Mr. Arlsan Chikhaoui, economist and CEO of Transactions Nord-Sud, an Algiers-based consultancy, writes that Algeria is in the grip of an irreversible transition. ALGERIA OVERVIEW Pump Priming • The Long View • Q&A with the Prime Minister HYDROCARBONS The Rebirth of Sonatrach • Virgin Markets FINANCE Independence, Please INDUSTRY Industrial Strength Indeed PRIVATIZATION Little to Show
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Since the late 1980s, Algeria has been living through a period of political and social crisis. The convulsions we have been witnessing since the October 1988 riots began a process of transition from a one- party system to, hopefully, an era of political pluralism. The most difficult task in this process is the restoration of political stability and moving from this transitional stage to one of durable growth. This can only be achieved through the modernization of both the model of governance and the economic environment.

The first of these objectives must be predicated upon limiting the relationship between the military and the political class; the Army is a means of power and is not power itself. The changes introduced by President Bouteflika since March 2000 to limit the influence of the Army in the management of political matters and reform the institution itself are key.

At the economic level, Algeria has been engaged for about a decade in a wide range of irreversible reforms. Today, the Algerian economy is unable to attract sufficient investment and is indeed far below the requirements of investors, suffering from many inefficiencies, notably, the delays in structural reform, the legislative process, modernization of infrastructure and so on.

In order to enhance economic growth, President Bouteflika has initiated a three-year project in May 2001 (see main story). This action will definitely stimulate economic growth ­ to around 5% or 6% ­ but will still depend on the coherence of the government's long-term economic policy, modernization of the industrial sector and the commercial environment.

Algeria is a young country, rich in natural resources, with substantial industrial potential, an unexploited agricultural sector, diversified tourism assets and many geopolitical advantages. It has initiated a process of transformation of the political and economic systems, and the objectives are to liberate the economy, establish market mechanisms and allow democracy to flourish.

In order to meet these objectives, Algeria is not solely counting on its own human and natural resources, but also on an efficient international partnership. Constant growth, creation of jobs through investment in small and medium-sized enterprises and diversification of foreign partners are all on the list of objectives. And in the light of the events of September 11 last year, this is all the more needed.


Mr. Chikhaoui was nominated as one of the "100 Future Leaders of Tomorrow" in 1999 by the World Economic Forum.

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