presidency quoted by Le Figaro explains that what is feared is:

the return of the old spectre of territorial amputation, as proposed by de Gaulle in 1961[5]. Since the partition of Sudan, our new position as the largest country in Africa ​​makes us extremely fragile – all the more so since, on our southern border, the Tuaregs broke with Bamako and declared their independence.

Such fears have been e xpressed with great clarity in an article in Algerian French-language daily El Watan (Oct. 10):

The fact is that Paris does not care much about the chronic instability in Tunisia, where the Salafists are now able to strut around as if they owned the place. And even less [about the situation] in Libya, where the political crisis is in full swing and where insecurity is rife. For France can barely conceal its geopolitical intentions in the Sahel. Its uranium in Niger has ended up radiating throughout the crisis in Mali, which is as complicated as that of Syria. Spoiling for a fight, under the banner of the UN, France has gone as far as to risk alienating neighboring countries, such as Algeria and Mauritania, which will inevitably suffer the blowback from any military intervention. That is why Algiers and Nouakchott are busy too, drumming up support for efforts to avoid a « French solution ». Faced with the prospect of a quagmire in Mali, there are two distinct camps: the war front led by France and the rejectionist front led by Algeria.



And indeed, in September and much of the first half of October, there were very clearly two camps in competition: on the one hand the French, lobbying for support for a UN Security Council resolution authorising the ECOWAS to use force against the jihadist entity in northern Mali; and on the other hand the Algerians, lobbying equally actively for a political solution through dialogue and negotiation. To this end, Algeria’s Minister-Delegate for Maghreb and African Affairs Abdelkader Messahel undertook a tour of Sahel capitals in early October, accompanied amongst others by Maj-Gen. Rachid ‘Attafi’ Lallali, head of the Direction du Renseignement Extérieur (foreign intelligence department) at the DRS. This served to confirm and consolidate the support of the governments of Mauritania and Niger for Algiers’ approach; the government of Mali, which had earlier formally requested a UN resolution authorising the use of force, remained clearly aligned with France. Meanwhile, representatives of Ansar Dine were quietly invited to Algiers for exploratory talks, in the hope of finding at least one negotiating partner. This in turn developed into a further point of disagreement between Algiers and Paris: with the French rejecting negotiations with terrorists outright and considering Ansar Dine to be of a piece with AQMI and MUJAO in this respect, Algeria began to argue that a distinction could be made between Ansar Dine, as an indigenous Malian Tuareg organisation, and the other two groups, made up of committed jihadists from all over north-west Africa.



By the time French Interior Minister Manuel Valls arrived in Algiers for a two-day visit on Oct. 13, however, Algerian government officials had become much more placatory. This was perhaps in part because Washington, after some humming and hawing, had thrown its weight behind the French-sponsored UNSC Resolution 2071 on northern Mali (approved unanimously by the Security Council on Oct. 12). But it appears also to have been in part the result of the lobbying process of the proceeding weeks. In its attempts to win over the Malian government, Algiers had been compelled to adopt a strong and unambiguous stance in favour of Mali’s territorial integrity, which it now considers “non-negotiable” (by contrast, it will be recalled, there were widespread suspicions at the beginning of the year that the Algerian authorities were backing the Tuareg rebellion). Under pressure, the MNLA announced that it was no longer insisting unconditionally on independence for the Azawad (northern Mali), leading in turn to splits in the organisation; in parallel, Algiers appears to be trying to provoke a split in Ansar Dine, between out-and-out jihadists and members of the Ifoghas clan who have joined its ranks largely out of tribal loyalty to Ibrahim Ag Ghaly but have no interest in transnational terrorism. At the same time, Resolution 2071 invites the Malian government, those rebel groups that have “cut off all ties to terrorist organisations” and representatives of the local population to “engage, as soon as possible, in a credible negotiation process in order to seek a sustainable political solution, mindful of the sovereignty, unity and territorial integrity of Mali », and leaves 45 days for this before the Security Council shall « respond to the request of the Transitional authorities of Mali regarding an international military force assisting the Malian Armed Forces in recovering the occupied regions in the north of Mali ».



This formulation leaves room for Paris and Algiers to express consensus that, while there can be no negotiations with terrorists, drug-traffickers and secessionists, talks are an essential first step. But Resolution 2071 also seems to leave plenty of room for the divergences between France and Algeria to re-emerge later down the line. As things stand now, it seems unlikely that Ansar Dine will really break with AQMI and MUJAO, while the divided MNLA’s real strength on the ground is a matter of conjecture, leaving very little prospect for meaningful negotiations towards a “sustainable political solution”. Consequently, there seems to be every likelihood that, when the allotted 45 days run out, the UNSC will be called upon to make good on its implied promise to authorise the use of force. And while Resolution 2071 does make a show of putting the Malian army and ECOWAS forces at the centre of a hypothetical military intervention, there can be little doubt that any operation in northern Mali would require French support (in logistics, transport, probably air power and electronic intelligence) and could also entail direct participation of French special forces (notably in attempting to retrieve French hostages held by AQMI/MUJAO). All of which suggests that by late November – with President Hollande’s tentatively planned visit to Algiers just days off – tensions between France and Algeria could be on the rise again.



Security



Levels of jihadist activity and related security incidents were somewhat below average in September: only 13 jihadist operations were recorded (down from 15 the previous month and 19 the month before that), out of a total incident count of 23. AQMI’s traditional heartland Kabylia has been particularly quiet: only one terrorism-related incident was reported in the Kabyle wilayas for the whole month between Aug. 13 and Sept. 13[6], and although AQMI activity resumed in Kabylia after that date it remained at a surprisingly low level, with only 8 operations reported for September and the first week of October. Algerian newspapers reported that security forces in the town of Tizi Ouzou, the largest city in Kabylia, were put on “maximum alert” on October 5 after intelligence services received “credible information” of a suicide car bomb “ready to go” in the town, but there does not appear to have been any follow-through. The question of whether AQMI’s capability in its historic heartland has been lastingly degraded, raised in our last report, remains open.



In ALGIERS, meanwhile, the situation was entirely quiet apart from one incident on Sept. 13 when the authorities destroyed a “suspect package” in the Baïnem forest on the western edges of the capital. A local resident spotted the object and alerted the authorities who cordoned off the area and brought in the bomb squad. The object was destroyed in a controlled explosion and its fragments taken to the lab for inspection. It is not clear, though, whether it was a actually bomb.



While the oil- and gas-producing regions of the SOUTH were on the whole quiet, activity and clashes with smugglers on the borders resumed after a four-month hiatus (see previous report). Only two armed clashes on the southern borders were reported from May 23 to September 12, and seven since, including two firefights with smugglers/jihadists around the town of Bordj Baji Mokhtar on the border with Mali, one incident with “jihadists coming in from Libya” near the town of Deb Deb in Illizi, a clash with s mugglers south of Djanet on the border with Libya, and a cla sh “near the border with Niger”. On Oct. 6 special forces units “on the border with Mali” captured “four Mujao jihadists” — three originally from Niger and one Algerian — “using advanced sensing devices brought in from Russia”. The jihadists were trying to sneak their way in among a group of refugees fleeing instability in northern Mali, but they were discovered. They were found to be carrying individual weapons and “an explosive belt”. The next day (Oct. 7) an army force clashed with a group of jihadists of the Belmokhtar group that were trying to cross into Algerian near Tinzaouatin on the Malian border. The army “destroyed an offroader and killed four jihadist”. Further, L’Expression reported on October 9 that the recent dismantling of a “terror support” network in the east of the country has allowed the authorities to seize “SAM-7 missiles[7] smuggled in from Libya”. The newspaper gave no further details, but this “revelation” came a couple of weeks after the commander of a powerful Libyan militia told the Washington Post (Sept. 24) that looters had stolen “a large number” of shoulder-fired, heat-seeking missiles (manpads) from the militia’s base in Benghazi when protesters who called for dismantling the country’s militias overran the compound. It is worth recalling here that the Algerian press has frequently talked of manpads seized by the authorities on the borders or smuggled into the country, but on the ground there is no firm evidence that Aqmi in Algeria itself has such weapons.



Across the border in northern Mali, Aqmi’s “emir of the Sahara region”, Nabil Makhloufi (aka, Abou Alqama, an Algerian national) was killed “in a car accident” north of Gao on September 8, according to reports on Mauritanian news sites, later confirmed by Aqmi itself. On October 4 ANI, a Mauritanian news agency, said Jemal Oukacha, alias Yahya Abou El Hammam, a close aid to Aqmi Emir Abdelmalik Droukdel, was named the group’s emir for the Sahara region. Abou El Hammam, an Algerian national, is one of the most prominent Al-Qaeda leaders in northern Mali, and was earlier this year appointed “governor of Timbuktu” by the AQMI/MUJAO/Ansar Dine alliance which currently controls northern Mali.



The news of Abou Alqama’s death set the Algerian press to speculating about clashes between the various factions in northern Mali. On Sept. 28 El-Khabar claimed that members of Belmokhtar’s group clashed with Mujao fighters, leaving eight of Belmokhtar’s men dead and Belmokhtar himself “seriously wounded”, supposedly because of disagreements between Belmokhtar and Mujao over how to handle the Algerian diplomats held hostage by the latter. Belmokhtar’s followers denied the news in a call to a Mauritanian news agency on Sept. 30, but the Algerian newspaper insisted its original story is true. However, reports that Belmokhtar has been killed or wounded have been legion over the years, and must always be treated with considerable caution.



Meanwhile, as Paris, Bamako, ECOWAS and the United Nations continue to debate the possibility of a military intervention against the AQMI/MUJAO/Ansar Dine alliance in northern Mali, the chief-of-staff of the Algerian Gendarmerie, Maj-Gen. Ahmed Bousteila, has convened a meeting of Gendarmerie commanders from all the wilayas bordering on Mali and Libya (Adrar, Bechar, Illizi, Ouargla, Tamanrasset and Tindouf). Held in the town of Tamanrasset on Oct. 16, the meeting appears to be mainly concerned with reviewing and optimising border patrols, the Gendarmerie’s border guard units being in the front line in the fight against arms smuggling and other contraband, as well as infiltration/exfiltration of elements linked to AQMI or allied armed groups.



END





[1] As it stands, the Hydrocarbons Law is already a strange hybrid: first conceived by then Energy Minister Chakib Khelil as a very liberal piece of legislation, offering international oil companies hitherto unparalleled access to Algeria’s upstream and midstream oil and gas sectors, it was to a large extent vitiated by amendments imposing a minimum 51% stake for Sonatrach in all upstream ventures and slapping a hefty ‘windfall tax’ on IOCs’ production when global oil prices exceed $30/barrel (which of course they have ever since).

[2] The example of Venezuelan President Hugo Chavez, who has influenced Bouteflika in the past, may conceivably have an impact on the President’s personal outlook.

[3] The approximate size of the multilateral force that has been proposed by the Economic Community of West African States (ECOWAS) to reconquer northern Mali.

[4] In his Sept. 25 speech presenting his government’s programme to parliament, Sellal proclaimed that « a strong internal front will protect Algeria against malevolent hands that seek to attack the country’s stability and unity of the Algerian people. »

[5] See WSSR 120418.

[6] There was also an incident on Sept. 5, when police manning a checkpoint at the entry to the Béjaïa port opened fire at car that tried to force its way into the port. But it is not clear whether this was the work of jihadists or in anyway connected to terrorism.

[7] Sic. Apparently referring to the SA-7, Russian-made MANPADS, equivalent to the American Stinger.