Algeria’s prime minister Ahmed Ouyahia faces a crowded agenda as he returns to the premiership for a third time. Security, economic modernisation and constitutional reform are all pressing issues in the North African state.

His return as prime minister, little more than two years after he was replaced by Islamic conservative Abdelaziz Belkhadem, is the result of altercations between the senior players around President Abdelaziz Bouteflika. The policy challenges he faces are acute.

Islamist radicals continue to engage in low-level guerrilla warfare and sporadic terrorist attacks. Meanwhile, with food prices rising and jobs in short supply, social pressures are intensifying. Matters are further complicated by the debate over whether and how to prolong Bouteflika’s presidency, which should end in April 2009.

Ouyahia, secretary general of Rassemblement National Democratique, the main junior coalition partner of the president’s Front de Liberation Nationale (FLN), has a reputation as a secular pragmatist.He advocates a firm stance on security but has shown himself willing to negotiate over issues such as the position of Algeria’s often disenchanted Kabyle minority. Aged 62, he is a native of Tizi Ouzou in Kabylia.

He also has a clear understanding of Algeria’s economic difficulties. High oil and gas prices have filled state coffers and improved the country’s balance of payments. But the boom has created few jobs and unemployment remains a serious problem, despite a fall in the official jobless rate from 30 per cent in 2000 to 14.7 per cent in 2007.

Ouyahia’s predecessor Belkhadem, a former foreign minister and FLN party boss, had become preoccupied with Islamist social priorities, such as closing down bars, and with plans for a constitutional reform to allow Bouteflika to run for a third term.

Pressing issues

Such concerns were a diversion from issues that have most impact on ordinary Algerians: the ongoing conflict with Al-Qaeda in the Islamic Maghreb and difficult socio-economic conditions.

Belkhadem has been shunted into a less powerful post as minister of state and personal representative of the president.
Ouyahia’s return to power on 23 June is believed to have been promoted by the military, ultimately the powerbase of the FLN and Bouteflika’s presidency. The new prime minister has long been associated with the ‘Eradicateur’ faction, which takes a tough line against Islamist militants, whereas Belkhadem sought to end violence through a process of national reconciliation.

The latter policy has been only a partial success. While the Civil Concord of 1991 succeeded in ending large-scale warfare, the subsequent 2004 National Peace & Reconciliation Charter has failed to persuade the residual militant elements to lay down their arms. Indeed, there has been an increase in terror attacks over the past year.

With no early sign of an end to violence, the military were able to persuade Bouteflika that he should bring back Ouyahia.
The new premier, who accepts the case for economic liberalisation, may also revive efforts to diversify business activity. Under Belkhadem, the privatisation programme lost momentum, with the sale of Credit Populaire d’Algerie bank placed on hold, despite interest from French, US and Spanish banks.

The global credit crunch provided the government with a useful excuse for delay. Yet privatisation was needed not to bring in extra revenue but to overhaul the risk-averse banking sector, which has starved private businesses of access to finance.

Economic diversification

The growth of the oil and gas sector, where productivity levels are high, has had little positive impact on the jobs market and Algeria needs to diversify its economy. At 39 per cent, it has the lowest proportion of its working age population in jobs of any country in the region, where the average figure is 48 per cent.

But Ouyahia could delay making any radical decisions until the second half of 2009, after the presidential election.

Although Bouteflika still enjoys wide personal popularity, his early success in peacemaking has been tarnished by the continued violence. Over the past few months, ruling circles have been debating whether to stage a referendum to seek popular approval for a change to the constitution that would allow him to run for a third term, or to retrospectively prolong the standard presidential term by two years, which would allow him to remain in office until 2011, despite questions over his health.

As long as Bouteflika remains in office, Algeria is likely to stick to a cautious economic strategy. The president favours hefty public investment in infrastructure, and in 2006 he intervened to tone down measures by the previous Ouyahia government to liberalise the energy sector.

Despite the evidence of rising social tensions, Bouteflika is unlikely to allow Ouyahia complete freedom to revive his liberal economic agenda this time either.