On the Brink: Algeria in Transition

Please contact our research team for more detailed analysis [email protected]

• The Algerian government has made a push in recent months to bolster its institutions and depersonalize power to help manage its looming leadership transition.
• President Bouteflika, currently dealing with numerous health issues and rarely seen in public, has pushed the decentralization movement to try and create a more sustainable governance system.
• Complicating the transition are deeply factionalized sub-national groups, security crises on multiple borders, low oil prices, decline in oil output, falling cash reserves, and a severe water crisis.
• SGA assess that despite the positive steps taken to manage the power transition, the near and mid-term outlook for Algeria will see much greater political and security risk, due to both internal fractures and external macro risks that profile closely with country conditions in the lead up to the Civil War in the early 1990s

The Algerian government unveiled a draft constitutional reform package in early January 2015, to bolster stability and preemptively address the impending leadership transition from Algeria’s ailing leader, President Abdel Aziz Bouteflika, who has led the nation since the resolution of its Civil War in 2002. The proposed reforms include a presidential term limit and establishing Tamazight as an official language alongside Arabic. The reform package was then approved in February by the Algerian parliament, where allies of President Bouteflika holds a strong majority. In reforming the constitution, Bouteflika is attempting to ensure a stable political future for Algeria through diffusing the power of the presidency to a variety of political institutions.

However, critics of the reform package, in particular the Islamist parties that were marginalized after the Civil War, have noted that the reforms will do little to reduce the influence held by Bouteflika’s inner circle, most notably the National Liberation Front party and military leadership. Bouteflika and his inner circle have held a firm grip on power in the North African country since 1999, but political, economic, and security concerns have substantially increased the risk of instability moving forward.

During the Arab Spring, the Algerian government fared better than most due to its deeply institutionalized security apparatus and the personal leadership prestige of President Abdel Aziz Bouteflika. Bouteflika's four presidential terms have shaped Algeria into a stable country governed by a strong civilian leadership. Increasing the power of his civilian government has been a tenet of his presidency, but the most defining changes — such as defanging the military intelligence service, which threatened the civilian leadership — have occurred over the last year or so. Despite his many critics, the patriotism the president inspires — a result of his revolutionary background and the important role he played in reconciliation after the bloody civil war — has helped preserve Algeria's stability in a volatile region. This condition makes Bouteflika's declining health more concerning for the country's political future at a time when external pressures could highlight internal fractures that have lain dormant since the Civil War. This is particularly the case because the security apparatus that helped maintain security during the Arab spring has now been mostly defanged by the recent reforms.

Though Bouteflika's leadership style is that of a strongman, his ability to inspire charisma and zeal for Algerian nationalism is unmatched in the region and not likely to be replaced by a political successor. Algeria's next leader will be a more neutral figure who will satisfy the requirements of the country's political, economic and military elites. In diversifying the power sources in government, Bouteflika is hoping that this neutral figure will be insulated against any single group’s grab for power by the other institutions’ interests.

While Bouteflika and his entourage maintain that the president has full control over his government, he has rarely been seen in public since he fell ill in 2013. He holds Cabinet meetings infrequently, and Prime Minister Abdelmalek Sellal and the ruling National Liberation Front party's secretary-general, Amar Sadaani, often have spoken in his place. In December, however, Bouteflika chaired several important meetings and met with numerous foreign leaders. The president was acting to solidify legal frameworks within the country and diplomatic relationships abroad in preparation for Algeria's coming leadership succession.

By employing constitutional reform, Bouteflika is hoping to ensure a stable political future for Algeria, diffusing the president's power amongst various stakeholders. Bouteflika used his strong support in parliament to push the idea of weakening the presidency in favor of a stronger prime minister and parliament as part of a new constitution. Bouteflika began holding sessions on constitutional reform Dec. 14, 2015.

Along with Bouteflika's constitutional reforms, he has also made changes to Algeria's security apparatus by weakening the Department of Intelligence and Security — Algeria's military intelligence service — both in its leadership and in its institutional form. This is a clear attempt to keep Algeria a civilian state after Bouteflika's presidency ends and an identification of the key threat to civilian, democratic leadership. The Algerian military under Gen. Gaid Salah will continue to wield extensive power and resources, meaning that the political challenges the military intelligence service posed for Algeria's civilian government are not likely to recur while Salah — a strong Bouteflika ally — remains in charge. In line with Bouteflika's weakening of the Department of Intelligence and Security, the new intelligence chief, Athmane Tartag, broke away from the previous chief's reputation for opaqueness by appearing in public. Our sources on the ground indicate intelligence hardliners view its newly appointed head with suspicion, and will look to undermine and replace him with a more traditional leader if the opportunity arises. Bouteflika is counting on the Army and his relationship with Saleh to help counter this threat.

Algeria has prized its military strength in recent years - in 2009 it surpassed South Africa as the continent's largest defense market, and it leverages its military capabilities to build relationships with European and regional security organizations. Today Algeria devotes roughly $10bn much each year to defense, as traditional military support constitutes a key cog in Bouteflika’s move to reduce the autonomy of the intelligence service. Negotiations among the Algerian political, military and business elite will likely be protracted as different contenders jockey for a role in the next government. This, along with new budget constraints due to low oil prices, will limit Algeria’s ability to act as a regional guarantor of security in the near-term, and an increase in external violence due to this force reduction would provide additional leverage for the internal security and intelligence services during negotiations. The longer negotiations take, the more likely that internal security service networks will benefit.

Economic constraints will also test the delicate power balance that Bouteflika has managed to construct. Algeria's economy continues to rely heavily on oil and natural gas exports, despite recent efforts targeting diversification. Since oil prices plummeted in 2014, Algiers has had to use more and more of its foreign currency reserves to make up for shortfalls in revenue. Indeed, Algeria's budget deficit nearly doubled between 2014 and 2015, jumping from 6.2 percent to 11.5 percent. Another year of expenditures with oil prices at the current levels will completely deplete Algeria’s foreign reserves. So although Algiers will continue to invest in its military, it will be wary of engaging too heavily in external security threats lest it become overextended and incapable of defending the Algerian homeland.

The president has laid the groundwork for a succession plan, and while he is unlikely to step down from the presidency, Bouteflika's deteriorating health adds urgency to the task of how Algeria will define itself in his absence. Bouteflika's successor will look to ensure the continued primacy of security forces in battling militant groups, safeguard the country's hydrocarbon revenue and maintain Algeria's extensive patronage networks. The security forces provide the greatest threat to a successful transition, as their interests have been compromised the most during the past year’s reforms. If the group feels passed over again in the transition and is enabled by external and internal extremist security threats, they will push for a return to their past, more autonomous operating structure.

Algeria has managed to avoid falling victim to regional instability due to its robust security apparatus, oil revenues, and political leadership. However, its President of two decades, one who emphasized civilian leadership and dismantling traditional power structures in favor of more resilient, democratic institutions, will soon pass the baton to the next generation of leaders. Regional security crises occurring on two separate borders will empower the military leadership and security apparatus, particularly with the vacuum that Bouteflika’s passing will create. Political transition, low oil prices, external security risk and an economy run through oil revenues and patronage networks presaged Algeria’s Civil War, and while the country’s institutions are now more robust than before, tribal, religious, and local affiliations run much deeper; the societal fractures that caused the Civil War remain just below the surface. Current reforms are forward looking and have made progress in creating political conditions conducive to a positive transition of power and further development of democratic institutions. We believe that, despite these measures, the security and economic crises threatening Algeria will significantly increase the country’s political risk in the near-term, jeopardizing a long-time security stalwart in the region in the years to come.