Algeria’s coronavirus crisis deepens with a new financial lockdown
There are signs of an emerging financial lockdown in Algeria as the coronavirus crisis worsens across North Africa and the Middle East. For days social media has shown reports of queues of people trying to withdraw their pensions from post offices, suggesting the country could be headed for even more economic troubles.
The Algerian government has also moved to limit the amount of money the public can take out of their bank accounts per day by imposing rules on how much customers can transfer between accounts or withdraw. Some banks are said to be running low on funds and some have not reopened since the Covid lockdown in March. Effectively, they have become “zombie banks.”
The new President, Abdelmajid Tebboune, was elected earlier this year after months of mass demonstrations by a peaceful street-type movement, known as the Hirak. The Hirak movement, which gathered extraordinary momentum across the country, began in February last year and has held regular Friday demonstrations in cities and towns across the country more or less ever since. After being elected, President Tebboune has said he was ‘listening’ to the Hirak’s demands and promised reform.
Earlier this month, President Tebboune announced that restrictions on attending mosques in the Covid lockdown would be lifted on August 15th. Beaches could be visited again in a number of provinces. Mosques could be attended, provided the air conditioning is not switched on. Yet there are obvious signs of distress. There are few flights in and out of the country, public transport and taxis are restricted within the ‘wilayas’ or counties. Several hospitals are running low on medicines, oxygen supplies and protective equipment.
Algeria is potentially one of the richest countries in Africa. A global player in oil and gas markets, it is one of the big three gas suppliers to the EU, along with Norway and Russia. Italy relies on Algeria, along with Russia, for a significant amount of its domestic gas. It also has vibrant, young and hugely underemployed population, now pushing at a total of 45 million.
The government has said that this “liquidity crisis” has been caused by “malign powers” but have not specified which powers these might be. The finance ministry has described this liquidity problem as a temporary glitch, caused by a variety of factors. One of the reasons given, apparently, was that Algerians had earlier drawn out too much money to pay for sheep to be sacrificed for the feast of Eid at the end of Ramadan.
In reality, the economy has suffered from decades of chronic mismanagement. It has been run by a network of quasi-military clans, known as Le Pouvoir, and been was wracked by civil war in the late 1980s to 1990s. The military stepped in to take control when the Islamist FIS – Islamic Salvation Front – looked likely to win the second round of elections outright in January 1992. Until 1998 there was an on-off terror campaign, instigated purportedly by elements like the Armed Islamic Group, the GIA.
The ageing former President, Abdelaziz Bouteflika – who held power for twenty years – was forced to step down last year as he was preparing to run for a fifth term. Having been incapacitated by a stroke, he was forced to quit by the head of the military, General Ahmed Gaid Salah, a lynchpin in the mechanism of power. The crisis brought months of mass demonstrations, generated by the Hirak movement. A new president was choses, reform promised, only for the point man of the regime, General Salah, to die of a heart attack on December 23rd 2019.
Less cheering for the anyone hoping for the dawn of a new democracy in Algeria is the regime’s record this summer in rounding up elements of the Hirak along with outspoken journalists. In the past month alone, seven prominent journalists have been arrested. Last Monday, Abdelkrim Zeghileche was jailed for two years for posts on social networks advocating a new party. He was charged with “threatening national unity.” On August 10th, his colleague Khaled Drareni, 40, was sentenced to three years for reporting on a Hirak demonstration in March. He was accused of “instigating armed rebellion” as well as “threatening national unity.” Two crew members who worked for France 24 were also arrested.
“Algeria is the country where, more than any other in the Middle East, authorities have exploited the pandemic to neutralize active opposition to its rule,” Eric Goldstein of Human Rights Watch reported this month.
Despite being the fourth largest gas exporter in the world, little of Algeria’s gas and oil wealth trickled down to the people. And foreign investment has until recently been hampered by the “51/49” rule, whereby any joint venture had to be at least 51% Algerian owned – a principle relaxed only at the end of last year, and then largely in name only.
Even before the waves of protest led by Hirak last year were aggravated by the pandemic, most Algerians felt poor and deprived relative to their nation’s natural wealth. Unemployment has always been high. A feature of urban life in cities, especially the capital are what locals call the hitistes – the many young men, and they are entirely men- who are without work who lean against the walls in the sun on every street corner
The new Tebboune regime has been trying to clean up its image, if not its act, by purging the less than productive management of state companies. The result is that nearly half of them are not functioning. One source with knowledge of Algerian affairs told me: “Of course they can restrict the funds drawn from bank accounts in Algiers, because they’ve already got theirs stuffed safely into Swiss bank accounts.” Many generals, former ministers and their associates linked to Bouteflika are now in prison on corruption charges.
But the most ominous sign that any likely economic reform could be in trouble is the recent news that members of Le Pouvoir are calling for a reassessment of the economic Association Agreement agreed with the European Union. New trade agreements between Algeria and the EU were due to come into force on September 1st. At the last minute the Algerian president has told his negotiator that the “deal must be balanced for Algeria.”
The President may have calculated that the deal would expose the structural weakness of the Algerian economy. Its oil and gas infrastructure urgently needs updating, investment and repair. Gas and oil revenue have slumped because of the fall in global prices and demand through the Covid crisis – though there was trouble well before.
All three of the central Maghreb countries, Tunisia and Morocco as well as Algeria have been hit hard by the Covid pandemic – compounding social ills and security tensions already which were already in place. Yet for Algeria the deepening crisis, symbolised by the distressed trying to get to get medical help, or access to some means of living, appears to be of a different order.
Amid the economic disruption, a referendum on a new constitution – one of the long-promised gestures made to demands for reform last year – is due to be held on November 1st. But the chances of this bringing meaningful change, or perhaps of even being held, are less than likely. The Hirak’s hopes are likely to be dashed. The odds are that reform will not bring more power to the people of Algeria – but more power to Le Pouvoir, and its many friends and relations.