A sustained popular revolt by the Algerian people is demonstrating that economic-policy myopia in the face of significant national challenges can pose serious risks to a regime’s survival.
Algerian President Abdelaziz Bouteflika’s regime has largely itself to blame for the country’s weak economy. As of the late 2000s, expanded state spending, financed by rising oil revenues, had revitalized the economy, following the devastating civil war of the 1990s. But after the 2011 Arab Spring, state expenditures shot up further, and then increased again in 2014, during Bouteflika’s fourth successful election campaign.
The government’s patronage extravaganza came at a time when the budget was already in deficit. Then the bottom fell out from oil prices. Since then, with annual consumption subsidies costing the equivalent of one-quarter of the economy’s output, Algeria’s fiscal and external deficits have exploded to 15% of GDP.
At the time, the collapse of oil prices prompted a national conversation, with several Algerian think tanks callingfor the country to abandon its quasi-socialist, centrally planned petro-state system in favor of a diversified market economy. And in 2016, the government unveiled its “New Economic Model,” setting the stage for a gradual process of economic liberalization.
But the political environment was not favorable. After the already-diminished Bouteflika’s controversial victory in 2014, the country’s political elites became obsessed with the divisive question of who would succeed him. To be sure, between 2014 and 2017, Prime Minister Abdelmalek Sellal did initiate marginal macroeconomic adjustments, including a modest devaluation of the currency. And in the summer of 2017, his successor, Abdelmajid Tebboune, began pursuing reforms to cut state spending and reduce corruption. But Algeria’s economic elite fiercely resisted these efforts, leading to Tebboune’s dismissal.
He was replaced by Algeria’s current prime minister, Ahmed Ouyahia, who was expected to focus solely on the matter of succession. In an attempt to pacify an increasingly discontented public, the Algerian government froze internal and external deficits at around 10% of GDP, financed by printing money and rapidly burning through hard-currency reserves (at a rate of $20 billion per year).
In retrospect, it now seems clear that the regime’s dithering in the face of unsustainable macroeconomic imbalances was a mistake. Judging from the most recent Arab Barometer survey(conducted in 2016), Algerians were not duped by the government’s Potemkin reforms. On the contrary, the regime’s costly efforts to enforce an artificial stability appear to have backfired. Between 2013 and 2016, while the government sought to avoid rocking the boat, public perceptions of economic security collapsed.
Moreover, during the same period, public trust in the government nosedived, most likely because the urgent need for reforms had become obvious to all. By 2016, the Algerian regime ranked among the least trusted governments in the Middle East, and no doubt has sunk further in the ensuing years.
Despite the deterioration in economic security, Algerians’ reported commitment to democracy has remained relatively high, on par with that of Moroccans, Lebanese, and Jordanians. Typically, the middle class – the main driver of liberalization in the region – cools on democratization when economic insecurity is on the rise. But in Algeria, the public’s sense of personalsecurity rose between 2011 and 2016, most likely reflecting Bouteflika’s successful pacification of the country during the previous decade.
Trends in Algerian public opinion indicate that the country has reached a quasi-revolutionary moment. Deep grievances and lost trust in government have combined with popular aspirations for a better political order. And because Algerians feel physically secure, they do not fear making demands of the authorities.
It is this potent mix that is driving the massive protests that erupted on February 22, in response to Bouteflika’s fifth-term candidacy. The coincidence of grievance and political aspiration suggests that this uprising has more in common with the Arab Spring of 2011 than with other past episodes of popular unrest driven largely by economic grievances, such as the October 1988riots, the Black Spring of 2001, and the tens of thousands of localized micro-riotsin the 2000s, during which participants made very specific claims on the government. The combination lends itself more to popular action than to despair. While Algeria’s Arab Spring dissipated after the regime ratcheted up state spending and allowed for limited constitutional reforms, one hopes that this new opportunity for fundamental change won’t be squandered.
Despite its economic weaknesses, Algeria still has valuable assets that would allow it to make the political transition to a more open system. Besides a well-educated population, recently modernized infrastructure networks, a dedicated bureaucracy, and still-sizable oil revenues of around $35 billion per year, the country has hard-currency reserves of about $80 billion, and little debt. Algerians thus are well-armed for a second war of independence, only this time they will not be struggling against a colonial power. Rather, they will be fighting to wrest democratic control from a political elite that has used the country’s oil wealth to ensure its own survival at the expense of social progress.
Project Syndicate