Algeria country profile

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The second largest country in Africa, the People's Democratic Republic of Algeria is bordered by Tunisia in the northeast, Libya in the east, Niger in the southeast, Mali in the southwest, Mauritania and the Western Sahara in the west and Morocco in the northwest.

Its name derives from El-Djazair, the Arabic name of the capital Algiers, meaning 'the islands'. The name refers to the four islands that lay off the city's coast until they were incorporated into the mainland in 1525.

The vast majority of the population is concentrated in towns near the Mediterranean coast, the largest towns being Algiers (with a population of about 3 million), Oran (2 million) and Constantine (750,000). The larger part of the country, south of the Atlas Mountains, is covered by the Sahara desert.

Table: Algeria at a glance

Government

Algeria is a republic with a socialist legal system based on French and Islamic law. Most executive power is invested in the president, who is elected by popular vote for a five-year term. Voting is by universal suffrage for all those aged 18 or more. All ministers, including the prime minister, are appointed by the president.

It has a bicameral legislature consisting of the National People's Assembly (lower house) and Council of Nations (upper house). Members are elected to the assembly by popular vote to serve five-year terms. One third of members of the council are appointed by the president and two-thirds indirectly by the electorate to serve six-year terms. Half of the council members are renewed every three years.

Last presidential election: 8 April 2004
Next election: April 2009

Results of last presidential election (turnout 58.1 per cent):

• Abdelaziz Bouteflika, National Rally for Democracy (RND) - 8,651,723 votes (85.0%)

• Ali Benflis, National Liberation Front (FLN) - 653,951 votes (6.4%)

• Abdellah Djaballah, Movement for National Reform (MSP) - 511,526 votes (5.0%)

• Said Sadi, Rally for Culture & Democracy (RCD) - 197,111 votes (1.9%)

• Louiza Hanoune, Workers' Party (PT) -   101,630 votes (1.0%)

• Ali Fawzi, Rebaine Generation of 1954 (Ahd '54) - 63,761 votes (0.6%)

Last elections to the National People's Assembly: 17 May 2007
Next elections: 2012

Results of last elections:

• National Liberation Front (FLN) 23% 136 seats

• National Rally for Democracy (RND) 10.3% 61 seats

• Movement for National Reform (MSP) 9.6% 52 seats

• Workers' Party (PT)   5.1% 26 seats

• Rally for Culture & Democracy (RCD) 3.4% 19 seats

• National Front (FNA)   4.2% 13 seats

• Independents    9.8% 33 seats

• Other     34.6% 49 seats

Last elections to the Council of Nations: 28 December 2006
Next elections: 2009

Results of last elections:

• National Liberation Front (FLN) 29

• National Rally for Democracy (RND) 12

• Movement for National Reform (MSP) 3

• Rally for Culture & Democracy (RCD) 1

• Independent 3

Government officials

• Prime Minister: Abdelaziz Belkhadem

• Minister of State for Foreign Affairs: Mourad Medelci

• Minister of State for Interior & Local Governments: Noureddine Yazid Zerhouni

• Minister of State for Justice & Keeper of the Seals: Tayeb Belaiz

• Minister of State without portfolio: Bouguerra Soltani

• Minister of Agriculture & Rural Development: Said Barkat

• Minister of Commerce: El Hachemi Djaaboub

• Minister of Communication: Abderrachid Boukerzaza

• Minister of Culture: Khalida Toumi

• Minister of Employment & National Solidarity: Djamal Ould Abbas

• Minister of Energy & Mining: Chakib Khelil

• Minister of Finance: Karim Djoudi

• Minister of Fisheries & Fishing Resources: Smail Mimoune

• Minister of Health, Population & Hospital Reform: Amar Tou

• Minister of Higher Education & Scientific Research: Rachid Harraoubia

• Minister of Housing & Urban Development: Noureddine Moussa

• Minister of Industry & Promotion of Investments: Abdelhamid Temmar

• Minister of Labour & Social Security: Tayeb Louh

• Minister of National Defence: Abdelaziz Bouteflika

• Minister of National Education: Boubekeur Benbouzid

• Minister of National Solidarity: Djamel Ould Abbes

• Minister of Postal Services & Information & Communication Technologies: Boudjemaa Haichour

• Minister of Public Works: Amar Ghoul

• Minister of Relations with the Parliament: Mahmoud Khedri

• Minister of Religious Affairs: Bouabdellah Ghlamallah

• Minister of Small & Medium-Sized Enterprises & Handicrafts: Mustapha Benbada

• Minister of Transport: Mohamed Maghlaoui

• Minister of Urban Planning, the Environment & Tourism: Cherif Rahmani

• Minister of Vocational & Educational Training: El Hadi Khaldi

• Minister of War Veterans (Moudjahidine): Mohamed Cherif Abbas

• Minister of Water Resources: Abdelmalek Sellal

• Minister of Youth & Sports: Hachemi Djiar

• Minister-Delegate to the Minister of Agriculture & Rural Development in Charge of Rural Development: Rachid Benaissa

• Minister-Delegate to the Minister of Finance in Charge of Financial Reform: Fatiha Mentouri

• Minister-Delegate to the Minister of Health, Population & Hospital Reform in Charge of Family Affairs & Women's Issues: Nouara Saadia Djaafar

• Minister-Delegate to the Minister of Higher Education & Scientific Research in Charge of Scientific Research: Souad Bendjaballah

• Minister-Delegate to the Minister of National Defence: Abdelmalek Guenaizia

• Minister-Delegate to the Minister of State for Foreign Affairs in Charge of Maghreb & African Affairs: Abdelkader Messahel

• Minister-Delegate to the Minister of State for Interior & Local Governments in Charge of Local Governments: Daho Ould Kablia

• Minister-Delegate to the Minister of Urban Planning & the Environment in Charge of Urban Environmental Affairs: Abderrachid Boukerzaza

• Secretary General of the Government: Ahmed Noui

• Governor, Central Bank: Mohamed Lekasassi

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Recent history & politics

Until it gained independence on 5 July 1962, Algeria was a French colony, and officially part of France from the late nineteenth century until the collapse of the fourth republic in 1958. The French invaded Algiers in 1830, but the violent conquest of the country, which resulted in the disappearance of about a third of its population, was not completed until the early 1900s when the last Tuareg (Berbers) were conquered. The population voted overwhelmingly in favour of independence in a plebiscite that ended the Algerian war of independence, an eight-year guerrilla campaign begun by the National Liberation Front (FLN) in 1954.

The country's first president, FLN leader Ahmed Ben Balla, was overthrown by former ally and defence minister Houari Boumedienne in 1965. Boumedienne was heavily reliant on the army and reduced the country's only political party to a largely symbolic role. Opposition parties were officially outlawed and state media control cemented in the 1976 constitution, while agriculture was collectivised and oil extraction facilities were nationalised as a massive industrialisation drive was launched.

Boumedienne was succeeded in 1978 by Chadli Bendjedid, and the socialist autocracy became increasingly bureaucratic. Left-wing and Islamist opposition to the regime grew, and mass protests in autumn 1988 resulted in the end of one-party rule. But when the first round of the country's first elections, in December 1991, brought victory for the Islamic Salvation Front (FIS), the military intervened and the elections were cancelled. Benjadid was forced to resign, and in March 1997 all parties based on religion were banned.

A bloody civil war between Islamists and security forces from 1992 to 2002 resulted in the deaths of more than 150,000 people in what became known as the 'black decade'. Elections resumed in 1995, and after 1998 the violence began to wane. After a series of short-term military leaders, President Bouteflika, running as an independent, was elected to power in April 1999.

Bouteflika offered an amnesty to those militants willing to give up their arms in 1999. Following his re-election in April 2004 with 85 per cent of the vote, a national referendum was held on the Charter on Peace and Reconciliation, designed to draw a line under the period of violence. The charter resulted in the absolution of military for their alleged role in the disappearance of thousands of Algerians during the violence, and a second amnesty for Islamist militants. Sporadic violence has continued, though, and the leading terrorist organisation the Salafist Group for Preaching and Combat (GSPC) renamed itself Al-Qaeda in the Islamic Maghreb in September 2006, since when there has been an escalation in attacks.

While President Bouteflika has overseen the introduction of programmes promoting economic diversification and the privatisation of state companies, his appointment in 2006 of Abdelaziz Belkhadem to replace Ahmed Ouyahia as prime minister was seen as signalling a return to the more traditional socialist policies of his predecessors. Most notably, key elements of the 2005 hydrocarbons law, which introduced one of the most liberal oil and gas licensing regimes in the Middle East, were reversed in 2006.

Bouteflika was admitted to a hospital in France in November 2005 with a serious stomach illness, and despite official reports of his return to full health, speculation continues that he had been critically ill, possibly with stomach cancer, and that he remains in poor health. In 2006, he announced plans to amend the constitution. The details of the proposed changes have not been announced, but they are thought to include the appointment of vice presidents and the abolition of the two-term presidential limit. Bouteflika has no clear successor. 

Economy

Algeria's economy is based overwhelmingly on oil and gas. The hydrocarbons sector accounts for about 60 per cent of budget revenues, 30 per cent of gross domestic product and more than 95 per cent of export earnings. Economic growth is strong, at around 3 per cent a year, and gross domestic product was about $100 billion in 2006. Hydrocarbons earnings have enabled Algeria to accumulate more than $90 billion of foreign currency reserves. In 2006, repayments to its London Club and Paris Club creditors reduced Algeria's external debt to less than 10 per cent of gross domestic product. The medium term outlook is good, with continued high oil earnings expected to underpin real growth in GDP of 3-4 per cent a year for the next five years.

There are serious weaknesses in the economy, however. The jobless rate in 2006 was about 16 per cent and for the under-30s it is estimated to be more than double that. The country's industrial base is poorly developed, and its huge earnings from oil and gas have provided little incentive to accelerate a sluggish economic diversification programme. About 1,200 companies are tabled to be privatised in some way and some form of private investment has been introduced to about 300 firms. But many larger state institutions, such as oil giant Sonatrach and state energy company Sonelgaz, have been excluded from the process due to their strategic value, while plans to sell off Air Algerie, Algerie Telecom and state-owned cement companies have stalled.

The banking sector is held back by its domination by relatively inefficient state-owned banks, which account for 85 per cent of the market. A number of foreign banks have applied for licences to operate in the country, but the market for international finance is weak, with Algiers preferring to fund projects either with equity or debt raised from state banks. The first privatisation of a state-owned bank, though, is under way. Six banks are prequalified to bid for a majority stake in Credit Populaire d'Algerie, and the sale of a stake in two further state banks is also planned.

While economic diversification has been slow, Algiers has committed to spend $60 billion in the development of basic infrastructure under the 2005-09 Complementary Programme for the Support of Economic Growth (PCSC), and could invest up to $100 billion in the scheme. It includes the erection of 1 million low-cost houses, the upgrade and expansion of the Algiers metro system and the construction of 1,200- kilometre East-West motorway, which will link the border with Morocco in the west to that with Tunisia in the east.

Table: Economic indicators

($ million, unless stated)

Sectors

Oil and gas

Algeria is a member of Opec and ranks 18th in the world in terms of oil reserves. It has the eighth-largest natural gas reserves in the world, and is the second-largest producer of natural gas in the Middle East after Iran, and the world's fourth-largest exporter of liquefied natural (LNG) gas.
The country is a key supplier of gas to Europe, and in 2005 exports through the Maghreb-Europe pipeline to Spain and the Transmed pipeline to Italy accounted for 16 per cent of the continent's piped gas. Two new pipelines are planned, both with capacity of 8 billion cubic metres a year. The Medgaz pipeline to Spain is due to come on stream in 2009 and first gas through the Galsi pipeline to Italy is set to be delivered in 2012. The Transmed pipeline is due to be expanded from 27 bcm/y to 33.5 bcm/y by April 2009, and proposals are also being developed with Nigeria and Niger for the Trans-Saharan Gas Pipeline. There are political obstacles to the scheme, but if it goes ahead it would bring 20-30 bcm/y of Nigerian gas to the Mediterranean market from 2015.

Algeria was responsible for the world's first ever export of LNG and in addition to serving the US market was responsible for 47 per cent of Europe's LNG imports in 2005. Between 2005-07 it has signed headline agreements to study co-operation on LNG projects with the UK/Dutch Shell Group, Norway's Statoil and Russia's Gazprom. Two new LNG plants are planned to come on stream in 2012: a 4.5 million-tonne-a-year (t/y) facility at Skikda and a 4 million-t/y train at Arzew. In September 2007, Algiers expelled its Spanish partners, Repsol and Gas Natural, from a partnership to develop an integrated project with Sonatrach to bring gas from the Gassi Touil area to the planned Arzew terminal due to extensive delays and cost escalation. The scheme, which includes construction of the terminal and LNG marketing and distribution, will now be carried out by Sonatrach alone.

The country's upstream oil and gas licensing terms are among the most stringent in the world. A new hydrocarbons law introduced in 2005 to replace the 1987 law offered substantial liberalisation. But in 2006 many of the most promising changes were reversed. In particular, the right of state energy company Sonatrach to take a 50 per cent stake in any upstream contract was reinstated. In addition, a windfall tax was introduced on the excess profits earned by international oil companies for all contracts signed under the 1987 hydrocarbons law. The tax applies on a sliding scale of between 5-50 per cent for profits made from oil prices exceeding $30 a barrel. The new tax, levied as a share of production, applied to oil but not gas. A number of companies, including the country's largest international reserves-holder, the US' Anadarko Petroleum Corporation, are seeking legal redress for breach of their existing contracts. Under the retained elements of the 2005 hydrocarbons law, Sonatrach's responsibility for regulating the oil and gas sector and for evaluating bids for oil and gas exploration licences has been passed to two new bodies, Agence Nationale pour la Valorisation des Ressources en Hydrocarbures (Alnaft) and Agence Nationale de Controle & de Regulation des Activites dans le domaine des Hydrocarbures (ARH).

Since 2005, Algiers has also stepped back from its targets to increase exports of oil to 2 million b/d from about 1.4 million b/d in 2006, and to gas exports to 85 bcm/y by 2010, from about 65 bcm/y in 2006. In 2007, Energy Minister Chakib Khelil declared that the country wanted to preserve its resources for future generations, and that future oil and gas licensing rounds would focus on the capacity of international partners to offer technology and access to overseas acreage. Sonatrach has begun a process of internationalisation in which it has already acquired exploration acreage in Egypt, Libya, Peru and Mali.

The last international licensing round was held in April 2005, and the launch of the seventh round, originally planned for late 2005, has been delayed pending the full implementation of the new law. Most of the recent increase in gas production has been accounted for by the In Salah and Amenas fields, developed by a consortium of Sonatrach, Norway's Statoil and the UK's BP, the country's largest foreign investor. Both fields have production capacity of 9 bcm/y.

Further downstream, Algeria is carrying out a programme to revamp refineries at Skikda and Arzew, and a new condensate topping refinery at Skikda is due to come on stream in 2008. Sonatrach is also considering whether to proceed with a proposed 300,000-barrel-a-day refinery at Tiaret in the centre of the country following the completion of feasibility studies in early 2007. Efforts to agree a joint venture partnership with an international partner to develop a gas-to-liquids plant at Tiaret, which would have been the country's first, were abandoned in April 2007.

Petrochemicals

Algiers has also laid out a masterplan to develop a series of world scale petrochemicals facilities. In July, France's Total won the contract to build an ethane cracker, and the local/international Almet consortium was awarded a contract to develop a methanol plant, both at Arzew. Three other schemes have been proposed: a naphtha cracker and propane dehydrogenation complex, both at Arzew, and a fuel oil cracker at Skikda. Joint venture talks on these plants have been suspended while Sonatrach explores the option of recruiting a technology provider to carry out feasibility studies before proceeding with the development of the facilities.

The country's fertiliser infrastructure is also being expanded. Agreements for new grassroots ammonia/urea plants have been signed with Egypt's Orascom Construction Industries and Oman's Bahwan Group, and a third is understood to be under consideration. Spain's Fertiberia has signed a contract to upgrade and expand existing facilities operated by state-owned Fertial.

Power

Strong growth in electricity demand has prompted an ambitious scheme to develop the country's power infrastructure. By 2016, national demand is expected to exceed 11,000 MW, compared with about 6,500 MW in 2006. In response, Algiers aims to commission 9,000-10,000 MW of new generation capacity by 2015. Two 1,200-MW facilities, at Terga and Koudiet Draouch, are under tender, and between May-July 2007, contracts were awarded to build a total of more than 1,500 MW in new capacity at six locations.